National Foundation on the Arts and the Humanities
International Trade Administration
National Oceanic and Atmospheric Administration
Defense Logistics Agency
Federal Energy Regulatory Commission
Centers for Disease Control and Prevention
National Institutes of Health
Coast Guard
Fish and Wildlife Service
Geological Survey
Indian Affairs Bureau
Land Management Bureau
National Park Service
Drug Enforcement Administration
Federal Bureau of Investigation
Employment and Training Administration
Occupational Safety and Health Administration
Fiscal Service
Federal Aviation Administration
Federal Motor Carrier Safety Administration
National Highway Traffic Safety Administration
Surface Transportation Board
Fiscal Service
Foreign Assets Control Office
Internal Revenue Service
Consult the Reader Aids section at the end of this page for phone numbers, online resources, finding aids, reminders, and notice of recently enacted public laws.
To subscribe to the Federal Register Table of Contents LISTSERV electronic mailing list, go to http://listserv.access.gpo.gov and select Online mailing list archives, FEDREGTOC-L, Join or leave the list (or change settings); then follow the instructions.
Federal Deposit Insurance Corporation.
Final rule.
The Federal Deposit Insurance Corporation (the “Corporation” or “FDIC”) is issuing a final rule that implements the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) regarding stress tests (“final rule”). The Dodd-Frank Act requires the Corporation to issue regulations that require FDIC-insured state nonmember banks and FDIC-insured state-chartered savings associations with total consolidated assets of more than $10 billion to conduct annual stress tests, report the results of such stress tests to the Corporation and the Board of Governors of the Federal Reserve System (“Board”), and publish a summary of the results of the stress tests. The final rule requires large covered banks to conduct annual stress tests beginning on the effective date of this final rule. The Corporation, however, will delay implementation of the annual stress test requirements under the final rule for institutions with total consolidated assets of more than $10 billion but less than $50 billion until September 30, 2013. The final rule requirement for public disclosure of a summary of the stress testing results for these institutions will be implemented starting with the 2014 stress test, with the disclosure occurring during the period starting June 15 and ending June 30 of 2015.
This final rule is effective October 15, 2012.
George French, Deputy Director, Policy, (202) 898–3929, Robert Burns, Associate Director, Mid-Tier Bank Branch, (202) 898–3905, or Ryan Sheller, Senior Large Financial Institutions Specialist, (202) 412–4861, Division of Risk Management and Supervision; Mark G. Flanigan, Counsel, (202) 898–7426, Jason Fincke, Senior Attorney, (202) 898–3659, Rachel Jones, Attorney, (202) 898–6858, or Ryan K. Clougherty, Senior Attorney, (202) 898–3843, Legal Division, Federal Deposit Insurance Corporation, 550 17th Street NW., Washington, DC 20429.
The Dodd-Frank Act was enacted on July 21, 2010.
Section 165(i)(2)(C) requires the Corporation, in coordination with the Board of Governors and the Federal Insurance Office, to issue regulations implementing the stress testing requirements that are consistent and comparable with the other Federal primary financial regulatory agencies.
On January 23, 2012, pursuant to section 165(i) of the Dodd-Frank Act, the Corporation issued a notice of proposed rulemaking in the
The NPR solicited public comment on all aspects of the proposed rule. The NPR's comment period ended on April 30, 2012, and resulted in the FDIC receiving 18 comment letters. Comments were submitted by, or on behalf of, individuals, banks and bank holding companies, consulting firms, and banking and financial services industry trade groups and associations. The comment letters generally supported the broader goals of the NPR, but many expressed concerns with respect to certain aspects of the proposed rule, as discussed in more detail below.
A number of commenters expressed concerns about the scope of the proposed rule and the need for coordination between the agencies in implementing the stress test requirements for various institutions. These commenters generally suggested that the agencies should seek comparability on their respective stress testing requirements and resolve some of the key differences between their respective proposals to ensure consistent and comparable stress testing for all covered financial institutions and to minimize regulatory burden.
The Corporation understands and is sensitive to commenters' concerns regarding the importance of issuing a consistent and comparable set of final stress testing rules across the banking agencies. The FDIC understands that there are a number of insured depository institutions subject to the stress testing final rules that may operate within organizational structures with regulated entities that may be supervised by different federal banking
The NPR sought public comment on the timing of the proposed rule, both with respect to the proposed immediate effectiveness and the proposed time period allotted for completion of the stress tests.
With respect to the proposed effective date, several commenters recommended delayed effective dates based on the asset size of the bank. One commenter suggested a delayed effective date because, due to the complexity of the rule's stress testing requirements, regional and community banks would require additional time to build and effectuate the systems necessary to conduct testing. Another commenter noted that community banks have not participated in stress tests and have not experienced the supervisory expectations that accompany the stress testing process and therefore need additional time to comply with the proposed rule. Several commenters requested delaying the implementation of the proposed rule for at least one year.
The FDIC recognizes that a number of state nonmember banks and state savings associations are at different stages in developing their stress testing frameworks. Certain institutions may need additional time to fully develop their stress testing systems, processes, and procedures, and to collect the information that the FDIC may require in connection with these tests. After considering the comments, the FDIC has decided to delay implementation of the final rule for institutions with total consolidated assets of more than $10 billion but less than $50 billion until September 30, 2013, to ensure that these institutions have sufficient time to develop high-quality stress testing programs. Furthermore, the FDIC has decided to delay the initial public disclosure requirement for these institutions until the 2014 stress test (with the public disclosure to be made in 2015).
Most banks with consolidated assets of $50 billion or more have been involved in stress testing previously, including the 2009 Supervisory Capital Assessment Program (SCAP) and the Board's Comprehensive Capital Analysis and Review (CCAR) stress tests, and consequently have in place a framework necessary to conduct the stress tests required by this rule. Given the size, complexity, and importance of these covered banks to the safety and soundness of the United States banking system, the FDIC believes it is appropriate for these covered banks to commence stress testing as soon as possible. Consequently, state nonmember banks and state savings associations with consolidated total assets equal to or exceeding $50 billion will be required to conduct their first annual stress tests under this final rule using financial data as of September 30, 2012.
The FDIC is aware, however, that some state nonmember banks and state savings associations with assets of $50 billion or more may not be able or ready to conduct the annual stress test this year in a manner that would yield meaningful results. For example, covered banks that were not subject to SCAP and CCAR may need more time to develop and implement a robust stress testing framework. Therefore, the FDIC is reserving authority in the rule to permit these covered banks to delay the application of the requirements under this final rule on a case-by-case basis.
The NPR sought public comment on the proposed time period allotted for completion of the stress tests. A number of comments were received expressing concern with respect to the proposed rule's timing for the annual stress test. Several commenters noted that the proposed rule would require covered banks to conduct stress tests during the busiest time of year for many institutions. Furthermore, one commenter argued that the narrow timeframe between the release of scenarios and the submission of the required reports could present timing issues for institutions, particularly smaller banks, in preparing year-end information. Additionally, several commenters requested that the Corporation provide flexibility with respect to when covered banks are required to perform stress tests. For example, one commenter recommended that covered banks be permitted to choose when they will conduct stress testing throughout the year, and also suggested that the Corporation should provide economic scenarios for the stress tests no later than September 30 of each calendar year.
After consideration of the comments, the FDIC has decided to make changes in the timeline in the final rule. The Corporation intends to distribute the scenarios to all covered banks no later than November 15 of each year, which aligns the development and issuance of the scenarios with the other agencies and which is approximately seven weeks prior to the date by which an over $50 billion covered bank must report the results of its annual stress test. The Corporation believes, based on its supervisory experience, that over $50 billion covered banks will have adequate time to carry out the required stress tests. For the $10 billion to $50 billion covered banks, the final rule extends the reporting date to March 31 of each year giving additional time to these institutions to conduct stress tests and report the results. The final rule also permits these institutions to report their stress test results under the same timeframe as their parent holding company.
The final rule states that a state nonmember bank or state savings association that becomes a covered bank after the final rule's effective date shall comply with the requirements of the final rule and conduct its stress test beginning in the calendar year after the date the state nonmember bank or state savings association becomes a covered bank. This modification to the proposed rule is in response to commenters' concerns that certain institutions have not previously been subject to stress-testing requirements and may need additional time to develop the systems and procedures, as well as information collection processes necessary to conduct these tests.
A number of the comments received by the Corporation raised concerns with respect to the development and use of economic scenarios within the proposed rule. For example, one commenter suggested that the scenarios should be realistic and robust enough to illuminate potential problems, and that, at a minimum, the “severely adverse” scenario should be as adverse as conditions were during the recent financial crisis. A trade association recommended that the scenarios address only general macroeconomic factors for institutions with between $10 billion and $50 billion in assets, while more complex institutions or those that have significant trading positions should incorporate rate “shocks” into their stress tests. Another commenter requested that the banking regulators
Several commenters requested that banks with small geographic footprints be permitted to develop economic scenarios relevant to banks' regional operations. One such commenter argued that the requirements could become a costly “check the box” exercise if stress scenarios are not relevant to banks with small geographic footprints. The commenter also recommended that the Corporation provide guidance to banks for developing their own scenarios, including reports on regional economic outlooks.
A comment submitted jointly by a number of industry organizations requested that the Corporation and other federal banking agencies minimize the burden of the multiple and overlapping stress test requirements by consistently using the same set of supervisory stress scenarios and models for all stress-test requirements. The FDIC intends to coordinate with other federal banking agencies on the development of scenarios. To promote a consistent and transparent framework to support scenario design, the banking agencies anticipate seeking comment on the procedures to be used by the agencies in the development of the scenarios. With regard to commenters' requests to use their own internally generated scenarios, the FDIC believes that all covered banks should use the same set of scenarios so that the results are more directly comparable. However, to allow for unforeseen circumstances, the FDIC reserves the authority to require a covered bank to use different or additional scenarios that the FDIC deems appropriate.
Commenters also expressed concerns about the required reports that must be submitted to the Corporation under the proposed rule. For example, one commenter suggested that the Corporation's expectations for the required reports should be clear and simple enough so that institutions, particularly smaller banks, do not have to rely on vendors or third-party professionals to comply with the requirements.
A number of commenters suggested that it would be appropriate in certain situations to allow a covered bank that is a subsidiary of a bank holding company (that is itself subject to stress testing requirements) to submit a single report for both the bank and the bank holding company. One such commenter requested that the Corporation provide more comprehensive guidance with respect to the standards by which the company-run stress tests will be analyzed.
The FDIC recently proposed reporting templates for covered banks with consolidated assets of $50 billion or more.
The FDIC reserves the authority to require a $10 billion to $50 billion covered bank to use the reporting template for larger banks. The FDIC may also, on a case-by-case basis, require a covered bank to report stress test results using a simpler format to be specified by the FDIC.
Many of the comments received by the Corporation addressed issues associated with the proposed rule's public disclosure requirement. Several commenters expressed concern that the publication of detailed stress test results could be misinterpreted by the general public which could, in turn, undermine public confidence in banks. One such commenter noted that the required public disclosure of results may be used for comparison across institutions, suggesting that regulators run the risk of creating an environment where banks present a conservative bias where there is flexibility in adopting test inputs.
Several commenters requested additional clarity with respect to the Corporation's expectations for the required summary public disclosure. One commenter noted that the company-run stress tests would not be standardized, and thus, comparison of results across various companies may not be possible. This commenter urged the Corporation to provide companies with a standardized template for disclosure that could enable a better understanding of the stress test results by the capital markets and the general public. Another commenter urged the Corporation to require small banks to disclose only a description of the types of risks being included in the stress test, a general description of the methodologies employed, and the capital ratios at the end of the planning horizon.
Two commenters recommended that the CCAR or CapPR disclosure templates be used for disclosure of the results of the severely adverse scenario for company-run stress tests, at least for covered banks with consolidated assets of $50 billion or more. One of these commenters supported not requiring the publication of summary results under the adverse scenario. Several commenters suggested that covered banks should not be required to disclose baseline stress test results or other information that could be used to reverse-engineer earnings guidance.
After careful consideration of the comments, the FDIC has decided to make the following changes. First, the public disclosure requirement will be delayed for an additional year for institutions with total consolidated assets of more than $10 billion but less than $50 billion so that these institutions will have additional time to develop robust stress testing methodologies before they report publicly. Therefore, these covered banks will conduct their required stress tests for the first time in 2013, with the first disclosure of a summary of stress test results occurring in 2015, based on the results of the 2014 stress tests. Covered banks with total consolidated assets of $50 billion or more that are subject to this final rule as of the effective date of this final rule must conduct their first stress test this year, with disclosure required in 2013.
Institutions that become $10 billion to $50 billion covered banks after the effective date of the final rule would begin stress testing in the calendar year after they become covered banks. This is a change from the proposed rule, which would have required institutions to begin stress testing in the same calendar year if they became covered banks no less than 90 days before September 30 of that year. This change was in response to comments that requested
Additionally, the final rule removes the requirement that covered banks publicly disclose results under the baseline scenario and adverse scenario. The FDIC agrees with the commenters that publicly disclosing the above items under a baseline or adverse scenario could be construed as long-term earnings forecasts.
In addition to the issues identified above, the Corporation received a number of comments that addressed a wide range of other topics associated with the proposed rule. A number of commenters suggested establishing a threshold to determine when a covered bank that is a subsidiary of an institution that is itself subject to stress-testing requirements would be required to perform independent stress tests and comply with the requirements of the proposed rule. Commenters suggested that the proposed rule may create duplicative efforts when a subsidiary covered bank comprises greater than 90 percent of its holding company's total consolidated assets. One of these commenters suggested that in order to eliminate duplicate stress testing, the Corporation should accept the CCAR and the Board of Governors' Board FR Y–14A form submissions for annual stress tests of a covered bank that comprises greater than 90 percent of its bank holding company's total consolidated assets and that also serves as the lead depository institution for the bank holding company covered by the CCAR process.
Another commenter noted that the completion of the stress testing and related supervisory evaluation process should not hinder or delay covered banks' ability to take necessary strategic capital actions not otherwise set forth in previously approved capital plans. One of the comments received requested that the Corporation set forth a robust and transparent process for responding to inquiries in a timely manner and suggested that experienced examiners should offer instruction, assistances, and feedback to facilitate the good faith efforts of smaller banks to implement the proposed rule. This commenter also suggested that the Corporation offer a dedicated email address that banks could use to submit questions and receive answers in a timely manner.
The FDIC has carefully considered the comments and has made appropriate revisions to the final rule as described below.
The Corporation is now issuing this final rule to implement the requirements of section 165(i)(2) as proposed in the NPR, with certain modifications, as discussed below. Under this final rule, FDIC-insured state nonmember banks and FDIC-insured state-chartered savings associations with total consolidated assets of more than $10 billion would be required to conduct an annual stress test. The FDIC is delaying the application of the annual stress test requirements by one year for state nonmember banks and state-chartered savings associations with consolidated assets of more than $10 billion but less than $50 billion.
The FDIC views the stress tests conducted under the final rule as providing forward-looking information to supervisors to assist in their overall assessments of a covered bank's capital adequacy and to aid in identifying downside risks and the potential impact of adverse outcomes on the covered bank. In addition, the FDIC may use stress tests to determine whether additional analytical techniques and exercises are appropriate for a covered bank to employ in identifying, measuring, and monitoring risks to the financial soundness of the covered bank, and may require a covered bank to implement such techniques and exercises in conducting its stress tests. Further, these stress tests are expected to support ongoing improvement in a covered bank's internal assessments of capital adequacy and overall capital planning.
The FDIC expects that the annual stress tests required under the final rule will be only one component of the broader stress testing activities conducted by covered banks. In this regard, the FDIC notes that the agencies have recently issued final joint guidance on “Stress Testing for Banking Organizations with More Than $10 Billion in Total Consolidated Assets.”
The final rule will apply to covered banks that are FDIC-insured state nonmember banks and FDIC-insured state savings associations with more than $10 billion in total consolidated assets. Covered banks will be required conduct stress in accordance with the requirements of the final rule. However, the final rule separates a “covered bank” into two categories: a state nonmember bank or state savings association that is either a $10 billion to $50 billion covered bank or an over $50 billion covered bank. The final rule defines a $10 billion to $50 billion covered bank as any state nonmember bank or state savings association with average total consolidated assets that are greater than $10 billion but less than $50 billion. The final rule defines an over $50 billion covered bank as any state nonmember bank or state savings association with average total consolidated assets that are not less than $50 billion. The stress testing, reporting, and disclosure requirements, and deadlines of the final rule differ depending on whether the covered bank is a $10 billion to $50 billion covered bank or an over $50 billion covered bank.
The FDIC recognizes that some covered bank subsidiaries may be affiliated with larger institutions also subject to requirements for stress testing, reporting, and disclosure. In such cases, it may be less burdensome and more appropriate for the covered bank subsidiaries to follow the timing requirements of their parent holding companies. The final rule permits covered bank subsidiaries to choose to conduct their stress tests using the same timeline requirements as their parent holding companies.
A state nonmember bank or state savings association becomes a covered bank for purposes of the final rule based on its total consolidated assets averaged over each of the institution's four most recent consecutive quarters as reported on its Call Reports. The date on which a state nonmember bank or state savings association becomes a covered bank is the as-of date of the fourth consecutive Call Report in which its reported average total consolidated assets are greater than $10 billion. Similarly, a covered bank will remained subject to the stress testing requirements of the final rule until it has $10 billion or less in total consolidated assets for each of the four most recent consecutive quarters as reported in the covered
The date by which a state nonmember bank or state savings association must conduct its first annual stress test under this final rule depends on its size category and whether it becomes a covered bank before or after the effective date of this final rule. A state nonmember bank or state savings association that is subject to this final rule as of October 15, 2012 must conduct the annual stress test under this final rule beginning this year if it is an over $50 billion covered bank, whereas a $10 billion to $50 billion covered bank would conduct its first annual stress test in 2013. Further, the final rule requirement for public disclosure of a summary of the stress testing results for a $10 billion to $50 billion covered bank will not occur until the 2014 stress test.
A state nonmember bank or state savings association that becomes a covered bank after October 15, 2012 would be required to conduct its first annual stress test in the calendar year following the year in which it becomes a covered bank. For example, a bank for which the four-quarter average of total consolidated assets exceeded $10 billion on its June 2013 Call Report (based on the average from its September 2012, December 2012, March 2013, and June 2013 Call Reports) would become a covered bank on June 30, 2013, and would conduct their first stress test in 2014.
When a covered bank comprises the bulk of the assets for a given parent holding company, the inputs to the stress tests conducted by that institution and the holding company, and the conclusions reached, would be expected to be similar. The FDIC expects to take this into account in applying the requirements of this rule. For example, for a holding company that is essentially a shell holding company with a single state nonmember or state savings association that has total consolidated assets of more than $10 billion, the Board and the FDIC would coordinate efforts and communicate with the holding company and the covered bank on how to adequately address their respective stress testing requirements while avoiding duplication of effort.
The FDIC recognizes that certain parent company structures may include one or more subsidiary banks or savings associations, each with total consolidated assets greater than $10 billion. The stress test requirements of section 165(i)(2) apply to the parent company and to each subsidiary bank or savings association of the covered company that has $10 billion or more in total consolidated assets. The FDIC anticipates addressing, on a case-by-case basis through the supervisory process, instances in which it may be appropriate to modify stress testing requirements when there are multiple covered banks within a single parent organization.
Under the final rule, each covered bank would be required to conduct an annual stress test using its financial data as of September 30 of that year, unless the FDIC communicates, in the fourth quarter of that year, a different required as-of date for any or all categories of financial data. Additionally, the Corporation could accelerate or extend any specified deadline for stress testing if the Corporation determined that such modification is appropriate in light of the institution's activities, level of complexity, scope of operations, risk profile, or regulatory capital.
The stress test must assess the potential impact of different scenarios on the capital of the covered bank and certain related items over a forward-looking, nine-quarter planning horizon (that is, through the December 31 reporting date of the second calendar year following the year containing the September 30 as-of date), taking into account all relevant exposures and activities.
The FDIC will provide a minimum of three economic scenarios, (baseline, adverse, and severely adverse), or such additional scenarios as the FDIC determines appropriate, no later than November 15, which the covered bank must use for the stress test. While each scenario includes the paths of a number of economic variables that are typically considered in stress test models, the FDIC expects that covered banks may use all or a subset of the economic variables provided, and may extrapolate other variables (such as local economic variables) from the paths of the economic variables provided, as appropriate, to conduct the stress test.
The FDIC may require a covered bank to include one or more additional scenarios in its stress test based on the institutions activities, level of complexity, risk profiles, scope of operations and regulatory capital, in addition to any other relevant factors. The FDIC will notify the institution in writing that it will be required to include one or more additional scenarios in its stress test, and the notification will include a description of the scenario and the basis for requiring the institution to include the scenario in its stress test.
The FDIC has established provisions within the final rule that apply to covered banks having significant trading activities. For those covered banks, an additional trading and counterparty risk scenario may be included as a component of their stress test scenarios. The FDIC will select an as-of date between October 1 and December 1 of that calendar year for the trading and counterparty risk scenario which will be communicated to the covered bank no later than December 1. This provision is necessary to allow the FDIC to tailor the scenarios and other stress test requirements for those covered banks to ensure that the stress tests provide a meaningful identification of downside risks and assessment of the potential impact of adverse outcomes on the covered bank's capital. Typically, the scenarios would include market price and rate “shocks” consistent with historical or hypothetical adverse market events.
The FDIC expects that the annual stress test scenarios will be revised from time to time to ensure that each scenario remains relevant under current economic and industry conditions. The FDIC will consult closely with the Board and OCC on the development of the annual stress test scenarios to ensure consistent and comparable stress tests for all covered financial institutions and to minimize regulatory burden.
The FDIC expects to issue for comment proposed guidance and procedures for scenario development at a later date.
The final rule requires each covered bank to use the annual stress test scenarios provided by the FDIC in conducting its annual stress tests. Each covered bank must use a planning horizon of at least nine quarters over which the impact of specified scenarios would be assessed. The nine-quarter planning horizon would permit the covered bank to make informed projections of its financial and capital
The final rule also requires the senior management of each covered bank to establish and maintain a system of controls, oversight, and documentation, including policies and procedures, designed to ensure that the stress testing processes used by the covered bank are effective in meeting the requirements of the final rule. The covered bank's policies and procedures must, at a minimum, outline the covered bank's stress testing practices and methodologies, and processes for validating and updating its stress testing practices consistent with applicable laws, regulations and supervisory guidance.
Section 165(i)(2)(B) requires a covered bank to submit a report to the Board and its primary financial regulatory agency at such time, in such form, and containing such information as the primary financial regulatory agency shall require. Section 165(i)(2)(C)(iv) mandates that the primary financial regulatory agencies require a covered bank to publish a summary of its stress test results.
The final rule requires that each over $50 billion covered bank submit a report of the stress test results and documentation to the FDIC and to the Board by January 5. The FDIC published for notice and comment specific annual stress test reporting requirements for over $50 billion covered banks in a separate information collection under the Paperwork Reduction Act (44 U.S.C. 3501–3521).
The confidentiality of information submitted to the Corporation under the final rule will be determined in accordance with applicable law including any available exemptions under the Freedom of Information Act (5 U.S.C. 552(b)) and the FDIC's Rules and Regulations regarding the Disclosure of Information (12 CFR Part 309).
Based on information submitted by a covered bank in the required report to the Corporation, as well as other relevant information, the Corporation will conduct an analysis of the quality of the bank's stress test processes and related results. The Corporation envisions that feedback concerning such analysis will be provided to a covered bank through the supervisory process. In addition, each covered bank must consider the results of the stress tests conducted under the final rule in the normal course of business including, but not limited to, the banking organization's capital planning, assessment of capital adequacy, and risk management practices. The Corporation may also require other actions consistent with safety and soundness of the covered bank.
Consistent with section 165(i)(2), the final rule also requires each covered bank to publish a summary of the results of its annual stress tests after submitting its annual stress test report to the FDIC and the Board. Under the final rule, a $10 billion to $50 billion covered bank must publish a summary of the results of its annual stress test from the period beginning on June 15 and ending June 30 and an over $50 billion covered bank must publish its summary disclosures from the period beginning on March 15 and ending on March 31.
The timing of the disclosures in the final rule has changed from the timing sequence proposed in the NPR. The proposed rule would have required all disclosures to be made no later than April 5. The final rule extends the disclosure due date for $10 billion to $50 billion covered banks to June 30. Therefore, this final rule replaces the specific disclosure due date with a 15-day period in which disclosures must be made. This change ensures adequate time for review of stress test results prior to disclosure.
The summary may be published on a covered bank's Web site or any other forum that is reasonably accessible to the public. The required information publicly disclosed by each covered bank for the severely adverse scenario, at a minimum, includes:
i. A description of the types of risks being included in the stress test;
ii. A summary description of the methodologies used in the stress test;
iii. Estimates of aggregate losses, pre-provision net revenue, net income, provision for loan and lease losses, capital ratios (including regulatory and any other capital ratios specified by the FDIC); and
iv. An explanation of the most significant causes for the changes in regulatory capital ratios, such as the amount of losses attributable to a particular portfolio.
Covered banks that are consolidated subsidiaries of a bank holding company or savings and loan holding company will be permitted to publish abbreviated disclosures with the parent's summary and on the same timeline as the parent holding company. These disclosures will include a summary of changes in regulatory capital ratios of the depository institution subsidiary over the planning horizon, including an explanation of the most significant causes for changes in regulatory capital ratios, such as the amount of losses attributable to a particular portfolio. However, the FDIC reserves the right to require additional disclosures if the FDIC believes that the disclosures at the holding company level do not accurately capture the potential impact of the scenarios on the condition of the covered bank.
The table below describes the steps and timeframes for the annual stress test for covered banks.
The final rule will be effective immediately upon publication in the
The FDIC believes the final rule is necessary to address the continuing exposure of the banking industry to potentially adverse economic conditions. The FDIC expects that all covered banks should have the capacity to understand their risks and the potential impact of stressful events and circumstances on their financial condition. The stress test requirements contained in the final rule will help covered banks and the FDIC to better understand such banks' financial condition in stressed environments, including the potential impact on covered banks' capital adequacy. Further, stress tests serve as an ongoing risk management tool that supports a covered bank's forward-looking assessment of its risks and better equips such organizations to address a range of adverse outcomes. As adverse economic conditions can occur quickly, the process of stress testing needs to begin promptly. Ensuring that covered banks are prepared for adverse economic situations is essential for their health and the overall financial stability of the economy. Accordingly, the FDIC finds good cause for the final rule to take effect immediately upon publication in the
The Paperwork Reduction Act of 1995 (44 U.S.C. 3501–3521) (“PRA”) prohibits the Corporation from conducting or sponsoring, and respondents are not required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (“OMB”) control number. In accordance with the PRA, the Corporation published notice of the proposed information collection for over $50 billion covered banks on August 30, 2012.
For over $50 billion covered banks, following the close of the sixty-day comment period associated with the Corporation's proposed information collection notice, the Corporation will submit its proposed information collection to the OMB director for approval. For $10 billion to $50 billion covered banks, the Corporation will submit a proposed information collection to OMB following the publication and 60-day comment period of a proposed information collection notice for $10 billion to $50 billion covered banks.
The estimated burden for the reporting and disclosure requirements is as follows:
Pursuant to section 605(b) of the Regulatory Flexibility Act (“RFA”),
Section 722 of the Gramm-Leach-Bliley Act
Section 302 of Riegle Community Development and Regulatory Improvement Act (“RCDRIA”) generally requires that regulations prescribed by federal banking agencies which impose additional reporting, disclosures or other new requirements on insured depository institutions take effect on the first day of a calendar quarter which begins on or after the date on which the regulations are published in final form unless an agency finds good cause that the regulations should become effective sooner. The final rule will be effective immediately upon publication in the
The Office of Management and Budget has determined that the final rule is not a “major rule” within the meaning of the relevant sections of the Small Business Regulatory Enforcement Fairness Act of 1996
Administrative practice and procedure, banks, banking, Federal Deposit Insurance Corporation, reporting and recordkeeping requirements, state savings associations, stress tests.
The Corporation amends part 325 of chapter III of title 12 of the Code of Federal Regulations as follows:
12 U.S.C. 1815(a), 1815(b), 1816, 1818(a), 1818(b), 1818(c), 1818(t), 1819(Tenth), 1828(c), 1828(d), 1828(i), 1828(n), 1828(o), 1831o, 1831p-1, 1835, 3907, 3909, 4808; Pub. L. 102–233, 105 Stat. 1761, 1789, 1790 (12 U.S.C. 1831n note); Pub. L. 102–242, 105 Stat. 2236, as amended by Pub. L. 103–325, 108 Stat. 2160, 2233 (12 U.S.C. 1828 note); Pub. L. 102–242, 105 Stat. 2236, 2386, as amended by Pub. L. 102–550, 106 Stat. 3672, 4089 (12 U.S.C. 1828 note); 12 U.S.C. 5365(i); 12 U.S.C. 5412(b)(2)(B).
(1) The Corporation may accelerate or extend any deadline for stress testing, reporting, or publication of the stress test results.
(2) The Corporation may require different or additional tests not otherwise required by this subpart or may require or permit different or additional analytical techniques and methodologies, different or additional scenarios (including components for the
(3) The Corporation may modify the reporting requirements of a report under this subpart or may require additional reports. The Corporation may modify the publication requirements of this subpart and or may require different or additional publication disclosures.
(4) Factors considered: Any exercise of authority under this section by the Corporation will be in writing and will consider the activities, level of complexity, risk profile, scope of operations, and the regulatory capital of the covered bank, in addition to any other relevant factors.
(5) Notice and comment procedures: In exercising its authority to require different or additional stress tests and different or additional scenarios (including components for the scenarios) under paragraph (c)(2) of this section, the Corporation will apply notice and response procedures in the same manner and to the same extent as the notice and response procedures in 12 CFR 325.6, as appropriate.
(6) Nothing in this subpart limits the authority of the Corporation under any other provision of law or regulation to take supervisory or enforcement action, including action to address unsafe and unsound practices or conditions, or violations of law or regulation.
(a)
(b)
(d)
(1)
(2)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
(a)
(1) A $10 billion to $50 billion covered bank as of October 15, 2012 must conduct its first stress test under this subpart using financial statement data as of September 30, 2013, and report the results of its stress test on or before March 31, 2014.
(2) A $10 billion to $50 billion covered bank that is subject to its first annual stress test pursuant to section 203(a)(1) of this subpart must make its initial public disclosure in the period starting June 15 and ending June 30 of 2015, by disclosing the results of a stress test conducted in 2014, using financial statement data as of September 30, 2014.
(3) A state nonmember bank or state savings association that is an over $50 billion covered bank as of October 15, 2012, must conduct its first stress test under this subpart using financial statement data as of September 30, 2012, and report the results of its stress test on or before January 5, 2013.
(b)
(c)
(2) Notwithstanding paragraph (c)(1) of this section, a state nonmember bank or state savings association that migrates from a $10 billion to $50 billion covered bank to an over $50 billion covered bank will be subject to the stress test requirements applicable to an over $50 billion covered bank immediately as of the date the state nonmember bank or state savings association satisfies the size threshold for an over $50 billion covered bank.
(d)
(2) A covered bank that elects to conduct its stress test under paragraph (d)(1) of this section will remain subject to the same timeline requirements of its parent company until otherwise approved by the FDIC.
(c)
(a)
(1) Pre-provision net revenues, losses, loan loss provisions and net income; and
(2) The potential impact on the regulatory capital levels and ratios applicable to the covered bank, and any other capital ratios specified by the Corporation, incorporating the effects of any capital action over the planning horizon and maintenance of an allowance for loan losses appropriate for credit exposures throughout the planning horizon.
(b)
(2) The board of directors, or a committee thereof, of a covered bank must approve and review the policies and procedures of the stress testing processes as frequently as economic conditions or the condition of the covered bank may warrant, but no less than annually. The board of directors and senior management of the covered bank must receive a summary of the results of the stress test.
(3) The board of directors and senior management of each covered bank must consider the results of the stress tests in the normal course of business, including but not limited to, the covered bank's capital planning, assessment of capital adequacy, and risk management practices.
(a)
(b)
(2) The description of aggregate losses and net income must include the cumulative losses and cumulative net income over the planning horizon, and the description of each regulatory capital ratio must include the beginning value, ending value, and minimum value of each ratio over the planning horizon.
(c)
(a)
(2) An over $50 billion covered bank must publish a summary of the results of its annual stress tests in the period starting March 15 and ending March 31.
(b)
(c)
(1) A description of the types of risks included in the stress test;
(2) A summary description of the methodologies used in the stress test;
(3) Estimates of aggregate losses, pre-provision net revenue, provision for loan and lease losses, net income, and pro forma capital ratios (including regulatory and any other capital ratios specified by the FDIC); and
(4) An explanation of the most significant causes for the changes in the regulatory capital ratios.
(d)
(2) The disclosure of regulatory capital ratios and any other capital ratios specified by the Corporation under this section must include the beginning value, ending value, and minimum value of each ratio over the planning horizon.
By order of the Board of Directors.
Federal Aviation Administration (FAA), DOT.
Final rule.
This rule establishes, amends, suspends, or revokes Standard Instrument Approach Procedures (SIAPs) and associated Takeoff Minimums and Obstacle Departure Procedures for operations at certain airports. These regulatory actions are needed because of the adoption of new or revised criteria, or because of changes occurring in the National Airspace System, such as the commissioning of new navigational facilities, adding new obstacles, or changing air traffic requirements. These changes are designed to provide safe and efficient use of the navigable airspace and to promote safe flight operations under instrument flight rules at the affected airports.
This rule is effective October 15, 2012. The compliance date for each SIAP, associated Takeoff Minimums, and ODP is specified in the amendatory provisions.
The incorporation by reference of certain publications listed in the regulations is approved by the Director of the
Availability of matter incorporated by reference in the amendment is as follows:
1. FAA Rules Docket, FAA Headquarters Building, 800 Independence Avenue SW., Washington, DC 20591;
2. The FAA Regional Office of the region in which the affected airport is located;
3. The National Flight Procedures Office, 6500 South MacArthur Blvd., Oklahoma City, OK 73169 or,
4. The National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202–741–6030, or go to:
1. FAA Public Inquiry Center (APA–200), FAA Headquarters Building, 800 Independence Avenue SW., Washington, DC 20591; or
2. The FAA Regional Office of the region in which the affected airport is located.
Richard A. Dunham III, Flight Procedure Standards Branch (AFS–420) Flight Technologies and Programs Division, Flight Standards Service, Federal Aviation Administration, Mike Monroney Aeronautical Center, 6500 South MacArthur Blvd., Oklahoma City, OK. 73169 (Mail Address: P.O. Box 25082 Oklahoma City, OK. 73125) telephone: (405) 954–4164.
This rule amends Title 14, Code of Federal Regulations, Part 97 (14 CFR part 97) by amending the referenced SIAPs. The complete regulatory description of each SIAP is listed on the appropriate FAA Form 8260, as modified by the National Flight Data Center (FDC)/Permanent Notice to Airmen (P–NOTAM), and is incorporated by reference in the amendment under 5 U.S.C. 552(a), 1 CFR part 51, and § 97.20 of Title 14 of the Code of Federal Regulations.
The large number of SIAPs, their complex nature, and the need for a special format make their verbatim publication in the
This amendment to 14 CFR part 97 is effective upon publication of each separate SIAP as amended in the transmittal. For safety and timeliness of change considerations, this amendment incorporates only specific changes contained for each SIAP as modified by FDC/P–NOTAMs.
The SIAPs, as modified by FDC P–NOTAM, and contained in this amendment are based on the criteria contained in the U.S. Standard for
Because of the close and immediate relationship between these SIAPs and safety in air commerce, I find that notice and public procedure before adopting these SIAPs are impracticable and contrary to the public interest and, where applicable, that good cause exists for making these SIAPs effective in less than 30 days.
The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore—(1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air Traffic Control, Airports, Incorporation by reference, and Navigation (Air).
Accordingly, pursuant to the authority delegated to me, Title 14, Code of Federal Regulations, Part 97, 14 CFR part 97, is amended by amending Standard Instrument Approach Procedures, effective at 0901 UTC on the dates specified, as follows:
49 U.S.C. 106(g), 40103, 40106, 40113, 40114, 40120, 44502, 44514, 44701, 44719, 44721–44722.
By amending: § 97.23 VOR, VOR/DME, VOR or TACAN, and VOR/DME or TACAN; § 97.25 LOC, LOC/DME, LDA, LDA/DME, SDF, SDF/DME; § 97.27 NDB, NDB/DME; § ILS, ILS/DME, MLS, MLS/DME, MLS/RNAV; § 97.31 RADAR SIAPs; § 97.33 RNAV SIAPs; and § 97.35 COPTER SIAPs, Identified as follows:
Federal Aviation Administration (FAA), DOT.
Final rule.
This rule establishes, amends, suspends, or revokes Standard Instrument Approach Procedures (SIAPs) and associated Takeoff Minimums and Obstacle Departure Procedures for operations at certain airports. These regulatory actions are needed because of the adoption of new or revised criteria, or because of changes occurring in the National Airspace System, such as the commissioning of new navigational facilities, adding new obstacles, or changing air traffic requirements. These changes are designed to provide safe and efficient use of the navigable airspace and to promote safe flight operations under instrument flight rules at the affected airports.
This rule is effective October 15, 2012. The compliance date for each SIAP, associated Takeoff Minimums, and ODP is specified in the amendatory provisions.
The incorporation by reference of certain publications listed in the regulations is approved by the Director of the
Availability of matters incorporated by reference in the amendment is as follows:
1. FAA Rules Docket, FAA Headquarters Building, 800 Independence Avenue SW., Washington, DC 20591;
2. The FAA Regional Office of the region in which the affected airport is located;
3. The National Flight Procedures Office, 6500 South MacArthur Blvd., Oklahoma City, OK 73169 or,
4. The National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202–741–6030, or go to:
1. FAA Public Inquiry Center (APA–200), FAA Headquarters Building, 800 Independence Avenue SW., Washington, DC 20591; or
2. The FAA Regional Office of the region in which the affected airport is located.
Richard A. Dunham III, Flight Procedure Standards Branch (AFS–420), Flight Technologies and Programs Division, Flight Standards Service, Federal Aviation Administration, Mike Monroney Aeronautical Center, 6500 South MacArthur Blvd. Oklahoma City, OK. 73169 (Mail Address: P.O. Box 25082, Oklahoma City, OK 73125) Telephone: (405) 954–4164.
This rule amends Title 14 of the Code of Federal Regulations, Part 97 (14 CFR part 97), by establishing, amending, suspending, or revoking SIAPS, Takeoff Minimums and/or ODPS. The complete regulators description of each SIAP and its associated Takeoff Minimums or ODP for an identified airport is listed on FAA form documents which are incorporated by reference in this amendment under 5 U.S.C. 552(a), 1 CFR part 51, and 14 CFR part 97.20. The applicable FAA Forms are FAA Forms 8260–3, 8260–4, 8260–5, 8260–15A, and 8260–15B when required by an entry on 8260–15A.
The large number of SIAPs, Takeoff Minimums and ODPs, in addition to their complex nature and the need for a special format make publication in the
This amendment to 14 CFR part 97 is effective upon publication of each separate SIAP, Takeoff Minimums and ODP as contained in the transmittal. Some SIAP and Takeoff Minimums and textual ODP amendments may have been issued previously by the FAA in a Flight Data Center (FDC) Notice to Airmen (NOTAM) as an emergency action of immediate flight safety relating directly to published aeronautical charts. The circumstances which created the need for some SIAP and Takeoff Minimums and ODP amendments may require making them effective in less than 30 days. For the remaining SIAPS and Takeoff Minimums and ODPS, an effective date at least 30 days after publication is provided.
Further, the SIAPs and Takeoff Minimums and ODPS contained in this amendment are based on the criteria contained in the U.S. Standard for Terminal Instrument Procedures (TERPS). In developing these SIAPS and Takeoff Minimums and ODPs, the TERPS criteria were applied to the conditions existing or anticipated at the affected airports. Because of the close and immediate relationship between these SIAPs, Takeoff Minimums and ODPs, and safety in air commerce, I find that notice and public procedures before adopting these SIAPS, Takeoff Minimums and ODPs are impracticable and contrary to the public interest and, where applicable, that good cause exists for making some SIAPs effective in less than 30 days.
The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore—(1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule ” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26,1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air Traffic Control, Airports, Incorporation by reference, and Navigation (Air).
Accordingly, pursuant to the authority delegated to me, Title 14, Code of Federal Regulations, Part 97 (14 CFR part 97) is amended by establishing, amending, suspending, or revoking Standard Instrument Approach Procedures and/or Takeoff Minimums and/or Obstacle Departure Procedures effective at 0902 UTC on the dates specified, as follows:
49 U.S.C. 106(g), 40103, 40106, 40113, 40114, 40120, 44502, 44514, 44701, 44719, 44721–44722.
Securities and Exchange Commission.
Final rule.
The Securities and Exchange Commission (the Commission) is adopting revisions to the Electronic Data Gathering, Analysis, and Retrieval System (EDGAR) Filer Manual and related rules to reflect updates to the EDGAR system. The revisions are being made primarily to support public dissemination of previously submitted draft registration statements either under the JOBS Act or the Division of Corporation Finance's foreign private issuer policy; support PDF as an official filing format for submission type 40–33 and 40–33/A; support changes in the beneficiary account and receiver American Bank Association number and name for fee payments made for filings; and allow a future period date up to the next business date for Form 8–K. The EDGAR system is scheduled to be upgraded to support this functionality on October 1, 2012.
Effective October 15, 2012. The incorporation by reference of the EDGAR Filer Manual is approved by the Director of the
In the Division of Corporation Finance, for questions on draft registration statements and Form 8–K, contact Jeffrey Thomas at (202) 551–3600; in the Division of Investment Management for questions concerning submission types 40–33 and 40–33/A, contact Barry Miller at (202) 551–6796; and in the Office of Information Technology, contact Rick Heroux at (202) 551–8800.
We are adopting an updated EDGAR Filer Manual, Volume I and Volume II. The Filer Manual describes the technical formatting requirements for the preparation and submission of electronic filings through the EDGAR system.
The revisions to the Filer Manual reflect changes within Volume I entitled EDGAR Filer Manual, Volume I: “General Information,” Version 14 (October 2012) and Volume II entitled EDGAR Filer Manual, Volume II: “EDGAR Filing,” Version 21 (October 2012). The updated manual will be incorporated by reference into the Code of Federal Regulations.
The Filer Manual contains all the technical specifications for filers to submit filings using the EDGAR system. Filers must comply with the applicable provisions of the Filer Manual in order to assure the timely acceptance and processing of filings made in electronic format.
The EDGAR system will be upgraded to Release 12.2 on October 1, 2012 and will introduce the following changes: EDGAR will be updated to support public dissemination of the confidential draft registration statements, submission types DRS and DRS/A. Issuers that submitted draft registrations either under the JOBS Act or the Division of Corporation Finance's foreign private issuer policy will be able to disseminate their previously submitted draft registration statements. A new correspondence type, DRSLTR, will be available to submit any correspondences related to draft registration statements. The options to disseminate draft registration statements as well as to create DRSLTR submissions can be accessed by selecting the “Draft Reg. Statement” link on the EDGAR Filing Web site.
Form ID application will be updated with “JOBS Act § 106” or “Foreign Private Issuer Policy” options to allow applicants to indicate that they are submitting an application for EDGAR access to file draft registration statements. These options will replace the “Access codes will be used to submit draft registration statement” check box.
Submission form types 8–K, 8–K/A, 8–K12B, 8–K12B/A, 8–K12G3, 8–K12G3/A, 8–K15D5, and 8–K15D5/A will allow a future period date up to the next business date from the date of submission, if the time of submission is
EDGAR will be updated to allow filers to submit, on a voluntary basis, copies of litigation documents pursuant to Section 33 of the Investment Company Act of 1940 (submission types 40–33 and 40–33/A) in Portable Document Format (PDF) as an official filing format. EDGAR will continue to allow ASCII and HTML as official filing formats for submission types 40–33 and 40–33/A.
Starting October 1, 2012, filers initiating FEDWIRE transactions to make deposits to pay their filing fees will need to use a new US Treasury beneficiary account number (850000001001), as well as a new American Bank Association (ABA) number and bank name for the receiving bank (021030004/TREAS NYC). The current bank account number (152307768324) and receiving bank ABA number and name (081000210/US BANK) will be invalid from this date forward. Filer may obtain the new US Treasury account number and ABA number from the notice posted on the “Information for EDGAR Filers” web page prior to October 1, 2012 and by accessing the updated “Instructions for Wire Transfer (FEDWIRE) and Check Payment of SEC Filing Fees” by logging onto the EDGAR Filing Web site and accessing the “Fees” link on the EDGAR menu thereafter.
The new online version of Form N–SAR, originally planned for deployment on July 9, 2012, has been delayed and will not go into production any sooner than January 14th 2013. The specific deployment date will be announced on the Commission's public Web site's “Information for EDGAR Filers” page (
Along with the adoption of the Filer Manual, we are amending Rule 301 of Regulation S–T to provide for the incorporation by reference into the Code of Federal Regulations of today's revisions. This incorporation by reference was approved by the Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR Part 51.
You may obtain paper copies of the updated Filer Manual at the following address: Public Reference Room, U.S. Securities and Exchange Commission, 100 F Street, NE., Room 1543, Washington DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. We will post electronic format copies on the Commission's Web site; the address for the Filer Manual is
Since the Filer Manual and the corresponding rule changes relate solely to agency procedures or practice, publication for notice and comment is not required under the Administrative Procedure Act (APA).
The effective date for the updated Filer Manual and the rule amendments is October 15, 2012. In accordance with the APA,
We are adopting the amendments to Regulation S–T under Sections 6, 7, 8, 10, and 19(a) of the Securities Act of 1933,
Incorporation by reference, Reporting and recordkeeping requirements, Securities.
In accordance with the foregoing, Title 17, Chapter II of the Code of Federal Regulations is amended as follows:
1. The authority citation for Part 232 continues to read in part as follows:
15 U.S.C. 77f, 77g, 77h, 77j, 77s(a), 77z–3, 77sss(a), 78c(b), 78
Filers must prepare electronic filings in the manner prescribed by the EDGAR Filer Manual, promulgated by the Commission, which sets out the technical formatting requirements for electronic submissions. The requirements for becoming an EDGAR Filer and updating company data are set forth in the updated EDGAR Filer Manual, Volume I: “General Information,” Version 14 (October 2012). The requirements for filing on EDGAR are set forth in the updated EDGAR Filer Manual, Volume II: “EDGAR Filing,” Version 21 (October 2012). All of these provisions have been incorporated by reference into the Code of Federal Regulations, which action was approved by the Director of the
By the Commission.
Occupational Safety and Health Administration (OSHA), Labor.
Final rule; notice of the Office of Management and Budget's (OMB) approval of information collection requirements.
The Occupational Safety and Health Administration (OSHA) is announcing that the Office of Management and Budget (OMB) approved the revised information collection requirements contained in the Hazard Communication Standard (HCS) (29 CFR parts 1910, 1915, and 1926) under the Paperwork Reduction Act of 1995 (PRA–95). The OMB control number is 1218–0072.
The collections of information contained in the final rule published March 26, 2012 (77 FR 17573) are effective October 15, 2012.
Theda Kenney or Todd Owen, Directorate of Standards and Guidance, OSHA, U.S. Department of Labor, Room N–3609, 200 Constitution Avenue NW., Washington, DC 20210; telephone (202) 693–2222.
On March 26, 2012, OSHA published a final rule that aligned the existing HCS with the United Nations Globally Harmonized System of Classification and Labeling of Chemicals that benefits workers by reducing confusion about chemical hazards in the workplace, facilitating safety training and improving the understanding of hazards, especially for low literacy workers. The final rule revised existing collection of information (paperwork) requirements that were approved by the Office of Management and Budget (OMB) under PRA–95, 44 U.S.C. 3501 et seq., and OMB's regulations at 5 CFR part 1320.
Hazard communication is currently addressed by many different international, national, and State authorities. These existing requirements are not always consistent and often contain different definitions of hazards and varying provisions for what information is required on labels and safety data sheets (SDSs). The final standard harmonizes the U.S. system with international norms and as a result would enhance worker safety and facilitate international trade. The final rule's modifications to the Hazard Communication Standard's collection of information requirements include: (1) Revised criteria for classification of chemical hazards; (2) revised labeling provisions that include requirements for use of standardized signal words, pictograms, hazard statements, and precautionary statements; (3) a specified format for SDSs; and (4) related revisions to definitions of terms used in the Standard and to requirements for employee training on labels and SDSs.
As required by PRA–95, the
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501–3520), OMB approved the collections of information contained in the HCS, and assigned these collections of information OMB control number 1218–0072. This approval expires on June 30, 2015. In accordance with 5 CFR 1320.5(b), an Agency may not conduct or sponsor, and a person need not respond to, a collection of information unless the collection displays a valid OMB control number. Also, notwithstanding any other provision of law, no employer shall be subject to penalty for failing to comply with a collection of information if the collection of information does not display a currently valid OMB control number.
David Michaels, Ph.D., MPH, Assistant Secretary of Labor for Occupational Safety and Health, directed the preparation of this notice. The authority for this notice is the Paperwork Reduction Act of 1995 (44 U.S.C. 3506
Pension Benefit Guaranty Corporation.
Final rule.
This final rule amends the Pension Benefit Guaranty Corporation's regulation on Benefits Payable in Terminated Single-Employer Plans to prescribe interest assumptions under the regulation for valuation dates in November 2012. The interest assumptions are used for paying benefits under terminating single-employer plans covered by the pension insurance system administered by PBGC.
Effective November 1, 2012.
Catherine B. Klion (
PBGC's regulation on Benefits Payable in Terminated Single-Employer Plans (29 CFR Part 4022) prescribes actuarial assumptions—including interest assumptions—for paying plan benefits under terminating single-employer plans covered by title IV of the Employee Retirement Income Security Act of 1974. The interest assumptions in the regulation are also published on PBGC's Web site (
PBGC uses the interest assumptions in Appendix B to Part 4022 to determine whether a benefit is payable as a lump sum and to determine the amount to pay. Appendix C to Part 4022 contains interest assumptions for private-sector pension practitioners to refer to if they wish to use lump-sum interest rates determined using PBGC's historical methodology. Currently, the rates in Appendices B and C of the benefit payment regulation are the same.
The interest assumptions are intended to reflect current conditions in the financial and annuity markets. Assumptions under the benefit payments regulation are updated monthly. This final rule updates the benefit payments interest assumptions for November 2012.
The November 2012 interest assumptions under the benefit payments regulation will be 0.75 percent for the period during which a benefit is in pay status and 4.00 percent during any years preceding the benefit's placement in pay status. In comparison with the interest assumptions in effect for October 2012, these interest assumptions are unchanged.
PBGC has determined that notice and public comment on this amendment are impracticable and contrary to the public interest. This finding is based on the need to determine and issue new interest assumptions promptly so that the assumptions can reflect current market conditions as accurately as possible.
Because of the need to provide immediate guidance for the payment of benefits under plans with valuation dates during November 2012, PBGC finds that good cause exists for making the assumptions set forth in this amendment effective less than 30 days after publication.
PBGC has determined that this action is not a “significant regulatory action” under the criteria set forth in Executive Order 12866.
Because no general notice of proposed rulemaking is required for this amendment, the Regulatory Flexibility Act of 1980 does not apply. See 5 U.S.C. 601(2).
Employee benefit plans, Pension insurance, Pensions, Reporting and recordkeeping requirements.
In consideration of the foregoing, 29 CFR part 4022 is amended as follows:
29 U.S.C. 1302, 1322, 1322b, 1341(c)(3)(D), and 1344.
Coast Guard, DHS.
Notice of availability.
The Coast Guard announces the availability of three policy letters providing guidance to vessels and mariners subject to the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers, 1978, as amended (STCW). These letters provide guidance on: The hours of rest requirements of the 2010 amendments to the STCW Convention and Code; issuance of endorsements and approval of training for Vessel Personnel with Designated Security Duties (VPDSD) and vessel personnel
The three letters are available for viewing beginning October 15, 2012.
The policy letters are available for viewing on the Coast Guard's National Maritime Center Web site at
The docket for this notice is available for inspection or copying at the Docket Management Facility (M–30), U.S. Department of Transportation, West Building Ground Floor, Room W12–140, 1200 New Jersey Avenue SE., Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. You may also find this docket on the Internet by going to
If you have questions on this notice, call or email the U.S. Coast Guard, Mariner Credentialing Program Policy Division (CG–CVC–4) at (202) 372–2357 or
In 2007, the International Maritime Organization (IMO) embarked on a comprehensive review of the entire STCW Convention and STCW Code. The Parties adopted amendments on June 25, 2010 at the STCW Diplomatic Conference in Manila, Philippines, and the amendments entered into force for all ratifying countries on January 1, 2012.
The STCW Convention is not self-implementing; therefore, the U.S., as a signatory to the Convention, must initiate regulatory changes to ensure full implementation of the amendments to the STCW Convention and STCW Code. The U.S. implements these provisions under the Convention and under the authority of United States domestic laws in United States Code Titles 5, 14, 33, 46, and pursuant to 46 CFR, Chapter I, Subchapter B.
The Coast Guard published a Supplemental Notice of Proposed Rulemaking (SNPRM) on August 1, 2011 (76 FR 45908), proposing changes to implement the STCW Convention and Code, to address the comments received from the public in response to the Notice of Proposed Rulemaking published on November 17, 2009 (74 FR 59354), and to incorporate the 2010 amendments to the STCW Convention that came into force on January 1, 2012. The public comment period for the SNPRM ended on September 30, 2011. The Coast Guard intends to publish a final rule to implement amendments to the STCW, including the 2010 amendments, and ensure that the U.S. is meeting its obligations under the Convention.
The following three policy letters provide guidance to parties affected by STCW:
This policy letter provides guidance to clarify the changes associated with the hours of rest requirements found within the 2010 amendments to the STCW Convention and Code. This policy will provide information on the changes to the hours of rest requirements that are now being monitored internationally. It also provides recommended methods to lessen the port state control impact on U.S. vessels while operating abroad until the Coast Guard promulgates the final rule implementing STCW.
This policy letter provides guidance on the issuance of endorsements and approval of training for Vessel Personnel with Designated Security Duties and vessel personnel requiring security awareness training under the 2010 amendments to the STCW Convention and Code. The IMO has provided an alternative means of compliance until January 1, 2014, and the Coast Guard has determined that the requirements in 33 CFR 104.220 and 104.225 can be used to comply with the 2010 amendments under this alternative. Endorsements will be issued based upon the documentary evidence that an individual has complied with existing regulations.
This policy letter provides guidance on issuance of endorsements other than the security endorsements discussed above, and approval of other related training to meet the 2010 amendments to the STCW Convention and Code. The guidance in this document is intended to assist industry and individual mariners to meet the requirements of STCW and 46 CFR, Chapter I, Subchapter B. This policy provides methods for issuing STCW endorsements established by the 2010 amendments that may be obtained by meeting current domestic requirements. In addition to the information regarding the STCW endorsements, the policy letter announces that the Coast Guard will consider granting approval of training to meet various provisions of the 2010 amendments.
This notice is issued under authority of 5 U.S.C. 552(a) and United States Code Titles 5, 14, 33, 46.
Coast Guard, DHS.
Final rule.
This rule redefines the geographical points described in our regulations, which demarcate an area of the Detroit River in which certain vessels are restricted to speeds not greater than 12 statute miles per hour.
This rule will be effective November 14, 2012.
Documents mentioned in this preamble are part of docket [USCG–2011–1086]. To view documents mentioned in this preamble as being available in the docket, go to
If you have questions on this rule, call or email LT Adrian Palomeque, Prevention Department, Sector Detroit, Coast Guard; telephone (313) 568–9508, email
On May 8, 2012, we published in the
As discussed in the aforesaid NPRM, representatives from LCA, the Lakes Pilots Association, the International Shipmasters Association, and the Canadian Shipowners Association previously made a request of the Coast Guard regarding 33 CFR Part 162. Particularly, these groups requested that the Coast Guard amend, via federal rulemaking, 33 CFR 162.138(a)(1)(ii), which requires vessels on the Detroit River north of the Detroit River Light to operate at no more than 12 statute miles per hour. In response to that request, the Coast Guard's Ninth District Commander, in consultation with the Captain of the Port, Sector Detroit, Windsor Port Authority, Transport Canada, and the Canadian Coast Guard, assessed the necessity and utility of the aforementioned regulatory provision and determined that the southern point of the restricted speed area in 33 CFR 162.138(a)(1)(ii) should be relocated to a point approximately 2.5 statute miles to the north at the D33 stationary light. The reasoning for the Ninth District Commander's decision is discussed in the following paragraph.
The speed restriction in 33 CFR 162.138(a)(1)(ii) requires vessels on the Detroit River north of the Detroit River Light to operate at no more than 12 statute miles per hour. This restriction serves two purposes. First, it is intended to prevent collisions and groundings. (See 33 CFR 162.130(a)). Second, it is intended to limit wake damage to vessels and shore structures (See 60 FR 35701–01). Because the Detroit River Light is several miles into Lake Erie and because the channel between the Detroit River Light and the D33 stationary light is roughly twelve-hundred feet wide, the Ninth District Commander has determined that limiting speed south of the D33 stationary light is not necessary to prevent wake damage or to prevent collisions and groundings. Thus, 33 CFR 162.138(a)(1)(ii), as currently written, serves as an unnecessary restriction on vessel operations. Moreover, this unnecessary restriction is exacerbated by the fact that upbound vessels must decelerate well in advance of the Detroit River Light in order to attain the maximum speed at the light itself.
Pursuant to the authority contained in the Ports and Waterways Safety Act, (33 U.S.C. 1221
As mentioned above, only one comment was received in response to the NPRM published on May 8, 2012. In that comment, LCA offered its full support for the proposed rulemaking.
This Final Rule is identical to the rule proposed in that NPRM. As stated in the NPRM, because 33 CFR 162.138, as currently written, unnecessarily restricts commercial vessel operations, the Ninth District Commander is amending 33 CFR 162.138 to reduce the size of the restricted speed area currently delineated in 33 CFR 162.138(a)(1)(ii). Particularly, this rule relocates the southern point of the restricted speed area from its current location at the Detroit River Light to a new location near the D33 stationary light.
We developed this proposed rule after considering numerous statutes and executive orders related to rulemaking. Below we summarize our analyses based on these statutes or executive orders.
This rule is not a significant regulatory action under section 3(f) of Executive Order 12866, Regulatory Planning and Review, as supplemented by Executive Order 13563, Improving Regulation and Regulatory Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of Executive Order 12866 or under section 1 of Executive Order 13563. The Office of Management and Budget has not reviewed it under those Orders.
It is not “significant” under the regulatory policies and procedures of the Department of Homeland Security (DHS). We conclude that this proposed rule is not a significant regulatory action because relocating the southern point of the restricted speed area delineated in 33 CFR 162.138(a)(1)(ii) will lessen navigation restrictions on the public and on private industry. Thus, we anticipate that it will not adversely affect the economy, will not interfere with other agencies, will not adversely alter the budget of any grant or loan recipients, and will not raise any novel legal or policy issues.
The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601–612, as amended, requires federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.
The Coast Guard received no comments from the Small Business Administration on this rule. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule would not have a significant economic impact on a substantial number of small entities. This rule will affect the following entities, some of which might be small entities: The owners and operators of vessels intending to transit between the Detroit River Light and the D33 stationary. However, the relocation of the southern point of the restricted speed area delineated in 33 CFR 162.138(a)(1)(ii) will not have a significant economic impact on a substantial number of small entities because it will lessen navigation restrictions on the public and private industry.
In keeping with section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104–121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the
Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture
This rule does not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501–3520).
A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect 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. We have analyzed this rule under that Order and determined that this rule does not have implications for federalism.
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531–1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.
This rule will not cause a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights.
This rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden.
We have analyzed this rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and does not create an environmental risk to health or risk to safety that may disproportionately affect children.
This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.
This action is not a “significant energy action” under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use.
This rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards.
We have analyzed this rule under Department of Homeland Security Management Directive 023–01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321–4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves amendments to navigation regulations and thus, is categorically excluded under paragraph 34(i) of the Commandant Instruction. A Categorical Exclusion Determination (CED) and a preliminary environmental analysis checklist are available in the docket where indicated under
Navigation (water), Waterways.
For the reasons discussed in the preamble, the Coast Guard amends 33 CFR Part 162 as follows:
33 U.S.C. 1231; Department of Homeland Security Delegation No. 0170.1.
Coast Guard, DHS.
Final rule.
The Coast Guard is amending the Columbus Day weekend regulated navigation area on Biscayne Bay in Miami, Florida. The amended regulated navigation area alters the boundaries of the area and expands the enforcement period. These regulations are necessary to protect the public during Columbus Day weekend; a period that has historically had a significant concentration of persons and vessels on the waters of Biscayne Bay. To ensure the public's safety, all vessels within the regulated navigation area are: Required to transit the regulated navigation area at no more than 15 knots; subject to control by the Coast Guard; and required to follow the instructions of all law enforcement vessels in the area.
This rule will be effective November 14, 2012 and will be enforced annually on Columbus Day weekend, starting at 12:01 p.m. on the Saturday before Columbus Day, through 2 a.m. on Monday (the Columbus Day holiday). Columbus Day is the federally recognized holiday occurring annually on the second Monday in October.
Documents indicated in this preamble are part of docket USCG–2012–0191. To view documents mentioned in this preamble as being available in the docket, go to
If you have questions on this rule, call or email Lieutenant Junior Grade Mike H. Wu, Sector Miami Prevention Department, Coast Guard; telephone (305) 535–7576, email
On July 25, 2012, we published a Notice of Proposed Rulemaking (NPRM) entitled USCG–2012–0191 in the
Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the
The legal basis for the rule is the Coast Guard's authority to establish regulated navigation areas and other limited access areas: 33 U.S.C. 1231; 46 U.S.C. Chapter 701, 3306, 3703; 50 U.S.C. 191, 195; 33 CFR 1.05–1, 6.04–1, 6.04–6, 160.5; Public Law 107–295, 116 Stat. 2064; Department of Homeland Security Delegation No. 0170.1.
The purpose of the rule is to ensure the safe transit of vessels and to protect persons, vessels, and the marine environment within the regulated navigation area during the Columbus Day weekend.
While no comments were receiving following the NPRM, the final rule has been modified by clarifying that Columbus Day weekend is the weekend preceding the second Monday of October.
This final rule revises the existing Biscayne Bay Columbus Day RNA in 33 CFR 165.779 by altering the RNA's boundaries and revising the enforcement period, extending it by two hours into the early morning of Columbus Day. The revised RNA encompasses certain waters of Biscayne Bay between Rickenbacker Causeway Bridge and Coon Point on Elliot Key in Miami, Florida.
All vessels within the regulated navigation area are: (1) Required to transit the area at no more than 15 knots; (2) subject to control by the Coast Guard; and (3) required to follow the instructions of all law enforcement vessels in the area.
The regulated navigation area is necessary to ensure the safety of the public during a time of heightened vessel traffic in the aforementioned area. Each year numerous recreation vessels, which include an annual sailing regatta, congregate in the waters of Biscayne Bay during Columbus Day weekend. The close proximity of numerous vessels within the proposed regulated navigation area during Columbus Day weekend poses a hazardous condition.
The regulated navigation area will result in the transiting of vessels at a reduced speed, thereby significantly reducing the threat of vessel collisions. Requiring vessels within the regulated navigation area to transit at no more than 15 knots will also enable law enforcement officials to identify, respond to, query, and stop operators who may pose a hazard to other vessels in the area. Nothing in this regulation alleviates the requirement for vessel operators from complying with all other federal, state, and local laws in the area, including manatee slow speed zones.
We developed this rule after considering numerous statutes and executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes or executive orders.
This rule is not a significant regulatory action under section 3(f) of Executive Order 12866, Regulatory Planning and Review, as supplemented by Executive Order 13563, Improving Regulation and Regulatory Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of Executive Order 12866 or under section 1 of Executive Order 13563. The Office of Management and Budget has not reviewed it under those Orders.
The economic impact of this rule is not significant for the following reasons: (1) The regulated navigation area will be enforced for less than 2 days each year; (2) although, during the enforcement period, vessels are required to transit the area at no more than 15 knots, be subjected to control by the Coast Guard, and be required to follow the instructions of all law enforcement vessels in the area, the regulated navigation area does not prohibit vessels from transiting the area; (3) vessels will still be able operate in surrounding waters that are not encompassed within the regulated navigation area without the restrictions imposed by the regulated navigation area; and (4) advance notification of the regulated navigation area will be made to the local maritime community via Local Notice to Mariners and Broadcast Notice to Mariners.
The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601–612, as amended, requires federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard received no comments from the Small Business Administration on this rule. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.
This rule may affect the following entities, some of which may be small entities: The owners or operators of vessels intending to transit the regulated navigation area from 12:01 p.m. on Saturday until 2 a.m. on Monday on the weekend preceding the federally recognized holiday of Columbus Day occurring annually on the second
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104–121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the
Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1–888–REG–FAIR (1–888–734–3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.
This rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501–3520).
A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on 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. We have analyzed this rule under that Order and have determined that it does not have implications for federalism.
The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531–1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or Tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.
This rule will not cause a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights.
This rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden.
We have analyzed this rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and does not create an environmental risk to health or risk to safety that may disproportionately affect children.
This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.
This action is not a “significant energy action” under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use.
This rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards.
We have analyzed this rule under Department of Homeland Security Management Directive 023–01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321–4370f), and have concluded this action is one of a category of actions which do not individually or cumulatively have a significant effect on the human environment. This rule involves establishing a regulated navigation area to ensure the safe transit of vessels and to protect persons, vessels, and the marine environment within the regulated navigation area during the Columbus Day weekend, which will be enforced for less than 2 days each year. This rule is categorically excluded, under figure 2–1, paragraph (34)(g), of the Instruction. An environmental analysis checklist and a categorical exclusion determination are available in the docket where indicated under
Harbors, Marine safety, Navigation (water), Reporting and recordkeeping requirements, Security measures, Waterways.
For the reasons discussed in the preamble, the Coast Guard amends 33 CFR Part 165 as follows:
33 U.S.C. 1231; 46 U.S.C. Chapter 701, 3306, 3703; 50 U.S.C. 191, 195; 33 CFR 1.05–1, 6.04–1, 6.04–6, 160.5; Pub. L. 107–295, 116 Stat. 2064; Department of Homeland Security Delegation No. 0170.1.
(a)
(b)
(c)
(2) At least 48 hours prior to each enforcement period, the Coast Guard will provide notice of the regulated area through advanced notice via Local Notice to Mariners and Broadcast Notice to Mariners. The Coast Guard will also provide notice of the regulated area by on-scene designated representatives.
(d)
Coast Guard, DHS.
Temporary final rule.
The Coast Guard is establishing a temporary safety zone on the waters of Lake Erie, East Huron, Ohio. This regulation is intended to restrict vessels from portions of Lake Erie during the Wounded Warriors Benefit. This safety zone is necessary to protect spectators and vessels from the hazards associated with launched pumpkins.
This rule is effective from 10:00 a.m. on October 27, 2012, until 7:00 p.m. on October 28, 2012.
Documents mentioned in this preamble are part of docket USCG–2012–0889. To view documents mentioned in this preamble as being available in the docket, go
If you have questions on this temporary rule, call or email the Marine Events Coordinator, LTJG Benjamin Nessia, Marine Safety Unit, Toledo, 420 Madison Avenue Suite 700, Toledo, OH 43604; (419) 418–6040, email
The Coast Guard is issuing this temporary final rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because doing so would be impracticable and contrary to the public interest. The details of this year's event were not submitted in sufficient time for the Coast Guard to solicit public comments before the start of the event. Thus, waiting for a notice and comment period to run would inhibit the Coast Guard from protecting the public and vessels from the hazards associated with the event.
Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the
On October 27, 2012, a pumpkin launching event will take place on Lake Erie in which participants shoot pumpkins from an air cannon into the lake in East Huron, OH. This event is known as the Wounded Warriors Benefit. The Captain of the Port Detroit has determined that this benefit is in close proximity to other watercraft and poses a significant risk to public safety and property. Thus, the Captain of the Port Detroit has determined it necessary to establish a safety zone to control vessel movement around the location of the launch platform which will help ensure the safety of persons and property at these events and help minimize the associated risks.
As suggested above, this rule is intended to ensure safety of the public and vessels during the Wounded Warriors Benefit. This rule will be effective from 10:00 a.m. on October 27, 2012 until 7:00 p.m. on October 28, 2012, and enforced from 10:00 a.m. until 7:00 p.m. on October 27, 2012; in the event of inclement weather, the zone will be enforced from 10:00 a.m. until 7:00 p.m. on October 28, 2012. The safety zone will encompass all waters of Lake Erie within a 2500 ft radius of the pumpkin launching site located at position 41° 23′ 6.7194″ N, −82° 27′ 46.6812″ W. All geographic coordinates are North American Datum of 1983 (NAD 83).
Entry into, transiting, or anchoring within the safety zone is prohibited unless authorized by the Captain of the Port Detroit or his designated on scene representative. The on-scene representative may be present on any Coast Guard, state or local law enforcement, or sponsor provided vessel assigned to patrol the event. The Captain of the Port or his designated on-scene representative may be contacted via VHF Channel 16.
We developed this rule after considering numerous statutes and executive orders related to rulemaking. Below we summarize our analyses
This rule is not a significant regulatory action under section 3(f) of Executive Order 12866, Regulatory Planning and Review, as supplemented by Executive Order 13563, Improving Regulation and Regulatory Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of Executive Order 12866 or under section 1 of Executive Order 13563. The Office of Management and Budget has not reviewed it under those Orders. It is not “significant” under the regulatory policies and procedures of the Department of Homeland Security (DHS). We conclude that this rule is not a significant regulatory action because we anticipate that it will have minimal impact on the economy, will not interfere with other agencies, will not adversely alter the budget of any grant or loan recipients, and will not raise any novel legal or policy issues. The safety zone will be relatively small and exist for a relatively short time. Thus, restrictions on vessel movement within that particular area are expected to be minimal. Under certain conditions, moreover, vessels may still transit through the area when permitted by the Captain of the Port.
Under the Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601–612, as amended, requires federal agencies to consider the potential impact of regulations on small entities during rulemaking. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.
This rule will affect the following entities, some of which may be small entities: The owners or operators of vessels intending to transit or anchor in the portion of Lake Erie discussed above during the enforcement of the safety zone established herein.
This safety zone will not have a significant economic impact on a substantial number of small entities for the following reasons: This rule will be enforced for approximately nine hours on either October 27 or 28, 2012.
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104–121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the
Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1–888–REG–FAIR (1–888–734–3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.
This rule calls for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501–3520).
A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect 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. We have analyzed this rule under that Order and determined that this rule does not have implications for federalism.
The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531–1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.
This rule will not cause a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights.
This rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden.
We have analyzed this rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and does not create an environmental risk to health or risk to safety that may disproportionately affect children.
This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between Federal Government and Indian tribes.
This action is not a “significant energy action” under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use.
This rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards.
We have analyzed this rule under Department of Homeland Security Management Directive 023–01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA)(42 U.S.C. 4321–4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves the establishment of a safety zone and, therefore it is categorically excluded from further review under paragraph 34(g) of Figure 2–1 of the Commandant
Harbors, Marine Safety, Navigation (water), Reporting and record keeping requirements, Security measures, Waterways.
For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:
33 U.S.C. 1231; 46 U.S.C. Chapters 701, 3306, 3703; 50 U.S.C. 191, 195; 33 CFR 1.05–1, 6.04–1, 6.04–6, and 160.5; Pub. L. 107–295, 116 Stat. 2064; Department of Homeland Security Delegation No. 0170.1.
(a)
(b)
(c)
(1) “On-scene Representative” means any Coast Guard Commissioned, warrant, or petty officer designated by the Captain of the Port Detroit to monitor a safety zone, permit entry into the zone, give legally enforceable orders to persons or vessels within the zones, and take other actions authorized by the Captain of the Port.
(2) “Public vessel” means vessels owned, chartered, or operated by the United States, or by a State or political subdivision thereof.
(d)
(2) This safety zone is closed to all vessel traffic, excepted as may be permitted by the Captain of the Port Detroit or his designated representative. All persons and vessels must comply with the instructions of the Coast Guard Captain of the Port or his designated representative. Upon being hailed by the U.S. Coast Guard by siren, radio, flashing light or other means, the operator of a vessel shall proceed as directed.
(3) All vessels must obtain permission from the Captain of the Port or his designated representative to enter, move within, or exit the safety zone established in this section when this safety zone is enforced. Vessels and persons granted permission to enter the safety zone must obey all lawful orders or directions of the Captain of the Port or a designated representative. While within a safety zone, all vessels must operate at the minimum speed necessary to maintain a safe course.
(e)
(f)
(g)
Coast Guard, DHS.
Temporary final rule.
The Coast Guard is establishing a safety zone on the Willamette River between the Oregon City Bridge and the Interstate 205 Bridge on October 13, 2012 from 7:30 p.m. (P.D.T.) to 9 p.m. (P.D.T.). This safety zone is necessary to ensure the safety of the maritime public during a fireworks display, and will do so by prohibiting unauthorized persons and vessels from entering the safety zone unless authorized by the Sector Columbia River Captain of the Port (COTP) or his designated representative.
This rule is effective from 7:30 p.m. to 9 p.m. on October 13, 2012.
Documents mentioned in this preamble are part of docket [USCG–2012–0805]. To view documents mentioned in this preamble as being available in the docket, go to
If you have questions on this rule, call or email, ENS Ian McPhillips, Waterways Management Division, Marine Safety Unit Portland, U.S. Coast Guard; telephone (503) 240–9319, email
The Coast Guard is issuing this final rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because to do so would be impracticable since the event will have taken place by the time the notice could be published and comments taken.
Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the
The Captain of the Port has been delegated the authority to establish safety zones for safety or environmental purposes in 33 CFR 160.5.
The fireworks display will create hazardous conditions for vessels in the area and the people onboard those vessels due to loud noises, falling debris, and explosions, as well as potential heavy vessel traffic congregating near the display. To mitigate these hazards, the Coast Guard believes that a temporary safety zone is needed.
The Coast Guard is establishing a temporary safety zone in the Sector Columbia River Captain of the Port Zone. The safety zone will be established on the Willamette River from shore to shore between the Oregon City Bridge and the Interstate 205 Bridge, and will be enforced during the Oregon City Bridge Grand Opening fireworks display from 7:30 p.m. (P.D.T.) to 9:00 p.m. (P.D.T.) on October 13, 2012. All persons and vessels will be prohibited from entering the safety zone during this time unless authorized by the Sector Columbia River Captain of the Port or his designated representative.
This safety zone will improve the safety of the maritime public in the area during the fireworks display by prohibiting persons and vessels from entering areas where the risks associated with the fireworks display are present.
We developed this rule after considering numerous statutes and executive orders related to rulemaking. Below we summarize our analyses based on these statutes and executive orders.
This rule is not a significant regulatory action under section 3(f) of Executive Order 12866, Regulatory Planning and Review, as supplemented by Executive Order 13563, Improving Regulation and Regulatory Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of Executive Order 12866 or under section 1 of Executive Order 13563. The Office of Management and Budget has not reviewed it under those Orders. The Coast Guard has made this determination because the safety zone created by this rule will not significantly affect the maritime public as vessels may still transit the zone with prior authorization from the Coast Guard.
The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601–612, as amended, requires federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.
This rule would affect the following entities, some of which might be small entities: The owners or operators of vessels intending to transit or anchor in a portion of the Willamette River from 7:30 p.m. (P.D.T.) to 9:00 p.m. (P.D.T.) on October 13, 2012.
This safety zone would not have a significant economic impact on a substantial number of small entities for the following reasons. This safety zone would be activated, and thus subject to enforcement, for only 1.5 hours in the evening. Although the safety zone would apply to the entire width of the river, traffic would be allowed to pass through the zone with the permission of the Captain of the Port. Before the activation of the zone, we will issue maritime advisories widely available to users of the river.
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104–121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the
Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1–888–REG–FAIR (1–888–734–3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.
This rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501–3520).
A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect 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. We have analyzed this rule under that Order and determined that this rule does not have implications for federalism.
The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531–1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a
This rule will not cause a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights.
This rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden.
We have analyzed this rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and does not create an environmental risk to health or risk to safety that may disproportionately affect children.
This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.
This action is not a “significant energy action” under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use.
This rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards.
We have analyzed this rule under Department of Homeland Security Management Directive 023–01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA)(42 U.S.C. 4321–4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves the establishment of a safety zone around the fall out area of a fireworks display. This rule is categorically excluded from further review under paragraph 34(g) of Figure 2–1 of the Commandant Instruction. An environmental analysis checklist supporting this determination and a Categorical Exclusion Determination are available in the docket where indicated under
Harbors, Marine Safety, Navigation (water), Reporting and recordkeeping requirements, Waterways.
For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:
33 U.S.C. 1226, 1231; 46 U.S.C. Chapter 701, 3306, 3703; 50 U.S.C. 191, 195; 33 CFR 1.05–1, 6.04–1, 6.04–6, and 160.5; Pub. L. 107–295, 116 Stat. 2064; Department of Homeland Security Delegation No. 0170.1.
(a)
(b)
(c)
Coast Guard, DHS.
Temporary final rule.
The Coast Guard is establishing a temporary safety zone on the Savannah River in Augusta, Georgia, during the 2012 Head of the South Regatta, which will consist of a series of rowing races. The 2012 Head of the South Regatta is scheduled to take place on Friday, November 9, 2012 and Saturday, November 10, 2012. The temporary safety zone is necessary for the safety of race participants, participant vessels, spectators, and the general public during the event. Persons and vessels are prohibited from entering, transiting through, anchoring in, or remaining within the safety zone unless authorized by the Captain of the Port Savannah or a designated representative.
This rule is effective from 6 a.m. on November 9, 2012 through 6 p.m. on November 10, 2012. This rule will be enforced daily from 6 a.m. to 6 p.m. on November 9, 2012 and November 10, 2012.
Documents mentioned in this preamble are part of docket [USCG–2012–0913]. To view documents mentioned in this preamble as being available in the docket, go to
If you have questions on this rule, call or email Marine Science Technician First Class William N. Franklin, Marine Safety Unit Savannah, Coast Guard; telephone 912–652–4353, email
The Coast Guard is issuing this final rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because the Coast Guard did not receive confirmation of the details of this event until September 11, 2012. As a result, the Coast Guard did not have sufficient time to publish a NPRM and to receive public comments prior to the event. Any delay in the effective date of this rule would be contrary to the public interest because immediate action is needed to minimize potential danger to the race participants, participant vessels, spectators, and the general public.
The legal basis for the rule is the Coast Guard's authority to establish regulated navigation areas and other limited access areas: 33 U.S.C. 1231; 46 U.S.C. Chapter 701, 3306, 3703; 50 U.S.C. 191, 195; 33 CFR 1.05–1, 6.04–1, 6.04–6, 160.5; Public Law 107–295, 116 Stat. 2064; Department of Homeland Security Delegation No. 0170.1.
The purpose of the rule is to protect race participants, participant vessels, spectators, and the general public from the hazards associated with the event.
On November 9, 2012, Augusta Rowing Club is hosting the 2012 Head of the South Regatta, a series of rowing races on the Savannah River in Augusta, Georgia. The races will start in the vicinity of Hammond Ferry Landing and finish in the vicinity of the Highway 520 Bridge.
The safety zone encompasses part of the Savannah River in Augusta, Georgia, where the event will be held. The safety zone will be enforced daily from 6 a.m. until 6 p.m. on November 9, 2012 and November 10, 2012. Persons and vessels are prohibited from entering, transiting through, anchoring in, or remaining within the safety zone unless authorized by the Captain of the Port Savannah or a designated representative.
Persons and vessels desiring to enter, transit through, anchor in, or remain within the safety zone may contact the Captain of the Port Savannah by telephone at 912–652–4353, or a designated representative via VHF radio on channel 16, to request authorization. If authorization to enter, transit through, anchor in, or remain within the safety zone is granted by the Captain of the Port Savannah or a designated representative, all persons and vessels receiving such authorization must comply with the instructions of the Captain of the Port Savannah or a designated representative. The Coast Guard will provide notice of the safety zone by Local Notice to Mariners, Broadcast Notice to Mariners, and on-scene designated representatives.
We developed this rule after considering numerous statutes and executive orders related to rulemaking. Below we summarize our analyses based on 13 of these statutes or executive orders.
This rule is not a significant regulatory action under section 3(f) of Executive Order 12866, Regulatory Planning and Review, as supplemented by Executive Order 13563, Improving Regulation and Regulatory Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of Executive Order 12866 or under section 1 of Executive Order 13563. The Office of Management and Budget has not reviewed it under those Orders.
The economic impact of this rule is not significant for the following reasons: (1) The safety zone will be enforced for a maximum of twenty four hours; (2) although persons and vessels will not be able to enter or remain in the safety zone without authorization from the Captain of the Port Savannah or a designated representative, they may operate in the surrounding area during the enforcement periods; (3) persons and vessels may still enter or remain in this safety zone if authorized by the Captain of the Port Savannah or a designated representative; and (4) the Coast Guard will provide advance notification of the safety zone to the local maritime community by Broadcast Notice to Mariners.
Under the Regulatory Flexibility Act (5 U.S.C. 601–612), we have considered whether this rule would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.
The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities. This rule may affect the following entities, some of which may be small entities: The owners or operators of vessels intending to enter, transit through, anchor in, or remain within that portion of the Savannah River encompassed within the safety zone from 6 a.m. until 6 p.m. on November 9, 2012 and November 10, 2012. For the reasons discussed in the Regulatory Planning and Review section above, this rule will not have a significant economic impact on a substantial number of small entities.
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104–121), we offer to assist small entities in understanding the rule so that they can better evaluate its effects on them and participate in the rulemaking process.
Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1–888–REG–FAIR (1–888–734–3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.
This rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501–3520).
A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on State or local governments and would either preempt State law or impose a substantial direct cost of
The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531–1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.
This rule will not cause a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights.
This rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden.
We have analyzed this rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and does not create an environmental risk to health or risk to safety that may disproportionately affect children.
This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.
This action is not a “significant energy action” under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use.
This rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards.
We have analyzed this rule under Department of Homeland Security Management Directive 023–01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321–4370f), and have concluded this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule is categorically excluded, under figure 2–1, paragraph (34)(g), of the Instruction. This rule involves establishing a temporary safety zone that will be enforced for a total of 24 hours. An environmental analysis checklist and a categorical exclusion determination are available in the docket where indicated under
Harbors, Marine safety, Navigation (water), Reporting and recordkeeping requirements, Security measures, Waterways.
For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:
33 U.S.C. 1231; 46 U.S.C. Chapter 701, 3306, 3703; 50 U.S.C. 191, 195; 33 CFR 1.05–1, 6.04–1, 6.04–6, 160.5; Pub. L. 107–295, 116 Stat. 2064; Department of Homeland Security Delegation No. 0170.1.
(a)
(b)
(c)
(2) Persons and vessels desiring to enter, transit through, anchor in, or remain within the regulated area may contact the Captain of the Port Savannah by telephone at 912–652–4353, or a designated representative via VHF radio on channel 16, to request authorization. If authorization to enter, transit through, anchor in, or remain within the regulated area is granted by the Captain of the Port Savannah or a designated representative, all persons and vessels receiving such authorization must comply with the instructions of the Captain of the Port Savannah or a designated representative.
(3) The Coast Guard will provide notice of the regulated area by Local Notice to Mariners, Broadcast Notice to Mariners, and on-scene designated representatives.
(d)
Postal Service
Final rule.
This final rule establishes the retail option of Every Door Direct Mail-Retail® (EDDM-Retail) as a formal product offering within Mailing Services, and ends the market test period for this initiative.
Effective January 27, 2013.
Bill Chatfield at 202–268–7278 or Dave Mastervich at 202–268–7419.
The Postal Service's final rule includes the announcement to make EDDM-Retail a permanent product, and contains the revisions to
In December 2010, the Postal Service announced a new market test to begin in January 2011, to enable customers to mail saturation flats with simplified addresses to all types of delivery in an even more simplified manner. The USPS
This market test has been very successful in making it easier for new customers to mail and increase their marketing efforts. On July 10, 2012, the Postal Service filed a request with the Postal Regulatory Commission (PRC) pursuant to 39 U.S.C. 3642 and 39 CFR 3020.30,
Our current standards for use of simplified addresses on Standard Mail and on other classes of mail entered through Business Mail Entry Units are not changing. We are adding an alternative marketing name of Every Door Direct Mail for commercial mailings of Standard Mail flats with simplified addresses.
The Postal Service adopts the following changes to
Administrative practice and procedure, Postal Service.
Accordingly, 39 CFR Part 111 is amended as follows:
5 U.S.C. 552(a); 13 U.S.C. 301–307; 18 U.S.C. 1692–1737; 39 U.S.C. 101, 401, 403, 404, 414, 416, 3001–3011, 3201–3219, 3403–3406, 3621, 3622, 3626, 3632, 3633, and 5001.
Flat-size mail is:
a. More than 11
Standard Mail flats with simplified addresses (under 602.3.0) may be mailed under conditions in 140 as EDDM-Retail flats or as commercial mail under 340 and 602.3.0.
EDDM-Retail flats must weigh a maximum of 3.3 ounces and must have a length greater than 10
a. The length (the longest dimension) must be a maximum of 15 inches.
b. The height must be a maximum of 12 inches.
c. The thickness must be a maximum of 0.75 inch.
For price, see Notice 123—Price List. Flats mailed under EDDM-Retail are not eligible for Nonprofit prices.
There are no annual presort or mailing fees to mail pieces as EDDM-Retail. Ancillary service endorsements are not allowed on pieces mailed as EDDM-Retail flats.
EDDM-Retail flats are Standard Mail, and are generally subject to Standard Mail eligibility standards, with differences as described in 2.0 due to the use of simplified addresses. EDDM-Retail mailpieces consist of mailable matter that is neither mailed nor required to be mailed as First-Class Mail and that is not authorized to be mailed as Periodicals. All EDDM-Retail flats in a mailing must be of identical content, size, and weight and cannot weigh more than 3.3 ounces. Each piece must meet the physical standards for a flat under 101.2.0. See 101.2.1 for dimensions.
Personal information may not be included in an EDDM-Retail mailpiece.
Mail containing bills or statements of account as defined in 333.2.2 may not be entered as EDDM-Retail mail.
Mail containing handwritten or typewritten matter may not be entered as EDDM-Retail mail.
EDDM-Retail mailpieces may not have First-Class Mail enclosures or attachments. An EDDM-Retail flat may bear a label, a sticker, or a release card eligible as Standard Mail matter, when affixed under 2.5 and 301.1.8.4. EDDM-
a. The host piece must be at least .009 inch thick.
b. The attachment is securely attached, not larger than the host piece, and does not extend beyond the host piece.
c. Each piece in the mailing bears the attachment, and the attachment is of identical size, weight, and positioning on the host piece.
d. The attachment does not interfere with processing or delivery. Folded or multipage attachments must be secured and sealed to prevent opening during handling.
EDDM-Retail flats are not sealed against postal inspection.
EDDM-Retail flats must be part of a saturation flats mailing with all pieces bearing simplified addresses meeting the saturation and addressing standards in 602.3.0. Each mailing must consist of 200 or more pieces or 50 or more pounds of mail up to a maximum of 5000 pieces per day per 5-digit ZIP Code. As an exception to this minimum quantity, a mailing to all addresses in a 5-digit ZIP Code area may contain fewer than 200 pieces when there are fewer than 200 deliverable addresses in the entire ZIP Code service area to which the pieces are mailed. All pieces in a mailing must be entered at the designated Post Office servicing the routes and Post Office Box sections to which delivery is intended.
No forwarding or return service is available for pieces mailed as EDDM-Retail.
No extra services are available with EDDM-Retail mailpieces.
Each EDDM-Retail mailing is subject to postage payment standards in 144, preparation standards in 145, and deposit and entry standards in 146.
EDDM-Retail flats are not subject to the ZIP Code accuracy or Move Update standards. Additional basic standards for Standard Mail flats in 343.3.0 apply to EDDM-Retail flats, unless stated otherwise in 140.
The mailer is responsible for proper postage payment. Postage for EDDM-Retail flats must be paid with a postage evidencing system indicia (604.4.0) of the correct amount of postage affixed to each piece or at the time of mailing by cash, check, debit card, or credit card.
Mailers must obtain a Customer Registration ID (CRID), available online at
A postage indicia must be on each piece mailed as EDDM-Retail, printed above and to the right of the simplified address. See Exhibit 1.3 for the required wording of the indicia.
Each mailing of EDDM-Retail flats must be accompanied by a postage statement (PS Form 3587) completed and signed by the mailer.
Documentation for mailings of EDDM-Retail flats includes the postage statement (see 2.1), a sample mailpiece, and (if applicable) a list of “do not deliver” addresses.
All pieces mailed as EDDM-Retail mailings must be bundled under 1.3 and presented directly to the correct delivery Post Office or destination delivery unit (DDU), or mailed to the DDU via Priority Mail under 146.
EDDM-Retail flats must be part of one mailing of at least 200 pieces (or 50 pounds) of mail except under 143.3.1, but no more than 5000 pieces per mailing per day at any one Post Office. If a Post Office serves multiple ZIP Codes, the maximum number of EDDM-Retail pieces per day is 5000 per 5-digit ZIP Code.
EDDM-Retail flats must be separated by delivery route (or Post Office Box section) under 145, using delivery statistics obtained from the EDDM web tool at the Web site
All EDDM-Retail mailings must be entered directly at the Post Office (or DDU) responsible for the Post Office Box or carrier route delivery for which the mailing is prepared, or shipped to that Post Office under 1.2.
Place prepared EDDM-Retail mail, in bundles with facing slips, in Priority Mail boxes, including Priority Mail Flat Rate boxes.
Box #1 (see 1.2.3) for the EDDM-Retail mailing must contain an envelope with the following:
a. Sample mailpiece.
b. Check or money order made out to “Postmaster” or “Postal Service” for the amount of postage for the EDDM-Retail pieces (not for the Priority Mail shipment). Include your telephone number on the front of the check.
c. Completed EDDM-Retail postage statement (PS Form 3587).
d. The Postmaster Instruction letter; see
On each box, write “Every Door Direct Mail—Retail” and “Open Immediately.” For multiple boxes, number the boxes, starting with 1 of X, (with “X” being the total number of boxes in the shipment). Include the payment and documentation in box #1.
Address the boxes to “Postmaster” at the Post Office that will deliver the mailpieces. To ship them, either bring the boxes to your local Post Office or use Click-N-Ship. Each box must have a Delivery Confirmation label affixed by the mailer.
[
Standard Mail flats with simplified addresses for which saturation flats prices are paid and EDDM-Retail flats (see 140) must have at least one dimension that is greater than a letter-size maximum dimension as noted in 1.1a. The minimum thickness must be at least 0.007 inch up to a maximum of 0.75 inch. As an exception to the minimum length, flats with simplified addresses may have a length shorter than a letter-size maximum length, under all of the following conditions: * * *
Mailpieces must be marked under the corresponding standards to show the class of service and/or price paid:
a. Basic Marking. The basic required marking that indicates the class or subclass which must be printed or produced as part of, directly below, or to the left of the permit imprint, meter imprint, or stamp as follows:
[
1. “First-Class Mail”
2. “Standard,” “STD,” “Presorted Standard,” or “PRSRT STD”
3. “Nonprofit Organization,” “Nonprofit Org.,” or “Nonprofit”
4. For Standard Mail flats mailed at saturation flats prices under EDDM- Retail standards in 140 and 602.3.0, add “EDDM-Retail” as the last line in the permit imprint indicia. See Exhibit 144.1.3 for an example.
The following conditions must be met when using a simplified address on commercial mailpieces:
[
c. Standard Mail flats with simplified addresses (also known as “Every Door Direct Mail” or “EDDM”) must have one dimension larger than a letter-size maximum dimension, except under 301.2.2.2. Standard Mail pieces, when mailed under conditions in 301.2.2.2 and delivered by city route delivery or Post Office Box delivery in offices with city route delivery, are considered to be flats and are charged postage for Standard Mail saturation flats. Letter-size pieces that meet the size standards in 301.2.2.2 and that are delivered by rural or HCR routes may be mailed (when entered at a BMEU) as letters or flats with simplified addresses, at the mailer's option. See 140 for more information about entering EDDM pieces (EDDM-Retail) at Retail locations.
[
* * * Postage for pieces mailed as EDDM-Retail flats must be as described in 144.
We will publish an appropriate amendment to 39 CFR part 111 to reflect these changes.
Environmental Protection Agency (EPA).
Final rule.
EPA is taking final action to disapprove a portion of the State Implementation Plan (SIP) submissions, submitted by the State of Alabama, through the Alabama Department of Environmental Management (ADEM), on July 25, 2008, and September 23, 2009, which were intended to meet the requirement of the Clean Air Act (CAA or the Act). The CAA requires that each state adopt and submit a SIP for the implementation, maintenance, and enforcement of each NAAQS promulgated by EPA, which is commonly referred to as an “infrastructure” SIP. Alabama certified that the Alabama SIP contains provisions that ensure the 1997 annual and 2006 24-hour fine particulate matter (PM
This rule will be effective November 14, 2012.
EPA has established a docket for this action under Docket Identification No. EPA–R04–OAR–2012–0343. All documents in the docket are listed on the
Sean Lakeman, Regulatory Development Section, Air Planning Branch, Air, Pesticides and Toxics Management Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth Street SW., Atlanta, Georgia 30303–8960. The telephone number is (404) 562–9043. Mr. Lakeman can be reached via electronic mail at
Upon promulgation of a new or revised NAAQS, sections 110(a)(1) and (2) of the CAA require states to make a SIP submission to address basic SIP requirements, including emissions inventories, monitoring, and modeling to assure attainment and maintenance for that new NAAQS. On July 18, 1997 (62 FR 36852), EPA promulgated a new annual PM
Section 110(a) of the CAA requires states to submit SIPs to provide for the implementation, maintenance, and enforcement of a new or revised NAAQS within three years following the promulgation of such NAAQS, or within such shorter period as EPA may prescribe. Section 110(a) imposes the obligation upon states to make a SIP submission to EPA for a new or revised NAAQS, but the contents of that submission may vary depending upon the facts and circumstances. In particular, the data and analytical tools available at the time the state develops and submits the SIP for a new or revised NAAQS affects the content of the submission. The contents of such SIP submissions may also vary depending upon what provisions the state's existing SIP already contains. In the case of the 1997 annual and 2006 24-hour PM
More specifically, section 110(a)(1) provides the procedural and timing requirements for SIPs. Section 110(a)(2) lists specific elements that states must meet for “infrastructure” SIP requirements related to a newly established or revised NAAQS. Among the elements that states must address is section 110(a)(2)(E)(ii), which in turn refers to the specific requirements of section 128. Section 128 explicitly provides that state SIPs “shall contain requirements” as described in sections 128(a)(1) and (2). In addition, states may adopt any additional requirements that are “more stringent” than those explicitly required in section 128. EPA issued guidance to states making recommendations concerning compliance with section 128.
In this action, EPA is only addressing sub-element 110(a)(2)(E)(ii). In taking final action on the proposed disapproval, EPA is responding to an adverse comment received on EPA's July 20, 2012, proposed disapproval of Alabama's July 25, 2008, and September 23, 2009, infrastructure submissions for sub-element 110(a)(2)(E)(ii). EPA is taking a separate action to address the other applicable infrastructure elements for the 1997 annual and 2006 24-hour PM
The following is EPA's response to the adverse comment received on EPA's July 20, 2012, proposed disapproval of Alabama's July 25, 2008, and September 23, 2009, infrastructure submissions as they relate to section 110(a)(2)(E)(ii) of the CAA.
In its July 20, 2012, proposed rulemaking (77 FR 42682), EPA preliminarily determined that the State's implementation plan did not contain provisions to comply with section 128 of the Act, and thus, Alabama's July 25, 2008, and September 23, 2009, submissions do not meet the requirements of the Act with respect to section 110(a)(2)(E)(ii).
EPA considered the State's comment and has determined the comments do not adequately address the requirements for the following procedural and substantive reasons. With respect to procedural issues, an adverse comment letter on a proposed action does not meet the statutory and regulatory requirements for a SIP submission. Section 110(a)(1), section 110(a)(2), and section 110(l), all provide that a state's implementation plan submission must undergo reasonable notice and opportunity for comment. In addition, EPA regulations at Part 51, Appendix V, set forth additional criteria for a SIP submission. EPA has determined that the conflict of interest disclosure protocol attached to the State's adverse comment letter does not constitute such a SIP submission for a number of reasons including, but not limited to, the fact that the State has not provided information that the submission has undergone the requisite public notice or a demonstration that the protocol has been adopted and is in final form as submitted. In addition, the protocol was not signed, stamped and dated by an appropriate official to indicate that it is fully enforceable by the State.
Substantively, were it an official submission, it would not be sufficient to satisfy the requirements of section 128 necessary for EPA to approve Alabama's infrastructure submissions as they relate to section 110(a)(2)(E)(ii). As noted in the proposed rule for today's action, section 128 requires that: (1) The majority of members of the state board or body which approves permits or enforcement orders represent the public interest and do not derive any significant portion of their income from persons subject to permitting or enforcement orders under the CAA; and (2) any potential conflicts of interest by such board or body, or the head of an executive agency with similar powers be adequately disclosed.
Alabama provides no explanation as to how its conflict of interest disclosure protocol would satisfy the public interest and significant portion of income requirements applicable to the majority of a state board or body subject to section 128(a)(1). Alabama's response to EPA's comments on the State's draft 2008 8-hour ozone infrastructure submission (included with Alabama's comment on today's rulemaking) notes that certain ADEM officials are charged with responsibilities for issuing permits or enforcement orders. EPA has interpreted the “board or body” requirements of section 128(a)(1) as not applying to individuals tasked with authority to approve permits or enforcement orders. However, where appeals of such permits or enforcement orders are resolved by boards or bodies, those entities are subject to the majority requirements of section 128(a)(1). Alabama's comment does not describe how appeals of permits or enforcement order are handled in the State. In order for EPA to determine that the requirements of section 128(a)(1) are not applicable in Alabama, the State must provide this information. If a board or body does review appeals of permit or enforcement orders, the SIP must require that such board or board be subject to the 128(a)(1) majority requirements in order for EPA to approve Alabama's section 110(a)(2)(E)(ii) infrastructure submittals. Based upon the information protocol described by Alabama, the State's approach fails to address the majority requirements of section 128.
In addition to the issues noted above regarding the section 128(a)(1) requirements, the question of whether a board or body handles appeals of permits or enforcement orders is also relevant to sufficiency of the State's protocol with respect to the section 128(a)(2) requirements. To the extent a board or body decides appeals of permits or enforcement orders, the SIP must require that members of such board or body be subject to the section 128(a)(2) conflict of interest disclosure requirements. The State's conflict of interest disclosure protocol, as submitted, would appear to only apply to three specified officials within ADEM. Alabama has failed to demonstrate how the submitted protocol would provide adequate disclosure consistent with the requirements section 128(a)(2).
EPA also notes that Alabama's conflict of interest disclosure protocol, at footnote 3, asserts that “EPA defines `significant portion of income' as 50% or more of gross personal income for a calendar year if the recipient is over 60 years of age and is receiving that portion under retirement, pension, or similar arrangement. This information need only be provided if the recipient falls in this category.” This statement is incomplete. The complete suggested definition for “Significant Portion of Income” recommended in EPA's 1978 Guidance to States for Meeting Conflict of Interest Requirements of Section 128 is “10 percent or more of gross personal income for a calendar year, including retirement benefits, consultation fees, and stock dividends, except that it shall mean 50 percent [or more] of gross personal income for a calendar year if the recipient is over 60 years of age and is receiving such portion pursuant to retirement, pension, or similar arrangement.” Alabama's protocol omits the generally applicable 10 percent standard.
EPA is finalizing disapproval of Alabama's infrastructure submissions as they relate to sub-element 110(a)(2)(E)(ii) because, as described above, the SIP presently does not contain provisions to address the requirements of section 128 of the CAA. Consistent with the obligations under the CAA, EPA intends to continue working with the State to resolve this SIP deficiency.
EPA is taking final action to disapprove the portion of Alabama's July 25, 2008, and September 23, 2009, submissions which was intended to meet the requirement to address element 110(a)(2)(E)(ii) for the 1997 annual and 2006 24-hour PM
Under section 179(a) of the CAA, final disapproval of a submittal that addresses a requirement of a Part D Plan (42 U.S.C. 7501–7515) or is required in response to a finding of substantial inadequacy as described in section 7410(k)(5) (SIP call) starts a sanctions clock. Section 110(a)(2)(E)(ii) provisions (the provisions being disapproved in today's notice) were not submitted to meet requirements for Part D, and
Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly this final action disapproves state law because it does not meet federal requirements. For that reason, this action:
• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Order 12866 (58 FR 51735, October 4, 1993);
• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104–4);
• Does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);
• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);
• Is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA; and
• Does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).
The Congressional Review Act, 5 U.S.C. 801
Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by December 14, 2012. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements.
Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Nitrogen dioxide, Ozone, Reporting and recordkeeping requirements, Volatile organic compounds.
40 CFR part 52 is amended as follows:
42 U.S.C. 7401
(e)
Environmental Protection Agency (EPA).
Final rule.
EPA is approving a State Implementation Plan (SIP) revision submitted by the State of Arizona to address the requirements regarding air pollution emergency episodes in Clean Air Act (CAA or Act).
This final rule is effective on November 14, 2012.
EPA has established a docket for this action, identified by Docket ID Number EPA–R09–OAR–2012–0244. The index to the docket for this action is available electronically at
Jeffrey Buss, Air Planning Office (AIR–2), U.S. Environmental Protection Agency, Region IX, (415) 947–4152,
Throughout this document, the terms “we,” “us,” and “our” refer to EPA.
On April 12, 2012 (77 FR 21911), EPA proposed to approve a SIP revision submitted by the State of Arizona to address the requirements regarding air pollution emergency episodes in CAA section 110(a)(2)(G). Section 110(a)(2)(G) requires that each SIP provide for authority comparable to that in section 303 of the Act (“Emergency Powers”) and adequate contingency plans to implement such authority. EPA proposed to approve Arizona's SIP revision as meeting the authority and contingency plans for the 1997 8-hour ozone National Ambient Air Quality Standard (NAAQS).
The rationale supporting EPA's action, including the scope of infrastructure SIPs in general, is explained in the Notice of Proposed Rulemaking (NPR) and in the technical support document (TSD) for that action and will not be restated here. The TSD is available online at
EPA is approving Arizona's SIP revision as meeting the authority and contingency plans for the 1997 8-hour ozone National Ambient Air Quality Standards (NAAQS or standards).
The Arizona Emergency Episode Plan is substantively identical to the CAA section 110(a)(2)(G) rule currently approved into Arizona's SIP (R9–3–219, “Air pollution emergency episodes”), which EPA approved in 1982 (47 FR 42572, September 28, 1982), with one exception which makes it more stringent than the SIP program. We determine that our approval of this submittal would comply with CAA section 110(l), because the SIP revision would not interfere with the ongoing process for ensuring that requirements for reasonable further progress (RFP) and attainment of the NAAQS are met, and the submitted SIP revision is more stringent than the rule previously approved into the SIP. We also determine that our approval of the submittal would comply with CAA section 193, to the extent it applies, because the SIP revision would ensure equivalent or greater emission reductions of ozone precursors compared to the SIP-approved rule. Therefore, EPA is removing the superseded Rule R9–3–219 from the SIP and approving Rule R18–2–220 and the “Procedures for Prevention of Emergency Episodes,” into the SIP.
Under the Clean Air Act, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve State choices, provided that they meet the criteria of the Clean Air Act. Accordingly, this action merely approves State law as meeting Federal requirements and does not impose additional requirements beyond those imposed by State law. For that reason, this action:
• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Order 12866 (58 FR 51735, October 4, 1993);
• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104–4);
• Does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);
• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);
• Is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the Clean Air Act; and
• Does not provide EPA with the discretionary authority to address disproportionate human health or environmental effects with practical, appropriate, and legally permissible methods under Executive Order 12898 (59 FR 7629, February 16, 1994).
The Congressional Review Act, 5 U.S.C. 801
Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by December 14, 2012. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements (see section 307(b)(2)).
Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Oxides of nitrogen, Ozone, Particulate matter, Reporting and recordkeeping requirements, Volatile organic compounds.
Part 52, chapter I, title 40 of the Code of Federal Regulations is amended as follows:
42 U.S.C. 7401
(c) * * *
(54) * * *
(i) * * *
(F) Previously approved on September 28, 1982, in paragraph (54)(i)(C), and now deleted without replacement: R9–3–219.
(151) The following plan revisions were submitted on August 15, 1994 by the Governor's designee.
(i) Incorporation by reference.
(A) Arizona Department of Environmental Quality.
(1) Rule R18–2–220, Air pollution emergency episodes, Department of Environmental Quality-Air Pollution Control, amended effective September 26, 1990.
(2) A letter from Eric C. Massey, Director, Air Quality, Arizona Department of Environmental Quality, to Jared Blumenfeld, Regional Administrator, US EPA, dated August 30, 2012, certifying that the attached copy of a document titled “Procedures for Prevention of Emergency Episodes: 1988 Edition” is a true and correct copy of the original and is an official publication of the Arizona Department of Environmental Quality.
(3) “Procedures for Prevention of Emergency Episodes,” 1988 edition, Arizona Department of Environmental Quality.
Environmental Protection Agency (EPA).
Direct final rule.
EPA is taking direct final action to approve two state implementation plan (SIP) revisions, submitted by the South Carolina Department of Health and Environmental Control (SC DHEC), on August 31, 2007, and April 29, 2010, to address the reasonable further progress (RFP) plan requirements for the 1997 8-hour ozone national ambient air quality standards (NAAQS) for the portion of York County, South Carolina that is within the bi-state Charlotte-Gastonia-Rock Hill 1997 8-hour ozone nonattainment area. The Charlotte-Gastonia-Rock Hill, North Carolina-South Carolina 1997 8-hour ozone nonattainment area (hereafter referred to as the “bi-state Charlotte Area”) is comprised of Cabarrus, Gaston, Lincoln, Mecklenburg, Rowan, Union and a portion of Iredell (Davidson and Coddle Creek Townships) Counties in North Carolina; and a portion of York County in South Carolina (hereafter referred to as “the York County Area”). EPA is also providing the status of its adequacy determination for the motor vehicle emissions budgets (MVEB) for volatile organic compounds (VOC) that were included in South Carolina's RFP plan. Further, EPA is approving these MVEB. These actions are being taken pursuant to section 110 of the Clean Air Act (CAA or Act). EPA will take action on North Carolina's RFP plan for its portion of the bi-state Charlotte Area, in a separate action.
This direct final rule is effective December 14, 2012 without further notice, unless EPA receives adverse comment by November 14, 2012. If EPA receives such comments, it will publish a timely withdrawal of the direct final rule in the
Submit your comments, identified by Docket ID Number, “EPA–R04–OAR–2008–0177,” by one of the following methods:
1.
2.
3.
4.
5.
Ms. Sara Waterson of the Regulatory Development Section, in the Air Planning Branch, Air, Pesticides and Toxics Management Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth Street SW., Atlanta, Georgia 30303–8960. The telephone number is (404) 562–9061. Ms. Sara Waterson can be reached via electronic mail at
EPA is approving revisions to the South Carolina SIP, submitted by the State of South Carolina through SC DHEC, on August 31, 2007, and April 29, 2010, to meet RFP requirements of the CAA for the York County Area for the 1997 8-hour ozone NAAQS. The RFP plan demonstrates that VOC emissions will be reduced by at least 15 percent for the period of 2002 through 2008. Additionally, EPA is approving the required 2008 VOC MVEB which were included in the York County Area RFP plan. EPA is taking these actions because they are consistent with CAA requirements for the requirements for RFP. The York County Area MVEB, expressed in tons per day (tpd) and kilograms per day (kgd), are provided in Table 1 below.
On July 18, 1997, EPA promulgated a revised 8-hour ozone NAAQS of 0.08 parts per million (ppm). Under EPA's regulations at 40 CFR part 50, the 1997 8-hour ozone NAAQS is attained when the 3-year average of the annual fourth highest daily maximum 8-hour average ambient air quality ozone concentrations is less than or equal to 0.08 ppm (i.e., 0.084 ppm when rounding is considered) (69 FR 23857, April 30, 2004). Ambient air quality monitoring data for the 3-year period must meet the data completeness requirement as determined in 40 CFR part 50, appendix I. The ambient air quality monitoring data completeness requirement is met when the average percent of days with valid ambient monitoring data is greater than 90 percent, and no single year has less than 75 percent data completeness.
Upon promulgation of a new or revised NAAQS, the CAA requires EPA to designate as nonattainment any area that is violating the NAAQS, based on the three most recent years of ambient air quality data at the conclusion of the designation process. The bi-state Charlotte Area was designated nonattainment for the 1997 8-hour ozone NAAQS on April 30, 2004 (effective June 15, 2004) using 2001–2003 ambient air quality data (69 FR 23857, April 30, 2004). At the time of designation the bi-state Charlotte Area was classified as a moderate nonattainment area for the 1997 8-hour ozone NAAQS. In the April 30, 2004, Phase I Ozone Implementation Rule, EPA established ozone nonattainment area attainment dates based on Table 1 of section 181(a) of the CAA. This established an attainment date six years after the June 15, 2004, effective date for areas classified as moderate areas for the 1997 8-hour ozone nonattainment designations. Section 181 of the CAA explains that the attainment date for moderate nonattainment areas shall be as expeditiously as practicable, but no later than six years after designation, or June 15, 2010. Therefore, the bi-state Charlotte Area's original attainment date was June 15, 2010.
The bi-state Charlotte Area did not attain the 1997 8-hour ozone NAAQS by June 15, 2010 (the applicable attainment date for moderate nonattainment areas); however, the Area qualified for an extension of the attainment date. Under certain circumstances, the CAA allows for extensions of the attainment dates prescribed at the time of the original nonattainment designation. In accordance with CAA section 181(a)(5), EPA may grant up to 2 one-year extensions of the attainment date under specified conditions. On May 31, 2011, EPA determined that North Carolina and South Carolina met the CAA requirements to obtain a one-year extension of the attainment date for the 1997 8-hour ozone NAAQS for the bi-state Charlotte Area.
On November 15, 2011 (76 FR 70656), EPA determined the bi-state Charlotte Area attained the 1997 8-hour ozone NAAQS; and subsequently, on March 7, 2012 (77 FR 13493), EPA determined that the bi-state Charlotte Area attained the 1997 8-hour ozone NAAQS by the applicable attainment date. The determination of attaining data was based upon complete, quality-assured and certified ambient air monitoring data for the 2008–2010 period, showing that the Area had monitored attainment of the 1997 8-hour ozone NAAQS. The requirements for the Area to submit an attainment demonstration and associated reasonably available control measures (RACM), RFP plan, contingency measures, and other planning SIP revisions related to attainment of the standard were suspended as a result of the determination of attainment, so long as the Area continues to attain the 1997 8-hour ozone NAAQS.
On January 12, 2012, South Carolina withdrew the attainment demonstration submissions (except RFP, emissions statements, and the emissions inventory) as allowed by 40 CFR 51.918 for the York County Area.
On November 29, 2005 (70 FR 71612), as revised on June 8, 2007 (72 FR 31727), EPA published a rule entitled “Final Rule To Implement the 8-Hour Ozone National Ambient Air Quality Standard—Phase 2; Final Rule To Implement Certain Aspects of the 1990 Amendments Relating to New Source Review and Prevention of Significant Deterioration as They Apply in Carbon Monoxide, Particulate Matter and Ozone NAAQS; Final Rule for Reformulated Gasoline” (hereafter referred to as the Phase 2 Rule). Section 182(b)(1) of the CAA and EPA's Phase 2 Rule
The bi-state Charlotte Area had an attainment date of June 15, 2010 (i.e., that is beyond five years after designation), that was later extended to June 15, 2011.
Pursuant to CAA section 172(c)(9), RFP plans must include contingency measures that will take effect without further action by the state or EPA, which includes additional controls that would be implemented if the area fails to reach the RFP milestones. While the CAA does not specify the type of measures or quantity of emissions reductions required, EPA provided guidance interpreting the CAA that implementation of these contingency measures would provide additional emissions reductions of up to 3 percent of the adjusted base year inventory in the year following the RFP milestone year (i.e., in this case 2008). For more information on contingency measures please see the April 16, 1992 General Preamble (57 FR 13498, 13510) and the November 29, 2005 Phase 2 8-hour ozone standard implementation rule (70 FR 71612, 71650). Finally, RFP plans must also include a MVEB for the precursors for which the plan is developed. See Section IV of this rulemaking for more information on MVEB requirements.
On August 31, 2007, and April 29, 2010, South Carolina submitted RFP plans for the York County Area to address the CAA's requirements for the 1997 8-hour ozone NAAQS. The August 31, 2007, SIP revision (as supplemented by the April 29, 2010, SIP revision) included an attainment demonstration plan, RFP plan for 2008 milestone year, contingency measures, RACT, RACM requirements, on-road VOC MVEB, and the 2002 base year emissions inventory. These SIP revisions were subject to notice and comment by the public and the State addressed the comments received on the proposed SIPs. Today's rulemaking is approving only the RFP plan, including the associated MVEB. The remainder of South Carolina's August 31, 2007, and April 29, 2010, SIP revisions were addressed by previous EPA actions, or by the State's withdrawal of submissions that were no longer necessary.
On August 31, 2007, and April 29, 2010, South Carolina submitted RFP plans for the York County Area to address the CAA's requirements for the 1997 8-hour ozone NAAQS. Below provides EPA's analysis of South Carolina's RFP submissions.
An emissions inventory is a comprehensive, accurate, current inventory of actual emissions from all sources and is required by section 182(a)(1) of the CAA. Because the York County Area as part of the bi-state Charlotte Area did not implement the 15 percent VOC reductions for the 1-hour ozone NAAQS, the requirement for South Carolina to meet RFP is a 15 percent VOC reduction between 2002 and 2008 with continued progress toward attainment through attainment.
The process for determining the emissions baseline from which the RFP reductions are calculated is described in section 182(b)(1) of the CAA and 40 CFR 51.910. This baseline value is the 2002 adjusted base year inventory. Sections 182(b)(1)(B) and (D) require the exclusion from the base year inventory of emissions benefits resulting from the Federal Motor Vehicle Control Program (FMVCP) regulations promulgated by January 1, 1990, and the Reid Vapor Pressure (RVP) regulations promulgated June 11, 1990 (55 FR 23666). The FMVCP and RVP emissions reductions are determined by the State using EPA's on-road mobile source emissions modeling software, MOBILE6. The FMVCP and RVP emission reductions are then removed from the base year inventory by the State, resulting in an adjusted base year inventory. The emission reductions needed to satisfy the RFP requirement are then calculated from the adjusted base year inventory. These reductions are then subtracted from the adjusted base year inventory to establish the emissions target for the RFP milestone year (2008).
For moderate areas like the York County Area (as part of the bi-state Charlotte Area),
As mentioned earlier and according to section 182(b)(1)(D) of the CAA, emission reductions that resulted from the FMVCP and RVP rules promulgated prior to 1990 are not creditable for achieving RFP emission reductions. Therefore, the 2002 base year inventory is adjusted by subtracting the VOC and NOx emission reductions that are expected to occur between 2002 and the future milestone years due to the FMVCP and RVP rules.
In the Phase 2 Rule, promulgated on November 29, 2005 (70 FR 71612), EPA outlines Method 1 as the process that states should use to show compliance with RFP for areas like the York County Area. A summary of the steps for Method 1 is provided below.
• Step A is the actual anthropogenic base year VOC emissions inventory in 2002.
• Step B is to account for creditable emissions for RFP.
• Step C is to calculate non-creditable emissions for RFP. Non-creditable emissions include emissions from: (1) Motor vehicle exhaust or evaporative emissions regulations promulgated by January 1, 1990; (2) regulations concerning RVP promulgated by November 15, 1990; (3) RACT corrections required prior to November 1990; and (4) corrective inspection and maintenance (I/M) plan required prior to November 1990.
• Step D is the 2002 base year emissions (Step A) minus the non-creditable emissions (Step C).
• Step E is to calculate the 2008 target level VOC emissions. This is calculated by reducing the emissions from Step D by 15 percent.
• The estimated 2008 VOC emissions are then compared to the 2008 target level VOC emissions (Step E).
As provided in South Carolina's August 31, 2007, SIP revision (as supplemented by the April 29, 2010, SIP revision), the State utilized the steps from Method 1 of the Phase 2 Rule. Specifically, South Carolina sets out its calculations in Section VI.B.2 of the August 31, 2007, plan and SC DHEC's April 29, 2010, SIP revision as summarized below.
South Carolina provided this emission inventory in Table VI–1 of the April 29, 2010, York County RFP plan, and as shown in Table 3, below. As mentioned above, EPA has already approved this inventory.
South Carolina conducted the mobile modeling in accordance with the directions outlined above for Step B. For the York County Area, the RVP requirement was set at 9.0 psi. Currently, I/M is not required in the York County Area, nor were there any outstanding obligations for the State to correct deficiencies for an existing or required I/M program. The York County Area was not designated nonattainment for the ozone NAAQS until June 15, 2005, and thus did not have outstanding requirements related I/M.
South Carolina calculated the non-creditable emission reductions between 2002 and 2008 by modeling its 2002 and 2008 motor vehicle emissions with all post-1990 CAA measures turned off, and calculating the difference. This difference resulted in 1.00 tpd and can be found in Table VI–3 of the State's August 31, 2007, SIP revision.
The adjusted VOC inventory for calculating the target level of VOC emissions reductions for 2008 is 23.80 tpd (i.e., 24.80 tpd (i.e., result of Step A) and 1.00 tpd (i.e., the result of Step C)).
The targeted level of emissions reductions for the York County Area to meet RFP requirements is 3.57 tpd of VOC (i.e, 23.80 tpd multiplied by 15 percent). Thus the required targeted level of VOC emissions is 20.23 tpd for the York County Area.
As mentioned above, the required target level for the York County Area to meet the initial RFP plan requirement is a 15 percent reduction in VOC emissions for 2008 from the VOC emissions in 2002 (as adjusted per CAA requirements). Specifically, to meet this requirement, South Carolina needed to demonstrate a reduction of at least 3.57 tpd. Table 4 below summarizes the results of South Carolina's calculations for this RFP analysis.
In its August 31, 2007, SIP revision, South Carolina calculated the 2008 VOC emissions inventory for the York County Area. This emissions inventory is provided below in Table 5 below.
As discussed above, the required target for VOC emissions for the year 2008 for South Carolina to meet the RFP requirements for York County is 20.23 tpd (i.e., 15 percent reduction from the adjusted 2002 baseline). As revealed in Table 5, South Carolina calculated an emissions inventory of 17.84 tpd of VOC for York County in 2008, which is well below the 20.23 tpd required target. Thus, EPA is making the determination that South Carolina's SIP revision demonstrates the required progress towards attainment for the York County Area as part of the bi-state Charlotte Area. In today's action, EPA is approving South Carolina's August 31, 2007, and April 29, 2010, SIP revisions as meeting the CAA and EPA's regulations regarding RFP.
Under section 176(c) of the CAA, new transportation plans, programs, and projects, such as the construction of new highways, must “conform” to (i.e., be consistent with) the part of the state's air quality plan that addresses pollution from cars and trucks. Conformity to the SIP means that transportation activities will not cause new air quality
Under the CAA, states are required to submit, at various times, control strategy SIPs and maintenance plans for nonattainment areas. These control strategy SIPs (including RFP and attainment demonstrations) and maintenance plans create MVEB for criteria pollutants and/or their precursors to address pollution from cars and trucks. Per 40 CFR part 93, a MVEB must be established for the target year and precursor pollutant of the RFP (i.e., in this case, for the target year of 2008 and for VOC). A state may adopt MVEB for other precursors as well. The MVEB is the portion of the total allowable emissions in the RFP plan that is allocated to highway and transit vehicle use and emissions.
After interagency consultation with the transportation partners for the York County Area, South Carolina developed VOC MVEB for the year 2008. Specifically, South Carolina developed these MVEB, as required, for the target year and precursor—2008 and VOC—for the RFP plan. The York County Area MVEB for the 2008 RFP plan are based on the projected 2008 mobile source emissions accounting for all mobile control measures. The 2008 VOC MVEB are defined in Table 6 below.
Through this rulemaking, EPA is approving the 2008 VOC MVEB for the York County Area because EPA has made the determination that the Area is on target to attain the 1997 8-hour ozone NAAQS with the emissions at the levels of the budgets. Once the MVEB for the York County Area are approved or found adequate (whichever is completed first), they must be used for future conformity determinations for the 1997 8-hour ozone NAAQS for the Metropolitan Planning Organization's long-range transportation plans and transportation improvement programs. After thorough review, EPA has previously determined that the budgets meet the adequacy criteria, as outlined in 40 CFR 93.118(e)(4) (
When reviewing a submitted “control strategy” SIP, RFP or maintenance plan containing a MVEB, EPA may affirmatively find the MVEB contained therein adequate for use in determining transportation conformity. Once EPA affirmatively finds the submitted MVEB is adequate for transportation conformity purposes, that MVEB must be used by state and federal agencies in determining whether proposed transportation projects conform to the SIP as required by section 176(c) of the CAA.
EPA's substantive criteria for determining adequacy of a MVEB are set out in 40 CFR 93.118(e)(4). The process for determining adequacy consists of three basic steps: Public notification of a SIP submission, a public comment period, and EPA's adequacy determination. This process for determining the adequacy of submitted MVEB for transportation conformity purposes was initially outlined in EPA's May 14, 1999, guidance, “Conformity Guidance on Implementation of March 2, 1999, Conformity Court Decision.” EPA adopted regulations to codify the adequacy process in the Transportation Conformity Rule Amendments for the “New 8-Hour Ozone and PM
As discussed earlier, South Carolina's RFP plan submission includes VOC MVEB for the York County Area for the year 2008. EPA reviewed the VOC MVEB through the adequacy process. The South Carolina SIP submission, including the 2008 VOC MVEB for the York County Area, was open for public comment on EPA's adequacy Web site on May 13, 2010, found at:
In a letter sent on May 25, 2012, EPA notified SC DHEC that the MOBILE6.2-based 2008 VOC MVEB for the York County Area were determined to be adequate for transportation conformity purposes. On June 6, 2012, EPA published its adequacy notice in the
EPA is taking direct final action to approve portions of two SIP revisions, submitted on August 31, 2007, and April 29, 2010, by the State of South Carolina, through the SC DHEC to meet the RFP requirements for the York County Area for the 1997 8-hour ozone NAAQS. Additionally, EPA is approving the VOC MVEB for the York County Area that were including in South Carolina's RFP plan. These
EPA is publishing this rule without prior proposal because the Agency views this as a non-controversial amendment and anticipates no adverse comments. However, in the proposed rules section of this
Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this action merely approves state law as meeting federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this final action:
• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Order 12866 (58 FR 51735, October 4, 1993);
• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104–4);
• Does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);
• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);
• Is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA; and
• Does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).
The Congressional Review Act, 5 U.S.C. 801
Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by December 14, 2012. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. Parties with objections to this direct final rule are encouraged to file a comment in response to the parallel notice of proposed rulemaking for this action published in the proposed rules section of today's
Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Ozone, Reporting and recordkeeping requirements, and Volatile organic compounds.
40 CFR part 52 is amended as follows:
42 U.S.C. 7401
(e) * * *
Federal Communications Commission.
Final rule.
In this document, the Public Safety and Homeland Security Bureau (Bureau) of the Commission implemented certain provisions of the Middle Class Tax Relief and Job Creation Act of 2012 (Public Safety Spectrum Act) governing deployment of a nationwide public safety broadband network in the 700 MHz band. Pursuant to clear statutory directives, the Bureau reallocated the D Block (758–763/788–793 MHz) for “public safety services” and delete Commission rules that are plainly inconsistent with this revised allocation; deleted the rules establishing, providing license authority with respect to, and governing operations under the Public Safety Broadband License in the existing public safety broadband spectrum; and adopted rules implementing the clear mandate of the Public Safety Spectrum Act to grant a license with respect to the public safety broadband spectrum (763–768/793–798 MHz), guard band (768–769/798–799 MHz), and the D Block to the First Responder Network Authority (FirstNet). By eliminating any confusion or uncertainty about the new regulatory framework applicable to the public safety broadband network, these action takes further steps necessary to facilitate the transition of this spectrum to FirstNet as required by the Act.
Effective November 14, 2012, except for the removal of §§ 90.18 and 90.528 of the Commission's rules. The Commission will publish a separate document in the
Gene Fullano, Federal Communications Commission, Public Safety and Homeland Security Bureau, 445 12th Street SW., Room 7–C747, Washington, DC 20554. Telephone: (202)–418–0492, email:
In the
In the
This
Under Section 603(a) of the Regulatory Flexibility Act (RFA), the Commission is not required to prepare a final regulatory flexibility analysis relating to the
Classified information, Freedom of information, Government publications, Infants and children, Organization and functions (Government agencies), Privacy, Reporting and recordkeeping requirements, Sunshine Act.
Communications common carriers, Radio.
Administrative practice and procedure, Business and industry, Civil defense, Common carriers, Communications equipment, Emergency medical services, Incorporation by reference, Individuals with disabilities, Radio, Reporting and recordkeeping requirements.
For the reasons discussed in the preamble, The Federal Communications Commission amends 47 CFR parts 0, 27, and 90 as follows:
Secs. 5, 48 Stat. 1068, as amended; 47 U.S.C. 155.
47 U.S.C. 154, 301, 302, 303, 307, 309, 332, 336, and 337 unless otherwise noted.
(b) * * *
(2) 746–758 MHz, 775–788 MHz, and 805–806 MHz.
(b)
(1) Two paired channels of 1 megahertz each are available for assignment in Block A in the 757–758 MHz and 787–788 MHz bands.
(2) Two paired channels of 1 megahertz each are available for assignment in Block B in the 775–776 MHz and 805–806 MHz bands.
(3) Two paired channels of 11 megahertz each are available for assignment in Block C in the 746–757 MHz and 776–787 MHz bands. In the event that no licenses for two channels in this Block C are assigned based on the results of the first auction in which such licenses were offered because the auction results do not satisfy the applicable reserve price, the spectrum in the 746–757 MHz and 776–787 MHz bands will instead be made available for assignment at a subsequent auction as follows:
(i) Two paired channels of 6 megahertz each available for assignment in Block C1 in the 746–752 MHz and 776–782 MHz bands.
(ii) Two paired channels of 5 megahertz each available for assignment in Block C2 in the 752–757 MHz and 782–787 MHz bands.
Sections 4(i), 11, 303(g), 303(r), and 332(c)(7) of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 161, 303(g), 303(r), and 332(c)(7), and Title VI of the Middle Class Tax Relief and Job Creation Act of 2012, Pub. L. 112–96, 126 Stat. 156.
Pursuant to the Middle Class Tax Relief and Job Creation Act of 2012, Public Law 112–96, 126 Stat. 156 (2012), the 758–769 MHz and 788–799 MHz bands are allocated for use by the First Responder Network Authority to deploy a nationwide public safety broadband network as prescribed by statute.
(c) * * *
(3)
(d) * * *
(77) Subpart R of this part contains rules for assignment of channels in the 758–775 MHz and 788–805 MHz bands.
This subpart sets forth the regulations governing the licensing and operations of all systems operating in the 758–775 MHz and 788–805 MHz frequency bands. * * *
This section sets forth the band plan for the 758–775 MHz and 788–805 MHz public safety bands.
(g)
Pursuant to Section 6201 of the Middle Class Tax Relief and Job Creation Act of 2012, Public Law 112–96, 126 Stat. 156 (2012), a nationwide license for use of the 758–769 MHz and 788–799 MHz bands shall be issued to the First Responder Network Authority for a initial license term of ten years from the date of the initial issuance of the license. Prior to expiration of the term of such initial license, the First Responder Network Authority shall submit to the Commission an application for the renewal of such license. Such renewal application shall demonstrate that, during the preceding license term, the First Responder Network Authority has met the duties and obligations set forth under the foregoing Act. A renewal license shall be for a term not to exceed ten years.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Temporary rule; closure.
NMFS implements accountability measures (AMs) for the commercial sector for gag in the exclusive economic zone (EEZ) of the South Atlantic. Commercial landings for gag, as estimated by the Science Research Director, are projected to reach the commercial annual catch limit (ACL) on October 20, 2012. Therefore, NMFS closes the commercial sector for gag and all other South Atlantic Shallow-Water Grouper (SASWG) on October 20, 2012 for the remainder of the 2012 fishing year, through December 31, 2012. Because there is a January through April seasonal closure for SASWG, SASWG will not reopen until May 1, 2013. In the South Atlantic, SASWG means gag, black grouper, red grouper, scamp, red hind, rock hind, yellowmouth grouper, yellowfin grouper, graysby, and coney. This action is necessary to reduce overfishing of the South Atlantic gag and other SASWG resources.
This rule is effective 12:01 a.m., local time, October 20, 2012, until 12:01 a.m., local time, January 1, 2013.
Catherine Hayslip, telephone: 727–824–5305, email:
The snapper-grouper fishery of the South Atlantic is managed under the Fishery Management Plan for the Snapper-Grouper Fishery of the South Atlantic Region (FMP). Gag in the South Atlantic are managed under this FMP. The FMP was prepared by the South Atlantic Fishery Management Council and is implemented under the authority of the Magnuson-Stevens Fishery Conservation and Management Act by regulations at 50 CFR part 622.
The commercial ACL (commercial quota) for gag in the South Atlantic is 352,940 lb (160,091 kg), gutted weight, for the current fishing year, as specified in 50 CFR 622.42(e)(7).
In accordance with regulations at 50 CFR 622.49(b)(3)(i), NMFS is required to close the commercial sector for gag and all other SASWG when the commercial ACL (commercial quota) for gag has been reached, or is projected to be reached, by filing a notification to that effect with the Office of the Federal Register. NMFS has determined that the commercial ACL (commercial quota) for South Atlantic gag will be reached by October 20. Accordingly, the commercial sector for South Atlantic gag and all other SASWG is closed effective 12:01 a.m., local time, October 20, 2012, until 12:01 a.m., local time, January 1, 2013. The recreational sector will continue to remain open until December 31, 2012.
Additionally, a seasonal closure is in place for the recreational and commercial sectors for gag and all other SASWG from January through April each fishing year as specified in 50 CFR 622.35(j). Therefore, the commercial harvest of gag and all other SASWG will not commence until May 1, 2013.
The operator of a vessel with a valid commercial vessel permit for South Atlantic snapper-grouper having gag or other SASWG onboard must have landed and bartered, traded, or sold such gag or other SASWG prior to 12:01 a.m., local time, October 20, 2012. During this commercial closure, the bag limit and possession limits specified in 50 CFR 622.39(d)(1) and (d)(2), respectively, apply to all harvest or possession of gag or other SASWG in or from the South Atlantic EEZ, and the sale or purchase of gag or other SASWG taken from the EEZ is prohibited. The prohibition on sale or purchase does not apply to the sale or purchase of gag or other SASWG that were harvested, landed ashore, and sold prior to 12:01 a.m., local time, October 20, 2012, and were held in cold storage by a dealer or processor. For a person on board a vessel for which a Federal commercial permit for the South Atlantic snapper-grouper fishery has been issued, the sale and purchase provisions of the commercial closure for gag or other SASWG would apply regardless of whether the fish are harvested in state or Federal waters, as specified in 50 CFR 622.43(a)(5)(iii).
During the seasonal closure for the recreational and commercial sectors for gag and all other SASWG from January through April each fishing year, no person may fish for, harvest, or possess in or from the South Atlantic EEZ any SASWG. In addition, for a person on board a vessel for which a valid Federal commercial or charter vessel/headboat permit for South Atlantic snapper-grouper has been issued, the provisions of this closure apply in the South Atlantic, regardless of where such fish are harvested,
This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA, (AA), finds that the need to immediately implement this action to close the commercial sector for gag and other SASWG constitutes good cause to waive the requirements to provide prior notice and opportunity for public comment pursuant to the authority set forth in 5 U.S.C. 553(b)(B), as such procedures would be unnecessary and contrary to the public interest. Such procedures would be unnecessary because the rule itself has been subject to notice and comment, and all that remains is to notify the public of the closure. Allowing prior notice and opportunity for public comment is contrary to the public interest because of the need to immediately implement this action to protect gag since the capacity of the fishing fleet allows for rapid harvest of the quota. Prior notice and opportunity for public comment would require time and would potentially result in a harvest well in excess of the established commercial ACL (commercial quota).
For the aforementioned reasons, the AA also finds good cause to waive the 30-day delay in the effectiveness of this action under 5 U.S.C. 553(d)(3).
This action is taken under 50 CFR 622.43(a) and is exempt from review under Executive Order 12866.
16 U.S.C. 1801
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Temporary rule; closure.
NMFS is prohibiting directed fishing for Pacific cod by vessels using pot gear in the Central Regulatory Area of the Gulf of Alaska (GOA). This action is necessary to prevent exceeding the 2012 Pacific cod total allowable catch apportioned to vessels using pot gear in the Central Regulatory Area of the GOA.
Effective 1200 hrs, Alaska local time (A.l.t.), October 12, 2012, through 2400 hrs, A.l.t., December 31, 2012.
Obren Davis, 907–586–7228.
NMFS manages the groundfish fishery in the GOA exclusive economic zone according to the Fishery Management Plan for Groundfish of the Gulf of Alaska (FMP) prepared by the North Pacific Fishery Management Council under authority of the Magnuson-Stevens Fishery Conservation and Management Act. Regulations governing fishing by U.S. vessels in accordance with the FMP appear at subpart H of 50 CFR part 600 and 50 CFR part 679. Regulations governing sideboard protections for GOA groundfish fisheries appear at subpart B of 50 CFR part 680.
The 2012 Pacific cod total allowable catch (TAC) apportioned to vessels using pot gear in the Central Regulatory Area of the GOA is 11,755 metric tons (mt), as established by the final 2012 and 2013 harvest specifications for groundfish of the GOA (77 FR 15194, March 14, 2012).
In accordance with § 679.20(d)(1)(i), the Administrator, Alaska Region, NMFS (Regional Administrator) has determined that the 2012 Pacific cod TAC apportioned to vessels using pot gear in the Central Regulatory Area of the GOA will soon be reached. Therefore, the Regional Administrator is establishing a directed fishing allowance of 11,755 mt and is setting aside the remaining 0 mt as bycatch to support other anticipated groundfish fisheries. In accordance with § 679.20(d)(1)(iii), the Regional Administrator finds that this directed fishing allowance has been reached. Consequently, NMFS is prohibiting directed fishing for Pacific cod by vessels using pot gear in the Central Regulatory Area of the GOA. After the effective date of this closure the maximum retainable amounts at § 679.20(e) and (f) apply at any time during a trip.
This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA (AA), finds good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) as such requirement is impracticable and contrary to the public interest. This requirement is impracticable and contrary to the public interest as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would delay the directed fishing closure of Pacific cod for vessels using pot gear in the Central Regulatory Area of the GOA. NMFS was unable to publish a notice providing time for public comment
The AA also finds good cause to waive the 30-day delay in the effective date of this action under 5 U.S.C. 553(d)(3). This finding is based upon the reasons provided above for waiver of prior notice and opportunity for public comment.
This action is required by § 679.20 and is exempt from review under Executive Order 12866.
16 U.S.C. 1801
Federal Aviation Administration (FAA), Department of Transportation (DOT).
Notice of proposed rulemaking (NPRM).
We propose to adopt a new airworthiness directive (AD) for all GA200 (Pty) Ltd Models GA200 and GA200C airplanes that would revise an existing AD. This proposed AD results from mandatory continuing airworthiness information (MCAI) originated by an aviation authority of another country to identify and correct an unsafe condition on an aviation product. The MCAI describes the unsafe condition as failure of the wing strut bolt through the main spar. We are issuing this proposed AD to require actions to address the unsafe condition on these products.
We must receive comments on this proposed AD by November 29, 2012.
You may send comments by any of the following methods:
•
•
•
•
For service information identified in this proposed AD, contact GippsAero, P.O. Box 881, Morwell, Victoria 3840, Australia, telephone: + 61 (0) 3 5172 1200; fax + 61 (0) 3 5172 1201; email:
You may examine the AD docket on the Internet at
Doug Rudolph, Aerospace Engineer, FAA, Small Airplane Directorate, 901 Locust, Room 301, Kansas City, Missouri 64106; telephone: (816) 329–4059; fax: (816) 329–4090; email:
We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the
We will post all comments we receive, without change, to
On August 31, 2012, we issued AD 2012–18–10, Amendment 39–17187 (77 FR 55686, September 11, 2012). That AD required actions intended to address an unsafe condition on the products listed above.
Since we issued AD 2012–18–10, Amendment 39–17187 (77 FR 55686, September 11, 2012), the Civil Aviation Safety Authority (CASA), which is the aviation authority for the Commonwealth of Australia, has issued AD AD/GA200/1, Amendment 1, dated September 21, 2012 (referred to after this as “the MCAI”), to correct an unsafe condition for the specified products. The MCAI states:
As a result of a reported case of failure of a strut on a GA200C aircraft, GippsAero has issued a mandatory service bulletin to alert operators and maintenance organisations and to provide inspection and rectification actions.
This Airworthiness Directive makes this inspection and rectification action mandatory. Failure to complete the actions required by this service bulletin may result in wing strut bolt failure, resulting in wing structural failure.
Amendment 1 is issued to revise the repeat inspection compliance time to 500 hours (previously 100 hours). The requirement service bulletin is also revised to provide a corrective action if the inboard (upper) strut fitting hole is found to be larger than specified. The initial inspection compliance time of 10 hours remains unchanged.
This proposed AD would retain the actions required in AD 2012–18–10, Amendment 39–17187 (77 FR 55686, September 11, 2012), change the compliance time for the repetitive inspections, and incorporate the revised service bulletin. You may obtain further information by examining the MCAI in the AD docket.
GippsAero has issued Mandatory Service Bulletin SB–GA200–2012–08, Issue 2, dated September 4, 2012. The actions described in this service information are intended to correct the unsafe condition identified in the MCAI.
This product has been approved by the aviation authority of another
We estimate that this proposed AD will affect 3 products of U.S. registry. We also estimate that it would take about 2 work-hours per product to comply with the basic requirements of this proposed AD. The average labor rate is $85 per work-hour.
Based on these figures, we estimate the cost of the proposed AD on U.S. operators to be $510, or $170 per product.
In addition, we estimate that any necessary follow-on actions would take about 2 work-hours and require parts costing $400, for a cost of $570 per product. We have no way of determining the number of products that may need these actions.
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. “Subtitle VII: Aviation Programs,” describes in more detail the scope of the Agency's authority.
We are issuing this rulemaking under the authority described in “Subtitle VII, Part A, Subpart III, Section 44701: General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
We determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect 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.
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979),
(3) Will not affect intrastate aviation in Alaska, and
(4) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
1. The authority citation for part 39 continues to read as follows:
49 U.S.C. 106(g), 40113, 44701.
2. The FAA amends § 39.13 by removing Amendment 39–17187 (77 FR 55686, September 11, 2012), and adding the following new AD:
We must receive comments by November 29, 2012.
This AD revises AD 2012–18–10, Amendment 39–17187 (77 FR 55686, September 11, 2012).
This AD applies to GA200 (Pty) Ltd Models GA200 and GA200C airplanes, all serial numbers, certificated in any category.
Air Transport Association of America (ATA) Code 57: Wings.
This AD was prompted by mandatory continuing airworthiness information (MCAI) issued by the aviation authority of another country to identify and correct an unsafe condition on an aviation product. The MCAI describes the unsafe condition as failure of the wing strut bolt through the main spar. We are issuing this AD to prevent failure of the wing strut bolt, which could result in wing failure.
Unless already done, do the following actions.
(1) Within 10 hours time-in-service (TIS) after September 14, 2012 (the effective date retained from AD 2012–18–10, Amendment 39–17187 (77 FR 55686, September 11, 2012)), inspect the inboard strut fitting following GippsAero Mandatory Service Bulletin SB–GA200–2012–08, Issue 1, dated August 22, 2012; or GippsAero Mandatory Service Bulletin SB–GA200–2012–08, Issue 2, dated September 4, 2012. Repetitively thereafter inspect at intervals not to exceed 500 hours TIS following GippsAero Mandatory Service Bulletin SB–GA200–2012–08, Issue 2, dated September 4, 2012.
(2) If the 100-hour TIS repetitive inspection previously required in AD 2012–18–10, Amendment 39–17187 (77 FR 55686, September 11, 2012) has already been done before the effective date of this AD following GippsAero Mandatory Service Bulletin SB–GA200–2012–08, Issue 1, dated August 22, 2012, the next required inspections are due at intervals not to exceed 500 hours TIS after the last inspection following GippsAero Mandatory Service Bulletin SB–GA200–2012–08, Issue 2, dated September 4, 2012.
(3) If any discrepancies are found during any of the inspections required by paragraphs (f)(1) and (f)(2) of this AD, before further flight after the inspection in which the discrepancy is found, take all necessary corrective actions following GippsAero Mandatory Service Bulletin SB–GA200–2012–08, Issue 1, dated August 22, 2012; or GippsAero Mandatory Service Bulletin SB–GA200–2012–08, Issue 2, dated September 4, 2012.
The following provisions also apply to this AD:
(1)
(2)
(3)
Refer to MCAI Civil Aviation Safety Authority (CASA) AD AD/GA200/1, Amendment 1, dated September 21, 2012; GippsAero Mandatory Service Bulletin SB–GA200–2012–08, Issue 1, dated August 22, 2012; and GippsAero Mandatory Service Bulletin SB–GA200–2012–08, Issue 2, dated September 4, 2012, for related information. For service information related to this AD, contact GippsAero, P.O. Box 881, Morwell, Victoria 3840, Australia, telephone: + 61 (0) 3 5172 1200; fax + 61 (0) 3 5172 1201; email:
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
This action proposes to modify VHF omnirange (VOR) Federal airway V–537 in Georgia. The FAA is proposing this action to realign the route due to the scheduled decommissioning of the Moultrie, GA, VOR/DME facility which forms a point along the route.
Comments must be received on or before November 29, 2012.
Send comments on this proposal to the U.S. Department of Transportation, Docket Operations, M–30, 1200 New Jersey Avenue SE., West Building Ground Floor, Room W12–140, Washington, DC 20590–0001; telephone: (202) 366–9826. You must identify FAA Docket No. FAA–2012–0971 and Airspace Docket No. 12–ASO–31 at the beginning of your comments. You may also submit comments through the Internet at
Paul Gallant, Airspace Policy and ATC Procedures Group, Office of Airspace Services, Federal Aviation Administration, 800 Independence Avenue SW., Washington, DC 20591; telephone: (202) 267–8783.
Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal.
Communications should identify both docket numbers (FAA Docket No. FAA–2012–0971 and Airspace Docket No. 12–ASO–31) and be submitted in triplicate to the Docket Management Facility (see
Commenters wishing the FAA to acknowledge receipt of their comments on this action must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to FAA Docket No. FAA–2012–0971 and Airspace Docket No. 12–ASO–31.” The postcard will be date/time stamped and returned to the commenter.
All communications received on or before the specified comment closing date will be considered before taking action on the proposed rule. The proposal contained in this action may be changed in light of comments received. All comments submitted will be available for examination in the public docket both before and after the comment closing date. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.
An electronic copy of this document may be downloaded through the Internet at
You may review the public docket containing the proposal, any comments received and any final disposition in person in the Dockets Office (see
Persons interested in being placed on a mailing list for future NPRM's should contact the FAA's Office of Rulemaking, (202) 267–9677, for a copy of Advisory Circular No. 11–2A, Notice of Proposed Rulemaking Distribution System, which describes the application procedure.
The FAA is proposing an amendment to Title 14, Code of Federal Regulations (14 CFR) part 71 to modify the description of VOR Federal airway V–537. The Moultrie, GA, VOR/DME, which forms a point along the route, is scheduled to be decommissioned, thus the route description would be redefined to provide for the continuity of V–537.
Specifically, V–537 extends between Palm Beach, FL, and Macon, GA. In order to maintain the current ground track of the airway, the FAA would redefine the position of the Moultrie, GA, VOR/DME with a navigation fix formed by the intersection of the Greenville, FL, VORTAC 001°(T)/360°(M) and the Macon, GA, VORTAC 185°(T)/184°(M) radials.
VOR Federal airways are published in paragraph 6010, of FAA Order 7400.9W dated August 8, 2012, and effective September 15, 2012, which is incorporated by reference in 14 CFR 71.1. The VOR Federal airway listed in this document would be subsequently published in the Order.
The FAA has determined that this proposed regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. Therefore, this proposed regulation: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under Department of Transportation (DOT) Regulatory
The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority.
This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of the airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it modifies the route structure as required to preserve the safe and efficient flow of air traffic within the National Airspace System.
This proposal will be subject to an environmental analysis in accordance with FAA Order 1050.1E, “Environmental Impacts: Policies and Procedures” prior to any FAA final regulatory action.
Airspace, Incorporation by reference, Navigation (air).
In consideration of the foregoing, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:
1. The authority citation for part 71 continues to read as follows:
49 U.S.C. 106(g), 40103, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959–1963 Comp., p. 389.
2. The incorporation by reference in 14 CFR 71.1 of FAA Order 7400.9W, Airspace Designations and Reporting Points, Dated August 8, 2012 and effective September 15, 2012, is amended as follows:
From Palm Beach, FL; INT Palm Beach 356° and Treasure, FL, 143° radials; Treasure; INT Treasure 318° and Orlando. FL, 140° radials; INT Orlando 140° and Melbourne, FL 298° radials; INT Melbourne 298° and Ocala, FL 145° radials; Ocala; Gators, FL; Greenville, FL; INT Greenville 001°(T)/360°(M) and Macon, GA, 185°(T)/184°(M) radials to Macon.
Defense Logistics Agency, DoD.
Proposed rule.
The Defense Logistics Agency (DLA) proposes to revise and update its existing rule concerning the DLA Freedom of Information Act (FOIA) Program. This rule implements changes to conform to the requirements of the Electronic Freedom of Information Act Amendments of 1996, Public Law 104–231, and the OPEN Government Act of 2007, Public Law 110–175. In addition, part 1285 will be redesignated as part 300.
Submit comments on or before December 14, 2012.
You may submit comments, identified by docket number and/or RIN number and title, by any of the following methods:
• Federal Rulemaking Portal:
• Mail: Federal Docket management System Office, 4800 Mark Center Drive, East Tower, Suite 02G09, Alexandria, VA 22350–3100.
Ms. Deborah Teer, (703) 767–5247 or
This rule supplements 32 CFR part 286 to accommodate specific requirements of the DLA FOIA Program.
a. This rule assigns responsibilities and establishes policies and procedures for a uniform DLA Freedom of Information Act program pursuant to the provisions of the Freedom of Information Act.
b. Authority: 5 U.S.C. 552.
This rule implements changes to conform to the requirements of the Electronic Freedom of Information Act Amendments of 1996, Public Law 104–231, and the OPEN Government Act of 2007, Public Law 110–175.
This regulatory action imposes no monetary costs to the Agency or public. The benefit to the public is the accurate reflection of the Agency's FOIA Program to ensure that policies and procedures are known to the public.
It has been certified that 32 CFR part 300 does not: (1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy; a sector of the economy; productivity; competition; jobs; the environment; public health or safety; or State, local, or tribal governments or communities; (2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another Agency; (3) Materially alter the budgetary impact of entitlements,
It has been determined that 32 CFR part 300 is not subject to the Regulatory Flexibility Act because it would not, if promulgated, have significant economic impact on a substantial number of small entities.
It has been determined that 32 CFR part 300 does not impose reporting or recordkeeping requirements under the Paperwork Reduction Act of 1995.
It has been certified that 32 CFR part 300 does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995.
It has been certified that 32 CFR part 300 does 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, as specified in Executive Order 13132.
32 CFR part 300 is not subject to Executive Order 13045.
For the reasons stated in the preamble, DLA proposes to redesignate 32 CFR part 1285 as part 300 and revise it to read as follows:
Appendix A to Part 300—Access to DLA Records
5 U.S.C. 552.
This part provides policies and procedures for the Defense Logistics Agency (DLA) implementation of the Freedom of Information Act (FOIA) (5 U.S.C. 552). This part supplements and implements the Department of Defense (DOD) FOIA Program Regulation (Refer to 32 CFR part 286 (
This part is published in accordance with the authority contained in 5 U.S.C. 552 and 32 CFR parts 285 and 286. It supplements 32 CFR part 286 to accommodate specific requirements of the DLA FOIA Program. For all FOIA issues not covered by this part, the rules set forth in 32 CFR part 286 will govern.
The following terms and meanings apply for the purposes of this part:
(a)
(b)
(c)
(d)
(e)
(f)
(1)
(2)
(3)
(g)
(h)
(i)
(j)
(k)
(l)
(m)
(n)
(o)
DLA adopts and supplements the DOD FOIA Program policy and procedures codified at 32 CFR part 286, Subpart A, General Provisions and Subpart B, FOIA Reading Rooms and 32 CFR part 285.
(a)
(b)
(1) To meet the requirements of Executive Order 13392, each FOIA Requester Service Center shall have an internet Web site that serves to educate the public on the FOIA process. At a minimum, each Web site shall have the address, telephone number, facsimile number, and electronic mail address to which FOIA requests can be sent; a link to DOD's FOIA handbook; the name and contact information of the DLA FOIA Officer and Public Liaison; and information on how a requester can obtain the status of a request. Additionally, each FOIA Requester Service Center Web site will have links to the DLA Headquarters FOIA/Privacy Web site reading room.
(c)
(2) With regards to electronic data, the issue of whether records are actually created or merely retrieved from an existing database is not always readily apparent. Consequently, when processing FOIA requests for electronic data, if the DLA Component has the capability to respond to the request, and the effort is reasonable and would be a business as usual approach, then the request should be processed. FOIA requests for electronic data will not be processed when:
(i) Processing a request would cause a significant interference with the operation of the DLA Component's automated system, require a significant amount of programming effort or require extensive complex programming to merge files of disparate data formats.
(ii) Creating computer programs and/or purchasing additional hardware (i.e., to extract electronic mail that has been archived) is needed.
(d)
(e)
Refer to the DOD FOIA Program regulations codified at 32 CFR part 286, Subpart C, Exemptions.
DLA adopts and supplements the DOD FOIA Program regulations codified at 32 CFR part 286, Subpart E, Release and Processing Procedures.
(a)
(2) When personally identifying information in a record is requested by the subject of the record or the subject's representative, and the information is contained within a Privacy Act system of records, the request will be processed under both the FOIA and the Privacy Act. DLA Components must comply with the provisions of DOD 5400.11–R, C3.1.3 to confirm the identity of the requester (
(a)
(1) Open a file in the DLA specified control system designed to ensure accountability and compliance with the FOIA. The control system will include the data elements needed to compile the statistics required in the annual Department of Justice FOIA report or other reports required by another authority. Each request shall automatically be assigned a unique tracking number.
(2) Screen the request for defects in the description, the requester category, the fee declaration, and full postal address. If the request is not perfected, the request is placed on hold and the FOIA Officer will notify requesters of any such defects and provide assistance to help remedy the defects. When a DLA FOIA Requester Service Center receives a request for records that clearly belong to an agency outside of DOD, the requester shall be told these are not agency records and, if possible, provide the name of the agency that may hold the records. No referral of the request is made outside of DOD.
(3) Once a request is perfected, DLA may make one request for additional information unrelated to fees and toll the 20 working-day period while awaiting the information. Tolling the 20 working-day period is not limited for fee related issues.
(4) DLA uses the date-of-search cut-off to ensure that as many records as possible will be captured by the agency's search. A FOIA request may not be on-going or open-ended in nature. DLA Components are responsible for providing records in possession and control of DLA at the time the search for records begins. DLA Components are not required to expend DLA funds to establish data links that provide real-time or near-real-time data to a FOIA requester.
(b) Multi-track processing. DLA components shall process requests according to their order of receipt. A DLA component uses three processing tracks by distinguishing between simple, complex, and expedited requests based on the need to search from multiple directorates/locations; the need to search for and review a voluminous amount of records; and/or the need to consult with other DLA or DoD Components. Requesters are notified in the acknowledgement letter of the track the request is placed in. Requests placed in the simple track can reasonably expect that their request will be completed within the statutory time limit for responding to requests. Requesters placed in the complex track may be given an opportunity to narrow or modify the scope of their request in order to qualify for faster processing within the specified limits of DLA's simple track. Expedited processing must be requested and a requester who seeks expedited processing must submit a statement, certified to be true and correct to the best of that person's knowledge and belief, explaining in detail the basis for requesting expedited processing. Within ten calendar days of its receipt of a request for expedited processing, the proper component shall decide whether to grant expedited processing and shall notify the requester of the decision. If a request for expedited processing is granted, the request shall be given priority and processed as soon as practicable. If a request for expedited processing is denied, any appeal of that decision shall be acted on expeditiously. Refer to the DoD FOIA Handbook for information on multi-track processing (
(c)
(d)
(a) The initial determination is whether to make a record available in response to a FOIA request. A full release may be made by an official knowledgeable of the record, with authority to determine that no harm would come from release. Adverse determinations (refer to § 300.3 (b)) must be made by the designated Initial Denial Authority (IDA). By this regulation, the Director, DLA, delegates to Heads of DLA Components (see § 300.3 (h)) the designation of IDA. The designation of IDA may be further delegated by the Heads of DLA Components to their Deputies. The IDA shall review all recommendations for withholding information and whether the criteria for withholding under one or more FOIA exemptions are met. DLA has IDAs throughout the agency; and each IDA will make the determination for records within their area of functional responsibility. If a request involves records from more than one functional area, consultation will be done with all responsible IDAs but will be signed by the IDA assigned the primary responsibility for processing the request.
(b) The FOIA requires that any reasonably segregable portion of a record must be released after appropriate application of the Act's nine exemptions. Segregation is not reasonable when it would produce an essentially meaningless set of words and phrases, or even sentences which taken separately or together have minimal or no information content.
(a) An appeal can be made as a result of an initial determination that is considered by the requester to be an adverse determination (see 300.3 (b)).
(b) An appeal must be made in writing to DLA's Appellate Authority and must be postmarked within 30 calendar days from the date of the initial determination letter. The General Counsel serves as DLA's appellate authority. The appeal should include reasons for reconsideration and a copy of the initial determination letter. An appeal may be mailed, emailed to
DLA adopts the DOD FOIA Program regulations codified at 32 CFR part 286, Subpart E, Release and Processing Procedures.
DLA adopts the rules and rates published in 32 CFR part 286, Subpart F, Fee Schedule. In addition, DLA considers fees charged by a Federal Records Center to retrieve and re-file records a part of the direct costs charged to requesters.
(a) General.
(1) The Defense Logistics Agency, established pursuant to authority vested in the Secretary of Defense, is an agency of DOD under the direction, authority, and control of the Assistant Secretary of Defense for Logistics and Materiel Readiness, and is subject to DOD policies, directives, and instructions.
(2) DLA is comprised of several Components and each DLA Component is responsible for maintaining its own records; therefore, FOIA requests should be addressed to the FOIA Requester Service Center that has custody of the record desired. (See (c) below.) DLA FOIA Officers will assist requesters in determining the correct DLA Requester Service Center to address requests. (See paragraph (c) of this appendix and DLA's public Web site at
(3) On the DLA public Web site is an index to assist in locating DLA records by category, organization, keyword search, or by contract prefix. The index is titled “Index of Information at DLA FOIA Service Centers” at
(b) Requester Requirements.
(1) Requesters are responsible for submitting a perfected request as defined in 300.3(m), FOIA Request.
(2) Addressing Requests.
Address requests to the DLA FOIA Requester Service Center most likely to hold the records (see paragraph (c) of this appendix for mailing addresses of DLA FOIA Offices designated to receive FOIA requests). If the DLA FOIA Requester Service Center is undeterminable, address requests to DLA Headquarters FOIA Office for proper routing.
(3) Availability of DLA Publications.
Many unrestricted DLA regulations, manuals, and handbooks are available online. Visit the DLA FOIA/Privacy Web site for more information at
(c) Locations of DLA FOIA Requester Service Centers.
Refer to the FOIA/Privacy Web page at
Defense Logistics Agency Headquarters, ATTN: DGA, 8725 John J. Kingman Rd., Ste 1644, Fort Belvoir, VA 22060–6221—Responsible for broad functional areas, such as Office of the Director, General Counsel, Small Business Programs, DLA Office of Inspector General, Legislative Affairs, Equal Employment Opportunity Office, Installation Support, Human Resources, Logistics Operations, Information Operations, Acquisition, and Financial Operations. This FOIA Requester Service Center also processes FOIA requests for the following locations:
○ DLA Transaction Service, Wright-Patterson AFB, Ohio—Editing/routing of logistics transactions, network interoperability and eBusiness services.
○ DLA Strategic Materials, Fort Belvoir, Va.—Manages the strategic and critical raw material stockpile that supports national defense needs.
○ DLA Europe & Africa, Kaiserslautern, Germany—Focal point for U.S. European Command's and U.S. Africa Command's theater of operations.
○ DLA Pacific, Camp Smith, Hawaii—Focal point for U.S. Pacific Command's theater of operations.
○ DLA Central, MacDill AFB, Fla.—Focal point for U.S. Central Command's theater of operations.
DLA Energy, 8725 John J. Kingman Rd., Ste 3729, Fort Belvoir, VA 22060–6222—Fuel, energy support and services, and bulk petroleum.
DLA Land and Maritime, ATTN: GC, 3990 E. Broad Street, Columbus, OH 43218–3990—Maritime and land weapons system supply chains.
DLA Aviation, 8000 Jefferson Davis Highway, Richmond, VA 23297–5000—Aviation supply chain.
DLA Troop Support, 700 Robbins Avenue, Bldg 36, Philadelphia, PA 19111–5096—Subsistence, clothing, and textiles, medical, and construction and equipment supply chains.
DLA Distribution, ATTN: DDC–GC, Mission Drive, Bldg 81, New Cumberland, PA 17070–5000—Worldwide network of 25 distribution depots and nine map support offices.
DLA Disposition Services and DLA Logistics Information Service, 74 Washington Avenue North, Battle Creek, MI 49017–3084.
○ Disposition Services: Reutilization, transfer, demilitarization, and environmental disposal and reuse.
○ Logistics Information Service: Manages a wide range of logistics information and identification systems.
DLA Document Services, 5450 Carlisle Pike, Bldg 9, P.O. Box 2020, Mechanicsburg, PA 17055–0788—Automated document production, printing services, digital conversion and document storage.
Coast Guard, DHS.
Notice of proposed rulemaking.
The U.S. Coast Guard is proposing to amend the Seafair Blue Angels Air Show Performance safety zone on the waters of Lake Washington, Seattle, WA. This action is necessary to safeguard participants and spectators from the safety hazards associated with the Seafair Blue Angels Air Show Performance, which include low flying high speed aircraft, and will do so by prohibiting entry into the safety zone unless authorized by the Captain of the Port (COTP), Puget Sound or a Designated Representative.
Comments and related material must be received by the Coast Guard on or before December 14, 2012.
You may submit comments identified by docket number using any one of the following methods:
(1)
(2)
(3)
See the “Public Participation and Request for Comments” portion of the
If you have questions on this rule, call or email ENS Nathaniel P. Clinger; Waterways Management Division, Coast Guard Sector Puget Sound; Coast Guard; telephone 206–217–6045, email
We encourage you to participate in this rulemaking by submitting comments and related materials. All comments received will be posted without change to
If you submit a comment, please include the docket number for this rulemaking, indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation. You may submit your comments and material online at
To submit your comment online, go to
If you submit your comments by mail or hand delivery, submit them in an unbound format, no larger than 8
To view comments, as well as documents mentioned in this preamble as being available in the docket, go to
Anyone can search the electronic form of comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review a Privacy Act notice regarding our public dockets in the January 17, 2008, issue of the
We do not now plan to hold a public meeting. But you may submit a request for one, using one of the methods specified under
The Coast Guard is amending this rule because the current regulation associated with the Seafair Blue Angels Air Show performance (33 CFR 165.1319) is not large enough to safeguard participants and spectators from the safety hazards associated with the Seafair Blue Angels Air Show Performance, which include low flying high speed aircraft.
The Coast Guard proposes to amend this safety zone to ensure the safety of the maritime public during the Seattle Blue Angels Air Show. The size of the safety zone in 33 CFR 165.1319 has been determined to be inadequate to accommodate the anticipated flight pattern of the Blue Angels, and the current regulation is not large enough to safeguard participants and spectators from the safety hazards associated with the Seafair Blue Angels Air Show Performance, which include low flying high speed aircraft. This proposed rule would extend the northern boundary line of the existing regulation northward by 500 yards, and updates coordinates to provide a zone of adequate size.
As described in the June 24, 2004 final rule (69 FR 35249), the Coast Guard established a safety zone for the annual Blue Angels Air Show Performance. The purpose of this rule was to protect the public from dangers including excessive noise and falling objects from any potential accidents caused by these low-flying military aircraft. The regulation contained in 33 CFR 165.1319 encompasses “all waters of Lake Washington, Washington State, enclosed by the following points: Near the termination of Roanoke Way 47°35′44″ N, 122°14′47″ W; thence to 47°35′48″ N, 122°15′45″ W; thence to 47°36′02.1″ N, 122°15′50.2″ W; thence to 47°35′56.6″ N, 122°16′29.2″ W; thence to 47°35′42″ N, 122°16′24″ W; thence to the east side of the entrance to the west highrise of the Interstate 90 bridge; thence westerly along the south side of the bridge to the shoreline on the western terminus of the bridge; thence southerly along the shoreline to Andrews Bay at 47°33′06″ N, 122°15′32″ W; thence northeast along the shoreline of Bailey Peninsula to its northeast point at 47°33′44″ N, 122°15′04″ W; thence easterly along the east-west line drawn tangent to Bailey Peninsula; thence northerly along the shore of Mercer Island to the point of origin. [Datum: NAD 1983]”
However, the participating aircraft have a flight pattern that will extend past the northern boundary of the regulation in 33 CFR 156.1319. As such, an extension is necessary in order to protect the spectating public.
This rule amends the Seafair Blue Angels Air Show Performance Safety Zone, extending the northern boundary starting at point 47°36′17.28″ N, 122°16′49.44″ W; thence west to point 47°36′17.28″ N, 122°16′58.56″ W; thence south along the shoreline to point 47°35′25.44″ N, 122°17′9.48″ W; thence east along the I–90 bridge to point 47°35′23.16″ N, 122°15′17.1″ W; thence north east along the shoreline to point
We developed this proposed rule after considering numerous statutes and executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes or executive orders.
This proposed rule is not a significant regulatory action under section 3(f) of Executive Order 12866, Regulatory Planning and Review, as supplemented by Executive Order 13563, Improving Regulation and Regulatory Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of Executive Order 12866 or under section 1 of Executive Order 13563. The Office of Management and Budget has not reviewed it under those Orders. The Coast Guard bases this finding on the fact that the safety zone will be in place for a limited period of time and vessel traffic will be able to transit around the safety zone. Maritime traffic may also request permission to transit through the zone from the (COTP), Puget Sound or a Designated Representative.
Under the Regulatory Flexibility Act (5 U.S.C. 601–612), we have considered the impact of this proposed rule on small entities. The Coast Guard certifies under 5 U.S.C. 605(b) that this proposed rule will not have a significant economic impact on a substantial number of small entities. This rule would affect the following entities, some of which may be small entities; the owners and operators of vessels intending to operate in the waters covered by the safety zone while it is in effect. The rule would not have a significant economic impact on a substantial number of small entities because the safety zone would be in place for limited periods of time and maritime traffic would still be able to transit around the safety zone. Maritime traffic may also request permission to transit through the zone from the COTP, Puget Sound or a Designated Representative.
If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this rule would have a significant economic impact on it, please submit a comment (see
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104–121), we want to assist small entities in understanding this proposed rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the
This proposed rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501–3520).
A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect 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. We have analyzed this proposed rule under that Order and determined that this rule does not have implications for federalism.
The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531–1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this proposed rule would not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.
This proposed rule would not cause a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights.
This proposed rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden.
We have analyzed this proposed rule under Executive Order 13045, Protection of Children From Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and would not create an environmental risk to health or risk to safety that might disproportionately affect children.
This proposed rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it would not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.
This proposed rule is not a “significant energy action” under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use.
This proposed rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards.
We have analyzed this proposed rule under Department of Homeland Security Management Directive 023–01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321–4370f), and have made a preliminary determination that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This proposed rule involves the amendment of a safety zone. This rule is categorically excluded from further review under paragraph
Harbors, Marine safety, Navigation (water), Reporting and recordkeeping requirements, Security measures, Waterways.
For the reasons discussed in the preamble, the Coast Guard proposes to amend 33 CFR part 165, as follows:
1. The authority citation for Part 165 continues to read as follows:
33 U.S.C. 1226, 1231; 46 U.S.C. Chapter 701, 3306, 3703; 50 U.S.C. 191, 195; 33 CFR 1.05–1, 6.04–1, 6.04–6, 160.5; Pub. L. 107–295, 116 Stat. 2064; Department of Homeland Security Delegation No. 0170.1
2. Amend § 165.1319 by revising paragraph (b) to read as follows:
(b)
National Park Service, Interior.
Proposed rule.
The National Park Service proposes to designate the Sleeping Bear Heritage Trail currently under construction within Sleeping Bear Dunes National Lakeshore as a route for bicycle use. The approximately 27-mile-long trail will generally parallel major state highways and offer visitors safe, non-motorized access to the park. National Park Service general regulations require promulgation of a special regulation to designate routes for bicycle use outside developed areas or off park roads.
Comments must be received by December 14, 2012.
You may submit your comments, identified by Regulation Identifier Number (RIN), by any of the following methods:
•
•
Phil Akers, Chief Ranger, Sleeping Bear Dunes National Lakeshore, 231–326–5135, or at 9922 Front Street, Empire, Michigan 49630.
Sleeping Bear Dunes National Lakeshore (SLBE or Lakeshore) was established in 1970 “for the benefit, inspiration, education, recreation, and enjoyment of the public.” (16 U.S.C. 460x). SLBE's enabling legislation requires the National Park Service (NPS) to “administer and protect [the Lakeshore] in a manner which provides for recreational opportunities consistent with the maximum protection of the natural environment within the area.” (16 U.S.C. 460x). The 71,000-acre Lakeshore is located in the northwest portion of Michigan's Lower Peninsula and encompasses a 35-mile stretch of Lake Michigan's eastern coastline as well as North Manitou and South Manitou islands. The mainland portion is located within Benzie and Leelanau counties. The Manitou Islands, in Leelanau County, are located to the northwest in Lake Michigan, about seven miles from the shore. The nearest city is Traverse City, Michigan (population 15,000), located 30 miles east of the Lakeshore. Smaller communities such as Empire, Glen Arbor, and Frankfort are closer.
Named after a complex of coastal sand dunes, the Lakeshore features white sand beaches, steep bluffs reaching as high as 450 feet above Lake Michigan, thick maple and beech forests, and clear inland lakes. The Lakeshore's most notable features—the ancient sand dunes—are products of wind, ice, and water action over thousands of years. The high, perched dunes afford spectacular views across Lake Michigan and of other glacially formed landscapes. The contrast between the open, sunny environment of the dunes and the adjacent lush beech-maple forests is striking.
The Robert H. Manning Memorial Lighthouse, three former U.S. Life-Saving Service/Coast Guard stations, several coastal villages, and picturesque farmsteads reflect the Lakeshore's rich maritime, agricultural, and recreational history. The region surrounding the Lakeshore is a popular vacation and summer home destination. SLBE offers visitors recreational activities such as hiking, backpacking, kayaking, cross-country skiing, backcountry camping, hunting, fishing, and boating.
Over 1.1 million people visit the Lakeshore annually. SLBE's main visitor attractions include the Dune Climb (330,000+ visitors/year), Pierce Stocking Scenic Drive (430,000 visitors/year), and the Visitor Center (130,000+ visitors/year). Traffic and parking congestion are a concern at these locations. A multi-use trail connecting the main visitor destinations would help relieve these traffic concerns while simultaneously enhancing visitor access to a variety of recreational activities.
Currently, bicycling within SLBE is allowed only on a lane shared with motor vehicles on Pierce Stocking Scenic Drive and on the road shoulders of state highways (M–22 and M–109) and county roads than run through the Lakeshore.
The Sleeping Bear Heritage Trail (SBHT) will be a hard-surfaced, approximately 27-mile-long trail from the southern Leelanau County line at Manning Road to County Road 651 at
Moving bicycle traffic off roads used by motor vehicles will reduce safety hazards and enhance opportunities for non-motorized enjoyment of the Lakeshore. It will also encourage the use of alternate means of transportation by park employees and park visitors to access these extremely popular areas. The SBHT will give bicyclists, walkers, runners, wheelchair users, rollerbladers, and cross-country skiers a safe, enjoyable, and healthy way to access and explore the Lakeshore.
Maps depicting the planned trail route including the completed first segment are available for review in the office of the Superintendent and on the Lakeshore's Web site at
The idea for a multi-use trail came from the Leelanau Scenic Heritage Route Committee (LSHR), which was created by the State of Michigan to preserve the historical integrity and safety of state highways M–22, M–109, and M–204. The LSHR is a broad partnership with representatives from 12 municipalities, the Lakeshore, the Michigan Department of Transportation, the Grand Traverse Band of Ottawa and Chippewa Indians, the Leelanau Conservancy, the Leelanau County Road Commission, the Leelanau County Planning Commission, chambers of commerce, interested organizations, and citizens.
Planning for the trail began in 2005 when the LSHR suggested the concept to the NPS. In 2006, the LSHR created a Trailway Work Group to develop a multi-use trail along the M–22 and M–109 corridor in the Lakeshore. The Work Group included representatives of SLBE, the Michigan Department of Transportation, local townships and villages, and other interested groups and citizens. Through the LSHR, the public had many opportunities for involvement in planning the SBHT. The public provided input and review at various meetings and activities, including over 25 LSHR Committee meetings and 15 Trailway Work Group meetings from 2005 to 2008, and Port Oneida Days at the Lakeshore in August 2006 and 2007. In 2006 the LSHR staff also made introductory presentations to local governments, with follow-up presentations made in 2008.
The multi-use trail concept, including bicycle use, and the trail route were considered in the preferred alternative of SLBE's October 2008 Final General Management Plan/Wilderness Study/Environmental Impact Statement (GMP/EIS) and Record of Decision (ROD) signed by the NPS SLBE Superintendent and NPS Mid-West Regional Director in January 2009. In March 2009, SLBE published the Leelanau Scenic Heritage Route Trailway Plan and Environmental Assessment (EA) which evaluated the environmental impacts of a no-action alterative and two action alternatives, including one identified as the preferred alternative.
The Leelanau Scenic Heritage Trailway route was named the Sleeping Bear Heritage Trail, and in August 2009, the NPS SLBE Superintendent and NPS Mid-West Regional Director signed a Finding of No Significant Impact (FONSI). The FONSI identified the preferred alternative as the selected action and concluded that the construction of the multi-use trail, which would include bicycle use, would not have a significant effect on the human environment. The GMP/EIS, ROD, EA, FONSI, and related documents may be viewed on the Lakeshore's planning Web site at
The SBHT will generally be constructed in M–22/M–109 and county road rights-of-way, and primarily within developed area zones as described in the Lakeshore's GMP. However, the trail route will occasionally deviate from the highway corridor and outside of developed areas as previously described in this rule, to provide access to natural, cultural, and recreation resources, and to promote a broader variety of experiences for the trailway user. Therefore SLBE is pursuing promulgation of a special regulation for bicycle use, as required by 36 CFR 4.30.
Accordingly, the proposed rule would add a new paragraph to 36 CFR 7.80, designating the proposed 27-mile-long SBHT as a route for bicycle use. The proposed rule also grants the Superintendent the authority to impose closures or restrictions upon bicycle use on designated trails after taking into consideration public health and safety, resource protection, and other management activities and objectives, provided public notice is given under 36 CFR 1.7.
The NPS now seeks comments on its proposal to designate this as a route for bicycle use. The construction of the SBHT as a multi-use trail, as stated above, was a separate decision and is not at issue in this proposal.
Executive Order 12866 provides that the Office of Information and Regulatory Affairs (OIRA) will review all significant rules. OIRA has determined that this rule is not significant.
Executive Order 13563 reaffirms the principles of Executive Order 12866 while calling for improvements in the nation's regulatory system to promote predictability, to reduce uncertainty, and to use the best, most innovative, and least burdensome tools for achieving regulatory ends. The executive order directs agencies to consider regulatory approaches that reduce burdens and maintain flexibility and freedom of choice for the public where these approaches are relevant, feasible, and consistent with regulatory objectives. Executive Order 13563 emphasizes further that regulations must be based on the best available science and that the rulemaking process must allow for public participation and an open exchange of ideas. We have developed this rule in a manner consistent with these requirements.
This rule will not have a significant economic effect on a substantial number of small entities under the RFA (5 U.S.C. 601
This rule is not a major rule under 5 U.S.C. 804(2), the SBREFA. This rule:
a. Does not have an annual effect on the economy of $100 million or more.
b. Will not cause a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions.
c. Does not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S.-based enterprises to compete with foreign-based enterprises. The rule would not require fees, or involve other measures that would increase costs to visitors or businesses. Rather, this rule would reasonably increase Lakeshore visitation and thereby generate benefits for businesses through increased visitor spending.
This rule does not impose an unfunded mandate on State, local, or tribal governments or the private sector of more than $100 million per year. The rule does not have a significant or unique effect on State, local or tribal governments or the private sector. It addresses public use of national park lands, and imposes no requirements on other agencies or governments. A statement containing the information required by the UMRA (2 U.S.C. 1531
Under the criteria in section 2 of Executive Order 12630, this rule does not have significant takings implications. The rule will not deny any property owner beneficial uses, or reduce the value, of their land. No taking of property will occur as a result of this rule. A takings implication assessment is not required.
Under the criteria in section 1 of Executive Order 13132, the rule does not have sufficient federalism implications to warrant the preparation of a Federalism summary impact statement. This proposed rule only affects use of NPS administered lands and waters. It has no outside effects on other areas. A Federalism summary impact statement is not required.
This rule complies with the requirements of Executive Order 12988. Specifically, this rule:
(a) Meets the criteria of section 3(a) requiring that all regulations be reviewed to eliminate errors and ambiguity and be written to minimize litigation; and
(b) Meets the criteria of section 3(b)(2) requiring that all regulations be written in clear language and contain clear legal standards.
The Department of the Interior strives to strengthen its government-to-government relationship with Indian tribes through a commitment to consultation with Indian tribes and recognition of their right to self-governance and tribal sovereignty. We have evaluated this rule under the Department's consultation policy and under the criteria in Executive Order 13175 and have determined that it has no substantial direct effects on federally recognized Indian tribes and that consultation under the Department's tribal consultation policy is not required.
Representatives of the five Indian tribes affiliated with SLBE were consulted during the evaluation of the trail concept and route in the preparation of the GMP/EIS. Representatives of the nearest affiliated tribe, the Grand Traverse Band of Ottawa and Chippewa Indians, are members of the LSHR that proposed the trail and helped to prepare the EA.
This rule does not contain information collection requirements, and a submission under the PRA is not required.
This rule does not constitute a major Federal action significantly affecting the quality of the human environment. A detailed statement under the NEPA is not required because we reached a FONSI. The GMP/EIS, EA, FONSI, and related documents may be viewed on the Lakeshore's planning Web site
This rule is not a significant energy action under the definition in Executive Order 13211. A statement of Energy Effects is not required.
We are required by Executive Orders 12866 (section 1(b)(12)) and 12988 (section 3(b)(1)(B)), and 13563 (section 1(a), and by the Presidential Memorandum of June 1, 1998, to write all rules in plain language. This means that each rule we publish must:
(a) Be logically organized;
(b) Use the active voice to address readers directly;
(c) Use common, everyday words and clear language rather than jargon;
(d) Be divided into short sections and sentences; and
(e) Use lists and tables wherever possible.
If you feel that we have not met these requirements, send us comments by one of the methods listed in the
It is the policy of NPS, whenever practicable, to afford the public an opportunity to participate in the rulemaking process. Accordingly, interested parties may submit written comments, suggestions, or objections regarding this proposed rule to the addresses noted at the beginning of this rule.
Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
National Parks, Reporting and recordkeeping requirements.
In consideration of the foregoing, the National Park Service proposes to amend 36 CFR part 7 as set forth below:
1. The authority for Part 7 continues to read as follows:
16 U.S.C. 1, 3, 9a, 462(k); Sec. 7.96 also issued under 36 U.S.C. 501–511, D.C. Code 10–137 (2001) and D.C. Code 50–2201 (2001).
2. In § 7.80 add paragraph (c) to read as follows:
(c)
(2) The Superintendent may open or close designated routes, or portions thereof, or impose conditions or restrictions for bicycle use after taking into consideration public health and safety, natural and cultural resource protection, and other management activities and objectives.
(i) The Superintendent will provide public notice of all such actions through one or more of the methods listed in § 1.7 of this chapter.
(ii) Violating a closure, condition, or restriction is prohibited.
Architectural and Transportation Barriers Compliance Board.
Notice of advisory committee meeting.
The Medical Diagnostic Equipment Accessibility Standards Advisory Committee (Committee) will hold its second meeting. On July 5, 2012, the Architectural and Transportation Barriers Compliance Board (Access Board) established an advisory committee to make recommendations to the Board on matters associated with comments received and responses to questions included in a previously published Notice of Proposed Rulemaking (NPRM) on Medical Diagnostic Equipment Accessibility Standards.
The Committee will meet on October 29, 2012, from 10:00 a.m. to 5:00 p.m. and on October 30, 2012, from 9:00 a.m. to 3:00 p.m.
The meeting will be held at the Access Board's Conference Room, 1331 F Street NW., Suite 800, Washington, DC 20004–1111.
Rex Pace, Office of Technical and Information Services, Architectural and Transportation Barriers Compliance Board, 1331 F Street NW., suite 1000, Washington, DC 20004–1111. Telephone number (202) 272–0023 (Voice); (202) 272–0052 (TTY). Electronic mail address:
On July 5, 2012, the Architectural and Transportation Barriers Compliance Board (Access Board) established an advisory committee to make recommendations to the Board on matters associated with comments received and responses to questions included in a previously published NPRM on Medical Diagnostic Equipment Accessibility Standards. See 77 FR 6916 (February 9, 2012). The NPRM and information related to the proposed standards are available on the Access Board's Web site at:
The advisory committee will hold its second meeting on October 29 and 30, 2012. The agenda for the meeting includes the following:
• Review of previous committee work;
• Formation of subcommittees based on medical diagnostic equipment type;
• Continued discussion on transfer surface height and size;
• Consideration of and possible discussion on permitted obstructions to the transfer surface;
• Consideration of and possible discussion on transfer support location and configuration;
• Consideration of and possible discussion on issues proposed by committee members; and
• Discussion of administrative issues.
The preliminary meeting agenda, along with information about the committee, is available at the Access Board's Web site (
Committee meetings are open to the public and interested persons can attend the meetings and communicate their views. Members of the public will have opportunities to address the committee on issues of interest to them during public comment periods scheduled on each day of the meeting.
The meetings will be accessible to persons with disabilities. An assistive listening system, computer assisted real-time transcription (CART), and sign language interpreters will be provided. Persons attending the meetings are requested to refrain from using perfume, cologne, and other fragrances for the comfort of other participants (see
Environmental Protection Agency (EPA).
Proposed rule.
EPA is proposing to approve portions of two state implementation plan (SIP) revisions, submitted by the South Carolina Department of Health and Environmental Control, on August 31, 2007, and April 29, 2010, to address the reasonable further progress (RFP) plan requirements for the 1997 8-hour ozone national ambient air quality standards (NAAQS) for the portion of York County, South Carolina that is within the bi-state Charlotte-Gastonia-Rock Hill 1997 8-hour ozone nonattainment area. The Charlotte-Gastonia-Rock Hill, North Carolina-South Carolina 1997 8-hour ozone nonattainment area (hereafter referred to as the “bi-state Charlotte Area”) is
Written comments must be received on or before November 14, 2012.
Submit your comments, identified by Docket ID No. EPA–R04–OAR–2008–0177 by one of the following methods:
1.
2.
3.
4.
5.
Sara Waterson, Regulatory Development Section, Air Planning Branch, Air, Pesticides and Toxics Management Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth Street SW., Atlanta, Georgia 30303–8960. The telephone number is (404) 562–9061. Ms. Waterson can be reached via electronic mail at
On March 12, 2008, EPA issued a revised ozone NAAQS.
Federal Communications Commission.
Proposed rule; reopening of comment and reply comment periods.
The Public Safety and Homeland Security Bureau on its own motion extends by one month the comment and reply deadlines to the
The comment and reply dates for the proposed rule published at 77 FR 45558 (August 1, 2012), are reopened. Submit comments on or before November 1, 2012. Submit reply comments on or before November 30, 2012.
You may submit comments, identified by WP Docket No. 07–100, PS Docket No. 06–229, WT Docket No. 06–150, by any of the following methods:
•
•
•
•
•
For detailed instructions for submitting comments, additional information on the rulemaking process, and where to find materials available for inspection, see the
Thomas Eng, Policy and Licensing Division, Public Safety and Homeland Security Bureau, Federal Communications Commission, 445 12th Street SW., Washington, DC 20554, at (202) 418–0019, TTY (202) 418–7233, or via email at
This is a summary of the Public Safety and Homeland Security Bureau's
Pursuant to §§ 1.415 and 1.419 of the Commission's rules, 47 CFR 1.415, 1.419, interested parties may file comments and reply comments. Comments may be filed using: (1) The Commission's Electronic Comment Filing System (ECFS), (2) the Federal Government's eRulemaking Portal, or (3) by filing paper copies. See
•
•
• Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first-class or overnight U.S. Postal Service mail. All filings must be addressed to the Commission's Secretary, Office of the Secretary, Federal Communications Commission.
• All hand-delivered or messenger-delivered paper filings for the Commission's Secretary must be delivered to FCC Headquarters at 445 12th St. SW., Room TW–A325, Washington, DC 20554. The filing hours are 8:00 a.m. to 7:00 p.m. All hand deliveries must be held together with rubber bands or fasteners. Any envelopes must be disposed of before entering the building.
• Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743.
• U.S. Postal Service first-class, Express, and Priority mail must be addressed to 445 12th Street SW., Washington DC 20554.
On our own motion, we extend the comment and reply deadlines established in the
The
Accordingly,
Federal Communications Commission.
Proposed rule.
This document sets forth a proposal to amend the FM Table of Allotments. The Commission requests comment on a petition filed by Navajo Technical College, proposing to amend the Table of Allotments by allotting Channel 297A at Crownpoint, New Mexico, as a Tribal Allotment. Channel 297A would constitute a first local service at Crownpoint. Channel 297A can be allotted at Crownpoint, New Mexico, in compliance with the Commission's minimum distance separation requirements with a site restriction of 0.9 km (0.58 miles) northeast of Crownpoint, at 35–41–07 North Latitude and 108–08–43 West Longitude.
The deadline for filing comments is November 12, 2012. Reply comments must be filed on or before November 26, 2012.
Federal Communications Commission, 445 12th Street SW., Washington, DC 20554. In addition to filing comments with the FCC, interested parties should serve counsel for petitioner as follows: Albert J. Catalano, Esq., Matthew J. Plache, Esq., Victoria Garcia, Esq., Catalano & Plache, PLLC, 3221 M Street NW., Washington, DC 20007.
Deborah A. Dupont, Media Bureau (202) 418–7072.
This is a synopsis of the Commission's
The Provisions of the Regulatory Flexibility Act of 1980 do not apply to this proceeding. Members of the public should note that from the time a Notice of Proposed Rule Making is issued until the matter is no longer subject to Commission consideration or court review, all
For information regarding proper filing procedures for comments,
Radio, Radio broadcasting.
1. The authority citation for Part 73 continues to read as follows:
47 U.S.C. 154, 303, 334, 336.
2. Section 73.202(b), the Table of FM Allotments under New Mexico, is amended by adding Crownpoint, 297A (Tribal Allotment).
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Proposed rule; request for comments.
NMFS proposes a regulatory amendment that would modify the groundfish retention standard (GRS) program in the Bering Sea and Aleutian Islands (BSAI) management area by removing certain regulatory requirements mandating minimum levels of groundfish retention and adding requirements for annual reports on groundfish retention performance. The GRS program was implemented to increase the retention and utilization of groundfish caught by trawl catcher/processor (C/P) vessels not listed in the American Fisheries Act (AFA), referred to as Amendment 80 vessels, and Amendment 80 cooperatives participating in the Bering Sea and Aleutian Islands groundfish fisheries. NMFS has discovered that the regulatory methodology used to calculate compliance with the GRS requires individual Amendment 80 vessels and Amendment 80 cooperatives to retain groundfish at minimum rates well above the minimum rates recommended by the Council or implemented by NMFS. As a result, the GRS is expected to impose significantly higher than predicted compliance costs on vessel owners and operators due to the increased level of retention needed to meet the minimum retention rates.
Additionally, NMFS has discovered that enforcement of the GRS has proven far more complex, challenging, and potentially costly than anticipated by NMFS. This proposed rule would relieve non-AFA trawl C/Ps and Amendment 80 cooperatives from undue compliance costs stemming from the mandatory GRS rates, but continue the GRS program goals of increased retention and utilization by establishing additional reporting requirements on groundfish retention performance together with current monitoring requirements for the Amendment 80 fleet. This action is intended to promote the goals and objectives of the Magnuson-Stevens Fishery Conservation and Management Act, the fishery management plan, and other applicable law.
Comments must be received no later than November 14, 2012.
You may submit comments on this document, identified by NOAA–NMFS–2011–0049, by any of the following methods:
•
•
•
•
Do not submit confidential business information, or otherwise sensitive or protected information. NMFS will accept anonymous comments (enter “N/A” in the required fields if you wish to remain anonymous). Attachments to electronic comments will be accepted in Microsoft Word or Excel, WordPerfect, or Adobe PDF file formats only.
Electronic copies of the Environmental Assessment, Regulatory Impact Review (RIR), and Initial Regulatory Flexibility Analysis (IRFA) that are collectively known as the analysis prepared for this proposed rule may be obtained from
Written comments regarding the burden-hour estimates or other aspects of the collection-of-information requirements contained in this proposed rule may be submitted to NMFS at the above address and by email to
Seanbob Kelly, 907–586–7228.
NMFS manages the U.S. groundfish fisheries of the Bering Sea and Aleutian Islands management area (BSAI) in the Exclusive Economic Zone (EEZ) under the Fishery Management Plan for Groundfish of the Bering Sea and Aleutian Islands Management Area (FMP). The Council prepared the FMP pursuant to the Magnuson-Stevens Fishery Conservation and Management Act (MSA). Regulations implementing the FMP appear at 50 CFR part 679. General regulations that pertain to U.S. fisheries appear at subpart H of 50 CFR part 600.
In June 2003, the Council adopted Amendment 79 to the FMP. Amendment 79 revised section 2.2.1 of the FMP to include the management objective of improving the retention of groundfish where practicable, by establishing minimum groundfish retention standards. At the same time the Council adopted Amendment 79, it adopted the groundfish retention standard (GRS) program. NMFS published a final rule implementing the GRS program in April 2006 (71 FR 17362), and the GRS program became effective in 2008.
As originally recommended by the Council and approved by NMFS, the GRS program applied to non-AFA trawl C/Ps equal to or greater than 125 feet (38.1 m) length overall (LOA). The GRS program required each of these vessels to retain and utilize a minimum amount of groundfish caught during the calendar year. The Council recommended the GRS program for non-AFA trawl C/Ps because, as a group, they had the lowest retained catch rates of any C/P sector operating in the BSAI groundfish fishery. The Council chose to exclude non-AFA trawl C/Ps less than 125 feet (38.1 m) LOA from the original GRS program because GRS compliance costs associated with observers and scale monitoring requirements were found to be higher for these vessels, and their contribution to the overall bycatch and discard of groundfish was minimal compared to vessels equal to or greater than 125 feet (38.1 m) LOA.
The Council's policy objectives for the GRS program included reducing bycatch, minimizing waste, and improving utilization of fish resources to the extent practicable, acknowledging that any solution to the problem of reducing discards must take into account the ability of NMFS to monitor discards and adequately enforce any regulations. The full rationale for the GRS is described in the preamble to the final rule for the GRS program (71 FR 17362, April 6, 2006) and is not repeated here. Regulations implementing the GRS program at §§ 679.7(m) and 679.27(j) established annual minimum groundfish retention standards and prohibited the owner or operator of a non-AFA trawl C/P equal to or greater than 125 feet (38.1 m) LOA from retaining an amount of groundfish during a fishing year that is less than the GRS. Section 679.27(j)(2) contains the equations used by NMFS for determining GRS compliance. GRS program regulations also established new observer and scale requirements at § 679.27(j)(5) in order to effectively monitor and account for groundfish catch onboard non-AFA trawl C/Ps subject to the GRS program. The GRS was phased in to allow owners and operators of affected vessels time to adjust to the retention requirements. The GRS was based on historic total catch and retention estimates presented in the analysis for the GRS program. The GRS schedule can be found at § 679.27(j)(4) and is listed below in Table 1.
In June 2006, the Council adopted Amendment 80 to the FMP, which authorized the allocation of specified groundfish species to harvesting cooperatives and established a catch share program for non-AFA trawl C/Ps. This catch share program is commonly referred to as the Amendment 80 program, and the vessels used in this program are commonly referred to as Amendment 80 vessels, or the Amendment 80 sector. Amendment 80 was intended to meet a number of policy objectives that included improving retention and utilization of fishery resources by the Amendment 80 sector, reducing potential bycatch reduction costs, encouraging fishing practices with lower discard rates, and promoting opportunities for the sector to increase the value of harvested species. NMFS approved Amendment 80 and published a final rule implementing it in 2007 (72 FR 52668, September 14, 2007), and the Amendment 80 program was fully effective starting with the 2008 fishing year.
Under the Amendment 80 program, NMFS annually issues an Amendment 80 quota share (QS) permit to a person holding the catch history of an original qualifying vessel. The amount of QS issued is based on the qualifying vessels' catch history of six Amendment 80 species (Atka mackerel, Aleutian Islands Pacific ocean perch, flathead sole, Pacific cod, rock sole, and yellowfin sole) in the BSAI from 1998 through 2004. Generally, the Amendment 80 program is intended to facilitate the formation of cooperatives among persons receiving Amendment 80 QS permits. These cooperatives are eligible to receive cooperative quota (CQ), which represents an exclusive harvest privilege for a portion of these fishery resources. Amendment 80 sector participants who do not choose to join a harvesting cooperative must fish in a limited access fishery, without an exclusive harvest privilege, and must continue in a race for fish with other participants in that fishery. The allocation of CQ allows vessel operators to make operational choices to improve returns from the fisheries and reduce discards of fish, because the incentives of the limited access fishery—to maximize catch rates to capture a larger share of the available catch—are removed. The principal benefits from the Amendment 80 program are achieved with harvesters choosing to join cooperatives. These benefits are described more fully in the final rule for Amendment 80 (72 FR 52668, September 14, 2007).
In addition to issuing QS permits and providing mechanisms for the formation of cooperatives, the Amendment 80 program established measures to reduce the discard of groundfish. Amendment 80 modified the GRS program in two critical ways. First, the GRS program
Under the current GRS program, each Amendment 80 cooperative and each vessel participating in the limited access fishery must ensure that it meets the GRS requirements, based on the amount of catch retained by that cooperative or vessel. Catch is defined in regulations at § 600.10 to include, but is not limited to, any activity that results in killing fish or bringing any live fish onboard a vessel. As noted earlier, vessels participating in a cooperative can aggregate the total catch and total retained catch by all vessels in the cooperative. Therefore, vessels with poorer retention rates may have an incentive to join a cooperative with other vessels that have better retention rates and are able to offset the lower retention rates of those vessels. As the GRS increased, individual vessels with lower retention rates likely had greater difficulty meeting the GRS than vessels that coordinated with other vessels in an Amendment 80 cooperative.
Many of the objectives for establishing monitoring and enforcement regulations under Amendment 80 were similar to those under Amendment 79. However, the regulations implementing Amendment 80 established a quota management program that had somewhat different monitoring needs. Therefore, the Council recommended and NMFS implemented a separate, enhanced set of monitoring and enforcement regulations for Amendment 80 because of the increased incentive for Amendment 80 vessels and Amendment 80 cooperatives to engage in presorting or “high grading” of catch prior to weighing under the quota-based catch share management plan. The monitoring and enforcement regulations implemented for Amendment 80 were in addition to and did not remove any of the monitoring and enforcement regulations established under the GRS program and were intended to minimize the under-reporting or misreporting of catch under the quota-based catch share program.
At its April 2010 meeting, the Council requested that NMFS report on the status of monitoring, enforcing, and prosecuting the GRS program. The Council's request was based, in part, on the concerns raised by NMFS at the time the Council took final action on BSAI Amendment 93, which established Amendment 80 cooperatives. The request also was based upon general concerns expressed by participants in the Amendment 80 sector regarding the enforcement of the GRS. Specifically, the Council requested a report on the enforcement and prosecution concerns raised since the development of the GRS program, including changes to the GRS program under Amendment 80, changes proposed by the Council at the time it adopted Amendment 93 to the FMP, and concerns about monitoring and enforcing the GRS program that were identified by the agency or industry participants. The Council also requested conceptual alternatives to modify the GRS program to address these concerns.
In June 2010, NMFS provided the Council with a preliminary assessment of the GRS program. NMFS raised two key concerns in the June 2010 report to the Council. First, NMFS pointed out that the methodology for calculating annual retention standards established in regulations implementing the GRS was different than the methodology used in the analysis for the GRS program to estimate the fleet's historic retention rates. NMFS explained that the methodology implemented in regulation was necessary for calculating retention rates that were verifiable and enforceable on an individual vessel basis. However, when NMFS compared the retention rates produced by the two methodologies, NMFS determined that the methodology used in the analysis for the GRS program, which was the basis for the Council's selection of minimum retention rates, produced consistently higher retention rates than the methodology established in regulation. As a result, NMFS realized that the fleet had to retain more groundfish in order to meet the minimum retention rate using the regulatory methodology than the fleet would have been required to retain using the methodology in the analysis. Second, NMFS explained the difficulties the agency was encountering in effectively enforcing and prosecuting the GRS for individual vessels, and that these difficulties would extend to prosecution of a single cooperative, or multiple cooperatives. NMFS also noted that since the GRS program was implemented, the retention rate of groundfish by the Amendment 80 fleet had increased substantially under either methodology. Additional information on the key concerns raised by NMFS is provided below.
At the June 2010 Council meeting, representatives of the Amendment 80 sector testified that vessel operators that met the GRS in 2009 will face significant additional challenges meeting the increasing standard. Vessel operators cited the differences in the Council's recommended GRS and NMFS' methodology for calculating compliance with that standard as an unintended burden on the fleet. Industry representatives reported to the Council that the GRS calculation specified in regulations results in a lower retention percentage than the methodology used in the analysis developed for the GRS program. Amendment 80 vessel operators raised concerns that it may not be possible to achieve the highest GRS required in regulation for vessels operating individually in the Amendment 80 limited access fishery, or collectively in a cooperative.
In its report to the Council, NMFS confirmed that the regulatory method for calculating compliance with the GRS consistently results in a lower calculated retention rate than the method used in the GRS program analysis, as shown in Table 2 below. In 2008, this difference was 13 percent, in 2009 it was 10 percent, and in 2010 it was 7 percent.
The regulatory method requires a level of groundfish retention much higher than that intended by the Council when it adopted the GRS program. The reasons for the underestimates of groundfish retention are not clear, but likely reflect a mixture of factors. One possible source of the variation in the retention estimates may stem from differences in the data used in the analysis for the GRS program to calculate the historic total catch and NMFS' current method for estimating groundfish retention.
Total catch estimates in the groundfish fisheries off Alaska are generated by NMFS from information provided through a variety of required industry reports of harvest and at-sea discard, and data collected through an extensive fishery observer program. Over the past decade, NMFS changed the methodologies used to determine catch estimates from the NMFS blend database (1995 through 2002) to the catch accounting system (2003 through present). The analysis for the GRS program used data from the blend database to determine the total retention rates of the non-AFA trawl C/P fleet and the Council relied on these retention rates to recommend specific groundfish retention standards for the GRS program.
In 2003, the catch accounting system was implemented to better meet the increasing information needs of fisheries scientists and managers. Currently, the catch accounting system relies on data derived from a mixture of production and observer reports as the basis of the total catch estimates. The approach for estimating retained catch used in the GRS program relies on round weight equivalents of retained products and NMFS product recovery rates to estimate retention. The 2003 modifications in catch estimation included providing more frequent data summaries at finer spatial and fleet resolution, and the increased use of observer data. Redesigned observer program data collections were implemented in 2008, and include recording sample-specific information in lieu of pooled information, increased use of systematic sampling over simple random and opportunistic sampling, and decreased reliance on observer computations. As a result of these modifications, NMFS is unable to recreate blend database estimates for total catch and retained catch after 2002. Therefore, NMFS is not able to reliably determine differences in retention rates when comparing historic data from the blend database to the current catch accounting system.
In the June 2010 report, NMFS described a suite of enforcement concerns about the ability to effectively prosecute a violation of the GRS. When the GRS program was approved by NMFS, NOAA's Office of General Counsel for Enforcement and Litigation raised concerns about certain difficulties it anticipated in prosecuting vessel specific violations of the GRS program. These concerns primarily focused on the program's reliance on an annual groundfish retention percentage based in part on data collected by numerous observers deployed on a vessel over the course of a year, and whether these observers would be available in future years to support the prosecution process. NMFS explained that these concerns are aggravated under Amendment 80 because the number of observers necessary to support an enforcement case and associated prosecution increases significantly from a single vessel scenario to a multiple vessel cooperative, or a multiple cooperative scenario as proposed by the Council at the time it adopted Amendment 93.
NMFS also explained that enforcement of the GRS has proven far more complex, challenging, and potentially more costly than anticipated at the time it approved the GRS program. The Amendment 80 sector has operated under a cooperative system for several years in a manner that appears to facilitate compliance with the GRS (see Table 2 of this preamble); however, the method used to calculate compliance with the GRS requires
After receiving NMFS' report and the public testimony described above, the Council recommended two GRS actions. First, the Council recommended that NMFS initiate an emergency rule to suspend the application of the GRS. The Council voted 10 to 1 to request that NMFS promulgate an emergency rule to relieve the GRS requirement for the non-AFA trawl C/Ps. The statutory provisions for emergency rules are described in section 305(c)(1) of the MSA. On December 15, 2010, NMFS published an emergency rule exempting Amendment 80 vessels and cooperatives from GRS regulations, effective during 2010 and 2011 (75 FR 78172). The preamble to the emergency rule describes the Council's justification for emergency action, and it is not repeated here. An extension of this emergency action was published on June 2, 2011, and the action was effective until December 17, 2011 (76 FR 31881).
Second, the Council recommended the development of an analysis to review and recommend permanent changes to the GRS program. Given the concerns raised by NMFS and the public, the Council stated that the analysis should examine options that would revise the GRS or that would remove the specific regulatory requirements to meet a GRS, and allow the Amendment 80 sector to implement an internal retention monitoring program that ensures continued high groundfish retention. During the February 2011 Council meeting, NMFS, with its Office of Law Enforcement (OLE), reiterated the agency's concerns about the potential costs and complexity of enforcing the GRS across cooperatives. At final action, the Council unanimously recommended that NMFS implement a regulatory amendment to modify the GRS program such that it meets the management objectives for groundfish retention included in the BSAI FMP and that maintains incentives for groundfish retention through a new groundfish retention reporting requirement.
This action is intended to provide a long-term solution to the problems outlined by the Council in the problem statement. The Council determined that this action is necessary because the circumstances that justified the increasing GRS have changed. The Council concluded that the regulatory constraint and associated GRS established for 2012, and each following fishing year, no longer achieve the goals that led to their establishment. This action is intended to mitigate higher than expected compliance costs of the GRS borne by the Amendment 80 sector. Furthermore, the Council determined that this action is needed to mitigate management and enforcement costs that were not foreseen when the regulation was promulgated.
The Council noted that the regulatory GRS of 85 percent may not be achievable by most vessels in the Amendment 80 sector in 2012 and each following year. The Council determined that the additional and potentially significant compliance costs associated with the 85 percent GRS are not warranted because the improvements in retention rates by the non-AFA trawl C/Ps through 2010 have met Council objectives. Furthermore, the Council concluded that the likelihood that additional vessels may be unable to meet the GRS, as calculated by NMFS, in coming years may unnecessarily increase compliance and enforcement costs, again noting that the Council's objectives for retention have been met.
Although this proposed rule would remove the GRS requirements from the regulations, Amendment 80 vessel owners have stated their intent to maintain groundfish retention rates that are consistent with Council intent, the BSAI FMP, and the MSA requirement that regulations be consistent with the 10 national standards for fishery conservation and management, including National Standard 9, which requires regulations to minimize bycatch to the extent practicable through cooperative civil contract agreements. The Council and NMFS determined that ongoing commitments of the Amendment 80 sector to maintain recent improvements in groundfish retention rates should enhance resource management and conservation.
The proposed action would remove regulations implementing the GRS at §§ 679.7 and 679.27. To meet Council intent for this action, NMFS would revise the language at § 679.27(b)(4) to remove references to the GRS program and would remove § 679.27(j), which contains the bulk of the GRS program's regulations. This action is not intended to change the use caps, sideboard limits, recordkeeping, permitting, monitoring, or catch accounting requirements established for the Amendment 80 sector. This proposed action also would leave in place the regulations at § 679.27(b)(4) that require non-AFA trawl C/Ps to meet a 15 percent utilization standard for all retained groundfish species listed in Table 2a to part 679 that are used in the calculation for percent of retained groundfish.
Also, the proposed action would add regulations requiring each Amendment 80 cooperative to provide an annual report to NMFS on groundfish retention performance. NMFS would require Amendment 80 cooperatives to report groundfish performance as part of the Amendment 80 cooperative report established in regulations at § 679.5(s)(6). Under existing regulations at § 679.5(s)(6), each Amendment 80 cooperative issued a CQ permit must annually submit a report to the Regional Administrator detailing the use of the cooperative's CQ. In addition, this action would require Amendment 80 cooperatives to calculate and report their annual aggregate groundfish retention rate using the methodology currently established in regulation at § 679.27(j)(3). The Council recommended the regulatory methodology over the methodology used in the analysis for the GRS program because blend data are no longer available and because use of the regulatory methodology would provide the Council and the public with a consistent and comparable data set of groundfish retention rates since the implementation of the GRS program in 2008. This additional reporting requirement is intended to provide the Council, NMFS, and the public with information as to whether the groundfish retention achievements of the GRS program are being maintained. As part of the annual reporting requirement proposed in this action, estimates of total catch for the non-AFA trawl C/Ps participating in Amendment 80 cooperatives would need to include all catch (as defined in § 600.10) that passes over the flow scale, including
To meet the Council's intent that monitoring and enforcement regulations not change under this action, NMFS proposes to modify regulations at § 679.93(c)(1) to incorporate certain provisions in regulations that would otherwise be removed under this proposed action. OLE has expressed concerns that removing certain specific catch monitoring provisions could result in fishing behavior that was not intended by the Council when it took final action to remove the GRS. Currently, regulations implementing the GRS prohibit non-AFA trawl C/Ps from receiving deliveries of sorted catch. Amendment 80 vessels are authorized to receive deliveries of unsorted codends from vessels for processing. However, deliveries received from a catcher vessel's refrigerated salt water tank are prohibited because such deliveries do not meet the definition of unsorted codend. “Unsorted Codend” is defined by regulations at § 679.2 as a codend of groundfish that is not brought on board a catcher vessel and that is delivered to a mothership, shoreside processor, or stationary floating processor without the potential for sorting. No other instance of catcher vessel harvest is considered an “unsorted codend.” All other catch that does not meet this definition is considered “presorted” whether or not sorting occurs.
Although the proposed rule would remove certain regulations at §§ 679.7(m)(3) and 679.27(j)(5)(iii) that require non-AFA trawl C/Ps to weigh all catch and prohibit any sorting of catch prior to weighing, this removal is necessary because these sections specifically reference the current GRS program that will be replaced by this action. However, the requirements put in place by these two provisions are essential to monitoring and enforcement. Sections 679.7(m)(3) and 679.27(j)(5)(iii) require weighing of catch and prohibit presorting, respectively. Removing these provisions would not be consistent with the Council's recommendation that this action not change existing monitoring and enforcement regulations. Therefore, this action would revise § 679.93(c)(1) to reincorporate these two requirements into the regulations, ensuring that the status quo monitoring and recording of catch by the Amendment 80 sector is retained and that pre-sorting will remain prohibited.
The Council recommended that the Amendment 80 fleet be required to annually report groundfish retention using observer, scale, and product data that can be verified by NMFS. As noted earlier in this preamble, Amendment 80 cooperatives would be required to report annual groundfish retention rates to the Council as part of the extant Amendment 80 annual cooperative report, instead of requiring an additional report from these participants. The confidential catch and production data needed to calculate annual groundfish retention are generally available to both NMFS and the Amendment 80 entity responsible for meeting current observer and production reporting requirements established for the Amendment 80 fleet. The authorized representative of an Amendment 80 cooperative could request that NMFS verify these data (see
The Council also recommended that it receive an annual report on groundfish retention performance by Amendment 80 vessels participating in the Amendment 80 limited access fishery. Rather than propose regulations that would require the owners of vessels participating in the Amendment 80 limited access fishery to report annual groundfish retention to the Council, NMFS determined that it would prepare information on groundfish retention performance for Amendment 80 vessels participating in the Amendment 80 limited access fishery. NMFS currently produces this data as part of its inseason management report to the Council, and would continue to report these retention rates to the Council during the October Council meeting. NMFS concluded that requiring individual vessels not participating in an Amendment 80 cooperative to participate in the new reporting requirement would be duplicative and could result in undue burden on these entities. Because NMFS will provide this information to the Council, no proposed regulation is needed to implement this aspect of the Council's recommendation.
This action proposes the following changes to the existing regulatory text at 50 CFR part 679:
• Remove the definition of “Groundfish Retention Standard (GRS)” from § 679.2;
• Add requirements for cooperative reporting and third party audits to § 679.5(s)(6)(iii)(D) and (E);
• Remove the prohibitions specific to the GRS at § 679.7(m);
• Remove the requirement that Amendment 80 cooperatives meet a minimum GRS at § 679.7(o)(4)(iv);
• Revise improved retention and improved utilization regulations at § 679.27(b)(4);
• Remove regulations implementing the GRS at § 679.27(j); and
• Revise regulations at § 679.93(c)(1).
Pursuant to sections 304(b)(1)(A) and 305(d) of the MSA, the NMFS Assistant Administrator has determined that this proposed rule is consistent with the FMP, other provisions of the MSA, and other applicable law, subject to further consideration after public comment.
This proposed rule has been determined to be not significant for purposes of Executive Order 12866.
An IRFA was prepared, as required by section 603 of the Regulatory Flexibility Act (RFA). A copy of this analysis is available from NMFS (see
The IRFA for this proposed action describes the reasons why this action is being proposed; describes the objectives and legal basis for the proposed rule; describes and estimates the number of small entities to which the proposed rule would apply; describes any projected reporting, recordkeeping, or other compliance requirements of the proposed rule; identifies any overlapping, duplicative, or conflicting Federal rules; and describes any significant alternatives to the proposed rule that accomplish the stated objectives of the MSA and any other applicable statutes, and that would minimize any significant adverse economic impact of the proposed rule
The preamble to this proposed rule describes the reasons why this action is being proposed, describes the objectives and legal basis for the proposed rule, and discusses both small and other regulated entities to adequately characterize the fishery participants. The MSA is the legal basis for the proposed rule. This proposed rule is needed to mitigate management and enforcement costs that were not foreseen when the regulation was promulgated. In addition, this action is needed to mitigate higher than expected compliance costs of the groundfish retention standard borne by the non-AFA trawl C/Ps. The objective for this proposal is to remove the groundfish retention standard for the Amendment 80 fleet and require the sector to report their groundfish retention performance to the Council annually. This objective is encompassed by authorities contained in the MSA. Under the MSA, the Unities States has exclusive management authority over all living marine resources found within the EEZ.
The management of marine fishery resources is vested in the Secretary of Commerce (Secretary), with advice from the Regional Fishery Management Councils. The groundfish fisheries in the EEZ off Alaska are managed under the Fishery Management Plan for Groundfish of the BSAI and the Fishery Management Plan for Groundfish of the Gulf of Alaska. Statutory authority for measures designed to reduce bycatch is specifically addressed in the MSA at section 301(a)(9). That section establishes National Standard 9—Bycatch, which directs the Councils to minimize bycatch to the extent practicable or minimize mortality when bycatch cannot be avoided.
The groundfish fisheries of the BSAI and GOA are managed under the MSA. In the Alaska region, the Council is responsible for preparing management plans for marine fishery resources requiring conservation and management. NMFS, under the U.S. Department of Commerce, is charged with carrying out the Federal mandates with regard to marine fish, once they are approved by the Secretary. NMFS' Alaska Regional Office and Alaska Fisheries Science Center review the management actions recommended by the Council.
These impacts are analyzed in the RIR prepared for this action (see
Earnings from all Alaska fisheries for 2009 were matched with the vessels that are members of the Amendment 80 sector and participated in the BSAI groundfish fisheries for that year. There are a total of 28 Amendment 80 qualified C/Ps in the sector. Based on the known affiliations and joint ownership of the Amendment 80 vessels, all vessels in the sector would be categorized as a large entity for the purpose of the RFA, because they all have annual revenues that exceed $4 million. Due to their participation in a harvest cooperative or through known ownership of multiple vessels, co-ownerships and “shares” ownership arrangements among vessels, and other economic and operational affiliations, it is the aggregate annual gross receipts of all affiliated operations worldwide that are relevant under the Small Business Administration rules. Because of the lack of complete data on ownership and affiliation, it was determined that preparation of an IRFA, in lieu of `certification' of this action under RFA, was appropriate, thereby allowing for public comment on this aspect of the RFA analysis.
An IRFA requires a description of any significant alternatives to the preferred alternative that would minimize any significant adverse economic impact of the proposed rule on small entities. The suite of potential actions includes two alternatives.
The Council's preferred alternative, Alternative 2, has been selected as the action alternative. It would remove the GRS from the GRS program for the Amendment 80 sector. Revocation of the GRS will result in significant operational benefits and cost savings to all directly regulated entities. The Amendment 80 sector would be permitted to internally monitor the groundfish retention rates to meet Council retention goals described in the analysis prepared for Amendment 79 and the GRS program, but avoid mandatory compliance standards and their associated costs. The action would also include a requirement for the sector, as a whole, to report to the Council its annual groundfish retention performance. It would also further the program's original purpose of reducing bycatch, encouraging the use of all fish resources, and minimizing waste.
The Council also considered an alternative to revise the GRS to require groundfish retention at rates similar to the estimates presented in the analysis prepared for the GRS program. The Council determined that, while revising the GRS could reduce economic hardship imposed on the Amendment 80 sector by more closely correlating groundfish retention rates with historical retention rates, it would not address the monitoring, enforcement, and prosecution issues that arise from the requirements for annual determination of vessel compliance with the GRS program. Because this alternative would not resolve the problems for the program, the Council decided not to forward this alternative in the analysis for the proposed action.
Based upon the best available scientific data and information, and consideration of the objectives of this action, there are no alternatives to the proposed action that have the potential to accomplish the stated objectives of the MSA and any other applicable statutes and that have the potential to minimize any significant adverse economic impact of the proposed rule on directly regulated small entities.
This action is projected to have de minimis impact on the recordkeeping and reporting requirements of small entities participating in the BSAI groundfish fisheries. Some recordkeeping and reporting requirements may be needed by individual firms. Those firms that already record and report catch data will likely not be significantly impacted by this proposed action. It is not possible to determine which firms will be most impacted by the requirements, since the information each firm collects is based on what they need to operate their business and the current reporting requirements. The regulations proposed in this amendment are not expected to impact the recordkeeping and reporting requirements for any other entities in the fishery.
Under this action, NMFS would not require the individual owners and operators of non-AFA trawl C/P vessels participating in the limited access fishery to annually report groundfish retention performance. Instead, NMFS would prepare retention estimates for each vessel in the limited access fishery
No Federal rules that might duplicate, overlap, or conflict with this proposed action have been identified.
This proposed rule contains a collection-of-information requirement subject to review and approval by OMB under the Paperwork Reduction Act (PRA). This requirement has been submitted to OMB for approval under OMB Control No. 0648–0565. Public reporting burden for the Amendment 80 cooperative report is estimated to average 25 hours per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information.
Public comment is sought regarding: Whether this proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; the accuracy of the burden estimate; ways to enhance the quality, utility, and clarity of the information to be collected; and ways to minimize the burden of the collection of information, including through the use of automated collection techniques or other forms of information technology. Send comments on these or any other aspects of the collection of information to NMFS at the
Notwithstanding any other provision of the law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the PRA, unless that collection of information displays a currently valid OMB Control Number.
Alaska, Fisheries, Reporting and recordkeeping requirements.
For the reasons set out in the preamble, 50 CFR part 679 is proposed to be amended as follows:
1. The authority citation for 50 CFR part 679 continues to read as follows:
16 U.S.C. 773
2. In § 679.2, remove the definition of “Groundfish Retention Standard (GRS).”
3. In § 679.5, add paragraph (s)(6)(iii)(D) and paragraph (s)(6)(iii)(E) to read as follows:
(s) * * *
(6) * * *
(iii) * * *
(D) For each Amendment 80 cooperative, the percent of groundfish retained by that Amendment 80 cooperative of the aggregate groundfish retained by all Amendment 80 vessels assigned to that Amendment 80 cooperative using the following equations:
Substituting the value for
(E) For each Amendment 80 cooperative, a third party must audit the Amendment 80 cooperative's annual groundfish retention calculations and the Amendment 80 cooperative must include the finding of the third party audit in its Amendment 80 annual cooperative report.
4. In § 679.7, remove and reserve paragraphs (m) and (o)(4)(iv).
5. In § 679.27,
a. Remove and reserve paragraph (j); and
b. Revise paragraph (b)(4) to read as follows:
(b) * * *
(4) For catcher/processors not listed in § 679.4(l)(2)(i) using trawl gear in the BSAI, all species listed in Table 2a to this part, except for groundfish in prohibited species status.
6. In § 679.93, revise paragraph (c)(1) to read as follows:
(c) * * *
(1)
Office of Human Resource Management, Departmental Management.
Notice of Appointment.
This notice announces the appointment of the members of the Senior Executive Service (SES) and Senior Level (SL) and Scientific or Professional (ST) Performance Review Boards (PRBs) for the Department of Agriculture, as required by 5 U.S.C. 4314(c)(4). The Department of Agriculture has a total of seven PRBs: The Secretary's PRB; Career Agency Head's PRB; Departmental Management and Staff Offices PRB; Natural Resources and Environment PRB; Farm and Foreign Agricultural Services, Rural Development, Food, Nutrition and Consumer Services PRB; Marketing and Regulatory Programs, Food Safety PRB; and Research, Education, and Economics PRB. The PRBs are comprised of career and noncareer executives and chairpersons, who make recommendations on the performance of executives to the Secretary, including performance ratings and bonuses for SES, SL, and ST employees. The boards meet annually to review and evaluate performance appraisal documents and provide written recommendations to the Secretary for final approval of performance ratings and base salary increases.
In accordance with 5 U.S.C. 4314(c)(4), the following executives may be appointed by mission areas to the USDA PRBs:
Baening, Brian; Bittleman, Sarah; Bonnie, Robert Farrell; Gonzales, Oscar; Gutter, Karis T.; Harden, Krysta.; Hipp, Janie; Holtzman, Max T.; Jett, Carole E.; Jones, Carmen; MacMillan, Anne; Mande, Jerold; Palmieri, Suzanne; Willis, Brandon L.; Wright, Ann.
Parham, Gregory L., Armstrong, Kent W.; Bange, Gerald A.; Baumes, Harry S.; Bender, Stuart; Bice, Donald; Black, David O.; Brady, Terence M.; Brewer, John; Bumbary-Langston, Inga P.; Chasteen, G. Taylor; Christian, Lisa A.; Clanton, Michael W.; Coffee, Richard; Farington, Kim S.; Foster, Andrea L.; Glauber, Joseph; Grahn, David P.; Hawk, Gilbert; Heard, Robin; Hobbs, Alma; Hohenstein, William G.; Holladay, Jon; Jackson, Yvonne T.; Jenson, William; Johansson, Robert C.; Jones, Diem-Linh; Kelly, Janet Karlease; Leland, Arlean; Leonard, Joe; Linden, Ralph A.; Lowe, Christopher S.; Lowe, Stephen O.; Maddux, Sheryl; McClam, Charles; Messmore, Karen; Milton, William; Moulton, Robert Jeffrey; Paul, Matt; Parker, Carolyn C.; Pfaeffle, Frederick; Repass, Todd; Romero, Ramona; Ruiz, Carl-Martin; Shearer, David P.; Speed, Randy L.; Turner, Calvin; Vos, John P.; Wallace, Charles; Walsh, Thomas M.; Watts, Michael; White, John S.; White, Sharmian L.; Wilburn, Curtis; Wilusz, Lisa; Young, Benjamin; Young, Mike; Zehren, Christopher J.
Avalos, Ed; Blue, Rebecca A.; Walsh, Joan L.
Bailey, Douglas; Barnes, Rex; Coale, Dana; Earnest, Darryl; Epstein, Robert; Guo, Ruihong; McCullough, Catherine; McEvoy, Miles; Morris, Craig; Neal, Arthur; Shipman, David.
Bech, Rebecca; Berger, Philip; Brown, Charles; Clark, Larry; Clay, William; Clifford, John; Davidson, Mark L.; Diaz-Soltero, Hilda; Dick, Jere; Diez, Jose; El Lissy, Osama A.; Firko, Michael J.; Gipson, Chester; Granger, Larry; Green, Jeffrey; Gregoire, Michael; Harabin, Victor; Hill, Jr., Richard; Hoffman, Neil E.; Holland, Marilyn; Huttenlocker, Robert; Jones, Bethany; Kaplan, David; Lautner, Elizabeth; Levings, Randall L.; McCammon, Sally L.; McCluskey, Brian; Mendoza, Jr., Martin; Morgan, Andrea; Munno, Joanne; Myers, Thomas; Purcell, Roberta; Shea, A. Kevin; Shere, Jack; Simmons, Beverly; Smith, Cynthia; Thiermann, Alejandro B.; Watson, Michael T.; Wiggins, Marsha A.; Zakarka, Christine.
Alonzo, Mary C.; Christian, Alan; Jones, Randall; Mitchell, Lawrence W.
Hagen, Elisabeth; Ronholm, Brian; Almanza, Alfred; Basu, Parthapratim; Blake, Carol L.; Chen, Vivian; Dearfield, Kerry L.; Derfler, Philip; Edelstein, Rachel; Engeljohn, Daniel; Esteban, Jose Emilio; Garcia, Joseph L.; Gilmore, Keith Allyn; Kelley, Lynda Collins; Jones, Ronald; Mian, Haroon S.; Myers, Jacqueline; Nintemann, Terri; Roth, Jane; Sidrak, Hany Z.; Smith, William; Stevens, Janet; Stuck, Karen; Tawadrous, Armia.
Scuse, Michael; Vetter, Darci.
Foster, Christian; Quick, Bryce; Nuzum, Janet; Riemenschneider, Robert; Sheikh, Patricia.
Beyerhelm, Christopher; Garcia, Juan M.; Gwinn, James; Harwood, Joy; Monahan, James; Nelson, Bruce; Stephenson, Robert; Thompson, Candace; Trimm, Alan; Ward, Bruce Edward; Ware, Heidi Grace.
Alston, Michael; Hand, Michael; Leach, Barbara; Murphy, William; Nelson, Leiann H.; Witt, Timothy; Worth, Thomas W.
Anand, Rajen; Arena-DeRosa, James; Arnette, Donald; Bailey, Jr., Robin David; Barnes, Darlene; Burr, David Glenn; Carlson, Steven; Concannon, Kevin; Dombroski, Patricia; Holden, Ollice; Jackson, Yvette S.; Kane, Deborah J.; Ludwig, William; Ng, Allen; O'Connor, Thomas; Pino, Lisa; Rowe, Audrey; Shahin, Jessica; Thornton, Jane; Tribiano, Jeffrey.
Tonsager Dallas; Cook, Cheryl; O'Brien, Doug.
Canales, Judith Ann; Hadjy, Pandor; Parker, Chadwick O.; Wiley, Curtis A.
Allen, Joyce; Banegas, Ronald; Davis, Richard A.; Glendenning, Roger; Hannah, Thomas; Hooper, Bryan; Ross, Robert; Trevino, Tammye.
Ackerman, Kenneth; Adelstein, Jonathan S.; Bojes, Gary; Elgohary, Nivin; Newby, James; Ponti-Lazaruk, Jacqueline; Villano, David; Zufolo, Jessica.
Sherman, Harris; Blazer, Arthur; Mills, Ann C.
Agpaoa, Elizabeth; Atkinson, Kathleen; Bedwell, James; Bisson, Peter A.; Blount, Emilee; Bryant, Arthur; Bytnerowicz, Andrzej; Christiansen, Victoria; Cleaves, David A.; Cohen, Warren Bruce; Coleman, Angela V.; Connaughton, Kent P.; Cordell, Harold K.; Cullen, Daniel; DeCoster, Timothy P.; Dixon, Antione; Doudrick, Robert; Eav, Bov B.; Ferguson, Tony; Ferrell, David L.; Forsgren, Harvey L.; Foster, George S.; Grant, Gordon E.; Guldin, Richard; Hammel, Kenneth E.; Harbour, Thomas C.; Hubbard, James E.; Iverson, Louis R.; Jeffries, Thomas W.; Jiron, Daniel J.; Joyner, Calvin N.; Krueger, Faye L.; Lago, Jacquelyn L.; Lemly, A. Dennis; Lugo, Ariel E.; Mangold, Robert D.; McGuire, Jennifer; Meinzer, Frederick C.; Mezainis, Valdis E.; Moore, Randy; Muse, Debra A.; Myers, Jr., Charles L., Nash, Douglas R.; Newman, Corbin L.; Pena, James M.; Pendleton, Beth G.; Peterson, David L.; Phipps, John E.; Rains, Michael T.; Raphael, Martin G.; Reaves, Jimmy L.; Richmond, Charles S.; Ries, Paul F.; Rodriguez-Franco, Carlos; Ross, Robert J.; Ryan, Michael G.; Sears, George A.; Shortle, Walter C.; Smith, Gregory C.; Spies, Thomas A.; Stouder, Deanna J.; Strong, Thelma J.; Thompson, Robin L.; Thompson III, Frank R.; Tidwell, Thomas; Tooke, Tony; Wagner, Mary A.; Weldon, Leslie; West, Cynthia D.; Zimmermann, Anne J.
Boozer, Astor F.; Christensen, Thomas; Erickson, Terrell; Gelburd, Diane; Golden, Michael; Herbert, Noller; Honeycutt, C. Wayne; Hubbs, Michael; Jordan, Leonard; Kramer, Anthony; Kunze, Stephen; Laur, Michele; Perry, Janet; Reed, Lesia; Salinas, Salvador; Speight, Eloris; Washington, Gary; Weller, Jason; White, Dave.
Bartuska, Ann; Woteki, Catherine.
Allen, Lindsay; Arnold, Jeffrey G.; Baldus, Lisa; Brennan, Deborah; Brenner, Richard; Bretting, Peter K.; Chandler, Laurence; Cleveland, Thomas; Collins, Wanda; Cregan, Perry B.; Erhan, Sevin; Fayer, Ronald; Gay, Cyril G.; Gibson, Paul; Gonsalves, Dennis; Gottwald, Timothy R.; Hackett, Kevin J.; Hammond, Andrew; Hatfield, Jerry L.; Hefferan, Colien; Huber, Steven C.; Hunt, Patrick G.; Jackson, Thomas J.; Jacobs-Young, Chavonda; Jenkins, Johnie Norton; Kappes, Steven; King, Jr., Edgar; Klesius, Phillip Harry; Knipling, Edward; Kochian, Leon V.; Kretsch, Mary; Kunickis, Sheryl; Lillehoj, Hyun S.; Lindsay, James A.; Liu, Simon; Loper, Joyce E.; Matteri, Robert; Mattoo, Autar K.; McGuire, Michael; McMurtry, John; Narang, Sudhir; Ort, Donald R.; Pollak, Emil; Rango, Albert; Rexroad, Jr., Caird; Riley, Ronald T.; Sebesta, Paul; Shafer, Steven; Simmons, Mary W., Smith, Timothy P.; Spence, Joseph; Suarez, David Lee; Swietlik, Dariusz; Tu, Shu-I; Upchurch, Dan; Vance, Carroll P.; Vogel, Kenneth P.; Willett, Julious L.; Yates, Allison; Zhang, Howard; Zuelke, Kurt.
Bianchi, Ronald; Bohman, Mary.
Barnes, Kevin L.; Bass, Robert; Bennett, Norman; Clark, Cynthia; Hamer, Jr., Hubert; Harris, James Mark; Klurfeld, Roger J.; Parsons, Joseph L.; Picanso, Robin; Prusacki, Joseph; Reilly, Joseph.
Boteler, Franklin; Brandon, Andrea; Broussard, Meryl; Desbois, Michel; Holland, Robert E.; Otto, Ralph; Qureshi, Muquarrab A.; Ramaswamy, Sonny; Sheely, Deborah.
Effective November 5, 2012 through November 23, 2012.
Karen Messmore, Director, Office of Human Resources Management, telephone: (202) 690–2994, email:
The Department of Commerce will submit to the Office of Management and Budget (OMB) for clearance the following proposal for collection of information under the provisions of the Paperwork Reduction Act (44 U.S.C. Chapter 35).
This project is a joint effort of the University of Utah, NOAA's National Weather Service (NWS), the Utah Department of Transportation (UDOT), and NorthWest Weathernet (NWN) to investigate and understand the relationship between meteorological phenomena and road conditions, as well as public understanding and response to available forecast information. The events which impact the Salt Lake City metro area during the winter of 2012–2013 will be examined. Through the administration of a targeted survey, important details will be gathered regarding: (a) The information that drivers possessed prior to and during a storm, including knowledge of observed and forecast weather conditions; (b) sources of weather and road information; (c) any modification of travel and/or commute plans, based on event information; (d) anticipation and perception of storm impacts and severity; and (e) perception and behavioral response to messages conveyed by the NWS and UDOT, along with their satisfaction of information provided. Analyses of the information gathered will focus on driver knowledge, perceptions, and decision making. Ultimately, the results of this survey will provide insight on how the Weather Enterprise may more
Copies of the above information collection proposal can be obtained by calling or writing Jennifer Jessup, Departmental Paperwork Clearance Officer, (202) 482–0336, Department of Commerce, Room 6616, 14th and Constitution Avenue NW., Washington, DC 20230 (or via the Internet at
Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to
Import Administration, International Trade Administration, Department of Commerce.
The Department of Commerce (the “Department”) has determined that imports of steel wire garment hangers (“hangers”) from Taiwan are being, or are likely to be, sold in the United States at less than fair value (“LTFV”), as provided in section 735 of the Tariff Act of 1930, as amended (the “Act”). The estimated margins of sales at LTFV are listed in the “
Paul Walker, AD/CVD Operations, Office 9, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone–202.482.0413.
On August 2, 2012, the Department published in the
The period of investigation (“POI”) is October 1, 2010, through September 30, 2011.
The merchandise subject to this investigation is steel wire garment hangers, fabricated from carbon steel wire, whether or not galvanized or painted, whether or not coated with latex or epoxy or similar gripping materials, and whether or not fashioned with paper covers or capes (with or without printing) or nonslip features such as saddles or tubes. These products may also be referred to by a commercial designation, such as shirt, suit, strut, caped, or latex (industrial) hangers.
Specifically excluded from the scope of the investigation are (a) wooden, plastic, and other garment hangers that are not made of steel wire; (b) steel wire garment hangers with swivel hooks; (c) steel wire garment hangers with clips permanently affixed; and (d) chrome plated steel wire garment hangers with a diameter of 3.4 mm or greater.
The products subject to the investigation are currently classified under U.S. Harmonized Tariff Schedule (“HTSUS”) subheadings 7326.20.0020 and 7323.99.9080. Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the merchandise is dispositive.
As noted in the
Pursuant to section 735(c)(1)(B) of the Act, we will instruct U.S. Customs and Border Protection (“CBP”) to continue to suspend liquidation of all entries of hangers from Taiwan which were entered, or withdrawn from warehouse, for consumption on or after August 2, 2012, the date of publication of the
Section 735(c)(5)(A) of the Act provides that the estimated all others rate shall be an amount equal to the weighted average of the estimated
We intend to disclose to parties in this proceeding the calculations performed within five days of the date of publication of this notice in accordance with section 351.224(b) of the Department's regulations.
In accordance with section 735(d) of the Act, we have notified the International Trade Commission (“ITC”) of our final determination. As our final determination is affirmative and in accordance with section 735(b)(2) of the Act, the ITC will determine, within 45 days, whether the domestic industry in the United States is materially injured, or threatened with material injury, by reason of imports or sales (or the likelihood of sales) for importation of the subject merchandise. If the ITC determines that such injury does exist, the Department will issue an antidumping duty order directing CBP to assess antidumping duties on all imports of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the effective date of the suspension of liquidation.
This notice also serves as a final reminder to parties subject to administrative protective order (“APO”) of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with section 351.305 of the Department's regulations. Timely notification of the destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and the terms of an APO is a sanctionable violation.
This determination is issued and published pursuant to sections 735(d) and 777(i)(l) of the Act.
National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice.
The Department of Commerce, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995.
Written comments must be submitted on or before December 14, 2012.
Direct all written comments to Jennifer Jessup, Departmental Paperwork Clearance Officer, Department of Commerce, Room 6616, 14th and Constitution Avenue NW., Washington, DC 20230 (or via the Internet at
Requests for additional information or copies of the information collection instrument and instructions should be directed to Allison Murphy, (978) 281–9122 or
This request is for revision and extension of a current information collection. Under the Magnuson-Stevens Fishery Conservation and Management Act, the Secretary of Commerce has the responsibility for the conservation and management of marine fishery resources. We, National Oceanic and Atmospheric Administration's (NOAA) National Marine Fisheries Service (NMFS), and the Regional Fishery Management Councils are delegated the majority of this responsibility. The New England Fishery Management Council (Council) develops management plans for fishery resources in New England.
In 2010, we implemented a new suite of regulations for the Northeast (NE) multispecies fishery through Amendment 16 to the Multispecies Fishery Management Plan (Amendment 16). This action updated status determination criteria for all regulated NE multispecies or ocean pout stocks; adopted rebuilding programs for NE multispecies stocks newly classified as being overfished and subject to overfishing; revised management measures, including significant revisions to the sector management measures, necessary to end overfishing, rebuild overfished regulated NE multispecies and ocean pout stocks, and mitigate the adverse economic impacts of increased effort controls. It also implemented new requirements under Amendment 16 for establishing acceptable biological catch (ABC), annual catch limits (ACLs), and accountability measures (AMs) for each stock managed under the FMP, pursuant to the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act).
Revisions:
Not all measures that were included in Amendment 16 were ultimately approved, including the Gulf of Maine Sink Gillnet Pilot Program, which would have necessitated a Letter of Authorization (LOA) had it been approved. Therefore, we propose to remove this requirement from the information collection. In addition, Framework 47 to the Multispecies FMP removed Restricted Gear Requirements from the regulations. Therefore the requirement to declare into these areas via vessel monitoring system (VMS), or to receive an LOA are also proposed to be removed from this information collection.
In an attempt to consolidate reporting requirements that are mandated by the NE multispecies regulation, we propose moving some requirements out of OMB Control No. 0648–0202, Northeast Region Permit Family of Forms, and into this collection, including: The Days-at-Sea (DAS) Transfer Program, Expedited Submission of Proposed Special Access Programs (SAPs), and North Atlantic Fisheries Organization (NAFO) Reporting Requirements.
Respondents must submit either paper forms via postal service, or electronic forms submitted via the internet or vessels' vessel monitoring system (VMS).
Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden (including hours and cost) of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology.
Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval of this information collection; they also will become a matter of public record.
National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice.
The Department of Commerce, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995.
Written comments must be submitted on or before December 14, 2012.
Direct all written comments to Jennifer Jessup, Departmental Paperwork Clearance Officer, Department of Commerce, Room 6616, 14th and Constitution Avenue NW., Washington, DC 20230 (or via the Internet at
Requests for additional information or copies of the information collection instrument and instructions should be directed to L. Christine McCay, (301) 563–1163 or
This request is for a new information collection.
The Coastal Zone Management Act of 1972, as amended (CZMA; 16 U.S.C. 1451
Section 1458 of the CZMA and implementing regulations at 15 CFR part 923, Subpart L, require that state coastal management programs be evaluated concerning the extent to which the state has implemented and enforced the program approved by the Secretary, addressed the coastal management needs identified in 16 U.S.C. 1452(2)(A) through (K), and adhered to the terms of any grant, loan, or cooperative agreement funded under the CZMA. Section 1461(f) of the CZMA and implementing regulations at 15 CFR Part 921, Subpart E, require that national estuarine research reserves be evaluated with regard to their operation and management, including education and interpretive activities, the research being conducted within the reserve, and be evaluated in accordance with section 1458 of the CZMA and procedures set forth in 15 CFR part 923.
NOAA's Office of Ocean and Coastal Resource Management (OCRM) conducts periodic evaluations of the 34 coastal management programs and 28 research reserves and produces written findings for each evaluation. OCRM has access to documents submitted in cooperative agreement applications, performance reports, and certain documentation required by the CZMA and implementing regulations. However, additional information from each coastal management program and research reserve, as well as information from the program and reserve partners and stakeholders with whom each works, is necessary to evaluate against statutory and regulatory requirements. Different information collection subsets are necessary for (1) coastal management programs, (2) their partners and stakeholders, (3) research reserves, and (4) their partners and stakeholders.
Coastal program and reserve manager respondents will receive information requests/questionnaires via email, and submittals will be made via email. Partners and stakeholders of coastal management programs and of reserves will receive a link to a web-based survey
Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden (including hours and cost) of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology.
Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval of this information collection; they also will become a matter of public record.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice.
NMFS announces that the overall annual tilefish quota for the 2013 fishing year (November 1, 2012–October 31, 2013) will remain the same as it was in fishing year 2012. NMFS is required to notify the public of the overall annual quota levels for tilefish if the previous year's quota specifications remain unchanged. This document also provides notice of tilefish specifications recently adopted by the Mid-Atlantic Fishery Management Council.
Jason Berthiaume, Fishery Management Specialist, (978) 281–9177; fax (978) 281–9135.
The tilefish regulations at § 648.292 specify that NMFS notify the public in the
This document also announces tilefish specifications recently adopted by the Mid-Atlantic Fishery Management Council (Council). At the April 2012 Council meeting, the Council adopted specifications for an acceptable biological catch (ABC), annual catch limit (ACL), and annual catch target (ACT). These specifications are consistent with the overall quota and rebuilding schedule that was established in Amendment 1 to the Golden Tilefish Fishery Management Plan. The adopted specifications also comply with the Council's annual catch limits and accountability measures omnibus amendment (76 FR 60606; September 29, 2011).
16 U.S.C. 1801
Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA).
Notice of request for comments regarding an extension to an existing OMB clearance.
Under the provisions of the Paperwork Reduction Act, the Regulatory Secretariat will be submitting to the Office of Management and Budget (OMB) a request to review and approve an extension of a previously approved information collection requirement concerning Novation/Change of Name Requirements. A notice was published in the
Public comments are particularly invited on: Whether this collection of information is necessary; whether it will have practical utility; whether our estimate of the public burden of this collection of information is accurate, and based on valid assumptions and methodology; ways to enhance the quality, utility, and clarity of the information to be collected; and ways in which we can minimize the burden of the collection of information on those who are to respond, through the use of appropriate technological collection techniques or other forms of information technology.
Submit comments on or before November 14, 2012.
Submit comments identified by Information Collection 9000–0076, Novation/Change of Name Requirements, by any of the following methods:
•
•
•
Mr. Curtis E. Glover, Sr., Procurement Analyst, Office of Governmentwide Acquisition Policy, GSA, (202) 208–4949 or via email
FAR 42.1203 and 42.1204 provide requirements for contractors to request novation/change of name agreements and supporting documents when a firm performing under Government contracts wishes the Government to recognize (1) a successor in interest to these contracts, or (2) a name change, it must submit certain documentation to the Government.
One respondent submitted public comments on the extension of the previously approved information collection. The analysis of the public comments is summarized as follows:
The burden is prepared taking into consideration the necessary criteria in OMB guidance for estimating the paperwork burden put on the entity submitting the information. For example, consideration is given to an entity reviewing instructions; using technology to collect, process, and disclose information; adjusting existing practices to comply with requirements; searching data sources; completing and reviewing the response; and transmitting or disclosing information. The estimated burden hours for a collection are based on an average between the hours that a simple disclosure by a very small business might require and the much higher numbers that might be required for a very complex disclosure by a major corporation. Also, the estimated burden hours should only include projected hours for those actions which a company would not undertake in the normal course of business. Careful consideration went into assessing the estimated burden hours for this collection, and it is determined that an upward adjustment is not required at this time. However, at any point, members of the public may submit comments for further consideration, and are encouraged to provide data to support their request for an adjustment.
Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA).
Notice of request for public comments regarding an extension to an existing OMB clearance.
Under the provisions of the Paperwork Reduction Act, the Regulatory Secretariat will be submitting to the Office of Management and Budget (OMB) a request to review and approve an extension of a previously approved information collection requirement concerning incentive contracts. A notice was published in the
Public comments are particularly invited on: Whether this collection of information is necessary for the proper performance of functions of the Federal Acquisition Regulation (FAR), and whether it will have practical utility; whether our estimate of the public burden of this collection of information is accurate, and based on valid assumptions and methodology; ways to enhance the quality, utility, and clarity of the information to be collected; and ways in which we can minimize the burden of the collection of information on those who are to respond, through the use of appropriate technological collection techniques or other forms of information technology.
Submit comments on or before November 14, 2012.
Submit comments identified by Information Collection 9000–0067, Incentive Contracts, by any of the following methods:
•
•
•
Mr. Michael O. Jackson, Procurement Analyst, Office of Acquisition Policy, GSA (202) 208–4949 or via email
In accordance with FAR 16.4, incentive contracts are normally used when a firm fixed-price contract is not appropriate and the required supplies or services can be acquired at lower costs, and sometimes with improved delivery or technical performance, by relating the amount of profit or fee payable under the contract to the contractor's performance.
The information required periodically from the contractor, such as cost of work already performed, estimated costs of further performance necessary to complete all work, total contract price for supplies or services accepted by the Government for which final prices have been established, and estimated costs allocable to supplies or services accepted by the Government and for which final prices have not been established, is needed to negotiate the final prices of incentive-related items and services. Contractors are required to submit the information in accordance with several incentive fee FAR clauses: FAR 52.216–16, Incentive Price Revision—Firm Target; FAR 52.216–17, Incentive Price Revision—Successive Targets; and FAR 52.216–10, Incentive Fee.
The contracting officer evaluates the information received to determine the contractor's performance in meeting the incentive target and the appropriate price revision, if any, for the items or services.
One respondent submitted public comments on the extension of the previously approved information collection. The analysis of the public comments is summarized as follows:
The burden is prepared taking into consideration the necessary criteria in OMB guidance for estimating the paperwork burden put on the entity submitting the information. For example, consideration is given to an entity reviewing instructions; using
The estimated annual burden remains the same from the notice published at 77 FR 18819 on March 28, 2012. Adjustments were made to the estimated number of respondents, and the estimated annual responses using fiscal year 2011 data from the Federal Procurement Data System as a baseline. In addition, the estimated hours per response increased, but the total estimated burden hours remain unchanged.
Department of Defense Education Activity (DoDEA), DoD.
Meeting cancellation notice and open meeting notice.
The meeting of the Department of Defense Advisory Council on Dependents' Education announced on August 31, 2012 (77 FR 53187–53188) under the provisions of the Federal Advisory Committee Act of 1972 (5 U.S.C., Appendix, as amended), and the Government in the Sunshine Act of 1976 (5 U.S.C. 552b, as amended), and scheduled to occur on Tuesday, October 16, 2012, from 8:00 a.m. to 12:00 p.m. Eastern Daylight Savings Time; Stuttgart and Wiesbaden, Germany, from 2:00 p.m. to 6:00 p.m., Central European Summer Time (CEST); Okinawa, Japan, from 9:00 p.m. to 1:00 a.m., Japan Standard Time (JST); Honolulu, Hawaii, from 2:00 a.m. to 6:00 a.m., Hawaii-Aleutian Standard Time (H–AST); Peachtree City, Georgia, from 8:00 a.m. to 12:00 p.m., Eastern Daylight Savings Time (EDST) has been cancelled.
Under the provisions of the Federal Advisory Committee Act of 1972 (5 U.S.C., Appendix, as amended), the Government in the Sunshine Act of 1976 (5 U.S.C. 552b, as amended), and 41 CFR 102–3.150, the Department of Defense announces that the following Federal advisory committee meeting of the Advisory Council on Dependents' Education will take place.
Tuesday, December 4, 2012, Alexandria, Virginia (via Video Teleconference or Telephone Conference), from 8:00 a.m. to 12:00 p.m., Eastern Standard Time (EST); Stuttgart and Wiesbaden, Germany, from 2:00 p.m. to 6:00 p.m., Central European Standard Time (CET); Okinawa, Japan, from 10:00 p.m. to 2:00 a.m., Japan Standard Time (JST); Honolulu, Hawaii, from 3:00 a.m. to 7:00 a.m., Hawaii-Aleutian Standard Time (HAST); Peachtree City, Georgia, from 8:00 a.m. to 12:00 p.m., Eastern Standard Time (EST).
4800 Mark Center Drive, Alexandria, VA 22350; USAG Stuttgart, Stuttgart, Germany; DoDDS-Europe Area Office, Wiesbaden, Germany; DoDDS-Pacific Area Office, Okinawa, Japan; Pacific Command, Honolulu, Hawaii; DDESS Area Office, Peachtree City, Georgia.
Mr. Joel K. Hansen at (571) 372–5812 or
Purpose of the Meeting: Recommend to the Director, DoDEA, general policies for the operation of the Department of Defense Dependents Schools (DoDDS); to provide the Director with information about effective educational programs and practices that should be considered by DoDDS; and to perform other tasks as may be required by the Secretary of Defense.
Agenda: The meeting agenda will reflect current DoDDS schools operational status, educational practices, and other educational matters that come before the Council.
Public Accessibility to the Meeting: Pursuant to 5 U.S.C. 552b and 41 CFR 102–3.140 through 102–3.165 and the availability of space, this meeting is open to the public. Seating is limited and is on a first-come basis. All members of the public who wish to attend the public meeting at the Mark Center must contact Mr. Joel Hansen at the number listed in this notice no later than noon on Tuesday, November 27, 2012, to make arrangements for entrance to the Mark Center. The public attendees should arrive at the Mark Center no later than 7:30 a.m. on December 4, 2012. To receive access to the Mark Center, please come prepared to present a picture identification card.
Committee's Point of Contact: Mr. Joel K. Hansen at (571) 372–5812, 4800 Mark Center Drive, Alexandria, VA 22350 or
Special Accommodations: Individuals requiring special accommodations to access the public meeting should contact Mr. Hansen at least five (5) business days prior to the meeting so that appropriate arrangements can be made.
Pursuant to 41 CFR 102–3.105(j) and 102–3.140 and section 10(a)(3) of the Federal Advisory Committee Act of 1972, the public or interested organizations may submit written statements to the Advisory Council on Dependents' Education about its mission and functions. Written statements may be submitted at any time or in response to the stated agendas of the planned meeting of the Advisory Council on Dependents' Education.
All written statements shall be submitted to the Designated Federal Officer (DFO) for the Advisory Council on Dependents' Education, Mr. Joel K. Hansen, 4800 Mark Center Drive, Alexandria, VA 22350;
Statements being submitted in response to the agendas mentioned in
The DFO will review all timely submissions with the Advisory Council on Dependents' Education Chairpersons and ensure they are provided to all members of the Advisory Council on Dependents' Education before the meeting that is the subject of this notice.
Oral Statements by the Public to the Membership:
Pursuant to 41 CFR 102–3.140(d), time will be allotted for public comments to the Advisory Council on Dependents' Education. Individual comments will be limited to a maximum of five minutes duration. The total time allotted for public comments will not exceed thirty minutes.
Take notice that on September 24, 2012, Leaf River Energy Center LLC (Leaf River), 53 Riverside Avenue, Westport, Connecticut, 06880, filed an application in Docket No. CP12–526–000 pursuant to Section 7(c) of the Natural Gas Act (NGA) and Part 157 of the Commission's Regulations, for a certificate of public convenience and necessity to expand the certificated storage capacities of three of its four existing caverns at its Leaf River Energy Center facility in Smith County, Mississippi near the town of Taylorsville. The proposed expansion would increase the aggregate working gas capacity of the Leaf River Energy Center from the current 32.0 Bcf to 48.0 Bcf while the total aggregate gas storage capacity would increase from about 41.9 Bcf to 62.8 Bcf. The expansion would be accomplished by additional leaching of three existing salt dome caverns and would not require the construction of any new facilities. Leaf River also requests reaffirmation of its authority to charge market based rates for the expanded storage services. A more detailed description of the project is available in the application which is on file with the Commission and open for public inspection.
This filing is available for review at the Commission in the Public Reference Room or may be viewed on the Commission's Web site at
Pursuant to section 157.9 of the Commission's rules, 18 CFR 157.9, within 90 days of this Notice the Commission staff will either complete its environmental assessment (EA) and place it into the Commission's public record (eLibrary) for this proceeding; or issue a Notice of Schedule for Environmental Review. If a Notice of Schedule for Environmental Review is issued, it will indicate, among other milestones, the anticipated date for the Commission staff's issuance of the final EA for this proposal. The filing of the EA in the Commission's public record for this proceeding or the issuance of a Notice of Schedule for Environmental Review will serve to notify federal and state agencies of the timing for the completion of all necessary reviews, and the subsequent need to complete all federal authorizations within 90 days of the date of issuance of the Commission staff's EA.
There are two ways to become involved in the Commission's review of this project. First, any person wishing to obtain legal status by becoming a party to the proceedings for this project should, on or before the comment date stated below file with the Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, a motion to intervene in accordance with the requirements of the Commission's Rules of Practice and Procedure (18 CFR 385.214 or 385.211) and the Regulations under the NGA (18 CFR 157.10). A person obtaining party status will be placed on the service list maintained by the Secretary of the Commission and will receive copies of all documents filed by the applicant and by all other parties. A party must submit 14 copies of filings made in the proceeding with the Commission and must mail a copy to the applicant and to every other party. Only parties to the proceeding can ask for court review of Commission orders in the proceeding.
However, a person does not have to intervene in order to have comments considered. The second way to participate is by filing with the Secretary of the Commission, as soon as possible, an original and two copies of comments in support of or in opposition to this project. The Commission will consider these comments in determining the appropriate action to be taken, but the filing of a comment alone will not serve to make the filer a party to the proceeding. The Commission's rules require that persons filing comments in opposition to the project provide copies of their protests only to the party or parties directly involved in the protest.
Persons who wish to comment only on the environmental review of this project should submit an original and two copies of their comments to the Secretary of the Commission. Environmental commenters will be placed on the Commission's environmental mailing list, will receive copies of the environmental documents, and will be notified of meetings associated with the Commission's environmental review process. Environmental commenters will not be required to serve copies of filed documents on all other parties. However, the non-party commenters will not receive copies of all documents filed by other parties or issued by the Commission (except for the mailing of environmental documents issued by the Commission) and will not have the right to seek court review of the Commission's final order.
Protests and interventions may be filed electronically via the Internet in lieu of paper; see, 18 CFR 385.2001(a)(1)(iii) and the instructions on the Commission's web site under the “e-Filing” link. The Commission strongly encourages electronic filings.
a.
b.
c.
d.
e.
f.
g.
h. Potential
i.
j. John B. Crockett filed a request to use the Traditional Licensing Process on September 4, 2012. Mr. Crockett provided public notice of his request on September 14, 2012. In a letter dated October 5, 2012, the Director of the Division of Hydropower Licensing approved Mr. Crockett's request to use the Traditional Licensing Process.
k. With this notice, we are initiating informal consultation with: (a) The U.S. Fish and Wildlife Service under section 7 of the Endangered Species Act and the joint agency regulations thereunder at 50 CFR Part 402; and (b) the Idaho State Historic Preservation Officer, as required by section 106, National Historical Preservation Act, and the implementing regulations of the Advisory Council on Historic Preservation at 36 CFR 800.2.
l. John B. Crockett filed a Pre-Application Document (PAD) including a proposed process plan and schedule with the Commission, pursuant to 18 CFR 5.6 of the Commission's regulations.
m. A copy of the PAD is available for review at the Commission in the Public Reference Room or may be viewed on the Commission's Web site (
n. Register online at
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k. With this notice, we are initiating informal consultation with: (a) The U.S. Fish and Wildlife Service and/or NOAA Fisheries under section 7 of the Endangered Species Act and the joint agency regulations thereunder at 50 CFR, Part 402 and (b) the State Historic Preservation Officer, as required by section 106, National Historical Preservation Act, and the implementing regulations of the Advisory Council on Historic Preservation at 36 CFR 800.2.
l. With this notice, we are designating Peabody Trout Creek Reservoir LLC as the Commission's non-federal representative for carrying out informal consultation, pursuant to section 7 of the Endangered Species Act and section 106 of the National Historic Preservation Act.
m. Peabody Trout Creek Reservoir LLC filed with the Commission a Pre-Application Document (PAD; including a proposed process plan and schedule), pursuant to 18 CFR 5.6 of the Commission's regulations.
n. A copy of the PAD is available for review at the Commission in the Public Reference Room or may be viewed on the Commission's Web site (
Register online at
o. With this notice, we are soliciting comments on the PAD and Commission's staff Scoping Document 1 (SD1), as well as study requests. All comments on the PAD and SD1, and study requests should be sent to the address above in paragraph h. In addition, all comments on the PAD and SD1, study requests, requests for cooperating agency status, and all communications to and from Commission staff related to the merits of
All filings with the Commission must include on the first page, Trout Creek Reservoir Hydroelectric Project and project number (P–14446), and bear the appropriate heading: “Comments on Pre-Application Document,” “Study Requests,” “Comments on Scoping Document 1,” “Request for Cooperating Agency Status,” or “Communications to and from Commission Staff.” Any individual or entity interested in submitting study requests, commenting on the PAD or SD1, and any agency requesting cooperating status must do so by December 4, 2012.
p. Although our current intent is to prepare an environmental assessment (EA), there is the possibility that an Environmental Impact Statement (EIS) will be required. Nevertheless, this meeting will satisfy the NEPA scoping requirements, irrespective of whether an EA or EIS is issued by the Commission.
Commission staff will hold two scoping meetings in the vicinity of the project at the time and place noted below. The daytime meeting will focus on resource agency, Indian tribes, and non-governmental organization concerns, while the evening meeting is primarily for receiving input from the public. We invite all interested individuals, organizations, and agencies to attend one or both of the meetings, and to assist staff in identifying particular study needs, as well as the scope of environmental issues to be addressed in the environmental document. The times and locations of these meetings are as follows:
Scoping Document 1 (SD1), which outlines the subject areas to be addressed in the environmental document, was mailed to the individuals and entities on the Commission's mailing list. Copies of SD1 will be available at the scoping meetings, or may be viewed on the Web at
The potential applicant and Commission staff will conduct an
At the scoping meetings, staff will: (1) Initiate scoping of the issues; (2) review and discuss existing conditions and resource management objectives; (3) review and discuss existing information and identify preliminary information and study needs; (4) review and discuss the process plan and schedule for pre-filing activity that incorporates the time frames provided for in Part 5 of the Commission's regulations and, to the extent possible, maximizes coordination of federal, state, and tribal permitting and certification processes; and (5) discuss the appropriateness of any federal or state agency or Indian tribe acting as a cooperating agency for development of an environmental document.
Meeting participants should come prepared to discuss their issues and/or concerns. Please review the PAD in preparation for the scoping meetings. Directions on how to obtain a copy of the PAD and SD1 are included in item n. of this document.
The meetings will be recorded by a stenographer and will be placed in the public records of the project.
Take notice that the Commission has received the following Natural Gas Pipeline Rate and Refund Report filings:
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, and service can be found at:
Take notice that the Commission has received the following Natural Gas Pipeline Rate and Refund Report filings:
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
Any person desiring to protest in any of the above proceedings must file in accordance with Rule 211 of the Commission's Regulations (18 CFR 385.211) on or before 5:00 p.m. Eastern time on the specified comment date.
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, and service can be found at:
Take notice that the Commission received the following electric corporate filings:
Take notice that the Commission received the following exempt wholesale generator filings:
Take notice that the Commission received the following electric rate filings:
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
Take notice that the Commission received the following electric corporate filings:
Take notice that the Commission received the following electric rate filings:
Take notice that the Commission received the following public utility holding company filings:
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
Take notice that the Commission received the following electric corporate filings:
Take notice that the Commission received the following electric rate filings:
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
Take notice that the Commission received the following electric rate filings:
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
Take notice that the Commission received the following electric corporate filings:
Take notice that the Commission received the following exempt wholesale generator filings:
Take notice that the Commission received the following electric rate filings:
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
Take notice that the Commission received the following electric rate filings:
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
The staff of the Federal Energy Regulatory Commission (FERC or Commission) will prepare an environmental assessment (EA) that will discuss the environmental impacts of the Texas Eastern and Appalachia Market Expansion Project 2014 (TEAM 2014) involving construction and operation, modification and abandonment of facilities proposed by Texas Eastern Transmission, LP (Texas Eastern) in Pennsylvania, West Virginia, Ohio, Kentucky, Tennessee, Alabama and Mississippi. The Commission will use this EA in its decision-making process to determine whether the project is in the public convenience and necessity.
This notice announces the opening of the scoping process the Commission will use to gather input from the public and interested agencies on the project. Your input will help the Commission staff determine what issues they need to evaluate in the EA. Please note that the scoping period will close on November 3, 2012. You may submit comments in written form. Further details on how to submit written comments are in the Public Participation section of this notice. This is not your only public input opportunity; please refer to the Environmental Review Process flow chart in Appendix 1.
This notice is being sent to the Commission's current environmental mailing list for this project. State and local government representatives should notify their constituents of this proposed project and encourage them to comment on their areas of concern.
If you are a landowner receiving this notice, a pipeline company representative may contact you about the acquisition of an easement to construct, operate, and maintain the proposed facilities. The company would seek to negotiate a mutually acceptable agreement. However, if the Commission approves the project, that approval conveys with it the right of eminent domain. Therefore, if easement negotiations fail to produce an agreement, the pipeline company could initiate condemnation proceedings where compensation would be determined in accordance with state law.
Texas Eastern may have provided landowners with a fact sheet prepared by the FERC entitled “An Interstate Natural Gas Facility on My Land? What Do I Need To Know?”. This fact sheet addresses a number of typically-asked questions, including the use of eminent domain and how to participate in the Commission's proceedings. It is also available for viewing on the FERC Web site (
TEAM 2014 involves constructing approximately 33.4 miles of 36-inch-diameter natural gas transmission pipeline comprised of seven separate pipeline loops
• The Holbrook Loop—a 6.6-mile pipeline in Fayette County, Pennsylvania, downstream of the existing Holbrook Compressor Station. A pig
• The Perulack West Loop—a 2.7-mile pipeline in Perry County, Pennsylvania, downstream of the existing Perulack Compressor Station;
• The Perulack East Loop—5.3-mile pipeline in Perry County, Pennsylvania, downstream of the existing Perulack Compressor Station. A pig receiver assembly and crossover piping would be installed along this loop;
• The Shermans Dale Loop—7.1-mile pipeline in Dauphin County, Pennsylvania, downstream of the existing Shermans Dale Compressor Station. A pig receiver assembly and crossover piping would be installed along this loop;
• The Grantville West Loop—a 2.4-mile pipeline in Lebanon County, Pennsylvania, downstream of the existing Grantville Compressor Station;
• The Grantville East Loop—a 3.8-mile pipeline in Lebanon County, Pennsylvania, downstream of the existing Grantville Compressor Station. A pig receiver assembly and crossover piping would be installed along this loop; and
• The Bernville Loop—a 5.5-mile pipeline in Berks County, Pennsylvania, downstream of the existing Bernville Compressor Station. A pig receiver assembly and crossover piping would be installed along this loop.
In addition, as part of TEAM 2014, Texas Eastern plans to add approximately 80,060 hp of compression and aboveground facility modifications at four existing Texas Eastern compressor stations:
• Uniontown Compressor Station—a paper uprate (software update to meet maximum hp) of one existing electric unit and power uprate (replacing hardware to improve hp) of two existing gas turbine units;
• Delmont Compressor Station—installation of one new gas turbine compressor unit, one new electric unit, and abandonment of one gas turbine unit and six gas-reciprocating units;
• Armagh Compressor Station—installation of a new gas compressor unit; and
• Entriken Compressor Station—installation of a new gas compressor unit.
TEAM 2014 would require modifications to numerous existing facilities to allow bi-directional flow/transmission of natural gas. These facilities include 18 existing compressor stations, 17 separate and existing pig launcher and receiver sites, and two existing meter and regulating facilities between Pennsylvania and Mississippi. These are described in Appendix 2. Although these modifications would occur at existing facilities, temporary workspaces may be needed outside of the existing/maintained facility footprints. The general location of the project facilities are shown in Appendix 3.
Texas Eastern is still in the planning phase of the project, and workspace requirements have not been finalized. However, TEAM 2014 would disturb approximately 1191.5 acres and install or modify about 12 miles of new access roads. The construction and operation of the pipeline loops would be mostly collocated adjacent to existing pipelines and would affect about 547.1 acres of land in Berks, Dauphin, Fayette, Lebanon, and Perry Counties, Pennsylvania. In addition, 48 new access roads would be required. Modifications at the compressor stations would be confined to the existing facility property and would temporarily affect 124 acres in Fayette, Westmoreland, Indiana and Huntingdon, Pennsylvania. Workspace for the bi-directional flow modifications is planned to temporarily impact about 520.4 acres within or adjacent to existing facilities in the following counties: Marshall County, West Virginia; Monroe, Noble, Athens, Meigs, and Scioto Counties, Ohio; Bath, Madison, Lincoln, Casey, and Monroe Counties, Kentucky; Trousdale, Wilson, Rutherford, Williamson, Giles, and Lawrence Counties, Tennessee; Colbert County, Alabama; and Itawamba, Monroe, Oktibbeha, Attala, Madison, Hinds, and Jefferson Counties, Mississippi.
The National Environmental Policy Act (NEPA) requires the Commission to take into account the environmental impacts that could result from an action whenever it considers the issuance of a Certificate of Public Convenience and Necessity. NEPA also requires us
In the EA we will discuss impacts that could occur as a result of the construction and operation of the proposed project under these general headings:
• Geology and soils;
• land use;
• water resources, fisheries, and wetlands;
• cultural resources;
• vegetation and wildlife;
• air quality and noise;
• endangered and threatened species;
• public safety; and
• cumulative impacts.
We will also evaluate reasonable alternatives to the proposed project or portions of the project, and make recommendations on how to lessen or avoid impacts on the various resource areas.
Although no formal application has been filed, we have already initiated our NEPA review under the Commission's pre-filing process. The purpose of the pre-filing process is to encourage early involvement of interested stakeholders and to identify and resolve issues before the FERC receives an application. As part of our pre-filing review, we have begun to contact some federal and state agencies to discuss their involvement in the scoping process and the preparation of the EA.
The EA will present our independent analysis of the issues. The EA will be available in the public record through eLibrary. Depending on the comments received during the scoping process, we may also publish and distribute the EA to the public for an allotted comment period. We will consider all comments on the EA before making our recommendations to the Commission. To ensure we have the opportunity to consider and address your comments, please carefully follow the instructions in the Public Participation section of this notice.
With this notice, we are asking agencies with jurisdiction by law and/or special expertise with respect to the environmental issues of this project to formally cooperate with us in the preparation of the EA.
In accordance with the Advisory Council on Historic Preservation's implementing regulations for section 106 of the National Historic Preservation Act, we are using this notice to initiate consultation with the applicable State Historic Preservation
You can make a difference by providing us with your specific comments or concerns about the project. Your comments should focus on the potential environmental effects, reasonable alternatives, and measures to avoid or lessen environmental impacts. The more specific your comments, the more useful they will be. To ensure that your comments are timely and properly recorded, please send your comments so that the Commission receives them in Washington, DC on or before November 3, 2012.
For your convenience, there are three methods which you can use to submit your comments to the Commission. In all instances please reference the project docket number (PF12–19–000) with your submission. The Commission encourages electronic filing of comments and has expert staff available to assist you at (202) 502–8258 or
(1) You can file your comments electronically using the eComment feature on the Commission's Web site (
(2) You can file your comments electronically using the eFiling feature on the Commission's Web site (
(3) You can file a paper copy of your comments by mailing them to the following address: Kimberly D. Bose, Secretary, Federal Energy Regulatory Commission, 888 First Street NE., Room 1A, Washington, DC 20426.
The environmental mailing list includes: Federal, state, and local government representatives and agencies; elected officials; environmental and public interest groups; Native American Tribes; other interested parties; and local libraries and newspapers. This list also includes all affected landowners (as defined in the Commission's regulations) who are potential right-of-way grantors, whose property may be used temporarily for project purposes, or who own homes within certain distances of aboveground facilities, and anyone who submits comments on the project. We will update the environmental mailing list as the analysis proceeds to ensure that we send the information related to this environmental review to all individuals, organizations, and government entities interested in and/or potentially affected by the proposed project.
When an EA is published for distribution, copies will be sent to the environmental mailing list for public review and comment. If you would prefer to receive a paper copy of the document instead of the CD version or would like to remove your name from the mailing list, please return the attached Information Request (Appendix 4).
Once Texas Eastern files its application with the Commission, you may want to become an “intervenor” which is an official party to the Commission's proceeding. Intervenors play a more formal role in the process and are able to file briefs, appear at hearings, and be heard by the courts if they choose to appeal the Commission's final ruling. An intervenor formally participates in the proceeding by filing a request to intervene. Instructions for becoming an intervenor are in the User's Guide under the “e-filing” link on the Commission's Web site. Please note that the Commission will not accept requests for intervenor status at this time. You must wait until the Commission receives a formal application for the project.
Additional information about the project is available from the Commission's Office of External Affairs, at (866) 208–FERC, or on the FERC Web site at
In addition, the Commission now offers a free service called eSubscription which allows you to keep track of all formal issuances and submittals in specific dockets. This can reduce the amount of time you spend researching proceedings by automatically providing you with notification of these filings, document summaries, and direct links to the documents. Go to
Finally, public meetings or site visits, if scheduled, will be posted on the Commission's calendar located at
This is a supplemental notice in the above-referenced proceeding, of Big Blue Wind Farm, LLC's application for market-based rate authority, with an accompanying rate schedule, noting that such application includes a request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability.
Any person desiring to intervene or to protest should file with the Federal Energy Regulatory Commission, 888
Notice is hereby given that the deadline for filing protests with regard to the applicant's request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability is October 25, 2012.
The Commission encourages electronic submission of protests and interventions in lieu of paper, using the FERC Online links at
Persons unable to file electronically should submit an original and 14 copies of the intervention or protest to the Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426.
The filings in the above-referenced proceeding(s) are accessible in the Commission's eLibrary system by clicking on the appropriate link in the above list. They are also available for review in the Commission's Public Reference Room in Washington, DC. There is an eSubscription link on the Web site that enables subscribers to receive email notification when a document is added to a subscribed docket(s). For assistance with any FERC Online service, please email
This is a supplemental notice in the above-referenced proceeding, of Niagara Wind Power, LLC's application for market-based rate authority, with an accompanying rate schedule, noting that such application includes a request for blanket authorization, under 18 CFR Part 34, of future issuances of securities and assumptions of liability.
Any person desiring to intervene or to protest should file with the Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Anyone filing a motion to intervene or protest must serve a copy of that document on the Applicant.
Notice is hereby given that the deadline for filing protests with regard to the applicant's request for blanket authorization, under 18 CFR Part 34, of future issuances of securities and assumptions of liability is October 25, 2012.
The Commission encourages electronic submission of protests and interventions in lieu of paper, using the FERC Online links at
Persons unable to file electronically should submit an original and 14 copies of the intervention or protest to the Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426.
The filings in the above-referenced proceeding(s) are accessible in the Commission's eLibrary system by clicking on the appropriate link in the above list. They are also available for review in the Commission's Public Reference Room in Washington, DC. There is an eSubscription link on the Web site that enables subscribers to receive email notification when a document is added to a subscribed docket(s). For assistance with any FERC Online service, please email
This is a supplemental notice in the above-referenced proceeding, of C.N. Brown Electricity, LLC's application for market-based rate authority, with an accompanying rate schedule, noting that such application includes a request for blanket authorization, under 18 CFR Part 34, of future issuances of securities and assumptions of liability.
Any person desiring to intervene or to protest should file with the Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Anyone filing a motion to intervene or protest must serve a copy of that document on the Applicant.
Notice is hereby given that the deadline for filing protests with regard to the applicant's request for blanket authorization, under 18 CFR Part 34, of future issuances of securities and assumptions of liability is October 25, 2012.
The Commission encourages electronic submission of protests and interventions in lieu of paper, using the FERC Online links at
Persons unable to file electronically should submit an original and 14 copies of the intervention or protest to the Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426.
The filings in the above-referenced proceeding(s) are accessible in the
On September 1, 2012, Soule Hydro LLC, filed an application for a successive preliminary permit, pursuant to section 4(f) of the Federal Power Act (FPA), proposing to study the feasibility of the Soule River Hydroelectric Project (project) to be located on the Soule River near Hyder within the Ketchikan Recording District in Alaska. The sole purpose of a preliminary permit, if issued, is to grant the permit holder priority to file a license application during the permit term. A preliminary permit does not authorize the permit holder to perform any land-disturbing activities or otherwise enter upon lands or waters owned by others without the owners' express permission.
The proposed project would consist of the following: (1) A 265-foot-high, 903-foot-long Main dam; (2) a 265-foot-high, 2,024 feet-long Saddle dam adjacent to the main dam; (3) a storage reservoir with a surface area of 1,072 acres and active storage capacity of 91,800 acre-feet; (4) a 16-foot-diameter, 11,400-foot-long conduit tunnel; (5) a powerhouse with approximate dimensions of 80 feet wide by 160 feet long containing three Francis-type turbines with total installed capacity of 77 megawatts; (6) a marine access facilities including staging area, boat ramp, barge basin, float, and access road; (7) a 138-kilovolt buried transmission line extending 700 feet from the powerhouse across the Soule River, 10 miles submarine cable across the Portland Canal, then 2.5 miles overhead to the point of interconnection at the existing BC Hydro substation near Stewart; and (8) appurtenant facilities. The estimated annual generation of the project would be 200 gigawatt-hours.
Applicant Contact: Mr. Bob Grimm, Alaska Power & Telephone Company, P.O. Box 3222, 193 Otto Street, Port Townsend, Washington 98368; phone: (360) 385–1733 ext. 120.
FERC Contact: Kim A. Nguyen; phone: (202) 502–6015.
Deadline for filing comments, motions to intervene, competing applications (without notices of intent), or notices of intent to file competing applications: 60 days from the issuance of this notice. Competing applications and notices of intent must meet the requirements of 18 CFR 4.36. Comments, motions to intervene, notices of intent, and competing applications may be filed electronically via the Internet. See 18 CFR 385.2001(a)(1)(iii) and the instructions on the Commission's Web site
More information about this project, including a copy of the application, can be viewed or printed on the “eLibrary” link of Commission's Web site at
Rule 2010 of the Federal Energy Regulatory Commission's (Commissions) Rules of Practice and Procedure, 18 CFR 385.2010, provides that, to eliminate unnecessary expense or improve administrative efficiency, the Secretary may establish a restricted service list for a particular phase or issue in a proceeding. The restricted service list should contain the names of persons on the service list who, in the judgment of the decisional authority establishing the list, are active participants with respect to the phase or issue in the proceeding for which the list is established.
The Commission staff is consulting with the Louisiana State Historic Preservation Officer (Louisiana SHPO) and the Advisory Council on Historic Preservation (Advisory Council) pursuant to the Advisory Council's regulations, 36 CFR Part 800, implementing section 106 of the National Historic Preservation Act
The programmatic agreement, when executed by the Commission, the Louisiana SHPO, and the Advisory Council would satisfy the Commission's section 106 responsibilities for all individual undertakings carried out in accordance with the licenses until the licenses expire or are terminated (36 CFR 800.13(e)).
On April 19, 2012, the Commission staff established a restricted service list for the Red River Lock & Dam No. 3, the Red River Lock & Dam No. 4, and the Red River Lock & Dam No. 5 projects. On October 3, 2012, the Caddo Nation requested to be added to the restricted
Federal Communications Commission.
Notice.
This document announces the date of the Emergency Access Advisory Committee's (Committee or EAAC) next meeting. At the October meeting, the agenda will include discussion of next steps for 2012 and the draft 2012 reports from subcommittee activities.
The Committee's next meeting will take place on Friday, October 12, 2012, 10:30 a.m. to 3:30 p.m. (EST), at the headquarters of the Federal Communications Commission (FCC).
Federal Communications Commission, 445 12th Street, SW., Washington, DC 20554, in the Commission Meeting Room.
Cheryl King, Consumer and Governmental Affairs Bureau, (202) 418–2284 (voice) or (202) 418–0416 (TTY), email:
On December 7, 2010, in document DA 10–2318, Chairman Julius Genachowski announced the establishment and appointment of members and Co-Chairpersons of the EAAC, an advisory committee required by the Twenty-First Century Communications and Video Accessibility Act (CVAA), Public Law 11–260, for the purpose of achieving equal access to emergency services by individuals with disabilities as part of our nation's migration to a national Internet protocol-enabled emergency network, also known as the next generation 9–1–1 system (NG9–1–1). The purpose of the EAAC is to determine the most effective and efficient technologies and methods by which to enable access to Next Generation 911 (NG 9–1–1) emergency services by individuals with disabilities, and to make recommendations to the Commission on how to achieve those effective and efficient technologies and methods. During the spring of 2011, the EAAC conducted a nationwide survey of individuals with disabilities and released a report on that survey on June 21, 2011. Following release of the survey report, the EAAC developed recommendations, which it submitted to the Commission on December 7, 2011, as required by the CVAA. At the October 2012 EAAC meeting, the agenda will include discussion of next steps for 2012 and the draft 2012 reports from subcommittee activities.
The meeting site is fully accessible to people using wheelchairs or other mobility aids. Sign language interpreters, open captioning, and assistive listening devices will be provided on site. Other reasonable accommodations for people with disabilities are available upon request. In your request, include a description of the accommodation you will need and a way we can contact you if we need more information. Last minute requests will be accepted, but may be impossible to fill. Send an email to:
To request materials in accessible formats for people with disabilities (Braille, large print, electronic files, audio format), send an email to
Federal Communications Commission.
Notice.
The following applicants filed AM or FM proposals to change the community of license: ADVANCE MINISTRIES, INC. D/B/A/NEW LIFE CHRISTIAN SCHOOL, Station NEW, Facility ID 177220, BMPED–20120906AAG, From COLORADO CITY, AZ, To GLENDALE, UT; BETTER PUBLIC BROADCASTING ASSOCIATION, Station KLXM, Facility ID 184961, BMPED–20120823AAP, From WEATHERFORD, OK, To ARAPAHO, OK; COMMUNITY RADIO PROJECT, Station KZET, Facility ID 173810, BPED–20120914AEF, From CORTEZ, CO, To TOWAOC, CO; ENTERTAINMENT MEDIA TRUST, DENNIS J. WATKINS, TRUSTEE, Station KQQZ, Facility ID 5281, BMP–20120628AAL, From DESOTO, MO, To FAIRVIEW HEIGHTS, IL; EPISCOPO, JOSEPH A, Station NEW, Facility ID 189518, BNPH–20110629BVH, From ROTAN, TX, To ROSCOE, TX; HI–LINE RADIO FELLOWSHIP, INC., Station KZNP, Facility ID 175929, BPED–20120924AAY, From PLAINS, MT, To MULLAN, ID; JEFF ANDRULONIS, Station WEAF, Facility ID 24146, BP–20120921AET, From ST. STEPHEN, SC, To SAINT STEPHEN, SC; OHANA BROADCAST COMPANY LLC, Station KSHK, Facility ID 62228, BPH–20120822AAH, From KEKAHA, HI, To HANAMAULU, HI; OHANA BROADCAST COMPANY LLC, Station KUAI, Facility ID 1752, BP–20120822AAO, From ELEELE, HI, To KEKAHA, HI; OHANA BROADCAST COMPANY LLC, Station KQNG, Facility ID 58938, BP–20120822AAP, From LIHUE, HI, To ELEELE, HI; ROY E. HENDERSON, Station KLTR, Facility ID 40775, PH–20120824AAB, From BRENHAM, TX, To HEMPSTEAD, TX; SMILE FM, Station WKKM, Facility ID 93344, BMPED–20120913ACB, From SPEAKER TWP., MI, To BURTCHVILLE TWP., MI; TRI–COUNTY RADIO, INCORPORATED, Station WEMP, Facility ID 85300, BMPH–20120828AFM, From TWO RIVERS, WI, To HOWARDS GROVE, WI.
The agency must receive comments on or before December 14, 2012.
Federal Communications Commission, 445 Twelfth Street SW., Washington, DC 20554.
Tung Bui, 202–418–2700.
The full text of these applications is available for inspection and copying during normal business hours in the Commission's Reference Center, 445 12th Street, SW., Washington, DC 20554 or electronically via the Media Bureau's Consolidated Data Base System,
Federal Deposit Insurance Corporation (FDIC).
Notice and request for comments.
In accordance with requirements of the Paperwork Reduction Act of 1995 (“PRA”), 44 U.S.C. 3501
Comments must be submitted on or before November 14, 2012.
Interested parties are invited to submit written comments to the FDIC by any of the following methods:
•
•
•
•
All comments should refer to the relevant OMB control number. A copy of the comments may also be submitted to the OMB desk officer for the FDIC: Office of Information and Regulatory Affairs, Office of Management and Budget, New Executive Office Building, Washington, DC 20503.
Leneta Gregorie, at the FDIC address above.
Proposal to renew the following currently approved collections of information:
Comments are invited on: (a) Whether the collection of information is necessary for the proper performance of the FDIC's functions, including whether the information has practical utility; (b) the accuracy of the estimates of the burden of the information collection, including the validity of the methodology and assumptions used; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the information collection on respondents, including through the use of automated collection techniques or other forms of information technology. All comments will become a matter of public record.
Federal Deposit Insurance Corporation.
In accordance with Section 271.25 of its rules regarding availability of information (12 CFR part 271), there is set forth below the domestic policy directive issued by the Federal Open Market Committee at its meeting held on September 12–13, 2012.
“The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability and promote sustainable growth in output. To further its long-run objectives, the Committee seeks conditions in reserve markets consistent with federal funds trading in a range from 0 to
By order of the Federal Open Market Committee.
Department of Health and Human Services, Office of the Secretary, Office of the Assistant Secretary for Health, Office of Disease Prevention and Health Promotion.
Notice.
The U.S. Department of Health and Human Services (HHS) solicits written comments regarding new objectives proposed to be added to Healthy People 2020 since its launch in December 2010 and written comments proposing new objectives to be included within existing Healthy People 2020 Topic Areas. Public participation helps shape Healthy People 2020, its framework, objectives, organization, and targets. Healthy People 2020 will provide opportunities for public input periodically throughout the decade to ensure Healthy People 2020 reflects current public health priorities and public input. The updated set of Healthy People 2020 objectives will be incorporated on
Written comments will be accepted until 5:00 p.m. ET on November 5, 2012.
Written comments will be accepted via an online public comment database at
Theresa Devine, MPH, Office of Disease Prevention and Health Promotion, U.S. Department of Health and Human Services, 1101 Wootton Parkway, Room LL–100, Rockville, MD 20852,
For three decades, Healthy People has provided a comprehensive set of national 10-year health promotion and disease prevention objectives aimed at improving the health of all Americans. Healthy People 2020 objectives provide a framework by presenting a comprehensive picture of the nation's health at the beginning of the decade, establishing national goals and targets to be achieved by the year 2020, and monitoring progress over time. The U.S. Department of Health and Human Services (HHS) is soliciting the submission of written comments regarding new objectives proposed to be added to Healthy People 2020 since its launch in December 2010.
Healthy People 2020 is the product of an extensive collaborative process that relies on input from a diverse array of individuals and organizations, both within and outside the federal government, with a common interest in improving the nation's health. Public comments were a cornerstone of Healthy People 2020's development. During the first phase of planning for Healthy People 2020, HHS asked for the public's comments on the vision, mission, and implementation of Healthy People 2020. Those comments helped set the framework for Healthy People 2020. The public was also invited to submit comments on proposed Healthy People 2020 objectives, which helped shape the final set of Healthy People 2020 objectives.
The public is now invited to comment on new objectives proposed to be added to Healthy People 2020. These new objectives were developed by Topic Area workgroups led by various agencies within the federal government. They have been reviewed by a Federal Interagency Workgroup on Healthy People 2020 and are presented now for the public's review and comment. The public is also invited to suggest additional objectives for consideration that address critical public health issues within existing Healthy People 2020 Topic Areas. All proposed new objectives must meet all of the objective selection criteria (see below).
Written comments will be accepted at
The following nine criteria should be taken into consideration when commenting on the proposed or suggesting additional objectives.
1. The result to be achieved should be important and understandable to a broad audience and support the Healthy People 2020 goals.
2. Objectives should be prevention oriented and/or should address health improvements that can be achieved through population-based and individual actions, and systems-based, environmental, health-service, or policy interventions.
3. Objectives should drive actions that will work toward the achievement of the proposed targets (defined as quantitative values to be achieved by the year 2020).
4. Objectives should be useful and reflect issues of national importance. Federal agencies, states, localities, non-governmental organizations, and the public and private sectors should be able to use objectives to target efforts in schools, communities, work sites, health practices, and other environments.
5. Objectives should be measurable and should address a range of issues, such as: Behavior and health outcomes; availability of, access to, and content of behavioral and health service interventions; socio-environmental conditions; and community capacity—directed toward improving health outcomes and quality of life across the life span. (Community capacity is defined as the ability of a community to plan, implement, and evaluate health strategies.)
6. Continuity and comparability of measured phenomena from year to year are important, thus, when appropriate, retention of objectives from previous Healthy People iterations is encouraged. However, in instances where objectives and/or measures have proven illsuited
7. The objectives should be supported by the best available scientific evidence. The objective selection and review processes should be flexible enough to allow revisions to objectives in order to reflect major updates or new knowledge.
8. Objectives should address population disparities. These include populations categorized by race/ethnicity, socioeconomic status, gender, disability status, sexual orientation, and geographic location. For particular health issues, additional special populations should be addressed, based on an examination of the available evidence on vulnerability, health status, and disparate care.
9. Healthy People 2020, like past versions, will be heavily data driven. Valid, reliable, nationally representative data and data systems should be used for Healthy People 2020 objectives. Each objective will have (1) a data source, or potential data source, identified, (2) baseline data and (3) assurance of at least one additional data point throughout the decade.
In compliance with the requirement of Section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995 for opportunity for public comment on proposed data collection projects, the Centers for Disease Control and Prevention (CDC) will publish periodic summaries of proposed projects. To request more information on the proposed projects or to obtain a copy of the data collection plans and instruments, call 404–639–7570 and send comments to Ronald Otten, CDC Reports Clearance Officer, 1600 Clifton Road, MS–D74, Atlanta, GA 30333 or send an email to
Well-Integrated Screening and Evaluation for Women Across the Nation (WISEWOMAN) Reporting System (OMB #0920–0612, exp. 3/31/2013)—Extension—National Center for Chronic Disease Prevention and Health Promotion (NCCDPHP), Centers for Disease Control and Prevention (CDC).
Cardiovascular disease (CVD), which includes heart disease, myocardial infarction, and stroke, is the leading cause of death for women in the United States, and is largely preventable. The WISEWOMAN program (Well-Integrated Screening and Evaluation for Women Across the Nation), administered by the Centers for Disease Control and Prevention (CDC), was established to examine ways to improve the delivery of services for women who have limited access to health care and elevated risk factors for CVD. The program focuses on reducing CVD risk factors and provides screening services for select risk factors such as elevated blood cholesterol, hypertension and abnormal blood glucose levels. The program also provides lifestyle interventions and medical referrals. On an annual basis, 21 grantees funded through the WISEWOMAN program have provided services to approximately 30,000 women who are already participating in the National Breast and Cervical Cancer Early Detection Program (NBCCEDP), also administered by CDC.
CDC currently collects information from WISEWOMAN grantees to support continuous program monitoring and improvement activities. CDC seeks to extend OMB approval for one additional year. There are no changes to the number of respondents, the data items reported to CDC, the estimated burden per response, or the total estimated annualized burden. All information will continue to be collected twice per year.
Information reported to CDC includes baseline and follow-up data (12 months post enrollment) for all women served through the WISEWOMAN program. These data, called the minimum data elements (MDE), include data elements that describe risk factors for the women served in each program and data elements that describe the number and type of intervention sessions attended. Funded grantees compile the data from their existing databases and report the MDE to CDC on April 15th and October 15th of each year.
The MDE data provide an assessment of how effective the WISEWOMAN program is at reducing the burden of cardiovascular disease risk factors among women who utilize program services. The information collected from grantees is also used to assess the cost-effectiveness and impact of the program. Because certain demographic information has already been collected as part of NBCCEDP, the additional burden of WISEWOMAN program reporting is modest.
The overall program evaluation is designed to demonstrate how WISEWOMAN can obtain more complete health data on vulnerable populations, promote public education about disease incidence and risk-factors, improve the availability of screening and diagnostic services for under-served women, ensure the quality of services provided to under-served women, and develop strategies for improved interventions. The information reported to CDC also includes programmatic information related to grantee management, public education and outreach, professional education, service delivery, cost, and progress toward meeting stated programmatic objectives.
All MDE information will be submitted to CDC electronically. The estimated burden per response for Screening and Assessment MDE is 16 hours. The estimated burden per response for Lifestyle Intervention MDE is 8 hours. Progress reports will be submitted in hardcopy format. The estimated burden per response for each progress report is 16 hours.
In compliance with the requirement of Section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995 for opportunity for public comment on proposed data collection projects, the Centers for Disease Control and Prevention (CDC) will publish periodic summaries of proposed projects. To request more information on the proposed projects or to obtain a copy of the data collection plans and instruments, call 404–639–7570 or send comments to Ronald Otten, CDC Reports Clearance Officer, 1600 Clifton Road, MS D–74, Atlanta, GA 30333 or send an email to
Evaluation of the National Tobacco Prevention and Control Public Education Campaign (OMB No. 0920–0923, exp. 2/28/2013)—Revision—National Center for Chronic Disease Prevention and Health Promotion (NCCDPHP), Centers for Disease Control and Prevention (CDC).
In 2012, CDC obtained OMB approval to collect information needed to evaluate CDC's National Tobacco Prevention and Control Public Education Campaign (The Campaign) (OMB No. 0920–0923, exp. 2/28/2013). The evaluation plan was based on two waves of data collection conducted in 2012: An initial baseline survey before the launch of The Campaign (wave 1), and a longitudinal follow-up survey of those participants approximately three months after the conclusion of The Campaign (wave 2). The pre/post assessment design allowed CDC to examine the association between smokers' and nonsmokers' exposure to The Campaign and changes in outcome variables of interest.
CDC recently announced plans to launch a second phase of The Campaign (Phase 2) using the same campaign name (“Tips from Former Smokers”), similar advertisement styles, similar message themes and strategies, and in some cases the same ad cast members. In order to apply a similar evaluation strategy to Phase 2 of The Campaign, CDC is requesting changes to the previously approved information collection plan. These changes include one additional survey in 2013 (wave 3), and changes to the previously approved follow-up questionnaires.
The evaluation plan for Phase 2 will utilize a similar study design (pre/post assessment) and the same sample sources that were utilized in the first phase of campaign evaluation. In 2013, CDC plans to administer 13,750 additional follow-up questionnaires to smokers sourced through the Knowledge Networks (KN) online panel and the Survey Sampling International (SSI) online panel, and 3,286 additional questionnaires to nonsmokers drawn from the KN Panel. Because respondents in 2013 will be drawn from the same sources utilized in 2012, CDC will be able to conduct longer-term longitudinal analysis of respondents who participate in both the first wave (2012) and third wave (2013) of information collection. CDC will assess relevant outcome measures prior to initiation of Phase 1 of The Campaign, and after completion of the combined Phase 1 and Phase 2 campaigns.
The analysis plan for Phase 2 of The Campaign will allow CDC to estimate smokers' and nonsmokers' exposure to Phase 2 campaign messages, characterize respondents' reactions to Phase 2 campaign messages, describe changes in knowledge, attitudes, and beliefs related to smoking and secondhand smoke, and quantify the number of quit attempts made during the Phase 2 campaign. The revised follow-up questionnaires for 2013 will be similar to the questionnaires administered in 2012, however, changes will be made to measure new outcomes targeted by the Phase 2 campaign, such as knowledge of the association between smoking and diabetes, and knowledge of the relationship between secondhand smoke exposure and heart attacks.
The Phase 2 Campaign is expected to launch in early winter/spring 2013 and will air for approximately three months. To ensure accurate measurement of campaign awareness after all media have been delivered, wave 3 data collection will occur approximately three months after the launch of Phase 2 messages. Information will be collected about smokers' and non-smokers' awareness of and exposure to campaign advertisements; knowledge, attitudes, and beliefs related to smoking and secondhand smoke; and behaviors related to smoking cessation (among the smokers in the sample) and behaviors related to non-smokers' encouragement of smokers to quit smoking. Respondents will undergo a brief screening process to ensure that they
OMB approval is requested for one year. Questionnaires will be administered on-line. Participation is voluntary and there are no costs to respondents other than their time.
In compliance with the requirement of Section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995 for opportunity for public comment on proposed data collection projects, the Centers for Disease Control and Prevention (CDC) will publish periodic summaries of proposed projects. To request more information on the proposed projects or to obtain a copy of the data collection plans and instruments, call 404–639–7570 or send comments to Ronald Otten, at 1600 Clifton Road, MS D74, Atlanta, GA 30333 or send an email to
Vital Statistics Training Application, OMB No. 0920–0217—Revision exp. 5/31/2013—National Center for Health Statistics (NCHS), Centers for Disease Control and Prevention (CDC).
In the United States, legal authority for the registration of vital events, i.e., births, deaths, marriages, divorces, fetal deaths, and induced terminations of pregnancy, resides individually with the States (as well as cities in the case of New York City and Washington, DC) and Puerto Rico, the Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands. These governmental entities are the full legal proprietors of vital records and the information contained therein. As a result of this State authority, the collection of registration-based vital statistics at the national level, referred to as the U.S. National Vital Statistics System (NVSS), depends on a cooperative relationship between the States and the Federal government. This data collection, authorized by 42 U.S.C. 242k, has been carried out by NCHS since it was created in 1960.
NCHS assists in achieving the comparability needed for combining data from all States into national statistics, by conducting a training program for State and local vital statistics staff to assist in developing expertise in all aspects of vital registration and vital statistics. The training offered under this program includes courses for registration staff, statisticians, and coding specialists, all designed to bring about a high degree of uniformity and quality in the data provided by the States. This training program is authorized by 42 U.S.C. 242b, section 304(a). NCHS notifies State and local vital registration officials, as well as Canadian counterparts, about upcoming training. Individual candidates for training then submit an application form including name, address, occupation, and other relevant information. NCHS is requesting 3 years of OMB clearance for these training application forms. There is no cost to respondents other than their time.
Under the provisions of Section 3507(a)(1)(D) of the Paperwork Reduction Act of 1995, the National Institutes of Health (NIH) has submitted to the Office of Management and Budget (OMB) a request to review and approve the information collection listed below. This proposed information collection was previously published in the
Written comments and/or suggestions regarding the item(s) contained in this notice, especially regarding the estimated public burden and associated response time, should be directed to the Attention: NIH Desk Officer, Office of Management and Budget, at OIRA_submission@omb.eop.gov or by fax to 202–395–6974. To request more information on the proposed project or to obtain a copy of the data collection plans and instruments, contact Dr. Christine D. Berg, Chief, Early Detection Research Group, National Cancer Institute, NIH, EPN Building, Room 3100, 6130 Executive Boulevard, Bethesda, MD 20892, or call non-toll-free number 301–496–8544 or email your request, including your address to: bergc@mail.nih.gov.
Comments regarding this information collection are best assured of having their full effect if received within 30 days of the date of this publication.
OMB approval is requested for 3 years. There are no costs to respondents other than their time. The total estimated annualized burden hours are 31,813.
In compliance with the requirement of Section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995, for opportunity for public comment on proposed data collection projects, the National Heart, Lung, and Blood Institute (NHLBI), the National Institutes of Health (NIH), will publish periodic summaries of proposed projects to the Office of Management and Budget (OMB) for review and approval.
While significant progress has been made, transfusion therapy—a very commonly used therapy affecting about six million recipients annually in the U.S.—remains one of the least understood medical procedures. REDS–II conducted studies of blood donor health but much more needs to be learned, including how donor genetic or environmental factors may affect the quality of collected blood components and influence non-infectious transfusion complications in recipients. Additionally, there is always the potential that a new, emerging or re-emerging infection may pose a threat to the safety of the U.S. blood supply. Much of the success of the REDS programs was due to their ability to respond in a timely fashion to potential blood safety threats such as West Nile Virus (WNV) in 2002 or Xenotropic Murine Leukemia Virus Related Virus (XMRV) in 2009. Globally, the threat of HIV and other blood-borne infections to blood safety remains real and has to be closely monitored. Therefore, continuing collection of new scientific evidence through REDS–III is both critical to public health in the U.S. and to countries struggling with the HIV epidemic where blood safety and availability are major concerns. Additionally, the research areas encompassed in REDS–III have been and continue to be hypothesis generating, leading to the development of new basic and translational research projects with implications well beyond the fields of blood banking and transfusion medicine. REDS–III has also been charged with the tasks of education and training and integration of these components in a transfusion medicine research network.
With this submission, the REDS–III Study seeks approval from OMB to develop research studies with data collection activities using focus groups, cognitive interviews, questionnaires and/or qualitative interviews following all required informed consent procedures for respondents and parents/caregivers as appropriate. With this generic clearance, study investigators will be able to use the OMB-approved data collection methods where appropriate to plan and implement time sensitive studies. Such studies that fall within the overall scope of this submission will be subjected to expedited review and approval by OMB before their implementation. Additionally, studies are reviewed by an NHLBI Observational Study Monitoring Board (OSMB) and by all relevant IRBs.
To request more information on the proposed project or to obtain a copy of the data collection plans and instruments, contact: Simone Glynn, MD, Project Officer/ICD Contact, Two Rockledge Center, Suite 9142, 6701 Rockledge Drive, Bethesda, MD 20892, or call 301–435–0065, or Email your request to:
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
National Institutes of Health, Public Health Service, HHS.
Notice.
This is notice, in accordance with 35 U.S.C. 209(c)(1) and 37 CFR part 404.7(a)(1)(i), that the National Institutes of Health, Department of Health and Human Services, is contemplating the grant of an exclusive license to practice the inventions embodied in (a) U.S. Patent Application 61/549,516 entitled “Anti-CD22 Chimeric Antigen Receptors” [HHS Ref. E–265–2011/0–US–01], and (b) U.S. Patent Application 60/325,360 [HHS Ref. E–129–2001/0–US–01], PCT Application PCT/US02/30316 [HHS Ref. E–129–2001/0–PCT–02], U.S. Patent 7,355,012 [HHS Ref. E–129–2001/0–US–03], European Patent 1448584 [HHS Ref. E–129–2001/0–EP–04] (validated in Germany, Spain, France, The United Kingdom and Italy [HHS Ref. E–129–2001/0–IT–12], Australian Patent 2002327053 [HHS Ref. E–129–2001/0–AU–05], Canadian Patent Application 2461351 [HHS Ref. E–129–2001/0–CA–06], U.S. Patent 7,777,019 [HHS Ref. E–129–2001/0–US–07], U.S. Patent Application 12/846,625 [HHS Ref. E–129–2001/0–US–13], U.S. Patent Application 13/438,725 [HHS Ref. E–129–2001/0–US–14] (all entitled “Mutated Anti-CD22 Antibodies with Increased Affinity to CD22 Expressing Leukemia Cells”), and all related continuing and foreign patents/patent applications for these technology families, to Neomune, Inc. The patent rights in these inventions have been assigned to and/or exclusively licensed to the Government of the United States of America.
The prospective exclusive license territory may be worldwide, and the field of use may be limited to:
Treatment of B cell malignancies that express CD22 on their cell surface using chimeric antigen receptors which contain the HA22 or BL22 antibody binding fragments.
Only written comments and/or applications for a license which are received by the NIH Office of Technology Transfer on or before November 14, 2012 will be considered.
Requests for copies of the patent application, inquiries, comments, and other materials relating to the contemplated exclusive evaluation option license should be directed to: David A. Lambertson, Ph.D., Senior Licensing and Patenting Manager, Office of Technology Transfer, National Institutes of Health, 6011 Executive Boulevard, Suite 325, Rockville, MD 20852–3804; Telephone: (301) 435–4632; Facsimile: (301) 402–0220; Email:
Chimeric antigen receptors (CARs) are engineered cell surface receptors which have been designed to target immune effector cells (such as a T cell) to certain cellular targets. CARs target diseased cells through antigen-specificity domain recognizes a protein that is preferentially expressed on the cells, and the immune effector cell proceeds to eradicate the diseased cells. Since there are a number of cell surface proteins that are preferentially expressed on cancer cells, CARs are potential therapeutic candidates in the treatment of cancer.
The specific CARs for which this exclusive license may be granted comprise a targeting domain which contains the antibody binding fragments of the anti-CD22 antibodies HA22 and BL22. CD22 is a cell surface protein that is preferentially expressed on several types of cancer cells, including hematological malignancies such as chronic lymphocytic leukemia (CLL), acute lymphocytic leukemia (ALL), hairy cell leukemia (HCL) and non-Hodgkin's lymphoma (NHL). By linking an anti-CD22 antibody binding fragment to a CAR, it is possible to selectively kill the CD22-expressing cancer cells, leaving non-cancer cells alone. This results in an effective therapeutic strategy with fewer side effects than a non-targeted therapy.
The prospective exclusive license will comply with the terms and conditions of 35 U.S.C. 209 and 37 CFR 404.7. The prospective exclusive license may be granted unless the NIH receives written evidence and argument that establishes that the grant of the license would not be consistent with the requirements of 35 U.S.C. 209 and 37 CFR 404.7 within thirty (30) days from the date of this published notice.
Complete applications for a license in the field of use filed in response to this notice will be treated as objections to the grant of the contemplated exclusive license. Comments and objections submitted to this notice will not be made available for public inspection and, to the extent permitted by law, will not be released under the Freedom of Information Act, 5 U.S.C. 552.
National Institutes of Health, Public Health Service, HHS.
Notice.
This is notice, in accordance with 35 U.S.C. 209(c)(1) and 37 CFR Part 404.7(a)(1)(i), that the National Institutes of Health, Department of Health and Human Services, is contemplating the grant to Birich Technologies, Inc., of an exclusive evaluation option license to practice the inventions embodied in the following U.S. Patent Applications (and all continuing applications and foreign counterparts): Serial No. 61/045,088 entitled, “COMPOSITIONS AND METHODS FOR DELIVERING INHIBITORY OLIGONUCLEOTIDES” [HHS Ref. E–051–2008/0–US–01]; Serial No. 61/333,512 entitled, “Peptide Inhibitors of Interferon Gamma and Interleukin 10 Signaling” [HHS Ref. E–167–2010/0–US–01]; and Serial No. 60/987,340 entitled, “Diagnostic and Therapeutic Applications of a p53 Isoform in Regenerative Medicine, Aging and Cancer” [HHS Ref. E–033–2008/0–US–01]. The patent rights in these inventions have been assigned or exclusively licensed to the Government of the United States of America.
The prospective exclusive evaluation option license territory may be worldwide, and the field of use may be limited to:
The use in humans of the peptide-based antisense delivery technology (ChemoArp) in conjunction with either (i) a peptide-based interleukin-10 (IL–10) inhibitor as a dual-biologic therapy to treat metastatic breast cancer, or ii) incorporating a
Upon the expiration or termination of the exclusive evaluation option license, Birich Technologies, Inc. will have the exclusive right to execute an exclusive commercialization license which will supersede and replace the exclusive evaluation option license with no greater field of use and territory than granted in the exclusive evaluation option license.
Only written comments or applications for a license (or both) which are received by the NIH Office of Technology Transfer on or before October 30, 2012 will be considered.
Requests for copies of the patent application, inquiries, comments, and other materials relating to the contemplated exclusive evaluation option license should be directed to: Patrick McCue, Ph.D., Licensing and Patenting Manager, Office of Technology Transfer, National Institutes of Health, 6011 Executive Boulevard, Suite 325, Rockville, MD 20852–3804; Telephone: (301) 435–5560; Facsimile: (301) 402–0220; Email:
These inventions concern i) compositions and methods for targeted delivery of inhibitory nucleic acids to cells using a cell surface receptor ligand targeting domain and an inhibitory oligonucleotide-binding domain to efficiently deliver the antisense nucleic acid to cells that expresses the cell surface receptor that binds the ligand, ii) compositions that potently and selectively interfere with dimerization of interleukin-10 and binding of this protein to its receptor, and iii) compositions that inhibit
The prospective exclusive evaluation option license is being considered under the small business initiative launched on 1 October 2011, and will comply with the terms and conditions of 35 U.S.C. 209 and 37 CFR Part 404.7. The prospective exclusive evaluation option license, and a subsequent exclusive commercialization license, may be granted unless the NIH receives written evidence and argument that establishes that the grant of the license would not be consistent with the requirements of 35 U.S.C. 209 and 37 CFR Part 404.7 within fifteen (15) days from the date of this published notice.
Complete applications for a license in the field of use filed in response to this notice will be treated as objections to the grant of the contemplated exclusive evaluation option license. Comments and objections submitted to this notice will not be made available for public inspection and, to the extent permitted by law, will not be released under the
National Protection and Programs Directorate, DHS.
Committee Management; Notice of an open Federal Advisory Committee Meeting.
The National Infrastructure Advisory Council (NIAC) will meet Tuesday, October 16, 2012, at the United States Access Board, 1331 F Street NW., Suite 800, Washington, DC 20004. The meeting will be open to the public.
The NIAC will meet Tuesday, October 16, 2012, from 1:30 p.m. to 4:30 p.m. The meeting may close early if the committee has completed its business. For additional information, please consult the NIAC Web site,
United States Access Board, 1331 F Street NW., Suite 800, Washington, DC 20004.
For information on facilities or services for individuals with disabilities or to request special assistance at the meeting, contact the person listed under
To facilitate public participation, we are inviting public comment on the issues to be considered by the Council as listed in the
•
•
•
•
Members of the public will have an opportunity to provide oral comments after the presentation of the report from the Regional Resilience Working Group. We request that comments be limited to the issues listed in the meeting agenda and previous NIAC studies. All previous NIAC studies can be located at
Nancy Wong, National Infrastructure Advisory Council Designated Federal Officer, Department of Homeland Security, telephone (703) 235–2888.
Notice of this meeting is given under the Federal Advisory Committee Act, 5 U.S.C. App. (Pub. L. 92–463). The NIAC shall provide the President through the Secretary of Homeland Security with advice on the security of the critical infrastructure sectors and their information systems.
The NIAC will meet to discuss issues relevant to the protection of critical infrastructure as directed by the President. At this meeting, the Council will receive and discuss a presentation from the NIAC Regional Resilience Working Group documenting their work to date on the Regional Resilience Study, which includes the role and impact of critical infrastructure on regional resiliency, best regional practices and models, and the contribution of public private partnerships. The presentation will be posted no later than one week prior to the meeting on the Council's public Web page on
The Federal Advisory Committee Act requires that notices of meetings of advisory committees be announced in the
This notice of the NIAC meeting is published in the
For information on facilities or services for individuals with disabilities or to request special assistance at the meeting, contact the NIAC Secretariat at (703) 235–2888 as soon as possible.
Fish and Wildlife Service, Interior.
Notice of availability; request for comment/information.
We, the Fish and Wildlife Service (Service), have received an application from Primax Properties, LLC (applicant), for an incidental take permit (ITP). The applicant requests a 5-year ITP under the Endangered Species Act of 1973, as amended (Act). We request public comment on the permit application (#TE83714A–0) and accompanying proposed habitat conservation plan (HCP), as well as on our preliminary determination that the plan qualifies as low-effect under the National Environmental Policy Act (NEPA). To make this determination, we used our environmental action statement and low-effect screening form, which are also available for review.
To ensure consideration, please send your written comments by November 14, 2012.
If you wish to review the application and HCP, you may request documents by email, U.S. mail, or phone (see below). These documents are also available for public inspection by appointment during normal business hours at the office below. Send your comments or requests by any one of the following methods.
Erin M. Gawera, telephone: (904) 731–3121; email:
Section 9 of the Act (16 U.S.C. 1531 et seq.) and our implementing Federal regulations in the Code of Federal Regulations (CFR) at 50 CFR part 17 prohibit the “take” of fish or wildlife species listed as endangered or threatened. Take of listed fish or wildlife is defined under the Act as “to harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect, or to attempt to engage in any such conduct” (16 U.S.C. 1532). However, under limited circumstances, we issue permits to authorize incidental take—i.e., take that is incidental to, and not the purpose of, the carrying out of an otherwise lawful activity.
Regulations governing incidental take permits for threatened and endangered species are at 50 CFR 17.32 and 17.22, respectively. The Act's take prohibitions do not apply to federally listed plants on private lands unless such take would violate State law. In addition to meeting other criteria, an incidental take permit's proposed actions must not
The applicant is requesting take of approximately 3.57 ac of occupied sand skink foraging and sheltering habitat incidental to construction of a commercial development, and seeks a 5-year permit. The 3.92-ac project site is located on 21.28-ac parcel #19–22–25–000100005200 within Section 19, Township 22 South, Range 25 East, Lake County, Florida. The applicant proposes to mitigate for the take of the sand skink by the purchase of 7.14 mitigation credits within the Hatchineha Ranch Conservation Bank.
We have determined that the applicant's proposal, including the proposed mitigation and minimization measures, would have minor or negligible effects on the species covered in the HCP. Therefore, we determined that the ITP is a “low-effect” project and qualifies for categorical exclusion under the National Environmental Policy Act (NEPA), as provided by the Department of the Interior Manual (516 DM 2 Appendix 1 and 516 DM 6 Appendix 1). A low-effect HCP is one involving (1) minor or negligible effects on federally listed or candidate species and their habitats, and (2) minor or negligible effects on other environmental values or resources.
We will evaluate the HCP and comments we receive to determine whether the ITP application meets the requirements of section 10(a) of the Act (16 U.S.C. 1531 et seq.). If we determine that the application meets these requirements, we will issue ITP #TE83714A–0. We will also evaluate whether issuance of the section 10(a)(1)(B) ITP complies with section 7 of the Act by conducting an intra-Service section 7 consultation. We will use the results of this consultation, in combination with the above findings, in our final analysis to determine whether or not to issue the ITP. If the requirements are met, we will issue the permit to the applicant.
If you wish to comment on the permit application, HCP, and associated documents, you may submit comments by any one of the methods in
Before including your address, phone number, email address, or other personal identifying information in your comments, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
We provide this notice under Section 10 of the Act and NEPA regulations (40 CFR 1506.6).
U.S. Geological Survey.
Notice of Meeting.
Pursuant to Public Law 106–503, the Scientific Earthquake Studies Advisory Committee (SESAC) will hold its next meeting on the campus of the Colorado School of Mines, Ballroom B, in Golden, Colorado. The Committee is comprised of members from academia, industry, and State government. The Committee shall advise the Director of the U.S. Geological Survey (USGS) on matters relating to the USGS's participation in the National Earthquake Hazards Reduction Program.
The Committee will receive reports on the status of activities of the Program and progress toward Program goals and objectives. The Committee will assess this information and provide guidance on the future undertakings and direction of the Earthquake Hazards Program.
Meetings of the Scientific Earthquake Studies Advisory Committee are open to the public.
October 29, 2012, commencing at 8:30 a.m. and adjourning at Noon on October 30, 2012.
Contact: Dr. William Leith, U.S. Geological Survey, MS 905, 12201 Sunrise Valley Drive, Reston, Virginia 20192, (703) 648–6786,
Bureau of Indian Affairs, Interior.
Notice.
The Assistant Secretary—Indian Affairs made a final agency determination to acquire approximately 468.39 acres of land into trust for the Mandan, Hidatsa, and Arikara Nation (MHA Nation) on October 10, 2012.
Diane Mann-Klager, Bureau of Indian Affairs, Division of Natural Resources, 115 Fourth Ave Southeast, Suite 400, Aberdeen, South Dakota 57401; phone: (605) 226–7621; email:
This notice is published in the exercise of authority delegated by the Secretary of the Interior to the Assistant Secretary—Indian Affairs by 209 Departmental Manual 8.1 and is published to comply with the requirements of 25 CFR 151.12(b) that notice be given to the public of the Secretary's decision to acquire land in trust at least 30 days prior to signatory acceptance of the land into trust. The purpose of the 30-day waiting period in 25 CFR 151.12(b) is to afford interested parties the opportunity to seek judicial review of final administrative decisions to take land in trust for Indian tribes and individual Indians before transfer of title to the property occurs.
On October 10, 2012, the Assistant Secretary—Indian Affairs decided to accept approximately 468.39 acres of land into trust for the MHA Nation; under the authority of the Indian Reorganization Act of 1934, 25 U.S.C. 465. The parcel is located on the Fort Berthold reservation, in Ward County, North Dakota, and is located in the northeast corner of the Fort Berthold Indian Reservation west of Makoti, North Dakota, in N
Bureau of Land Management, Interior.
30-day notice and request for comments.
The Bureau of Land Management (BLM) has submitted an information collection request to the Office of Management and Budget (OMB) to continue the collection of information from applicants for a land patent under the Color-of-Title Act. The Office of Management and Budget (OMB) previously approved this information collection activity, and assigned it control number 1004–0029.
The OMB is required to respond to this information collection request within 60 days but may respond after 30 days. For maximum consideration, written comments should be received on or before November 14, 2012.
Please submit comments directly to the Desk Officer for the Department of the Interior (OMB #1004–0029), Office of Management and Budget, Office of Information and Regulatory Affairs, fax 202–395–5806, or by electronic mail at
Please indicate “Attn: 1004–0029” regardless of the form of your comments.
Jeff Holdren, at 202–912–7335. Persons who use a telecommunication device for the deaf (TDD) may call the Federal Information Relay Service (FIRS) at 1–800–877–8339, to leave a message for Mr. Holdren. You may also review the information collection request online at
The Paperwork Reduction Act (44 U.S.C. 3501–3521) and OMB regulations at 5 CFR part 1320 provide that an agency may not conduct or sponsor a collection of information unless it displays a currently valid OMB control number. Until OMB approves a collection of information, you are not obligated to respond. In order to obtain and renew an OMB control number, Federal agencies are required to seek public comment on information collection and recordkeeping activities (see 5 CFR 1320.8(d) and 1320.12(a)).
As required at 5 CFR 1320.8(d), the BLM published a 60-day notice in the
1. Whether the collection of information is necessary for the proper functioning of the BLM, including whether the information will have practical utility;
2. The accuracy of the BLM's estimate of the burden of collecting the information, including the validity of the methodology and assumptions used;
3. The quality, utility and clarity of the information to be collected; and
4. How to minimize the information collection burden on those who are to respond, including the use of appropriate automated, electronic, mechanical, or other forms of information technology.
Please send comments as directed under
The following information is provided for the information collection:
• Form 2540–1, Color-of-Title Application;
• Form 2540–2, Color-of-Title Conveyances Affecting Color or Claim of Title; and
• Form 2540–3, Color-of-Title Tax Levy and Payment Record.
The following table details the individual components and respective hour burdens of this information collection request:
Bureau of Land Management, Interior.
Notice of Availability.
In accordance with the National Environmental Policy Act of 1969, as amended (NEPA), and the Federal Land Policy and Management Act of 1976, as amended, the Bureau of Land Management (BLM) has prepared a Draft Supplemental Environmental Impact Statement (EIS) and a Draft Resource Management Plan (RMP) Amendment for the proposed Silver State Solar South Project located on public lands east of Primm, Nevada, and by this notice is announcing the opening of the comment period.
To ensure that comments will be considered, the BLM must receive written comments on the Draft Supplementary EIS and the Draft RMP Amendment within 90 days following the date the Environmental Protection Agency publishes its Notice of Availability in the
You may submit comments related to the Silver State Solar South Project by any of the following methods:
•
•
• Fax: 702–515–5155, attention Gregory Helseth.
•
Gregory Helseth, Renewable Energy Project Manager, at 702–515–5173; or address 4701 North Torrey Pines Drive, Las Vegas, Nevada 89130–2301; or email
Silver State Solar, LLC, has submitted a right-of-way (ROW) application for the construction, operation, maintenance, and termination of a solar energy generation facility on 13,183 acres of public land east of Primm, Nevada. The ROW application is assigned BLM case number N–89530. This application expands on the previously considered ROW application N–85801. The proposed solar energy project would consist of photovoltaic (PV) panels and related infrastructure ROW appurtenances, including a substation and switchyard facilities, and would produce about 350 megawatts (MW) of electricity. The solar field and infrastructure would consist of single-axis tracker systems or fixed panels, an underground and overhead electrical power collection system, two step-up transformers, 230 kilovolt (kV) and 220 kV transmission lines, an operation and maintenance area, a switchyard, paved access and maintenance roads, flood and drainage controls, and a fire break.
The Silver State Solar South Project Draft Supplemental EIS will address the new application N–89530 and update as necessary the consideration of N–85801, which was initially analyzed in the Final EIS for the Silver State Solar North Project. The approved Silver State Solar North Project did not authorize ROW application N–85801. The BLM approved a Record of Decision on October 12, 2010, for the Silver State Solar North Project and authorized ROW N–85077 for the construction and operation of a 50 MW PV solar energy facility on 618 acres of BLM administered lands adjacent to the Silver State South project area. The application for N–85801 is now included as part of the Silver State Solar South Project, along with ROW application N–89530. If the BLM approves ROW application N–89530, the BLM will also need to amend the October 1998 Las Vegas RMP to address proposed changes in land and resource use within the Jean Lake/Roach Lake Special Recreation Management Area (SRMA).
The Draft Supplemental EIS analyzes the site-specific impacts on air quality, biological resources, cultural resources, special designations (SRMA), water resources, and geological resources and hazards. The document will also analyze land and airspace use, noise, paleontological resources, public health, socioeconomics, soils, traffic and transportation, visual resources, wilderness characteristics, waste management, worker safety, fire protection, and hazardous materials handling; as well as facility-design engineering, efficiency, reliability, transmission-system engineering, transmission line safety, and nuisance issues.
By this notice, the BLM is complying with requirements in 43 CFR 1610.2(c) to notify the public of potential amendments to land use plans. The BLM will integrate the land use planning process with the NEPA process for this project. Besides the SRMA, the BLM will consider additional plan amendments to the Las Vegas RMP, including a proposed nomination for an Area of Critical Environmental Concern (ACEC) within the Ivanpah Valley and a Visual Resource Management (VRM) change within the project boundary from Class III to Class IV.
As required by 43 C.F.R. 1610.7–2(b), the BLM is also taking public comments on the proposed ACEC. In order to adequately protect the relevant and important values in the proposed 40,180-acre ACEC, the BLM is evaluating whether to impose the following new restrictions:
○ Retaining the lands in Federal ownership;
○ Allowing facilities that provide resource protection;
○ Enhancing the relevant and important (R&I) values and/or addressing human health and safety on a case-by-case basis;
○ Imposing a linear ROW avoidance restriction;
○ Excluding large site-type ROWs (greater than 5 acres);
○ Restoring temporary disturbances to meet the standard BLM restoration standards; and
○ Allowing land use authorizations and small site-type ROWs (5 acres or less) on a case-by-case basis.
The proposed ACEC would be closed to livestock grazing.
The BLM would limit development of recreation facilities to those necessary for resource protection only. Off-highway vehicle (OHV) use would be limited to designated routes, and permitted non-speed recreation activities in the ACEC would require a desert tortoise spotter during the tortoise active season. In addition, the BLM would monitor the activities to ensure tortoises are not affected.
For sensitive species, the BLM would allow prescribed fire use to meet resource objectives and habitat enhancement purposes in appropriate areas to support habitat recovery objectives and allow use of approved herbicides following ground-disturbing activities in order to implement invasive species control methods and support habitat recovery objectives. Military maneuvers would not be authorized. Activities that result in loss or degradation of tortoise habitat would require reclamation so that pre-disturbance conditions may be reached within a reasonable time frame; reclamation may include, but is not limited to, salvaging and transplanting cactus and yucca, recontouring of the area, scarifying compacted soil, adding soil amendments, seeding, and transplanting of seedling shrubs. Subsequent seeding or transplanting efforts may be required if monitoring indicates that the original effort was not successful. Alternative B and C would not designate an ACEC; however, the BLM would manage the area as part of an SRMA.
The visual resource class change from Class III to Class IV would only apply to the project site and applies to alternatives B, C and D.
The BLM will use and coordinate the NEPA comment process to satisfy the public involvement process for Section 106 of the National Historic Preservation Act (16 U.S.C. 470(f)) as provided for in 36 CFR 800.2(d)(3). Native American tribal consultations have been conducted in accordance with policy. Tribal concerns have been given due consideration, including impacts on Indian trust assets.
The Draft Supplemental EIS analyzes four alternatives, including the no action alternative (Alternative A) and three action alternatives. Alternative B is Silver State's original proposal (as described in its Plan of Development dated July 2011). This alternative was introduced in initial scoping meetings and does not include perimeter roads. Alternative B would disturb up to 3,855 acres of Federal land. Alternative C would disturb up to 2,515 acres of Federal lands, and includes the project layout for Phases II and III that was previously evaluated in the 2010 Final EIS. Alternative D would disturb up to 3,091 acres of Federal land and is a modified layout of Silver State's original proposal (Alternative B above) to allow access through a historically used recreation route.
The BLM is required to select a preferred alternative for the RMP amendment; this decision is separate from whether a preferred alternative is identified for the proposed project. The BLM preferred alternative for the RMP amendment identified in the Draft Supplemental EIS is to (1) Reduce the acreage of the SRMA by the project footprint (if approved) and (2) To change the VRM class from VRM Class III to IV for the project footprint (if approved). There is no BLM preferred project alternative identified in the Draft Supplemental EIS so that the BLM can make best use of public input to reach an informed decision. Formal scoping for the project occurred from September 1 to October 31, 2011 (74 FR 31306). The BLM received a total of 55 comment submissions during the scoping period, identifying 201 issues. The comments identified concerns in a broad range of categories, including OHV access; recreation; socioeconomic resources; federally listed species and their habitat, including desert tortoise habitat and rare plants; surface water/storm runoff; alternatives for analysis; and cumulative impacts.
Maps of the proposed project area and the alternatives being analyzed in the Draft Supplemental EIS are available at the BLM Southern Nevada District Office and the Southern Nevada BLM energy Web site cited above. Please note that public comments and information submitted including names, street addresses, and email addresses of persons who submit comments will be available for public review and disclosure at the above address during regular business hours (8 a.m. to 4 p.m.), Monday through Friday, except holidays.
Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
40 CFR 1506.6, 40 CFR 1506.10, 43 CFR 16.
Bureau of Land Management, Interior.
Notice of filing of plats of survey.
The Bureau of Land Management (BLM) will file the plat of survey of the lands described below in the BLM Montana State Office, Billings, Montana, on November 14, 2012.
Protests of the survey must be filed before November 14, 2012 to be considered.
Protests of the survey should be sent to the Branch of Cadastral Survey, Bureau of Land Management, 5001 Southgate Drive, Billings, Montana 59101–4669.
Marvin Montoya, Cadastral Surveyor, Branch of Cadastral Survey, Bureau of Land Management, 5001 Southgate Drive, Billings, Montana 59101–4669, telephone (406) 896–5124 or (406) 896–5009,
This survey was executed at the request of
The lands we surveyed are:
T. 127 N., R. 48 W.
The plat, in four sheets, representing the dependent resurvey of a portion of the subdivisional lines, a portion of the subdivision of sections 22 and 27, and the adjusted original meanders of Lake Traverse, through section 27, and the subdivision of sections 22 and 27, Township 127 North, Range 48 West, Fifth Principal Meridian, South Dakota, was accepted September 27, 2012.
We will place a copy of the plat, in four sheets, and related field notes we described in the open files. They will be available to the public as a matter of information. If the BLM receives a protest against this survey, as shown on this plat, in four sheets, prior to the date of the official filing, we will stay the filing pending our consideration of the protest. We will not officially file this plat, in four sheets, until the day after we have accepted or dismissed all protests and they have become final, including decisions or appeals.
43 U.S.C. Chap. 3.
Bureau of Land Management, Interior.
Notice of filing of plats of survey.
The Bureau of Land Management (BLM) will file the plat of survey of the lands described below in the BLM Montana State Office, Billings, Montana, on November 14, 2012.
Protests of the survey must be filed before November 14, 2012 to be considered.
Protests of the survey should be sent to the Branch of Cadastral Survey, Bureau of Land Management, 5001 Southgate Drive, Billings, Montana 59101–4669.
Marvin Montoya, Cadastral Surveyor, Branch of Cadastral Survey, Bureau of Land Management, 5001 Southgate Drive, Billings, Montana 59101–4669, telephone (406) 896–5124 or (406) 896–5009,
This survey was executed at the request of the Regional Director, Bureau of Indian Affairs, Rocky Mountain Region, Billings, Montana and was necessary to determine individual and tribal trust lands.
The lands we surveyed are:
T. 27 N., R. 54 E.
The plat, in four sheets, representing the dependent resurvey of portions of the north boundary, the subdivisional lines, the subdivision of section 4, and the adjusted original meanders of the left bank of the Missouri River, downstream, through section 4, and the subdivision of section 4, and the survey of a portion of the meanders of the present left bank, downstream through section 4, Township 27 North, Range 54 East, Principal Meridian, Montana, was accepted September 20, 2012.
We will place a copy of the plat, in four sheets, and related field notes we described in the open files. They will be available to the public as a matter of information. If the BLM receives a protest against this survey, as shown on this plat, in four sheets, prior to the date of the official filing, we will stay the filing pending our consideration of the protest. We will not officially file this plat, in four sheets, until the day after we have accepted or dismissed all protests and they have become final, including decisions or appeals.
43 U.S.C. Chap. 3.
Bureau of Land Management, Interior.
Notice of filing of plats of survey.
The Bureau of Land Management (BLM) will file the plat of survey of the lands described below in the BLM Montana State Office, Billings, Montana, on November 14, 2012.
Protests of the survey must be filed before November 14, 2012 to be considered.
Protests of the survey should be sent to the Branch of Cadastral Survey, Bureau of Land Management, 5001 Southgate Drive, Billings, Montana 59101–4669.
Marvin Montoya, Cadastral Surveyor, Branch of Cadastral Survey, Bureau of Land Management, 5001 Southgate Drive, Billings, Montana 59101–4669, telephone (406) 896–5124 or (406) 896–5009,
This survey was executed at the request of the Regional Director, Bureau of Indian Affairs, Rocky Mountain Region, Billings, Montana, and was necessary to determine boundaries of Federal (Bureau of Land Management) and trust lands.
The lands we surveyed are:
The plat, in one sheet, representing the dependent resurvey of the south boundary of the Fort Belknap Indian Reservation, through Township 25 North, Range 25 East, Principal Meridian, Montana, was accepted, September 26, 2012.
We will place a copy of the plat, in one sheet, and related field notes we described in the open files. They will be available to the public as a matter of information. If the BLM receives a protest against this survey, as shown on this plat, in one sheet, prior to the date
43 U.S.C. Chap. 3.
Bureau of Land Management, Interior.
Notice of filing of plats of survey.
The Bureau of Land Management (BLM) will file the plat of survey of the lands described below in the BLM Montana State Office, Billings, Montana, on November 14, 2012.
Protests of the survey must be filed before November 14, 2012 to be considered.
Protests of the survey should be sent to the Branch of Cadastral Survey, Bureau of Land Management, 5001 Southgate Drive, Billings, Montana 59101–4669.
Marvin Montoya, Cadastral Surveyor, Branch of Cadastral Survey, Bureau of Land Management, 5001 Southgate Drive, Billings, Montana 59101–4669, telephone (406) 896–5124 or (406) 896–5009,
This survey was executed at the request of the Regional Director, Bureau of Indian Affairs, Rocky Mountain Region, Billings, Montana, and was necessary to determine boundaries of Federal (Bureau of Land Management) and trust lands.
The lands we surveyed are:
The plat, in one sheet, representing the dependent resurvey of the south boundary of the Fort Belknap Indian Reservation, through Township 25 North, Range 26 East, Principal Meridian, Montana, was accepted September 20, 2012.
We will place a copy of the plat, in one sheet, and related field notes we described in the open files. They will be available to the public as a matter of information. If the BLM receives a protest against this survey, as shown on this plat, in one sheet, prior to the date of the official filing, we will stay the filing pending our consideration of the protest. We will not officially file this plat, in one sheet, until the day after we have accepted or dismissed all protests and they have become final, including decisions or appeals.
43 U.S.C. Chap. 3.
National Park Service, Interior.
Notice of Termination of Environmental Impact Statement.
The National Park Service (NPS) is terminating the preparation of an environmental impact statement (EIS) for the Mount Rushmore National Memorial General Management Plan (GMP) and will be preparing an Environmental Assessment (EA) instead.
The draft GMP EA is expected to be distributed for public comment in the fall of 2012. Specific dates, times, and locations will be announced on the Internet at the NPS Planning, Environment, and Public Comment Web site (
Mount Rushmore National Memorial, 13000 Hwy 244 Bldg 31 Suite 1, Keystone, South Dakota 57751; telephone, (605) 574–2523.
Contact Superintendent Schreier at the address above, by telephone at (605) 574–3131, or by email at
We, the NPS, have determined that an EA rather than an EIS is the appropriate level of environmental documentation for the GMP. Preliminary analysis of alternatives showed there was no potential for significant impacts to park resources and values and no concerns or issues were expressed during the public scoping process for the GMP that have the potential for controversial impacts. For these reasons the NPS determined the proposal would not constitute a major federal action requiring an EIS. A notice of intent to prepare the EIS for the GMP was published in the November 26, 2008,
We intend to issue an EA that considers the following two alternatives and their related impacts:
Nominations for the following properties being considered for listing
A request to move has been made for the following resource:
A request for removal has been made for the following resources:
On October 9, 2012, the Department of Justice lodged a proposed Consent Decree with the United States District Court for the Eastern District of Wisconsin in the lawsuit entitled
The United States filed this lawsuit under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The complaint seeks injunctive relief and payment of past and future costs that the United States incurred and will incur responding to releases of hazardous substances at the Cedarville Dams (a/k/a Cedar Creek) Superfund Site in Cedarburg, Wisconsin. In the proposed Consent Decree, the defendant agrees to pay the United States' past and future response costs and to perform the selected remedy for the Operable Unit 1, which addresses contamination at Mercury Marine's former Plant 2 at 2526 St. John
The publication of this notice opens a period for public comment on the proposed Consent Decree. Comments should be addressed to the Assistant Attorney General, Environment and Natural Resources Division, and should refer to
During the public comment period, the proposed Consent Decree may be examined and downloaded at this Justice Department Web site:
Please enclose a check or money order for $11.75 (25 cents per page reproduction cost) payable to the United States Treasury.
30-Day Notice.
The Department of Justice (DOJ), Drug Enforcement Administration (DEA) will be submitting the following information collection request to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act of 1995. The proposed information collection is published to obtain comments from the public and affected agencies. This proposed information collection was previously published in the
The purpose of this notice is to allow for an additional 30 days for public comment until November 14, 2012. This process is conducted in accordance with 5 CFR 1320.10.
If you have comments, especially on the estimated public burden or associated response time, suggestions, or need a copy of the proposed information collection instrument with instructions or additional information, please contact John W. Partridge, Chief, Liaison and Policy Section, Office of Diversion Control, Drug Enforcement Administration, 8701 Morrissette Drive, Springfield, VA 22152; (202) 307–7297.
Written comments concerning this information collection should be sent to the Office of Information and Regulatory Affairs, Office of Management and Budget, Attn: DOJ Desk Officer. The best way to ensure your comments are received is to email them to
Written comments and suggestions from the public and affected agencies concerning the proposed collection of information are encouraged. Your comments should address one or more of the following four points:
• Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
• Evaluate the accuracy of the agencies estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
• Enhance the quality, utility, and clarity of the information to be collected; and
• Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission of responses.
(1)
(2)
(3)
Form number: DEA Forms 224, 224a, 224b, 224c.
Component: Office of Diversion Control, Drug Enforcement Administration, U.S. Department of Justice.
(4)
Primary: Business or other for-profit.
Other: Not-for-profit institutions; State, local, or tribal government.
Abstract: All firms and individuals who dispense controlled substances must register with the DEA under the Controlled Substances Act. Pharmacies wishing to be online pharmacies must apply to modify their registrations. Such registration is mandatory under the law and needed for control measures over legal handlers of controlled substances and to monitor their activities.
(5)
(6)
30-Day Notice.
The Department of Justice (DOJ), Drug Enforcement Administration (DEA) will be submitting the following information collection request to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act of 1995. The proposed information collection is published to obtain comments from the public and affected agencies. This proposed information collection was previously published in the
The purpose of this notice is to allow for an additional 30 days for public comment until November 14, 2012. This process is conducted in accordance with 5 CFR 1320.10.
If you have comments, especially on the estimated public burden or associated response time, suggestions, or need a copy of the proposed information collection instrument with instructions or additional information, please contact John W. Partridge, Chief, Liaison and Policy Section, Office of Diversion Control, Drug Enforcement Administration, 8701 Morrissette Drive, Springfield, VA 22152; (202) 307–7297.
Written comments concerning this information collection should be sent to the Office of Information and Regulatory Affairs, Office of Management and Budget, Attn: DOJ Desk Officer. The best way to ensure your comments are received is to email them to
Written comments and suggestions from the public and affected agencies concerning the proposed collection of information are encouraged. Your comments should address one or more of the following four points:
• Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
• Evaluate the accuracy of the agencies estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
• Enhance the quality, utility, and clarity of the information to be collected; and
• Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission of responses.
(1)
(2)
(3)
Form number: DEA form 488.
Component: Office of Diversion Control, Drug Enforcement Administration, Department of Justice.
(4)
Primary: Business or other for-profit.
Other: None.
Abstract: Title 21 U.S.C. 952 and 21 CFR 1315.34 require that persons who desire to import the List I chemicals ephedrine, pseudoephedrine, and phenylpropanolamine during the next calendar year shall apply on DEA Form 488 for import quota for such List I chemicals.
(5)
(6)
30-Day Notice.
The Department of Justice (DOJ), Drug Enforcement Administration (DEA) will be submitting the following information collection request to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act of 1995. The proposed information collection is published to obtain comments from the public and affected agencies. This proposed information collection was previously published in the
The purpose of this notice is to allow for an additional 30 days for public comment until November 14, 2012. This process is conducted in accordance with 5 CFR 1320.10.
If you have comments, especially on the estimated public burden or associated response time, suggestions, or need a copy of the proposed information collection instrument with instructions or additional information, please contact John W. Partridge, Chief, Liaison and Policy Section, Office of Diversion Control, Drug Enforcement Administration, 8701 Morrissette Drive, Springfield, VA 22152; (202) 307–7297.
Written comments concerning this information collection should be sent to the Office of Information and Regulatory Affairs, Office of Management and Budget, Attn: DOJ Desk Officer. The best way to ensure your comments are received is to email them to
Written comments and suggestions from the public and affected agencies concerning the proposed collection of information are encouraged. Your comments should address one or more of the following four points:
• Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
• Evaluate the accuracy of the agencies estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
• Enhance the quality, utility, and clarity of the information to be collected; and
• Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission of responses.
(1)
(2)
(3)
Form number: DEA Forms 486 and 486A.
Component: Office of Diversion Control, Drug Enforcement Administration, Department of Justice.
(4)
Primary: Business or other for-profit.
Other: Not-for-profit; State, local, and tribal government.
Abstract: Persons importing, exporting, and conducting international transactions with List I and List II chemicals must notify DEA of those transactions in advance of their occurrence, including information regarding the person(s) to whom the chemical will be transferred and the quantity to be transferred. Persons must also provide return declarations, confirming the date of the importation and transfer, and the amounts of the chemical transferred. For the List I chemicals ephedrine, pseudoephedrine, and phenylpropanolamine, importers must report all information known to them on the chain of distribution of the chemical from the manufacturer to the importer. This information is used to prevent shipments not intended for legitimate purposes.
(5)
(6)
60-day Notice.
The Department of Justice, Federal Bureau of Investigation, Criminal Justice Information Services Division will be submitting the following information collection request to the Office of Management and Budget (OMB) for review and clearance in accordance with established review procedures of the Paperwork Reduction Act of 1995. The proposed information collection is published to obtain comments from the public and affected agencies. Comments are encouraged and will be accepted until December 14, 2012.
This process is conducted in accordance with 5 CFR 1320.10.
All comments, suggestions, or questions regarding additional information, to include obtaining a copy of the proposed information collection instrument with instructions, should be directed to Mrs. Amy C. Blasher, Unit Chief, Federal Bureau of Investigation, Criminal Justice Information Services (CJIS) Division, Module E–3, 1000 Custer Hollow Road, Clarksburg, West Virginia 26306, or facsimile to (304) 625–3566.
Written comments and suggestions from the public and affected agencies concerning the proposed collection of information are encouraged. Comments should address one or more of the following four points:
(1) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
(2) Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
(3) Enhance the quality, utility, and clarity of the information to be collected; and
(4) Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques of other forms of information technology, e.g., permitting electronic submission of responses.
(1)
(2)
(3)
(4)
(5)
(6)
If additional information is required contact: Jerri Murray, Department Clearance Officer, Policy and Planning Staff, Justice Management Division, United States Department of Justice, Two Constitution Square, 145 N Street NE., Room 2E–508, Washington, DC 20530.
60 Day notice.
The Department of Justice (DOJ), Federal Bureau of Investigation (FBI), Criminal Justice Information Services (CJIS) Division's National Instant Criminal Background Check System (NICS) Section will be submitting the following information collection request to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act of 1995. The proposed information collection is published to obtain comments from the public and affected agencies.
Comments are encouraged and will be accepted for 60 days until December 14, 2012. This process is conducted in accordance with Title 5, Code of Federal Regulations (CFR), § 1320.10. If you have comments, especially on the estimated public burden or associated response time, suggestions, or need a copy of the proposed information collection instrument with instructions or additional information, please contact Sherry L. Kuneff, Management and Program Analyst, Federal Bureau of Investigation, Criminal Justice Information Services (CJIS) Division, NICS Section, Module A–3, 1000 Custer Hollow Road, Clarksburg, West Virginia 26306, or facsimile at (304) 625–7540.
Written comments and suggestions from the public and affected agencies concerning the proposed collection of information are encouraged. Your comments should address one or more of the following four points:
(1) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency/component, including whether the information will have practical utility;
(2) Evaluate the accuracy of the agency's/component's estimate of the burden of the proposed collection of the information, including the validity of the methodology and assumptions used;
(3) Enhance the quality, utility, and clarity of the information to be collected; and
(4) Minimize the burden of the collection of information on those who are to respond, including the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission of responses.
(1)
Title of the Form:
Federal Firearms Licensee (FFL) Enrollment/National Instant Criminal Background Check System (NICS) E-Check Enrollment Form.
Federal Firearms Licensee (FFL) Officer/Employee Acknowledgment of Responsibilities under the National Instant Criminal Background Check System (NICS) Form.
(2)
Sponsor: Criminal Justice Information Services (CJIS) Division of the Federal Bureau of Investigation (FBI), Department of Justice (DOJ).
(3)
(4)
It is estimated that 250 FFLs enroll with the NICS per month for a total of 3,000 enrollments per year. The average response time for reading the directions for the National Instant Criminal Background Check System (NICS) Federal Firearms Licensee (FFL) Enrollment/NICS E-Check Enrollment Form is estimated to be two minutes; time to complete the form is estimated to be three minutes; and the time it takes to assemble, mail, or fax the form to the FBI is estimated to be three minutes, for a total of eight minutes. The average hour burden for this specific form is 3,000 × 8 minutes/60 = 400 hours.
The Federal Firearms Licensee (FFL) Officer/Employee Acknowledgment of Responsibilities Form under the National Instant Criminal Background Check System (NICS) takes approximately three minutes to read the responsibilities and two minutes to complete the form, for a total of five minutes. The average hour burden for this specific form is 6,000 × 5 minutes/60 = 250 hours.
The letter mailed to each new FFL takes an additional two minutes to read which would be 3,000 × 2 minutes/60 = 100 hours.
The entire process of reading the letter and completing both forms would take 15 minutes per respondent. The average hour burden for completing both forms and reading the accompanying letter would be 3,000 × 15/60 = 750 hours.
(5)
The entire process of reading the letter and completing both forms would take 15 minutes per respondent. The average hour burden for completing both forms and reading the accompanying letter would be 3,000 × 15/60 = 750 hours.
If additional information is required, contact: Jerri Murray, Department Clearance Officer, United States Department of Justice, Justice Management Division, Policy and Planning Staff, Two Constitution Square, 145 N Street NE., Room2E–508, Washington, DC 20530.
In accordance with Section 223 of the Trade Act of 1974, as amended (“Act”), 19 U.S.C. 2273, the Department of Labor issued a Certification of Eligibility to Apply for Worker Adjustment Assistance on August 3, 2012, applicable to workers of General Motors Vehicle Manufacturing, including on-site leased workers from Aerotek, Kelly Services, Voith Industrial Services, Shreveport Ramp Services, Dana Holding Corporation, The Landing of GM, Filtration Services Group, BASF, G4S Secure Services, Seibert Powder Coating, and Advantis Occupational Health, Shreveport, Louisiana (subject firm).
On September 17, 2012, the Department issued an amended certification to include on-site leased workers of Veolia ES Industrial Services, Inc. and Automotive Quality Associates.
The workers' firm is engaged in activities related to the production of pick-up trucks.
Based on information provided in a later-filed Trade Adjustment Assistance petition, the Department reviewed the certification for workers of the subject firm.
New information from the subject firm shows that workers from Career Adventures are sufficiently under the control of General Motors Vehicle Manufacturing, Shreveport, Louisiana, to be considered leased workers.
The intent of the Department's certification is to include all workers of the subject firm who were adversely affected by increased imports of pick-up trucks.
Based on these findings, the Department is amending this certification to include workers leased from Career Adventures working on-site at the subject firm. The amended notice applicable to TA–W–81,751 is hereby issued as follows:
All workers of General Motors Vehicle Manufacturing, including on-site leased workers from Aerotek, Kelly Services, Voith Industrial Services, Shreveport Ramp Services, Dana Holding Corporation, The Landing of GM, Filtration Services Group, BASF, G4S Secure Services, Seibert Powder Coating, Advantis Occupational Health, Veolia ES Industrial Services, Inc., Automotive Quality Associates, and Career Adventures, Shreveport, Louisiana, who became totally or partially separated from employment on or after July 28, 2012, through August 3, 2014, and all workers in the group threatened with total or partial separation from employment on the date of certification through two years from the date of certification, are eligible to apply for adjustment assistance under Chapter 2 of Title II of the Trade Act of 1974, as amended.
In accordance with Section 223 of the Trade Act of 1974, as amended (“Act”), 19 U.S.C. 2273, the Department of Labor issued a Certification of Eligibility to Apply for Worker Adjustment Assistance on July 3, 2012, applicable to workers and former workers of Hydro Aluminum North America, Inc., Kalamazoo, Michigan. The subject worker group includes on-site leased workers from Employment Group, Aerotek, and Manpower. The workers' firm is engaged in activities related to the production of extruded aluminum rod, bar, and other extruded shapes.
The certification was based on the Department's findings that the criteria set forth in Section 222(e) of the Act, 19 U.S.C. 2272(e), have been met.
Based on information provided in a later-filed petition, the Department reviewed the certification for workers of the subject firm.
Additional information provided by the company official revealed that the Kalamazoo, Michigan facility is not part of the Kalamazoo Division but is part of the Midwest Region. The certification is being amended to reflect this correction.
The new information also revealed that the Midwest Region includes facilities in Indiana, Missouri, Ohio and Michigan, and that Regional operation is coordinated through the Kalamazoo, Michigan facility. The Monett, Missouri facility has ceased operations and work formerly completed at that facility has been moved to the remaining Midwest Region facilities. The worker group at the Monett, Missouri facility includes on-site leased workers from Penmac.
The intent of the Department's certification is to include all workers of the subject firm who were adversely affected by imports of certain aluminum extrusions from China.
Based on these findings, the Department is amending this certification to include workers and former workers of the Monett, Missouri facility of Hydro Aluminum North America, Inc., Midwest Region, including on-site leased workers of Penmac.
The amended notice applicable to TA–W–81,589 is hereby issued as follows:
All workers of Hydro Aluminum North America, Inc., Midwest Region, including on-site leased workers from Employment Group, Aerotek, and Manpower, Kalamazoo, Michigan (TA–W–81,589), and Hydro Aluminum North America, Inc., Midwest Region, including on-site leased workers from Penmac, Monett, Missouri (TA–W–81,589A), who became totally or partially separated from that employment on or after May 19, 2010 through May 19, 2012, are eligible to apply for adjustment assistance under Chapter 2 of Title II of the Trade Act of 1974, as amended.
Occupational Safety and Health Administration (OSHA), Labor.
Notice of renewal of the NACOSH charter.
The Secretary of Labor will renew the charter of the National Advisory Committee on Occupational Safety and Health (NACOSH).
Ms. Deborah Crawford, OSHA Directorate of Evaluation and Analysis, Room N–3641, U.S. Department of Labor, 200 Constitution Avenue NW., Washington, DC 20210; telephone (202) 693–1932.
The Secretary of Labor (Secretary) will renew the NACOSH charter. The Charter will expire two years from the date it is filed.
NACOSH was established by Section 7(a) of the Occupational Safety and Health Act of 1970 (OSH Act) (29 U.S.C. 651, 656) to advise, consult with and make recommendations to the Secretary and the Secretary of Health and Human Services on matters relating to the administration of the OSH Act. Under the OSH Act, Congress intended NACOSH to be a continuing advisory committee of indefinite duration.
NACOSH operates in accordance with the Federal Advisory Committee Act (FACA) (5 U.S.C. App. 2) and OSHA's regulations on NACOSH (29 CFR part 1912a). Pursuant to FACA and its implementing regulations (41 CFR 102–3), the NACOSH Charter must be renewed every two years. The Charter expires two years from the date it is filed.
The new Charter includes minor updates and an increase in the staff years for operating NACOSH from 1.5 to 2 staff years.
To read or download a copy of the new NACOSH Charter, go to Docket No. OSHA–2012–0019 at
David Michaels, Ph.D., MPH, Assistant Secretary of Labor for Occupational Safety and Health, directed the preparation of this notice under the authority granted by Section 7 of the Occupational Safety and Health Act of 1970 (U.S.C. 656), the Federal Advisory Committee Act (5 U.S.C. App. 2); 29 CFR Part 1912a; 41 CFR part 102–3; and Secretary of Labor's Order No. 1–2012 (77 FR 3912, 1/25/2012).
National Aeronautics and Space Administration.
Notice of meeting.
In accordance with the Federal Advisory Committee Act, Public Law 92–463, as amended, the National Aeronautics and Space Administration (NASA) announces a meeting of the Astrophysics Subcommittee of the NASA Advisory Council (NAC) Science Committee. This Subcommittee reports to the Science Committee of the NAC. The meeting will be held via Teleconference and WebEx for the purpose of soliciting, from the scientific community and other persons, scientific and technical information relevant to program planning.
Tuesday, November 6, 2012, 12 p.m. to 4 p.m., local time.
This meeting will take place telephonically and by WebEx. Any interested person may call the USA toll free conference call number 888–391–7042, pass code APS, to participate in this meeting by telephone. The WebEx link is
Ms. Marian Norris, Science Mission Directorate, NASA Headquarters, Washington, DC 20546, (202) 358–4452, fax (202) 358–4118, or
The agenda for the meeting includes the following topics:
It is imperative that the meeting be held on this date to accommodate the scheduling priorities of the key participants.
10:00 a.m., Thursday, October 18, 2012.
Board Room, 7th Floor, Room 7047. 1775 Duke Street (All visitors must use Diagonal Road Entrance), Alexandria, VA 22314–3428.
Open.
1. NCUA's Rules and Regulations, Low-Income Designation, Acceptance Deadline.
2. Request from BMI Federal Credit Union to Convert to a Community Charter.
3. Quarterly Insurance Fund Report.
11:00 a.m.
11:15 a.m., Thursday, October 18, 2012.
Board Room, 7th Floor, Room 7047, 1775 Duke Street, Alexandria, VA 22314–3428.
Closed.
1. Charter and Purchase and Assumption Request Pursuant to Section 205(b)(1)(A) of the Federal Credit Union Act. Closed pursuant to exemptions: (4), (8), and (9)(i)(B).
2. Consideration of Supervisory Activities (3). Closed pursuant to some or all of the following exemptions: (8), (9)(i)(B) and 9(ii).
3. Personnel. Closed pursuant to Exemption (2).
Mary Rupp, Secretary of the Board, Telephone: 703–518–6304
National Endowment for the Humanities.
Notice of Meetings.
Pursuant to section 10(a)(2) of the Federal Advisory Committee Act (5 U.S.C. App.), notice is hereby given that 11 meetings of the Humanities Panel will be held during November 2012 as follows. The purpose of the meetings is for panel review, discussion, evaluation, and recommendation of applications for financial assistance under the National Foundation on the Arts and Humanities Act of 1965 (20 U.S.C. 951–960, as amended).
See
The meetings will be held at the Old Post Office Building, 1100 Pennsylvania Ave. NW., Washington, DC 20506. See
Lisette Voyatzis, Committee Management Officer, 1100 Pennsylvania Ave. NW., Room, 529, Washington, DC 20506, or call (202) 606–8322. Hearing-impaired individuals are advised that information on this matter may be obtained by contacting the National Endowment for the Humanities' TDD terminal at (202) 606–8282.
1.
This meeting will discuss applications for the America's Media Makers Production grant program on the subject of American Studies, submitted to the Division of Public Programs.
2.
This meeting will discuss applications for the Humanities Collections and Reference Resources grant program on the subject of U.S. History and Culture, submitted to the Division of Preservation and Access.
3.
This meeting will discuss applications for the America's Historical & Cultural Organizations Implementation grant program on the subject of U.S. History and the West, submitted to the Division of Public Programs.
4.
This meeting will discuss applications for the America's Historical & Cultural Organizations Implementation grant program on the subject of recent U.S. History, submitted to the Division of Public Programs.
5.
This meeting will discuss applications for the Humanities Collections and Reference Resources grant program on the subject of History of Science and Technology, submitted to the Division of Preservation and Access.
6.
This meeting will discuss applications for the Humanities Collections and Reference Resources grant program on the subject of U.S. History and Culture, submitted to the Division of Preservation and Access.
7.
This meeting will discuss applications for the America's Media Makers Production grant program, submitted to the Division of Public Programs.
8.
This meeting will discuss applications for the Humanities Collections and Reference Resources grant program on the subject of U.S. History and Culture, submitted to the Division of Preservation and Access.
9.
This meeting will discuss applications for the Digital Humanities Start-Up Grants grant program on the subject of New Media, submitted to the Office of Digital Humanities.
10.
This meeting will discuss applications for the Digital Humanities Start-Up Grants grant program on the subject of Scholarly Communications, submitted to the Office of Digital Humanities.
11.
This meeting will discuss applications for the Humanities Collections and Reference Resources grant program on the subject of Art History, submitted to the Division of Preservation and Access.
Because these meetings will include review of personal and/or proprietary financial and commercial information given in confidence to the agency by grant applicants, the meetings will be closed to the public pursuant to sections 552b(c)(4) and 552b(c)(6) of Title 5 U.S.C., as amended. I have made this determination pursuant to the authority granted me by the Chairman's Delegation of Authority to Close Advisory Committee Meetings dated July 19, 1993.
National Science Foundation.
Notice of a Waste Management Permit Application Received Under the Antarctic Conservation Act.
Notice is hereby given that the National Science Foundation (NSF) has received a waste management permit application for Mike Libecki and his team to conduct a skiing and mountaineering expedition to Queen Maud Land from November 6 to December 31, 2012. The application by Mike Libecki of Salt Lake City, Utah is submitted to NSF pursuant to regulations issued under the Antarctic Conservation Act of 1978.
Interested parties are invited to submit written data, comments, or views with respect to this permit application within November 14, 2012. Permit applications may be inspected by interested parties at the Permit Office, address below.
Comments should be addressed to Permit Office, Room 755, Office of Polar Programs, National Science Foundation, 4201 Wilson Boulevard, Arlington, Virginia 22230.
Dr. Polly A. Penhale at the above address or (703) 292–8030.
NSF's Antarctic Waste Regulation, 45 CFR Part 671, requires all U.S. citizens and entities to obtain a permit for the use or release of a designated pollutant in Antarctica, and for the release of waste in Antarctica. NSF has received a permit application under this Regulation for
Designated pollutants that would be associated with the expedition are white gas for cooking, kitchen waste, solid waste, trash, batteries, and human waste (urine and human solid waste). All waste will be stored in plastic barrels and returned to Cape Town for disposal. If camping fuel is spilled, the contaminated snow and ice will be contained in waste barrels and brought to Cape Town for disposal.
The permit applicant: Mike Libecki, Salt Lake City, Utah, Permit application No. 2013 WM–004.
In accordance with Federal Advisory Committee Act (Pub. L. 92–463, as amended), the National Science Foundation announces the following meeting:
U.S. Nuclear Regulatory Commission.
Call for nominations.
The U.S. Nuclear Regulatory Commission (NRC) is advertising for nominations for the positions of health care administrator and nuclear cardiologist on the Advisory Committee on the Medical Uses of Isotopes (ACMUI). Nominees for the position of the health care administrator should have professional or personal experience with or knowledge about health care administration. Nominees for the position of the nuclear cardiologist should be a physician with professional or personal experience with or knowledge about nuclear cardiology.
Nominations are due on or before December 14, 2012.
The cover letter for the health care administrator should describe the nominee's current involvement with health care administration and express the nominee's interest in the position. Please ensure that the resume or curriculum vitae includes the following information, if applicable: Education; certification; professional association membership and committee membership activities; and number of years, recentness, and type of setting for health care administration.
The cover letter for the nuclear cardiologist should describe the nominee's current involvement with nuclear cardiology and express the nominee's interest in the position.
Please ensure that the resume or curriculum vitae includes the following information, as applicable: Education; certification; professional association membership and committee membership activities; and number of years, recentness, and type of setting for nuclear cardiology.
Ms. Sophie Holiday, U.S. Nuclear Regulatory Commission, Office of Federal and State Materials and Environmental Management Programs; (301) 415–7865;
The health care administrator and nuclear cardiologist provide advice to NRC staff on issues associated with the regulation of medical applications of byproduct material. The nominee for the health care administrator position is appointed based on his or her professional and personal experience with and/or knowledge about health care administration, involvement and/or leadership with health care organizations, and related experience obtained in letters or during the selection process. The nominee for the nuclear cardiologist position is appointed based on his or her professional and personal experience with and/or knowledge about nuclear cardiology, involvement and/or leadership with nuclear cardiology organizations, and related experience obtained in letters or during the selection process. Nominees should have the demonstrated ability to establish effective work relationships with peers and implement successful approaches to problem solving and conflict resolution.
NRC is inviting nominations for the appointments of the health care administrator and nuclear cardiologist to the ACMUI. The term of the individual currently occupying the health care administrator position will end May 2013 and the term of the individual currently occupying the nuclear cardiologist position will end October 2013.
ACMUI members currently serve a four-year term and may be considered for reappointment to an additional term. The current membership is comprised of the following professionals: (a) Nuclear medicine physician; (b) nuclear cardiologist; (c) nuclear medicine physicist; (d) therapy medical physicist; (e) radiation safety officer; (f) nuclear pharmacist; (g) two radiation oncologists; (h) patients' rights advocate; (i) Food and Drug Administration representative; (j) Agreement State representative; (k) health care administrator; and (l) diagnostic radiologist. For additional information about membership on the ACMUI, visit the ACMUI Membership Web page,
Nominees must be U.S. citizens and be able to devote approximately 160 hours per year to Committee business.
For the U.S. Nuclear Regulatory Commission.
Nuclear Regulatory Commission [NRC–2012–0002].
Weeks of October 8, 15, 22, 29, November 5, 12, 19, 2012.
Commissioners' Conference Room, 11555 Rockville Pike, Rockville, Maryland.
Public and Closed.
This meeting will be webcast live at the Web address—
There are no meetings scheduled for the week of October 15, 2012.
This meeting will be webcast live at the Web address—
This meeting will be webcast live at the Web address—
This meeting will be webcast live at the Web address—
There are no meetings scheduled for the week of November 12, 2012.
There are no meetings scheduled for the week of November 19, 2012.
* The schedule for Commission meetings is subject to change on short notice. To verify the status of meetings, call (recording)—301–415–1292. Contact person for more information: Rochelle Bavol, 301–415–1651.
By a vote of 4–0 on October 10, 2012, the Commission determined pursuant to U.S.C. 552b(e) and § 9.107(a) of the Commission's rules that the above referenced Affirmation Session (
The NRC Commission Meeting Schedule can be found on the Internet at:
The NRC provides reasonable accommodation to individuals with disabilities where appropriate. If you need a reasonable accommodation to participate in these public meetings, or need this meeting notice or the transcript or other information from the public meetings in another format (e.g. braille, large print), please notify Bill Dosch, Chief, Work Life and Benefits Branch, at 301–415–6200, TDD: 301–415–2100, or by email at
This notice is distributed electronically to subscribers. If you no longer wish to receive it, or would like to be added to the distribution, please contact the Office of the Secretary, Washington, DC 20555 (301–415–1969), or send an email to
Dominion Nuclear Connecticut, Inc., (DNC or the licensee) is the holder of Facility Operating License No. DPR–65, which authorizes operation of the Millstone Power Station, Unit 2 (MPS2). The license provides, among other things, that the facility is subject to all rules, regulations, and orders of the U.S. Nuclear Regulatory Commission (NRC, the Commission) now or hereafter in effect.
The facility consists of a pressurized-water reactor located in New London County, Connecticut.
By letter dated November 5, 2004,
Section 50.68(b)(1) of 10 CFR set forth the following requirement, at the time the exemption was granted, that must be met, in lieu of a monitoring system capable of detecting criticality events.
Plant procedures shall prohibit the handling and storage at any one time of more fuel assemblies than have been determined to be safely subcritical under the most adverse moderation conditions feasible by unborated water.
The licensee was unable to satisfy the above requirement for handling the 10 CFR Part 72 licensed contents of the TN NUHOMS®–32PT system. Section 50.12(a) allows licensees to apply for an exemption from the requirements of 10 CFR Part 50 if the regulation is not necessary to achieve the underlying purpose of the rule and other conditions are met. The licensee stated in the application that compliance with 10 CFR 50.68(b)(1) is not necessary for handling the 10 CFR Part 72 licensed contents of the cask system to achieve the underlying purpose of 10 CFR 50.68(b)(1). The Commission determined that, pursuant to 10 CFR 50.12(a), the exemption was authorized by law, would not present an undue risk to the public health and safety, and was consistent with the common defense and security. Also, special circumstances were present. Therefore, the Commission granted DNC an exemption from the requirements of 10 CFR 50.68(b)(1) for the loading, unloading, and handling of the components of the TN NUHOMS®–32PT storage system at MPS2.
On November 16, 2006 (71 FR 66648), the NRC published a direct final rule in the
(c) While a spent fuel transportation package approved under Part 71 of this chapter or spent fuel storage cask approved under Part 72 of this chapter is in the spent fuel pool:
(1) The requirements in § 50.68(b) do not apply to the fuel located within that package or cask; and
(2) The requirements in Part 71 or 72 of this chapter, as applicable, and the requirements of the Certificate of Compliance for that package or cask apply to the fuel within that package or cask.
The statements of consideration state that for licensees with an approved exemption, these licensees can continue to use their approved exemption or they may choose to comply with the amended rule. The statements of consideration go on to say, “[o]perating under the exemption or the amended rule have effectively the same criticality accident requirements for fuel within a package or cask in a spent fuel pool, namely only those of 10 CFR Part 71 or 72, as applicable.”
By letter dated April 10, 2012,
Pursuant to 10 CFR 50.12, the Commission may, upon application by any interested person or upon its own initiative, grant exemptions from the requirements of 10 CFR Part 50 when (1) the exemptions are authorized by law, will not present an undue risk to public health or safety, and are consistent with the common defense and security; and (2) when special circumstances are present. On February 15, 2005, the NRC granted the above exemption for the technical requirements of 10 CFR 50.68(b)(1) for loading, unloading, and handling of the components of the TN NUHOMS®–32PT storage system at MPS2.
Based on the NRC rule change that amended the requirements of 10 CFR 50.68, in November 2006, DNC is able to comply with all requirements of 10 CFR 50.68. The NRC staff examined the licensee's rationale, and concluded that the revocation is acceptable because the licensee has established compliance with 10 CFR 50.68 for loading, unloading, and handling of the components of the TN NUHOMS®–32PT storage system at MPS2.
This revocation of exemption would remove the licensee's exemption from the associated requirements of 10 CFR 50.68(b)(1) for loading, unloading, and handling of the components of the TN NUHOMS®–32PT dry cask storage system at MPS2, which was granted by the Commission on February 15, 2005. With the exemption removed, MPS2 will be subject to all of the applicable requirements of 10 CFR 50.68. The NRC staff has determined that revoking the exemption will not result in a violation of the Atomic Energy Act of 1954, as amended, or the Commission's regulations.
The underlying purposes of 10 CFR 50.68 is to maintain spent fuel pools subcritical in an unborated, maximum moderation condition. DNC has decided to comply with all of the amended requirements of 10 CFR 50.68 which were issued in November 2006, without exemption. Based on compliance with the requirements of 10 CFR 50.68, no new accident precursors are created by the revocation of this exemption, thus, the probability of postulated accidents is not increased. Also, based on compliance with the requirements of 10 CFR 50.68, the consequences of postulated accidents are not increased. Therefore, there is no undue risk to public health and safety.
The proposed revocation of exemption would restore the requirements of 10 CFR 50.68 for loading, unloading, and handling of the components of the TN NUHOMS®–32PT dry cask storage system at MPS2 . This change to the operation of the plant has no relation to security issues. Therefore, the common defense and security is not impacted by this exemption.
Accordingly, the Commission has determined that the exemption granted February 15, 2005, related to loading, unloading, and handling of the components of the TN NUHOMS®–32PT dry cask storage system at MPS2 is hereby revoked.
Pursuant to 10 CFR 51.32, the Commission has determined that the revocation of this exemption will not have a significant effect on the quality of the human environment (71 FR 66650).
This exemption revocation is effective upon issuance.
For the Nuclear Regulatory Commission.
Securities and Exchange Commission.
Notice of Telephonic Meeting of Securities and Exchange Commission Investor Advisory Committee.
The Securities and Exchange Commission Investor Advisory Committee, established pursuant to Section 911 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, is providing notice that it will hold a telephonic meeting on Friday, October 12, 2012. The meeting will begin at 12:00 p.m. (EDT) and end at 1:00 p.m. and will be open to the public via telephone at 1–866–606–4717, participant code 3877211. Persons needing special accommodations to take part because of a disability should notify the contact person listed below. The public is invited to submit written statements to the Committee. The agenda for the meeting includes discussion of and voting on a recommendation from the Investor as Purchaser subcommittee regarding the Jumpstart Our Business Startups Act (JOBS Act) requirements on general solicitation and general advertising in Rule 506 private placements.
Written statements should be received on or before October 12, 2012.
Written statements may be submitted by any of the following methods:
Use the Commission's Internet submission form (
Send an email message to
Send paper statements in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, Stop 1090, 100 F Street NE., Washington, DC 20549–1090.
Statements also will be available for Web site viewing and printing in the Commission's Public Reference Room, 100 F Street NE., Room 1580, Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. All statements received will be posted without change; we do not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly.
M. Owen Donley, Chief Counsel, at (202) 551–6322, Office of Investor Education and Advocacy, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549.
Pursuant to Section 19(b)(1)
The Exchange proposes to amend Sections 303A.00, 303A.02(a) and 303A.05 of the Exchange's Listed Company Manual (the “Manual”) to comply with the requirements of Securities and Exchange Commission (“Commission” or “SEC”) Rule 10C–1.
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
This Amendment No. 1 to SR–NYSE–2012–49 (the “filing”) amends and replaces in its entirety the Filing as originally submitted on September 25, 2012. Amendment No. 1 corrects a single error in the rule text in Exhibit 5 as originally filed. The error was in Section 303A.00 under the heading “Transition Periods for Compensation Committee Requirements.”
The Exchange proposes to amend Sections 303A.00, 303A.02(a) and 303A.05 of the Manual to comply with the requirements of SEC Rule 10C–1.
The proposed changes to Sections 303A.00, 303A.02(a) and 303A.05 will not become operative until July 1, 2013. Consequently, the existing text of these sections will remain in the Manual until June 30, 2013 and will be removed immediately thereafter.
Section 952 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”)
In adopting independence requirements for compensation committee members, Rule 10C–1(b)(1)(ii)
The Exchange's director independence standards are set forth in Section 303A.02. Section 303A.02(a) provides that no director qualifies as “independent” unless the board of directors affirmatively determines that the director has no material relationship with the listed company (directly or as a partner, shareholder or officer of an organization that has a relationship with the company).
The Exchange proposes to amend Section 303A.02(a) of the Manual to adopt proposed Section 303A.02(a)(ii),
The Exchange does not propose to adopt any specific numerical tests with respect to the factors specified in proposed Section 303A.02(a)(ii) or to adopt a requirement to consider any other specific factors. In particular, the Exchange does not intend to adopt an absolute prohibition on a board making an affirmative finding that a director is independent solely on the basis that the director or any of the director's affiliates are shareholders owning more than some specified percentage of the listed company. In the adopting release for Rule 10C–1 (the “Adopting Release”),
The Exchange believes that its existing “bright line” independence standards as set forth in Section 303A.02(b) of the Manual are sufficiently broad to encompass the types of relationships which would generally be material to a director's independence for compensation committee service. In addition, Section 303A.02(a) already requires the board to consider any other material relationships between the director and the listed company or its management that are not the subject of “bright line” tests in Section 303A.02(b). The Exchange believes that these requirements with respect to general director independence, when combined with the specific considerations required by proposed Section 303A.02(a)(ii), represent an appropriate standard for compensation committee independence that is consistent with the requirements of Rule 10C–1.
Rule 10C–1(b)(2)
(i) The compensation committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, independent legal counsel or other adviser; and
(ii) The compensation committee shall be directly responsible for the appointment, compensation and oversight of the work of any compensation consultant, independent legal counsel and other adviser retained by the compensation committee.
Rule 10C–1(b)(3)
The required powers of the compensation committee under Rule 10C–1(b)(2) and (3) as set forth above are in significant part already required by the NYSE's existing compensation committee listing standard, as they are required elements of the compensation committee charter as set forth in Section 303A.05(b). In the interests of clarity and emphasis, the Exchange proposes to adopt the requirements specified in Rule 10C–1(b)(2) and (3) verbatim as a proposed new subsection (c) of Section 303A.05. The Exchange proposes to remove the comparable requirements currently in Section 303A.05(b) commentary and replace them with a provision stating that the compensation committee charter must provide that the committee has all of the powers specified in new subsection (c).
Rule 10C–1(b)(4)
(i) The provision of other services to the listed company by the person that employs the compensation consultant, legal counsel or other adviser;
(ii) The amount of fees received from the listed company by the person that employs the compensation consultant, legal counsel or other adviser, as a percentage of the total revenue of the person that employs the compensation consultant, legal counsel or other adviser;
(iii) The policies and procedures of the person that employs the compensation consultant, legal counsel or other adviser that are designed to prevent conflicts of interest;
(iv) Any business or personal relationship of the compensation consultant, legal counsel or other adviser with a member of the compensation committee;
(v) Any stock of the listed company owned by the compensation consultant, legal counsel or other adviser; and
(vi) Any business or personal relationship of the compensation consultant, legal counsel, other adviser or the person employing the adviser with an executive officer of the listed company.
Accordingly, the Exchange proposes to include in proposed Section 303A.05(c) a provision specifying that, before engaging an adviser, the compensation committee must consider the factors enumerated above. As proposed, Section 303A.05(c) would not include any specific additional factors for consideration, as the Exchange believes that the list included in Rule 10C–1(b)(4) is very comprehensive and the proposed listing standard would also require the compensation committee to consider any other factors that would be relevant to the adviser's independence from management.
Consistent with Rule 10C–1(b)(2)(iii),
Rule 10C–1(a)(3)
The Adopting Release contemplates that exchanges may provide transition periods through the exemptive authority provided to the exchanges under Rule 10C–1(b)(1)(iii).
In addition, the Exchange proposes to continue to apply to the proposed new compensation committee requirements the existing transition periods available to newly-listed companies under Section 303A.00. Transition periods are available to: Companies listing in connection with their initial public offerings (“IPOs”) or which did not have a class of common stock registered under the Exchange Act prior to the listing date;
The Exchange proposes to exempt smaller reporting companies
Rule 10C–1(b)(5)
Pursuant to the general exemptive authority granted in Rule 10C–1(b)(5)(i), the Exchange proposes to exempt from all of the proposed requirements each category of issuer that qualifies for a general or specific exemption under Rule 10C–1(b)(1)(iii)(A). The Exchange also proposes to provide a general exemption from all of the requirements to all of the other categories of issuers that are currently exempt from the NYSE's existing compensation committee requirements. Thus, as proposed, controlled companies, limited partnerships and companies in bankruptcy, closed-end and open-end funds registered under the 1940 Act, passive business organizations in the form of trusts (such as royalty trusts), derivatives and special purpose securities (such as those described in Sections 703.19 and 703.20 of the Manual), and issuers whose only listed equity security is a preferred stock, would be exempt. The Exchange notes that these categories of issuers typically: (i) Are externally managed and do not directly employ executives (e.g., limited partnerships that are managed by their general partner or closed-end funds managed by an external investment adviser); (ii) do not by their nature have employees (e.g., passive business organizations in the form of trusts or issuers of derivative or special purpose securities); or (iii) have executive compensation policy set by a body other than the board (e.g., bankrupt companies have their executive compensation determined by the bankruptcy court). In light of these structural reasons why these categories of issuers generally do not have compensation committees, the Exchange believes that it would be a significant and unnecessarily burdensome alteration in their governance structures to require them to comply with the proposed new requirements and that it is appropriate to grant them an exemption.
Section 303A.00 currently provides that foreign private issuers are permitted to follow home country practice in lieu of compliance with the Exchange's compensation committee listing standard. The Exchange proposes to follow this approach by granting a general exemption, pursuant to the discretion granted to the Exchange by Rule 10C–1(b)(5)(i),
The Exchange currently does not require issuers whose only listed security is a preferred stock to comply with Section 303A.05(c). The Exchange proposes to grant these issuers a general exemption from compliance with the proposed amended rule. The Exchange believes this approach is appropriate because holders of listed preferred stock have significantly greater protections with respect to their rights to receive dividends and a liquidation preference upon dissolution of the issuer, and preferred stocks are typically regarded by investors as a fixed income investment comparable to debt securities, the issuers of which are exempt from compliance with Rule 10C–1.
The Exchange believes that the proposed rule change in relation to the Exchange's compensation committee requirements and the proposed compensation consultant independence requirements are consistent with Section 10C of the Exchange Act and Rule 10C–1 thereunder in that they comply with the requirements of Rule 10C–1 with respect to the adoption by national securities exchanges of compensation committee listing standards. The Exchange believes that the proposed rule change is consistent with Section 6(b)
The Exchange believes that the proposed amendments to its compensation committee listing standards are consistent with the protection of investors and the public interest in that they strengthen the independence requirements for compensation committee membership, provide additional authority to compensation committees and require compensation committees to consider the independence of compensation consultants.
The Exchange believes that the general exemptions from the proposed requirements that it is granting to foreign private issuers and smaller reporting companies are consistent with Section 10C and Rule 10C–1, for the reasons stated above in the “Purpose” section, including because (i) Rule 10C–1(b)(5)(ii) explicitly exempts smaller reporting companies and (ii) foreign private issuers will comply with their home country law and, if they avail themselves of the exemption, will be required to disclose that fact under existing NYSE listing requirements. The Exchange believes it is an appropriate use of its exemptive authority under Rule 10C–1(b)(5)(i), and that it is not unfairly discriminatory under Section 6(b)(5) of the Act, to provide general exemptions under the proposed rules to issuers whose only listed class of equity securities on the Exchange is a preferred stock, as holders of listed preferred stock have significantly greater protections with respect to their rights to receive dividends and a liquidation
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
The Exchange has not solicited written comments on the proposed rule change. The Exchange has received two comment letters on the proposed rule change.
The Exchange does not believe that it is appropriate to consider board compensation as part of the compensation committee independence determination with respect to individual directors. Non-executive directors devote considerable time to the affairs of the companies on whose boards they sit and eligible candidates would be difficult to find if board and committee service were unpaid in nature. Consequently, independent directors of listed companies are almost invariably paid for their board and committee service. As all independent directors are almost certainly going to receive board compensation from the company and do so on terms determined by the board as a whole, the Exchange does not believe that an analysis of the board compensation of individual directors is a meaningful consideration in determining their independence for purposes of compensation committee service.
The Exchange's existing director independence requirements require the board to consider relationships between the director and any member of management in making its affirmative independence determinations. Commentary included in Section 303A.02(a) makes this explicit by stating that when the board is making an affirmative independence determination “the concern is independence from management.” Consequently, the Exchange does not believe that any further clarification of this requirement is necessary.
The Exchange does not believe that it is necessary to explicitly require that the additional independence considerations for compensation committee service should be a part of the board's general independence determinations for all independent directors. Section 303A.02(a) notes that “[I]t is not possible to anticipate, or explicitly to provide for, all circumstances that might signal potential conflicts of interest, or that might bear on the materiality of a director's relationship to a listed company” and that the board should therefore “broadly consider all relevant facts and circumstances” when making affirmative independence determinations. As such, the Exchange believes that, where appropriate, listed company boards should already be including in their general independence determinations factors including those being added to the compensation committee independence determination.
The Exchange does not believe it is necessary to include in the listing standards a statement that a single factor may be sufficiently material to render a director non-independent, as this is clearly the intention of the listing standards as drafted. Section 303A.02(a) in its current form and in its proposed amended form requires the board to consider the materiality of each separate relationship between the director and the listed company or its management.
The second commenter proposed that the Exchange should require companies to make a public disclosure with respect to the factors considered by the compensation committee in reviewing the independence of compensation consultants, legal counsel and other compensation advisers. This commenter also proposed that the Exchange should require with respect to outside counsel hired by the compensation committee the same disclosure as is required by Item 407(e)(3)(iv) of Regulation S–K with respect to the nature of any conflict that arises from the engagement of a compensation consultant identified in the proxy statement. The Exchange does not believe that it is necessary to establish additional disclosure requirements of this nature. Item 407 of Regulation S–K contains extensive disclosure requirements with respect to a listed company's corporate governance and the Exchange's own rules generally incorporate those requirements by reference where applicable. Moreover, with respect to disclosure of any conflicts of interest that may arise with respect to outside counsel hired by the compensation committee, the Exchange believes that the rigorous conflict of interest requirements applicable to attorneys adequately address such concerns. And the Exchange is mindful that requiring additional public disclosures regarding outside counsel could require a listed company to disclose information that otherwise may be protected by attorney-client privilege.
Within 45 days of the date of publication of this notice in the
(A) By order approve or disapprove the proposed rule change, or
(B) Institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
BX proposes to modify the listing rules for compensation committees to comply with Rule 10C–1 under the Exchange Act and make other related changes. The text of the proposed rule change is available on BX's Web site at
BX will implement the proposed rule upon approval. Proposed BX Venture Market Listing Rule 5605(d)(3), which requires compensation committees to have the specific responsibilities and authority necessary to comply with Rule 10C–1(b)(2), (3) and (4)(i)–(vi) under the Exchange Act, shall be effective immediately.
Companies must comply with the remaining provisions of the amended listing rules by the earlier of: (1) Their second annual meeting held after the date of approval of this proposal; or (2) December 31, 2014. Until a Company is required to comply with the amended listed rules, it must continue to comply with BX's existing listing rules.
In its filing with the Commission, BX included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. BX has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements.
Section 952 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”)
Rule 10C–1 generally requires that:
• Each member of the compensation committee of a listed issuer must be an independent member of the board of directors;
• in determining independence requirements for compensation committee members, exchanges must consider relevant factors, including, but not limited to:
• the source of compensation of a member, including any consulting, advisory or other compensatory fee paid by the issuer to such member; and
• whether the member is affiliated with the issuer, a subsidiary of the issuer or an affiliate of a subsidiary of the issuer;
• the compensation committee must have the authority to retain or obtain the advice of a compensation consultant, independent legal counsel or other compensation adviser;
• the listed issuer must provide for appropriate funding, as determined by the compensation committee, for payment of reasonable compensation to such compensation advisers;
• the compensation committee may select such compensation advisers only after taking into consideration six independence factors that are enumerated in Rule 10C–1, as well as any other factors identified by an exchange; and
• certain categories of issuers, including, but not limited to, controlled companies and smaller reporting companies, are generally exempt from all of Rule 10C–1, while other categories of issuers, including, but not limited to, foreign private issuers that provide certain disclosures, are specifically exempt from the requirement to have a fully independent compensation committee.
While BX does not presently list any securities, the Commission has approved listing rules for the Exchange's BX Venture Market.
• Companies
• compensation committee members must not accept directly or indirectly any consulting, advisory or other compensatory fee, other than for board service, from a Company or any subsidiary thereof;
• in determining whether a director is eligible to serve on a compensation committee, a Company's board must consider whether the director is affiliated with the Company, a subsidiary of the Company or an affiliate of a subsidiary of the Company to determine whether such affiliation would impair the director's judgment as a member of the compensation committee;
• Companies may continue to rely on BX's existing exception that allows certain non-Independent Directors to serve on a compensation committee under exceptional and limited circumstances;
• if a Company fails to comply with the compensation committee composition requirements in certain circumstances, it may rely on a cure period;
• Companies must adopt a formal, written compensation committee charter that must specify the compensation committee responsibilities and authority in Rule 10C–1 relating to the: (i) Authority to retain compensation consultants, independent legal counsel and other compensation advisers; (ii) authority to fund such advisers; and (iii) responsibility to consider certain independence factors before selecting such advisers, other than in-house legal counsel;
• Companies must review and reassess the adequacy of the compensation committee charter on an annual basis;
• BX's existing exemptions from, and phase-in schedules for, the compensation-related listing rules remain generally unchanged, other than to add exemptions for cooperatives and Controlled Companies, as defined below, as well as a phase-in schedule for Companies ceasing to be Controlled Companies; and
• Smaller Reporting Companies
Rule 10C–1 requires BX to include in its submission: (i) A review of whether and how its existing or proposed listing rules satisfy the requirements of Rule 10C–1; (ii) a discussion of the consideration of factors relevant to compensation committee independence conducted by BX; and (iii) the definition of independence applicable to compensation committee members that BX proposes to adopt or retain in light of such review.
BX's current listing rules require that compensation of the chief executive officer and all other Executive Officers
Although it was not required to do so by Rule 10C–1,
BX also considered whether eliminating the Alternative would pose an undue hardship on listed Companies. Since BX does not currently have any listed Companies, it does not believe
As a result, BX proposes to eliminate the Alternative and require listed Companies to have a standing compensation committee with the responsibility for determining, or recommending to the full board for determination, the compensation of the chief executive officer and all other Executive Officers of the Company.
BX's current listing rules do not impose size requirements on any board committees, other than the audit committee, which must consist of at least three members.
Although it was not required to do so by Rule 10C–1, BX considered whether it is appropriate to impose a minimum size requirement on a compensation committee. Given the importance of compensation decisions to stockholders, BX believes that it is appropriate to have more than one director responsible for these decisions and that therefore, a compensation committee should consist of at least two members. BX then considered whether to require compensation committees to adhere to the same size requirement as audit committees and have a minimum of three members. However, BX was concerned that it might be difficult for Companies, especially smaller Companies, to comply with a requirement to have a three-member compensation committee, in addition to a three-member audit committee.
BX also considered whether imposing a minimum size requirement on a compensation committee would be unduly burdensome to listed Companies, especially in combination with the proposal to eliminate the Alternative, as discussed above. Since BX does not currently have any listed Companies, it does not believe that imposing a minimum size requirement on a compensation committee would be unduly burdensome.
As a result, BX proposes to require a compensation committee of a Company to consist of at least two members of the board of directors.
BX's current listing rules require a compensation committee to be comprised solely of Independent Directors, as defined in BX Venture Market Listing Rule 5605(a)(2).
• A director who is an Executive Officer or employee of the Company;
• a director who is, or at any time during the past three years was, employed by the Company;
• a director who accepted or who has a Family Member
• a director who is a Family Member of an individual who is, or at any time during the past three years was, employed by the Company as an Executive Officer;
• a director who is, or has a Family Member who is, a partner in, or a controlling Shareholder
• a director of the Company who is, or has a Family Member who is, employed as an Executive Officer of another entity where at any time during the past three years any of the Executive Officers of the Company serve on the compensation committee of such other entity;
• a director who is, or has a Family Member who is, a current partner of the Company's outside auditor, or was a partner or employee of the Company's outside auditor who worked on the Company's audit at any time during any of the past three years.
Second, a Company's board of directors must make an affirmative determination that each Independent Director has no relationship that, in the opinion of the board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
BX proposes to continue unchanged its existing requirement that a compensation committee be comprised solely of Independent Directors, as defined in BX Venture Market Listing Rule 5605(a)(2).
Rule 10C–1 requires that in determining the independence requirements for compensation committee members, BX must consider relevant factors, including, but not limited to, the source of compensation of a member, including any consulting, advisory or other compensatory fee paid by the issuer to the member.
This is in contrast to BX's current listing rules relating to audit committees, which require audit committee members to meet the criteria for independence set forth in Rule 10A–3(b)(1) under the Exchange Act, subject to certain exemptions.
After reviewing its current listing rules, BX concluded that there is no compelling justification to have different independence standards for audit and compensation committee members with respect to the acceptance of compensatory fees from a Company. Accordingly, BX proposes to adopt the same standard for compensation committee members that applies to audit committee members under Rule 10A–3 under the Exchange Act with respect to compensatory fees. Specifically, BX's proposal prohibits a compensation committee member from accepting directly or indirectly any consulting, advisory or other compensatory fee from an issuer or any subsidiary. As in Rule 10A–3, compensatory fees shall not include: (i) Fees received as a member of the compensation committee, the board of directors or any other board committee; or (ii) the receipt of fixed amounts of compensation under a retirement plan (including deferred compensation) for prior service with the Company (provided that such compensation is not contingent in any way on continued service).
Rule 10C–1 requires that in determining the independence requirements for compensation committee members, BX also must consider whether a member is affiliated with the issuer, a subsidiary of the issuer or an affiliate of a subsidiary of the issuer.
Beyond the definition of Independent Director, BX's current listing rules relating to audit committees require audit committee members to meet the criteria for independence set forth in Rule 10A–3(b)(1) under the Exchange Act, subject to certain exemptions.
After reviewing its current listing rules, BX considered whether to propose that compensation committee members must meet the same standard applicable to audit committee members under Rule 10A–3 under the Exchange Act with respect to affiliation, similar to its proposal with respect to compensatory fees. However, BX concluded that such a blanket prohibition would be inappropriate for compensation committees. In fact, BX believes that it may be appropriate for certain affiliates, such as representatives of significant stockholders, to serve on compensation committees since their interests are likely aligned with those of other stockholders in seeking an appropriate executive compensation program.
As a result, BX proposes that Companies' boards of directors should consider affiliation in making an eligibility determination for compensation committee members, but it does not propose bright-line rules around this factor. In making this eligibility determination, a Company's board specifically must consider whether the director is affiliated with the Company, a subsidiary of the Company or an affiliate of a subsidiary of the Company to determine whether such affiliation would impair the director's judgment as a member of the compensation committee. In performing this analysis, a board of directors is not required to apply a “look-back” period, and is therefore required to consider affiliation only with respect to relationships that occur during an individual's term of service as a compensation committee member.
A board may conclude that it is appropriate for a director who is an affiliate to serve on the compensation committee. While this differs from the requirement applicable to audit committee members, BX could identify no compelling policy justification for precluding all affiliates, such as owners of a Company, even those with very large stakes, from serving on the compensation committee.
Rule 10C–1 permits BX to consider other relevant factors in determining the independence requirements for compensation committee members.
With some edits, BX proposes to retain its existing exception that allows a Company to have a non-Independent Director serve on the compensation committee under exceptional and limited circumstances.
A Company that relies on this exception must disclose either on or through the Company's Web site or in the proxy statement for the next annual meeting subsequent to such determination (or, if the Company does not file a proxy, in its Form 10–K or 20–F), the nature of the relationship and the reasons for the determination. In addition, the Company must provide any disclosure required by Instruction 1 to Item 407(a) of Regulation S–K regarding its reliance on this exception. A member appointed under this exception may not serve longer than two years.
BX believes this exception is an important means to allow Companies flexibility as to board and committee membership and composition in unusual circumstances, which may be particularly important for smaller Companies.
BX would allow a Company to avail itself of the exception even for a director who fails the new requirements adopted pursuant to Rule 10C–1.
Consistent with Rule 10C–1, BX's proposal provides Companies with an opportunity to cure defects in the composition of compensation committees.
Under BX's proposal, if a Company fails to comply with the compensation committee composition requirements due to one vacancy, or one compensation committee member ceases to be independent due to circumstances beyond the member's reasonable control, the Company shall regain compliance by the earlier of the next annual shareholders meeting or one year from the occurrence of the event that caused the noncompliance. However, if the annual shareholders meeting occurs no later than 180 days following the event that caused the noncompliance, the Company shall instead have 180 days from such event to regain compliance. This provides a Company at least 180 days to cure noncompliance and would typically allow a Company to regain compliance in connection with its next annual meeting. A Company relying on this provision shall provide notice to BX immediately upon learning of the event or circumstance that caused the noncompliance.
BX proposes to require each Company to certify that it has adopted a formal written compensation committee charter and that the compensation committee will review and reassess the adequacy of the formal written charter on an annual basis.
BX proposes that the compensation committee charter must specify:
• The scope of the compensation committee's responsibilities, and how it carries out those responsibilities, including structure, processes and membership requirements;
• The compensation committee's responsibility for determining, or recommending to the board for determination, the compensation of the chief executive officer and all other Executive Officers of the Company;
• That the chief executive officer of the Company may not be present during voting or deliberations by the compensation committee on his or her compensation; and
• The specific compensation committee responsibilities and authority set forth in proposed BX Venture Market Listing Rule 5605(d)(3), which implements the requirements of Section 10C(b)–(e) of the Exchange Act and Rule 10C–1(b)(2), (3) and (4)(i)–(vi) thereunder.
The requirement for the charter to specify the scope of the compensation committee's responsibilities, and how it carries out those responsibilities, including structure, processes and membership requirements, is copied
The requirement for the charter to specify the compensation committee's responsibility for determining, or recommending to the board for determination, the compensation of the chief executive officer and all other Executive Officers of the Company, is based upon BX's current compensation-related listing rules.
The requirement for the charter to specify that the chief executive officer of the Company may not be present during voting or deliberations by the compensation committee on his or her compensation is based upon BX's current compensation-related listing rules.
Finally, the requirement for the charter to specify the specific compensation committee responsibilities and authority set forth in proposed BX Venture Market Listing Rule 5605(d)(3) is modeled after BX's similar listing rule relating to audit committee charters.
Rule 10C–1 permits BX to identify other relevant independence factors that a compensation committee must consider when selecting a compensation consultant, legal counsel or other adviser.
Rule 10C–1 allows the national securities exchanges to exempt from the listing rules adopted pursuant to Rule 10C–1 certain categories of issuers, as the national securities exchange determines is appropriate, taking into consideration, among other relevant factors, the potential impact of the listing rules on smaller reporting issuers.
In addition, BX's current listing rules provide that a Foreign Private Issuer may follow its home country practice in lieu of BX's compensation-related listing rules if the Foreign Private Issuer discloses in its annual reports filed with the Commission each requirement that it does not follow and describes the home country practice followed by the issuer in lieu of such requirements.
Finally, BX proposes to add exemptions to its compensation committee rules for cooperatives
BX proposes that its existing phase-in schedules for the requirements relating to compensation committee composition remain generally unchanged. BX's current listing rules include phase-in schedules for: Companies listing in connection with an initial public offering
In addition, BX proposes minor clarifying changes to the phase-in schedule in its current listing rules for Companies transferring from other markets.
Since BX is proposing to add to its rules an exemption for Controlled Companies, as discussed above, BX also proposes to add a phase-in schedule for Companies ceasing to be Controlled Companies. This proposed phase-in schedule is modeled after the similar phase-in schedule in Nasdaq's rules.
None of the aforementioned phase-in schedules apply to the requirement to adopt a formal written compensation committee charter including the content specified in BX Venture Market Listing Rule 5605(d)(1)(A)–(D).
While Rule 10C–1 exempts Smaller Reporting Companies from all of its requirements, BX's current listing rules do not include any such exemptions.
However, as discussed above, BX proposes to eliminate the Alternative in its current listing rules that allows compensation decisions to be made by a majority of the Independent Directors rather than by a committee composed entirely of Independent Directors. BX proposes to eliminate the Alternative for Smaller Reporting Companies, just like all other Companies. As a result, Smaller Reporting Companies would be
In addition, BX proposes that Smaller Reporting Companies must adopt a formal written compensation committee charter or board resolution that specifies the committee's responsibilities and authority. Unlike other Companies, Smaller Reporting Companies may include this content in a board resolution, rather than a compensation committee charter, and Smaller Reporting Companies are not required to review and reassess the adequacy of the charter or board resolution on an annual basis. The charter or board resolution must specify the same content as other Companies, except Smaller Reporting Companies are not required to specify the specific compensation responsibilities and authority set forth in proposed BX Venture Market Listing Rule 5605(d)(3) relating to the: (i) Authority to retain compensation consultants, independent legal counsel and other compensation advisers; (ii) authority to fund such advisers; and (iii) responsibility to consider certain independence factors before selecting such advisers, other than in-house legal counsel.
BX also proposes to apply the same phase-in schedule to a Company ceasing to be a Smaller Reporting Company that applies to a Company listing in conjunction with its initial public offering. Since a Smaller Reporting Company is required to have a compensation committee comprised of at least two Independent Directors, a Company that has ceased to be a Smaller Reporting Company may use the phase-in schedule for the additional eligibility requirements relating to compensatory fees and affiliation, but not for the minimum size requirement or the requirement that the committee consist only of Independent Directors. This phase-in schedule will start to run on the due date of the SEC filing in which the Company is required to report that it is an issuer other than a Smaller Reporting Company.
BX proposes that Rule 5605(d)(3), relating to compensation committee responsibilities and authority, shall be effective immediately.
In order to allow Companies to make necessary adjustments to their boards and committees in the course of their regular annual meeting schedules, BX proposes that Companies must comply with the remaining provisions of the amended listing rules on compensation committees by the earlier of: (1) Their second annual meeting held after the date of approval of BX's amended listing rules; or (2) December 31, 2014. This transition period is similar to the transition period used when Nasdaq implemented similar requirements for audit committees in 2003.
A Company must certify to BX, no later than 30 days after the implementation deadline applicable to it, that it has complied with the amended listing rules on compensation committees. BX will provide Companies with a form for this certification.
During the transition period, Companies that are not yet required to comply with the amended listing rules on compensation committees must continue to comply with BX's existing listing rules, which have been redesignated as Listing Rule 5605A(d) and IM–5605A–6 in BX's proposal.
Finally, BX proposes to make minor conforming changes to its requirements relating to audit committees. BX also proposes to correct certain typographical errors in its corporate governance requirements as set forth in Exhibit 5.
BX believes that the proposed rule change is consistent with the provisions of Section 6 of the Exchange Act,
As required by the Dodd-Frank Act and Rule 10C–1, BX is proposing amendments to its listing rules relating to the independence of compensation committees and their advisers. BX reviewed its existing compensation-relating listing rules, in combination with the requirements of Rule 10C–1, to develop a set of proposed compensation-related listing rules. These proposals generally fall into three categories: proposed rule amendments to comply with Rule 10C–1; proposals
More specifically, BX's proposed amendments to its listing rules in order to comply with Rule 10C–1 set forth: additional eligibility requirements for compensation committee members relating to compensatory fees and affiliation; an opportunity to cure defects in compensation committee composition; a requirement that compensation committees have the specific responsibilities and authority necessary to comply with Rule 10C–1(b)(2), (3) and (4)(i)–(vi) under the Exchange Act; and exemptions for limited partnerships, management investment companies, foreign private issuers that provide certain required disclosures, Controlled Companies and Smaller Reporting Companies. BX believes that its proposals fairly balance the goal of protecting the investing public by ensuring effective deliberation over executive compensation with the goal of avoiding the imposition of undue costs on Companies.
BX's proposals to continue relatively unchanged some of its existing exemptions to the compensation-related listing rules for certain categories of Companies and to add a new exemption for cooperatives takes into account the unique characteristics of these Companies.
The proposed rule amendments not required by Rule 10C–1 require that: Companies must have a standing compensation committee; the committee must consist of a minimum of two members; the committee must have a formal written charter (or board resolution, in the case of Smaller Reporting Companies) that specifies the committee's responsibilities and authority; and Smaller Reporting Companies must continue to comply with certain of BX's compensation-related listing rules. As discussed in the “Purpose” section, BX believes that these new requirements will facilitate effective oversight of executive compensation and promote accountability to investors for executive compensation decisions. With regard to Smaller Reporting Companies, BX notes that these Companies continue to be subject to the same requirements as all other Companies, except the new requirements that BX is proposing under Rule 10C–1 relating to compensatory fees, affiliation and the specific compensation committee responsibilities and authority set forth in proposed BX Venture Market Listing Rule 5605(d)(3). BX believes that this hybrid approach does not discriminate unfairly between issuers because it recognizes the fact that the “executive compensation arrangements of [Smaller Reporting Companies] generally are so much less complex than those of other public companies that they do not warrant the more extensive disclosure requirements imposed on companies that are not [Smaller Reporting Companies] and related regulatory burdens that could be disproportionate for [Smaller Reporting Companies].”
BX does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Exchange Act, as amended.
BX did not solicit comments on the proposed rule change. BX received two written comments, which are attached as Exhibit 2.
The first commenter recommended that BX should require Companies to disclose: (i) How they are complying with the requirement to consider the independence factors enumerated in Rule 10C–1; and (ii) the nature of any conflict of interest arising from the engagement of legal counsel by a compensation committee. BX considered these recommendations, but it preferred to defer to the judgment of the Commission with respect to the appropriate disclosure framework under Rule 10C–1. BX therefore decided not to propose any new disclosure requirements for Companies, other than those that are required by Rule 10C–1.
The second commenter proffered four recommendations. First, this commenter recommended that BX include director fees within the list of relevant factors that must be considered when assessing the independence of compensation committee members. BX does not believe that the intent of the Dodd-Frank Act or Rule 10C–1 was to limit independence based on director compensation, and therefore, BX proposes to continue to exempt board fees from its prohibition on payment of compensatory fees to a compensation committee member. Second, this commenter recommended that BX include in the requirements for compensation committee independence a factor relating to business or personal relationships between directors and officers. As discussed in the “Purpose” section above, BX reviewed its current and proposed listing rules and concluded that these rules are sufficient to ensure the independence of compensation committee members. Therefore, BX determined not to propose further independence requirements, other than those discussed above. Third, this commenter recommended that BX expand the additional factors for compensation committee eligibility to cover all independent directors, not just those serving on the compensation committee. While BX heavily weighed the commenter's concern that multiple definitions of independence add to the complexity of board membership, BX believed that the intent of the Dodd-Frank Act and Rule 10C–1 was to address the independence of compensation committee members, as well as their advisers, specifically. BX concluded therefore that it is inappropriate to expand the additional requirements proposed herein to cover all independent directors. Finally, this commenter recommended that BX clarify that, while the factors must be considered in their totality, a single factor can result in a loss of director independence. BX confirms that a director cannot be deemed independent if he or she fails any one of the bright-line prohibitions in BX Venture Market Listing Rule 5605(a)(2).
Within 45 days of the date of publication of this notice in the
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
Phlx is proposing to modify certain Exchange Rules to clarify further that the provisions of the Rule 800 Series are not effective to permit the listing of securities. The text of the proposed rule change is available at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements.
The Commission recently adopted rules that require any national securities exchange that lists equity securities to have listing standards relating to the independence of compensation committees and their advisers.
The Exchange operates NASDAQ OMX PSX (“PSX”), a fully integrated order display and execution system for all NMS stocks,
The Exchange proposes to modify Rules 800–803 and 867.5 to clarify further that the provisions of the Rule 800 Series are not effective to permit the listing of securities. Specifically, the Exchange proposes to change the title of the Rule 800 Series from “Listing of Securities” to “Standards for Trading Securities Pursuant to Unlisted Trading Privileges.” Regarding Rule 801, the Exchange proposes to delete references to listing and add clarifying language to state that the Exchange lists only standardized options, as defined in Rule 9b–1 under the Act, issued by a clearing agency that is registered pursuant to Section 17A of the Act, pursuant to the Rule 1000, 1000A and 1000C Series. In addition, the Exchange will not list securities pursuant to any other rule until the Exchange files a proposed rule change under Section 19(b)(2) under the Act to amend its rules to make any changes needed to comply with Rules 10A–3 and 10C–1 under the Act and to incorporate additional qualitative and other listing criteria, and such proposed rule change is approved by the Commission. The Exchange also proposes to state explicitly in Rule 801, as well as Rule 803, which is discussed further below, that the provisions of the Rule 800 Series are not effective to permit the listing of securities.
Regarding Rule 802, the Exchange proposes to move the statement that “[t]he Exchange does not rate or guarantee the quality of any security dealt on the Exchange” to Rule 801. The Exchange also proposes to move the definition of the terms “public shareholder” and “public holder” to Rule 800, which includes definitions that apply to the entire Rule 800 Series. The Exchange proposes to delete the remainder of Rule 802, which relates to determinations concerning listing or delisting, and is therefore irrelevant since the Exchange does not list securities pursuant to the Rule 800 Series.
The Exchange proposes to change the title of Rule 803 from “Criteria for Listing—Tier I” to “Listing Standards for Unlisted Trading Privileges.” As discussed above, Rule 803(o) includes a statement that the provisions of the Rule 800 Series that permit the listing of securities will not be effective until the Exchange files a proposed rule change under Section 19(b)(2) under the Act to amend its rules to make any changes needed to comply with Rule 10A–3 under the Act and to incorporate additional qualitative listing criteria, and such proposed rule change is approved by the Commission. The Exchange proposes to move this language to Rule 801, so that it is more prominent at the beginning of this section of rules, and to revise the existing language to state that the Exchange will not list securities pursuant to any other rule until it complies with the aforementioned conditions. The Exchange also proposes to add a reference to Rule 10C–1 under the Act, which requires securities exchanges that list equity securities to adopt rules relating to the independence of compensation committees and their advisers,
Finally, the Exchange proposes to add similar clarifying language to Rule 867.5, which relates to compensation committees.
The Exchange believes that its proposal is consistent with Section 6(b) of the Act,
The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act.
No written comments were either solicited or received.
Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090.
All submissions should refer to File Number SR–Phlx–2012–115. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),
CBOE proposes to update its Rule 31.10—Corporate Governance—in order to comply with new Rule 10C–1 under the Act. The text of the proposed rule change is available on the Exchange's Web site (
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
Effective July 27, 2012, the Commission adopted Rule 10C–1 (the “New Rule”) to the Act.
Rule 31.10 currently states that compensation of the chief executive officer, and all other executive officers, of an issuer must be determined, or recommended to the board of directors of the issuer for determination, either by a majority of all independent directors or a compensation committee comprised solely of independent directors. The New Rule's requirements regarding a compensation committee, as well as the broad definition of “compensation committee” and the independence of those directors on the compensation committee (all described below), make Rule 31.10(c)'s statement that compensation of executive officers may be determined by a majority of all independent directors a bit superfluous. Due to the broad definition of the term “compensation committee” as defined in the New Rule, the Exchange hereby proposes to simply state that compensation of all executive officers of an issuer be determined, or recommended to the board of directors of the issuer for determination, by a compensation committee.
The New Rule provides a definition of “compensation committee”, which the Exchange proposes to adopt. For the purposes of Rule 31.10, the term “compensation committee” shall mean: (A) A committee of the board of directors that is designated as the compensation committee; or (B) in the absence of a committee of the board of directors that is designated as the compensation committee, a committee of the board of directors performing functions typically performed by a
The New Rule states that “each member of the compensation committee must be an independent member of the board of directors of the listed issuer, and must otherwise be independent.”
The Exchange hereby proposes to amend Rule 31.10(c) to state that all members of a compensation committee must be “independent directors” as defined in Rule 31.10(h)(2). “Independent director” is defined in Rule 31.10(h)(2) as:
(A) a director who is, or at any time during the past three years was, employed by the company or by any parent or subsidiary of the company;
(B) a director who accepted or who has a family member who accepted any payments from the company or any parent or subsidiary of the company in excess of $60,000 during the current or any of the past three fiscal years, other than the following:
(i) compensation for board or board committee service;
(ii) payments arising solely from investments in the company's securities;
(iii) compensation paid to a family member who is a non-executive employee of the company or a parent or subsidiary of the company;
(iv) benefits under a tax-qualified retirement plan, or non-discretionary compensation; or
(v) loans permitted under Exchange Act Section 13(k).
Provided, however, that audit committee members are subject to additional, more stringent requirements under Exchange Act Rule 10A–3, which requirements are incorporated by reference in the Exchange rules pursuant to Rule 31.10(b).
(C) a director who is a family member of an individual who is, or at any time during the past three years was, employed by the company or by any parent or subsidiary of the company as an executive officer;
(D) a director who is, or has a family member who is, a partner in, or a controlling shareholder or an executive officer of, any organization to which the company made, or from which the company received, payments for property or services in the current or any of the past three fiscal years that exceed 5% of the recipient's consolidated gross revenues for that year, or $200,000, whichever is more, other than the following:
(i) payments arising solely from investments in the company's securities; or
(ii) payments under non-discretionary charitable contribution matching programs;
(E) a director of the listed company who is, or has a family member who is, employed as an executive officer of another entity where at any time during the past three years any of the executive officers of the listed company serve on the compensation committee of such other entity;
(F) a director who is, or has a family member who is, a current partner of the company's outside auditor, or was a partner or employee of the company's outside auditor who worked on the company's audit at any time during any of the past three years; or
(G) in the case of an investment company, in lieu of Rules 31.10(h)(2)(A)–(F), a director who is an “interested person” of the company as defined in Section 2(a)(19) of the Investment Company Act of 1940, other than in his or her capacity as a member of the board of directors or any board committee.
The Exchange believes that the current definition of “independent director” meets the criteria listed for determining independence requirements under the New Rule. The requirements that a director is not considered “independent” if he or a family member has accepted any payments from the company or any parent or subsidiary of the company in excess of $60,000 during the current or any of the past three fiscal years, other than compensation for board or committee service, payments arising solely from investments in the company's securities, compensation paid to a family member who is a non-executive employee of the company or a parent or subsidiary of the company, benefits under a tax-qualified retirement plan, or non-discretionary compensation, or loans permitted under Exchange Act Section 13(k) demonstrates that the definition of “independent” considers the sources of compensation of a member of the compensation committee.
The Exchange believes that the current definition of “independent director” meets the requirement in the New Rule that the Exchange's rules must consider whether the director is affiliated with the issuer or a subsidiary or affiliate of a subsidiary of the issuer. For purposes of the New Rule, an “affiliate” of, or a person “affiliated” with, a specified person, is a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified.
The New Rule states that any exchange to which the New Rule applies must provide issuers an opportunity to cure any violations of the rules that such exchange may put in place as a result of the New Rule.
Rule 31.10(c) currently provides an exception to the independence requirement for compensation committee members. This exception states that, notwithstanding said independence requirements, if the compensation committee is comprised of at least three members, one director, who is not independent as defined in Rule 31.10(h)(2) and is not a current officer or employee or a family member of an officer or employee, may be appointed to the compensation committee if the board, under exceptional and limited circumstances, determines that such individual's membership on the committee is required by the best interests of the company and its shareholders, and the board discloses, in the proxy statement for the next annual meeting subsequent to such determination (or, if the issuer does not file a proxy, in its Form 10–K or 20–F), the nature of the relationship and the reasons for the determination. A member appointed under this exception may not serve longer than two years.
Currently, Rule 31.10(c) states that the chief executive officer of an issuer may not be present during voting or deliberations regarding his salary. CBOE proposes to extend this clause to all executive officers and state that the executive officer for whom compensation is being determined may not be present during voting or deliberations regarding compensation of that executive officer. The Exchange believes that this extension is appropriate and will further prevent any executive officer for whom compensation is being determined from having undue or inappropriate influence on his compensation.
The New Rule exempts from the independence requirements limited partnerships, companies in bankruptcy proceedings, open-end management investment companies registered under the Investment Company Act of 1940, and any foreign private issuer that discloses in its annual report the reasons that the foreign private issuer does not have an independent compensation committee.
Rule 31.10(f) currently exempts a number of other categories of issuers from the executive compensation requirements of Rule 31.10(c). These types of issuers are controlled companies, registered management investment companies (which are similar to open-end management investment companies), and asset-backed issuers and other passive issuers, cooperatives.
The New Rule also discusses the retention of compensation consultants, independent legal counsel and other compensation advisers to assist the compensation committee of an issuer in determining compensation for executives.
Under this new Interpretation and Policy .11 to Rule 31.10, each listed issuer must provide for appropriate funding, as determined by the compensation committee, in its capacity as a committee of the board of directors, for payment of reasonable compensation to a compensation consultant, independent legal counsel or any other adviser retained by the compensation committee.
Under this new Interpretation and Policy .11 to Rule 31.10, the compensation committee of a listed issuer may select a compensation consultant, legal counsel or other adviser to the compensation committee only after taking into consideration the following factors: (1) The provision of other services to the issuer by the person that employs the compensation consultant, legal counsel or other adviser, (2) the amount of fees received from the issuer by the person that employs the compensation consultant, legal counsel or other adviser, as a percentage of the total revenue of the person that employs the compensation consultant, legal counsel or other adviser, (3) the policies and procedures of the person that employs the compensation consultant, legal counsel or other adviser that are designed to prevent conflicts of interest, (4) any business or personal relationship of the compensation consultant, legal counsel or other adviser with a member of the compensation committee, (5) any stock of the issuer owned by the compensation consultant, legal counsel or other adviser, and (6) any business or personal relationship of the compensation consultant, legal counsel, other adviser or the person employing the adviser with an executive office of the issuer. A compensation committee must consider these factors with respect to any compensation consultant, legal counsel or other advisor that provides advice to the compensation committee (other than in-house legal counsel).
The requirements of this Interpretation and Policy .11 to Rule 31.10 shall not apply to (1) any controlled company or to any smaller reporting company, (2) the listing of a security futures product cleared by a clearing agency that is registered pursuant to section 17A of the Act (15 U.S.C. 78q–1) or that is exempt from the registration requirements of section 17A(b)(7)(A) (15 U.S.C. 78q–1(b)(7)(A)), or (3) the listing of a standardized option, as defined in § 240.9b–1(a)(4), issued by a clearing agency that is registered pursuant to section 17A of the Act (15 U.S.C. 78q–1). These exemptions comply with those stated in the New Rule.
The Exchange believes the proposed rule change is consistent with the Act
The Exchange further believes that the proposed changes are consistent with the New Rule. Further, these proposed changes, in ensuring independent determination of executive compensation, will also improve investor confidence regarding executive compensation. This improved investor confidence will perfect the mechanism for a free and open market and a national market system.
CBOE does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
The Exchange neither solicited nor received comments on the proposed rule change.
Within 45 days of the date of publication of this notice in the
A. By order approve or disapprove such proposed rule change, or
B. Institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The purpose of the proposed rule change is to update the Contract Reference Obligation International Securities Identification Numbers (“Contract Reference Obligation ISINs”) and entity names in Schedule 502 of the ICC Rules in order to reflect the changes to the industry standard Contract Reference Obligation ISINs and entity names for one single name credit default swap contract that ICC currently clears (the Sara Lee Corporation), which will undergo a succession event on September 17, 2012. As a result of the Sara Lee Corporation's succession event, ICC will clear two single names (The Hillshire Brands Company and DE US, Inc.).
In its filing with the Commission, ICC included statements concerning the purpose of and basis for the proposed rule change, and discussed any comments it received on the proposed rule change. The text of these statements and comments may be examined at the places specified in Item IV below. ICC has prepared summaries, set forth in sections A, B, and C, below, of the most significant aspects of these statements.
The proposed rule change would amend Schedule 502 of the ICC Rules, which lists all the Contract Reference Obligation ISINs and entity names of all single name credit default swaps contracts that ICC clears. This amendment will update Schedule 502 to account for the Sara Lee Corporation's September 17, 2012 succession event. Specifically, the amendment will remove Schedule 502's listing of the credit default swap contract that ICC currently clears for the Sara Lee Corporation, and replace it with listings for the credit default swap contracts of the Sara Lee Corporation's successor companies, The Hillshire Brands Company and DE US, Inc. This update does not require any changes to the body of the ICC Rules. Also, the update does not require any changes to the ICC risk management framework.
Section 17A(b)(3)(F)
ICC does not believe that the proposed rule change would have any impact, or impose any burden, on competition.
ICC has not solicited written comments regarding the proposed change. ICC will notify the Commission of any written comments received by ICC.
The foregoing rule change has become effective upon filing pursuant to Section 19(b)(3)(A)
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule changes are consistent with the Act. Comments may be submitted by any of the following methods:
• Electronic comments may be submitted by using the Commission's Internet comment form (
• Paper comments should be sent in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–0609.
All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly.
All submissions should refer to File Number SR–ICC–2012–14 and should be submitted on or before November 5, 2012.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act”),
Nasdaq proposes to modify the listing rules for compensation committees to comply with Rule 10C–1 under the Exchange Act and make other related changes. The text of the proposed rule change is available on Nasdaq's Web site at
Nasdaq will implement the proposed rule upon approval. Proposed Nasdaq Listing Rule 5605(d)(3), which requires compensation committees to have the specific responsibilities and authority necessary to comply with Rule 10C–1(b)(2), (3) and (4)(i)–(vi) under the Exchange Act, shall be effective immediately.
Companies must comply with the remaining provisions of the amended listing rules by the earlier of: (1) Their second annual meeting held after the date of approval of this proposal; or (2) December 31, 2014. Until a Company is required to comply with the amended listed rules, it must continue to comply with Nasdaq's existing listing rules.
In its filing with the Commission, Nasdaq included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified
Section 952 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”)
Rule 10C–1 generally requires that:
• Each member of the compensation committee of a listed issuer must be an independent member of the board of directors;
• in determining independence requirements for compensation committee members, exchanges must consider relevant factors, including, but not limited to:
• The source of compensation of a member, including any consulting, advisory or other compensatory fee paid by the issuer to such member; and
• whether the member is affiliated with the issuer, a subsidiary of the issuer or an affiliate of a subsidiary of the issuer;
• the compensation committee must have the authority to retain or obtain the advice of a compensation consultant, independent legal counsel or other compensation adviser;
• the listed issuer must provide for appropriate funding, as determined by the compensation committee, for payment of reasonable compensation to such compensation advisers;
• the compensation committee may select such compensation advisers only after taking into consideration six independence factors that are enumerated in Rule 10C–1, as well as any other factors identified by an exchange; and
• certain categories of issuers, including, but not limited to, controlled companies and smaller reporting companies, are generally exempt from all of Rule 10C–1, while other categories of issuers, including, but not limited to, foreign private issuers that provide certain disclosures, are specifically exempt from the requirement to have a fully independent compensation committee.
Nasdaq is proposing to modify its compensation-related listing rules, as required by Rule 10C–1. Generally, Nasdaq's proposals provide that:
• Companies
• compensation committee members must not accept directly or indirectly any consulting, advisory or other compensatory fee, other than for board service, from a Company or any subsidiary thereof;
• in determining whether a director is eligible to serve on a compensation committee, a Company's board must consider whether the director is affiliated with the Company, a subsidiary of the Company or an affiliate of a subsidiary of the Company to determine whether such affiliation would impair the director's judgment as a member of the compensation committee;
• Companies may continue to rely on Nasdaq's existing exception that allows certain non-Independent Directors to serve on a compensation committee under exceptional and limited circumstances;
• if a Company fails to comply with the compensation committee composition requirements in certain circumstances, it may rely on a cure period;
• Companies must adopt a formal, written compensation committee charter that must specify the compensation committee responsibilities and authority in Rule 10C–1 relating to the: (i) Authority to retain compensation consultants, independent legal counsel and other compensation advisers; (ii) authority to fund such advisers; and (iii) responsibility to consider certain independence factors before selecting such advisers, other than in-house legal counsel;
• Companies must review and reassess the adequacy of the compensation committee charter on an annual basis;
• Nasdaq's existing exemptions from, and phase-in schedules for, the compensation-related listing rules remain generally unchanged; and
• Smaller Reporting Companies
Rule 10C–1 requires Nasdaq to include in its submission: (i) A review of whether and how its existing or proposed listing rules satisfy the requirements of Rule 10C–1; (ii) a discussion of the consideration of factors relevant to compensation committee independence conducted by Nasdaq; and (iii) the definition of independence applicable to compensation committee members that Nasdaq proposes to adopt or retain in light of such review.
Nasdaq's current listing rules require that compensation of the chief executive officer and all other Executive Officers
Although it was not required to do so by Rule 10C–1,
Nasdaq also considered whether eliminating the Alternative would pose an undue hardship on Nasdaq-listed Companies. Only a small number of Companies rely on the Alternative,
As a result, Nasdaq proposes to eliminate the Alternative and require Nasdaq-listed Companies to have a standing compensation committee with the responsibility for determining, or recommending to the full board for determination, the compensation of the chief executive officer and all other Executive Officers of the Company.
Nasdaq's current listing rules do not impose size requirements on any board committees, other than the audit committee, which must consist of at least three members.
Although it was not required to do so by Rule 10C–1, Nasdaq considered whether it is appropriate to impose a minimum size requirement on a compensation committee. Given the importance of compensation decisions to stockholders, Nasdaq believes that it is appropriate to have more than one director responsible for these decisions and that therefore, a compensation committee should consist of at least two members. Nasdaq then considered whether to require compensation committees to adhere to the same size requirement as audit committees and have a minimum of three members. However, Nasdaq was concerned that it might be difficult for Companies, especially smaller Companies, to comply with a requirement to have a three-member compensation committee, in addition to a three-member audit committee.
Nasdaq also considered whether imposing a minimum size requirement on a compensation committee would be unduly burdensome to Nasdaq-listed Companies, especially in combination with the proposal to eliminate the Alternative, as discussed above. Since only a small number of Companies currently have a compensation committee of one member and Nasdaq would allow a transition period to add an additional member, Nasdaq does not believe that requiring a compensation committee to consist of at least two members would be an undue hardship for Nasdaq-listed Companies.
As a result, Nasdaq proposes to require a compensation committee of a Company to consist of at least two members of the board of directors.
Nasdaq's current listing rules require a compensation committee to be comprised solely of Independent Directors, as defined in Nasdaq Listing Rule 5605(a)(2).
• A director who is an Executive Officer or employee of the Company;
• a director who is, or at any time during the past three years was, employed by the Company;
• A director who accepted or who has a Family Member
• A director who is a Family Member of an individual who is, or at any time during the past three years was, employed by the Company as an Executive Officer;
• A director who is, or has a Family Member who is, a partner in, or a controlling Shareholder
• A director of the Company who is, or has a Family Member who is, employed as an Executive Officer of another entity where at any time during the past three years any of the Executive Officers of the Company serve on the
• a director who is, or has a Family Member who is, a current partner of the Company's outside auditor, or was a partner or employee of the Company's outside auditor who worked on the Company's audit at any time during any of the past three years.
Second, a Company's board of directors must make an affirmative determination that each Independent Director has no relationship that, in the opinion of the board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
Nasdaq proposes to continue unchanged its existing requirement that a compensation committee be comprised solely of Independent Directors, as defined in Nasdaq Listing Rule 5605(a)(2).
Rule 10C–1 requires that in determining the independence requirements for compensation committee members, Nasdaq must consider relevant factors, including, but not limited to, the source of compensation of a member, including any consulting, advisory or other compensatory fee paid by the issuer to the member.
This is in contrast to Nasdaq's current listing rules relating to audit committees, which require audit committee members to meet the criteria for independence set forth in Rule 10A–3(b)(1) under the Exchange Act, subject to certain exemptions.
After reviewing its current listing rules, Nasdaq concluded that there is no compelling justification to have different independence standards for audit and compensation committee members with respect to the acceptance of compensatory fees from a Company. Accordingly, Nasdaq proposes to adopt the same standard for compensation committee members that applies to audit committee members under Rule 10A–3 under the Exchange Act with respect to compensatory fees. Specifically, Nasdaq's proposal prohibits a compensation committee member from accepting directly or indirectly any consulting, advisory or other compensatory fee from an issuer or any subsidiary. As in Rule 10A–3, compensatory fees shall not include: (i) Fees received as a member of the compensation committee, the board of directors or any other board committee; or (ii) the receipt of fixed amounts of compensation under a retirement plan (including deferred compensation) for prior service with the Company (provided that such compensation is not contingent in any way on continued service).
Rule 10C–1 requires that in determining the independence requirements for compensation committee members, Nasdaq also must consider whether a member is affiliated with the issuer, a subsidiary of the issuer or an affiliate of a subsidiary of the issuer.
Beyond the definition of Independent Director, Nasdaq's current listing rules relating to audit committees require audit committee members to meet the criteria for independence set forth in Rule 10A–3(b)(1) under the Exchange Act, subject to certain exemptions.
After reviewing its current listing rules, Nasdaq considered whether to propose that compensation committee members must meet the same standard applicable to audit committee members under Rule 10A–3 under the Exchange Act with respect to affiliation, similar to its proposal with respect to compensatory fees. However, Nasdaq concluded that such a blanket prohibition would be inappropriate for compensation committees. In fact, Nasdaq believes that it may be appropriate for certain affiliates, such as representatives of significant stockholders, to serve on compensation committees since their interests are likely aligned with those of other stockholders in seeking an appropriate executive compensation program.
As a result, Nasdaq proposes that Companies' boards of directors should consider affiliation in making an eligibility determination for compensation committee members, but it does not propose bright-line rules around this factor. In making this eligibility determination, a Company's board specifically must consider whether the director is affiliated with the Company, a subsidiary of the Company or an affiliate of a subsidiary of the Company to determine whether such affiliation would impair the director's judgment as a member of the compensation committee. In performing this analysis, a board of directors is not required to apply a “look-back” period, and is therefore required to consider affiliation only with respect to relationships that occur during an individual's term of service as a compensation committee member.
A board may conclude that it is appropriate for a director who is an affiliate to serve on the compensation committee. While this differs from the requirement applicable to audit committee members, Nasdaq could identify no compelling policy justification for precluding all affiliates, such as owners of a Company, even those with very large stakes, from serving on the compensation committee.
Rule 10C–1 permits Nasdaq to consider other relevant factors in determining the independence requirements for compensation committee members.
With minor edits, Nasdaq proposes to retain its existing exception that allows a Company to have a non-Independent Director serve on the compensation committee under exceptional and limited circumstances.
In addition to the existing exception for compensation committees, Nasdaq's current listing rules include similar exceptions for audit and nominations committees.
Nasdaq would allow a Company to avail itself of the exception even for a director who fails the new requirements adopted pursuant to Rule 10C–1.
Consistent with Rule 10C–1, Nasdaq's proposal provides Companies with an opportunity to cure defects in the composition of compensation committees.
Under Nasdaq's proposal, if a Company fails to comply with the compensation committee composition requirements due to one vacancy, or one compensation committee member ceases to be independent due to circumstances beyond the member's reasonable control, the Company shall regain compliance by the earlier of the next annual shareholders meeting or one year from the occurrence of the event that caused the noncompliance. However, if the annual shareholders meeting occurs no later than 180 days following the event that caused the noncompliance, the Company shall instead have 180 days from such event to regain compliance. This provides a Company at least 180 days to cure noncompliance and would typically allow a Company to regain compliance in connection with its next annual meeting. A Company relying on this provision shall provide notice to Nasdaq immediately upon learning of the event or circumstance that caused the noncompliance.
Nasdaq proposes to require each Company to certify that it has adopted a formal written compensation committee charter and that the compensation committee will review and reassess the adequacy of the formal written charter on an annual basis.
Nasdaq proposes that the compensation committee charter must specify:
• the scope of the compensation committee's responsibilities, and how it carries out those responsibilities, including structure, processes and membership requirements;
• the compensation committee's responsibility for determining, or recommending to the board for determination, the compensation of the chief executive officer and all other Executive Officers of the Company;
• that the chief executive officer of the Company may not be present during voting or deliberations by the compensation committee on his or her compensation; and
• the specific compensation committee responsibilities and authority set forth in proposed Nasdaq Listing Rule 5605(d)(3), which implements the requirements of Section 10C(b)–(e) of the Exchange Act and Rule 10C–1(b)(2), (3) and (4)(i)–(vi) thereunder.
The requirement for the charter to specify the scope of the compensation committee's responsibilities, and how it carries out those responsibilities, including structure, processes and membership requirements, is copied from Nasdaq's similar listing rule relating to audit committee charters.
The requirement for the charter to specify the compensation committee's responsibility for determining, or recommending to the board for determination, the compensation of the chief executive officer and all other Executive Officers of the Company, is based upon Nasdaq's current compensation-related listing rules.
The requirement for the charter to specify that the chief executive officer of the Company may not be present during voting or deliberations by the compensation committee on his or her compensation is based upon Nasdaq's current compensation-related listing rules.
Finally, the requirement for the charter to specify the specific compensation committee responsibilities and authority set forth in proposed Nasdaq Listing Rule 5605(d)(3) is modeled after Nasdaq's similar listing rule relating to audit committee charters.
Rule 10C–1 permits Nasdaq to identify other relevant independence factors that a compensation committee must consider when selecting a compensation consultant, legal counsel or other adviser.
Rule 10C–1 allows the national securities exchanges to exempt from the listing rules adopted pursuant to Rule 10C–1 certain categories of issuers, as the national securities exchange determines is appropriate, taking into consideration, among other relevant factors, the potential impact of the listing rules on smaller reporting issuers.
In addition, Nasdaq's current listing rules provide that a Foreign Private Issuer may follow its home country practice in lieu of Nasdaq's compensation-related listing rules if the Foreign Private Issuer discloses in its annual reports filed with the Commission each requirement that it does not follow and describes the home country practice followed by the Company in lieu of such requirements.
Nasdaq proposes that its existing phase-in schedules for the requirements relating to compensation committee composition remain generally unchanged. Nasdaq's current listing rules include phase-in schedules for: Companies listing in connection with an initial public offering,
In addition, Nasdaq proposes no changes to the phase-in schedule in its current listing rules for Companies transferring from other markets.
None of the aforementioned phase-in schedules apply to the requirement to adopt a formal written compensation committee charter including the content specified in Nasdaq Listing Rule 5605(d)(1)(A)–(D).
While Rule 10C–1 exempts Smaller Reporting Companies from all of its requirements, Nasdaq's current listing rules do not include any such exemptions.
However, as discussed above, Nasdaq proposes to eliminate the Alternative in its current listing rules that allows compensation decisions to be made by a majority of the Independent Directors rather than by a committee composed entirely of Independent Directors. Nasdaq proposes to eliminate the Alternative for Smaller Reporting Companies, just like all other Nasdaq-listed Companies. As a result, Smaller Reporting Companies would be required to have a compensation committee comprised of at least two Independent Directors as defined under Nasdaq's existing listing rules.
In addition, Nasdaq proposes that Smaller Reporting Companies must adopt a formal written compensation committee charter or board resolution that specifies the committee's responsibilities and authority. Unlike other Companies, Smaller Reporting Companies may include this content in a board resolution, rather than a compensation committee charter, and Smaller Reporting Companies are not required to review and reassess the adequacy of the charter or board resolution on an annual basis. The charter or board resolution must specify the same content as other Companies, except Smaller Reporting Companies are not required to specify the specific compensation responsibilities and authority set forth in proposed Nasdaq Listing Rule 5605(d)(3) relating to the: (i) Authority to retain compensation consultants, independent legal counsel and other compensation advisers; (ii) authority to fund such advisers; and (iii) responsibility to consider certain independence factors before selecting such advisers, other than in-house legal counsel.
Nasdaq also proposes to apply the same phase-in schedule to a Company ceasing to be a Smaller Reporting Company that applies to a Company listing in conjunction with its initial public offering. Since a Smaller Reporting Company is required to have a compensation committee comprised of at least two Independent Directors, a Company that has ceased to be a Smaller Reporting Company may use the phase-in schedule for the additional eligibility requirements relating to compensatory fees and affiliation, but not for the minimum size requirement or the requirement that the committee consist only of Independent Directors. This phase-in schedule will start to run on the due date of the SEC filing in which the Company is required to report that it is an issuer other than a Smaller Reporting Company.
Nasdaq proposes that Rule 5605(d)(3), relating to compensation committee responsibilities and authority, shall be effective immediately.
In order to allow Companies to make necessary adjustments to their boards and committees in the course of their regular annual meeting schedules, Nasdaq proposes that Companies must comply with the remaining provisions of the amended listing rules on compensation committees by the earlier of: (1) Their second annual meeting held after the date of approval of Nasdaq's amended listing rules; or (2) December 31, 2014. This transition period is similar to the transition period used when Nasdaq implemented similar requirements for audit committees in 2003.
A Company must certify to Nasdaq, no later than 30 days after the implementation deadline applicable to it, that it has complied with the amended listing rules on compensation committees. Nasdaq will provide Companies with a form for this certification.
During the transition period, Companies that are not yet required to comply with the amended listing rules on compensation committees must continue to comply with Nasdaq's existing listing rules, which have been redesignated as Listing Rule 5605A(d) and IM–5605A–6 in Nasdaq's proposal.
Finally, Nasdaq proposes to make minor conforming changes to its requirements relating to audit and nominations committees. Nasdaq also proposes to correct certain typographical errors in its corporate governance requirements as set forth in Exhibit 5.
Nasdaq believes that the proposed rule change is consistent with the provisions of Section 6 of the Exchange Act,
As required by the Dodd-Frank Act and Rule 10C–1, Nasdaq is proposing amendments to its listing rules relating to the independence of compensation committees and their advisers. Nasdaq reviewed its existing compensation-relating listing rules, in combination with the requirements of Rule 10C–1, to develop a set of proposed compensation-related listing rules. These proposals generally fall into three categories: Proposed rule amendments to comply with Rule 10C–1; proposals to continue certain rules relatively unchanged; and proposed rule amendments not required by Rule 10C–1. Nasdaq believes that collectively, these proposals protect investors and the public interest by requiring Companies, with certain exemptions, to have a compensation committee meeting certain requirements relating to composition, responsibilities and authority.
More specifically, Nasdaq's proposed amendments to its listing rules in order to comply with Rule 10C–1 set forth: Additional eligibility requirements for compensation committee members relating to compensatory fees and affiliation; an opportunity to cure defects in compensation committee composition; a requirement that compensation committees have the specific responsibilities and authority necessary to comply with Rule 10C–1(b)(2), (3) and (4)(i)–(vi) under the Exchange Act; and exemptions for limited partnerships, management investment companies, Controlled Companies, foreign private issuers that provide certain required disclosures, and Smaller Reporting Companies. Nasdaq believes that its proposals fairly balance the goal of protecting the investing public by ensuring effective deliberation over executive compensation with the goal of avoiding the imposition of undue costs on Companies.
Nasdaq's proposals to continue relatively unchanged some of its existing exemptions to the compensation-related listing rules for certain categories of Companies takes into account the unique characteristics of these Companies.
The proposed rule amendments not required by Rule 10C–1 require that: Companies must have a standing compensation committee; the committee must consist of a minimum of two members; the committee must have a formal written charter (or board resolution, in the case of Smaller Reporting Companies) that specifies the committee's responsibilities and authority; and Smaller Reporting Companies must continue to comply with certain of Nasdaq's compensation-related listing rules. As discussed in the “Purpose” section, Nasdaq believes that these new requirements will facilitate effective oversight of executive compensation and promote accountability to investors for executive compensation decisions. With regard to Smaller Reporting Companies, Nasdaq notes that these Companies continue to be subject to the same requirements as all other Companies, except the new requirements that Nasdaq is proposing under Rule 10C–1 relating to compensatory fees, affiliation and the specific compensation committee responsibilities and authority set forth in proposed Nasdaq Listing Rule 5605(d)(3). Nasdaq believes that this hybrid approach does not discriminate unfairly between issuers because it recognizes the fact that the “`executive compensation arrangements of [Smaller Reporting Companies] generally are so much less complex than those of other public companies that they do not warrant the more extensive disclosure requirements imposed on companies that are not [Smaller Reporting Companies] and related regulatory burdens that could be disproportionate for [Smaller Reporting Companies].' ”
Nasdaq does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Exchange Act, as amended.
Nasdaq did not solicit comments on the proposed rule change. Nasdaq received two written comments, which are attached as Exhibit 2.
The first commenter recommended that Nasdaq should require Companies to disclose: (i) How they are complying with the requirement to consider the independence factors enumerated in Rule 10C–1; and (ii) the nature of any conflict of interest arising from the engagement of legal counsel by a compensation committee. Nasdaq considered these recommendations, but it preferred to defer to the judgment of the Commission with respect to the appropriate disclosure framework under Rule 10C–1. Nasdaq therefore decided not to propose any new disclosure requirements for Companies, other than those that are required by Rule 10C–1.
The second commenter proffered four recommendations. First, this commenter recommended that Nasdaq include director fees within the list of relevant factors that must be considered when assessing the independence of compensation committee members. Nasdaq does not believe that the intent of the Dodd-Frank Act or Rule 10C–1 was to limit independence based on director compensation, and therefore, Nasdaq proposes to continue to exempt board fees from its prohibition on payment of compensatory fees to a compensation committee member. Second, this commenter recommended that Nasdaq include in the requirements for compensation committee independence a factor relating to business or personal relationships between directors and officers. As discussed in the “Purpose” section above, Nasdaq reviewed its current and proposed listing rules and concluded that these rules are sufficient to ensure the independence of compensation committee members. Therefore, Nasdaq determined not to propose further independence requirements, other than those discussed above. Third, this commenter recommended that Nasdaq expand the additional factors for
Within 45 days of the date of publication of this notice in the
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Exchange Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),
The Exchange's proposed rule change would amend BATS Rule 14.10, entitled “Corporate Governance Requirements,” in accordance with the provisions of Section 952 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) requiring the listing rules of a national securities exchange to prohibit the listing of any equity security of an issuer that is not in compliance with certain compensation committee and compensation adviser requirements, as well as modifying the numbering of Rule 14.10 in order to accommodate the proposed amendments and additions.
The text of the proposed rule change is available at the Exchange's Web site at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant parts of such statements.
This Amendment No. 1 to SR–BATS–2012–039 (the “Filing”) amends and replaces in its entirety the Filing as originally submitted on September 25, 2012. Amendment No. 1 further clarifies
Section 952 of the Dodd-Frank Act added Section 10C to the Act,
The Exchange proposes to amend Rule 14.10(c)(4)(A) and (B) to require that, in addition to meeting the criteria listed under Rule 14.10(c)(1)(B), in evaluating the independence of a director acting in the capacity described in Rule 14.10(c)(4)(B), the board of directors of a Company
The Exchange believes that the adoption of proposed Rule 14.10(c)(4)(A), along with the existing bright line tests for director independence under Rule 14.10(c)(1)(B), would bring the Exchange in compliance with Rule 10C–1(b)(1), because the Rules would require that each director that is acting in the capacity described in Rule 14.10(c)(4)(B) be independent based on an evaluation by the board that include the consideration of the proposed factors in Rule 14.10(c)(4)(A). In determining these independence requirements, the Exchange considered relevant factors, including, but not limited to: The source of compensation of a director, including any consulting, advisory or other compensatory fee paid by the Company to such director and whether the director of a Company is affiliated with the Company, a subsidiary of the Company, or an affiliate of a subsidiary of the Company. Rule 10C–1 permits the Exchange to consider other relevant factors in determining the independence requirements for compensation committee members.
The Exchange is also proposing to amend Rule 14.10(c)(4)(B) to add a title to and adjust the numbering of the Rule. The changes are being proposed in order to remain consistent with existing rule structure and to ensure that the rules are well-organized and easily understandable.
The Exchange is also proposing to delete existing Rule 14.10(c)(4)(C). As currently written, Rule 14.10(c)(4)(C) provides an exception to the independence standards under Rule 14.10(c)(4)(A) and (B) where the compensation committee is comprised of at least three members, permitting one director who is not independent and is not a current officer or employee or a family member of an officer or employee to be appointed to the compensation committee if the board determines that such individual's membership is required by the best interest of the Company. However, no such exception exists under Rule 10C–1 and, after considering the factors relevant to compensation committee independence under Rule 10C–1, the Exchange believes that deletion of the exception under its rules would comply with Rule 10C–1.
Additionally, the Exchange is proposing to add Rule 14.10(c)(4)(C)(i) to permit the compensation committee of a Company, acting in its capacity as a committee of the Company's board of directors and in its sole discretion, to retain or obtain the advice of a Compensation Consultant. The Company must provide for appropriate funding, as determined by the compensation committee, for payment of reasonable compensation to a Compensation Consultant retained by the compensation committee. The Exchange believes that this proposed Rule 14.10(c)(4)(C)(i) would comply with Rule 10C–1 and, more specifically, Rule 10C–1(b)(2)(i) in that it would provide the compensation committee of the Company's board of directors with the authority to retain or obtain the advice of a Compensation Consultant. Further, proposed Rule 14.10(c)(4)(C)(i) would require the Company to provide appropriate funding to the compensation committee for such Compensation Consultant, as required under Rule 10C–1(b)(3).
The Exchange is also proposing to amend Rule 14.10(c)(4)(C)(ii) to require Independent Directors of a Company that are acting in the capacity described in Rule 14.10(c)(4)(B), regardless of whether the Independent Directors are acting as a committee of the Company's board of directors, that are selecting a Compensation Consultant to perform an independence assessment of the Compensation Consultant, as described below, prior to selecting the Compensation Consultant. An independence assessment is not required for the receipt of advice from in-house legal counsel. An independence assessment would include the consideration of the
The Exchange believes that proposed Rule 14.10(c)(4)(C)(ii) would comply with Rule 10C–1 and, more specifically, Rule 10C–1(b)(4) because the proposed rule would require the Independent Directors of a Company that are acting in the capacity described in Rule 14.10(c)(4)(B) to perform an independence assessment of the Compensation Consultant based on the factors required by Rule 10C–1(b)(4)(i)–(vi) before engaging such Compensation Consultant. Further, because proposed Rule 14.10(c)(4)(C)(ii) would adopt the standards exactly as provided in Rule 10C–1(b)(4), the Exchange believes that it would be in compliance with Rule 10C–1.
In addition, the Exchange is proposing to amend Rule 14.10(c)(4)(C)(iii) and (iv), also regarding Compensation Consultants. Specifically, the Exchange is proposing that Independent Directors of a Company that are acting in the capacity described in Rule 14.10(c)(4)(B): (i) shall be directly responsible for the appointment, compensation and oversight of the work of any retained Compensation Consultant; and (ii) shall not be required to implement or act consistently with the advice or recommendations of the retained Compensation Consultant, nor be restricted in their ability or obligation to exercise their own judgment in fulfilling their duties. The Exchange believes that proposed Rules 14.10(c)(4)(C)(iii) and (iv) comply with Rule 10C–1 and, more specifically, Rule 10C–1(b)(ii) and (iii), [sic] in that the proposed rules mirror exactly the requirements of Rule 10C–1(b)(ii) and (iii) [sic] and, therefore, would bring the Exchange's listing rules in compliance with Rule 10C–1.
The Exchange is also proposing to add Rule 14.10(c)(4)(D), which provides a Company that fails to comply with the composition committee requirements under Rule 14.10(c)(4)(B) because a director ceases to be independent for reasons outside the director's reasonable control with a cure period during which the Company may allow that director to continue to act in the capacity described in Rule 14.10(c)(4)(B) until the earlier of its next annual shareholders meeting or one year from the occurrence of the event that caused the failure to comply with this requirement. A Company relying on this provision must provide notice to the Exchange immediately upon learning of the event or circumstances that caused the noncompliance. The Exchange believes that proposed Rule 14.10(c)(4)(D) would comply with Rule 10C–1(a)(3), which requires the Exchange to provide for appropriate procedures for a listed issuer to have a reasonable opportunity to cure any defects that would be the basis for a prohibition before the imposition of such prohibition. Rule 14.10(c)(4)(D) also describes a cure period that would be compliant with Rule 10C–1(a)(3), which the Exchange has proposed to adopt. For these reasons, the Exchange believes that proposed Rule 14.10(c)(4)(D) would comply with Rule 10C–1(a)(3).
The Exchange is also proposing to amend Rules 14.10(e)(1)(A) and (B) in order to eliminate exemptions to Rule 14.10(c)(4) for asset-backed issuers and other passive issuers (collectively, “Asset-backed Issuers”) and cooperatives. The Exchange believes that these changes comply with Rule 10C–1 because Rule 10C–1 provides exemptions to independence requirements in certain circumstances as well as general exemptions in other circumstances, however, Rule 10C–1 does not provide any exemptions for Asset-backed Issuers or for cooperatives. Rule 10C–1 does provide the Exchange with some discretion to provide exemptions to the requirements of Rule 10C–1, however, the Exchange declines to propose exemptions for Asset-backed Issuers or cooperatives at this time. For these reasons, the Exchange believes that proposed Rules 14.10(e)(1)(A) and (B) comply with the requirements of Rule 10C–1. In conjunction with this change, the Exchange is also proposing to eliminate the existing exemptions from the requirements of Rule 14.10(c)(4) for Asset-backed Issuers and cooperatives. The Exchange recognizes the importance of independence in the process of determining executive officer compensation. Additionally, under the proposed Rules, Companies will not be required in all cases to comply, initially and on a continued basis, with the independence requirements. For example, Companies listing in connection with their initial public offering will have a phase-in period before compliance with Rules 14.10(c)(4)(A) and (B) becomes necessary, and all Companies will be subject to a cure period should an event occur that causes noncompliance with the Rules. The Exchange does recognize that certain issuers, including Asset-backed Issuers and cooperatives, might have governance structures that make compliance with Rule 14.10(c)(4) difficult or impractical. However, due to the fact that the Exchange does not have any listed Asset-backed Issuers or cooperatives, the Exchange is proposing to remove the current exemption so that it can more fully review, as a whole, potential exemptions for Asset-backed Issuers and cooperatives. The Exchange will constantly evaluate the appropriateness of these exemptions as well as exemptions for all other categories of issuers and may propose to reinstitute these or other exemptions in the future.
The Exchange is also proposing to amend Rule 14.10(e)(1)(C) to require foreign private issuers to comply with the Compensation Consultants requirement of Rule 14.10(c)(4)(C). The Exchange is proposing the amendment in order to make clear that, while 10C–1(b)(iii)(4) [sic] exempts foreign private issuers from the independence requirements of 10C–1(b)(ii), [sic] which the proposed Rule 14.10(e)(1)(C) reflects, Rule 10C–1 does not exempt foreign private issuers from the Compensation Consultant requirements under Rule 10C–1(b)(4). As such, the Exchange is proposing to amend its Rules to continue to exempt foreign private issuers from the independence requirements of Rules 14.10(c)(4)(A) and (B), but to make clear that foreign private issuers are not exempt from the Compensation Consultant requirements of Rule 14.10(c)(4)(C). For these reasons, the Exchange believes that the proposed changes to Rule 14.10(e)(1)(C) comply with the requirements of Rule 10C–1.
The Exchange is also proposing to amend Rule 14.10(e)(1)(D)(ix) to require limited partnerships to comply with the Compensation Consultants requirement of Rule 14.10(c)(4)(C). The Exchange is proposing the amendment in order to
The Exchange is also proposing to amend Rule 14.10(e)(1)(E) to make clear that not all managed investment companies are exempt from Rules 14.10(c)(4)(A) and (B), but rather, only open-end management investment companies registered under the Investment Company Act of 1940 are exempt from the requirements. The Exchange is making this proposal in order to make its rules reflect that, while Rule 10C–1(b)(iii)(3) [sic] exempts open-end management investment companies registered under the Investment Company Act of 1940 from the independence requirements of Rule 10C–1(b)(ii), [sic] this exemption does not apply to all management investment companies. In addition, Rule 10C–1 does not exempt open-end management investment companies from the Compensation Consultant requirements under Rule 10C–1(b)(4). As such, the Exchange is proposing to amend its rules to reflect that open-end management investment companies will not be exempt from the Compensation Consultant requirements under Rule 14.10(c)(4)(C). Because these changes have been made to make Rule 14.10(e)(1)(E) reflect the language of Rule 10C–1, the Exchange believes that the proposed changes comply with the requirements of Rule 10C–1.
The Exchange is also proposing to add Rule 14.10(e)(1)(F), which will provide that Companies in bankruptcy proceedings are exempt from the independence requirements of Rules 14.10(c)(4)(A) and (B). The Exchange is making this proposal in order to make its rules reflect that, while Rule 10C–1(b)(iii)(2) [sic] exempts Companies in bankruptcy proceedings from the independence requirements of 10C–1(b)(ii), Rule 10C–1 does not exempt Companies in bankruptcy proceedings from the Compensation Consultant requirements under Rule 10C–1(b)(4). As such, the Exchange is proposing to amend its rules to exempt Companies in bankruptcy proceedings from the independence requirements of Rules 14.10(c)(4)(A) and (B), but to make clear that Companies in bankruptcy proceedings are not exempt from the Compensation Consultant requirements of Rule 14.10(c)(4)(C). Because these changes have been made to make Rule 14.10(e)(1)(F) reflect the requirements of Rule 10C–1, the Exchange believes that the proposed changes comply with the requirements of Rule 10C–1.
The Exchange is also proposing to add Rule 14.10(e)(1)(G), which will provide that smaller reporting companies, as defined in Rule 12b–2 under the Act (“Smaller Reporting Companies”), are exempt from all of the requirements of Rule 14.10(c)(4). The Exchange is making this proposal in order to make its rules reflect that Rule 10C–1(b)(5)(ii) exempts Smaller Reporting Companies from the entirety of Rule 10C–1(b), including the independence and Compensation Consultant requirements under Rule 10C–1. As such, the Exchange is proposing to amend its rules to exempt Smaller Reporting Companies from the independence requirements of Rules 14.10(c)(4)(A) and (B) as well as the Compensation Consultant requirements of Rule 14.10(c)(4)(C). Because these changes have been made to make Rule 14.10(e)(1)(G) reflect the requirements of Rule 10C–1, the Exchange believes that the proposed changes comply with the requirements of Rule 10C–1. In addition, this approach will minimize new costs imposed on Smaller Reporting Companies and allow them some flexibility not allowed for larger Companies.
The Exchange also proposes to amend Rule 14.10(e)(2)(A) to allow a Company listing in connection with its initial public offering to phase-in the independent committee requirements set forth in Rules 14.10(c)(4)(A) and (B) as follows: (1) One independent member at the time of listing; (2) a majority of independent members within 90 days of listing; and (3) all independent members within one year of listing. The Exchange believes that this amendment complies with Rule 10C–1 because it provides a Company with the opportunity to gradually meet the requirements of Rules 14.10(c)(4)(A) and (B) after becoming listed in connection with an initial public offering, rather than forcing a Company to meet independence requirements prior to its initial public offering. Since Companies listing in connection with an initial public offering may not have previously had an independent compensation committee, the Exchange believes that allowing such Companies to phase in compliance with the independent compensation committee requirements will reasonably provide these Companies with a window identical to that of the Independent Director Oversight of Director Nominations under Rule 14.10(c)(5) and the independent audit committee requirement pursuant to Rule 10A–3(b)(1)(iv)(A) under the Act.
The Exchange also proposes to add Rule 14.10(e)(2)(D) in order to permit a Company listed on the Exchange prior to the effective date of this proposal, commencing on June 1, 2013, to phase-in compliance with the Independent Director Oversight of Executive Officer Compensation requirements set forth in Rules 14.10(c)(4)(A) and (B) on the same schedule as Companies listing in conjunction with their initial public offering.
The Exchange also proposes to make a clarifying amendment to Rule 14.10(c)(1)(B), which defines an Independent Director, in order to indicate that there are additional factors involved in the determination of independence for directors acting in the capacity described in Rule 14.10(c)(4)(B). Lastly, the Exchange proposes to modify the numbering of Rule 14.10 in order to accommodate the amendments and additions proposed above.
Approval of the rule change proposed in this submission is consistent with the requirements of the Act and the rules and regulations thereunder that are applicable to a national securities exchange, and, in particular, with the requirements of Section 6(b) of the Act.
The Exchange also believes that the proposal will contribute to investor protection and the public interest by requiring that only Independent Directors of an issuer oversee executive officer compensation matters, consider independence criteria before retaining compensation advisers, and have ultimate responsibility for the appointment, compensation, and oversight of these advisers. As discussed above, after considering the factors provided in Rule 10C–1(b)(1)(ii) and evaluating how the factors could impact the ability of a director to act independently in the determination of executive compensation, the Exchange believes that it can best comply with Rule 10C–1 by adopting in its Rules the factors set forth in Rule 10C–1(b)(1)(ii). The Exchange believes that this approach will best provide the board of directors of a Company with the requisite guidance and discretion to evaluate the independence of each director as it relates to the determination of executive compensation.
The Exchange does not believe that the proposed rule change imposes any burden on competition.
The Exchange has neither solicited nor received written comments on the proposed rule change.
Within 45 days of the date of publication of this notice in the
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1)
The Exchange proposes to amend Sections 110, 801, 803 and 805 of the Exchange's Company Guide (the “Company Guide”) to comply with the requirements of Securities and Exchange Commission (“Commission” or “SEC”) Rule 10C–1.
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
This Amendment No. 1 to SR–NYSEMKT–2012–48 (the “filing”) replaces the original Filing submitted on September 25, 2012 in its entirety. Amendment No. 1 corrects a single error in the rule text in Exhibit 5 as originally filed. The error was in Section 805(c)(5) under the heading “Transition Period.”
NYSE MKT proposes to amend Sections 110, 801, 803 and 805 of the Company Guide to comply with the requirements of SEC Rule 10C–1.
The proposed changes to Sections 110, 801, 803 and 805 will become operative on July 1, 2013. Consequently, the existing text of these sections will remain in the Company Guide until June 30, 2013 and will be removed immediately thereafter.
Section 952 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”)
Rule 10C–1 does not by its terms require a national securities exchange to mandate that listed companies must have a compensation committee. However, in the absence of a compensation committee, most of the provisions of Rule 10C–1 applicable to compensation committees are applicable to “the members of the board of directors who oversee executive compensation matters on behalf of the board of directors.”
In adopting independence requirements for compensation committee members, 10C–1(b)(1)(ii)
The Exchange's director independence standards are set forth in Section 803(A)(2). That section provides that no director qualifies as independent unless the issuer's board of directors affirmatively determines that the director does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In addition, Section 803(A)(2) provides that a director may not be deemed to be independent if such director has a relationship with the listed company which violates any one of five “bright line” tests.
The provisions of Section 803(A)(2) will continue to be applicable to
The Exchange proposes to amend Section 803(A)(2) of the Company Guide to require that, in affirmatively determining the independence of any director who will serve on the compensation committee of the listed company's board of directors, or, in the case of a company that does not have a compensation committee, in affirmatively determining the independence of all independent directors, the board of directors must consider all factors specifically relevant to determining whether a director has a relationship to the listed company which is material to that director's ability to be independent from management, in connection with the duties of a compensation committee member including, but not limited to, the two factors that are explicitly enumerated in Rule 10C–1(b)(ii) that are set forth in proposed Section 805(c)(1). When considering the sources of a director's compensation in determining his independence for purposes of compensation committee service, proposed new commentary .03 to Section 805 provides that the board should consider whether the director receives compensation from any person or entity that would impair his ability to make independent judgments about the listed company's executive compensation. Similarly, when considering any affiliate relationship a director has with the company, a subsidiary of the company, or an affiliate of a subsidiary of the company, in determining his independence for purposes of compensation committee service, the proposed commentary provides that the board should consider whether the affiliate relationship places the director under the direct or indirect control of the listed company or its senior management, or creates a direct relationship between the director and members of senior management, in each case of a nature that would impair his ability to make independent judgments about the listed company's executive compensation.
The Exchange does not propose to adopt any specific numerical tests with respect to the factors specified in proposed Section 805(c)(1) or to adopt a requirement to consider any other specific factors. In particular, the Exchange does not intend to adopt an absolute prohibition on a board making an affirmative finding that a director is independent solely on the basis that the director or any of the director's affiliates are shareholders owning more than some specified percentage of the listed company. In the adopting release for Rule 10C–1 (the “Adopting Release”),
The Exchange believes that its existing “bright line” independence standards as set forth in Section 803(A)(2) of the Company Guide are sufficiently broad to encompass the types of relationships which would generally be material to a director's independence for compensation committee service. In addition, Section 803(A)(2) already requires the board to consider any relationship that would interfere with the director's exercise of independent judgment in carrying out the responsibilities of a director. The Exchange believes that these requirements with respect to general director independence, when combined with the specific considerations required by proposed Section 805(c)(1), represent an appropriate standard for compensation committee independence that is consistent with the requirements of Rule 10C–1.
Rule 10C–1(b)(2)
(a) The compensation committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, independent legal counsel or other adviser; and
(b) The compensation committee shall be directly responsible for the appointment, compensation and oversight of the work of any compensation consultant, independent legal counsel and other adviser retained by the compensation committee.
Rule 10C–1(b)(3)
The Exchange proposes to adopt the requirements specified in Rule 10C–1(b)(2) and (3) verbatim as new subsection (c)(3) to Section 805.
Rule 10C–1(b)(4)
(i) The provision of other services to the listed company by the person that employs the compensation consultant, legal counsel or other adviser;
(ii) The amount of fees received from the listed company by the person that employs the compensation consultant, legal counsel or other adviser, as a percentage of the total revenue of the person that employs the compensation consultant, legal counsel or other adviser;
(iii) The policies and procedures of the person that employs the compensation consultant, legal counsel or other adviser that are designed to prevent conflicts of interest;
(iv) Any business or personal relationship of the compensation consultant, legal counsel or other adviser with a member of the compensation committee;
(v) Any stock of the listed company owned by the compensation consultant, legal counsel or other adviser; and
(vi) Any business or personal relationship of the compensation consultant, legal counsel, other adviser or the person employing the adviser with an executive officer of the listed company.
Accordingly, the Exchange proposes to add as new subsection (c)(4) to Section 805 a provision specifying that, before engaging an adviser, the compensation committee must consider the factors enumerated above. As proposed, Section 805(c)(4) would not include any additional factors for consideration, as the Exchange believes that the list included in Rule 10C–1(b)(4) is very comprehensive and the proposed listing standard would also require the compensation committee to consider any other factors that would be relevant to the adviser's independence from management.
Consistent with Rule 10C–1(b)(2)(iii),
Rule 10C–1(a)(3)
The Adopting Release contemplates that exchanges may provide transition periods through the exemptive authority provided to the exchanges under Rule 10C–1(b)(1)(iii).
The Exchange proposes to exempt smaller reporting companies
Rule 10C–1(b)(5)
Pursuant to the general exemptive authority granted in Rule 10C–1(b)(5)(i), the Exchange proposes to exempt from all of the proposed requirements each category of issuers that qualifies for a general or specific exemption under Rule 10C–1(b)(1)(iii)(A). The Exchange also proposes to provide a general exemption from all of the requirements to all of the other categories of issuers that are currently exempt from the Exchange's existing compensation committee requirements. Thus, as proposed, controlled companies, limited partnerships, companies in bankruptcy, and open-end and closed-end funds that are registered under the 1940 Act, asset-backed issuers and other passive business organizations (such as royalty trusts) or derivatives and special purpose securities listed pursuant to Exchange Rules 1000, and 1200 and Sections 106, 107 and 118B would be exempt from both the new compensation committee independence requirements and the new compensation adviser requirements. The Exchange notes that these categories of issuers typically: (i) Are externally managed and do not directly employ executives (e.g., limited partnerships that are managed by their general partner or closed-end funds managed by an external investment adviser); (ii) do not by their nature have employees (e.g., passive business organizations (such as royalty trusts)); or (iii) have executive compensation policy set by a body other than the board (e.g., bankrupt companies have their executive compensation determined by the bankruptcy court). In light of these structural reasons why these categories of issuers generally do not have compensation committees, the Exchange believes that it would be a significant and unnecessarily burdensome alteration in their governance structures to require them to comply with the proposed new requirements and that it is appropriate to grant them an exemption.
Foreign private issuers
The Exchange currently does not require issuers whose only listed security is a preferred stock to comply with Section 805. The Exchange proposes to grant these issuers a general exemption from compliance with the proposed amended rule. The Exchange believes this approach is appropriate because holders of listed preferred stock have significantly greater protections with respect to their rights to receive dividends and a liquidation preference upon dissolution of the issuer, and preferred stocks are typically regarded by investors as a fixed income investment comparable to debt securities, the issuers of which are exempt from compliance with Rule 10C–1.
The Exchange believes that the proposed rule change in relation to the Exchange's compensation committee requirements and the proposed compensation consultant independence requirements are consistent with Section 10C of the Exchange Act and Rule 10C–1 thereunder in that they comply with the requirements of Rule 10C–1 with respect to the adoption by national securities exchanges of compensation committee listing standards. The Exchange believes that the proposed rule change is consistent with Section 6(b)
The Exchange believes that the proposed amendments to its compensation committee listing standards are consistent with the protection of investors and the public interest in that they strengthen the independence requirements for compensation committee membership, provide additional authority to compensation committees and require compensation committees to consider the independence of compensation consultants.
The Exchange believes that the general exemptions from the proposed requirements that it is granting to foreign private issuers that request an exemption based on home country practice and smaller reporting companies are consistent with Section 10C and Rule 10C–1, for the reasons stated above in the “Purpose” section, including because (i) Rule 10C–1(b)(5)(ii) explicitly exempts smaller reporting companies and (ii) foreign private issuers will comply with their home country law and, if they avail themselves of the exemption, will be required to disclose that fact under
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
The Exchange has not solicited written comments on the proposed rule change. The Exchange has received two comment letters on the proposed rule change.
The Exchange does not believe that it is appropriate to consider board compensation as part of the compensation committee independence determination with respect to individual directors. Non-executive directors devote considerable time to the affairs of the companies on whose boards they sit and eligible candidates would be difficult to find if board and committee service were unpaid in nature. Consequently, independent directors of listed companies are almost invariably paid for their board and committee service. As all independent directors are almost certainly going to receive board compensation from the company and do so on terms determined by the board as a whole, the Exchange does not believe that an analysis of the board compensation of individual directors is a meaningful consideration in determining their independence for purposes of compensation committee service.
The Exchange interprets its existing director independence requirements as requiring the board to consider relationships between the director and any member of management in making its affirmative independence determinations. Consequently, the Exchange does not believe that any further clarification of this requirement is necessary.
The Exchange does not believe that it is necessary to explicitly require that the additional independence considerations for compensation committee service should be a part of the board's general independence determinations for all independent directors. Section 803(A) provides that, in making its affirmative determination with respect to a director's independence, the board must satisfy itself that the director “does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.” As such, the Exchange believes that, where appropriate, listed company boards should already be including in their general independence determinations factors including those being added to the compensation committee independence determination.
The Exchange does not believe it is necessary to include in the listing standards a statement that a single factor may be sufficiently material to render a director non-independent, as this is clearly the intention of the listing standards as drafted. Section 803(A) in its current form and in its proposed amended form requires the board to consider the materiality of each separate relationship between the director and the listed company or its management.
The second commenter proposed that the Exchange should require companies to make a public disclosure with respect to the factors considered by the compensation committee in reviewing the independence of compensation consultants, legal counsel and other compensation advisers. This commenter also proposed that the Exchange should require with respect to outside counsel hired by the compensation committee the same disclosure as is required by Item 407(e)(3)(iv) of Regulation S–K with respect to the nature of any conflict that arises from the engagement of a compensation consultant identified in the proxy statement The Exchange does not believe that it is necessary to establish additional disclosure requirements of this nature. Item 407 of Regulation S–K contains extensive disclosure requirements with respect to a listed company's corporate governance. Moreover, with respect to disclosure of any conflicts of interest that may arise with respect to outside counsel hired by the compensation committee, the Exchange believes that the rigorous conflict of interest requirements applicable to attorneys adequately address such concerns. And the Exchange is mindful that requiring additional public disclosures regarding outside counsel could require a listed company to disclose information that otherwise may be protected by attorney-client privilege.
Within 45 days of the date of publication of this notice in the
(A) By order approve or disapprove the proposed rule change, or
(B) Institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1)
The Exchange proposes to establish fees for certain proprietary options market data products. The text of the proposed rule change is available on the Exchange's Web site at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
The Exchange proposes to establish fees for certain proprietary options market data products. The products covered by the fees are ArcaBook for Amex Options—Trades, ArcaBook for Amex Options—Top of Book, ArcaBook for Amex Options—Depth of Book, ArcaBook for Amex Options—Complex, ArcaBook for Amex Options—Series Status, and ArcaBook for Amex Options—Order Imbalance (collectively, the “Amex Options Products”).
The Exchange proposes to charge an Access Fee of $3,000 per month and a Redistribution Fee of $2,000 per month.
For the receipt and use of the Amex Options Products, the Exchange proposes to charge Professional End-Users $50 per month for each “User per Source.”
The unit-of-count for Redistributors of controlled accesses to market data, such as display devices and single-use application program interfaces (“APIs”), is each Access ID. Redistributors must ensure, by way of their agreements with clients, that Access IDs are not shared among Users. If a Professional End-User cannot or does not disclose in advance its restrictions relating to Access ID sharing, thereby enabling simultaneous access by multiple Users, the maximum number of potential accesses (i.e., the greatest number of natural persons, applications, and devices that can access the market data) will be chargeable.
Professional End-Users approved for User per Source reporting may report the total number of natural persons per each Source rather than the number of Access IDs per Source. For example, if a natural person has two Access IDs receiving data from a single Redistributor's data feed, the Professional End-User may report a count of one. If a natural person has one Access ID receiving data from two Redistributors' data feeds, however, the Professional End-User must report a count of two. Likewise, if a natural person has two Access IDs receiving data feeds from two separate Redistributors, the Professional End-User must report a count of two.
In order to report User per Source, the Professional End-User must identify the User associated with each Access ID. Possible methods to identify the User include using human resources or other corporate identifiers associated with a User in an inventory system. Where an Access ID cannot be associated to a natural person User, the Professional End-User must treat that Access ID as a User per Source.
This aspect of User per Source reporting applies only to a Professional End-User's controlled internal distribution of data, and does not apply to Redistributor-controlled access as described above; therefore, a Professional End-User may not net internal Users against Access IDs for a Redistributor's controlled access, such as a device or API, as described in the preceding section.
Some internal distribution networks feature downstream applications that control access to market data without using a centralized Entitlement System. The Access IDs of each such application must be reported, and Professional End-Users must ensure that audit trails are maintained. Professional End-Users that have been approved for User per Source reporting may report each of the Users of the application and not the Access IDs of these systems; however, Professional End-Users must ensure that all Users are reported across all Entitlement Systems and applications. For example, a User that has an Access ID from an Entitlement System and an Access ID from a downstream application each receiving data from a single Redistributor source would be reported once.
In a Closed Network, a Professional End-User has an environment whereby market data is published on an intranet or subnet with no other access control such as an Entitlement System. In environments such as this, all assigned IP addresses on the network range are considered a User per Source and are therefore reportable. In the case of a closed network in which physical access to the network determines a User's ability to access market data, the Professional End-User must report any device that has physical access to the network as a separate User per Source.
In closed networks that employ virtual devices, the Professional End-User must report all physical and virtual devices. For example, if a server provides five different market data products through five different IP addresses, each of which is capable of accessing market data, the Professional End-User must report all five IP addresses for each of the five products. That is, the Professional End-User must report virtual devices (in the form of IP addresses) as well as physical devices, and not just the physical server.
In order to remove an Access ID from the reporting and fee obligations for the Amex Options Products, the Professional End-User must disable the ability of the Access ID to receive such data entirely. The Professional End-User must maintain an audit trail to evidence the disabling of an Access ID for any period. In the absence of an adequate audit trail, all Access IDs that connect to the server remain fee liable. If the Professional End-User cannot limit or track the number of Access IDs, it must report all Access IDs.
Frequently, Users are assigned the same User name to log into multiple services and applications that do not share a common Entitlement System. For example, a natural person might elect to use the same User name to gain access to Redistributor A's services as it uses to gain access to Redistributor B's services. Or, he or she may use the same User name to access Redistributor A's Service X as he or she uses to gain access to Redistributor A's Service Y. Or, he or she may use the same User name to access Application A with Redistributor A's data as he or she may use to access Application B with Redistributor A's data. Despite the use of the same User name for multiple purposes, each use of a User name by a separate Entitlement System must be treated as a separate Access ID.
Simultaneous Access is the capability of a single Access ID to be used concurrently on two or more devices identified on a network by their host name, IP address, or other system-level identifier for network access. Entitlement Systems must control and track the number of simultaneous accesses by a single Access ID.
Contention-Based Entitlement Systems are not consistent with User per Source reporting. Those are systems for which a limited number of “tokens” or “accesses” that control the number of simultaneous Users are shared among Users. As is the case if a Professional End-User cannot or does not disclose in advance its restrictions relating to Access ID sharing, thereby enabling simultaneous access by multiple Users, the maximum number of potential accesses (i.e., the greatest number of natural persons, applications, and devices that can access the market data) will be chargeable.
The Exchange proposes to charge each Redistributor $1.00 per month for each Nonprofessional End-User to whom it provides Amex Options Products. The Exchange proposes to impose the charge on the Redistributor, rather than on the Nonprofessional End-User. In addition, the Exchange proposes to cap the Nonprofessional End-User Fee at $5,000 per month for each Redistributor. The Exchange proposes to apply the same criteria for qualification as a Non-Professional End-User as it does for non-professional subscribers to its other products.
The Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the Securities Exchange Act of 1934 (the “Act”)
The Exchange believes that the proposed User per Source reporting methodology is reasonable, equitable, and not unfairly discriminatory because it will help to simplify market data administration. The Exchange recognizes that each Redistributor and Professional End-User may use Amex Options Products differently, and the reporting methodology takes into account the various uses and provides a means to avoid duplicative counting that will allow data recipients to better manage their costs. Moreover, the reporting methodology does not discriminate among data recipients and users, as the reporting methodology would apply equally to all Professional End-Users that choose to utilize it.
The existence of alternatives to the Amex Options Products, including real-time consolidated data, free delayed consolidated data, and proprietary data from other sources, ensures that the Exchange cannot set unreasonable fees, or fees that are unreasonably discriminatory, when vendors and subscribers can elect such alternatives. The recent decision of the United States Court of Appeals for the District of Columbia Circuit in
In fact, the legislative history indicates that the Congress intended that the market system `evolve through the interplay of competitive forces as unnecessary regulatory restrictions are removed' and that the SEC wield its regulatory power `in those situations where competition may not be sufficient,' such as in the creation of a `consolidated transactional reporting system.'
As explained below in the Exchange's Statement on Burden on Competition, the Exchange believes that there is substantial evidence of competition in the marketplace for data and that the Commission can rely upon such evidence in concluding that the fees established in this filing are the product
As the
For these reasons, the Exchange believes that the proposed fees are reasonable, equitable, and not unfairly discriminatory.
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. An exchange's ability to price its data feed products is constrained by (1) competition among exchanges in a variety of dimensions, (2) the existence of inexpensive real-time consolidated data and free delayed consolidated data, and (3) the inherent contestability of the market for proprietary data.
The market for proprietary data products is currently competitive and inherently contestable because there is fierce competition for the inputs necessary to the creation of proprietary data and strict pricing discipline for the proprietary products themselves. Numerous options exchanges compete with each other for trades and market data, providing virtually limitless opportunities for entrepreneurs who wish to produce and distribute their own market data. This proprietary data is produced by each individual exchange in a vigorously competitive market.
It is common for broker-dealers to further exploit this competition by sending their order flow to multiple markets, rather than providing it all to a single market. The current options market structure is dispersed and complex with trading volume dispersed among many highly automated trading centers that compete for order flow in the same options, with trading centers offering a wide range of services that are designed to attract different types of market participants with varying trading needs.
Competitive markets for order flow, executions, and transaction reports provide pricing discipline for the inputs of proprietary data products and therefore constrain markets from overpricing proprietary market data. The U.S. Department of Justice recently acknowledged the aggressive competition among exchanges. In announcing the abandoned bid for NYSE Euronext by NASDAQ OMX Group Inc. and IntercontinentalExchange Inc., Assistant Attorney General Christine Varney stated that exchanges “compete head to head to offer real-time equity data products. These data products include the best bid and offer of every exchange and information on each equity trade, including the last sale.”
Transaction execution and proprietary data products are complementary in that market data is both an input and a byproduct of the execution service. In fact, market data and trade execution are a paradigmatic example of joint products with joint costs. The decision whether and on which platform to post an order will depend on the attributes of the platform where the order can be posted, including the execution fees, data quality, and price and distribution of its data products. Without trade executions, exchange data products cannot exist. Further, data products are valuable to many end-users only insofar as they provide information that end-users expect will assist them or their customers in making trading decisions. In that respect, the Exchange believes that the Amex Options Products will offer options market data information that is useful for both professionals and non-professionals in making trading and investment decisions.
The costs of producing market data include not only the costs of the data distribution infrastructure, but also the costs of designing, maintaining, and operating the exchange's transaction execution platform and the cost of regulating the exchange to ensure its fair operation and maintain investor confidence.
Moreover, if broker-dealers choose to direct fewer orders to a particular exchange, the value of that exchange's market data product to those broker-dealers decreases for two reasons. First, the product will contain less information because executions of fewer orders will be reflected in it. Second, and perhaps more importantly, the product will be less valuable to broker-dealers that choose to direct their orders to other venues because it does not provide information about the venues to which they are directing their orders. Data from the competing venues to which the broker-dealers are directing orders would become correspondingly more valuable.
Similarly, in the case of products that are distributed through market data vendors, the vendors provide price discipline for proprietary data products because they control the primary means of access to certain end-users. Vendors impose price restraints based upon their business models. For example, vendors such as Bloomberg and Thomson Reuters that assess a surcharge on data they sell may refuse to offer proprietary products that end-users will not purchase in sufficient numbers. Internet portals, such as Google, impose a discipline by providing only data that will enable them to attract “eyeballs” that contribute to their advertising revenue.
Other market participants have noted that the liquidity provided by the order book, trade execution, core market data, and non-core market data are joint products of a joint platform and have
The Exchange believes that retail broker-dealers, such as Schwab and Fidelity, offer their customers proprietary data only if it promotes trading and generates what they believe is sufficient commission revenue to justify the cost of acquiring that data. Although the business models may differ, these vendors' pricing discipline is the same: they can simply refuse to purchase any proprietary data product that fails to provide what they believe is sufficient value. The Exchange and other producers of proprietary data products must understand and respond to these varying business models and pricing disciplines in order to market proprietary data products successfully. Moreover, the Exchange believes that products can enhance order flow to the Exchange by providing more widespread distribution of information about transactions in real time, thereby encouraging wider participation in the market. Conversely, less order flow to a venue decreases the value of that venue's market data products to distributors and investors because the products contain less content.
Analyzing the cost of market data distribution in isolation from the cost of all of the inputs supporting the creation of market data will inevitably underestimate the cost of the data. Thus, because it is impossible to create data without a fast, technologically robust, and well-regulated execution system, system costs and regulatory costs affect the price of market data. It would be equally misleading, however, to attribute all of an exchange's costs to the market data portion of an exchange's joint product. Rather, all of an exchange's costs are incurred for the unified purposes of attracting order flow, executing and/or routing orders, and generating and selling data about market activity. The total return that an exchange earns reflects the revenues it receives from the joint products and the total costs of the joint products.
Competition among trading platforms can be expected to constrain the aggregate return that each platform earns from the sale of its joint products, but different platforms may choose from a range of possible, and equally reasonable, pricing strategies as the means of recovering total costs. For example, some platforms may choose to pay rebates to attract orders, charge relatively low prices for market information (or provide information free of charge), and charge relatively high prices for accessing posted liquidity. Other platforms may choose a strategy of paying lower rebates (or no rebates) to attract orders, setting relatively high prices for market information, and setting relatively low prices for accessing posted liquidity. In this environment, there is no economic basis for regulating maximum prices for one of the joint products in an industry in which suppliers face competitive constraints with regard to the joint offering.
The level of competition and contestability in the market is evident in the numerous alternative venues that compete for order flow, including 10 self-regulatory organization (“SRO”) options markets. Plans to launch two new options exchanges have been announced.
In addition to the competition and price discipline described above, the market for proprietary data products is also highly contestable because market entry is rapid, inexpensive, and profitable. The history of electronic trading is replete with examples of entrants that swiftly grew into some of the largest electronic trading platforms and proprietary data producers: Archipelago, Bloomberg Tradebook, Island, RediBook, Attain, TrackECN, BATS Trading and Direct Edge.
In this environment, a super-competitive increase in the fees charged for either transactions or data has the potential to impair revenues from both products. A broker-dealer that shifted its order flow from one platform to another in response to order execution price differentials would both reduce the value of that platform's market data and reduce its own need to consume data from the disfavored platform. If a platform increases its market data fees, the change may affect the overall cost of doing business with the platform, and affected market participants will assess whether they can lower their trading costs by directing orders elsewhere, thereby lessening the need for the more expensive data, or simply not purchase the data.
In establishing the fees for the Amex Options Products, the Exchange considered the competitiveness of the market for data and all of the implications of that competition. The Exchange believes that it has considered all relevant factors and has not considered irrelevant factors in order to establish fair, reasonable, and not unreasonably discriminatory fees and an equitable allocation of fees among all users. The existence of numerous alternatives to the Exchange's product, including real-time consolidated data, free delayed consolidated data, and proprietary data from other sources, ensures that the Exchange cannot set unreasonable fees, or fees that are unreasonably discriminatory, when vendors and subscribers can elect these alternatives. Accordingly, the Exchange believes that the acceptance of data feed products in the marketplace demonstrates the consistency of these fees with applicable statutory standards.
No written comments were solicited or received with respect to the proposed rule change.
The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A)
At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act.
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1)
The Exchange proposes to amend NYSE Arca Equities Rule 5.3(k)(4) to comply with the requirements of Securities and Exchange Commission (“Commission” or “SEC”) Rule 10C–1.
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
NYSE Arca, through its wholly-owned corporation, NYSE Arca Equities, proposes to amend NYSE Arca Equities Rule 5.3(k)(4) to comply with the requirements of SEC Rule 10C–1.
The proposed changes to NYSE Arca Equities Rule 5.3(k)(4) will become operative on July 1, 2013. Consequently, the existing text of these sections will remain in the NYSE Arca Equities Rulebook until June 30, 2013 and will be removed immediately thereafter.
Section 952 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”)
In adopting independence requirements for compensation committee members, 10C–1(b)(1)(ii)
The Exchange's director independence standards are set forth in NYSE Arca Equities Rule 5.3(k)(1). That section provides that no director qualifies as independent unless the board of directors affirmatively determines that the director has no material relationship with the listed company, either directly or as a partner, shareholder or officer of an organization that has a relationship with the company. In addition, NYSE Arca Equities Rule 5.3(k)(1) provides that a director may not be deemed to be independent if such director has a relationship with the listed company which violates any one of five “bright line” tests.
The provisions of NYSE Arca Equities Rule 5.3(k)(1) as currently in effect will continue to be applicable to independence determinations in relation to compensation committee service, as compensation committee members will be required to be independent under the Exchange's general board independence standards set forth in NYSE Arca Equities Rule 5.3(k)(1), in addition to the independence requirements proposed specifically for compensation committee service.
The Exchange proposes to amend NYSE Arca Equities Rule 5.3(k)(4) to require that, in affirmatively determining the independence of any director who will serve on the compensation committee of the listed company's board of directors, the board of directors must consider all factors specifically relevant to determining whether a director has a relationship to the listed company which is material to that director's ability to be independent from management, in connection with the duties of a compensation committee member including, but not limited to, the two factors that are set forth in proposed NYSE Arca Equities Rule 5.3(k)(4) and are explicitly enumerated in Rule 10C–1(b)(ii). When considering the sources of a director's compensation in determining his independence for purposes of compensation committee service, NYSE Arca Equities Rule 5.3(k)(4) as amended provides that the board should consider whether the director receives compensation from any person or entity that would impair his ability to make independent judgments about the listed company's executive compensation. Similarly, when considering any affiliate relationship a director has with the company, a subsidiary of the company, or an affiliate of a subsidiary of the company, in determining his independence for purposes of compensation committee service, the proposed amended rule text provides that the board should consider whether the affiliate relationship places the director under the direct or indirect control of the listed company or its senior management, or creates a direct relationship between the director and members of senior management, in each case of a nature that would impair his ability to make independent judgments
The Exchange does not propose to adopt any specific numerical tests with respect to the factors specified in proposed NYSE Arca Equities Rule 5.3(k)(4)(ii) or to adopt a requirement to consider any other specific factors. In particular, the Exchange does not intend to adopt an absolute prohibition on a board making an affirmative finding that a director is independent solely on the basis that the director or any of the director's affiliates are shareholders owning more than some specified percentage of the listed company. In the adopting release for Rule 10C–1 (the “Adopting Release”),
The Exchange believes that its existing “bright line” independence standards as set forth in NYSE Arca Equities Rule 5.3(k)(1) are sufficiently broad to encompass the types of relationships which would generally be material to a director's independence for compensation committee service. In addition to these “bright line” tests, NYSE Arca Equities Rule 5.3(k)(1) also already requires the board to consider any relationship that would be material to the independence of a director. The Exchange believes that these requirements with respect to general director independence, when combined with the specific considerations required by proposed NYSE Arca Equities Rule 5.3(k)(4)(ii), represent an appropriate standard for compensation committee independence that is consistent with the requirements of Rule 10C–1.
Rule 10C–1(b)(2)
(a) The compensation committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, independent legal counsel or other adviser; and
(b) The compensation committee shall be directly responsible for the appointment, compensation and oversight of the work of any compensation consultant, independent legal counsel and other adviser retained by the compensation committee.
Rule 10C–1(b)(3)
The Exchange proposes to adopt the requirements specified in Rule 10C–1(b)(2) and (3) verbatim as new subsection (iv) to NYSE Arca Equities Rule 5.3(k)(4).
Rule 10C–1(b)(4)
(i) The provision of other services to the listed company by the person that employs the compensation consultant, legal counsel or other adviser;
(ii) The amount of fees received from the listed company by the person that employs the compensation consultant, legal counsel or other adviser, as a percentage of the total revenue of the person that employs the compensation consultant, legal counsel or other adviser;
(iii) The policies and procedures of the person that employs the compensation consultant, legal counsel or other adviser that are designed to prevent conflicts of interest;
(iv) Any business or personal relationship of the compensation consultant, legal counsel or other adviser with a member of the compensation committee;
(v) Any stock of the listed company owned by the compensation consultant, legal counsel or other adviser; and
(vi) Any business or personal relationship of the compensation consultant, legal counsel, other adviser or the person employing the adviser with an executive officer of the listed company.
Accordingly, the Exchange proposes to add as new subsection (v) to NYSE Arca Equities Rule 5.3(k)(4) a provision specifying that, before engaging an adviser, the compensation committee must consider the factors enumerated above. As proposed, NYSE Arca Equities Rule 5.3(k)(4)(v) would not include any additional factors for consideration, as the Exchange believes that the list included in Rule 10C–1(b)(4) is very comprehensive and the proposed listing standard would also require the compensation committee to consider any other factors that would be relevant to the adviser's independence from management.
Consistent with Rule 10C–1(b)(2)(iii),
Rule 10C–1(a)(3)
Rule 10C–1(b)(5)
Pursuant to the general exemptive authority granted in Rule 10C–1(b)(5)(i), the Exchange proposes to exempt from all of the proposed requirements each category of issuer that qualifies for a general or specific exemption under Rule 10C–1(b)(1)(iii)(A). The Exchange also proposes to provide a general exemption from all of the requirements to all of the other categories of issuers that are currently exempt from the Exchange's existing compensation committee requirements. Thus, as proposed, controlled companies, limited partnerships and companies in bankruptcy, closed-end and open-end funds registered under the 1940 Act, asset backed issuers and other passive business organizations (such as royalty trusts), derivatives and special purpose securities, and issuers whose only listed equity security is a preferred stock, would be exempt. The Exchange notes that these categories of issuers typically: (i) Are externally managed and do not directly employ executives (e.g., limited partnerships that are managed by their general partner or closed-end funds managed by an external investment adviser); (ii) do not by their nature have employees (e.g., passive business organizations in the form of trusts or issuers of derivative or special purpose securities); or (iii) have executive compensation policy set by a body other than the board (e.g., bankrupt companies have their executive compensation determined by the bankruptcy court). In light of these structural reasons why these categories of issuers generally do not have compensation committees, the Exchange believes that it would be a significant and unnecessarily burdensome alteration in their governance structures to require them to comply with the proposed new requirements and that it is appropriate to grant them an exemption.
The Exchange proposes to adopt as new Commentary .03 to NYSE Arca Equities 5.3(k)(4) a general exemption from the application of the rule for foreign private issuers. Foreign private issuers are currently exempt from the existing compensation committee requirement pursuant to NYSE Arca Equities Rule 5.3(n). The Exchange proposes to follow this approach by granting a general exemption, pursuant to the discretion granted to the Exchange by Rule 10C–1(b)(5)(i),
The Exchange currently does not require issuers whose only listed security is a preferred stock to comply with NYSE Arca Equities Rule 5.3(k)(4). The Exchange proposes to grant these issuers a general exemption from compliance with the proposed amended rule. The Exchange believes this approach is appropriate because holders of listed preferred stock have significantly greater protections with respect to their rights to receive dividends and a liquidation preference upon dissolution of the issuer, and preferred stocks are typically regarded by investors as a fixed income investment comparable to debt securities, the issuers of which are exempt from compliance with Rule 10C–1.
The Exchange believes that the proposed rule change in relation to the Exchange's compensation committee
The Exchange believes that the proposed amendments to its compensation committee listing standard are consistent with the protection of investors and the public interest in that they strengthen the independence requirements for compensation committee membership, provide additional authority to compensation committees and require compensation committees to consider the independence of compensation consultants.
The Exchange believes that the general exemptions from the proposed requirements that it is granting to foreign private issuers and smaller reporting companies are consistent with Section 10C and Rule 10C–1, for the reasons stated above in the “Purpose” section, including because (i) Rule 10C–1(b)(5)(ii) explicitly exempts smaller reporting companies and (ii) foreign private issuers will comply with their home country law and, if they avail themselves of the exemption, will be required to disclose that fact under existing Exchange listing requirements. The Exchange believes it is an appropriate use of its exemptive authority under Rule 10C–1(b)(5)(i), and that it is not unfairly discriminatory under Section 6(b)(5) of the Act, to provide general exemptions under the proposed rules to issuers whose only listed class of equity securities on the Exchange is a preferred stock, as holders of listed preferred stock have significantly greater protections with respect to their rights to receive dividends and a liquidation preference upon dissolution of the issuer, and preferred stocks are typically regarded by investors as a fixed income investment comparable to debt securities, the issuers of which are exempt from compliance with Rule 10C–1. The Exchange believes that it is an appropriate use of its exemptive authority under Rule 10C–1(b)(5)(i), and that it is not unfairly discriminatory under Section 6(b)(5) of the Act, to provide general exemptions under the proposed rules for all of the other categories of issuers that are not currently subject to the Exchange's compensation committee requirement, for the structural reasons discussed in the “Purpose” section and because it would be a significant and unnecessarily burdensome alteration in their governance structures to require them to comply with the proposed new requirements.
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
The Exchange has not solicited written comments on the proposed rule change. The Exchange has received two comment letters on the proposed rule change.
The Exchange does not believe that it is appropriate to consider board compensation as part of the compensation committee independence determination with respect to individual directors. Non-executive directors devote considerable time to the affairs of the companies on whose boards they sit and eligible candidates would be difficult to find if board and committee service were unpaid in nature. Consequently, independent directors of listed companies are almost invariably paid for their board and committee service. As all independent directors are almost certainly going to receive board compensation from the company and do so on terms determined by the board as a whole, the Exchange does not believe that an analysis of the board compensation of individual directors is a meaningful consideration in determining their independence for purposes of compensation committee service.
The Exchange interprets its existing director independence requirements as requiring the board to consider relationships between the director and any member of management in making its affirmative independence determinations. Consequently, the Exchange does not believe that any further clarification of this requirement is necessary.
The Exchange does not believe that it is necessary to explicitly require that the additional independence considerations for compensation committee service should be a part of the board's general independence determinations for all independent directors. NYSE Arca Equities Rule 5.3(k)(1) provides that the board must affirmatively determine that the director has no material relationship with the listed company, either directly or as a partner, shareholder or officer of an organization that has a relationship with the company. As such, the Exchange believes that, where appropriate, listed company boards should already be including in their general independence determinations factors including those being added to the compensation committee independence determination.
The Exchange does not believe it is necessary to include in the rule a statement that a single factor may be sufficiently material to render a director non-independent, as this is clearly the intention of the rule as drafted. NYSE Arca Equities Rule 5.3(k)(1) in its current form and proposed NYSE Arca Equities Rule 5.3(k)(4) require the board to consider the materiality of each separate relationship between the director and the listed company or its management.
The second commenter proposed that the Exchange should require companies to make a public disclosure with respect to the factors considered by the compensation committee in reviewing the independence of compensation consultants, legal counsel and other compensation advisers. This commenter also proposed that the Exchange should require with respect to outside counsel hired by the compensation committee the same disclosure as is required by Item 407(e)(3)(iv) of Regulation S–K with respect to the nature of any conflict that arises from the engagement of a compensation consultant identified in the proxy statement. The Exchange does not believe that it is necessary to establish additional disclosure requirements of this nature. Item 407 of Regulation S–K contains extensive disclosure requirements with respect to a listed company's corporate governance. Moreover, with respect to disclosure of any conflicts of interest that may arise with respect to outside counsel hired by the compensation committee, the Exchange believes that the rigorous conflict of interest requirements applicable to attorneys adequately address such concerns, and the Exchange is mindful that requiring additional public disclosures regarding outside counsel could require a listed company to disclose information that otherwise may be protected by attorney-client privilege.
Within 45 days of the date of publication of this notice in the
(A) By order approve or disapprove the proposed rule change, or
(B) Institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
The Social Security Administration (SSA) publishes a list of information collection packages requiring clearance by the Office of Management and Budget (OMB) in compliance with Public Law 104–13, the Paperwork Reduction Act of 1995, effective October 1, 1995. This notice includes revisions to OMB-approved information collections.
SSA is soliciting comments on the accuracy of the agency's burden estimate; the need for the information; its practical utility; ways to enhance its quality, utility, and clarity; and ways to minimize burden on respondents, including the use of automated collection techniques or other forms of information technology. Mail, email, or fax your comments and recommendations on the information collection(s) to the OMB Desk Officer and SSA Reports Clearance Officer at the following addresses or fax numbers.
Office of Management and Budget, Attn: Desk Officer for SSA, Fax: 202–395–6974, Email address:
Social Security Administration, DCRDP, Attn: Reports Clearance Director, 107 Altmeyer Building, 6401 Security Blvd., Baltimore, MD 21235, Fax: 410–966–2830, Email address:
The information collections below are pending at SSA. SSA will submit them to OMB within 60 days from the date of this notice. To be sure we consider your comments, we must receive them no later than December 14, 2012. Individuals can obtain copies of the collection instruments by writing to the above email address.
1.
2.
3.
The Social Security Administration (SSA) publishes a list of information collection packages requiring clearance by the Office of Management and Budget (OMB) in compliance with Public Law 104–13, the Paperwork Reduction Act of 1995, effective October 1, 1995. This notice includes revisions to OMB-approved information collections.
SSA is soliciting comments on the accuracy of the agency's burden estimate; the need for the information; its practical utility; ways to enhance its quality, utility, and clarity; and ways to minimize burden on respondents, including the use of automated collection techniques or other forms of information technology. Mail, email, or fax your comments and recommendations on the information collection(s) to the OMB Desk Officer and SSA Reports Clearance Officer at the following addresses or fax numbers.
Office of Management and Budget, Attn: Desk Officer for SSA, Fax: 202–395–6974, Email address:
Social Security Administration, DCRDP, Attn: Reports Clearance Director, 107 Altmeyer Building, 6401 Security Blvd., Baltimore, MD 21235, Fax: 410–966–2830, Email address:
The information collections below are pending at SSA. SSA will submit them to OMB within 60 days from the date of this notice. To be sure we consider your comments, we must receive them no later than December 14, 2012. Individuals can obtain copies of the collection instruments by writing to the above email address.
1.
2.
3.
4.
5.
Notice of request for public comment and submission to OMB of proposed collection of information.
The Department of State has submitted the information collection described below to the Office of Management and Budget (OMB) for approval. In accordance with the Paperwork Reduction Act of 1995 we are requesting comments on this collection from all interested individuals and organizations. The purpose of this Notice is to allow 30 days for public comment.
Submit comments directly to the Office of Management and Budget (OMB) up to November 14, 2012.
Direct comments to the Department of State Desk Officer in the Office of Information and Regulatory Affairs at the Office of Management and Budget (OMB). You may submit comments by the following methods:
•
•
Direct requests for additional information regarding the collection listed in this notice, including requests for copies of the proposed collection instrument and supporting documents, to the Office of Passport Services at
•
•
•
•
•
•
•
•
•
•
•
•
We are soliciting public comments to permit the Department to:
• Evaluate whether the proposed information collection is necessary for the proper functions of the Department.
• Evaluate the accuracy of our estimate of the time and cost burden for this proposed collection, including the validity of the methodology and assumptions used.
• Enhance the quality, utility, and clarity of the information to be collected.
• Minimize the reporting burden on those who are to respond, including the use of automated collection techniques or other forms of information technology.
Please note that comments submitted in response to this Notice are public record. Before including any detailed personal information, you should be aware that your comments as submitted, including your personal information, will be available for public review.
The Intelligence Reform and Terrorism Prevention Act of 2004 (IRTPA) calls for the Secretary of Homeland Security, along with the Secretary of State, to develop and implement a plan that requires sufficient documentation of identity and citizenship to be shown when entering the United States. The requirement that requires sufficient documentation of identity and citizenship to be shown when entering the United States along with other socio-demographic variables has left the future demand for U.S. passport products as undefined. The ambiguity of passport demand has resulted in Passport Services (CA/PPT) having an urgent need to obtain regular statistical data on issues that focuses on and are related to passport applications and travel. In support of these efforts, CA/PPT will conduct monthly forecasts of passport demand. The data gathered from the Passport Demand Forecasting Study will be used to monitor, assess, and forecast passport demand on a continuous basis.
CA/PPT is conducting a Passport Demand Forecast Study that includes monthly surveys that will gather data from a national representative sample of U.S. citizens, U.S. nationals, and any other categories of individuals that are entitled to a U.S. passport product. Methodologies can include mail, web/internet, telephone, and mixed-mode
Bureau of Economic & Business Affairs, Office of Sanctions Policy and Implementation, Department of State.
The Deputy Secretary of State has determined that it would be contrary to the national security interests of the United States to continue to apply the sanction referred to in section 570(b) of the Foreign Operations, Export Financing, and Related Programs Appropriations Act of 1997 (Pub. L. 104–208) (the “Act”), which authorizes and directs the President to prohibit U.S. persons from making new investment in Burma, if the President makes certain determinations and certifications to Congress. The President made the required determinations and certifications and imposed a prohibition on new investment in Executive Order 13047 (May 20, 1997). He subsequently delegated the waiver authority under Section 570(e) of the Act to the Secretary of State on July 11, 2012, and the determination described above constitutes the exercise of such waiver authority. In conjunction with this waiver determination, the Department of the Treasury's Office of Foreign Assets Control issued a General License (No. 17) on July 11, 2012 authorizing new investment in Burma by U.S. persons subject to limitations and requirements set forth therein.
These steps are in response to the recent reforms that have taken place in Burma over the past year. Continued application of the ban on investment would be contrary to U.S. national security interests because it would hinder current U.S. policy to support those in the Burmese government leading important reform efforts. Further reforms would advance longstanding U.S. national security interests such as promoting national reconciliation and democracy in Burma; improving respect for human rights; curtailing the flow from Burma of refugees, illicit narcotics, infectious diseases, and victims of trafficking; and advancing nonproliferation goals. While the Department of State remains concerned about the protection of human rights, corruption, and the role of the military in the Burmese economy, it believes that the participation of U.S. businesses in the Burmese economy will set a model for responsible investment and business operations as well as encourage further change, promote economic development, and contribute to the welfare of the Burmese people.
John Marshall Klein, Senior Sanctions Officer, Economic & Business Affairs, Office of Sanctions Policy and Implementation, 202–647–9452.
Office of the Secretary of Transportation (OST), U.S. Department of Transportation (DOT), Federal Aviation Administration (FAA), Federal Highway Administration (FHWA), Federal Motor Carriers Administration (FMCSA) Federal Railroad Administration (FRA), Maritime Administration (MARAD), Pipeline and Hazardous Materials Safety Administration (PHSMA), Research and Innovative Technology Administration (RITA), St. Lawrence Seaway Development Corporation (SLSDC).
Notice of Interim Guidance and Request for Comments.
On July 6, 2012, the President signed into law Public Law 112–141, the Moving Ahead for Progress in the 21st Century Act (MAP–21). Section 1118 of MAP–21 directs the Secretary of Transportation to encourage each State to develop a comprehensive State Freight Plan that outlines immediate and long-range plans for freight-related transportation investments. Section 1117 of MAP–21 directs the Secretary to encourage each State to establish a State Freight Advisory Committee. The Department of Transportation is issuing this Notice to provide Interim Guidance on both State Freight Plans and State Freight Advisory Committees. It encourages States to develop State Freight Plans and provides guidance to States on the required elements of a State Freight Plan and information on funding and on the relationship of State Freight Plans to other provisions of MAP–21. It encourages States to develop State Freight Advisory Committees as part of the process for developing a State Freight Plan. The Department requests public comments on all aspects of this Interim Guidance.
All public comments must be received by November 15, 2012.
You may send comments identified by Docket Number DOT–OST–2012–0168 using any of the following methods:
The Department will post all comments received, without change, to
Docket: To read background documents or comments received, go to
Privacy Act: Anyone is able to search the electronic form of all comments
This Interim Guidance will also be posted on the Department's MAP–21 Web site (
Mr. Jack Wells, Chief Economist, 1200 New Jersey Avenue SE., Washington, DC 20590. Telephone Number (202) 366–9224 or Email
The purpose of this document is to provide guidance on the implementation of Section 1118 (State Freight Plans) and Section 1117 (State Freight Advisory Committees) of the Moving Ahead for Progress in the 21st Century Act (MAP–21). Section 1118 directs the Secretary of Transportation to encourage States to develop freight plans that are comprehensive and that include both immediate and long-term freight planning activities and investments. Section 1117 directs the Secretary to encourage each State to establish a State Freight Advisory Committee consisting of a representative cross-section of public and private freight stakeholders. Section 1118 specifies certain minimum contents for State Freight Plans, and states that such a plan may be developed separate from or be incorporated into the statewide strategic long-range transportation plan required by section 135 of title 23, United States Code.
Section 1116 of MAP–21 (Prioritization of Projects to Improve Freight Movement) authorizes the Secretary to increase the Federal share payable for any project to 95 percent for projects on the Interstate System and 90 percent for any other project if the Secretary certifies that the project:
• Demonstrates the improvement made by the project to the efficient movement of freight (including making progress on freight performance measures established under MAP–21) and
• Is identified in a State Freight Plan developed pursuant to section 1118.
The Federal Highway Administration will be issuing separate guidance on the implementation of Section 1116. One purpose of this guidance is to inform States of the freight planning process they must undertake to qualify for the freight prioritization provisions of Section 1116.
The U.S. Department of Transportation strongly encourages all States to develop State Freight Plans. The Department believes that freight transportation, because its effects are often regional or national in scope, and includes freight providers that own and operate private infrastructure, has often been more difficult for States to incorporate into their planning process than has passenger transportation, and that accordingly infrastructure investments and other State policy initiatives related to freight transportation have often received less funding and attention than passenger-related initiatives. Because freight transportation is critical to the economic vitality of the United States, renewed attention to safe and efficient freight transportation can have a positive effect on the economic growth of the United States.
State Freight Plans can identify freight transportation facilities that are critical to each State's economic growth and give appropriate priority to investments in such facilities. In doing so, such Plans can enhance economic growth at both the State and National level, thus enhancing the Nation's economic competitiveness. State Freight Plans can also help to guide investments and other policies that will help to achieve the Department's other strategic goals, including safety, state of good repair, livability, and environmental sustainability. State Freight Plans can also identify freight transportation facilities that are critical to export movements and, by directing resources toward improving those facilities, assist the United States in meeting the goals of the President's National Export Initiative.
The State Freight Plan may be developed separate from or incorporated into the statewide strategic long-range transportation plan required by section 135 of title 23, United States Code. If the State Freight Plan is separate from the statewide strategic long-range transportation plan, each plan should show how the findings of the State Freight Plan are incorporated into the statewide strategic long-range transportation plan. If the two plans are combined, the statewide strategic long-range transportation plan should include a separate section focused on freight transportation, and must include the elements specified in section 1118. Other State transportation plans, such as State Rail Plans, are required by statute to be coordinated with section 135 of title 23, and as a consequence the freight component of those plans should be incorporated into the State Freight Plan to ensure a comprehensive and system-wide planning approach.
The Department also strongly encourages all States to establish State Freight Advisory Committees. Such Advisory Committees are an important part of the process needed to develop a thorough State Freight Plan. Bringing together the perspectives and knowledge of public and private partners, including shippers, carriers, and infrastructure owners and operators, is important to developing a quality State Freight Plan.
The Department will be developing a multimodal National Freight Strategic Plan in accordance with the requirements of Section 1115 of MAP–21, and intends to rely significantly on the freight plans prepared by the States.
Authorization level under MAP–21: There is no formula or discretionary funding specifically associated with State Freight Plans or State Freight Advisory Committees.
States may use funding allocated under the Surface Transportation Program (23 U.S.C. 133) for developing State Freight Plans, as well as funding under the State Planning and Research Program (23 U.S.C. 505). They may also use carryover balances from National Highway System funds authorized under SAFETEA–LU (23 U.S.C. 103(b)(6)(E) as in effect on the day before enactment of MAP–21) that can be used for transportation planning in accordance with 23 U.S.C. 134 and 135 (23 U.S.C. 103 was amended by MAP–21 section 1104, which eliminated the National Highway System Program under section 103, and hence eliminated the funding for planning under section 103 as amended).
Section 1118 of MAP–21 requires that a State Freight Plan developed pursuant to Section 1118 include, at a minimum, the following elements:
• An identification of significant freight system trends, needs, and issues with respect to the State;
• A description of the freight policies, strategies, and performance measures that will guide the freight-related transportation investment decisions of the State;
• A description of how the plan will improve the ability of the State to meet the national freight goals established under section 167 of title 23, United States Code;
• Evidence of consideration of innovative technologies and operational strategies, including intelligent transportation systems, that improve the safety and efficiency of freight movement;
• In the case of routes on which travel by heavy vehicles (including mining, agricultural, energy cargo or equipment, and timber vehicles) is projected to substantially deteriorate the condition of roadways, a description of improvements that may be required to reduce or impede the deterioration; and
• An inventory of facilities with freight mobility issues, such as truck bottlenecks, within the State, and a description of the strategies the State is employing to address those freight mobility issues.
State Freight Plans may be organized in any structure that works best for individual States, as long as they cover the required elements; however, in order to aid States in addressing the required criteria, and to facilitate the incorporation of analysis from the State Freight Plans into the National Freight Strategic Plan, as well as to aid in conceptualizing the detailed issues surrounding robust freight planning, DOT is suggesting the following structure as a recommended model for states to follow.
As specified in section 1118, a State Freight Plan must include a description of how the plan will improve the ability of the State to meet the national freight goals established under 23 U.S.C. 167. The following is a summary of the goals of the National Freight Policy established in 23 U.S.C. 167:
• Improving the contribution of the freight transportation system to economic efficiency, productivity, and competitiveness;
• Reducing congestion on the freight transportation system;
• Improving the safety, security, and resilience of the freight transportation system;
• Improving the state of good repair of the freight transportation system;
• Using advanced technology, performance management, innovation, competition, and accountability in operating and maintaining the freight transportation system;
• Reducing adverse environmental and community impacts of the freight transportation system.
The Department recommends that each State Freight Plan include a discussion of the role that freight transportation plays in the State's overall economy. This section would identify what industries are most important to the State, and what supply chains (including the transportation modes that support them) are critical to the State's industries. In particular, it would indicate what supply chains involving the State are important to exports, whether the exports of that State or of other States.
As specified in section 1118, a State Freight Plan must include a discussion of the State's freight policies and strategies that will guide the freight-related transportation investment decisions of the State. The Department recommends that this section also discuss how these freight policies and strategies will guide not just freight-related transportation investment decisions of the State, but also the broader freight improvement strategy of the State, including operational strategies and policy changes. The Department recommends that this discussion also:
• Include the State's grant and loan programs that are available to pay for freight-related transportation infrastructure;
• Identify the State's freight-related institutions, including transportation-related infrastructure owners and regulatory authorities, such as the State DOT, port authorities, toll roads, and bridge and tunnel authorities;
• Explain the governance structures and funding mechanisms for such authorities (e.g., whether the authorities are controlled by the governor or are independent, and whether the authority has a dedicated source of revenue);
• Identify private transportation infrastructure owners, such as railroads, terminals, pipelines, and freight transfer facilities;
• Identify statutory and constitutional constraints on freight-related investments and policies, such as prohibitions on spending State funds for certain kinds of freight infrastructure;
• Discuss regional freight planning activities in which the State participates, such as planning for key multi-state freight corridors, multi-state metropolitan areas, or for other regional groups of States; and
• Set out the State's priorities in freight transportation infrastructure development.
As specified in section 1118, a State Freight Plan must include an inventory of facilities with freight mobility issues. The Department recommends that this inventory also include a complete inventory of the State's freight transportation assets. This would include a description of the State's transportation infrastructure in all freight-carrying modes, the warehousing and intermodal facilities located in the State, and the freight gateways and corridors that are located in or that pass through the State. MAP–21 places particular emphasis on transportation infrastructure that is used to serve areas of the State that are significant for energy development, mining, agriculture, and timber production, and the Department recommends that the State Freight Plan inventory note particularly routes that are used to move equipment for these productive activities into those areas and for moving the output of those productive activities out of those areas.
As specified in section 1118, a State Freight Plan must include the performance measures that will guide the freight-related transportation investment decisions of the State. The Department recommends that this discussion also include an analysis of the conditions and performance of the State's freight transportation system. This analysis would include the identification of bottlenecks in the
The Department recommends that States use measures of conditions of transportation infrastructure that reflect the quality of service that this infrastructure provides to users of that infrastructure and to the general public. Similarly, measures of the performance of the freight transportation system would reflect the quality of freight service provided to freight shippers and the impact of the freight transportation system on the general public. Measures of conditions and performance would reflect outcomes that are directly important to the system's users and to the general public (for example, reductions in crashes, fatalities, and injuries; reduced delay and congestion; and reduced vehicle operating costs); The Department recommends that States try to avoid using measures that are not of direct importance to users and the general public (for example, miles of track or number of bridges inspected each year).
Consistent with one of the required elements of the National Freight Strategic Plan, which must be developed in consultation with the States, the Department recommends that State Freight Plans include a 20-year forecast of freight transportation demands, broken down by mode of transportation and commodity classification, and showing demands for transportation of freight coming into the State, outbound from the State, passing through the State between outside origin and destination points, and moving intrastate between origin and destination points within the State. The freight forecast could draw upon the forecast prepared by the Federal Highway Administration's (FHWA) Office of Freight Management and Operations and on the Federal Aviation Administration's national and airport-level forecasts of air cargo. The FHWA forecast includes projected tonnage for each mode—truck, rail, air (air and truck), water, and pipeline.
As specified in section 1118, a State Freight Plan must identify significant freight system trends, needs, and issues with respect to the State. The Department recommends that this discussion also include how emerging trends make those needs and issues of greater significance, or how these trends affect how those needs and issues can be addressed.
The Department recommends that a State Freight Plan include an analysis of the strengths of the State's freight system that it wishes to preserve and the problems that it wishes to solve. This analysis would show what the strengths of the State's freight system are that the State wishes to build upon; it would also show in what respects the State's freight system does not meet the State's goals, and indicate which problems are most important for the State to address. Some of these might include problems that the State expects to develop in the future as a result of increasing demand for freight transportation or other trends that the State is anticipating.
The Department recommends that a State Freight Plan include a discussion of the State's decision-making process on freight transportation improvements, including how the State conducted outreach to stakeholders and the public and how the State prioritized the various strategies, projects, and policy changes it considered. This discussion would show how the State coordinated improvements to different modes of transportation in order to achieve its goals in the most cost-effective way. It would also discuss ways in which the State coordinated with other States in regional freight planning efforts, and with metropolitan areas within the State that have done freight planning.
The Department encourages States to conduct economic analysis as part of the State Freight Plan, including analyses of benefits and costs of various improvements that they are considering. If economic analysis has been conducted, the results of that analysis should be reported in this portion of the State Freight Plan. The discussion would show how the State compared alternative approaches to achieving the same goal. As specified in section 1118, the discussion must also show evidence of consideration of operational strategies (such as congestion pricing) or innovative technologies (such as use of intelligent transportation systems (ITS)) that improve the safety and efficiency of freight movement. If an economic analysis is provided, it would be particularly useful to estimate benefits and costs of each alternative considered.
As specified in section 1118, a State Freight Plan must include a description of the strategies the State is employing to address freight mobility issues. The Department recommends that this description also include a presentation of the State's complete freight improvement strategy, with different improvements ranked in order of priority (or grouped into higher and lower priority groups). This presentation of the State's freight improvement strategy would include an analysis of how each improvement will advance the State's strategic goals, relating to:
• Capital investments;
• Operational improvements, such as congestion pricing and travel demand management;
• Policy changes, including performance management, competition, and accountability initiatives; and
• Expanded use of ITS and other innovative technologies.
• An analysis of how proposed improvements will affect specific supply chains and industries that have been identified as important to the State in Section 2;
• Because MAP–21 places particular emphasis on infrastructure that is used for transporting mining, agricultural, energy, and timber equipment and products, a discussion of how those freight transportation routes would be affected (and in particular how the strategy would impede the deterioration in the condition of infrastructure on those routes);
• An analysis of the improvements in outcomes that are expected to result from the proposed freight improvements;
• A discussion of how the freight plan relates to other transportation
Finally, the Department recommends that a State Freight Plan include a comprehensive implementation plan, showing both short-term and long-term strategies, and including an approximate time schedule for each proposed freight improvement. This implementation plan would include an analysis of which capital improvements have the potential to generate a revenue stream, and hence which projects have the potential to be funded with loans (repaid from the revenue stream) rather than solely through grants or general funds. The Plan would include a funding plan, showing how each project will be funded, including those funded by grants, loans, and public-private partnerships. The Plan would discuss the State's proposed partnerships with private infrastructure owners, such as railroads, terminal operators, and pipeline companies. Finally, the Plan would discuss how the State proposes to work with adjacent States on projects that cross State lines, or on freight corridors that cross State lines (even if the project itself is all in one State).
The Department recommends that States use a collaborative process for freight planning that involves all of the relevant stakeholders affected by the freight transportation system. These stakeholders would include owners of freight transportation infrastructure (both public and private); carriers operating on publicly-owned freight infrastructure; shippers and freight forwarders; representatives of employees of these stakeholders; State, local, and tribal governments; and the general public. Stakeholders might be domiciled both inside the State and outside of the State.
States are strongly encouraged to establish State Freight Advisory Committees to facilitate this collaborative process. As specified in section 1117 of MAP–21, State Freight Advisory Committees should include representatives of a cross-section of public and private sector experts and stakeholders. These might include representatives of:
• The transportation department of the State;
• Metropolitan planning organizations, councils of government, regional councils, and other regional and planning organizations;
• Local and tribal governments;
• Independent transportation authorities, such as seaport and airport authorities, toll highway authorities, and bridge and tunnel authorities;
• Private infrastructure owners, such as railroads and pipelines;
• Carriers, including carriers operating on their own infrastructure and carriers operating on publicly-owned infrastructure;
• Shippers and freight forwarders;
• Freight-related associations;
• Organizations representing the freight industry workforce;
• Environmental, safety, and community organizations; and
• Independent transportation experts, including academic specialists and consultants.
State Freight Advisory Committees should be charged with
• Advising the State on freight-related priorities, issues, projects, and funding needs;
• Serving as a forum for discussion of State decisions affecting freight transportation;
• Communicating and coordinating regional priorities with other organizations;
• Promoting the sharing of information between the private and public sectors on freight issues; and
• Participating in the development of the State's Freight Plan.
The modal administrations of the U.S. Department of Transportation and other departments in the U.S. Government can provide a wide range of data and analysis to assist States in the freight planning process. The following is a series of links to internet Web sites that provide useful data and analysis resources:
Click on “Forecast Tables, US Commercial and Foreign Flag Carriers, Tables 5–23.” Cargo forecasts are Tables 19 and 20.
DOT invites interested parties to submit comments on any aspect of the Department's implementation of MAP–21 requirements for State Freight Plans or State Freight Advisory Committees. The Department will consider these comments as it continues to implement the freight provisions of the law. The instructions for submitting comments can be found in the Addresses section above. Late-filed comments will be considered to the extent practicable.
Federal Motor Carrier Safety Administration (FMCSA), DOT.
Notice of Unified Carrier Registration Plan Board of Directors Meeting.
The meeting will be held on October 25, 2012, from 12:00 noon to 3:00 p.m., Eastern Standard Time.
This meeting will be open to the public via conference call. Any interested person may call 1–877–820–7831, passcode, 908048 to listen and participate in this meeting.
Open to the public.
The Unified Carrier Registration Plan Board of Directors (the Board) will continue its work in developing and implementing the Unified Carrier Registration Plan and Agreement and to that end, may consider matters properly before the Board.
Mr. Avelino Gutierrez, Chair, Unified Carrier Registration Board of Directors at (505) 827–4565.
Surface Transportation Board, DOT.
Notice of Proposed Settlement Agreement, Issuance of Procedural Schedule.
On September 4, 2012, United States Department of Energy and the United States Department of Defense (the Government) and BNSF Railway Company (BNSF) (collectively Movants), filed a motion requesting approval of an agreement that would settle these rate reasonableness disputes as between them only. The Board is adopting a procedural schedule for filing comments and replies addressing their proposed settlement agreement. (As detailed below, these proceedings involve disputes among a number of different entities, including other railroad carriers besides BNSF. This settlement applies only to the parties submitting the instant agreement and does not resolve these proceedings in their entirety.)
Comments are due by November 29, 2012. Reply comments are due by December 31, 2012.
Comments and replies may be submitted either via the Board's e-filing format or in the traditional paper format. Any person using e-filing should attach a document and otherwise comply with the instructions at the E-FILING link on the Board's Web site, at
Marc Lerner, (202) 245–0390. [Assistance for the hearing impaired is available through the Federal Information Relay Service (FIRS) at: 1–800–877–8339.]
In March 1981, the Government filed these complaints against 21 major railroads (the Railroad Defendants) under section 229 of the Staggers Rail Act of 1980, Public Law 96–448, 94 Stat. 1895. The Government sought reparations and a rate prescription relating to the nationwide movement of spent nuclear fuel, other high level radioactive wastes, and the empty containers (casks) and buffer and escort cars used for their movement (radioactive materials). In 1986, the Board's predecessor, the Interstate Commerce Commission (ICC), found that the Railroad Defendants were engaging in an unreasonable practice, imposing substantial and unwarranted cost additives—above and beyond the regular train service rates—in an effort to avoid transporting these radioactive materials. The ICC canceled the existing rates and cost additives, prescribed new rates, and awarded reparations.
The Railroad Defendants petitioned the Board to dismiss the complaints in 1996, and, in 1997, they invited the Government to explore the possibility of settling the complaints. Discussions commenced on a nationwide settlement covering all of the Railroad Defendants that might carry radioactive materials. The Government subsequently chose to negotiate only with Union Pacific Railroad Company (UP), the destination carrier for most of the movements of radioactive materials that were to be covered by the nationwide settlement, after the parties concluded that there were potential antitrust problems in negotiating with the Railroad Defendants as a group. On September 15, 2004, the Government and UP filed a motion seeking approval under 49 U.S.C. 10704 of a settlement agreement (the UP Agreement) they had negotiated to resolve these complaints as between them only. The Board, in a decision served in these proceedings on August 2, 2005: (1) Approved the UP Agreement; (2) dismissed UP as a party to these proceedings; (3) relieved UP of any obligation to participate in these or related proceedings involving claims against connecting railroad defendants
Movants jointly request that the Board approve the proposed agreement they have negotiated (the BNSF Agreement) to settle these rate reasonableness complaints as between them only and that the requested approval be without prejudice to the Governments' complaints and other actions insofar as they apply to the remaining Railroad Defendants involved in these proceedings. The UP Agreement, according to Movants, served as a model for their Agreement.
The BNSF Agreement, which Movants describe as flexible, comprehensive, long-term, and system-wide:
(1) Provides for a term of 25 years commencing on the effective date of the Board's approval of the BNSF Agreement and continues in effect for additional 5-year periods, subject to a 1-year termination notice requirement;
(2) Applies broadly to the nationwide movement on BNSF's rail lines of irradiated spent fuel, parts, and constituents; spent fuel moving from foreign countries to the United States for disposal; empty casks; radioactive wastes; and buffer and escort cars. Excluded from the BNSF Agreement are local movements originating and terminating in the East, which are covered by the rate basis prescribed in
(3) Establishes that the movement of these commodities constitutes common carrier service; addresses the elements of service required of BNSF; adopts guidelines for safe handling and security; obligates BNSF to provide, as needed, “extra services” as described in the BNSF Agreement, at the rates agreed upon;
(4) Adopts a rate methodology to:
(a) apply to all future movements of these radioactive materials in common carrier service. The methodology adopts maximum R/VC markups (not to exceed to 1.80, 2.50, or 3.51 times the shipment cost, depending on commodity type) of BNSF's most current system-average variable unit costs computed under the Board's Uniform Rail Costing System. Movants state that the proposed rate methodology is consistent with, but broadens, the rate prescription adopted in
(b) compensate BNSF for “extra services” and dedicated train service, when requested by the Government, and procedures to calculate “equitable compensation” for emergency related costs that BNSF may incur.
(5) Adopts a procedure to update rates and “extra services” annually to reflect changes in BNSF's system-average unit costs;
(6) Extinguishes BNSF's liability (and that of its predecessors and subsidiaries) for reparations in all matters arising out of these proceedings; and
(7) Adopts Alternative Dispute Resolution procedures with final recourse to the Board and mechanisms to renegotiate portions of the BNSF Agreement in a limited number of circumstances or if changed circumstances make further adherence to the terms of the BNSF Agreement “grossly inequitable” to either party.
Movants request that the Board: (1) Prescribe the rate methodology and maximum R/VC ratios that have been agreed to for the radioactive materials and rail services that are the subject of the BNSF Agreement; (2) dismiss BNSF as a defendant in these proceedings, preserve the liability of connecting carriers for reparations as to their portion of the charges assessed on through routes that include(d) BNSF, and not require BNSF to participate in rate proceedings initiated by the Government against remaining Railroad Defendants (except that BNSF will remain obligated to respond to the Board's subpoena authority); (3) retain jurisdiction over these proceedings and continue to hold them in abeyance pending further settlement negotiations; and (4) publish notice of their motion and the proposed BNSF Agreement in the
The Board is granting Movants' request in part. Notice of their motion and the proposed BNSF Agreement is being published in the
By the Board, Rachel D. Campbell, Director, Office of Proceedings.
Financial Management Service, Fiscal Service, Treasury.
Notice of systems of records.
In accordance with the requirements of the Privacy Act of 1974, as amended, 5 U.S.C. 552a, Financial Management Service is publishing its inventory of Privacy Act systems of records.
Pursuant to the Privacy Act of 1974 (5 U.S.C. 552a) and the Office of Management and Budget Circular No. A–130, Financial Management Service (FMS) has completed a review of its Privacy Act systems of records notices to identify minor changes to those notices. The systems of records were last published in their entirety on May 15, 2009, at 74 FR 23006–23021.
The following system of records was added to FMS's inventory of Privacy Act notices since May 9, 2000:
FMS .008—Mailing List Records—Treasury/FMS, published on December 16, 2010, at 75 FR 78802.
On August 17, 2011, FMS published a notice in the
On July 19, 2011, FMS published a notice in the
The systems notices are reprinted in their entirety following the Table of Contents.
This notice covers all systems of records adopted by the FMS as of [enter date of FR publication]. The systems notices are reprinted in their entirety following the Table of Contents.
Administrative Records—Treasury/FMS.
FMS, U.S. Department of the Treasury, Prince George's Metro Center II, 3700 East-West Highway, Room 144, Hyattsville, MD 20782. Also, please see Appendix I.
FMS personnel.
(1) Motor Vehicle Accident Reports. (2) Parking Permits. (3) Distribution lists of individuals requesting various Treasury publications. (4) Treasury Credentials.
5 U.S.C. 301.
These records may be used to:
(1) Disclose to GSA for driver's permits, parking permits, accident reports, and credentials;
(2) Disclose to GPO or FMS contractors for servicing the public on Treasury publications and managing subscriptions to the appropriate publications;
(3) Disclose to appropriate agencies, entities, and persons when (a) the Department suspects or has confirmed that the security or confidentiality of information in the system of records has been compromised; (b) the Department has determined that as a result of the suspected or confirmed compromise there is a risk of harm to economic or property interests, identity theft or fraud, or harm to the security or integrity of this system or other systems or programs (whether maintained by the Department or another agency or entity) that rely upon the compromised information; and (c) the disclosure made to such agencies, entities, and persons is reasonably necessary to assist in connection with the Department's efforts to respond to the suspected or confirmed compromise and prevent, minimize, or remedy such harm.
Records in this system are stored electronically or on paper in secure facilities in a locked drawer behind a locked door.
Records may be retrieved by name and Treasury publication.
Locked containers.
Administrative Procedure—names are only given to those who control the listing.
(1) Distribution List [printed materials]—destroyed after appropriate revision of mailing list or after three months, whichever is sooner.
(2) Motor Vehicle Accident Reports—destroyed six years after the end of the fiscal year during which the records were created.
(3) Treasury Credentials—destroyed in accordance with National Archives and Records Administration (NARA) General Records Schedule 11, item 4.
(4) Parking Permits—destroyed two years after the end of the fiscal year during which the records were created.
Director, Facilities Management Division, FMS, U.S. Department of the Treasury, Prince George's Metro Center II, 3700 East-West Highway, Room 144, Hyattsville, MD 20782.
Inquiries under the Privacy Act of 1974 shall be sent to the Disclosure Officer, FMS, U.S. Department of the Treasury, Liberty Center Building, 401 14th Street SW., Washington, DC 20227. All individuals making inquiries should provide with their request as much descriptive matter as is possible to identify the particular record desired. The system manager will advise as to whether the Service maintains the record requested by the individual.
Individuals requesting information under the Privacy Act of 1974 concerning procedures for gaining access or contesting records should write to the Disclosure Officer at the address shown above. All individuals are urged to examine the rules of the U.S. Department of the Treasury published in 31 CFR Part 1, subpart C concerning requirements of this Department with respect to the Privacy Act of 1974.
See “Record Access Procedures” above.
Financial Management Service personnel.
None.
Motor Vehicle Accident Reports: Prince George's Metro Center II, 3700 East-West Highway, Room 127, Hyattsville, MD 20782.
Parking Permits: 1. Prince George's Metro Center II, 3700 East-West Highway, Room 127, Hyattsville, MD 20782.
2. Liberty Center Building, 401 14th Street SW., Room 118, Washington, DC 20227. Distribution List: Prince George's Metro Center II, 3700 East-West Highway, Hyattsville, MD 20782.
Treasury Credentials: Prince George's Metro Center II, 3700 East-West Highway, Room 158–B, Hyattsville, MD 20782.
Payment Records—Treasury/FMS.
The FMS, U.S. Department of the Treasury, Washington, DC 20227. Records are also located throughout the United States at FMS operations centers, Federal Records Centers, Federal Reserve Banks acting as Treasury's fiscal agents, and financial institutions acting as Treasury's financial agents. Additional addresses may be obtained from the system managers.
Individuals who are the intended or actual recipients of payments disbursed by the United States Government.
Payment records showing a payee's name; Social Security number, employer identification number, or other agency identification or account number; physical and/or electronic mailing address; telephone numbers; payment amount; date of issuance; trace number or other payment identification number, such as Treasury check number and symbol; financial institution information, including the routing number of his or her financial institution and the payee's account number at the financial institution; and vendor contract and/or purchase order number.
5 U.S.C. 301; 31 U.S.C. 3325, and 31 U.S.C. 3321 note; Executive Order 6166, dated June 10, 1933.
These records may be used to:
(1) Disclose to the banking industry for payment verification;
(2) Disclose to Federal investigative agencies, Departments and agencies for whom payments are made, and payees;
(3) Disclose pertinent information to appropriate Federal, State, local or foreign agencies responsible for investigating or prosecuting the violations of, or for enforcing or implementing, a statute, rule, regulation, order, or license, where the disclosing agency becomes aware of an indication of a violation or potential violation of civil or criminal law or regulation;
(4) Disclose information to a Federal, State, or local agency maintaining civil, criminal or other relevant enforcement information or other pertinent information, which has requested information relevant or necessary to the requesting agency's or the bureau's hiring or retention of an individual, or issuance of a security clearance, license, contract, grant, or other benefit;
(5) Disclose information to a court, magistrate, mediator, or administrative tribunal in the course of presenting evidence; to counsel, experts, or witnesses in the course of civil discovery, litigation, or settlement negotiations, in response to a subpoena, or in connection with criminal law proceedings;
(6) Disclose information to foreign governments in accordance with formal or informal international agreements;
(7) Provide information to a congressional office in response to an inquiry made at the request of the individual to whom the record pertains;
(8) Provide information to the news media in accordance with guidelines contained in 28 CFR 50.2 which relate to an agency's functions relating to civil and criminal proceedings;
(9) Provide information to unions recognized as exclusive bargaining representatives under the Civil Service Reform Act of 1978, 5 U.S.C. 7111 and 7114;
(10) Provide information to third parties during the course of an investigation to the extent necessary to obtain information pertinent to the investigation;
(11) Disclose information concerning delinquent debtors to Federal creditor agencies, their employees, or their agents for the purpose of facilitating or conducting Federal administrative offset, Federal tax refund offset, Federal salary offset, or for any other authorized debt collection purpose;
(12) Disclose information to any State, Territory or Commonwealth of the United States, or the District of Columbia to assist in the collection of State, Commonwealth, Territory or District of Columbia claims pursuant to a reciprocal agreement between FMS and the State, Commonwealth, Territory or the District of Columbia, or pursuant to Federal law that authorizes the offset of Federal payments to collect delinquent obligations owed to the State, Commonwealth, Territory, or the District of Columbia;
(13) Disclose to the Defense Manpower Data Center and the United States Postal Service and other Federal agencies through authorized computer matching programs for the purpose of identifying and locating individuals who are delinquent in their repayment of debts owed to the Department or other Federal agencies in order to collect those debts through salary offset and administrative offset, or by the use of other debt collection tools;
(14) Disclose information to a contractor of the FMS for the purpose of performing routine payment processing services, subject to the same limitations applicable to FMS officers and employees under the Privacy Act;
(15) Disclose information to a fiscal or financial agent of the FMS, its employees, agents, and contractors, or to a contractor of the FMS, for the purpose of ensuring the efficient administration of payment processing services, subject to the same or equivalent limitations applicable to FMS officers and employees under the Privacy Act;
(16) Disclose information to appropriate agencies, entities, and persons when (a) the Department suspects or has confirmed that the security or confidentiality of information in the system of records has been compromised; (b) the Department has determined that as a result of the suspected or confirmed compromise there is a risk of harm to economic or property interests, identity theft or fraud, or harm to the security or integrity of this system or other systems or programs (whether maintained by the Department or another agency or entity) that rely upon the compromised information; and (c) the disclosure made to such agencies, entities, and persons is reasonably necessary to assist in connection with the Department's efforts to respond to the suspected or confirmed compromise and prevent, minimize, or remedy such harm; and
(17) Disclose information to (a) a Federal or state agency, its employees, agents (including contractors of its agents) or contractors; or, (b) a fiscal or financial agent designated by the FMS or other Department of the Treasury bureau or office, including employees, agents or contractors of such agent; or, (c) a contractor of the FMS, for the purpose of identifying, preventing, or recouping improper payments to an applicant for, or recipient of, Federal funds, including funds disbursed by a state in a state-administered, Federally funded program; disclosure may be made to conduct computerized comparisons for this purpose.
Records in this system are stored electronically or on paper in secure facilities in a locked drawer behind a locked door.
Records may be retrieved by name, social security number, employer identification number, agency-supplied identifier, date of payment, or trace
All official access to the records is on a need-to-know basis, as authorized by a business line manager at FMS, or a fiscal or financial agent of the United States, consistent with agent authority granted by Treasury or FMS. Procedural and physical safeguards, such as personal accountability, audit logs, and specialized communications security, are utilized. Each user of computer systems containing records has individual passwords (as opposed to group passwords) or other unique, secure access authentication credentials for which he or she is responsible. Thus, a security manager can identify access to the records by user. Access to computerized records is limited, through use of access codes, encryption techniques, and/or other internal mechanisms, to those whose official duties require access. Storage facilities are secured by various means such as security guards, badge access, and locked doors with key entry.
FMS has submitted a records schedule to the NARA with a proposed retention period of seven years. Until NARA approves the proposed records schedule, disposal is not authorized.
Chief Disbursing Officer, FMS, 401 14th Street SW., Washington, DC 20227.
Inquiries under the Privacy Act of 1974 shall be addressed to the Disclosure Officer, FMS, 401 14th Street SW., Washington, DC 20227. All individuals making inquiries should provide with their request as much descriptive matter as is possible to identify the particular record desired. The system manager will advise as to whether the FMS maintains the record requested by the individual.
Individuals requesting information under the Privacy Act of 1974 concerning procedures for gaining access or contesting records should write to the Disclosure Officer at the address shown above. All individuals are urged to examine the rules of the U.S. Department of the Treasury published in 31 CFR, Part 1, subpart C concerning requirements of this Department with respect to the Privacy Act of 1974.
See “Record Access Procedures” above.
Information in this system is provided by Federal departments and agencies responsible for certifying, disbursing, and collecting Federal payments; Treasury or FMS-designated fiscal and financial agents of the United States that process payments and collections; and commercial database vendors. Each of these record sources may include information obtained from individuals.
None.
Claims and Inquiry Records on Treasury Checks, and International Claimants—Treasury/FMS.
FMS, U.S. Department of the Treasury, Prince George's Metro Center II, 3700 East-West Highway, Room 727D, Hyattsville, MD 20782.
(1) Payees and holders of Treasury checks, (2) Claimants awarded benefits under the War Claims Act and the International Claims Settlement Act of 1949.
(1) Treasury check claim file: Treasury check, claim of payee with name and address, settlement action taken.
(2) Awards for claims for losses sustained by individuals.
5 U.S.C. 301; (1) For Treasury check claims—31 U.S.C. 71 with delegation of authority from Comptroller General of the United States; (2) International claims—50 U.S.C. 2012; 22 U.S.C. 1627, 1641, 1642.
(1) Information is routinely disclosed to endorsers concerning checks for which there is liability, Federal agencies, State and local law enforcement agencies, General Accountability Office, Congressional offices and media assistance offices on behalf of payee claimants.
(2) International Claims—Information in files is used by claimants (awardees) and their representatives, Foreign Claims Settlement Commission, and Congressmen. These records and information in the records may be used to:
(a) Disclose pertinent information to appropriate Federal, State, local or foreign agencies responsible for investigating or prosecuting the violations of, or for enforcing or implementing, a statute, rule, regulation, order, or license, where the disclosing agency becomes aware of an indication of a violation or potential violation of civil or criminal law or regulation;
(b) Disclose information to a Federal, State, or local agency, maintaining civil, criminal or other relevant enforcement information or other pertinent information, which has requested information relevant to or necessary to the requesting agency's or the bureau's hiring or retention of an individual, or issuance of a security clearance, license, contract, grant, or other benefit;
(3) Disclose information to a court, magistrate, or administrative tribunal of competent jurisdiction;
(4) Disclose information to foreign governments in accordance with formal or informal international agreements;
(5) Provide information to a congressional office in response to an inquiry made at the request of the individual to whom the record pertains;
(6) Provide information to the news media in accordance with guidelines contained in 28 CFR 50.2 which relate to an agency's functions relating to civil and criminal proceedings;
(7) Provide information to unions recognized as exclusive bargaining representatives under the Civil Service Reform Act of 1978, 5 U.S.C. 7111 and 7114;
(8) Provide information to third parties during the course of an investigation to the extent necessary to obtain information pertinent to the investigation;
(9) Disclose information to the public when attempts by FMS to locate the claimant have been unsuccessful. This information is limited to the claimant's name and city and state of last known address, and the amount owed to the claimant. (This routine use does not apply to the Iran Claims Program or the Holocaust Survivors Claims Program or other claims programs that statutorily prohibit disclosure of claimant information); and
(10) Disclose information to appropriate agencies, entities, and persons when (a) the Department suspects or has confirmed that the security or confidentiality of information in the system of records has been compromised; (b) the Department has determined that as a result of the
Records in this system are stored electronically or on paper in secure facilities in a locked drawer behind a locked door.
Records may be retrieved by:
(1) Name of payee and check number and symbol;
(2) Alpha cross-reference to case number; and
(3) Name of claimant or alpha reference to claim number.
(1) Secured building.
(2) Secured files in secured building.
Disposal of electronic Treasury check claims records is not authorized at this time.
Category 1: Director, Financial Processing Division, Prince George's Metro Center II, 3700 East-West Highway, Room 727D, Hyattsville, MD 20782. Category 2: Director, Funds Management Division, Prince George's Metro Center II, 3700 East-West Highway, Room 620D, Hyattsville, MD 20782.
Inquiries under the Privacy Act of 1974 shall be addressed to the Disclosure Officer, Financial Management Service, 401 14th Street SW., Washington, DC 20227. All individuals making inquiries should provide with their request as much descriptive matter as is possible to identify the particular record desired. The system managers will advise as to whether FMS maintains the record requested by the individual.
Individuals requesting information under the Privacy Act of 1974 concerning procedures for gaining access or contesting records should write to: Disclosure Officer, Financial Management Service, U.S. Department of the Treasury, 401 14th Street SW., Washington, DC 20227.
All individuals are urged to examine the rules of the U.S. Department of the Treasury published in 31 CFR Part 1, subpart C concerning requirements of this Department with respect to the Privacy Act of 1974.
See “Record Access Procedures” above.
(1) Individual payees of Treasury checks, endorsers of Treasury checks, investigative agencies, contesting claimants.
(2) Awards certified to Treasury for payment by Foreign Claims Settlement Commission.
None.
Education and Training Records—Treasury/FMS.
Washington, DC 20227; Financial Management Service, U.S. Department of the Treasury, 1990 K Street NW., Suite 300, Washington, DC 20006.
All Government employees (including separated employees, in certain cases) and other individuals who access and apply for FMS training services.
(1) Personal Profile—Account Record;
(2) Transcript Record;
(3) Enrollment Status Record;
(4) Job Skills Record;
(5) Individual Development Plan Record;
(6) Assessment Performance Results Record;
(7) Managerial Approval/Disapproval Status Record;
(8) Class Roster Record;
(9) Certificate—Training Program Status Record;
(10) Class Evaluation Record;
(11) Payment Record;
(12) Statistical Reports—retrievable by names: (a) Personnel Transcript Report, (b) Class Enrollment Report, (c) Class Payment/Billing Report, (d) Status of Training Report, (e) Ad hoc Training Report, and (f) Other similar files or registers.
5 U.S.C. 301; 31 U.S.C. 321; 31 U.S.C. chapter 33; 31 U.S.C. 3720.
The purpose of this system is to maintain records about Government employees and other individuals who participate in FMS' education and training program. The information contained in the records will assist FMS in properly tracking individual training and accurately account for training revenue and expenditures generated through the FMS' training programs (for example, Learning Management System (LMS)). For FMS personnel, the records contained in FMS' training records will also assist managers' active participation in their employees' learning plans. FMS maintains the information necessary to ensure that FMS keeps accurate records related to classes, including a training participant's training and enrollment status, class completion information, transcripts and certificates of accomplishment. FMS also maintains the records to ensure that financial records pertaining to a training participant's payment for training fees are maintained accurately. FMS' training records will serve to report receipts to the appropriate Federal agency (currently the Treasury Department's Bureau of Public Debt) responsible for maintaining FMS' financial records for training. Finally, the information contained in the covered records will be used for collateral purposes related to the training processes, such as the collection of statistical information on training programs, development of computer systems, investigation of unauthorized or fraudulent activity related to submission of information to FMS for training program purposes and the collection of debts arising out of such activity.
These records may be used to disclose information to:
(1) Appropriate Federal, State, local or foreign agencies responsible for
(2) A court, magistrate, or administrative tribunal, in the course of presenting evidence, including disclosures to opposing counsel or witnesses, for the purpose of civil discovery, litigation, or settlement negotiations or in response to a subpoena, where relevant or potentially relevant to a proceeding, or in connection with criminal law proceedings;
(3) A congressional office in response to an inquiry made at the request of the individual to whom the record pertains;
(4) Federal agencies, financial institutions, and contractors for the purpose of performing financial management services, including, but not limited to, processing payments, investigating and rectifying possible erroneous reporting information, testing and enhancing related computer systems, creating and reviewing statistics to improve the quality of services provided, or conducting debt collection services;
(5) Federal agencies, their agents and contractors for the purposes of facilitating the collection of receipts, determining the acceptable method of collection, the accounting of such receipts, and the implementation of programs related to the receipts being collected as well as status of their personnel training, statistical training information;
(6) Financial institutions, including banks and credit unions, and credit card companies for the purpose of collections and/or investigating the accuracy of information required to complete transactions using electronic methods and for administrative purposes, such as resolving questions about a transaction;
(7) Unions recognized as exclusive bargaining representatives under the Civil Service Reform Act of 1978, 5 U.S.C. 7111 and 7114;
(8) Foreign governments in accordance with formal or informal international agreements and if they maintain proper administrative or financial controls related to the training activity;
(9) Third parties during the course of an investigation to the extent necessary to obtain information pertinent to the investigation;
(10) Federal agencies, their agents and contractors, credit bureaus, and employers of individuals who owe delinquent debt when the debt arises from the unauthorized use of electronic payment methods. The information will be used for the purpose of collecting such debt through offset, administrative wage garnishment, referral to private collection agencies, litigation, reporting the debt to credit bureaus, or for any other authorized debt collection purpose;
(11) Representatives of the NARA who are conducting records management inspections under authority of 44 U.S.C. 2904 and 2906; and
(12) Appropriate agencies, entities, and persons when (a) the Department suspects or has confirmed that the security or confidentiality of information in the system of records has been compromised; (b) the Department has determined that as a result of the suspected or confirmed compromise there is a risk of harm to economic or property interests, identity theft or fraud, or harm to the security or integrity of this system or other systems or programs (whether maintained by the Department or another agency or entity) that rely upon the compromised information; and (c) the disclosure made to such agencies, entities, and persons is reasonably necessary to assist in connection with the Department's efforts to respond to the suspected or confirmed compromise and prevent, minimize, or remedy such harm.
Records in this system are stored electronically or on paper in secure facilities in a locked drawer behind a locked door.
Electronic training data can be retrieved by Class Name and/or Organization Name and Participant Name. Electronic financial data can be retrieved by Name, Organization and payment information (Credit Card, Form 182, DD Form 1556, for example).
All hardcopy records are maintained in a secured building, secured room, and locked cabinets. FMS personnel access to training data is primarily for the purpose of using the training services or administering the LMS. For technical and administrative purposes, non-FMS personnel access is limited to contractors who are maintaining the LMS system in the normal performance of their duties and have completed non-disclosure statements and undergone security background checks consistent with their access in accordance with the existing contract.
Retention periods vary by record type, up to a maximum of 7 years after last training activity.
Assistant Commissioner, Management, Human Resources Division, FMS, U.S. Department of the Treasury, Prince George's Metro Center II, 3700 East-West Highway, Hyattsville, MD 20782.
Inquiries under the Privacy Act of 1974 shall be addressed to the Disclosure Officer, FMS, 401 14th Street SW., Washington, DC 20227. All individuals making inquiries should provide with their request as much descriptive matter as is possible to identify the particular record desired. The system manager will advise as to whether the Service maintains the record requested by the individual.
Individuals requesting information under the Privacy Act of 1974, as amended, concerning procedures for gaining access to or contesting records should write to the Disclosure Officer. All individuals are urged to examine the rules of the U.S. Department of the Treasury published in 31 CFR Part 1, subpart C, and appendix G, concerning requirements of this Department with respect to the Privacy Act of 1974.
See “Record Access Procedures” above.
Information in this system is provided by: The individual on whom the record is maintained; the individual's employer, other governmental agency or educational institutions.
None.
FMS Personnel Records—Treasury/FMS.
FMS, U.S. Department of the Treasury, 401 14th Street SW., Washington, DC 20227; FMS, U.S. Department of the Treasury, Prince George's Metro Center II, 3700 East-West Highway, Hyattsville, MD 20782.
All Government employees (including separated employees, in certain cases) and applicants.
(1) Locator Cards.
(2) Incentive Awards Record.
(3) Official Personnel Folder.
(4) Personnel Roster.
(5) Logs of SF–52's.
(6) Correspondence File.
(7) Position Listings.
(8) Position Descriptions with Evaluation Statements.
(9) Personnel Management Evaluation Survey Reports.
(10) Request for Certification File.
(11) Merit Promotion File.
(12) Exit Interview File.
(13) Performance File.
(14) Statistical Reports—retrievable by names: (a) Personnel Status Report, (b) Ad Hoc Retiree Report, (c) Monthly EEO report, (d) Direct Hire Authority Report, (e) Registers Worked File, (f) Statements of Employment and Financial Interest, and (g) Other similar files or registers.
(15) Training Course Nominations.
(16) Evaluation of Training Program.
(17) Tuition Assistance Files.
(18) Senior Executive Service Development File.
(19) Management Development File.
Executive Order 10561, dated September 13, 1954, Federal Personnel Manual, and Title 5 of U.S.C. Code.
These records may be used to:
(1) Disclose pertinent information to appropriate Federal, State, local or foreign agencies responsible for investigating or prosecuting the violations of, or for enforcing or implementing, a statute, rule, regulation, order, or license, where the disclosing agency becomes aware of an indication of a violation or potential violation of civil or criminal law or regulation;
(2) Disclose information to a Federal, State, or local agency, maintaining civil, criminal or other relevant enforcement information or other pertinent information, which has requested information relevant to or necessary to the requesting agency's or the bureau's hiring or retention of an individual, or issuance of a security clearance, license, contract, grant, or other benefit;
(3) Disclose information to a court, magistrate, or administrative tribunal in the course of presenting evidence, including disclosures to opposing counsel or witnesses in the course of civil discovery, litigation, or settlement negotiations, in response to a subpoena, or in connection with criminal law proceedings;
(4) Disclose information to foreign governments in accordance with formal or informal international agreements;
(5) Provide information to a congressional office in response to an inquiry made at the request of the individual to whom the record pertains;
(6) Provide information to the news media in accordance with guidelines contained in 28 CFR 50.2 which relate to an agency's functions relating to civil and criminal proceedings;
(7) Provide information to unions recognized as exclusive bargaining representatives under the Civil Service Reform Act of 1978, 5 U.S.C. 7111 and 7114;
(8) Provide information to third parties during the course of an investigation to the extent necessary to obtain information pertinent to the investigation; and
(9) Disclose information to appropriate agencies, entities, and persons when (a) the Department suspects or has confirmed that the security or confidentiality of information in the system of records has been compromised; (b) the Department has determined that as a result of the suspected or confirmed compromise there is a risk of harm to economic or property interests, identity theft or fraud, or harm to the security or integrity of this system or other systems or programs (whether maintained by the Department or another agency or entity) that rely upon the compromised information; and (c) the disclosure made to such agencies, entities, and persons is reasonably necessary to assist in connection with the Department's efforts to respond to the suspected or confirmed compromise and prevent, minimize, or remedy such harm.
Hardcopy/Electronic.
Alphabetically by name; also in some instances by organization, then Social Security number.
Secured building, secured room, and locked cabinets. Non-FMS access is limited to investigators from OPM, etc., members of Fair Employment staff and Union officials.
Delete/destroy in accordance with NARA General Records Schedule 1.
Director, Personnel Management Division, FMS, U.S. Department of the Treasury, Prince George's Metro Center II, 3700 East-West Highway, Room 115–F, Hyattsville, MD 20782.
Inquiries under the Privacy Act of 1974 shall be addressed to the Disclosure Officer, FMS, 401 14th Street SW., Washington, DC 20227. All individuals making inquiries should provide with their request as much descriptive matter as is possible to identify the particular record desired. The system manager will advise as to whether the Service maintains the record requested by the individual.
Individuals requesting information under the Privacy Act of 1974 concerning procedures for gaining access or contesting records should write to the Disclosure Officer at the address shown above. All individuals are urged to examine the rules of the U.S. Department of the Treasury published in 31 CFR Part 1, subpart C concerning requirements of this Department with respect to the Privacy Act of 1974.
See “Record Access Procedures” above.
Applicant Personnel Action Forms (SF–50), SF–171 (completed by applicant), Payroll Actions References, Educational Institutions, etc.
None.
Direct Deposit Enrollment Records—Treasury/FMS.
Records are located at the Federal Reserve Bank, acting in its capacity as Treasury's fiscal agent, 2200 North Pearl Street, Dallas, TX 75201.
Individuals who enroll with the FMS to receive Federal payments from the Federal Government via an electronic funds transfer program known as “Direct Deposit.”
The records may contain identifying information, such as an individual's name(s), social security number, home
5 U.S.C. 301; 31 U.S.C. 321; 31 U.S.C. chapter 33; 31 U.S.C. 3332.
The purpose of this system is to maintain records about individuals who wish to enroll in the Direct Deposit program in order to receive Federal payments directly to a bank account or other similar type of account via electronic funds transfer, rather than by paper check. The records are used to process Direct Deposit enrollment applications that may be received directly by FMS, its fiscal agents, and/or contractors. The records are collected and maintained to guarantee that Direct Deposit enrollment applications are processed properly to ensure that a recipient's Federal payment will be disbursed to the correct account. Without the appropriate information, FMS, its fiscal agents and contractors, would not be able to process the Direct Deposit enrollment application as requested by the individual authorizing the Direct Deposit. The information will also be used for collateral purposes related to the processing of Direct Deposit enrollments, such as collection of statistical information on operations, development of computer systems, investigation of unauthorized or fraudulent activity, and the collection of debts arising out of such activity.
These records may be used to disclose information to:
(1) Appropriate Federal, State, local or foreign agencies responsible for investigating or prosecuting the violation of, or for enforcing or implementing, a statute, rule, regulation, order, or license, where the disclosing agency becomes aware of a potential violation of civil or criminal law or regulation;
(2) A court, magistrate, or administrative tribunal, in the course of presenting evidence, including disclosures to opposing counsel or witnesses, for the purpose of civil discovery, litigation, or settlement negotiations or in response to a subpoena, where relevant or potentially relevant to a proceeding, or in connection with criminal law proceedings;
(3) A congressional office in response to an inquiry made at the request of the individual to whom the record pertains;
(4) Fiscal agents, financial agents, financial institutions, and contractors for the purposes of (a) Processing Direct Deposit enrollment applications, including, but not limited to, processing Direct Deposit enrollment forms and implementing programs related to Direct Deposit; investigating and rectifying possible erroneous information; creating and reviewing statistics to improve the quality of services provided; conducting debt collection services for debts arising from Direct Deposit activities; or developing, testing and enhancing computer systems; and (b) processing waivers from the requirement to receive payments electronically, including, but not limited to, processing automatic waivers and applications for waivers, as well as implementing the waivers; investigating and rectifying possible erroneous information or fraud; creating and reviewing statistics to improve the quality of services provided; or developing, testing and enhancing computer systems.
(5) Federal agencies, their agents and contractors for the purposes of facilitating the processing of Direct Deposit enrollment applications and the implementation of programs related to Direct Deposit;
(6) Federal agencies, their agents and contractors, credit bureaus, and employers of individuals who owe delinquent debt for the purpose of garnishing wages, only when the debt arises from the unauthorized or improper use of the Direct Deposit program. The information will be used for the purpose of collecting such debt through offset, administrative wage garnishment, referral to private collection agencies, litigation, reporting the debt to credit bureaus, or for any other authorized debt collection purpose;
(7) Financial institutions, including banks and credit unions, for the purpose of disbursing payments and/or investigating the accuracy of information required to complete transactions using Direct Deposit and for administrative purposes, such as resolving questions about a transaction;
(8) Representatives of the NARA who are conducting records management inspections under authority of 44 U.S.C. 2904 and 2906; and
(9) Appropriate agencies, entities, and persons when (a) the Department suspects or has confirmed that the security or confidentiality of information in the system of records has been compromised; (b) the Department has determined that as a result of the suspected or confirmed compromise there is a risk of harm to economic or property interests, identity theft or fraud, or harm to the security or integrity of this system or other systems or programs (whether maintained by the Department or another agency or entity) that rely upon the compromised information; and (c) the disclosure made to such agencies, entities, and persons is reasonably necessary to assist in connection with the Department's efforts to respond to the suspected or confirmed compromise and prevent, minimize, or remedy such harm.
Debt information concerning a government claim against a debtor when the debt arises from the unauthorized use of Direct Deposit is also furnished, in accordance with 5 U.S.C. 552a(b)(12) and 31 U.S.C. 3711(e), to consumer reporting agencies, as defined by the Fair Credit Reporting Act, 5 U.S.C. 1681(f), to encourage repayment of a delinquent debt.
Records in this system are stored electronically or on paper in secure facilities in a locked drawer behind a locked door.
Records are retrieved by name, social security number, telephone number, transaction identification number, or other alpha/numeric identifying information.
All official access to the system of records is on a need-to-know basis only, as authorized by a business line manager at FMS or FMS's fiscal agent. Procedural and physical safeguards, such as personal accountability, audit logs, and specialized communications security, are utilized. Each user of computer systems containing records has individual passwords (as opposed to group passwords) for which he or she is responsible. Thus, a security manager can identify access to the records by user. Access to computerized records is limited, through use of access codes, encryption techniques, and/or other internal mechanisms, to those whose official duties require access. Storage facilities are secured by various means such as security guards, badge access, and locked doors with key entry.
Electronic and paper records for enrollments and associated transactions will be retained for six (6) months or as otherwise required by statute or court order. Records in electronic media are electronically erased using industry-accepted techniques, and in accordance with applicable FMS policies regarding the retention and disposal of fiscal agency records. Paper records are destroyed in accordance with fiscal agency archive and disposal procedures and applicable FMS policies regarding the retention and disposal of fiscal agency records.
Assistant Commissioner, Payment Management, EFT Strategy Division, Financial Management Service, 401 14th Street SW., Washington, DC 20227.
Inquiries under the Privacy Act of 1974, as amended, shall be addressed to the Disclosure Officer, Financial Management Service, 401 14th Street SW., Washington, DC 20227. All individuals making inquiries should provide with their request as much descriptive matter as is possible to identify the particular record desired. The system manager will advise as to whether FMS maintains the records requested by the individual.
Individuals requesting information under the Privacy Act of 1974, as amended, concerning procedures for gaining access to or contesting records should write to the Disclosure Officer. All individuals are urged to examine the rules of the U.S. Department of the Treasury published in 31 CFR Part 1, subpart C, and appendix G, concerning requirements of this Department with respect to the Privacy Act of 1974, as amended.
See “Record Access Procedures” above.
Information in this system is provided by the individual on whom the record is maintained (or by his or her authorized representative), other persons who electronically authorize payments from the Federal government, Federal agencies responsible for authorizing payments, Federal agencies responsible for disbursing payments, Treasury financial agents, and Treasury fiscal agents that process Direct Deposit enrollment applications, and contractors.
None.
Payroll and Pay Administration—Treasury/FMS.
FMS, U.S. Department of the Treasury, Prince George's Metro Center II, 3700 East-West Highway, Room 133 and 101A, Hyattsville, MD 20782; and Room 120, Liberty Center Building, Washington, DC 20227.
All employees of the Service and separated employees.
(1) Official Payroll Folder (a) Levy and Garnishment Records. (b) SF–1192—Savings Bond Authorization. (c) SF–1199A—Allotment of Pay to Savings Account. (d) Copies of SF–50—Notification of Personnel Action. (e) Withholding Tax Exemptions. (f) Copy of Health Benefit Designation. (g) Copy of Life Insurance Forms. (h) Payroll Change Slips. (i) Combined Federal Campaign Designations. (j) Copy of SF–1150. (2) Time and Attendance Reports (a) SF–71 Request for Leave. (b) Court Leave Documents. (c) Request for Advancement of Leave. (3) Payroll Comprehensive Listing (a) Current Payment Information. (b) Record of Leave Earned and Used. (c) All Deductions from Pay. (d) Personnel Information such as Grade, Step, Salary, Title, Date of Birth, Social Security Number, Veterans Preference, Tenure, etc. (4) Payroll Control Registers.
Title 5—Pay, Leave and Allowances.
These records may be used to disclose information:
(1) To Federal Agencies and to State and Local Agencies for tax purposes; and
(2) To appropriate agencies, entities, and persons when (1) the Department suspects or has confirmed that the security or confidentiality of information in the system of records has been compromised; (2) the Department has determined that as a result of the suspected or confirmed compromise there is a risk of harm to economic or property interests, identity theft or fraud, or harm to the security or integrity of this system or other systems or programs (whether maintained by the Department or another agency or entity) that rely upon the compromised information; and (3) the disclosure made to such agencies, entities, and persons is reasonably necessary to assist in connection with the Department's efforts to respond to the suspected or confirmed compromise and prevent, minimize, or remedy such harm.
Records in this system are stored electronically or on paper in secure facilities in a locked drawer behind a locked door. The records are stored on magnetic disc, tape, digital media, and CD–ROM.
Records may be retrieved by Social Security Number.
Records in this system are safeguarded in a secured building, secured room and locked cabinets.
Dispose of in accordance with NARA General Records Schedule 2.
Director, Personnel Management Division, FMS, Prince George's Metro Center II, 3700 East-West Highway, Room 115–F, Hyattsville, MD 20782.
Inquiries under the Privacy Act of 1974 shall be addressed to the Disclosure Officer, 401 14th Street SW., Washington, DC 20227. All individuals making inquiries should provide with
Individuals requesting information under the Privacy Act of 1974 concerning procedures for gaining access or contesting records should write to the Disclosure Officer at the address shown above. All individuals are urged to examine the rules of the U.S. Department of the Treasury published in 31 CFR Part 1, subpart C concerning requirements of this Department with respect to the Privacy Act of 1974.
See “Record Access Procedures” above.
From individual Service employees.
None.
Mailing List Records—Treasury/FMS.
Records are located at the offices of FMS, 401 14th Street SW., Washington, DC 20227, or its fiscal or financial agents at various locations. The addresses of the fiscal or financial agents may be obtained by contacting the System Manager below.
Low- to moderate-income individuals, who are more likely to be unbanked or underbanked, who could potentially receive Federal tax refund payments, and whose names and addresses are included on mailing lists purchased from commercial providers.
The records may contain identifying information, such as an individual's name(s) and address.
5 U.S.C. 301; 31 U.S.C. 321; 31 U.S.C. chapter 33; 31 U.S.C. 3332; Title XII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub. L. 111–203, Jul. 21, 2010).
The purpose of this system is to maintain limited records (names and addresses) about low to moderate income individuals, who are more likely to be unbanked or under-banked, and who could potentially receive Federal tax refund payments. The records are used to send letters to individuals informing them of the benefits of electronic payments and Treasury-recommended account options for receiving payments electronically. Without the information, FMS, its fiscal or financial agents and contractors, would not be able to directly notify prospective payment recipients about the benefits of electronic payments and the Treasury-recommended account options for the receipt of Federal payments electronically.
The information will also be used to study the effectiveness of offering account options to individuals for the purpose of receiving Federal payments. To study program efficacy, FMS may use its mailing list records to collect aggregate statistical information on the success and benefits of direct mail and the use of commercial database providers.
These records may be used to disclose information to:
(1) The U.S. Department of Justice (“DOJ”) for its use in providing legal advice to the Department or in representing the Department in a proceeding before a court, adjudicative body, or other administrative body before which the Department is authorized to appear, where the use of such information by the DOJ is deemed by the Department to be relevant and necessary to the litigation, and such proceeding names as a party or interests: (a) The Department or any component thereof; (b) Any employee of the Department in his or her official capacity; (c) Any employee of the Department in his or her individual capacity where DOJ has agreed to represent the employee; or (d) The United States, where the Department determines that litigation is likely to affect the Department or any of its components.
(2) A congressional office in response to an inquiry made at the request of the individual to whom the record pertains.
(3) Fiscal agents, financial agents, and contractors for the purpose of mailing information to individuals about the benefits of electronic Federal payments and Treasury-recommended account options for receipt of federal payments electronically, including, but not limited to, processing direct mail or performing other marketing functions; and creating and reviewing statistics to improve the quality of services provided.
(4) Federal agencies, their agents and contractors for the purposes of implementing and studying options for encouraging current and prospective Federal payment recipients to receive their Federal payments electronically.
(5) Representatives of the NARA who are conducting records management inspections under authority of 44 U.S.C. 2904 and 2906.
(6) Appropriate agencies, entities, and persons when: (a) FMS suspects or has confirmed that the security or confidentiality of information in the system of records has been compromised; (b) FMS has determined that as a result of the suspected or confirmed compromise there is a risk of harm to economic or property interests, identity theft or fraud, or harm to the security or integrity of this system or other systems or programs (whether maintained by FMS or another agency or entity) that rely upon the compromised information; and (c) the disclosure made to such agencies, entities, and persons is reasonably necessary to assist in connection with FMS's efforts to respond to the suspected or confirmed compromise and prevent, minimize, or remedy such harm.
Records in this system are stored electronically or on paper in secure facilities in a locked drawer behind a locked door. The records are store on magnetic disc, tape, digital media, and CD–ROM.
Records are retrieved by name, address, or other alpha/numeric identifying information.
All official access to the system of records is on a need-to-know basis only, as authorized by a business line manager at FMS or FMS's fiscal or financial agent. Procedural and physical safeguards, such as personal accountability, audit logs, and specialized communications security, are utilized. Each user of computer systems containing records has individual passwords (as opposed to group passwords) for which he or she is responsible. Thus, a security manager can identify access to the records by user. Access to computerized records is limited, through use of access codes, encryption techniques, and/or other
Electronic and paper records for mail operations based on the use of the mailing list records will be retained in accordance with FMS's record retention requirements or as otherwise required by statute or court order. FMS disposes, or arranges for the disposal of records in electronic media using industry-accepted techniques, and in accordance with applicable FMS policies regarding the retention and disposal of fiscal or financial agency records. Paper records are destroyed in accordance with fiscal or financial agency archive and disposal procedures and applicable FMS policies regarding the retention and disposal of fiscal agency records.
Agency Enterprise Solutions Division, Payment Management, FMS, 401 14th Street SW., Washington, DC 20227.
Inquiries under the Privacy Act of 1974, as amended, shall be addressed to the Disclosure Officer, Financial Management Service, 401 14th Street SW., Washington, DC 20227. All individuals making inquiries should provide with their request as much descriptive matter as is possible to identify the particular record desired. The system manager will advise as to whether FMS maintains the records requested by the individual.
Individuals requesting information under the Privacy Act of 1974, as amended, concerning procedures for gaining access to or contesting records should write to the Disclosure Officer. All individuals are urged to examine the rules of the U.S. Department of the Treasury published in 31 CFR Part 1, subpart C, and appendix G, concerning requirements of this Department with respect to the Privacy Act of 1974, as amended.
See “Record Access Procedures” above.
Information in this system is provided by commercial database providers based on publicly available information.
None.
Delegations and Designations of Authority for Disbursing Functions—Treasury/FMS.
Kansas City Regional Financial Center (KFC), FMS, Department of the Treasury, 4241 NE 34th Street, Kansas City, MO 64117.
Heads of Agencies, Certifying Officers, Designated Agents, and other Federal employees designated to perform specific disbursement-related functions.
Records are maintained on the designation or removal of individuals to act in a specified capacity pursuant to a proper authorization.
5 U.S.C. 301; Executive Order 6166, dated June 10, 1933.
These records may be used to:
(1) Disclose to banking institutions, Federal Reserve Banks, and Government agencies for verification of information on authority of individuals to determine propriety of actions taken by such individuals;
(2) Disclose pertinent information to appropriate Federal, State, local or foreign agencies responsible for investigating or prosecuting the violations of, or for enforcing or implementing, a statute, rule, regulation, order, or license, where the disclosing agency becomes aware of an indication of a violation or potential violation of civil or criminal law or regulation;
(3) Disclose information to a Federal, State, or local agency, maintaining civil, criminal or other relevant enforcement information or other pertinent information, which has requested information relevant to or necessary to the requesting agency's or the bureau's hiring or retention of an individual, or issuance of a security clearance, license, contract, grant, or other benefit;
(4) Disclose information to a court, magistrate, or administrative tribunal in the course of presenting evidence, including disclosures to opposing counsel or witnesses in the course of civil discovery, litigation, or settlement negotiations, in response to a subpoena, or in connection with criminal law proceedings;
(5) Disclose information to foreign governments in accordance with formal or informal international agreements;
(6) Provide information to a congressional office in response to an inquiry made at the request of the individual to whom the record pertains;
(7) Provide information to the news media in accordance with guidelines contained in 28 CFR 50.2 which relate to an agency's functions relating to civil and criminal proceedings;
(8) Provide information to unions recognized as exclusive bargaining representatives under the Civil Service Reform Act of 1978, 5 U.S.C. 7111 and 7114;
(9) Provide information to third parties during the course of an investigation to the extent necessary to obtain information pertinent to the investigation; and
(10) Disclose information to appropriate agencies, entities, and persons when (a) the Department suspects or has confirmed that the security or confidentiality of information in the system of records has been compromised; (b) the Department has determined that as a result of the suspected or confirmed compromise there is a risk of harm to economic or property interests, identity theft or fraud, or harm to the security or integrity of this system or other systems or programs (whether maintained by the Department or another agency or entity) that rely upon the compromised information; and (c) the disclosure made to such agencies, entities, and persons is reasonably necessary to assist in connection with the Department's efforts to respond to the suspected or confirmed compromise and prevent, minimize, or remedy such harm.
Records in this system are stored electronically or on paper in secure facilities in a locked drawer behind a locked door.
Records may be retrieved by name.
Access to computerized records is limited through use of access codes, encryption techniques, and/or other internal mechanisms, to those whose official duties require access. Storage facilities are secured by various means such as security guards, badge access, locked doors and locked cabinets.
Hardcopy records—destroy three years after authority is revoked. Electronic records—disposal is not authorized at this time.
Director, Kansas City Regional Financial Center (KFC), FMS, Department of the Treasury, 4241 NE. 34th Street, Kansas City, MO 64117.
Inquiries under the Privacy Act of 1974 shall be addressed to the Disclosure Officer, FMS, 401 14th Street SW., Washington, DC 20227. All individuals making inquiries should provide with their request as much descriptive matter as is possible to identify the particular record desired. The system managers will advise as to whether the Service maintains the record requested by the individual.
Individuals requesting information under the Privacy Act of 1974 concerning procedures for gaining access or contesting records should write to the Disclosure Officer. All individuals are urged to examine the rules of the U.S. Department of the Treasury published in 31 CFR Part 1, subpart C concerning requirements of this Department with respect to the Privacy Act of 1974.
See “Record Access Procedures” above.
Government Departments and Agencies requiring services of Treasury Department for issuance and payment of Treasury checks.
None.
Pre-complaint Counseling and Complaint Activities—Treasury/FMS.
Financial Management Service, U.S. Treasury Department, Prince George's Metro Center II, 3700 East-West Highway, Room 132, Hyattsville, MD 20782.
Employees seeking services of EEO Counselors.
Monthly pre-complaint activity reports from seven Financial Centers and Headquarters.
5 U.S.C. 7154; 42 U.S.C. 200e–16; Executive Order 11478; and 5 CFR Part 713.
These records may be used to:
(1) Keep records on EEO Counseling activities for annual submission to Treasury; and
(2) Disclose information to appropriate agencies, entities, and persons when (a) the Department suspects or has confirmed that the security or confidentiality of information in the system of records has been compromised; (b) the Department has determined that as a result of the suspected or confirmed compromise there is a risk of harm to economic or property interests, identity theft or fraud, or harm to the security or integrity of this system or other systems or programs (whether maintained by the Department or another agency or entity) that rely upon the compromised information; and (c) the disclosure made to such agencies, entities, and persons is reasonably necessary to assist in connection with the Department's efforts to respond to the suspected or confirmed compromise and prevent, minimize, or remedy such harm.
Records in this system are stored on paper in secure facilities in a locked drawer behind a locked door.
Records may be retrieved by station and date of receipt.
Staff supervision is maintained during the day. Records are kept locked in the files.
Destroy EEO case files 4 years after final adjustment. Destroy pre-complaint counseling reports after 1 year.
EEO Officer, FMS, Prince George's Metro Center II, 3700 East-West Highway, Room 132, Hyattsville, MD 20782.
Inquiries under the Privacy Act of 1974 shall be addressed to the Disclosure Officer, 401 14th Street SW., Washington, DC 20227. All individuals making inquiries should provide with their request as much descriptive matter as is possible to identify the particular record desired. The system manager will advise as to whether FMS maintains the record requested by the individual.
Individuals requesting information under the Privacy Act of 1974 concerning procedures for gaining access or contesting records should write to the Disclosure Officer. All individuals are urged to examine the rules of the U.S. Department of the Treasury published in 31 CFR Part 1, subpart C concerning requirements of this Department with respect to the Privacy Act of 1974.
See “Record Access Procedures” above.
Monthly submissions by Financial Centers and Headquarters.
None.
Gifts to the United States—Treasury/FMS.
FMS, U.S. Department of the Treasury, Prince George's Metro Center II, 3700 East-West Highway, Hyattsville, MD 20782.
Donors of intervivos and testamentary gifts to the United States.
Correspondence, copies of wills and court proceedings, and other material related to gifts to the United States.
31 U.S.C. 3113.
The records may be used to disclose information to appropriate agencies, entities, and persons when (1) the Department suspects or has confirmed that the security or confidentiality of information in the system of records has been compromised; (2) the Department
Records in this system are stored on paper in secure facilities in a locked drawer behind a locked door.
Records may be retrieved by name of donor.
Access is limited to persons on official business.
Permanent retention.
Financial Information Management, Directorate, FMS, Prince George's Metro Center II, 3700 East-West Highway, Hyattsville, MD 20782.
Individuals wishing to be notified if they are named in this system of records, or gain access to records maintained in this system must submit a written request containing the following elements:
(1) Identify the record system;
(2) Identify the category and type of records sought; and
(3) Provide at least two items of secondary identification (date of birth, employee identification number, dates of employment or similar information). Address inquiries to Disclosure Officer (See “Record Access Procedures” below).
Disclosure Officer, Financial Management Service, U.S. Department of the Treasury, Liberty Center Building, 401 14th Street SW., Washington, DC 20227.
See “Record Access Procedures” above.
Individuals, executors, administrators and other involved persons.
None.
Debt Collection Operations System—Treasury/FMS.
Records are also located throughout the United States at FMS operations centers, Federal Records Centers, Federal Reserve Banks acting as Treasury's fiscal agents, and financial institutions acting as Treasury's financial agents. Additional addresses may be obtained from the system managers.
Individuals who owe debts to: (a) The United States, through one or more of its departments and agencies; and/or (b) States, territories and commonwealths of the United States, and the District of Columbia (hereinafter collectively referred to as “States”).
Debt records containing information about the debtor(s), the type of debt, the governmental entity to which the debt is owed, and the debt collection tools utilized to collect the debt. The records may contain identifying information, such as name(s) and taxpayer identifying number (i.e., Social Security Number or employer identification number); debtor contact information, such as work and home address, and work and home telephone numbers; information concerning the financial status of the debtor and his/her household, including income, assets, liabilities or other financial burdens, and any other resources from which the debt may be recovered; and name of employer and employer address. Debts include unpaid taxes, loans, assessments, fines, fees, penalties, overpayments, advances, extensions of credit from sales of goods or services, and other amounts of money or property owed to, or collected by, the Federal Government or a State, including past due support which is being enforced by a State. The records also may contain information about: (a) The debt, such as the original amount of the debt, the debt account number, the date the debt originated, the amount of the delinquency or default, the date of delinquency or default, basis for the debt, amounts accrued for interest, penalties, and administrative costs, and payments on the account; (b) Actions taken to collect or resolve the debt, such as copies of demand letters or invoices, documents or information required for the referral of accounts to collection agencies or for litigation, and collectors' notes regarding telephone or other communications related to the collection or resolution of the debt; and (c) The referring or governmental agency that is collecting or owed the debt, such as name, telephone number, and address of the agency contact.
Federal Claims Collection Act of 1966 (Pub. L. 89–508), as amended by the Debt Collection Act of 1982 (Pub. L. 97–365, as amended); Deficit Reduction Act of 1984 (Pub. L. 98–369, as amended); Debt Collection Improvement Act of 1996 (Pub. L. 104–134, sec. 31001); Taxpayer Relief Act of 1997 (Pub. L. 105–34); Internal Revenue Service Restructuring and Reform Act of 1998 (Pub. L. 105–206); 26 U.S.C. 6402; 26 U.S.C. 6331; 31 U.S.C. Chapter 37 (Claims), Subchapter I (General) and Subchapter II (Claims of the U.S. Government); 31 U.S.C. 3321 note.
The purpose of this system is to maintain records about individuals who owe debt(s) to the United States, through one or more of its departments and agencies, and/or to States, including past due support enforced by States. The information contained in the records is maintained for the purpose of taking action to facilitate the collection and resolution of the debt(s) using various collection methods, including, but not limited to, requesting repayment of the debt by telephone or in writing, offset, levy, administrative wage garnishment, referral to collection agencies or for litigation, and other collection or resolution methods authorized or required by law. The information also is maintained for the purpose of providing collection information about the debt to the agency collecting the debt, to provide statistical information on debt collection operations, and for the purpose of testing and developing enhancements to the computer systems which contain the records. The information also is maintained for the purpose of resolving delinquent debts owed by debtors who are ineligible for Federally funded programs until the delinquency is resolved, and for identifying, preventing, or recouping improper payments to individuals who owe delinquent obligations to Federal and/or state agencies.
These records may be used to disclose information to:
(1) Appropriate Federal, State, local or foreign agencies responsible for investigating or implementing, a statute, rule, regulation, order, or license;
(2) A court, magistrate, mediator, or administrative tribunal in the course of presenting evidence; counsel, experts, or witnesses in the course of civil discovery, litigation, or settlement negotiations, in response to a subpoena, or in connection with criminal law proceedings;
(3) A congressional office in response to an inquiry made at the request of the individual to whom the record pertains;
(4) Any Federal agency, State or local agency, U.S. territory or commonwealth, or the District of Columbia, or their agents or contractors, including private collection agencies (consumer and commercial):
a. To facilitate the collection of debts through the use of any combination of various debt collection methods required or authorized by law, including, but not limited to;
(i) Request for repayment by telephone or in writing;
(ii) Negotiation of voluntary repayment or compromise agreements;
(iii) Offset of Federal payments, which may include the disclosure of information contained in the records for the purpose of providing the debtor with appropriate pre-offset notice and to otherwise comply with offset prerequisites, to facilitate voluntary repayment in lieu of offset, and to otherwise effectuate the offset process;
(iv) Referral of debts to private collection agencies, to Treasury-designated debt collection centers, or for litigation;
(v) Administrative and court-ordered wage garnishment;
(vi) Debt sales;
(vii) Publication of names and identities of delinquent debtors in the media or other appropriate places; and
(viii) Any other debt collection method authorized by law;
b. To conduct computerized comparisons to locate Federal payments to be made to debtors;
c. To conduct computerized comparisons to locate employers of, or obtain taxpayer identifying numbers or other information about, an individual for debt collection purposes;
d. To collect a debt owed to the United States through the offset of payments made by States, territories, commonwealths, or the District of Columbia;
e. To account or report on the status of debts for which such entity has a financial or other legitimate need for the information in the performance of official duties;
f. For the purpose of denying Federal financial assistance in the form of a loan or loan guaranty to an individual who owes delinquent debt to the United States or who owes delinquent child support that has been referred to FMS for collection by administrative offset;
g. To develop, enhance and/or test database, matching, communications, or other computerized systems which facilitate debt collection processes; or
h. For any other appropriate debt collection purpose.
(5) The Department of Defense, the U.S. Postal Service, or other Federal agency for the purpose of conducting an authorized computer matching program in compliance with the Privacy Act of 1974, as amended, to identify and locate individuals receiving Federal payments including, but not limited to, salaries, wages, and benefits, which may include the disclosure of information contained in the records for the purpose of requesting voluntary repayment or implementing Federal employee salary offset or other offset procedures;
(6) The Department of Justice or other Federal agency:
a. when requested in connection with a legal proceeding, or
b. to obtain concurrence in a decision to compromise, suspend, or terminate collection action on a debt;
(7) Any individual or other entity who receives Federal payments as a joint payee with a debtor for the purpose of providing notice of, and information about, offsets from such Federal payments; and
(8) Any individual or entity:
a. To facilitate the collection of debts through the use of any combination of various debt collection methods required or authorized by law, including, but not limited to:
(i) Administrative and court-ordered wage garnishment;
(ii) Report information to commercial credit bureaus;
(iii) Conduct asset searches or locate debtors;
(iv) Publish names and identities of delinquent debtors in the media or other appropriate places; or
(v) Debt sales;
b. For the purpose of denying Federal financial assistance in the form of a loan or loan guaranty to an individual who owes delinquent debt to the United States or who owes delinquent child support that has been referred to FMS for collection by administrative offset; or
c. For any other appropriate debt collection purpose. Disclosure to consumer reporting agencies including for the provision of routine debt collection services by an FMS contractor subject to the same limitations applicable to FMS officers and employees under the Privacy Act; and
(9) Appropriate agencies, entities, and persons when (A) the Department suspects or has confirmed that the security or confidentiality of information in the system of records has been compromised; (B) the Department has determined that as a result of the suspected or confirmed compromise there is a risk of harm to economic or property interests, identity theft or fraud, or harm to the security or integrity of this system or other systems or programs (whether maintained by the Department or another agency or entity) that rely upon the compromised information; and (C) the disclosure made to such agencies, entities, and persons is reasonably necessary to assist in connection with the Department's efforts to respond to the suspected or confirmed compromise and prevent, minimize, or remedy such harm.
(10) (a) A Federal or state agency, its employees, agents (including contractors of its agents) or contractors; or, (b) a fiscal or financial agent designated by the FMS or other Department of the Treasury bureau or office, including employees, agents or contractors of such agent; or, (c) a contractor of the FMS, for the purpose of identifying, preventing, or recouping improper payments to an applicant for, or recipient of, Federal funds, including funds disbursed by a state in a state-administered, Federally funded program; disclosure may be made to conduct computerized comparisons for this purpose.
Debt information concerning a government claim against a debtor is also furnished, in accordance with 5 U.S.C. 552a(b)(12) and 31 U.S.C. 3711(e), to consumer reporting agencies, as defined by the Fair Credit Reporting Act, 5 U.S.C. 1681(f), to encourage repayment of a delinquent debt.
Records in this system are stored electronically or on paper in secure facilities in a locked drawer behind a locked door.
Records may be retrieved by various combinations of name, taxpayer identifying number (i.e., social security number or employer identification number), or debt account number.
All officials access the system of records on a need-to-know basis only, as authorized by the system manager. Procedural and physical safeguards are utilized, such as accountability, receipt records, and specialized communications security. Access to computerized records is limited, through use of access codes, entry logs, and other internal mechanisms, to those whose official duties require access. Hard-copy records are held in steel cabinets, with access limited by visual controls and/or lock systems. During normal working hours, files are attended by responsible officials; files are locked up during non-working hours. The building is patrolled by uniformed security guards.
Retention periods vary by record type, up to a maximum of seven years after the end of the fiscal year in which a debt is resolved or returned to the agency as uncollectible.
System Manager, Debt Management Services, FMS, 401 14th Street SW., Washington, DC 20227.
Inquiries under the Privacy Act of 1974, as amended, shall be addressed to the Disclosure Officer, FMS, 401 14th Street SW., Washington, DC 20227. All individuals making inquiries should provide with their request as much descriptive matter as is possible to identify the particular record desired. The system manager will advise as to whether FMS maintains the records requested by the individual.
Individuals requesting information under the Privacy Act of 1974, as amended, concerning procedures for gaining access or contesting records should write to the Disclosure Officer. All individuals are urged to examine the rules of the U.S. Department of the Treasury published in 31 CFR Part 1, subpart C, and appendix G, concerning requirements of this Department with respect to the Privacy Act of 1974, as amended.
See “Record Access Procedures” above.
Information in this system is provided by the individual on whom the record is maintained; Federal and State agencies to which the debt is owed; Federal agencies and other entities that employ the individual or have information concerning the individual's employment or financial resources; Federal and State agencies issuing payments; collection agencies; locator and asset search companies, credit bureaus, and other database vendors; Federal, State or local agencies furnishing identifying information and/or debtor address information; and/or public documents.
None.
Collections Records—Treasury/FMS.
Records are located at the FMS, U.S. Department of the Treasury, Liberty Center Building (Headquarters), 401 14th Street SW., Washington, DC 20227. Records are also located throughout the United States at various Federal Reserve Banks and financial institutions, which act as Treasury's fiscal and financial agents. The address(es) of the fiscal and financial agents may be obtained from the system manager below.
Individuals who electronically authorize payments to the Federal government through the use of communication networks, such as the Internet, via means such as Automated Clearing House (ACH), check conversion, credit card, and/or stored value card.
Collections records containing information about individuals who electronically authorize payments to the Federal government to the extent such records are covered by the Privacy Act of 1974. The records may contain identifying information, such as an individual's name(s), taxpayer identifying number (i.e., Social Security Number or employer identification number), home address, home telephone number, and personal email address (home and work); an individual's employer's name, address, telephone number, and email address; an individual's date of birth and driver's license number; information about an individual's bank account(s) and other types of accounts from which payments are made, such as financial institution routing and account number; credit card numbers; information about an individual's payments made to or from the United States (or to other entities such as private contractors for the Federal government), including the amount, date, status of payments, payment settlement history, and tracking numbers used to locate payment information; user name and password assigned to an individual; other information used to identify and/or authenticate the user of an electronic system to authorize and make payments, such as a unique question and answer chosen by an individual; information concerning the authority of an individual to use an electronic system (access status) and the individual's historical use of the electronic system. The records also may contain information about the governmental agency to which payment is made and information required by such agency as authorized or required by law. The information contained in the records covered by FMS's system of records is necessary to process financial transactions while protecting the government and the public from financial risks that could be associated with electronic transactions. It is noted that the system covers records obtained in connection with various mechanisms that are either used currently or may be used in the future for electronic financial transactions. Not every transaction will require the maintenance of all of the information listed in this section. The categories of records cover the broad spectrum of information that might be connected to various types of transactions.
5 U.S.C. 301; 31 U.S.C. 321; 31 U.S.C. chapter 33; 31 U.S.C. 3720
The purpose of this system is to maintain records about individuals who electronically authorize payments to the Federal government. The information contained in the records is maintained for the purpose of facilitating the collection and reporting of receipts from the public to the Federal government and to minimize the financial risk to the Government and the public of unauthorized use of electronic payment methods. Examples of payment mechanisms authorized electronically include ACH, check conversion, credit card, or stored value cards. Individuals may authorize payments using paper check conversion or Internet-based systems through programs such as “Pay.gov” and “Electronic Federal
(a) Provide collections information to the Federal agency collecting the public receipts;
(b) Authenticate the identity of individuals who electronically authorize payments to the Federal government;
(c) Verify the payment history and eligibility of individuals to electronically authorize payments to the Federal government;
(d) Provide statistical information on collections operations;
(e) Test and develop enhancements to the computer systems that contain the records; and
(f) Collect debts owed to the Federal government from individuals when the debt arises from the unauthorized use of electronic payment methods.
FMS's use of the information contained in the records is necessary to process financial transactions while protecting the government and the public from financial risks that could be associated with electronic transactions. The records are collected and maintained for three primary reasons. First, in order to process a payment electronically, a payor needs to submit his or her name and bank account or credit card account information. Without such information, FMS would not be able to process the payment as requested by the individual authorizing the payment. Second, to authenticate the identity of the person initiating the electronic transaction, FMS may, in some instances, require some or all of the information described in “Categories of records in the system,” above, depending upon the level of risk associated with a particular type of transaction. Third, to verify the financial and other information provided by the person initiating the electronic transaction and to evaluate the payor's ability to make the payment authorized, FMS may compare information submitted with information available in FMS's electronic transaction historical database or commercial databases used for verification purposes, much like a store clerk determines whether someone paying by paper check has a history of writing bad checks. The ability to research historical transaction information will help eliminate the risk of fraudulent activity, such as the purchase of government products using an account with insufficient funds or using a stolen identity. By collecting and maintaining a certain amount of unique personal information about an individual who purchases goods from the government, FMS can help ensure that the individual's sensitive financial information will not be fraudulently accessed or used by anyone other than the individual.
In addition, the information contained in the covered records will be used for collateral purposes related to the processing of financial transactions, such as collection of statistical information on operations, development of computer systems, investigation of unauthorized or fraudulent activity related to electronic transactions, and the collection of debts arising out of such activity.
These records may be used to disclose information to:
(1) Appropriate Federal, state, local or foreign agencies responsible for investigating or prosecuting the violation of, or for enforcing or implementing, a statute, rule, regulation, order, or license, but only if the investigation, prosecution, enforcement or implementation concerns a transaction(s) or other event(s) that involved (or contemplates involvement of), in whole or part, an electronic method of collecting receipts for the Federal government. The records and information may also be disclosed to commercial database vendors to the extent necessary to obtain information pertinent to such an investigation, prosecution, enforcement or implementation;
(2) Commercial database vendors for the purposes of authenticating the identity of individuals who electronically authorize payments to the Federal government, to obtain information on such individuals' payment or check writing history, and for administrative purposes, such as resolving a question about a transaction. For purposes of this notice, the term “commercial database vendors” means vendors who maintain and disclose information from consumer credit, check verification, and address databases;
(3) A court, magistrate, or administrative tribunal, in the course of presenting evidence, including disclosures to opposing counsel or witnesses, for the purpose of civil discovery, litigation, or settlement negotiations or in response to a subpoena, where arguably relevant to the litigation, or in connection with criminal law proceedings;
(4) A congressional office in response to an inquiry made at the request of the individual to whom the record pertains;
(5) Fiscal agents, financial agents, financial institutions, and contractors for the purpose of performing financial management services, including, but not limited to, processing payments, investigating and rectifying possible erroneous reporting information, creating and reviewing statistics to improve the quality of services provided, conducting debt collection services, or developing, testing and enhancing computer systems;
(6) Federal agencies, their agents and contractors for the purposes of facilitating the collection of receipts, determining the acceptable method of collection, the accounting of such receipts, and the implementation of programs related to the receipts being collected;
(7) Federal agencies, their agents and contractors, credit bureaus, and employers of individuals who owe delinquent debt for the purpose of garnishing wages only when the debt arises from the unauthorized use of electronic payment methods. The information will be used for the purpose of collecting such debt through offset, administrative wage garnishment, referral to private collection agencies, litigation, reporting the debt to credit bureaus, or for any other authorized debt collection purpose;
(8) Financial institutions, including banks and credit unions, and credit card companies for the purpose of collections and/or investigating the accuracy of information required to complete transactions using electronic methods and for administrative purposes, such as resolving questions about a transaction; and
(9) Appropriate agencies, entities, and persons when (a) the Department suspects or has confirmed that the security or confidentiality of information in the system of records has been compromised; (b) the Department has determined that as a result of the suspected or confirmed compromise there is a risk of harm to economic or property interests, identity theft or fraud, or harm to the security or integrity of this system or other systems or programs (whether maintained by the Department or another agency or entity) that rely upon the compromised information; and (c) the disclosure made to such agencies, entities, and persons is reasonably necessary to assist in connection with the Department's efforts to respond to the suspected or confirmed compromise and prevent, minimize, or remedy such harm.
Debt information concerning a government claim against a debtor when the debt arises from the unauthorized use of electronic payment methods is also furnished, in accordance with 5 U.S.C. 552a(b)(12) and 31 U.S.C. 3711(e), to consumer reporting agencies, as defined by the Fair Credit Reporting Act, 5 U.S.C. 1681(f), to encourage repayment of a delinquent debt.
Records in this system are stored electronically in secure facilities in a locked drawer behind a locked door.
Records may be retrieved by account number (such as financial institution account number or credit card account number), name (including an authentication credential, e.g., a user name), social security number, transaction identification number, or other alpha/numeric identifying information.
All officials access the system of records on a need-to-know basis only, as authorized by the system manager after security background checks. Procedural and physical safeguards, such as personal accountability, audit logs, and specialized communications security, are utilized. Accountability and audit logs allow systems managers to track the actions of every user of the system. Each user has an individual password (as opposed to a group password) for which he or she is responsible. Thus, a system manager can identify access to the records by user. Access to computerized records is limited, through use of encryption, access codes, and other internal mechanisms, to those whose official duties require access. Storage facilities are secured by various means such as security guards, locked doors with key entry, and limited virtual access requiring a physical token.
Disposal is not authorized at this time.
Assistant Commissioner, Federal Finance, FMS, 401 14th Street SW., Washington, DC 20227.
Inquiries under the Privacy Act of 1974, as amended, shall be addressed to the Disclosure Officer, FMS, 401 14th Street SW., Washington, DC 20227. All individuals making inquiries should provide with their request as much descriptive matter as is possible to identify the particular record desired. The system manager will advise as to whether FMS maintains the records requested by the individual.
Individuals requesting information under the Privacy Act of 1974, as amended, concerning procedures for gaining access to or contesting records should write to the Disclosure Officer. All individuals are urged to examine the rules of the U.S. Department of the Treasury published in 31 CFR Part 1, subpart C, and appendix G, concerning requirements of this Department with respect to the Privacy Act of 1974, as amended.
See “Record Access Procedures” above.
Information in this system is provided by the individual on whom the record is maintained (or by his or her authorized representative), other persons who electronically authorize payments to the Federal government, Federal agencies responsible for collecting receipts, Federal agencies responsible for disbursing and issuing Federal payments, Treasury fiscal and financial agents that process collections, and commercial database vendors.
None.
Office of Foreign Assets Control, Treasury.
Notice.
The Treasury Department's Office of Foreign Assets Control (“OFAC”) is publishing the names of two (2) entities whose property and interests in property are blocked pursuant to Executive Order 13224 of September 23, 2001, “Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten To Commit, or Support Terrorism.”
The designations by the Director of OFAC of the two (2) entities in this notice, pursuant to Executive Order 13224, are effective on October 4, 2012.
Assistant Director, Compliance Outreach & Implementation, Office of Foreign Assets Control, Department of the Treasury, Washington, DC 20220, tel.: 202/622–2490.
This document and additional information concerning OFAC are available from OFAC's Web site (
On September 23, 2001, the President issued Executive Order 13224 (the “Order”) pursuant to the International Emergency Economic Powers Act, 50 U.S.C. 1701–1706, and the United Nations Participation Act of 1945, 22 U.S.C. 287c. In the Order, the President declared a national emergency to address grave acts of terrorism and threats of terrorism committed by foreign terrorists, including the September 11, 2001 terrorist attacks in New York, Pennsylvania, and at the Pentagon. The Order imposes economic sanctions on persons who have committed, pose a significant risk of committing, or support acts of terrorism. The President identified in the Annex to the Order, as amended by Executive Order 13268 of July 2, 2002, 13 individuals and 16 entities as subject to the economic sanctions. The Order was further amended by Executive Order 13284 of January 23, 2003, to reflect the creation of the Department of Homeland Security.
Section 1 of the Order blocks, with certain exceptions, all property and interests in property that are in or hereafter come within the United States or the possession or control of United States persons, of: (1) Foreign persons listed in the Annex to the Order; (2) foreign persons determined by the Secretary of State, in consultation with the Secretary of the Treasury, the Secretary of the Department of
On October 4, 2012 the Director of OFAC, in consultation with the Departments of State, Homeland Security, Justice and other relevant agencies, designated, pursuant to one or more of the criteria set forth in subsections 1(b), 1(c) or 1(d) of the Order, two (2) entities whose property and interests in property are blocked pursuant to Executive Order 13224.
The listings for these entities on OFAC's list of Specially Designated Nationals and Blocked Persons appear as follows:
Internal Revenue Service (IRS), Treasury.
Notice and request for comments.
The Department of the Treasury, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995, Public Law 104–13 (44 U.S.C. 3506(c)(2)(A)). Currently, the IRS is soliciting comments concerning certain cash or deferred arrangements and employee and matching contributions under employee plans, and retirement plans; cash or deferred arrangements.
Written comments should be received on or before December 14, 2012 to be assured of consideration.
Direct all written comments to Yvette Lawrence, Internal Revenue Service, Room 6129, 1111 Constitution Avenue NW., Washington, DC 20224.
Requests for additional information or copies of the regulation should be directed to Allan Hopkins at Internal Revenue Service, room 6129, 1111 Constitution Avenue NW., Washington, DC 20224, or at (202) 622–6665, or through the Internet at
The following paragraph applies to all of the collections of information covered by this notice:
An agency may not conduct or sponsor, and a person is not required to
Internal Revenue Service (IRS), Treasury.
Notice and request for comments.
The Department of the Treasury, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995, Public Law 104–13 (44 U.S.C. 3506(c)(2)(A)). Currently, the IRS is soliciting comments concerning Form 706–GS(T), Generation-Skipping Transfer Tax Return For Terminations; REG–130477–00; REG–130481–00 (TD 8987) Required Distributions From Retirement Plans (§§ 1.401(a)(9)–1 and 1.401(a)(9)–4); Revenue Procedure 2000–37; Reverse Like-Kind Exchanges (modified by Revenue Procedure 2004–51); Form 13460, Employer/Payer Information; and Notice 2003–67, Notice on Information Reporting for Payments in Lieu of Dividends.
Written comments should be received on or before December 14, 2012 to be assured of consideration.
Direct all written comments to Yvette Lawrence, Internal Revenue Service, Room 6129, 1111 Constitution Avenue NW., Washington, DC 20224. Please send separate comments for each specific information collection listed below. You must reference the information collection's title, form number, reporting or record-keeping requirement number, and OMB number (if any) in your comment.
Requests for additional information or copies of the collection tools should be directed to R. Joseph Durbala, Internal Revenue Service, Room 6129, 1111 Constitution Avenue NW., Washington, DC 20224, or at (202) 622–3634, or through the Internet at
Currently, the IRS is seeking comments concerning the following information collection tools, reporting, and record-keeping requirements:
(1)
(2)
(3)
(4)
(5)
The following paragraph applies to all of the collections of information covered by this notice:
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.
Department of Veterans Affairs.
Notice of Advisory Committee Charter Renewals.
In accordance with the provisions of the Federal Advisory Committee Act (FACA), 5 U.S.C. App. 2, and after consultation with the General Services Administration, the Secretary of Veterans Affairs has determined that the following Federal advisory committees are vital to the mission of the Department of Veterans Affairs (VA) and renewing their charters would be in the public interest. Consequently, the charters for the following Federal advisory committees are renewed for a two-year period, beginning on the dates listed below:
The Secretary has also renewed the charters for the following statutorily authorized Federal advisory committees for a two-year period, beginning on the dates listed below:
Vivian Drake, Committee Management Officer, Department of Veterans Affairs, Advisory Committee Management Office (00AC), 810 Vermont Avenue NW., Washington, DC 20420; telephone (202) 461–7028; or email at
By direction of the Secretary.
Environmental Protection Agency (EPA) and National Highway Traffic Safety Administration (NHTSA), DOT.
Final rule.
EPA and NHTSA, on behalf of the Department of Transportation, are issuing final rules to further reduce greenhouse gas emissions and improve fuel economy for light-duty vehicles for model years 2017 and beyond. On May 21, 2010, President Obama issued a Presidential Memorandum requesting that NHTSA and EPA develop through notice and comment rulemaking a coordinated National Program to improve fuel economy and reduce greenhouse gas emissions of light-duty vehicles for model years 2017–2025, building on the success of the first phase of the National Program for these vehicles for model years 2012–2016. This final rule, consistent with the President's request, responds to the country's critical need to address global climate change and to reduce oil consumption. NHTSA is finalizing Corporate Average Fuel Economy standards for model years 2017–2021 and issuing augural standards for model years 2022–2025 under the Energy Policy and Conservation Act, as amended by the Energy Independence and Security Act. NHTSA will set final standards for model years 2022–2025 in a future rulemaking. EPA is finalizing greenhouse gas emissions standards for model years 2017–2025 under the Clean Air Act. These standards apply to passenger cars, light-duty trucks, and medium-duty passenger vehicles, and represent the continuation of a harmonized and consistent National Program. Under the National Program automobile manufacturers will be able to continue building a single light-duty national fleet that satisfies all requirements under both programs while ensuring that consumers still have a full range of vehicle choices that are available today. EPA is also finalizing minor changes to the regulations applicable to model years 2012–2016, with respect to air conditioner performance, nitrous oxides measurement, off-cycle technology credits, and police and emergency vehicles.
This final rule is effective on December 14, 2012,
EPA and NHTSA have established dockets for this action under Docket ID No. EPA–HQ–OAR–2010–0799 and NHTSA 2010–0131, respectively. All documents in the docket are listed in the
EPA: Christopher Lieske, Office of Transportation and Air Quality, Assessment and Standards Division, Environmental Protection Agency, 2000 Traverwood Drive, Ann Arbor MI 48105; telephone number: 734–214–4584; fax number: 734–214–4816; email address:
This action affects companies that manufacture or sell new light-duty vehicles, light-duty trucks, and medium-duty passenger vehicles, as defined under EPA's CAA regulations,
This list is not intended to be exhaustive, but rather provides a guide regarding entities likely to be regulated 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
NHTSA, on behalf of the Department of Transportation, and EPA are issuing final rules to further reduce greenhouse gas emissions and improve fuel economy for light-duty vehicles for model years 2017 and beyond. On May 21, 2010, President Obama issued a Presidential Memorandum requesting that EPA and NHTSA develop through notice and comment rulemaking a coordinated National Program to improve fuel economy and reduce greenhouse gas emissions of light-duty vehicles for model years 2017–2025, building on the success of the first phase of the National Program for these vehicles for model years 2012–2016. These final rules are consistent with the President's request and respond to the country's critical need to address global
These standards apply to passenger cars, light-duty trucks, and medium-duty passenger vehicles (i.e. sport utility vehicles, cross-over utility vehicles, and light trucks), and represent the continuation of a harmonized and consistent National Program for these vehicles. Under the National Program automobile manufacturers will be able to continue building a single light-duty national fleet that satisfies all requirements under both programs.
The National Program is estimated to save approximately 4 billion barrels of oil and to reduce GHG emissions by the equivalent of approximately 2 billion metric tons over the lifetimes of those light duty vehicles produced in MYs 2017–2025. The agencies project that fuel savings will far outweigh higher vehicle costs, and that the net benefits to society of the MYs 2017–2025 National Program will be in the range of $326 billion to $451 billion (7 and 3 percent discount rates, respectively) over the lifetimes of those light duty vehicles sold in MYs 2017–2025.
The National Program is projected to provide significant savings for consumers due to reduced fuel use. Although the agencies estimate that technologies used to meet the standards will add, on average, about $1,800 to the cost of a new light duty vehicle in MY 2025, consumers who drive their MY 2025 vehicle for its entire lifetime will save, on average, $5,700 to $7,400 (7 and 3 percent discount rates, respectively) in fuel, for a net lifetime savings of $3,400 to $5,000. This estimate assumes gasoline prices of $3.87 per gallon in 2025 with small increases most years throughout the vehicle's lifetime.
EPA and NHTSA are finalizing separate sets of standards for passenger cars and for light trucks, under their respective statutory authority. EPA is setting national CO
Section 202 (a) of the Clean Air Act requires EPA to establish standards for emissions of pollutants from new motor vehicles which emissions cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare.
EPCA, as amended by EISA, contains a number of provisions regarding how NHTSA must set CAFE standards. EPCA requires that NHTSA establish separate passenger car and light truck standards (49 U.S.C. 32902(b)(1)) at “the maximum feasible average fuel economy level that it decides the manufacturers can achieve in that model year (49 U.S.C. 32902(a)),” based on the agency's consideration of four statutory factors: Technological feasibility, economic practicability, the effect of other standards of the Government on fuel economy, and the need of the nation to conserve energy (49 U.S.C. 32902(f)). EPCA does not define these terms or specify what weight to give each concern in balancing them; thus, NHTSA defines them and determines the appropriate weighting that leads to the maximum feasible standards given the circumstances in each CAFE standard rulemaking. For MYs 2011–2020, EPCA further requires that separate standards for passenger cars and for light trucks be set at levels high enough to ensure that the CAFE of the industry-wide combined fleet of new passenger cars and light trucks reaches at least 35 mpg not later than MY 2020 (49 U.S.C. 32902(b)(2)(A))]. For model years 2021–2030, standards need simply be set at the maximum feasible level (49 U.S.C.32903(b)(2)(B).
Section I.E of the preamble contains a detailed discussion of both agencies' statutory authority.
NHTSA and EPA are finalizing rules for light-duty vehicles that the agencies believe represent the appropriate levels of fuel economy and GHG emissions standards for model years 2017 and beyond pursuant to their respective statutory authorities.
EPA is establishing standards that are projected to require, on an average industry fleet wide basis, 163 grams/mile of carbon dioxide (CO
Both the CO
The agencies will conduct a comprehensive mid-term evaluation and agency decision-making process for the MYs 2022–2025 standards as described in the proposal. The mid-term evaluation reflects the rules' long time frame and, for NHTSA, the agency's statutory obligation to conduct a
As proposed, the agencies are finalizing several provisions which provide compliance flexibility to manufacturers to meet the standards without compromising the program's overall environmental and energy security objectives. Further discussion of compliance flexibilities is in Section C.4, II.F, III.B, III.C, IV.I.
The agencies are continuing to allow manufacturers to generate credits for over-compliance with the CO
As proposed, EPA is establishing that the maximum total A/C credits available for cars will be 18.8 grams/mile CO
EPA proposed and is finalizing provisions allowing manufacturers to continue to generate and use off-cycle credits to demonstrate compliance with the GHG standards. These credits are for measureable GHG emissions and fuel economy improvements attributable to use of technologies whose benefits are not measured by the two-cycle test mandated by EPCA. Under its EPCA authority, EPA proposed and is finalizing provisions to allow manufacturers to generate fuel consumption improvement values for purposes of CAFE compliance based on the use of off-cycle technologies.
In order to provide temporary regulatory incentives to promote the penetration of certain “game changing” advanced vehicle technologies into the light duty vehicle fleet, EPA is finalizing, as proposed, an incentive multiplier for CO
NHTSA currently interprets EPCA and EISA as precluding it from offering incentives for the alternative fuel operation of EVs, PHEVs, FCVs, and NGVs, except as specified by statute, and thus did not propose and is not including incentive multipliers comparable to the EPA incentive multipliers described above.
The agencies recognize that the standards presented in this final rule for MYs 2017–2025 will be challenging for large vehicles, including full-size pickup trucks. To help address this challenge, the program will, as proposed, contain incentives for the use of hybrid electric and other advanced technologies in full-size pickup trucks.
It is important to note that NHTSA's CAFE standards and EPA's GHG standards will both be in effect, and both will lead to increases in average fuel economy and reductions in GHGs. The two agencies' standards together comprise the National Program, and the following discussions of the respective costs and benefits of NHTSA's CAFE standards and EPA's GHG standards does not change the fact that both the CAFE and GHG standards, jointly, are the source of the benefits and costs of the National Program.
The costs and benefits projected by NHTSA to result from the CAFE standards are presented first, followed by those projected by EPA to result from the GHG emissions standards. For several reasons, the estimates for costs and benefits presented by NHTSA and EPA for their respective rules, while consistent, are not directly comparable, and thus should not be expected to be identical. See Section I.D of the preamble for further details and discussion.
NHTSA has analyzed in detail the projected costs and benefits for the 2017–2025 CAFE standards for light-
The Table below shows NHTSA's estimated overall lifetime discounted costs and benefits, and net benefits for the model years 2017–2025 CAFE standards.
EPA has analyzed in detail the projected costs and benefits of the 2017–2025 GHG standards for light-duty vehicles. The Table below shows EPA's estimated lifetime discounted cost, fuel savings, and benefits for all such vehicles projected to be sold in model years 2017–2025. The benefits include impacts such as climate-related economic benefits from reducing emissions of CO
EPA is announcing final greenhouse gas emissions standards for model years 2017–2025 and NHTSA is announcing final Corporate Average Fuel Economy standards for model years 2017–2021 and issuing augural
This joint rulemaking builds on the success of the first phase of the National Program to regulate fuel economy and GHG emissions from U.S. light-duty vehicles, which established strong and coordinated standards for MYs 2012–2016. As with the MY 2012–2016 final rules, a key element in developing this rulemaking was the agencies' discussions with automobile manufacturers, the California Air Resources Board (CARB) and many other stakeholders. During the extended public comment period, the agencies received nearly 300,000 written comments (and nearly 400 oral comments through testimony at three public hearings held in Detroit, Philadelphia and San Francisco) on this rule and received strong support from most auto manufacturers, the United Auto Workers (UAW), nongovernmental organizations (NGOs), consumer groups, national security experts and veterans, State/local government and auto suppliers.
Continuing the National Program in coordination with California will help to ensure that all manufacturers can build a single fleet of vehicles that satisfy all requirements under both federal programs as well as under California's program,
Combined with the standards already in effect for MYs 2012–2016, as well as the MY 2011 CAFE standards, the final standards will result in MY 2025 light-duty vehicles with nearly double the fuel economy, and approximately one-half of the GHG emissions compared to MY 2010 vehicles—representing the most significant federal actions ever taken to reduce GHG emissions and improve fuel economy in the U.S.
EPA is establishing standards that are projected to require, on an average industry fleet wide basis, 163 grams/mile of carbon dioxide (CO
The agencies project that manufacturers will comply with the final rules by using a range of technologies, including improvements in air conditioning efficiency, which reduce both GHG emissions and fuel consumption. Compliance with EPA's GHG standards is also likely to be achieved through improvements in air conditioning system leakage and through the use of alternative air conditioning refrigerants with a lower global warming potential (GWP), which reduce GHGs (i.e., hydrofluorocarbons) but which do not generally improve fuel economy. The agencies believe there is a wide range of technologies already available to reduce GHG emissions and improve fuel economy from both passenger cars and trucks. The final rules facilitate long-term planning by manufacturers and suppliers for the continued development and deployment across their fleets of fuel saving and GHG emissions-reducing technologies. The agencies believe that advances in gasoline engines and transmissions will continue for the foreseeable future, and that there will be continual improvement in other technologies, including vehicle weight reduction, lower tire rolling resistance, improvements in vehicle aerodynamics, diesel engines, and more efficient vehicle accessories. The agencies also expect to see increased electrification of the fleet through the expanded production of stop/start, hybrid, plug-in hybrid and electric vehicles. Finally, the agencies expect that vehicle air conditioners will continue to improve by becoming more efficient and by increasing the use of alternative refrigerants and lower leakage air conditioning systems. Many of these technologies are already available today, some on a limited number of vehicles while others are more widespread in the fleet, and manufacturers will be able to meet the standards through significant efficiency improvements in these technologies, as well as through a significant penetration of these and other technologies across the fleet. Auto manufacturers may also introduce new technologies that we have not considered for this rulemaking analysis, which could result in possible alternative, more cost-effective paths to compliance.
From a societal standpoint, this second phase of the National Program is estimated to save approximately 4 billion barrels of oil and to reduce GHG emissions by the equivalent of approximately 2 billion metric tons over the lifetimes of those light duty vehicles produced in MYs 2017–2025. These savings and reductions come on top of those that are being achieved through the MYs 2012–2016 standards.
These final standards are projected to provide significant savings for consumers due to reduced fuel use. Although the agencies estimate that technologies used to meet the standards will add, on average, about $1,800 to the cost of a new light duty vehicle in MY 2025, consumers who drive their MY 2025 vehicle for its entire lifetime will save, on average, $5,700 to $7,400 (7 and 3 percent discount rates, respectively) in fuel, for a net lifetime savings of $3,400 to $5,000. This estimate assumes gasoline prices of $3.87 per gallon in 2025 with small increases most years throughout the vehicle's lifetime.
In addition to saving consumers money at the pump, the agencies have designed their final standards to preserve consumer choice—that is, the standards should not affect consumers' opportunity to purchase the size of vehicle with the performance, utility and safety features that meets their needs. The standards are based on a vehicle's size (technically they are based on vehicle footprint, which is the area defined by the points where the tires contact the ground), and larger vehicles have numerically less stringent fuel economy/GHG emissions targets and smaller vehicles have numerically more stringent fuel economy/GHG emissions targets. Footprint based standards promote fuel economy and GHG emissions improvements in vehicles of all sizes, and are not expected to create incentives for manufacturers to change the size of their vehicles in order to comply with the standards. Moreover, since the standards are fleet average standards for each manufacturer, no specific vehicle
EPA is adopting final greenhouse gas emissions standards for model years 2017–2025 and NHTSA is adopting final Corporate Average Fuel Economy standards for model years 2017–2021 and presenting augural standards for model years 2022–2025. These rules will implement strong and coordinated Federal greenhouse gas and fuel economy standards for passenger cars, light-duty trucks, and medium-duty passenger vehicles. Together, these vehicle categories, which include passenger cars, sport utility vehicles, crossover utility vehicles, minivans, and pickup trucks, are presently responsible for approximately 60 percent of all U.S. transportation-related greenhouse gas emissions and fuel consumption. The final rules continue the National Program by setting more stringent standards for MY 2017 and beyond light duty vehicles. This coordinated program will achieve important reductions of
In working together to finalize these standards, NHTSA and EPA are building on the success of the first phase of the National Program to regulate fuel economy and GHG emissions from U.S. light-duty vehicles, which established the strong and coordinated light duty vehicle standards for model years (MY) 2012–2016. As with the MY 2012–2016 final rules, a key element in developing the final rules was the agencies' collaboration with the California Air Resources Board (CARB) and discussions with automobile manufacturers and many other stakeholders. Continuing the National Program will help to ensure that all manufacturers can build a single fleet of U.S. light duty vehicles that satisfy all requirements under both federal programs as well as under California's program, helping to reduce costs and regulatory complexity while providing significant energy security, consumer savings and environmental benefits.
The agencies have been developing the basis for these final standards almost since the conclusion of the rulemaking establishing the first phase of the National Program. Consistent with Executive Order 13563, this rule was developed with early consultation with stakeholders, employs flexible regulatory approaches to reduce burdens, maintains freedom of choice for the public, and helps to harmonize federal and state regulations. After much research and deliberation by the agencies, along with CARB and other stakeholders, on July 29, 2011 President Obama announced plans for extending the National Program to MY 2017–2025 light duty vehicles and NHTSA and EPA issued a Supplemental Notice of Intent (NOI) outlining the agencies' plans for proposing the MY 2017–2025 standards and program.
As described below, NHTSA and EPA are finalizing a continuation of the National Program for light-duty vehicles that the agencies believe represents the appropriate levels of fuel economy and GHG emissions standards for model years 2017 and beyond, given the technologies that the agencies project will be available for use on these vehicles and the agencies' understanding of the cost and manufacturers' ability to apply these technologies during that time frame, and consideration of other relevant factors. Under this joint rulemaking, EPA is establishing GHG emissions standards under the Clean Air Act (CAA), and NHTSA is establishing CAFE standards under EPCA, as amended by the Energy Independence and Security Act of 2007 (EISA). This joint final rulemaking reflects a carefully coordinated and harmonized approach to implementing these two statutes, in accordance with all substantive and procedural requirements imposed by law.
These final rules allow for long-term planning by manufacturers and suppliers for the continued development and deployment across their fleets of fuel saving and emissions-reducing technologies. NHTSA's and EPA's technology assessment indicates there is a wide range of technologies available for manufacturers to consider utilizing to reduce GHG emissions and improve fuel economy. The agencies believe that advances in gasoline engines and transmissions will continue during these model years and that these technologies are likely to play a key role in compliance strategies for the MYs 2017–2025 standards, which is a view that is supported in the literature, among the vehicle manufacturers, suppliers, and by public comments.
Although a number of these technologies are available today, the agencies' assessments support that there will be continuing improvements in the efficiency of some of the technologies and that the cost of many of the technologies will be lower in the future.
As discussed further below, and as with the standards for MYs 2012–2016, the agencies believe that the final standards help to preserve consumer choice, that is, the standards should not affect consumers' opportunity to purchase the size and type of vehicle that meets their needs, and should not otherwise affect vehicles' performance attributes. NHTSA and EPA are finalizing standards based on vehicle footprint, which is the area defined by the points where the tires contact the ground, where smaller vehicles have relatively more stringent targets, and larger vehicles have less stringent targets. Footprint based standards promote fuel economy and GHG emissions improvements in vehicles of all sizes, and are not expected to create incentives for manufacturers to change the size of their vehicles in order to comply with the standards. Consequently, these rules should not have a significant effect on the relative availability of different size vehicles in the fleet. The agencies' analyses used a constraint of preserving all other aspects of vehicles' functionality and performance, and the technology cost and effectiveness estimates developed in the analyses reflect this constraint.
Given the long time frame at issue in setting standards for MYs 2022–2025 light-duty vehicles, and given NHTSA's statutory obligation to conduct a
The 2017–2025 National Program is estimated to reduce GHGs by approximately 2 billion metric tons and to save 4 billion barrels of oil over the lifetime of MYs 2017–2025 vehicles relative to the MY 2016 standard curves already in place.
Continuing the National Program has both energy security and climate change benefits. Climate change is a significant long-term threat to the global environment. EPA has found that elevated atmospheric concentrations of six greenhouse gases—carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride—taken in combination endanger both the public health and the public welfare of current and future generations. EPA further found that the combined emissions of these greenhouse gases from new motor vehicles and new motor vehicle engines contribute to the greenhouse gas air pollution that endangers public health and welfare. 74 FR 66496 (Dec. 15, 2009). As summarized in EPA's Endangerment and Cause or Contribute Findings under Section 202(a) of the Clean Air Act, anthropogenic emissions of GHGs are very likely (90 to 99 percent probability) the cause of most of the observed global warming over the last
Improving our energy and national security by reducing our dependence on foreign oil has been a national objective since the first oil price shocks in the 1970s. Although our dependence on foreign petroleum has declined since peaking in 2005, net petroleum imports accounted for approximately 45 percent of U.S. petroleum consumption in 2011.
Following the successful adoption of a National Program for model years (MY) 2012–2016 light duty vehicles, President Obama issued a Memorandum on May 21, 2010 requesting that the NHTSA, on behalf of the Department of Transportation, and the U.S. EPA develop “
The President's memorandum requested that the agencies, “work with the State of California to develop by September 1, 2010, a technical assessment to inform the rulemaking process * * *”. Together, NHTSA, EPA, and CARB issued the joint Technical Assessment Report (TAR) consistent with Section 2(a) of the Presidential Memorandum.
The TAR evaluated a range of potential stringency scenarios through model year 2025, representing a 3, 4, 5, and 6 percent per year estimated decrease in GHG levels from a model
Manufacturers and others commented extensively on a variety of topics in the TAR, including the stringency of the standards, program design elements, the effect of potential standards on vehicle safety, and the TAR's discussion of technology costs, effectiveness, and feasibility. In response, the agencies and CARB spent the next several months continuing to gather information from the industry and others in response to the agencies' initial analytical efforts. EPA and NHTSA issued a follow-on Supplemental NOI in November 2010,
The agencies' stakeholder engagement between December 2010 and July 29, 2011 focused on ensuring that the agencies possessed the most complete and comprehensive set of information to inform the proposed rulemaking. Information that the agencies presented to stakeholders is posted in the NPRM docket and referenced in multiple places in the NPRM. Throughout this period, the stakeholders repeated many of the broad concerns and suggestions described in the TAR, NOI, and November 2010 SNOI. For example, stakeholders uniformly expressed interest in maintaining a harmonized and coordinated national program that would be supported by CARB and allow auto makers to build one fleet and preserve consumer choice. The stakeholders also raised concerns about potential stringency levels, consumer acceptance of some advanced technologies and the potential structure of compliance flexibilities available under EPCA (as amended by EISA) and the CAA. In addition, most of the stakeholders wanted to discuss issues concerning technology availability, cost and effectiveness and economic practicability. The auto manufacturers, in particular, sought to provide the agencies with a better understanding of their respective strategies (and associated costs) for improving fuel economy while satisfying consumer demand in the coming years. Additionally, some stakeholders expressed concern about potential safety impacts associated with the standards, consumer costs and consumer acceptance, and potential disparate treatment of cars and trucks. Some stakeholders also stressed the importance of investing in infrastructure to support more widespread deployment of alternative vehicles and fuels. Many stakeholders also asked the agencies to acknowledge prevailing economic uncertainties in developing proposed standards. In addition, many stakeholders discussed the number of years to be covered by the program and what they considered to be important features of a mid-term review of any standards set or proposed for MY 2022–2025. In all of these meetings, NHTSA and EPA sought additional data and information from the stakeholders that would allow them to refine their initial analyses and determine proposed standards that are consistent with the agencies' respective statutory and regulatory requirements. The general issues raised by those stakeholders are addressed in the sections of this final rule discussing the topics to which the issues pertain (
The first stage of the meetings occurred between December 2010 and June 20, 2011. These meetings covered topics that were generally similar to the meetings that were held prior to the publication of the November 2010 Supplemental NOI and that were summarized in that document. Manufacturers provided the agencies more detailed information related to their product plans for vehicle models and fuel efficiency improving technologies and associated cost estimates, as well as more detailed feedback regarding the potential program design elements to be included in the program. The second stage of meetings occurred between June 21, 2011 and July 14, 2011, during which EPA, NHTSA, CARB and several components of the Executive Office of the President kicked-off an intensive series of meetings, primarily with manufacturers, to share tentative regulatory concepts including concept stringency curves and program flexibilities based on the analyses completed by the agencies as of June 21, 2011
Throughout all three stages, EPA and NHTSA continued to engage other stakeholders to ensure that the agencies were obtaining the most comprehensive and reliable information possible to guide the agencies in developing proposed standards for MY 2017–2025. Environmental organizations consistently stated that stringent standards are technically achievable and critical to important national interests. Labor interests stressed the need to
On July 29, 2011, President Obama with the support of thirteen major automakers, announced plans to pursue the next phase in the Administration's national vehicle program, increasing fuel economy and reducing GHG emissions for passenger cars and light trucks built in MYs 2017–2025.
On the same day as the President's announcement, EPA and NHTSA released a second SNOI (published in the
The agencies signed their respective proposed rules on November 16, 2011 (76 FR 74854 (December 1, 2011)), and subsequently received a large number of comments representing many perspectives. Between January 17 and 24, 2012 the EPA and NHTSA held three public hearings in Detroit, Philadelphia and San Francisco. Nearly 400 people testified and many more attended the hearings. In response to requests, the written comment period was extended by two weeks for a total of 74 days from
An overwhelming majority of commenters supported the proposed 2017–2025 CAFE and GHG standards with most organizations and nearly all of the private individuals expressing broad support for the program and for the continuation of the National Program to model years (MY) 2017–2025 light-duty vehicles, and the Program's projected achievement of an emissions level of 163 gram/mile fleet average CO
In general, more than a dozen automobile manufacturers supported the proposed standards as well as the credit opportunities and other provisions that provide compliance flexibility, while also recommending some changes to the credit and flexibility provisions—in fact, a significant majority of comments from industry focused on the credit and flexibility provisions. Nearly all automakers stressed the importance of the mid-term evaluation to assess the progress of technology development and cost, and the accuracy of the agencies' assumptions due to the long time-frame of the rule. Many industry commenters expressly predicated their support of the 2017–2025 National Program on the existence of this evaluation. Environmental and public interest non-governmental organizations (NGOs), as well as States that commented were also very supportive of extending the National Program to MYs 2017–2025 passenger vehicles and light trucks. Many of these organizations expressed concern that the mid-term evaluation might be used as an opportunity to weaken standards or to delay the environmental benefits of the National Program.
The agencies also received comments that either opposed the issuance of the standards, or that argued that they should be modified in various ways. The Center for Biological Diversity (CBD) commented that the proposed standards were not sufficiently stringent, recommending that the agencies increase the standards to 60–70 mpg in 2025. CBD, as well as several other organizations,
Some car-focused manufacturers objected to the truck curves, which they considered lenient while some small truck manufacturers objected to the large truck targets, which they considered lenient; and some intermediate and small volume manufacturers with limited product lines requested additional lead time, as well as less stringent standards for their vehicles. Manufacturers in general argued that backstops were not
The National Automobile Dealers Association (NADA) opposed the MYs 2017–2025 proposed standards, arguing that the agencies should delay rulemaking since they believe there was no need to set standards so far in advance, that the costs of the proposed program are higher than agencies have projected, and that some (mostly low income) consumers will not be able to acquire financing for new cars meeting these more stringent standards.
Many environmental and consumer groups commented that the benefits of the rule were understated and the costs overstated, arguing that several potential benefits had not been included and the technology effectiveness estimates were overly conservative. Some environmental groups also expressed concern that the benefits of the rule could be eroded if the agencies' assumptions about the market do not come to pass or if manufacturers build larger vehicles. Other groups, such as NADA, Competitive Enterprise Institute, and the Institute for Energy Research, argued that the benefits of the rule were overstated and the costs understated, asserting that manufacturers would have already made improvements if the agencies' calculations were correct.
Many commenters discussed potential environmental and health aspects of the rule. Producers of specific materials, such as aluminum, steel, or plastic, commented that standards should ultimately reflect a life cycle analysis that accounts for the greenhouse gas emissions attributable to the materials from which vehicles are manufactured. Some environmental groups requested that standards for electrified vehicles reflect emissions attributable to upstream electricity generation. Many commenters expressed support for the rule and its health benefits, while other commenters were concerned about possible negative health impacts due to assumptions about future fuel properties.
Many commenters also addressed issues relating to safety, with most generally supporting the agencies' efforts to continue to improve their understanding of the relationship between mass reduction and safety. Consistent with their comments in prior rulemakings, several environmental and consumer organizations commented that data exist that mass reduction does not have adverse safety impacts, and stated that the use of better designs and materials can improve both fuel economy and safety. Dynamic Research Institute (DRI) submitted a study, and other commenters pointed to DRI's work and additional studies for the agencies' consideration, as discussed in more detail in Section II.G below. Materials producers (aluminum, steel, composite, etc.) commented that their respective materials can be used to improve safety. The Alliance commented that while some recent mass reduction vehicle design concept studies have created designs that perform well in simulation modeling of safety standard and voluntary safety guideline tests, the design concepts yield aggressively stiffer crash pulses may be detrimental to rear seat occupants, vulnerable occupants and potential crash partners. The Alliance also commented that there are simulation model uncertainties with respect to advanced materials, and the real-world crash behavior of these concepts may not match that predicted in those studies. The Alliance and Volvo commented that it is important to monitor safety trends, and the Alliance urged that the agencies revisit this topic during the mid-term evaluation.
Additional comments touched on the use of “miles per gallon” to describe the standards, the agencies' baseline market forecast, consumer welfare and trends in consumer preferences for fuel economy, and a wide range of other topics.
Throughout this notice, the agencies discuss key issues arising from the public comments and the agencies' responses to those comments. The agencies also respond to comments in the Joint TSD and in their respective RIAs. In addition, EPA has addressed all of the public comments specific to the GHG program in a Response to Comments document.
In 2004, the California Air Resources Board (CARB) approved standards for new light-duty vehicles, regulating the emission of CO
As requested by the President and in the interest of maximizing regulatory harmonization, NHTSA and EPA worked closely with CARB throughout the development of the proposed rules. CARB staff released its proposal for MYs 2017–2025 GHG emissions standards consistent with the standards proposed by EPA on December 9, 2011 and the California Air Resources Board adopted these standards at its January 26, 2012 Board meeting, with final approval at its March 22, 2012 Board meeting.
These final rules continue the collaborative analytical effort between NHTSA and EPA, which began with the MYs 2012–2016 rulemaking for light-duty vehicles. NHTSA and EPA have worked together on nearly every aspect of the technical analysis supporting these joint rules. The results of this collaboration are reflected in key elements of the respective NHTSA and EPA rules, as well as in the analytical work contained in the Joint Technical Support Document (Joint TSD). The agencies have continued to develop and refine the supporting analyses since issuing the proposed rule last December. The Joint TSD, in particular, describes important details of the analytical work that are common to both agencies' rules, and also explains any key differences in approach. The joint analyses addressed in the TSD include the build-up of the baseline and reference fleets, the derivation of the shape of the footprint-based attribute curves that define the agencies' respective standards, a detailed description of the estimated costs and effectiveness of the technologies that are available to vehicle manufacturers, the economic inputs used to calculate the costs and benefits of the final rules, a description of air conditioner and other off-cycle technologies, and the agencies' assessment of the impacts of hybrid technology incentive provisions for full-size pick-up trucks. This comprehensive joint analytical approach has provided a sound and consistent technical basis for both agencies in developing their final standards, which are summarized in the sections below.
EPA and NHTSA are finalizing separate sets of standards for passenger cars and for light trucks, each under its respective statutory authority. EPA is setting national CO
As proposed, EPA is finalizing standards that are projected to require, on an average industry fleet wide basis, 163 grams/mile of CO
Consistent with the proposal, for passenger cars, the CO
Consistent with its statutory authority,
The second phase of the CAFE program, from MYs 2022–2025, includes standards that are not final due to the statutory provision that NHTSA shall issue regulations prescribing average fuel economy standards for at least 1 but not more than 5 model years at a time.
NHTSA notes that for the first time in this rulemaking, EPA is finalizing, under its EPCA authority, rules allowing the impact of air conditioning system efficiency improvements to be included in the calculation of fuel economy for CAFE compliance. Given that these real-world improvements will be available to manufacturers for compliance, NHTSA has accounted for this by determining the amount that industry is expected to improve air conditioning system efficiency in each model year from 2017–2025, and setting the CAFE standards to reflect these improvements, in a manner consistent with EPA's GHG standards. See Sections III.B.10 and IV.I.4.b of this final rule preamble for more information.
NHTSA also notes that the rates of increase in stringency for CAFE standards are lower than EPA's rates of increase in stringency for GHG standards. As in the MYs 2012–2016 rulemaking, this is for purposes of harmonization and in reflection of several statutory constraints in EPCA/EISA. As a primary example, NHTSA's standards, unlike EPA's, do not reflect the inclusion of air conditioning system refrigerant and leakage improvements, but EPA's standards allows consideration of such A/C refrigerant improvements which reduce GHGs but do not affect fuel economy. As another example, the Clean Air Act allows various compliance flexibilities (among them certain credit generating mechanisms) not present in EPCA.
As with the MYs 2012–2016 standards, NHTSA and EPA's final MYs 2017–2025 passenger car and light truck standards are expressed as mathematical functions depending on the vehicle footprint attribute.
As shown in Table I–1 NHTSA's fleet-wide estimated required CAFE levels for passenger cars would increase from between 40.1 and 39.6 mpg in MY 2017 to between 55.3 and 56.2 mpg in MY 2025. Fleet-wide required CAFE levels for light trucks, in turn, are estimated to increase from between 29.1 and 29.4 mpg in MY 2017 and between 39.3 and 40.3 mpg in MY 2025. For the reader's reference, Table I–1 also provides the estimated average fleet-wide required levels for the combined car and truck fleets, culminating in an estimated overall fleet average required CAFE level of a range from 48.7 to 49.7 mpg in MY 2025. Considering these combined car and truck increases, the standards together represent approximately a 4.0 percent annual rate of increase,
The estimated average required mpg levels for passenger cars and trucks under the standards shown in Table I–1 above include the use of A/C efficiency improvements, as discussed above, but do not reflect a number of flexibilities and credits that manufacturers may use for compliance that NHTSA cannot consider in establishing standards based on EPCA/EISA constraints. These flexibilities cause the actual achieved fuel economy to be lower than the required levels in the table above. The flexibilities and credits that NHTSA cannot consider include the ability of manufacturers to pay civil penalties rather than achieving required CAFE levels, the ability to use Flexible Fuel Vehicle (FFV) credits, the ability to count electric vehicles for compliance, the operation of plug-in hybrid electric vehicles on electricity for compliance prior to MY 2020, and the ability to transfer and carry-forward credits. When accounting for these flexibilities and credits, NHTSA estimates that the CAFE standards will lead to the following average achieved fuel economy levels, based on the agencies' projections of what each manufacturer's fleet will comprise in each year of the program:
NHTSA is also required by EISA to set a minimum fuel economy standard for domestically manufactured passenger cars in addition to the attribute-based passenger car standard. The minimum standard “shall be the greater of (A) 27.5 miles per gallon; or (B) 92 percent of the average fuel economy projected by the Secretary for the combined domestic and non-domestic passenger automobile fleets manufactured for sale in the United States by all manufacturers in the model year * * *,” and applies to each manufacturer's fleet of domestically manufactured passenger cars (
Based on NHTSA's current market forecast, the agency is finalizing minimum standards for domestic passenger cars for MYs 2017–2021 and providing augural standards for MYs 2022–2025 as presented below in Table I–3.
EPA is finalizing GHG emissions standards, and Table I–4 provides estimates of the projected overall fleet-wide CO
As shown in Table I–4, projected fleet-wide CO
EPA anticipates that manufacturers will take advantage of program flexibilities, credits and incentives, such as car/truck credit transfers, air conditioning credits, off-cycle credits, advanced technology vehicle multipliers, intermediate volume manufacturer lead-time provisions, and hybrid and performance-based incentives for full size pick-up trucks. Three of these flexibility provisions—advanced technology vehicle multipliers, intermediate volume manufacturer lead-time provisions, and the full size pick-up hybrid/performance incentives—are expected to have an impact on the fleet-wide emissions levels that manufacturers will actually achieve.
A more detailed description of how the agency arrived at the year by year progression of both the projected compliance targets and the achieved CO
As previously stated, there was broad support for the proposed standards by auto manufacturers including BMW, Chrysler, Ford, GM, Honda, Hyundai, Kia, Jaguar/Land Rover, Mazda, Mitsubishi, Nissan, Tesla, Toyota, Volvo, as well as the Global Automakers. Of the larger manufacturers, Volkswagen and Mercedes commented that the proposed passenger car standards were relatively too stringent while light truck standards were relatively too lenient and suggested several alternatives to the proposed standards. Toyota also commented that lower truck stringency puts more burdens on small cars. Honda was concerned that small light trucks face disproportionate stringency compared to larger footprint trucks under the proposed standards. The agencies' consideration of these and other comments and of the updated technical analyses did not lead to changes to the stringency of the standards nor in the shapes of the curves discussed above. These issues are discussed in more detail in Sections II, III and IV.
NHTSA and EPA reviewed the technology assessment employed in the proposal in developing this final rule, and concluded that there is a wide range of technologies available in the MY 2017–2025 timeframe for manufacturers to consider in upgrading light-duty vehicles to reduce GHG emissions and improve fuel economy. Commenters generally agreed with this assessment and conclusion.
As noted further in Section II.D, for this final rule, the agencies considered over 40 current and evolving vehicle and engine technologies that manufacturers could use to improve the fuel economy and reduce CO
A number of commenters suggested that the proposed standards were either too stringent or not stringent enough (either in some model years or in all model years, depending on the commenter), and nearly all auto manufacturers and their associations stressed the importance of the mid-term evaluation of the MYs 2022–2025 standards in their comments due to the long timeframe of the rule and uncertainty in assumptions given this timeframe. Our consideration of these comments as well as our revised analyses, leads us to conclude that the general rate of increase in the stringency of the standards as proposed remains appropriate. The comprehensive mid-term evaluation process being finalized and our evaluation of the stringency of the standards is discussed further in Sections III and IV.
Both agencies also considered other alternative standards as part of their respective Regulatory Impact Analyses that span a reasonable range of alternative stringencies both more and less stringent than the final standards. EPA's and NHTSA's analyses of these regulatory alternatives (and explanation of why we are finalizing the standards) are contained in Sections III and IV of this preamble, respectively, as well as in the agencies' respective Regulatory Impact Analyses (RIAs).
NHTSA and EPA are finalizing attribute-based standards for passenger cars and light trucks, as required by EISA and as allowed by the CAA, and will continue to use vehicle footprint as the attribute.
Under the footprint-based standards, the curve defines a GHG or fuel economy performance target for each separate car or truck footprint. Using the curves, each manufacturer thus will have a GHG and CAFE average standard that is unique to each of its fleets, depending on the footprints and production volumes of the vehicle models produced by that manufacturer. A manufacturer will have separate footprint-based standards for cars and for trucks. The curves are mostly sloped, so that generally, larger vehicles (
The final footprint-based standards are identical to those proposed. The passenger car curves are also similar in shape to the car curves for MYs 2012–2016. However, as proposed, the final light truck curves for MYs 2017–2025 reflect more significant changes compared to the light truck curves for MYs 2012–2016; specifically, the agencies have increased the slope and extended the large-footprint cutpoint for the light truck curves over time to larger footprints. We continue to believe that these changes from the MYs 2012–2016 curves represent an appropriate balance of both technical and policy issues, as discussed in Section II.C below and Chapter 2 of the Joint TSD.
NHTSA is adopting the attribute curves below for model years 2017 through 2021 and presenting the augural attribute curves below for model years 2022–2025. As just explained, these targets, expressed as mpg values, will be production-weighted to determine each manufacturer's fleet average standard for cars and trucks. Although the general model of the target curve equation is the same for each vehicle category and each year, the parameters of the curve equation differ for cars and trucks. Each parameter also changes on a model year basis, resulting in the yearly increases in stringency. Figure I–1 below illustrates the passenger car CAFE curves for model years 2017 through 2025 while Figure I–2 below illustrates the light truck CAFE curves for model years 2017 through 2025.
EPA is finalizing the attribute curves shown in Figure I–3 and Figure I–4 below, for model years 2017 through 2025. As with the CAFE curves, the general form of the equation is the same for each vehicle category and each year, but the parameters of the equation differ for cars and trucks. Again, each parameter also changes on a model year basis, resulting in the yearly increases in stringency. Figure I–3 below illustrates the CO
EPA and NHTSA received a number of comments about the shape of the car and truck curves. Some commenters, including Honda, Toyota and Volkswagen, stated that the light truck curve was too lenient for large trucks, while Nissan and Honda stated the light truck curve was too stringent for small trucks; Porsche and Volkswagen stated the car curve was too stringent generally, and Toyota stated it was too stringent for small cars. A number of NGOs (Center for Biological Diversity, International Council on Clean Transportation, Natural Resources Defense Council, Sierra Club, Union of Concerned Scientists) also commented on the truck curves as well as the relationship between the car and truck curves. We address all these comments further in Section II.C as well as in Sections III and IV.
Generally speaking, a smaller footprint vehicle will tend to have higher fuel economy and lower CO
As proposed, the agencies are finalizing several provisions which provide compliance flexibility to manufacturers to meet the standards. Many of the provisions are also found in the MYs 2012–2016 rules. For example, the agencies are continuing to allow manufacturers to generate credits for over-compliance with the CO
Credit “carry-back” means that manufacturers are able to use credits to offset a deficit that had accrued in a prior model year, while credit “carry-forward” means that manufacturers can bank credits and use them toward compliance in future model years. EPCA, as amended by EISA, requires NHTSA to allow manufacturers to carry back credits for up to three model years, and to carry forward credits for up to five model years. EPA's MYs 2012–2016 light duty vehicle GHG program includes the same limitations and, as proposed, EPA is continuing this limitation in the MY 2017–2025 program. In its comments, Volkswagen requested that credits under the GHG rules be allowed to be carried back for five model years rather than three as proposed. A five year carry back could create a perverse incentive for shortfalls to accumulate past the point where they can be rectified by later model year performance. EPA is therefore adopting the three year carry back period in its rule. NHTSA is required to allow a three year carry-back period by statute.
However, to facilitate the transition to the increasingly more stringent standards, EPA proposed, and is finalizing under its CAA authority a one-time CO
Credit “transfer” means the ability of manufacturers to move credits from their passenger car fleet to their light truck fleet, or vice versa. As part of the EISA amendments to EPCA, NHTSA was required to establish by regulation a CAFE credit transferring program, now codified at 49 CFR Part 536, to allow a manufacturer to transfer credits between its car and truck fleets to achieve compliance with the standards. For example, credits earned by over-compliance with a manufacturer's car fleet average standard could be used to offset debits incurred due to that manufacturer's not meeting the truck fleet average standard in a given year. However, EISA imposed a cap on the amount by which a manufacturer could raise its CAFE standards through transferred credits: 1 mpg for MYs 2011–2013; 1.5 mpg for MYs 2014–2017; and 2 mpg for MYs 2018 and beyond.
Under section 202 (a) of the CAA there is no statutory limitation on car-truck credit transfers, and EPA's GHG program allows unlimited credit transfers across a manufacturer's car-light truck fleet to meet the GHG
Credit “trading” means the ability of manufacturers to sell credits to, or purchase credits from, one another. EISA allowed NHTSA to establish by regulation a CAFE credit trading program, also now codified at 49 CFR Part 536, to allow credits to be traded between vehicle manufacturers. EPA also allows credit trading in the light-duty vehicle GHG program. These sorts of exchanges between averaging sets are typically allowed under EPA's current mobile source emission credit programs. EISA also prohibits manufacturers from using traded credits to meet the minimum domestic passenger car CAFE standard.
Air conditioning (A/C) systems contribute to GHG emissions in two ways. The primary refrigerant used in automotive air conditioning systems today—a hydrofluorocarbon (HFC) refrigerant and potent GHG called HFC–134a—can leak directly from the A/C system (direct A/C emissions). In addition, operation of the A/C system places an additional load on the engine that increases fuel consumption and thus results in additional CO
For this rule, as with the MYs 2012–2016 program, EPA is finalizing its proposal to allow manufacturers to generate CO
In addition to the grams-per-mile CO
For MYs 2012–2016, EPA provided an option for manufacturers to generate credits for utilizing new and innovative technologies that achieve CO
EPA proposed and is finalizing provisions allowing manufacturers to continue to generate and use off-cycle credits for MY 2017 and later to demonstrate compliance with the light-duty vehicle GHG standards. In addition, as with A/C efficiency, improving efficiency through the use of off-cycle technologies leads to real-world fuel economy benefits and allows the vehicle to go farther on a gallon of gas. Thus, under its EPCA authority EPA proposed and is finalizing provisions to allow manufacturers to generate fuel consumption improvement
Many automakers indicated that they had a strong interest in pursuing off-cycle technologies, and encouraged the agencies to refine and simplify the evaluation process to provide more certainty as to the types of technologies the agencies would approve for credit generation. Other commenters, such as suppliers and some NGOs, also provided technical input on various aspects of the off-cycle credit program. Some environmental groups expressed concerns about the uncertainties in calculating off-cycle credits and that the ability for manufacturer's to earn credits from off-cycle technologies should not be a disincentive for implementing other (2-cycle) technologies. For MY 2017 and later, EPA is finalizing several proposed provisions to expand and streamline the MYs 2012–2016 off-cycle credit provisions, including an approach by which the agencies will provide default values, which will eliminate the need for case-by-case-testing, for a subset of off-cycle technologies whose benefits are reliably and conservatively quantified. EPA is finalizing a list of technologies and default credit values for these technologies, as well as capping the maximum amount of these credits which can be utilized unless a manufacturer demonstrates through testing that greater amounts are justified. The agencies believe that our assessment of off-cycle technologies and associated credit values on this list is conservative, and emphasize that automakers may apply for additional off-cycle credits beyond the minimum credit value and cap if they present sufficient supporting data. Manufacturers may also apply to receive credit for off-cycle technologies besides those listed, again, if they have sufficient data. EPA received several comments regarding the list of technologies and associated credit values and has modified the list somewhat in response to these comments, as discussed in Section II.F.2. EPA was also persuaded by the public comments that the default credit values should not be contingent upon a minimum penetration of the technology into a manufacturer's fleet, and so is not adopting this aspect of the proposal. Manufacturers often apply new technologies on a limited basis to gain experience, gauge consumer acceptance, allow refinement of the manufacturing and production processes for quality and cost, and other legitimate reasons. The proposed minimum penetration requirement might have discouraged introduction of off-cycle technologies in these legitimate circumstances.
In addition, as requested by commenters, EPA is providing additional detail on the process and timing for the credit/fuel consumption improvement values application and approval process for those instances where manufacturers seek off-cycle credits rather than using the default values from the list provided, or seek credits for technologies other than those provided through the list. EPA is finalizing a timeline for the approval process, including a 60-day EPA decision process from the time a manufacturer submits a complete application for credits based on 5-cycle testing. As proposed, EPA is also finalizing a detailed, step-by-step process, including a specification of the data that manufacturers must submit. EPA will also consult with NHTSA during the review process. For off-cycle technologies that are both not covered by the pre-approved off-cycle credit/fuel consumption improvement values list and that are not quantifiable based on the 5-cycle test cycle option provided in the 2012–2016 rulemaking, EPA is retaining the public comment process from the MYs 2012–2016 rule, and will consult with NHTSA during the review process.
Finally, in response to many OEM and supplier comments encouraging EPA to allow access to the pre-defined credit menu earlier than MY 2017, EPA is allowing use of the credit menu for the GHG program beginning in MY 2014 to facilitate compliance with the GHG standards for MYs 2014–2016. This provision is for the GHG rules only, and does not apply to the 2012–2016 CAFE standards; the off-cycle credit program will not begin until MY 2017 for the CAFE program, as discussed in Section IV.I.4.c. A full description of the program, including an overview of key comments and responses, is provided in Section III.C.5. A number of technical comments were also submitted by a variety of stakeholders, which are addressed in Chapter 5 of the joint TSD.
In order to provide temporary regulatory incentives to promote advanced vehicle technologies, EPA is finalizing, as proposed, an incentive multiplier for CO
NHTSA currently interprets EPCA and EISA as precluding it from offering additional incentives for the alternative fuel operation of EVs, PHEVs, FCVs, and NGVs, except as specified by statute,
For EVs, PHEVs and FCVs, EPA is also finalizing, as proposed, to set a value of 0 g/mile for the tailpipe CO
As proposed and as discussed above, for EVs and other dedicated alternative fuel vehicles, EPA will calculate fuel economy for the CAFE program (under its EPCA statutory authority, as further described in Section I.E.2.a) using the same methodology as in the MYs 2012–2016 rulemaking.
The methodology that EPA is finalizing for dual fueled vehicles under the GHG program and to calculate fuel economy for the CAFE program is discussed below in subsection I.C.7.a.
The agencies recognize that the standards presented in this final rule for MYs 2017–2025 will be challenging for large vehicles, including full-size pickup trucks often used in commercial applications. To help address this challenge, the program will, as proposed, adopt incentives for the use of hybrid electric and non-hybrid electric “game changing” technologies in full-size pickup trucks.
EPA is providing the incentive for the GHG program under EPA's CAA authority, and for the CAFE program under EPA's EPCA authority. EPA's GHG and NHTSA's CAFE standards are set at levels that take into account this flexibility as an incentive for the introduction of advanced technology. This provides the opportunity in the program's early model years to begin penetration of advanced technologies into this category of vehicles, and in turn creates more opportunities for achieving the more stringent MYs 2022–2025 truck standards.
EPA is providing a per-vehicle CO
The program requirements and incentive amounts differ somewhat for mild and strong HEV pickup trucks. As proposed, mild HEVs will be eligible for a per-vehicle CO
Because there are other promising technologies besides hybridization that can provide significant reductions in GHG emissions and fuel consumption from full size pickup trucks, EPA is also adopting, as proposed, a performance-based CO
To avoid double-counting, no truck will receive credit under both the HEV and the performance-based approaches. Further details on the full-size truck technology credit program are provided in sections II.F.3 and III.C.3, as well as in Chapter 5.3 of the joint TSD.
The agencies received a variety of comments on the proposal for this technology incentive program for full size pickup trucks. Some environmental groups and manufacturers questioned the need for it, arguing that this vehicle segment is not especially challenged by the standards, that hybrid systems would readily transfer to it from other vehicle classes, and that the credit essentially amounts to an economic advantage for manufacturers of these trucks. Other industry commenters requested that it be made available to a broader class of vehicles, or that the minimum penetration thresholds be removed or relaxed. There were also a number of comments on the technical requirements defining eligibility and mild/strong HEV performance. In response to the comments, the agencies made some changes to the proposed program, including adjustments to the penetration thresholds for mild HEVs, clarification that non-gasoline HEVs can qualify, and improvements to the technical criteria for mild and strong hybrids. The comments and changes are discussed in detail in sections II.F.3, and III.C.3, and in Chapter 5 of the TSD.
Given the long time frame at issue in setting standards for MYs 2022–2025, and given NHTSA's obligation to conduct a
The agencies received many comments about the importance of the proposed mid-term evaluation due to the long time-frame of the rule and the uncertainty in assumptions due to this long timeframe. Nearly all auto manufacturers and associations predicated their support of the MY 2017–2025 National Program on the agencies conducting this evaluation and decision-making process. In addition, a number of auto manufacturers suggested additional factors that the agencies should consider during the evaluation process and also stressed the importance of completing the evaluation no later than April 1, 2018, the timeframe proposed by the agencies. Several associations also asked for more detail to be codified regarding the timeline, content and procedures of the review process. Several automakers and organizations suggested that the agencies also conduct a series of smaller, focused evaluations or “check-ins” on key issues and technological and market trends. Several organizations and associations stressed the importance of involving CARB and broad public participation in the review process.
The agencies also received a number of comments from environmental and consumer organizations expressing concerns about the mid-term evaluation—that it could occur too early, before reliable data on the new standards is available, be disruptive to auto manufacturers' product planning and add uncertainty, and that it should not be used as an opportunity to delay benefits or weaken the overall National Program for MY 2022–2025. Those organizations commented that if the agencies determined that a mid-term evaluation was necessary, it should be used as an opportunity to increase the stringency of the 2022–2025 standards. Some environmental groups opposed the concept of the agencies performing additional interim reviews. Finally, several environmental organizations urged transparency and recommended that the agencies provide periodic updates on technology progress and compliance trends. One commenter, NADA, stated that the rule should not be organized in a way that would require a mid-term evaluation and that the agencies should wait to set standards for MYs 2017–2021 until more information is available. The mid-term evaluation comments are discussed in detail in sections III.B.3 and IV.A.3.b.
The agencies are finalizing the mid-term evaluation and agency decision-making process as proposed. As stated in the proposal, both NHTSA and EPA will develop and compile up-to-date information for the mid-term evaluation, through a collaborative, robust and transparent process, including public notice and comment. The evaluation will be based on (1) a holistic assessment of all of the factors considered by the agencies in setting standards, including those set forth in this final rule and other relevant factors, and (2) the expected impact of those factors on the manufacturers' ability to comply, without placing decisive weight on any particular factor or projection. In order to align the agencies' rulemaking for MYs 2022–2025 and to maintain a joint national program, if the EPA determination is that standards will not change, NHTSA will issue its final rule concurrently with the EPA determination. If the EPA determination is that standards may change, the agencies will issue a joint NPRM and joint final rule. The comprehensive evaluation process will lead to final agency action by both agencies, as described in sections III.B.3 and IV.A.3 of this Notice.
NHTSA's final action will be a
Consistent with the agencies' commitment to maintaining a single national framework for regulation of vehicle GHG emissions and fuel economy, the agencies fully expect to conduct the mid-term evaluation in close coordination with the California Air Resources Board (CARB). In adopting their GHG standards on March 22, 2012, the California Air Resources Board directed the Executive Officer to continue collaborating with EPA and NHTSA as the Federal GHG standards were finalized and also “to participate in U.S. EPA's mid-term review of the 2022 through 2025 model year passenger vehicle greenhouse gas standards being proposed under the 2017 through 2025 MY National Program”.
Further discussion of the mid-term evaluation can be found in Sections III.B.3 and IV.A.3.b of this final rule preamble.
The MYs 2012–2016 final rules established detailed and comprehensive regulatory provisions for compliance and enforcement under the GHG and
This compliance approach allows manufacturers to satisfy the GHG program requirements in the same general way they comply with previously existing applicable CAA and CAFE requirements. Manufacturers will demonstrate compliance on a fleet-average basis at the end of each model year, allowing model-level testing to continue throughout the year as is the current practice for CAFE determinations. The compliance program design includes a single set of manufacturer reporting requirements and relies on a single set of underlying data. This approach still allows each agency to assess compliance with its respective program under its respective statutory authority. The program also addresses EPA enforcement in instances of noncompliance.
As proposed, EPA is finalizing provisions which state that CO
As proposed, EPA is accounting for E85 use by flexible fueled vehicles (FFVs) as in the existing MY 2016 and later program, based on actual usage of E85 which represents a real-world tailpipe emissions reduction attributed to alternative fuels. Unlike PHEV and dual fuel CNG vehicles, there is not a significant cost differential between an FFV and a conventional gasoline vehicle and historically consumers have fueled these vehicles with E85 a very small percentage of the time. But E85 use in FFVs is expected to rise in the future due to Renewable Fuel Standard program requirements. GHG emissions compliance issues for dual fuel vehicles are discussed further in Section III.C.4.a.
In the CAFE program for MYs 2017–2019, the fuel economy of dual fuel vehicles will be determined in the same manner as specified in the MY 2012–2016 rule, and as defined by EISA. Beginning in MY 2020, EISA does not specify how to measure the fuel economy of dual fuel vehicles, and EPA is finalizing its proposal, under its EPCA authority, to use the “utility factor” methodology for PHEV and CNG vehicles described above to determine how to apportion the fuel economy when operating on gasoline or diesel fuel and the fuel economy when operating on the alternative fuel. For FFVs under the CAFE program, EPA is using the same methodology it uses for the GHG program to apportion the fuel economy, namely based on actual usage of E85. As proposed, EPA is continuing to use Petroleum Equivalency Factors and the 0.15 divisor used in the MY 2012–2016 rule for the alternative fuels, however with no cap on the amount of fuel economy increase allowed. This issue is discussed further in Section III.C.4.b and in Section IV.I.3.a.
Under EPCA, manufacturers are allowed to exclude emergency vehicles from their CAFE fleet
As proposed, EPA is finalizing provisions to address two categories of smaller manufacturers. The first category is small businesses as defined by the Small Business Administration (SBA). For vehicle manufacturers, SBA's definition of small business is any firm with less than 1,000 employees. As with the MYs 2012–2016 program, EPA is exempting small businesses—that is, any company that meets the SBA's definition of a small business—from the MY 2017 and later GHG standards. EPA believes this exemption is appropriate given the unique challenges small businesses would face in meeting the GHG standards, and since these businesses make up less than 0.1% of total U.S. vehicle sales, there is no significant impact on emission reductions. As proposed, EPA is also finalizing an opt-in provision that will allow small businesses wishing to waive their exemption and comply with the GHG standards to do so. EPA received no adverse comments on its proposed approach for small businesses.
EPA's final rule also addresses small volume manufacturers, those with U.S. annual sales of less than 5,000 vehicles.
Also, EPA requested comment on allowing manufacturers able to demonstrate that they are operationally independent from a parent company (defined as 10% or greater ownership), to also be eligible for small volume manufacturer alternative standards and treatment under the GHG program. Under the current program, the vehicle sales of such companies must be aggregated with the parent company in determining eligibility for small volume manufacturer provisions. The only comments addressing this issue supported including a provision recognizing operational independence in the rules. EPA has continued to evaluate the issue and the final GHG rule includes provisions allowing manufacturers to demonstrate to EPA that they are operationally independent. This is different from the CAFE program, which aggregates manufacturers for compliance purposes if a control relationship exists, either in terms of stock ownership or design control, or both.
EPA sought comment on whether additional lead-time is needed for niche intermediate sized manufacturers. Under the Temporary Lead-time Allowance Alternative Standards (TLAAS) provisions in the MYs 2012–2016 GHG rules (see 75 FR 25414–417), manufacturers with sales of less than 50,000 vehicles were provided additional flexibility through MY 2016. EPA invited comment on whether this or some other form of flexibility is warranted for niche intermediate volume, limited line manufacturers (see section III.B.7).
NRDC commented in support of EPA's proposal not to extend the TLAAS program. EPA received comments from Jaguar Land Rover, Porsche and Suzuki that the standards will raise significant feasibility concerns for some intermediate volume manufacturers that will be part of the expanded TLAAS program in MY 2016, especially in the early transition years of the program. Porsche commented that they would need to meet standards up to 25 percent more stringent in MY 2017 compared to MY 2016, requiring utilization of advanced technologies at rates wholly disproportionate to rates expected for larger manufacturers with more diverse product lines. EPA is persuaded that these manufacturers require additional lead-time to make the transition from the TLAAS regime to the more stringent standards. To provide this needed lead-time, EPA is finalizing provisions for manufacturers with sales below 50,000 vehicles per year that are part of the TLAAS program through MY 2016, which will allow eligible manufacturers to remain at their MY 2016 standards through MY 2018 and then begin making the transition to more stringent standards. The manufacturers that utilize this added lead time will be required to meet the primary program standards in MY 2021 and later. The intermediate volume manufacturer lead-time provisions are discussed in detail in Section III.B.8.
As proposed, EPA is extending to MY 2017 and later the flexibility for manufacturers to use CO
This section summarizes the projected costs and benefits of the MYs 2017–2025 CAFE and GHG emissions standards for light-duty vehicles. These projections helped inform the agencies' choices among the alternatives considered and provide further confirmation that the final standards are appropriate under the agencies' respective statutory authorities. The costs and benefits projected by NHTSA to result from the CAFE standards are presented first, followed by those projected by EPA to result from the GHG emissions standards.
For several reasons, the estimates for costs and benefits presented by NHTSA and EPA, while consistent, are not directly comparable, and thus should not be expected to be identical. NHTSA and EPA's standards are projected to result in slightly different fuel efficiency improvements. EPA's GHG standard is more stringent in part due to its assumptions about manufacturers' use of air conditioning leakage/refrigerant replacement credits, which will result in reduced emissions of HFCs. NHTSA's final standards are at levels of stringency that assume improvements in the efficiency of air conditioning systems, but these standards do not require reductions in HFC emissions, which are generally not related to fuel economy or energy conservation. In addition, as noted above, the CAFE and GHG standards offer somewhat different program flexibilities and provisions, and the agencies' analyses differ in their accounting for these flexibilities, primarily because NHTSA is statutorily prohibited from considering some flexibilities when establishing CAFE standards,
Specifically, the projected costs and benefits presented by NHTSA and EPA are not directly comparable because EPA's standards include air conditioning-related improvements in HFC reductions, and reflect compliance with the GHG standards, whereas NHTSA projects some manufacturers will pay civil penalties as part of their compliance strategy, as allowed by EPCA. EPCA also prohibits NHTSA from considering manufacturers' ability to earn, transfer or trade credits earned for over-compliance when setting standards. The Clean Air Act imposes no such limitations. The Clean Air Act also allows EPA to provide incentives for particular technologies, such as for electric vehicles and dual fueled vehicles. For these reasons, EPA's estimates of GHG reductions and fuel savings achieved by the GHG standards are higher than those projected by NHTSA for the CAFE standards. For these same reasons, EPA's estimates of manufacturers' costs for complying with the passenger car and light truck GHG standards are slightly higher than NHTSA's estimates for complying with the CAFE standards.
It also bears discussion here that, for this final rulemaking, the agencies have analyzed the costs and benefits of the standards using two different forecasts of the light vehicle fleet through MY 2025. The agencies have concluded that the significant uncertainty associated with forecasting sales volumes, vehicle technologies, fuel prices, consumer demand, and so forth out to MY 2025, make it reasonable and appropriate to evaluate the impacts of the final CAFE and GHG standards using two baselines.
These two market forecasts contain certain differences, although as will be discussed below, the differences are not significant enough to change the agencies' decision as to the structure and stringency of the final standards, and indeed corroborate the reasonableness of the EPA final GHG standards and that the NHTSA standards are the maximum feasible. For example, the 2008 based fleet forecast uses the MY 2008 “baseline” fleet, which represents the most recent model year for which the industry had sales data that was not affected by the subsequent economic recession. On the other hand, the 2010 based fleet projection employs a market forecast (provided by LMC Automotive) which is more current than the projection provided by CSM (utilized for the MY 2008 based fleet projection). The CSM forecast appears to have been particularly influenced by the recession, showing major declines in market share for some manufacturers (
However, the MY 2010 based fleet projection also is highly influenced by the economic recession. The MY 2010 CAFE certification data has become available since the proposal (see section 1.2.1 of the Joint TSD for the proposed rule, which noted the possibility of these data becoming available), and is used in EPA's alternative analysis, and continues to show the effects of the recession. For example, industry-wide sales were skewed down 20%
Thus, given the volume of information that goes into creating a baseline forecast and given the significant uncertainty in any projection out to MY 2025, the agencies think that the best way to illustrate the possible impacts of that uncertainty for purposes of this rulemaking is the approach taken here of analyzing the effects of the final standards under both the MY 2008-based and the MY 2010-based fleet projections. EPA is presenting its primary analysis of the standards using the same baseline/future fleet projection that was used in the NPRM (i.e., corrected MY 2008 CAFE certification data, information from AEO 2011, and a future fleet forecast purchased from CSM). EPA also conducted an alternative analysis of the standards based on MY 2010 CAFE certification data, updated AEO 2012 (early release) projections of the future fleet sales volumes, and a forecast of the future fleet mix projections to MY 2025 purchased from LMC Automotive. At the same time, given that EPA believes neither projection is strongly superior to the other, EPA has performed a detailed analysis of the final standards using the MY 2010 baseline, and we have concluded that the final standards are likewise appropriate using this alternative baseline/fleet projection. EPA's analysis of the alternative baseline/future fleet (based on MY 2010) is presented in EPA's Final Regulatory Impact Analysis (RIA), Chapter 10. NHTSA's primary analysis uses both market forecasts, and accordingly presents values from both in tables throughout this preamble and in NHTSA's FRIA. Joint TSD Chapter 1 includes a full description of the two market projections and their derivation.
As with the MYs 2012–2016 standards, and the MYs 2014–2018 standards for heavy duty vehicles and engines, NHTSA and EPA have harmonized the programs as much as possible, and continuing the National Program to MYs 2017–2025 will result in significant cost savings and other advantages for the automobile industry by allowing them to manufacture and sell one fleet of vehicles across the U.S., rather than potentially having to comply with multiple state standards that may occur in the absence of the National Program. It is also important to note that NHTSA's CAFE standards and EPA's GHG standards will both be in effect, and each will lead to increases in average fuel economy and reductions in GHGs. The two agencies' standards together comprise the National Program,
In reading the following section, we note that tables are identified as reflecting “estimated required” values and “estimated achieved” values. When establishing standards, EPCA allows NHTSA to only consider the fuel economy of dual-fuel vehicles (for example, FFVs and PHEVs) when operating on gasoline, and prohibits NHTSA from considering the use of dedicated alternative fuel vehicle credits (including for example EVs), credit carry-forward and carry-back, and credit transfer and trading. NHTSA's primary analysis of costs, fuel savings, and related benefits from imposing higher CAFE standards does not include them. However, EPCA does not prohibit NHTSA from considering the fact that manufacturers may pay civil penalties rather than comply with CAFE standards, and NHTSA's primary analysis accounts for some manufacturers' tendency to do so. The primary analysis is generally identified in tables throughout this document by the term “
To illustrate the effects of the flexibilities and technologies that NHTSA is prohibited from including in its primary analysis, NHTSA performed a supplemental analysis of these effects on benefits and costs of the CAFE standards that helps to illustrate their real-world impacts. As an example of one of the effects, including the use of FFV credits reduces estimated per-vehicle compliance costs of the program, but does not significantly change the projected fuel savings and CO
Thus, NHTSA's primary analysis shows the estimates the agency considered for purposes of establishing new CAFE standards, and its supplemental analysis including manufacturer use of flexibilities and advanced technologies currently reflects the agency's best estimate of the potential real-world effects of the CAFE standards.
Without accounting for the compliance flexibilities and advanced technologies that NHTSA is prohibited from considering when determining the maximum feasible level of new CAFE standards, since manufacturers' decisions to use those flexibilities and technologies are voluntary, NHTSA estimates that the required fuel economy increases would lead to fuel savings totaling a range from 180 billion to 184 billion gallons throughout the lives of light duty vehicles sold in MYs 2017–2025. At a 3 percent discount rate, the present value of the economic benefits resulting from those fuel savings is between $513 billion and $525 billion; at a 7 percent private discount rate, the present value of the economic benefits resulting from those fuel savings is between $400 billion and $409 billion.
The agency further estimates that these new CAFE standards will lead to corresponding reductions in CO
Accounting for compliance flexibilities reduces the fuel savings achieved by the standards, as manufacturers are able to comply through credit mechanisms that reduce the amount of fuel economy technology that must be added to new vehicles in order to meet the targets set by the standards. NHTSA estimates that the fuel economy increases would lead to fuel savings totaling about 170 billion gallons throughout the lives of light duty vehicles sold in MYs 2017–2025, when compliance flexibilities are considered. At a 3 percent discount rate, the present value of the economic benefits resulting from those fuel savings is between $481 billion and $488 billion; at a 7 percent private discount rate, the present value of the economic benefits resulting from those fuel savings is between $375 billion and $380 billion. The agency further estimates that these new CAFE standards will lead to corresponding reductions in CO
Considering manufacturers' ability to employ compliance flexibilities and advanced technologies for meeting the standards, NHTSA estimates the following for fuel savings and avoided CO
NHTSA estimates that the fuel economy increases resulting from the standards will produce other benefits both to drivers (
Considering manufacturers' ability to employ compliance flexibilities and advanced technologies for meeting the standards, NHTSA estimates the present value of these benefits will be reduced as follows:
NHTSA attributes most of these benefits (between $513 billion and $525 billion at a 3 percent discount rate, or between $400 billion and $409 billion at a 7 percent discount rate, excluding consideration of compliance flexibilities and advanced technologies for meeting the standards) to reductions in fuel consumption, valuing fuel (for societal purposes) at the future pre-tax prices projected in the Energy Information Administration's (EIA) reference case
NHTSA estimates that the increases in technology application necessary to achieve the projected improvements in fuel economy will entail considerable monetary outlays. The agency estimates that the incremental costs for achieving the CAFE standards—that is, outlays by vehicle manufacturers over and above those required to comply with the MY 2016 CAFE standards—will total between about $134 billion and $140 billion.
However, NHTSA estimates that manufacturers employing compliance flexibilities and advanced technologies to meet the standards can significantly reduce these outlays:
NHTSA projects that manufacturers will recover most or all of these additional costs through higher selling prices for new cars and light trucks. To allow manufacturers to recover these increased outlays (and, to a much less extent, the civil penalties that some manufacturers are expected to pay for non-compliance), the agency estimates that the standards will lead to increase in average new vehicle prices ranging from $183 to $287 per vehicle in MY 2017 to between $1,461 and $1,616 per vehicle in MY 2025:
And as before, NHTSA estimates that manufacturers employing compliance flexibilities and advance technologies to meet the standards will significantly reduce these increases.
Despite estimated increases in average vehicle prices of between $183 to $287 per vehicle in MY 2017 to between $1,461 and $1,616 per vehicle in MY 2025, NHTSA estimates that discounted fuel savings over the vehicles' lifetimes will be sufficient to offset initial costs. Even discounted at 7%, lifetime fuel savings are estimated to be more than 2.5 times the incremental price increase induced by manufacturers' compliance with the standards. Although NHTSA estimates lifetime fuel cost savings using 3% and 7% discount rates based on OMB guidance, it is possible that consumers use different discount rates when valuing fuel savings, or value savings over a period of time shorter than the vehicle's full useful life. A more nuanced discussion of consumer valuation of fuel savings appears in Section IV.G.6.
As is the case with technology costs, accounting for the program's compliance flexibilities reduces savings in lifetime fuel expenditures due to lower levels of achieved fuel economy than are required under the standards.
The CAFE standards are projected to produce net benefits in a range from $498 billion to $507 billion at a 3 percent discount rate (a range of $476 billion to $483 billion, with compliance flexibilities), or between $372 billion and $377 billion at a 7 percent discount rate (a range of $356 billion to $362 billion, with compliance flexibilities), over the useful lives of the light duty vehicles sold during MYs 2017–2025.
While the estimated incremental technology outlays and incremental increases in average vehicle costs for the final MYs 2017–2021 standards in today's analysis are similar to the estimates in the proposal, we note for the reader's reference that the incremental cost estimates for the augural standards in MYs 2022–2025 are lower than in the proposal. The lower costs in those later model years result from the updated analysis used in this final rule. In MY 2021, the estimated incremental technology outlays for the combined fleet range from $14.9 billion to $16.5 billion as compared to $17 billion in the proposal, while the estimated incremental increases in average vehicle costs range from $964 to $1,043, as compared to $1,104 in the proposal. In MY 2025, the estimated incremental technology outlays for the combined fleet range from $23.3 billion to $26.8 billion, as compared to $32.4 billion in the proposal, while the estimated incremental increases in average vehicle costs range from $1,461 to $1,616, as compared to $1,988 in the proposal. The changes in the MY 2025 incremental costs reflect the combined result of a number of changes and corrections to the CAFE model and inputs, including (but not limited to) the following items:
• Focused corrections were made to the MY2008-based market forecast;
• A new MY2010-based market forecast was introduced;
• Mild HEV technology and off-cycle technologies are now available in the analysis;
• The amount of mass reduction applied in the analysis
• The effectiveness of advanced transmissions when applied to conventional naturally aspirated engines has been revised based on a study completed by Argonne National Laboratory for NHTSA;
• Estimates of future fuel prices were updated;
• The model was corrected to ensure that post-purchase fuel prices are
• The model was corrected to ensure that the incremental costs and fuel savings are fully accounted for when applying diesel engines.
These changes to the model and inputs are discussed in detail in Sections II.G, IV.C.2, and IV.C.4 of the preamble; Chapter V of NHTSA's FRIA, and Chapters 3 and 4 of the joint TSD.
Acting together, these changes and corrections caused technology costs attributable to the baseline MYs 2009–2016 CAFE standards to increase for both fleets in most model years. In addition, the changes and corrections had the combined effect of reducing the total technology costs (
While the incremental costs for MYs 2022–2025 are lower than in the NPRM, the total estimated costs for compliance (inclusive of baseline costs) were reduced to a lesser extent. In assessing the appropriate level for maximum feasible standards, NHTSA takes into consideration a number of factors, including technological feasibility, economic practicability (which includes the consideration of cost as well as many other factors), the effect of other motor vehicle standards of the Government on fuel economy, the need of the United States to conserve energy, and safety, as well as other factors. Considering all of these factors, NHTSA continues to believe that the final standards are maximum feasible, as discussed below in Section IV.F.
EPA has analyzed in detail the projected costs and benefits of the 2017–2025 GHG standards for light-duty vehicles. Table I–19 shows EPA's estimated lifetime discounted cost, fuel savings, and benefits for all such vehicles projected to be sold in model years 2017–2025. The benefits include impacts such as climate-related economic benefits from reducing emissions of CO
Table I–20 shows EPA's estimated lifetime fuel savings and CO
Table I–21 shows EPA's estimated lifetime discounted benefits for all light-duty vehicles sold in model years 2017–2025. Although EPA estimated the benefits associated with four different values of a one ton CO
Table I–22 shows EPA's estimated lifetime fuel savings, lifetime CO
Table I–23 shows EPA's estimated incremental and total technology outlays for cars and trucks for each of the model years 2017–2025. The technology outlays shown in Table I–21 are for the industry as a whole and do not account for fuel savings associated with the program. Also, the technology outlays shown in Table I–21 do not include the estimated maintenance costs which are included in the program costs presented in Table I–19. Table I–24 shows EPA's estimated incremental cost increase of the average new vehicle for each model year 2017–2025. The values shown are incremental to a baseline vehicle and are not cumulative. In other words, the estimated increase for 2017 model year cars is $206 relative to a 2017 model year car meeting the MY 2016 standards. The estimated increase for a 2018 model year car is $374 relative to a 2018 model year car meeting the MY 2016 standards (not $206 plus $374).
In Section I.C.1 and I.C.2 NHTSA and EPA present the agencies' estimates of the incremental costs and benefits of the final CAFE and GHG standards, relative to costs and benefits estimated to occur absent the new standards. Taken as a whole, these represent the incremental costs and benefits of the National Program for Model Years 2017–2025. On a year-by-year comparison for model years 2017–2025, the two agencies' per-vehicle cost estimates are similar for the beginning years of the program, but in the last few model years, EPA's cost estimates are significantly higher than the NHTSA cost estimates. When comparing the CAFE required new vehicle cost estimate in Table I–15 with the GHG standard new vehicle cost estimate in Table I–24, we see that the model year 2025 CAFE incremental new vehicle cost estimate is $1,461–$1,616 per vehicle (when, as required by EISA/EPCA, NHTSA sets aside EVs, pre-MY2019 PHEVs, and credit-based CAFE flexibilities), and the GHG standard incremental cost estimate is $1,836 per vehicle—a difference of $220–$375. The agencies have examined these cost estimate differentials, and as discussed below, it is principally explained by how the two agencies modeled future compliance with their respective standards, and by the application of low-GWP refrigerants attributable only to EPA's standards. As also described below, in reality auto companies will build a single fleet of vehicles to comply with both the CAFE and GHG standards, and the only significant real-world difference in the program costs are is limited to the hydrofluorocarbon (HFC) reductions expected under the GHG standards, which EPA estimates at $68/vehicle cost.
As documented below in Section IV, although NHTSA is precluded by EISA/EPCA from considering CAFE credits, EVs, and pre-MY2019 PHEVs when determining the maximum feasible stringency of new CAFE standards, NHTSA has conducted additional analysis that accounts for EISA/EPCA's provisions regarding CAFE credits, EVs, and PHEVs. Under that analysis, as shown in Table I–16, NHTSA's estimate of the incremental new vehicle costs attributable to the new CAFE standards ranges from $1,257 to $1,400. Insofar as EPA's analysis focuses on the agencies' MY 2008-based market forecast and attempts to account for some CAA-based flexibilities (most notably, unlimited credit transfers between the PC and LT fleets), NHTSA's $1,400 result is based on methods conceptually more similar to those applied by EPA. Therefore, although the difference in MY 2025 is considerably greater than differences in earlier model years, the agencies have focused on understanding the $436 difference between NHTSA's $1,400 result and EPA's $1,836 result, both for the MY 2008-based market forecast.
Of this $436 difference, $247 is explained by NHTSA's simulation of EISA/EPCA's credit carry-forward provisions. EISA/EPCA allows manufacturers to “carry forward” credits up to five model years, applying those credits to offset compliance shortfalls and thereby avoid civil penalties.
As it has in past rulemakings and in the NPRM preceding today's final rule, NHTSA has also applied its CAFE model in a manner that simulates the potential that, as allowed under EISA/EPCA and as suggested by their past CAFE levels, some manufacturers could elect to pay civil penalties rather than achieving compliance with future CAFE standards.
In addition to these differences in modeling of programmatic features, EPA projects that manufacturers will achieve significant GHG emissions reductions through the use of different air conditioning refrigerants (the HFC refrigerant in today's vehicles is a powerful greenhouse gas, with a global warming potential 1,430 times that of CO2).
Taken together, as shown in Table I–25, these three factors suggest a difference of $434, based on $247 and $119 for NHTSA's simulation of EISA/EPCA's credit carry-forward and civil penalty provisions, respectively, and $68 for EPA's estimate of HFC costs. While $2 lower than the $436 difference mentioned above, the agencies consider this remaining difference to be small (about 0.1% of average incremental cost) and well within the range of differences to be anticipated given other structural differences between the agencies analyses and modeling systems.
The agencies' estimates are based on each agency's different modeling tools for forecasting costs and benefits between now and MY 2025. As described in detail in the Joint Technical Support Document, the agencies harmonized inputs for our modeling tools. However, our modeling tools (the NHTSA-developed CAFE model and the EPA-developed OMEGA model), while similar in core function, were developed to estimate the program costs based on each agencies' respective statutory authorities, which in some cases include specific constraints. It is important to note that these are modeling tool differences, but that, while the models result in different estimates of the costs of compliance, manufacturers will ultimately produce a single fleet of vehicles to be sold in the United States that considers both EPA greenhouse gas emissions standards and NHTSA CAFE standards. Manufacturers are currently selling MY2012 and MY2013 vehicles based on considering these standards. Every technology an automotive company applies to its vehicles that improves fuel economy will also lower CO
Section I.E of the preamble contains a detailed overview discussion of the NHTSA and EPA respective statutory authorities. In addition, each agency discusses comments pertaining to its statutory authority and the agencies' responses in Sections III and IV, respectively and EPA responds as well in its response to comment documents.
NHTSA establishes CAFE standards for passenger cars and light trucks for each model year under EPCA, as amended by EISA. EPCA mandates a motor vehicle fuel economy regulatory program to meet the various facets of the need to conserve energy, including the environmental and foreign policy implications of petroleum use by motor vehicles. EPCA allocates the responsibility for implementing the program between NHTSA and EPA as follows: NHTSA sets CAFE standards for passenger cars and light trucks; EPA establishes the procedures for testing, tests vehicles, collects and analyzes manufacturers' data, and calculates the individual and average fuel economy of each manufacturer's passenger cars and light trucks; and NHTSA enforces the standards based on EPA's calculations.
We have summarized below the most important aspects of standard setting under EPCA, as amended by EISA. For each future model year, EPCA requires that NHTSA establish separate passenger car and light truck standards at “the maximum feasible average fuel
Because EPCA states that standards must be set for “* * * automobiles manufactured by manufacturers,” and because Congress provided specific direction on how small-volume manufacturers could obtain exemptions from the passenger car standards, NHTSA has long interpreted its authority as pertaining to setting standards for the industry as a whole. Prior to this NPRM, some manufacturers raised with NHTSA the possibility of NHTSA and EPA setting alternate standards for part of the industry that met certain (relatively low) sales volume criteria—specifically, that separate standards be set so that “intermediate-size,” limited-line manufacturers do not have to meet the same levels of stringency that larger manufacturers have to meet until several years later. NHTSA sought comment in the NPRM on whether or how EPCA, as amended by EISA, could be interpreted to allow such alternate standards for certain parts of the industry. Suzuki requested that NHTSA and EPA both adopt an approach similar to California's of providing more lead time to manufacturers with national average sales below 50,000 units, by allowing those “limited line manufacturers” to meet the MY 2017 standards in MY 2020, the MY 2018 standards in MY 2021, and so on, with a 3-year time lag in complying with the standards generally applicable for a compliance category. Suzuki stated simply that the standards are harder for small manufacturers to meet than for larger manufacturers, because the per-vehicle cost of developing or purchasing the necessary technology is higher, and that since the GHG emissions attributable to vehicles built by manufacturers who would be eligible for this option represent a very small portion of overall emissions, the impact should be minimal.
Although EPA is adopting such an approach as part of its final rule (
“Technological feasibility” refers to whether a particular method of improving fuel economy can be available for commercial application in the model year for which a standard is being established. Thus, the agency is not limited in determining the level of new standards to technology that is already being commercially applied at the time of the rulemaking, a consideration which is particularly relevant for a rulemaking with a timeframe as long as the present one. For this rulemaking, NHTSA has considered all types of technologies that improve real-world fuel economy, including air-conditioner efficiency, due to EPA's decision to allow generation of fuel consumption improvement values for CAFE purposes based on improvements to air-conditioner efficiency that improves fuel efficiency.
“Economic practicability” refers to whether a standard is one “within the financial capability of the industry, but not so stringent as to” lead to “adverse economic consequences, such as a significant loss of jobs or the unreasonable elimination of consumer choice.”
It is important to note, however, that the law does not preclude a CAFE standard that poses considerable challenges to any individual manufacturer. The Conference Report for EPCA, as enacted in 1975, makes clear, and the case law affirms, “a determination of maximum feasible average fuel economy should not be keyed to the single manufacturer which might have the most difficulty achieving a given level of average fuel economy.”
“The effect of other motor vehicle standards of the Government on fuel economy,” involves an analysis of the effects of compliance with emission, safety, noise, or damageability standards on fuel economy capability and thus on average fuel economy. In previous CAFE rulemakings, the agency has said that pursuant to this provision, it considers the adverse effects of other motor vehicle standards on fuel economy. It said so because, from the CAFE program's earliest years
In the wake of
In the NPRM, NHTSA sought comment on whether and in what way the effects of the California and EPA standards should be considered under EPCA/EISA,
“The need of the United States to conserve energy” means “the consumer cost, national balance of payments, environmental, and foreign policy implications of our need for large quantities of petroleum, especially imported petroleum.”
Projected future fuel prices are a critical input into the economic analysis of alternative CAFE standards, because they determine the value of fuel savings both to new vehicle buyers and to society, which is related to the consumer cost (or rather, benefit) of our need for large quantities of petroleum. In this rule, NHTSA relies on fuel price projections from the U.S. Energy Information Administration's (EIA) most recent Annual Energy Outlook (AEO) for this analysis. Federal government agencies generally use EIA's projections in their assessments of future energy-related policies.
U.S. consumption and imports of petroleum products impose costs on the domestic economy that are not reflected in the market price for crude petroleum, or in the prices paid by consumers of petroleum products such as gasoline. These costs include (1) higher prices for petroleum products resulting from the effect of U.S. oil import demand on the world oil price; (2) the risk of disruptions to the U.S. economy caused by sudden reductions in the supply of imported oil to the U.S.; and (3) expenses for maintaining a U.S. military presence to secure imported oil supplies from unstable regions, and for maintaining the strategic petroleum reserve (SPR) to provide a response option should a disruption in commercial oil supplies threaten the U.S. economy, to allow the United States to meet part of its International Energy Agency obligation to maintain emergency oil stocks, and to provide a national defense fuel reserve. Higher U.S. imports of crude oil or refined petroleum products increase the magnitude of these external economic costs, thus increasing the true economic cost of supplying transportation fuels above the resource costs of producing them. Conversely, reducing U.S. imports of crude petroleum or refined fuels or reducing fuel consumption can reduce these external costs.
While reductions in domestic fuel refining and distribution that result from lower fuel consumption will reduce U.S. emissions of various pollutants, additional vehicle use associated with the rebound effect
NHTSA has considered environmental issues, both within the context of EPCA and the National Environmental Policy Act, in making decisions about the setting of standards from the earliest days of the CAFE program. As courts of appeal have noted in three decisions stretching over the last 20 years,
NHTSA considers the potential for adverse safety consequences when establishing CAFE standards. This practice is recognized approvingly in case law.
EPCA provides that in determining the level at which it should set CAFE standards for a particular model year, NHTSA may not consider the ability of manufacturers to take advantage of several EPCA provisions that facilitate compliance with the CAFE standards and thereby reduce the costs of compliance. Specifically, in determining the maximum feasible level of fuel economy for passenger cars and light trucks, NHTSA cannot consider the fuel economy benefits of “dedicated” alternative fuel vehicles (like battery electric vehicles or natural gas vehicles), must consider dual-fueled automobiles to be operated only on gasoline or diesel fuel, and may not consider the ability of manufacturers to use, trade, or transfer credits.
NHTSA has broad discretion in balancing the above factors in determining the average fuel economy level that the manufacturers can achieve. Congress “specifically delegated the process of setting * * * fuel economy standards with
The standards for passenger cars and for light trucks must increase ratably each year through MY 2020.
The standards for passenger cars and light trucks must also be based on one or more vehicle attributes, like size or weight, which correlate with fuel economy and must be expressed in terms of a mathematical function.
This approach can be used to require virtually all manufacturers to increase significantly the fuel economy of a broad range of both passenger cars and light trucks,
EPCA provides EPA with the responsibility for establishing procedures to measure fuel economy and to calculate CAFE. Current test procedures measure the effects of nearly all fuel saving technologies. EPA is revising the procedures for measuring fuel economy and calculating average fuel economy for the CAFE program, however, to account for certain impacts on fuel economy not currently included
NHTSA determines compliance with the CAFE standards based on measurements of automobile manufacturers' CAFE from EPA. If a manufacturer's passenger car or light truck CAFE level exceeds the applicable standard for that model year, the manufacturer earns credits for over-compliance. The amount of credit earned is determined by multiplying the number of tenths of a mpg by which a manufacturer exceeds a standard for a particular category of automobiles by the total volume of automobiles of that category manufactured by the manufacturer for a given model year. As discussed in more detail in Section IV.I, credits can be carried forward for 5 model years or back for 3, and can also be transferred between a manufacturer's fleets or traded to another manufacturer.
If a manufacturer's passenger car or light truck CAFE level does not meet the applicable standard for that model year, NHTSA notifies the manufacturer. The manufacturer may use “banked” credits to make up the shortfall, but if there are no (or not enough) credits available, then the manufacturer has the option to submit a “carry back plan” to NHTSA. A carry back plan describes what the manufacturer plans to do in the following three model years to earn enough credits to make up for the shortfall through future over-compliance. NHTSA must examine and determine whether to approve the plan.
In the event that a manufacturer does not comply with a CAFE standard, even after the consideration of credits, EPCA provides for the assessing of civil penalties.
Unlike the National Traffic and Motor Vehicle Safety Act, EPCA does not provide for recall and remedy in the event of a noncompliance. The presence of recall and remedy provisions
In contrast, a CAFE standard applies to a manufacturer's entire fleet for a model year. It does not require that a particular individual vehicle be equipped with any particular equipment or feature or meet a particular level of fuel economy. It does require that the manufacturer's fleet, as a whole, comply. Further, although under the attribute-based approach to setting CAFE standards fuel economy targets are established for individual vehicles based on their footprints, the individual vehicles are not required to meet or exceed those targets. However, as a practical matter, if a manufacturer chooses to design some vehicles that fall below their target levels of fuel economy, it will need to design other vehicles that exceed their targets if the manufacturer's overall fleet average is to meet the applicable standard.
Thus, under EPCA, there is no such thing as a noncompliant vehicle, only a noncompliant fleet. No particular vehicle in a noncompliant fleet is any more, or less, noncompliant than any other vehicle in the fleet.
Title II of the Clean Air Act (CAA) provides for comprehensive regulation of mobile sources, authorizing EPA to regulate emissions of air pollutants from all mobile source categories. Pursuant to these sweeping grants of authority, EPA considers such issues as technology effectiveness, its cost (both per vehicle, per manufacturer, and per consumer), the lead time necessary to implement the technology, and based on this the feasibility and practicability of potential standards; the impacts of potential standards on emissions reductions of both GHGs and non-GHGs; the impacts of standards on oil conservation and energy security; the impacts of standards on fuel savings by consumers; the impacts of standards on the auto industry; other energy impacts; as well as other relevant factors such as impacts on safety
Pursuant to Title II of the Clean Air Act, EPA has taken a comprehensive, integrated approach to mobile source emission control that has produced benefits well in excess of the costs of regulation. In developing the Title II program, the Agency's historic, initial focus was on personal vehicles since that category represented the largest source of mobile source emissions. Over time, EPA has established stringent emissions standards for large truck and other heavy-duty engines, nonroad engines, and marine and locomotive engines, as well. The Agency's initial focus on personal vehicles has resulted in significant control of emissions from these vehicles, and also led to technology transfer to the other mobile source categories that made possible the stringent standards for these other categories.
As a result of Title II requirements, new cars and SUVs sold today have emissions levels of hydrocarbons, oxides of nitrogen, and carbon monoxide that are 98–99% lower than new vehicles sold in the 1960s, on a per
Title II emission standards have also stimulated the development of a much broader set of advanced automotive technologies, such as on-board computers and fuel injection systems, which are the building blocks of today's automotive designs and have yielded not only lower pollutant emissions, but improved vehicle performance, reliability, and durability.
This final rule implements a specific provision from Title II, section 202(a).
Any standards under CAA section 202(a)(1) “shall be applicable to such vehicles * * * for their useful life.” Emission standards set by the EPA under CAA section 202(a)(1) are technology-based, as the levels chosen must be premised on a finding of technological feasibility. Thus, standards promulgated under CAA section 202(a) are to take effect only “after providing 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” (section 202 (a)(2); see also
Although standards under CAA section 202(a)(1) are technology-based, they are not based exclusively on technological capability. EPA has the discretion to consider and weigh various factors along with technological feasibility, such as the cost of compliance (see section 202(a) (2)), lead time necessary for compliance (section 202(a)(2)), safety (see
In addition, EPA has clear authority to set standards under CAA section 202(a) that are technology forcing when EPA considers that to be appropriate, but is not required to do so (as compared to standards set under provisions such as section 202(a)(3) and section 213(a)(3)). EPA has interpreted a similar statutory provision, CAA section 231, as follows:
While the statutory language of section 231 is not identical to other provisions in title II of the CAA that direct EPA to establish technology-based standards for various types of engines, EPA interprets its authority under section 231 to be somewhat similar to those provisions that require us to identify a reasonable balance of specified emissions reduction, cost, safety, noise, and other factors. See, e.g.,
This interpretation was upheld as reasonable in
One commenter mistakenly characterized section 202(a) as a “technology-forcing” provision. Comments of CBD p. 5. As just explained, it is not, but even if it were, EPA retains considerable discretion to balance the various relevant statutory factors, again as just explained. The same commenter maintained that the GHG standards should “protect the public health and welfare with an adequate margin of safety.”
Under section 203 of the CAA, sales of vehicles are prohibited unless the vehicle is covered by a certificate of conformity. EPA issues certificates of conformity pursuant to section 206 of the Act, based on (necessarily) 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. Useful life standards may apply an adjustment factor to account for vehicle emission control deterioration or variability in use (section 206(a)).
Pursuant to EPCA, EPA is required to measure fuel economy for each model and to calculate each manufacturer's average fuel economy.
Section 207 of the CAA grants EPA broad authority to require manufacturers to remedy vehicles if EPA determines there are a substantial number of noncomplying vehicles. In addition, section 205 of the CAA
EPA oversees testing, collects and processes test data, and performs calculations to determine compliance with both CAA and CAFE standards. CAA standards apply not only at the time of certification but also throughout the vehicle's useful life, and EPA is accordingly finalizing in-use standards as well as standards based on testing performed at time of production. See section III.E. Both the CAA and EPCA provide for penalties should manufacturers fail to comply with their fleet average standards, but, unlike EPCA, there is no option for manufacturers to pay fines in lieu of compliance with the standards. Under the CAA, penalties are typically determined on a vehicle-specific basis by determining the number of a manufacturer's highest emitting vehicles that cause the fleet average standard violation. Penalties under Title II of the CAA are capped at $25,000 per day of violation and apply on a per vehicle basis. See CAA section 205(a).
EPA establishes the test procedures under which compliance with both the CAA GHG standards and the EPCA fuel economy standards are measured. EPA's testing authority under the CAA is flexible, but testing for fuel economy for passenger cars is by statute is limited to the Federal Test procedure (FTP) or test procedures which provide results which are equivalent to the FTP. 49 U.S.C. § 32904 and section III.B, below. EPA developed and established the FTP in the early 1970s and, after enactment of EPCA in 1976, added the Highway Fuel Economy Test (HFET) to be used in conjunction with the FTP for fuel economy testing. EPA has also developed tests with additional cycles (the so-called 5-cycle test) which test is used for purposes of fuel economy labeling and is also used in the EPA program for extending off-cycle credits under both the light-duty and (along with NHTSA) heavy-duty vehicle GHG programs. See 75 FR 25439; 76 FR 57252. In this rule, EPA is retaining the FTP and HFET for purposes of testing the fleetwide average standards, and is further modifying the N2O measurement test procedures and the A/C CO
As the above discussion makes clear, there are both important differences between the statutes under which each agency is acting as well as several important areas of similarity. One important difference is that EPA's authority addresses various GHGs, while NHTSA's authority addresses fuel economy as measured under specified test procedures and calculated by EPA. This difference is reflected in this rulemaking in the scope of the two standards: EPA's rule takes into account reductions of direct air conditioning emissions, and establishes standards for methane and N
Another important area where the two agencies' authorities are similar but not identical involves the transfer of credits between a single firm's car and truck fleets. EISA revised EPCA to allow for such credit transfers, but placed a cap on the amount of CAFE credits which can be transferred between the car and truck fleets. 49 U.S.C. 32903(g)(3). Under CAA section 202(a), EPA is continuing to allow CO
These differences, however, do not change the fact that in many critical ways the two agencies are charged with addressing the same basic issue of reducing GHG emissions and improving fuel economy. The agencies are looking at the same set of control technologies (with the exception of the air conditioning leakage-related technologies). The standards set by each agency will drive the kind and degree of penetration of this set of technologies across the vehicle fleet. As a result, each agency is trying to answer the same basic question—what kind and degree of technology penetration is necessary to achieve the agencies' objectives in the rulemaking time frame, given the agencies' respective statutory authorities?
In making the determination of what standards are appropriate under the CAA and EPCA, each agency is to exercise its judgment and balance many similar factors. NHTSA's factors are provided by EPCA: Technological feasibility, economic practicability, the effect of other motor vehicle standards of the Government on fuel economy, and the need of the United States to conserve energy. EPA has the discretion under the CAA to consider many related factors, such as the availability of technologies, the appropriate lead time for introduction of technology, and based on this the feasibility and practicability of their standards; the impacts of their standards on emissions reductions (of both GHGs and non-GHGs); the impacts of their standards on oil conservation; the impacts of their standards on fuel savings by consumers; the impacts of their standards on the auto industry; as well as other relevant factors such as impacts on safety. Conceptually, therefore, each agency is considering and balancing many of the same concerns, and each agency is making a decision that at its core is answering the same basic question of what kind and degree of technology penetration is it appropriate to call for in light of all of the relevant factors in a given rulemaking, for the model years concerned. Finally, each agency has the authority to take into consideration impacts of the standards of the other agency. Among the other factors that is considers in determining maximum
In this context, it is in the Nation's interest for the two agencies to continue to work together in developing these standards, and they have done so. For example, the agencies have committed considerable effort to develop a joint Technical Support Document that provides a technical basis underlying each agency's analyses. The agencies also have worked closely together in developing and reviewing their respective modeling, to develop the best analysis and to promote technical consistency. The agencies have developed a common set of attribute-based curves that each agency supports as appropriate both technically and from a policy perspective. The agencies have also worked closely to ensure that their respective programs will work in a coordinated fashion, and will provide regulatory compatibility that allows auto manufacturers to build a single national light-duty fleet that would comply with both the GHG and the CAFE standards. The resulting overall close coordination of the GHG and CAFE standards should not be surprising, however, as each agency is using a jointly developed technical basis to address the closely intertwined challenges of energy security and climate change.
As set out in detail in Sections III and IV of this notice, both EPA and NHTSA believe the agencies' standards are fully justified under their respective statutory criteria. The standards are feasible in each model year within the lead time provided, based on the agencies' projected increased use of various technologies which in most cases are already in commercial application in the fleet to varying degrees. Detailed assessment of the technologies that could be employed by each manufacturer supports this conclusion. The agencies also carefully assessed the costs of the rules, both for the industry as a whole and per manufacturer, as well as the costs per vehicle, and consider these costs to be reasonable during the rulemaking time frame and recoverable (from fuel savings). The agencies recognize the significant increase in the application of technology that the standards would require across a high percentage of vehicles, which will require the manufacturers to devote considerable engineering and development resources before 2017 laying the critical foundation for the widespread deployment of upgraded technology across a high percentage of the 2017–2025 fleet. This clearly will be challenging for automotive manufacturers and their suppliers, especially in the current economic climate, and given the stringency of the recently-established MYs 2012–2016 standards. However, based on all of the analyses performed by the agencies, our judgment is that it is a challenge that can reasonably be met.
The agencies also evaluated the impacts of these standards with respect to the expected reductions in GHGs and oil consumption and, found them to be very significant in magnitude. The agencies considered other factors such as the impacts on noise, energy, and vehicular congestion. The impact on safety was also given careful consideration. Moreover, the agencies quantified the various costs and benefits of the standards, to the extent practicable. The agencies' analyses to date indicate that the overall quantified benefits of the standards far outweigh the projected costs. All of these factors support the reasonableness of the standards. See Section III (GHG standards) and Section IV (CAFE standards) for a detailed discussion of each agency's basis for its selection of its standards.
The fact that the benefits are estimated to considerably exceed their costs supports the view that the standards represent an appropriate balance of the relevant statutory factors.
In this section, NHTSA and EPA discuss several aspects of our joint technical analyses. These analyses are common to the development of each agency's standards. Specifically we discuss: The development of the vehicle market forecasts used by each agency for assessing costs, benefits, and effects; the development of the attribute-based standard curve shapes; the technologies the agencies evaluated and their costs and effectiveness; the economic assumptions the agencies included in their analyses; a description of the credit programs for air conditioning; off-cycle technology, and full-sized pickup trucks; as well as the effects of the standards on vehicle safety. The Joint Technical Support Document (TSD) discusses the agencies' joint technical work in more detail.
The agencies have based this final rule on a very significant body of data and analysis that we believe is the best information currently available on the full range of technical and other inputs utilized in our respective analyses. As noted in various places throughout this preamble, the Joint TSD, the NHTSA RIA, and the EPA RIA, new information has become available since the proposal from a range of sources. These include work the agencies have completed (e.g., work on technology costs and effectiveness and creating a second future fleet forecast based on model year 2010 baseline data). In addition, information from other sources is now incorporated into our analyses, including the Energy Information
In order to calculate the impacts of the EPA and NHTSA regulations, it is necessary to estimate the composition of the future vehicle fleet absent regulatory action, to provide a reference point relative to which costs, benefits, and effects of the regulations are assessed. As in the NPRM, EPA and NHTSA have developed comparison fleets in two parts. The first step was to develop baseline estimates of the fleets of new vehicles to be produced for sale in the U.S. through MY2025, one starting with the actual MY 2008 fleet, and one starting with the actual MY 2010 fleet. These baselines include vehicle sales volumes, GHG/fuel economy performance levels, and contain listings of the base technologies on every MY 2008 or MY 2010 vehicle sold. This information comes from CAFE certification data submitted by manufacturers to EPA, and for purposes of rulemaking analysis, was supplemented with publicly and commercially available information regarding some vehicle characteristics (
EPA and NHTSA used a transparent approach to developing the baseline and reference fleets, largely working from publicly available data. Because both input and output sheets from our modeling are public, stakeholders can verify and check EPA's and NHTSA's modeling, and perform their own analyses with these datasets.
During the comment period, the agencies also received formal comments regarding the NPRM baseline and reference fleets. Chrysler questioned the agencies' assumption that the company's sales would decline by 53% over 17 years, and stated that the forecast had implications not just for the agencies' analysis, but also, indirectly, for Chrysler's competitiveness, because suppliers and customers who “see [such] projections supported by Federal agencies * * * are potentially given a highly negative view of the viability of the company * * * [which] may result in less favorable contracts with suppliers and lower sales to customers.” Chrysler requested that the agencies update their volume projections for the final rule.
The agencies' projection that Chrysler's sales would steadily decline was primarily attributable to the manufacturer- and segment-level forecasts provided in December 2009 by CSM. The agencies thought that forecast to have been credible at the time considering economic and industry conditions during the months before CSM provided the agencies with a long-range forecast, when the overall light vehicle market was severely depressed and Chrysler and GM were—with nascent federal assistance—in the process of reorganizing. We recognize that Chrysler's production has since recovered to levels suggesting much better long-term prospects than forecast by CSM in 2009. While the agencies are continuing to use the market forecast developed for the NPRM (after minor corrections unrelated to Chrysler's comments), we are also using a second market forecast we have developed for today's final rule, making use of a newer forecast (in this case, from LMC) of manufacturer- and segment-level shares, a forecast that shows significantly higher sales (more than double that of the earlier forecast) for Chrysler in 2025.
Environmental Consultants of Michigan commented that use of 4-year-old certification data was “unconscionable” and unreflective of technology improvements already made to vehicles since then, requesting that the agencies delay the final rule until the market forecast can be updated with appropriate data.
The agencies also received a comment from Volkswagen, stating that “Volkswagen sees
The Union of Concerned Scientists (UCS) expressed concern that if the light vehicle market does not shift toward passenger cars as indicated in the agencies' market forecast, energy and environmental benefits of the new standards could be less than projected.
Nonetheless, the agencies recognize that overall fuel consumption and GHG emissions by the light vehicle fleet will depend on, among many other things, the relative market shares of passenger cars and light trucks. In its probabilistic uncertainty analysis, presented in NHTSA's RIA accompanying today's notice as required by OMB for significant rulemakings, NHTSA has varied the passenger car share (as a function of fuel price), such that the resultant distributions of estimated model results—including fuel savings and CO
Although much of the discussion in this and following sections describes the methodology for creating a single baseline and reference fleet, for this final rule the agencies actually developed two baseline and reference fleets. In the NPRM, the agencies used MY 2008 CAFE certification data to establish the “2008-based fleet projection.”
For analysis supporting the NPRM, the agencies developed a forecast of the light vehicle market through MY 2025
For this final rulemaking, the agencies have analyzed the costs and benefits of the standards using two different forecasts of the light vehicle fleet through MY 2025. The agencies have concluded that the significant uncertainty associated with forecasting sales volumes, vehicle technologies, fuel prices, consumer demand, and so forth out to MY 2025 makes it reasonable and appropriate to evaluate the impacts of the final CAFE and GHG standards using two baselines. One market forecast, similar to the one used for the NPRM, uses corrected data regarding the MY 2008 fleet, information from AEO 2011, and information purchased from CSM. As noted above, the agencies received comments regarding the market forecast used in the NPRM suggesting that updates in several respects could be helpful to the agencies' analysis of final standards; given those comments and since the agencies were already planning to produce an updated market forecast, the final rule also contains another market forecast using MY 2010 CAFE certification data, information from AEO 2012, and information purchased from LMC Automotive (formerly JD Powers Automotive).
The two market forecasts contain certain differences, although as will be discussed below, the differences are not significant enough to change the agencies' decision as to the structure and stringency of the final standards. For example, MY 2008 certification data represents the most recent model year for which the industry's offerings were not strongly affected by the subsequent economic recession, which may make it reasonable to use if we believe that the future vehicle mix of models are more likely to be reflective of the pre-recession mix than mix of models produced after MY 2008 (
The MY 2010 based fleet projection, which is used in EPA's alternative analysis and in NHTSA's co-analysis, employs a future fleet forecast provided by LMC Automotive, which is more current than the projection provided by CSM in 2009, and which reflects the post-proposal MY 2010 CAFE certification data. However, this MY 2010 CAFE data also shows effects of the economic recession. For example, industry-wide sales were skewed down 20% compared to MY 2008 levels. For some companies like Chrysler, Mitsubishi, and Subaru, sales were down by 30–40% from MY 2008 levels, as documented in today's joint TSD. For BMW, General Motors, Jaguar/Land Rover, Porsche, and Suzuki, sales were down by more than 40%. Employing the MY 2008 vehicle data avoids using these baseline market shifts when projecting the future fleet. On the other hand, it also perpetuates vehicle brands and models (and thus, their outdated fuel economy levels and engineering characteristics) that have since been discontinued. The MY 2010 CAFE certification data accounts for the phase-out of some brands (
Thus, given the volume of information that goes into creating a baseline forecast and given the significant uncertainty in any projection out to MY 2025, the agencies think that a reasonable way to illustrate the possible impacts of that uncertainty for purposes of this rulemaking is the approach taken here of analyzing the effects of the final standards under both the MY 2008-based baseline and the MY 2010-based baseline. The agencies' analyses are presented in our respective RIAs and preamble sections.
NHTSA and EPA developed a baseline fleet comprised of model year 2008 data gathered from EPA's emission and fuel economy database. This baseline fleet was used for the NPRM and was updated for this FRM.
There was only one change since the NPRM. A contractor working on a market share model noted some problems with some of the 2008 MY vehicle wheelbase data. Each of the affected vehicle's wheelbase and footprint were corrected for the MY 2008-based fleet used for this final rule. A more complete discussion of these changes is available in Chapter 1.3.1 of the TSD.
The 2008 baseline fleet reflects all fuel economy technologies in use on MY 2008 light duty vehicles as reported by manufacturers in their CAFE certification data. The 2008 emission and fuel economy database included data on vehicle production volume, fuel economy, engine size, number of engine cylinders, transmission type, fuel type, etc.; however it did not contain complete information on technologies. Thus, the agencies relied on publicly available data like the more complete technology descriptions from Ward's Automotive Group.
As in the NPRM, EPA and NHTSA have based the projection of total car and total light truck sales for MYs 2017–2025 on projections made by the Department of Energy's Energy Information Administration (EIAEIA publishes a mid-term projection of national energy use called the Annual Energy Outlook (AEO). This projection utilizes a number of technical and econometric models which are designed to reflect both economic and regulatory
The agencies used the Energy Information Administration's (EIA's) National Energy Modeling System (NEMS) to estimate the future relative market shares of passenger cars and light trucks. However, NEMS methodology includes shifting vehicle sales volume, starting after 2007, away from fleets with lower fuel economy (the light truck fleet) towards vehicles with higher fuel economies (the passenger car fleet) in order to facilitate projected compliance with CAFE and GHG standards. Because we use our market projection as a baseline relative to which we measure the effects of new standards, and we attempt to estimate the industry's ability to comply with new standards without changing product mix (
In the AEO 2011 Interim data, EIA projects that total light-duty vehicle sales will gradually recover from their currently depressed levels by around 2013. In 2017, car sales are projected to be 8.4 million (53 percent) and truck sales are projected to be 7.3 million (47 percent). Although the total level of sales of 15.8 million units is similar to pre-2008 levels, the fraction of car sales is projected to be higher than that existing in the 2000–2007 timeframe. This projection reflects the impact of assumed higher fuel prices. Sales projections of cars and trucks for future model years can be found in Chapter 1 of the joint TSD.
In addition to a shift towards more car sales, sales of segments within both the car and truck markets have been changing and are expected to continue to change. Manufacturers are introducing more crossover utility vehicles (CUVs), which offer much of the utility of sport utility vehicles (SUVs) but use more car-like designs. The AEO 2011 report does not, however, distinguish such changes within the car and truck classes. In order to reflect these changes in fleet makeup, EPA and NHTSA used a long range forecast
The next step was to project the CSM forecasts for relative sales of cars and trucks by manufacturer and by market segment onto the total sales estimates of AEO 2011. Table II–1 and Table II–2 show the resulting projections for the reference 2025 model year and compare these to actual sales that occurred in the baseline 2008 model year. Both tables show sales using the traditional definition of cars and light trucks.
NHTSA has changed the definition of a truck for 2011 model year and beyond. The new definition has moved some 2 wheel drive SUVs and CUVs to the car category. Table II–3 shows the different volumes for car and trucks based on the new and old NHTSA definition. The table shows the difference in 2008, 2021, and 2025 to give a feel for how the change in definition changes the car/truck split.
The CSM forecast
Table II—5 are examples of the data received from CSM. The task of estimating future sales using these tables is complex. We used the same methodology as in the previous rulemaking. A detailed description of how the projection process was done is found in Chapter 1.3.2 of the TSD.
The overall result was a projection of car and truck sales for model years 2017–2025—the reference fleet—which matched the total sales projections of the AEO forecast and the manufacturer and segment splits of the CSM forecast. These sales splits are shown in Table II–6 below.
Given publicly- and commercially-available sources that can be made equally transparent to all reviewers, the forecast described above represented the agencies' best forecast available at the time of its publishing regarding the likely composition direction of the fleet. EPA and NHTSA recognize that it is impossible to predict with certainty how manufacturers' product offerings and sales volumes will evolve through MY 2025 under baseline conditions—that is, without further changes in standards after MY 2016. While the agencies have not included variations in the market forecast as aspects of our respective sensitivity analyses, we have conducted our central analyses twice—once each for the MY 2008- and MY 2010-based market forecasts that reflect differences in available vehicle models, differences in manufacturer- and segment-level market shares, and differences in the overall volumes of passenger cars and light trucks. In addition, as discussed above, NHTSA's probabilistic uncertainty analysis accounts for uncertainty regarding the relative market shares of passenger cars and light trucks.
The final step in the construction of the 2008 based fleet projection involves applying additional technology to individual vehicle models—that is, technology beyond that already present in MY 2008—reflecting already-promulgated standards through MY 2016, and reflecting the assumption that MY 2016 standards would apply through MY 2025. A description of the agencies' modeling work to develop their respective final reference (or adjusted baseline) fleets appear in the agencies' respective RIAs.
NHTSA and EPA also developed a baseline fleet comprised of model year
EPA and NHTSA have based the projection of total car and total light truck sales for MYs 2017–2025 on projections made by the Department of Energy's Energy Information Administration (EIA). EIA published its Early Annual Energy Outlook for 2012 in December 2011. EIA released updated data to NHTSA in February (AEO Early Release). The final version of AEO 2012 was released June 25, 2012, after the agencies had already completed our analyses using the early release results.
As the we did with the Interim 2011 AEO data, the agencies developed a new projection of passenger car and light truck sales shares by running scenarios from the Early Release AEO 2012 reference case that first deactivate the above-mentioned sales-volume shifting methodology and then hold post-2017 CAFE standards constant at MY 2016 levels. As discussed in Chapter 1 of the agencies' joint Technical Support Document, incorporating these changes reduced the NEMS-projected passenger car share of the light vehicle market by an average of about 5% during 2017–2025.
In the AEO 2012 Early Release data, EIA projects that total light-duty vehicle sales will gradually recover from their currently depressed levels by around 2013. In 2017, car sales are projected to be 8.7 million (55 percent) and truck sales are projected to be 7.1 million (45 percent). Although the total level of sales of 15.8 million units is similar to pre-2008 levels, the fraction of car sales is projected to be higher than that existing in the 2000–2007 timeframe. This projection reflects the impact of assumed higher fuel prices. Sales projections of cars and trucks for future model years can be found in Chapter 1.4.3 of the joint TSD.
In addition to a shift towards more car sales, sales of segments within both the car and truck markets have been changing and are expected to continue to change. Manufacturers are introducing more crossover utility vehicles (CUVs), which offer much of the utility of sport utility vehicles (SUVs) but use more car-like designs. The AEO 2012 report does not, however, distinguish such changes within the car and truck classes. In order to reflect these changes in fleet makeup, EPA and NHTSA used a custom long range forecast purchased from LMC Automotive (formerly J.D. Powers Forecasting). NHTSA and EPA decided to use the forecast from LMC for the 2010 model year based fleet for several reasons discussed in Chapter 1 of the Joint TSD, and believe the projection provides a useful cross-check for the forecast used for the projections reflected in the 2008 model year based fleet. For the public's reference, a copy of LMC's long range forecast has been placed in the docket for this rulemaking.
The next step was to project the LMC forecasts for relative sales of cars and trucks by manufacturer and by market segment onto the total sales estimates of AEO 2012. Table II–7 and Table II–8 show the resulting projections for the reference 2025 model year and compare these to actual sales that occurred in the baseline 2010 model year. Both tables show sales using the traditional definition of cars and light trucks. As discussed above, the new forecast from LMC shown in Table II–7 shows a significant increase in Chrysler/Fiat's sales (1.6 million) from those projected by CSM (768 thousand).
NHTSA has changed the definition of a truck for 2011 model year and beyond. The new definition has moved some 2 wheel drive SUVs and CUVs to the car category. Table II–9 shows the different volumes for car and trucks based on the new and old NHTSA definition. The table shows the difference in 2010, 2021, and 2025 to give a feel for how the change in definition changes the car/truck split.
The LMC forecast provides estimates of car and truck sales by manufacturer segment and by manufacturer separately. The forecast was broken up into two tables: one table with manufacturer volumes by year and the other with vehicle segments percentages by year. Table II–10 is an example of the data received from LMC. The task of estimating future sales using these tables is complex. Table II–11 is the LMC projected volumes for each manufacturer.
Table II–12 has the LMC segment percentages for 2016, 2021, and 2025. We used a new methodology that is different than we used for the 2008 fleet projection. A detailed description of how the projection process was done is found in Chapter 1 of the TSD.
The overall result was a projection of car and truck sales for model years 2017–2025—the reference fleet—which matched the total sales projections of the AEO forecast and the manufacturer and segment splits of the LMC forecast. These sales splits are shown in Table II–13 below.
The final step in the construction of the 2010 model year based fleet involves applying additional technology to individual vehicle models—that is, technology beyond that already present in MY 2010——reflecting already-promulgated standards through MY 2016, and reflecting the assumption that MY 2016 standards would continue to apply in each model year through MY 2025. A description of the agencies' modeling work to develop their respective final reference (or adjusted baseline) fleets appear in the agencies' respective RIAs.
Table II–14 is the difference in actual and projected sales volumes between the 2010 based and the 2008 based fleet forecast. This summary table is the most convenient way to compare the projections from CSM and LMC, since the forecasting companies use different segmentations of vehicles. It also provides a comparison of the two AEO forecasts since the projections are normalized to AEO's total volume of cars and trucks in each year of the projection. The table shows a total projected reduction from the 2008 fleet to the 2010 fleet in 2025 of .5 million cars and .8 million trucks. The largest manufacturer changes in the 2025 model projections are for Chrysler and Toyota. The newer projection increases Chrysler's total vehicles by .9 million vehicles, while it decreases Toyota's total vehicles by .8 million.
The table also shows that the total actual reduction in cars from 2008 MY to 2010 MY is 1.0 million vehicles, and the reduction in trucks is 1.6 million vehicles.
Table II–15 shows the change in volumes between the two forecasts for cars and trucks based on the new and old NHTSA definition. The table shows the change to give a feel for how the change in definition impacts the car/truck split. Many factors impact the changes shown here including differences in AEO, differences in the number of SUV and CUV vehicles becoming cars, and the future volume projected by CSM and LMC.
Table II–16 is the changes in car and truck split due to the difference between the 2010 and 2008 forecast. The table shows that the different AEO forecasts, CSM and LMC projections have an insignificant impact on the car and truck split.
The joint TSD contains further comparisons of the two projections at the end of Chapter 1.
So, given all of the discussion above, the agencies have created these two baselines to illustrate possible uncertainty in the future market forecast. The industry-wide differences between the forecasts are relatively minor, even if there are some fairly significant differences for individual manufacturers. Analysis under both baselines supports the agencies' respective decisions as to the stringency of the final standards, as discussed further in Sections III and IV below.
As in the MYs 2012–2016 CAFE/GHG rules, and as NHTSA did in the MY 2011 CAFE rule, NHTSA and EPA are promulgating attribute-based CAFE and CO
Under an attribute-based standard, every vehicle model has a performance target (fuel economy and CO
The agencies believe that an attribute-based standard is preferable to a single-industry-wide average standard in the
Second, depending on the attribute, attribute-based standards reduce the incentive for manufacturers to respond to CAFE and CO
Third, attribute-based standards provide a more equitable regulatory framework for different vehicle manufacturers.
Fourth, attribute-based standards better respect economic conditions and consumer choice as compared to single-value standards. A flat, or single value, standard encourages a certain vehicle size fleet mix by creating incentives for manufacturers to use vehicle downsizing as a compliance strategy. Under a footprint-based standard, manufacturers have the incentive to invest in technologies that improve the fuel economy of the vehicles they sell rather than shifting their product mix, because reducing the size of the vehicle is generally a less viable compliance strategy given that smaller vehicles have more stringent regulatory targets.
As in the MYs 2012–2016 CAFE/GHG rules, and as NHTSA did in the MY 2011 CAFE rule, NHTSA and EPA are promulgating CAFE and CO
First, in the agencies' judgment, from the standpoint of vehicle safety, it is important that the CAFE and CO
Further, although we recognize that weight is better correlated with fuel economy and CO
The agencies recognize that based on economic and consumer demand factors that are external to this rule, the distribution of footprints in the future may be different (either smaller or larger) than what is projected in this rule. The agencies recognize that a recent independent analysis, discussed below, suggests that the NPRM form of the MY 2014 standards could, under some circumstances posited by the authors, induce some increases in vehicle footprint. Underlining the potential uncertainty, considering a range of scenarios, the authors obtained a wide range of results in their analyses. As discussed in later in this section,
In the NPRM, the agencies stated that we continue to find that footprint is the most appropriate attribute upon which to base the proposed standards, but recognizing strong public interest in this issue, we sought comment on whether the agencies should consider setting standards for the final rule based on another attribute or another combination of attributes. The agencies also specifically requested that the commenters address the concerns raised in the paragraphs above regarding the use of other attributes, and explain how standards should be developed using the other attribute(s) in a way that contributes more to fuel savings and CO
The agencies received several comments regarding the attribute(s) upon which post-MY 2016 CAFE and GHG standards should be based. The National Auto Dealers Association (NADA)
Regarding the comments from IPI, as IPI appears to acknowledge, EPCA/EISA expressly requires that CAFE standards be attribute-based and defined in terms of mathematical functions. Also, NHTSA has, in fact, considered and reconsidered options other than footprint, over the course of multiple CAFE rulemakings conducted throughout the past decade. When first contemplating attribute-based systems, NHTSA considered attributes such as weight, “shadow” (overall area), footprint, power, torque, and towing capacity. NHTSA also considered approaches that would combine two or potentially more than two such attributes. To date, every time NHTSA (more recently, with EPA) has considered options for light-duty vehicles, the agency has concluded that a properly designed footprint-based approach provides the best means of achieving the basic policy goals (
Regarding Ferrari's and BMW's comments, as stated previously, in the agencies' judgment, footprint-based standards (a) discourage vehicle downsizing that might compromise occupant protection, (b) encourage the application of technology, including weight-efficient materials (
Finally, as explained in section III.B.6 and documented in section III.D.6 below, EPA agrees with Porsche that the MY2017 GHG standards, and the GHG standards for the immediately succeeding model years, pose special challenges of feasibility and (especially) lead time for intermediate volume manufacturers, in particular for limited-line manufacturers of smaller footprint, high performance passenger cars. It is for this reason that EPA has provided additional lead time to these manufacturers. NHTSA, however, is providing no such additional lead time. As required under EISA/EPCA, manufacturers continue—as since the 1970s—to have the option of paying civil penalties in lieu of achieving compliance with the standards, and NHTSA is uncertain as to what authority would allow it to promulgate separate standards for different classes of manufacturers, having raised this issue in the proposal and having received no legal analysis with suggestions from Porsche or other commenters.
By requiring NHTSA to set CAFE standards that are attribute-based and defined by a mathematical function, NHTSA interprets Congress as intending that the post-EISA standards to be data-driven—a mathematical function defining the standards, in order to be “attribute-based,” should reflect the observed relationship in the data between the attribute chosen and fuel economy.
The relationship between fuel economy (and GHG emissions) and footprint, though directionally clear (
The next sections examine the policy concerns that the agencies considered in developing the target curves that define
The mathematical functions for the MYs 2017–2025 curves are somewhat changed from the functions for the MYs 2012–2016 curves, in response to comments received from stakeholders pre-proposal in order to address technical concerns and policy goals that the agencies judge more significant in this rulemaking than in the prior one, given their respective timeframes, and have retained those same mathematical functions for the final rule as supported by commenters. This section discusses the methodology the agencies selected as, at this time, best addressing those technical concerns and policy goals, given the various technical inputs to the agencies' current analyses. Below the agencies discuss how the agencies determined the cutpoints and the flat portions of the MYs 2017–2025 target curves. We also note that both of these sections address only how the curves were fit to fuel consumption and CO
Thus, recognizing that there are many reasonable statistical methods for fitting curves to data points that define vehicles in terms of footprint and fuel economy, as in past rules, the agencies added equivalent levels of technology to the baseline fleet as a starting point for the curve analysis. The agencies continue to believe that this is a valid method to adjust for technology differences between actual vehicle models in the MY 2008 and MY 2010 fleets. The statistical method for fitting that curve, however, was revisited by the agencies in this rule. For the NPRM, the agencies chose to fit the proposed standard curves using an ordinary least-squares formulation, on sales-weighted data, using a fleet that has had technology applied, and after adjusting the data for the effects of weight-to-footprint, as described below. This represented a departure from the statistical approach for fitting the curves in MYs 2012–2016, as explained in the next section. The agencies considered a wide variety of reasonable statistical methods in order to better understand the range of uncertainty regarding the relationship between fuel consumption (the inverse of fuel economy), CO
During the year and a half between when the MYs 2012–2016 final rule was issued and when the MYs 2017–2025 NPRM was issued, NHTSA and EPA received a number of comments from stakeholders on how curves should be fitted to the passenger car and light truck fleets. Some limited-line manufacturers have argued that curves should generally be flatter in order to avoid discouraging production of small vehicles, because steeper curves tend to result in more stringent targets for smaller vehicles. Most full-line manufacturers have argued that a passenger car curve similar in slope to the MY 2016 passenger car curve would be appropriate for future model years, but that the light truck curve should be revised to be less difficult for manufacturers selling the largest full-size pickup trucks. These manufacturers argued that the MY 2016 light truck curve was not “physics-based,” and that in order for future tightening of standards to be feasible for full-line manufacturers, the truck curve for later model years should be steeper and extended further (
In developing the curve shapes for the proposed rule, the agencies were aware of the current and prior technical concerns raised by OEMs concerning the effects of the stringency on individual manufacturers and their ability to meet the standards with available technologies, while producing vehicles at a cost that allowed them to recover the additional costs of the technologies being applied. Although we continued to believe that the methodology for fitting curves for the MYs 2012–2016 standards was technically sound, we recognized manufacturers' concerns regarding their abilities to comply with a similarly shallow curve after MY 2016 given the anticipated mix of light trucks in MYs 2017–2025. As in the MYs 2012–2016 rules, the agencies considered these concerns in the analysis of potential curve shapes. The agencies also considered safety concerns which could be raised by curve shapes creating an incentive for vehicle downsizing as well the economic losses that could be incurred if curve shapes unduly discourage market shifts—including vehicle upsizing—that have vehicle buyers value. In addition, the agencies sought to improve the balance of compliance burdens among manufacturers, and thereby increase the likelihood of improved fuel economy and reduced GHG emissions across the entire spectrum of footprint targets. Among the technical concerns and resultant policy trade-offs the agencies considered were the following:
• Flatter standards (
• Flatter standards potentially impact the utility of vehicles by providing an incentive for vehicle downsizing.
• Steeper footprint-based standards may create incentives to upsize
• Given the same industry-wide average required fuel economy or CO
• Given the same industry-wide average required fuel economy or CO
• If cutpoints are adopted, given the same industry-wide average required fuel economy, moving small-vehicle cutpoints to the left (
• If cutpoints are adopted, given the same industry-wide average required fuel economy, moving large-vehicle cutpoints to the right (
All of these were policy goals that required weighing and consideration. Ultimately, the agencies did not agree that the MY 2017 target curves for the proposal, on a relative basis, should be made significantly flatter than the MY 2016 curve,
Nonetheless, the agencies recognized full-line OEM concerns and tentatively concluded that further increases in the stringency of the light truck standards would be more feasible if the light truck curve was made steeper than the MY 2016 truck curve and the right (large footprint) cut-point was extended over time to larger footprints. This conclusion was supported by the agencies' technical analyses of regulatory alternatives defined using the curves developed in the manner described below.
The Alliance, GM, and the UAW commented in support of the reasonableness of the agencies' proposals regarding the shape and slope of the curves and how they were developed, although the Alliance stated that the weighting and regression analysis used to develop the curves for MYs 2022–2025 should be reviewed during the mid-term evaluation process.
Other commenters objected to specific aspects of the agencies' approach to developing the curves. ACEEE provided extensive comments, arguing generally that agencies appeared to be proposing curve choices in response to subjective policy concerns (namely, protecting large trucks) rather than on a sound technical basis.
The agencies reaffirm the reasonable technical and policy basis for selecting the truck curve. Three primary drivers form this technical basis: (a) The largest trucks have unique equipment and design, as described in the Ford comment referenced below in section II.C.4.f; (b) the agencies agree with those large truck manufacturers who indicated in discussions prior to the proposal that they believed that the light truck standard should be somewhat steeper after MY 2016, primarily because, after more than ten recent years of progressive increases in the stringency of applicable CAFE standards (after nearly ten years during which Congress did not allow NHTSA to increase light truck CAFE standards), manufacturers of large pickups would have limited options to comply with more stringent standards without resorting to compromising large truck load carrying and towing capacity; and (c) given the relatively few platforms which comprise the majority of the sales at the largest truck footprints, the agencies were concerned about requiring levels of average light truck performance that might lead to overly aggressive technology penetration rates in this important segment of the work fleet. Specifically, the agencies were concerned at proposal, and remain concerned about issues of lead time and cost with regard to manufacturers of these work vehicles. As noted later in this chapter, while the largest trucks are a small segment of the overall truck fleet, and an even smaller segment of the overall fleet,
As discussed in the NPRM and in Chapter 2 of the TSD, as well as in section III.D and IV.E below, we considered all of the utilized methods of normalizing (including not normalizing) fuel economy levels and the different methods for fitting functional forms to the footprint and fuel economy and CO
We note that comments by CBD, ACEEE, NACAA, and an individual, Yegor Tarazevich, referenced a 2011 study by Whitefoot and Skerlos, “Design incentives to increase vehicle size created from the U.S. footprint-based fuel economy standards.”
Were the agencies to use the Whitefoot and Skerlos methodology (
Regarding the cost impacts of footprint increases, that authors make an
Regarding the fuel economy impacts of footprint increases, the authors present a regression analysis based on which increases in footprint are estimated to entail increases in weight which are, in turn, estimated to entail increases in fuel consumption. However, this relationship was not the relationship the agencies used to develop the MY 2014 standards the authors examine in that study. Where the target function's slope is similar to that of the tendency for fuel consumption to increase with footprint, fuel economy should tend to decrease approximately in parallel with the fuel economy target, thereby obviating the “benefit” of deliberate increases in vehicle footprint. The agencies' analysis supporting today's final rule indicates relatively wide ranges wherein the relationship between fuel consumption and footprint may reasonably be specified.
As part of the mid-term evaluation and future NHTSA rulemaking, the agencies plan to further investigate methods to estimate the potential that standards might tend to induce changes in the footprint. The agencies will also continue to closely monitor trends in footprint (and technology penetration) as manufacturers come into compliance with increasing levels of the footprint standards.
In considering how to address the various policy concerns discussed in the previous sections, the agencies revisited the data and performed a number of analyses using different combinations of the various statistical methods, weighting schemes, adjustments to the data and the addition of technologies to make the fleets less technologically heterogeneous. As discussed above, in the agencies' judgment, there is no single “correct” way to estimate the relationship between CO
For each fleet, the agencies began with the MY 2008-based market forecast developed to support the proposal (
The agencies believe one possible approach is to fit curves to the minimally adjusted data shown above (the approach still includes sales mix adjustments, which influence results of sales-weighted regressions), much as DOT did when it first began evaluating potential attribute-based standards in 2003.
As in prior rulemakings, the agencies consider technology differences between vehicle models to be a significant factor producing uncertainty regarding the relationship between CO
The agencies adjusted the baseline fleet for technology by adding all technologies considered, except for the most advanced high-BMEP (brake mean effective pressure) gasoline engines, diesel engines, ISGs, strong HEVs, PHEVs, EVs, and FCVs. The agencies included 15 percent mass reduction on all vehicles.
For the reasons discussed above regarding revisiting the shapes of the curves, the agencies considered adjustments for other differences between vehicle models (
For the proposal, the agencies also examined some differences between the technology-adjusted car and truck fleets in order to better understand the relationship between footprint and CO
This analysis, presented in chapter 2.4.1.2 of the joint TSD, indicated that vehicle performance (power-to-weight ratio) and “density” (curb weight divided by footprint) are both correlated to fuel consumption (and CO
For today's final rule, the agencies repeated the above analyses, using the corrected MY 2008-based market forecast and, separately, the MY 2010-based market forecasts. As discussed in section 2.6 of the joint TSD and further detailed in a memorandum available at Docket No. NHTSA–2010–0131–0325, doing so produced results similar to the analysis used in the proposal.
The agencies sought comment on the appropriateness of the adjustments described in Chapter 2 of the joint TSD, particularly regarding whether these adjustments suggest that standards should be defined in terms of other attributes in addition to footprint, and whether they may encourage changes other than encouraging the application of technology to improve fuel economy
ACEEE objected to the agencies' adjustments to the truck curves, arguing that if the truck slope needs to be adjusted for “density,” then that suggests that the MY 2008-based market forecast used to build up the reference fleet must be “incorrect and show * * * unrealistically low pickup truck fuel consumption, due to the overstatement of the benefits of certain technologies.”
ACEEE further stated that “the fuel consumption trend that the density adjustment is meant to correct appears in the unadjusted fleet as well as the technology-adjusted fleet of light trucks (TSD Figures 2–1 and 2–2),” which they argued is evidence that “the flattening of fuel consumption at higher footprints is not a byproduct of unrealistic technology adjustments, but rather a reflection of actual fuel economy trends in today's market.”
Thus, ACEEE stated, the deviations from the analytical approach previously adopted were not justified with data provided in the NPRM, and the resulting “
Conversely, the UAW strongly supported the agencies' balancing of “the challenges of adding fuel-economy improving technologies to the largest light trucks with the need to maintain the full functionality of these vehicles across a wide range of applications”
In response, the agencies maintain that the adjustments (including no adjustments) considered in the NPRM are all reasonable to apply for purposes of developing potential fuel economy and GHG target curves, and that it is left to policy makers to determine an appropriate perspective involved in selecting weights (if any) to be applied, and to interpret the consequences of various alternatives. As described above and in Chapter 2 of the TSD, the agencies believe that the adjustments made to the truck curve are appropriate because work trucks provide utility (towing and load-carrying capability) that requires more torque and power, more cooling and braking capability, and more fuel-carrying capability (
Regarding ACEEE's specific comments about the application of these adjustments to the light truck fleet, we disagree with the characterization of the adjustments as
For the NPRM, the above approaches resulted in three data sets each for (a) vehicles without added technology and (b) vehicles with technology added to reduce technology differences, any of which may provide a reasonable basis for fitting mathematical functions upon which to base the slope of the standard curves: (1) Vehicles without any further adjustments; (2) vehicles with adjustments reflecting differences in “density” (weight/footprint); and (3) vehicles with adjustments reflecting differences in “density,” and adjustments reflecting differences in performance (power/weight). Using these data sets, the agencies tested a range of regression methodologies, each judged to be possibly reasonable for application to at least some of these data sets. Beginning with the corrected MY 2008-based market forecast and the MY 2010-based market forecast developed for today's final rule, the above approaches resulted in six data sets—three for each of the two market forecasts.
In the MYs 2012–2016 final rules, the agencies employed a robust regression approach (minimum absolute deviation, or MAD), rather than an ordinary least squares (OLS) regression.
As noted, one of the reasons stated for choosing MAD over least square regression in the MYs 2012–2016 rulemaking was that MAD reduced the weight placed on outliers in the data. However, the agencies have further considered whether it is appropriate to classify these vehicles as outliers. Unlike in traditional datasets, these vehicles' performance is not mischaracterized due to errors in their measurement, a common reason for outlier classification. Being certification data, the chances of large measurement errors should be near zero, particularly towards high CO
Based on these considerations as well as the adjustments discussed above, the agencies concluded it was not meaningful to run MAD regressions on gpm data that had already been adjusted in the manner described above. Normalizing already reduced the variation in the data, and brought outliers towards average values. This was the intended effect, so the agencies deemed it unnecessary to apply an additional remedy to resolve an issue that had already been addressed, but we sought comment on the use of robust regression techniques under such circumstances. ACEEE stated that either MAD (
Likewise, the agencies reconsidered employing sales-weighting to represent the data. As explained below, the decision to sales weight or not is ultimately based upon a choice about how to represent the data, and not by an underlying statistical concern. Sales weighting is used if the decision is made to treat each (mass produced) unit sold as a unique physical observation. Doing so thereby changes the extent to which different vehicle model types are emphasized as compared to a non-sales weighted regression. For example, while total General Motors Silverado (332,000) and Ford F–150 (322,000) sales differed by less than 10,000 in the MY 2021 market forecast (in the MY 2008-based forecast), 62 F–150s models and 38 Silverado models were reported in the agencies baselines. Without sales-weighting, the F–150 models, because there are more of them, were given 63 percent more weight in the regression despite comprising a similar portion of the marketplace and a relatively homogenous set of vehicle technologies.
The agencies did not use sales weighting in the MYs 2012–2016 rulemaking analysis of the curve shapes. A decision to not perform sales weighting reflects judgment that each vehicle model provides an equal amount of information concerning the underlying relationship between footprint and fuel economy. Sales-weighted regression gives the highest sales vehicle model types vastly more emphasis than the lowest-sales vehicle model types thus driving the regression toward the sales-weighted fleet norm. For unweighted regression, vehicle sales do not matter. The agencies note that the MY 2008-based light truck market forecast shows MY 2025 sales of 218,000 units for Toyota's 2WD Sienna, and shows 66 model configurations with MY 2025 sales of fewer than 100 units. Similarly, the agencies' MY 2008-based market forecast shows MY 2025 sales of 267,000 for the Toyota Prius, and shows 40 model configurations with MY2025 sales of fewer than 100 units. Sales-weighted analysis would give the Toyota Sienna and Prius more than a thousand times the consideration of many vehicle model configurations. Sales-weighted analysis would, therefore, cause a large number of vehicle model configurations to be virtually ignored in the regressions.
However, the agencies did note in the MYs 2012–2016 final rules that, “sales weighted regression would allow the difference between other vehicle attributes to be reflected in the analysis, and also would reflect consumer demand.”
In the interest of taking a fresh look at appropriate methodologies as promised in the last final rule, in developing the proposal, the agencies gave full consideration to both sales-weighted and unweighted regressions.
For the NPRM, we performed regressions describing the relationship between a vehicle's CO
Thus, the basic OLS regression on the initial data (with no technology applied) and no sales-weighting represents one perspective on the relation between footprint and fuel economy. Adding sales weighting changes the interpretation to include the influence of sales volumes, and thus steps away from representing vehicle technology alone. Likewise, MAD is an attempt to reduce the impact of outliers, but reducing the impact of outliers might perhaps be less representative of technical relationships between the variables, although that relationship may change over time in reality. Each combination of methods and data reflects a perspective, and the regression results simply reflect that perspective in a simple quantifiable manner, expressed as the coefficients determining the line through the average (for OLS) or the median (for MAD) of the data. It is left to policy makers to determine an appropriate perspective and to interpret the consequences of the various alternatives.
We sought comments on the application of the weights as described above, and the implications for interpreting the relationship between fuel efficiency (or CO
For both the NPRM and today's final rule, both agencies analyzed the same statistical approaches. For regressions against data including technology normalization, NHTSA used the CAFE modeling system, and EPA used EPA's OMEGA model. The agencies obtained similar regression results, and have based today's joint rule on those obtained by NHTSA. Chapter 2 of the joint TSD contains a large set of illustrative figures which show the range of curves determined by the possible combinations of regression technique, with and without sales weighting, with and without the application of technology, and with various adjustments to the gpm variable prior to running a regression.
For the curves presented in the NPRM and finalized today, the choice among the alternatives presented in Chapter 2 of the draft Joint TSD was to use the OLS formulation, on sales-weighted data developed for the NPRM (with some errors not then known to the agencies), using a fleet that has had technology applied, and after adjusting the data for the effect of weight-to-footprint, as described above. The agencies believe that this represented a technically reasonable approach for purposes of developing target curves to define the proposed standards, and that
Similarly, for the agencies' MY 2008-based market-forecast and the agencies' current estimates of future technology effectiveness, the inclusion of the weight-to-footprint data adjustment prior to running the regression also helped to improve the fit of the curves by reducing the variation in the data, and the agencies believe that the benefits of this adjustment for the proposed rule likely outweigh the potential that resultant curves might somehow encourage reduced load carrying capability or vehicle performance (note that we are not suggesting that we believe these adjustments will reduce load carrying capability or vehicle performance). In addition to reducing the variability, the truck curve is also steepened, and the car curve flattened compared to curves fitted to sales weighted data that do not include these normalizations. The agencies agreed with manufacturers of full-size pick-up trucks that in order to maintain towing and hauling utility, the engines on pick-up trucks must be more powerful, than their low “density” nature would statistically suggest based on the agencies' current MY 2008-based market forecast and the agencies' current estimates of the effectiveness of different fuel-saving technologies. Therefore, it may be more equitable (
Several comments were submitted subsequent to the NPRM with regard to the non-homogenous nature of the truck fleet, and the “unique” attributes of pickup trucks. As noted above, Ford described the attributes of these vehicles, noting that “towing capability generally requires increased aerodynamic drag caused by a modified frontal area, increased rolling resistance, and a heavier frame and suspension to support this additional capability.”
In the agencies' judgment, the curves and cutpoints defining the light truck standards appropriately account for engineering differences between different types of vehicles. For example, the agencies' estimates of the applicability, cost, and effectiveness of different fuel-saving technologies differentiate between small, medium, and large light trucks. While we acknowledge that uncertainties regarding technology efficacy affect the outcome of methods including normalization to account for differences in technology, the other normalizations we have considered are not intended to somehow compensate for this uncertainty, but rather to reflect other analytical concepts that could be technically reasonable for purposes of estimating relationships between footprint and fuel economy. Furthermore, we agree with Ford that pickup trucks have distinct attributes that warrant consideration of slopes other than the flattest within the range spanned by technically reasonable options. We also note that, as documented in the joint TSD, even without normalizing light truck fuel economy values for
As described above, however, other approaches are also technically reasonable, and also represent a way of expressing the underlying relationships. The agencies revisited the analysis for the final rule, having corrected the underlying 2008-based market forecast, having developed a MY 2010-based market forecast, having updated estimates of technology effectiveness, and having considered relevant public comments. In addition, the agencies updated the technology cost estimates, which altered the NPRM analysis results, but not the balance of the trade-offs being weighed to determine the final curves.
As discussed above, based in part on the Whitefoot/Skerlos paper and its findings regarding the implied potential for vehicle upsizing, some commenters, such as NACAA and Center for Biological Diversity, considered the slopes for both the car and truck curves to be too steep, and ACEEE, Sierra Club, Volkswagen, Toyota, and Honda more specifically commented that the truck slope was too steep. On the other hand, the UAW, Ford, GM, and Chrysler supported the slope of both the car and truck curves. ICCT commented, as they have in prior rulemakings, that the car and the truck curve should be identical, and UCS commented that the curves should be adjusted to minimize the “gap” in target stringency in the 45 ft
As also discussed above, the agencies continue to believe that the slopes for both the car and the truck curves finalized in this rulemaking remain appropriate. There is also good reason for the slopes of the car and truck curves potentially to be distinct from one another—for one, our analysis produces different results for these fleets based on their different characteristics, and more importantly for NHTSA, EPCA/EISA requires that standards for passenger cars and light trucks be established separately. The agencies agree with Ford (and others) that the properties of cars and trucks are different. The agencies agree with Ford's observation (and illustration) that “* * * cars and trucks have different functional characteristics, even if they have the same footprint and nearly the same base curb weights. For example, the Ford Edge and the Ford Taurus have the same footprint, but vastly different capabilities with respect to cargo space and towing capacity. Some of the key features incorporated on the Edge that enable the larger tow capability include an engine oil cooler, larger radiator and updated cooling fans. This is just one of the many examples that show the functional difference between cars and trucks * * *”
The slope has several implications relative to the MY 2016 curves, with the majority of changes on the truck curve. For the NPRM, the agencies selected a car curve slope similar to that finalized in the MYs 2012–2016 final rulemaking (4.7 g/mile-ft
The agencies continue to believe that without a limit at the smallest footprints, the function—whether logistic or linear—can reach values that would be unfairly burdensome for a manufacturer that elects to focus on the market for small vehicles; depending on the underlying data, an unconstrained form could result in stringency levels that are technologically infeasible and/or economically impracticable for those manufacturers that may elect to focus on the smallest vehicles. On the other side of the function, without a limit at the largest footprints, the function may provide no floor on required fuel economy. Also, the safety considerations that support the provision of a disincentive for downsizing as a compliance strategy apply weakly, if at all, to the very largest vehicles. Limiting the function's value for the largest vehicles thus leads to a function with an inherent absolute minimum level of performance, while remaining consistent with safety considerations.
Just as for slope, in determining the appropriate footprint and fuel economy values for the “cutpoints,” the places along the curve where the sloped portion becomes flat, the agencies took a fresh look for purposes of this rule, taking into account the updated market forecast and new assumptions about the availability of technologies. The next two sections discuss the agencies' approach to cutpoints for the passenger car and light truck curves separately, as the policy considerations for each vary somewhat.
The passenger car fleet upon which the agencies based the target curves proposed for MYs 2017–2025 was derived from MY 2008 data, as discussed above. In MY 2008, passenger car footprints ranged from 36.7 square feet, the Lotus Exige 5, to 69.3 square feet, the Daimler Maybach 62. In that fleet, several manufacturers offer small, sporty coupes below 41 square feet, such as the BMW Z4 and Mini, Honda S2000, Mazda MX–5 Miata, Porsche Carrera and 911, and Volkswagen New Beetle. Because such vehicles represent a small portion (less than 10 percent) of the passenger car market, yet often have performance, utility, and/or structural characteristics that could make it technologically infeasible and/or economically impracticable for manufacturers focusing on such vehicles to achieve the very challenging average requirements that could apply in the absence of a constraint, EPA and NHTSA again proposed to cut off the sloped portion of the passenger car function at 41 square feet, consistent with the MYs 2012–2016 rulemaking. The agencies recognized that for manufacturers who make small vehicles in this size range, putting the cutpoint at 41 square feet creates some incentive to downsize (
Above 56 square feet, the only passenger car models present in the MY 2008 fleet were four luxury vehicles with extremely low sales volumes—the Bentley Arnage and three versions of the Rolls Royce Phantom. The MY 2010 fleet was similar, with three BMW models, the Maybach 57S, the Rolls Royce Ghost, and four versions of the Rolls Royce Phantom in this size range. As in the MYs 2012–2016 rulemaking, NHTSA and EPA therefore proposed again to cut off the sloped portion of the passenger car function at 56 square feet.
While meeting with manufacturers prior to issuing the proposal, the agencies received comments from some manufacturers that, combined with slope and overall stringency, using 41 square feet as the footprint at which to cap the target for small cars would result in unduly challenging targets for small cars. The agencies do not agree. No specific vehicle need meet its target (because standards apply to fleet average performance), and maintaining a sloped function toward the smaller end of the passenger car market is important to discourage unsafe downsizing, the agencies thus proposed to again “cut off” the passenger car curve at 41 square feet, notwithstanding these comments.
The agencies sought comment on setting cutpoints for the MYs 2017–2025 passenger car curves at 41 square feet and 56 square feet. IIHS expressed some concern regarding the “breakpoint” of the fuel economy curve at the lower extreme where footprint is the smallest–that is, the leveling-off point on the fuel economy curve where the fuel economy requirement ceases to increase as footprint decreases.
The agencies agree with IIHS that moving the 41 square foot cutpoint to an even smaller value would additionally discourage downsizing of the smallest vehicles—that is, the vehicles for which downsizing would be most likely to compromise occupant protection. However, in the agencies' judgment, notwithstanding narrow market niches for some types vehicles (exemplified by,
The light truck fleet upon which the agencies based the proposed target curves for MYs 2017–2025, like the passenger car fleet, was derived from MY 2008 data, as discussed in Section 2.4 above. In MY 2008, light truck footprints ranged from 41.0 square feet, the Jeep Wrangler, to 77.5 square feet, the Toyota Tundra. For consistency with the curve for passenger cars, the agencies proposed to cut off the sloped portion of the light truck function at the same footprint, 41 square feet, although we recognized that no light trucks are currently offered below 41 square feet. With regard to the upper cutpoint, the agencies heard from a number of manufacturers during the discussions leading up to the proposal of the MY 2017–2025 standards that the location of the cutpoint in the MYs 2012–2016 rules, 66 square feet, resulted in challenging targets for the largest light trucks in the later years of that rulemaking. See 76 FR 74864–65. Those manufacturers requested that the agencies extend the cutpoint to a larger footprint, to reduce targets for the largest light trucks which represent a significant percentage of those manufacturers light truck sales. At the same time, in re-examining the light truck fleet data, the agencies concluded that aggregating pickup truck models in the MYs 2012–2016 rule had led the agencies to underestimate the impact of the different pickup truck model configurations above 66 square feet on manufacturers' fleet average fuel economy and CO
In the agencies' view, there was legitimate basis for these comments. The agencies' MY 2008-based market forecast supporting the NPRM included about 24 vehicle configurations above 74 square feet with a total volume of about 50,000 vehicles or less during any MY in the 2017–2025 time frame. While a relatively small portion of the overall truck fleet, for some manufacturers, these vehicles are a non-trivial portion of sales. As noted above, the very largest light trucks have significant load-carrying and towing capabilities that make it particularly challenging for manufacturers to add fuel economy-improving/CO
Considering manufacturer CBI and our estimates of the impact of the 66 square foot cutpoint for future model years, the agencies determined to adopt curves that transition to a different cut point. While noting that no specific vehicle need meet its target (because standards apply to fleet average performance), we believe that the information provided to us by manufacturers and our own analysis supported the gradual extension of the cutpoint for large light trucks in the proposal from 66 square feet in MY 2016 out to a larger footprint square feet before MY 2025.
The agencies proposed to phase in the higher cutpoint for the truck curve in order to avoid any backsliding from the MY 2016 standard. A target that is feasible in one model year should never become less reasonable in a subsequent model year—manufacturers should have no reason to remove fuel economy-improving/CO
The agencies received some comments on the selection of these cutpoints. ACEEE commented that the extension of the light truck cutpoint upward from 66 square feet to 74 square feet. would reduce stringency for large trucks even though there is no safety-related reason to discourage downsizing of these trucks.
The agencies have considered these comments regarding the cutpoint applied to the high footprint end of the target function for light trucks, and we judge there to be minimal risk that manufacturers would respond to this upward extension of the cutpoint by deliberately increasing the size of light trucks that are already at the upper end of marketable vehicle sizes. Such vehicles have distinct size, maneuverability, fuel consumption, storage, and other characteristics as opposed to the currently more popular vehicles between 43 and 48 square feet, and are likely not suited for all consumers in all usage scenarios. Further, larger vehicles typically also have additional production costs that make it unlikely that these vehicles will become the predominant vehicles in the fleet. Therefore, we remain concerned that not to extend this cutpoint to 74 square feet would fail to take into adequate consideration the challenges to improving fuel economy and CO
We have considered the Sierra Club and ACEEE suggestion that the agencies provide an alternate emissions target for light trucks larger than 60 square feet (Sierra Club) or 66 square feet (ACEEE) that exceed the sales projected in the rule in the year that sales exceed the projection. Doing so would effectively introduce sales volume as a second “attribute”; in our judgment, this would introduce additional uncertainty regarding outcomes under the standards, and would not clearly be within the scope of notice provided by the NPRM.
The curves discussed above all reflect the addition of technology to individual vehicle models to reduce technology differences between vehicle models before fitting curves. This application of technology was conducted not to directly determine the proposed standards, but rather for purposes of technology adjustments, and set aside considerations regarding potential rates of application (
The minimum stringency determination was done using the two cycle curves. Stringency adjustments for air conditioning and other credits were calculated after curves that did not cross were determined in two cycle space. The year over year increase in these
As in the MYs 2012–2016 rules, the agencies developed curves defining regulatory alternatives for consideration by “shifting” these curves. For the MYs 2012–2016 rules, the agencies did so on an absolute basis, offsetting the fitted curve by the same value (in gpm or g/mi) at all footprints. In developing the proposal for MYs 2017–2025, the agencies reconsidered the use of this approach, and concluded that after MY 2016, curves should be offset on a relative basis—that is, by adjusting the entire gpm-based curve (and, equivalently, the CO
On this basis, and considering that the “flattening” occurs gradually for the regulatory alternatives the agencies have evaluated, the agencies tentatively concluded that this approach to offsetting the curves to develop year-by-year regulatory alternatives neither re-creates a situation in which manufacturers are likely to respond to standards in ways that compromise highway safety, nor undoes the attribute-based standard's more equitable balancing of compliance burdens among disparate manufacturers. The agencies invited comment on these conclusions, and on any other means that might avoid the potential outcomes—in particular, negative fuel consumption and CO
The fuel economy values in the agencies' market forecasts are based on the 2-cycle (
For the GHG target curves, the offset for air conditioning system performance is being handled in the same manner as for the MYs 2012–2016 rules. For the CAFE target curves, NHTSA for the first time is accounting for potential improvements in air conditioning system performance. Using this methodology, the agencies first use a multiplicative stringency adjustment for the sloped portion of the curves to reflect the effectiveness on technologies other that air conditioning system technologies, creating a series of curve shapes that are “fanned” based on two-cycle performance. Then the curves were offset vertically by the air conditioning improvement by an equal amount at every point.
While the agencies received many comments regarding the provisions for determining adjustments to reflect improvements to air conditioners, the agencies received no comments regarding how curves developed considering 2-cycle fuel economy and CO
For the past five years, the agencies have been working together closely to follow the development of fuel consumption- and GHG-reducing technologies, which continue to evolve rapidly. We based the proposed rule on the results of two major joint technology analyses that EPA and NHTSA had recently completed—the Technical Support Document to support the MYs 2012–2016 final rule and the 2010 Technical Analysis Report (which supported the 2010 Notice of Intent and was also done in conjunction with CARB). For this final rule, we relied on our joint analyses for the proposed rule, as well as new information and analyses, including information we
In the proposal, we presented our assessments of the costs and effectiveness of all the technologies that we believe manufacturers are likely to use to meet the requirements of this rule, including the latest information on several quickly-changing technologies. The proposal included new estimates for hybrid costs based on a peer-reviewed ANL battery cost model. We also presented in the proposal new cost data and analyses relating to several technologies based on a study by FEV: an 8-speed automatic transmission replacing a 6-speed automatic transmission; an 8-speed dual clutch transmission replacing a 6-speed dual clutch transmission; a power-split hybrid powertrain with an I4 engine replacing a conventional engine powertrain with V6 engine; a mild hybrid with stop-start technology and an I4 engine replacing a conventional I4 engine; and the Fiat Multi-Air engine technology. Also in the proposal, we presented an updated assessment of our estimated costs associated with mass reduction.
As would be expected given that some of our cost estimates were developed several years ago, we have also updated all of our base direct manufacturing costs to put them in terms of more recent dollars (2010 dollars are used in this final rule while 2009 dollars were used in the proposal). As proposed, we have also updated our methodology for calculating indirect costs associated with new technologies since completing both the MYs 2012–2016 final rule and the TAR. We continue to use the indirect cost multiplier (ICM) approach used in those analyses, but have made important changes to the calculation methodology—changes done in response to ongoing staff evaluation and public input.
Since the MYs 2012–2016 rule and TAR, the agencies have updated many of the technologies' effectiveness estimates largely based on new vehicle simulation work conducted by Ricardo Engineering. This simulation work provides the effectiveness estimates for a number of the technologies most heavily relied on in the agencies' analysis of potential standards for MYs 2017–2025. Additionally for the final rule, NHTSA conducted a vehicle simulation project with Argonne National Laboratory (ANL), as described in NHTSA's FRIA, that performed additional analyses on mild hybrid technologies and advanced transmissions to help NHTSA develop effectiveness values better tailored for the CAFE model's incremental structure. The effectiveness values for the mild hybrid vehicles were applied by both agencies for the final rule.
The agencies also reviewed the findings and recommendations in the updated NAS report “Assessment of Fuel Economy Technologies for Light-Duty Vehicles” that was completed and issued after the MYs 2012–2016 final rule.
The agencies received comments to the proposal on some of these assessments as discussed further below. Also, since the time of the proposal, in some cases we have been able to improve on our earlier assessments. We note these comments and the improvements made in the assessments in the discussion of each technology, below. However, the agencies did not receive comments for most of the technical and cost assessments presented in the proposal, and the agencies have concluded the assessments in the proposal remain valid for this final rule.
Key changes in the final rule relative to the proposal are the use of 2010 dollars rather than 2009 dollars, updates to all battery pack and non-battery costs for hybrids, plug-in hybrids and full electric vehicles (because an updated version of the Argonne National Labs BatPaC model was available which more appropriately included a battery discharge safety system in the costs), and the inclusion of a mild hybrid technology that was not included in the proposal. NHTSA updated the effectiveness values of advanced transmissions coupled with naturally-aspirated engines based on ANL's simulation work. We describe these changes below and in Chapter 3 of the Joint TSD. We next provide a brief summary of the technologies that we considered for this final rule; Chapter 3 of the Joint TSD presents our assessments of these technologies in much greater detail.
The agencies conclude that manufacturers can add a variety of technologies to each of their vehicle models and/or platforms in order to improve the vehicles' fuel economy and GHG performance. In order to analyze a variety of regulatory alternative scenarios, it was essential to have a thorough understanding of the technologies available to the manufacturers. As was the case for the proposal, the analyses we performed for this final rule included an assessment of the cost, effectiveness, availability, development time, and manufacturability of various technologies within the normal redesign and refresh periods of a vehicle line (or in the design of a new vehicle). As we describe in the Joint TSD, the point in time when we project that a technology can be applied affects our estimates of the costs as well as the technology penetration rates (“phase-in caps”).
The agencies considered dozens of vehicle technologies that manufacturers could use to improve the fuel economy and reduce CO
The technologies that we considered can be grouped into four broad categories: engine technologies; transmission technologies; vehicle technologies (such as mass reduction, tires and aerodynamic treatments); and electrification technologies (including hybridization and changing to full electric drive).
Few comments were received specific to these technologies. The Alliance emphasized the agencies should examine the progress in the development of powertrain improvements as part of the mid-term evaluation and determine if researchers are making the kind of breakthroughs anticipated by the agencies for technologies like high-efficiency transmissions. VW cautioned the agencies about the uncertainties with high BMEP engines, including the possible costs due to increased durability requirements and questioned the potential benefit for this type of engine of engine technology. VW commented that additional development is necessary to overcome the significant obstacles of these types of engines. ICCT emphasized that many of the powertrain effectiveness values, derived by Ricardo, were too conservative as technology in this area is expected to improve at a faster pace during the rulemaking period. As described in the joint TSD, the agencies relied on a number of technical sources for this engine technology. Additionally as described in the Ricardo report, Ricardo was tasked with extrapolating technologies to their expected performance and efficiency levels in the 2020–2025 timeframe to account for future improvements. The agencies continue to believe that the modeling and simulation conducted by Ricardo is robust, as they have built prototypes of these engines and used their knowledge to help inform the modeling. The agencies will, of course, continue to watch the development of this key technology in the future. For transparency purposes and full disclosure, it is important to note the ICCT partially funded the Ricardo study.
There are a number of other potential technologies available to manufacturers in meeting the 2017–2025 standards that the agencies have evaluated but have not considered in our final analyses. These include HCCI, “multi-air”, and camless valve actuation, and other advanced engines currently under development.
As noted in the introduction to this section, most of the direct cost estimates for technologies carried over from the MYs 2012–2016 final rule and subsequently used in this final rule are fundamentally unchanged since the MYs 2012–2016 final rule analysis and/or the 2010 TAR. We say “fundamentally” unchanged since the basis of the direct manufacturing cost estimates have not changed; however, the costs have been updated to more recent dollars, our estimated learning effects have resulted in further cost reductions for some technologies, the indirect costs are calculated using a modified methodology, and the impact of long-term ICMs is now present during the rulemaking timeframe. Besides these changes, there are also some other notable changes to the costs used in previous analyses. We highlight these changes in Section II.D.2.a, below. We highlight the changes to the indirect cost methodology and adjustments to more recent dollars in Sections II.D.2.b and c. Lastly, we present some updated terminology used for our approach to estimating learning effects in an effort to eliminate confusion with our past terminology. This is discussed in Section II.D.2.d, below.
New for the final rule relative to the proposal are the use of 2010 dollars rather than 2009 dollars, updates to all battery pack and non-battery costs for hybrids, plug-in and full electric vehicles because an updated version of the ANL BatPaC model was available and because we wanted to include a battery discharge safety system in the costs, and the inclusion of a mild hybrid technology that was not included in the proposal. We describe these changes below and in Chapter 3 of the Joint TSD.
The agencies note that the technology costs included in this final rule take into account those associated with the initial build of the vehicle. We received comments on the proposal for this rule suggesting that there could be additional maintenance required with some new technologies, and that additional maintenance costs could occur as a result because “the technology will be more complicated and time consuming for mechanics to repair.”
For direct manufacturing costs (DMC) related to turbocharging, downsizing, gasoline direct injection, transmissions, as well as non-battery-related costs on hybrid, plug-in hybrid, and electric vehicles, the agencies have relied on costs derived from “tear-down” studies (see below). For battery-related DMC for HEVs, PHEVs, and EVs, the agencies have relied on the BatPaC model developed by Argonne National Laboratory for the Department of Energy. For mass reduction DMC, the agencies have relied on several studies as described in detail in Chapter 3 of the Joint TSD. We discuss each of these briefly here and in more detail in the Joint TSD. For the majority of the other technologies considered in this rule and described above, and where no new data were available, the agencies have relied on the MYs 2012–2016 final rule and sources described there for estimates of DMC.
As a general matter, the agencies believe that the best method to derive technology cost estimates is to conduct studies involving tear-down and analysis of actual vehicle components. A “tear-down” involves breaking down a technology into its fundamental parts and manufacturing processes by completely disassembling actual vehicles and vehicle subsystems and precisely determining what is required for its production. The result of the tear-down is a “bill of materials” for each and every part of the relevant vehicle systems. This tear-down method of costing technologies is often used by manufacturers to benchmark their products against competitive products. Historically, vehicle and vehicle component tear-down has not been done on a large scale by researchers and regulators due to the expense required for such studies. While tear-down studies are highly accurate at costing technologies for the year in which the study is intended, their accuracy, like that of all cost projections, may diminish over time as costs are extrapolated further into the future because of uncertainties in predicting commodities (and raw material) prices, labor rates, and manufacturing practices. The projected costs may be higher or lower than predicted.
Over the past several years, EPA has contracted with FEV, Inc. and its subcontractor Munro & Associates, to conduct tear-down cost studies for a number of key technologies evaluated by the agencies in assessing the feasibility of future GHG and CAFE standards. The analysis methodology included procedures to scale the tear-down results to smaller and larger vehicles, and also to different technology configurations. EPA documented FEV's methodology in a report published as part of the MYs 2012–2016 rulemaking, detailing the costing of the first tear-down conducted in this work (#1 in the list below).
Since then, FEV's work under this contract has continued. Additional cost studies have been completed and are available for public review.
Over the course of this contract, teardown-based studies have been performed thus far on the technologies listed below. These completed studies provide a thorough evaluation of the new technologies' costs relative to their baseline (or replaced) technologies.
1. Stoichiometric gasoline direct injection (SGDI) and turbocharging with engine downsizing (T–DS) on a DOHC (dual overhead cam) I4 engine, replacing a conventional DOHC I4 engine.
2. SGDI and T–DS on a SOHC (single overhead cam) on a V6 engine, replacing a conventional 3-valve/cylinder SOHC V8 engine.
3. SGDI and T–DS on a DOHC I4 engine, replacing a DOHC V6 engine.
4. 6-speed automatic transmission (AT), replacing a 5-speed AT.
5. 6-speed wet dual clutch transmission (DCT) replacing a 6-speed AT.
6. 8-speed AT replacing a 6-speed AT.
7. 8-speed DCT replacing a 6-speed DCT.
8. Power-split hybrid (Ford Fusion with I4 engine) compared to a conventional vehicle (Ford Fusion with V6). The results from this tear-down were extended to address P2 hybrids. In addition, costs from individual components in this tear-down study were used by the agencies in developing cost estimates for PHEVs and EVs.
9. Mild hybrid with stop-start technology (Saturn Vue with I4 engine), replacing a conventional I4 engine. New for this final rule, the agencies have used portions of this tear-down study in estimating mild hybrid costs.
10. Fiat Multi-Air engine technology. (Although results from this cost study are included in the rulemaking docket, they were not used by the agencies in this rulemaking's technical analyses because the technology is under a very recently awarded patent and we have chosen not to base our analyses on its widespread use across the industry in the 2017–2025 timeframe.)
Items 6 through 10 in the list above are new since the MYs 2012–2016 final rule.
In addition, FEV and EPA extrapolated the engine downsizing costs for the following scenarios that were based on the above study cases:
1. Downsizing a SOHC 2 valve/cylinder V8 engine to a DOHC V6.
2. Downsizing a DOHC V8 to a DOHC V6.
3. Downsizing a SOHC V6 engine to a DOHC 4 cylinder engine.
4. Downsizing a DOHC 4 cylinder engine to a DOHC 3 cylinder engine.
The agencies have relied on the findings of FEV for estimating the cost of the technologies covered by the tear-down studies.
The agencies have also reevaluated the costs for HEVs, PHEVs, and EVs since we issued the MYs 2012–2016 final rule and the 2010 TAR. In the proposal, we noted that electrified vehicle technologies were developing rapidly and the agencies sought to capture results from the most recent analysis. Further, we noted that the MYs 2012–2016 rule employed a single $/kWh estimate and did not consider the specific vehicle and technology application for the battery when we estimated the cost of the battery. Specifically, batteries used in HEVs (high power density applications) versus EVs (high energy density applications) need to be considered appropriately to reflect the design differences, the chemical material usage differences, and differences in $/kWh as the power to energy ratio of the battery varies for different applications.
To address those issues for the proposal, the agencies did two things. First, EPA developed a spreadsheet tool
Subsequent to the proposal for this rule, the agencies requested changes to the BatPaC model. These requests were that an option be added to select between liquid or air thermal management and that adequate surface area and cell spacing be determined accordingly. Also, the agencies requested a feature to allow battery packs to be configured as subpacks in parallel or modules in parallel, as additional options for staying within voltage and cell size limits for large packs. ANL added these features in a version of the model distributed March 1, 2012. This version of the model is used for the battery cost estimates in the final rule.
The agencies have chosen to use the ANL model as the basis for estimating the cost of large-format lithium-ion batteries for this assessment for several reasons. The model was developed by scientists at ANL who have significant experience in this area. Also, the model uses a bill of materials methodology for developing cost estimates. The ANL model appropriately considers the vehicle application's power and energy requirements, which are two of the fundamental parameters when designing a lithium-ion battery for an HEV, PHEV, or EV. The ANL model can estimate production costs based on user defined inputs for a range of production volumes. The ANL model's cost estimates, while generally lower than the estimates we received from the OEMs, are generally consistent with the supplier cost estimates that EPA received from large-format lithium-ion battery pack manufacturers. This includes data the EPA received during on-site visits in the 2008–2011 time frame. Finally, the agencies chose to use the ANL model because it has been described and presented in the public domain and does not rely upon confidential business information (which could not be reviewed by the public).
The potential for future reductions in battery cost and improvements in battery performance relative to current batteries will play a major role in determining the overall cost and performance of future PHEVs and EVs. The U.S. Department of Energy manages major battery-related R&D programs and partnerships, and has done so for many years, including the ANL model utilized in this report. DOE has reviewed the updated BatPaC model and supports its use in this final rule.
As we did in the proposal, we have also estimated the costs (hardware and labor) associated with in-home electric vehicle charging equipment, which we expect to be necessary for PHEVs and EVs, and their installation. New for the final rule are costs associated with an on-vehicle battery discharge system. These battery discharge systems allow the batteries in HEVs, PHEVs and EVs to be discharged safely at the site of an accident prior to moving affected vehicles to storage or repair facilities. Charging equipment and battery discharge system costs are covered in more detail in Chapter 3 of the Joint TSD.
The agencies have revised the costs for mass reduction from the MYs 2012–2016 rule and the 2010 Technical Assessment Report. For this rule, the agencies are relying on a wide assortment of sources from the literature as well as data provided from a number of OEMs. Based on this review, the agencies have estimated a new cost curve such that the costs increase as the levels of mass reduction increase. Both agencies have mass reduction feasibility and cost studies that were completed in time for the final rule. However the results from these studies were not employed in the rulemaking analysis because the peer reviews had not been completed and changes to the studies based on the peer reviews were not completed. Both have since been completed. For the primary analyses, both agencies use the same mass reduction costs as were used in the proposal, although they have been updated to 2010 dollars. All of these studies are discussed in Chapter 3 of the Joint TSD as well as in the respective publications. The use of the new cost results from the studies would have made little difference to the final rule cost analysis for two reasons:
(1) The NPRM (+/− 40%) sensitivity analysis conducted by the agencies showed little difference in overall costs due to the change in mass reduction costs;
(2) The agencies project even less mass reduction levels in the final rule compared to the NPRM based on the use of revised fatality coefficients from NHTSA's updated study of the effects on vehicle mass and size on highway safety, which is discussed in section II.G of this preamble.
As done in the proposal, the agencies have estimated the indirect costs by applying indirect cost multipliers (ICM) to direct cost estimates. EPA derived ICMs a basis for estimating the impact on indirect costs of individual vehicle technology changes that would result from regulatory actions. EPA derived separate ICMs for low-, medium-, and high-complexity technologies, thus enabling estimates of indirect costs that reflect the variation in research, overhead, and other indirect costs that can occur among different technologies. The agencies also applied ICMs in our MYs 2012–2016 rulemaking.
Prior to the development of the ICM methodology,
There is some level of uncertainty surrounding both the ICM and RPE markup factors. The ICM estimates used in this rule group all technologies into four broad categories in terms of complexity and treat them as if individual technologies within each of the categories (“low”, “medium”, “high1” and “high2” complexity) will have the same ratio of indirect costs to direct costs. This simplification means it is likely that the direct cost for some technologies within a category will be higher and some lower than the estimate for the category in general. More importantly, the ICM estimates have not been validated through a direct accounting of actual indirect costs for individual technologies. Rather, the ICM estimates were developed using adjustment factors developed in two separate occasions: the first, a consensus process, was reported in the RTI report; the second, a modified Delphi method, was conducted separately and reported in an EPA memo.
RPEs themselves are inherently difficult to estimate because the accounting statements of manufacturers do not neatly categorize all cost elements as either direct or indirect costs. Hence, each researcher developing an RPE estimate must apply a certain amount of judgment to the allocation of the costs. Since empirical estimates of ICMs are ultimately derived from the same data used to measure RPEs, this affects both measures. However, the value of RPE has not been measured for specific technologies, or for groups of specific technologies. Thus applying a single average RPE to any given technology by definition overstates costs for very simple technologies, or understates them for advanced technologies.
In every recent GHG and fuel economy rulemaking proposal, we have requested comment on our ICM factors and whether it is most appropriate to use ICMs or RPEs. We have generally received little to no comment on the issue specifically, other than basic comments that the ICM values are too low. In addition, in the June 2010 NAS report, NAS noted that the under the initial ICMs, no technology would be assumed to have indirect costs as high as the average RPE. NRC found that “RPE factors certainly do vary depending on the complexity of the task of integrating a component into a vehicle system, the extent of the required changes to other components, the novelty of the technology, and other factors. However, until empirical data derived by means of rigorous estimation methods are available, the committee prefers to use average markup factors.”
As EPA has developed its ICM approach to indirect cost estimation, the agency has publicly discussed and responded to comment on its approach during the MYs 2012–2016 light-duty GHG rule, and also in the more recent heavy-duty GHG rule (see 76 FR 57106) and in the 2010 TAR. The agency published its work in the Journal of Production Economics
The agencies received comments on the approach used to estimate indirect costs in the proposal. One commenter (NADA) argued that the ICM approach was not valid and an RPE approach was the only appropriate approach.
Note that our ICM, while identical to those used in the proposal, have changed since the MYs 2012–2016 rule. The first change—increased ICM factors—was done as a result of further thought among EPA and NHTSA that the ICM factors presented in the original RTI report for low and medium complexity technologies should no longer be used and that we should rely solely on the modified-Delphi values for these complexity levels. For that reason, we eliminated the averaging of original RTI values with modified-Delphi values and instead are relying solely on the modified-Delphi values for low and medium complexity technologies. The second change was a re-evaluation by agency staff of the complexity classification of each of the technologies that were not directly examined in the RTI and modified Delphi studies. As a result, more technologies have been classified as medium complexity and fewer as low complexity. The third change—the way the factors are applied—resulted in the warranty portion of the indirect costs being applied as a multiplicative factor (thereby decreasing going forward as direct manufacturing costs decrease due to learning), and the remainder of the indirect costs being applied as an additive factor (thereby remaining constant year-over-year and not being reduced due to learning). This third change has a comparatively large impact on the resultant technology costs and, we believe, more appropriately estimates costs over time. In addition to these changes, a secondary-level change was made as part of this ICM recalculation. That change was to revise upward the RPE level reported in the original RTI report from an original value of 1.46 to 1.5, to reflect the long term average RPE. The original RTI study was based on 2008 data. However, an analysis of historical RPE data indicates that, although there is year to year variation, the average RPE has remained roughly constant at 1.5. ICMs are applied to future years' data and, therefore, NHTSA and EPA staffs believed that it would be appropriate to base ICMs on the historical average rather than a single year's result. Therefore, ICMs were adjusted to reflect this average level. These changes to the ICMs since the MYs 2012–2016 rule and the methodology are described in greater detail in Chapter 3 of the Joint TSD. NHTSA also has further discussion of ICMs in Chapter 7 of NHTSA's FRIA.
Because the production of automotive components is capital-intensive, it is possible for substantial capital investments in manufacturing equipment and facilities to become “stranded” (where their value is lost, or diminished). This would occur when the capital is rendered useless (or less useful) by some factor that forces a major change in vehicle design, plant operations, or manufacturer's product mix, such as a shift in consumer demand for certain vehicle types. It can also be caused by new standards that phase in at a rate too rapid to accommodate planned replacement or redisposition of existing capital to other activities. The lost value of capital equipment is then amortized in some way over production of the new technology components.
It is difficult to quantify accurately any capital stranding associated with new technology phase-ins under the standards in this final rule because of the iterative dynamic involved—that is, the new technology phase-in rate strongly affects the potential for additional cost due to stranded capital, but that additional cost in turn affects the degree and rate of phase-in for other individual competing technologies. In addition, such an analysis is very company-, factory-, and manufacturing process-specific, particularly in regard to finding alternative uses for equipment and facilities. Nevertheless, in order to account for the possibility of stranded capital costs, the agencies asked FEV to perform a separate analysis of potential stranded capital costs associated with rapid phase-in of technologies due to new standards, using data from FEV's primary teardown-based cost analyses.
The assumptions made in FEV's stranded capital analysis with potential for major impacts on results are:
• All manufacturing equipment was bought brand new when the old technology started production (no carryover of equipment used to make the previous components that the old technology itself replaced).
• 10-year normal production runs: Manufacturing equipment used to make old technology components is straight-line depreciated over a 10-year life.
• Factory managers do not optimize capital equipment phase-outs (that is, they are assumed to routinely repair and replace equipment without regard to whether or not it will soon be scrapped due to adoption of new vehicle technology).
• Estimated stranded capital is amortized over 5 years of annual production at 450,000 units (of the new technology components). This annual production is identical to that assumed in FEV's primary teardown-based cost analyses. The 5-year recovery period is chosen to help ensure a conservative analysis; the actual recovery would of course vary greatly with market conditions.
The stranded capital analysis was performed for three transmission technology scenarios, two engine technology scenarios, and one hybrid technology scenario. The methodology used by EPA in applying the results to the technology costs is described in Chapter 3.8.7 and Chapter 5.1 of EPA's RIA. The methodology used by NHTSA in applying the results to the technology costs is described in NHTSA's RIA section V.
In their written comments on the proposal, the Center for Biological Diversity and the International Council on Clean Transportation argued that the long lead times being provided for the phase-in of new standards, stretching out as they do over two complete redesign cycles, will virtually eliminate any capital stranding, making it inappropriate to carry over what they consider to be a “relic” from shorter-term rulemakings. As discussed above, it is difficult to quantify accurately any capital stranding associated with new technology phase-ins, especially given the projected and unprecedented deployment of technologies in the rulemaking timeframe. The FEV analysis attempted to define the possible stranded capital costs, for a select set of technologies, using the above set of assumptions. Since the direct manufacturing costs developed by FEV assumed a 10 year production life (
This simple change from the earlier analyses and from the proposal is to update any costs presented in earlier analyses to 2010 dollars using the GDP price deflator as reported by the Bureau of Economic Analysis on January 27, 2011. The factors used to update costs from 2007, 2008 and 2009 dollars to 2010 dollars are shown below.
The agencies have not changed the approach to manufacturer learning since the proposal. For many of the technologies considered in this rulemaking, the agencies expect that the industry should be able to realize reductions in their costs over time as a result of “learning effects,” that is, the fact that as manufacturers gain experience in production, they are able to reduce the cost of production in a variety of ways. For this rule, the agencies continue to apply learning effects in the same way as we did in both the MYs 2012–2016 final rule and in the 2010 TAR. However, in the proposal, we employed some new terminology in an effort to eliminate some confusion that existed with our old terminology. (This new terminology was described in the recent heavy-duty GHG final rule (see 76 FR 57320)). Our old terminology suggested we were accounting for two completely different learning effects—one based on volume production and the other based on time. This was not the case since, in fact, we were actually relying on just one learning phenomenon, that being the learning-by-doing phenomenon that results from cumulative production volumes.
As a result, the agencies have also considered the impacts of manufacturer learning on the technology cost estimates by reflecting the phenomenon of volume-based learning curve cost reductions in our modeling using two algorithms depending on where in the learning cycle (i.e., on what portion of the learning curve) we consider a technology to be—“steep” portion of the curve for newer technologies and “flat” portion of the curve for more mature technologies. The observed phenomenon in the economic literature which supports manufacturer learning cost reductions are based on reductions in costs as production volumes increase with the highest absolute cost reduction occurring with the first doubling of production. The agencies use the terminology “steep” and “flat” portion of the curve to distinguish among newer technologies and more mature technologies, respectively, and how learning cost reductions are applied in cost analyses.
Learning impacts have been considered on most but not all of the technologies expected to be used because some of the expected technologies are already used rather widely in the industry and, presumably, quantifiable learning impacts have already occurred. The agencies have applied the steep learning algorithm for only a handful of technologies considered to be new or emerging technologies such as PHEV and EV batteries which are experiencing heavy development and, presumably, rapid cost declines in coming years. For most technologies, the agencies have considered them to be more established and, hence, the agencies have applied the lower flat learning algorithm. For more discussion of the learning approach and the technologies to which each type of learning has been applied the reader is directed to Chapter 3 of the Joint TSD. NHTSA has further discussion in Chapter 7 of the NHTSA FRIA. Note that, since the agencies had to project how learning will occur with new technologies over a long period of time, we request comments on the assumptions of learning costs and methodology. In particular, we are interested in input on the assumptions for advanced 27-bar BMEP cooled exhaust gas recirculation (EGR) engines, which are currently still in the experimental stage and not expected to be available in volume production until 2017. For our analysis, we have based estimates of the costs of this engine on current (or soon to be current) production technologies (
The agencies did not receive comments on the issue of manufacturer learning.
For this final rule, EPA has conducted another peer reviewed study with the global engineering consulting firm, Ricardo, Inc., adding to and refining the results of the 2007 study, consistent with a longer-term outlook through model years MYs 2017–2025. The 2007 study was a detailed, peer reviewed vehicle simulation project to quantify the effectiveness of a multitude of technologies for the MYs 2012–2016 rule (as well as the 2010 NOI) published in 2008. The extent of the new study was vast, including hundreds of thousands of vehicle simulation runs. The results were, in turn, employed to calibrate and update EPA's lumped parameter model, which is used to quantify the synergies and dis-synergies associated with combining technologies together for the purposes of generating
Additionally, there were a number of technologies that Ricardo did not model explicitly. For these, the agencies relied on a variety of sources in the literature. A few of the values are identical to those presented in the MYs 2012–2016 final rule, while others were updated based on the newer version of the lumped parameter model. More details on the Ricardo simulation, lumped parameter model, as well as the effectiveness for supplemental technologies are described in Chapter 3 of the Joint TSD.
The agencies note that the effectiveness values estimated for the technologies considered in the modeling analyses may represent average values, and do not reflect the virtually unlimited spectrum of possible values that could result from adding the technology to different vehicles. For example, while the agencies have estimated an effectiveness of 0.6 to 0.8 percent for low-friction lubricants, depending on the vehicle class, each vehicle could have a unique effectiveness estimate depending on the baseline vehicle's oil viscosity rating. Similarly, the reduction in rolling resistance (and thus the improvement in fuel economy and the reduction in CO
As discussed in the proposal, the U.S. D.O.T. Volpe Center entered into a contract with Argonne National Laboratory (ANL) to provide full vehicle simulation modeling support for this MYs 2017–2025 rulemaking. While modeling was not complete in time for use in the NPRM, the ANL results were available for the final rule and were used to define the effectiveness of mild hybrids for both agencies, and NHTSA used the results to update the effectiveness of advanced transmission technologies coupled with naturally-aspirated engines for the CAFE analysis, as discussed in the Joint TSD and more fully in NHTSA's RIA. This simulation modeling was accomplished using ANL's full vehicle simulation tool called “Autonomie,” which is the successor to ANL's Powertrain System Analysis Toolkit (PSAT) simulation tool, and that includes sophisticated models for advanced vehicle technologies. The ANL simulation modeling process and results are documented in multiple reports and are peer reviewed. Both the ANL reports and peer review report can be found in NHTSA's docket.
During MYs 2017–2025 manufacturers are expected to go through the normal automotive business cycle of redesigning and upgrading their light-duty vehicle products, and in some cases introducing entirely new vehicles not in the market today. The MYs 2017–2025 standards timeframe allows manufacturers the time needed to incorporate GHG reduction and fuel-saving technologies into their normal business cycle while considering the requirements of the MYs 2012–2016 standards. This is important because it has the potential to avoid the much higher costs that could occur if manufacturers need to add or change technology at times other than their scheduled vehicle redesigns. This time period also provides manufacturers the opportunity to plan for compliance using a multi-year time frame, again consistent with normal business practice. Over these 9 model years, and the 5 prior model years that make up the MYs 2012–2016 standards, there will be an opportunity for manufacturers to evaluate, presumably, every one of their vehicle platforms and models and add technology in a cost effective way to control GHG emissions and improve fuel economy. This includes all the technologies considered here and the redesign of the air conditioner systems in ways that will further reduce GHG emissions and improve fuel economy.
Because of the complexities of the automobile manufacturing process, manufacturers are generally only able to add new technologies to vehicles on a specific schedule; just because a technology exists in the marketplace or is made available, does not mean that it is immediately available for applications on all of a manufacturer's vehicles. In the automobile industry there are two terms that describe when technology changes to vehicles occur: redesign and refresh (i.e., freshening). Vehicle redesign usually refers to significant changes to a vehicle's appearance, shape, dimensions, and powertrain. Redesign is traditionally associated with the introduction of “new” vehicles into the market, often characterized as the “next generation” of a vehicle, or a new platform. Across the industry, redesign of models generally takes place about every 5 years. However, while 5 years is a typical design period, there are many instances where redesign cycles can be longer or shorter. For example, it has generally been the case that pickup trucks and full size vans have longer redesign cycles (
We have a more detailed discussion in Chapter 3.4 of the joint TSD that describes how refresh and redesign cycles play into the modeling each agency has done in support of the final standards.
GHG-reducing and fuel-saving technologies for vehicle applications vary widely in function, cost, effectiveness and availability. Some of these attributes, like cost and availability vary from year to year. New technologies often take several years to become available across the entire market. The agencies use phase-in caps to manage the maximum rate that the CAFE and OMEGA models can apply new technologies.
Phase-in caps are intended to function as a proxy for a number of real-world limitations in deploying new technologies in the auto industry. These limitations can include but are not limited to, engineering resources at the OEM or supplier level, restrictions on intellectual property that limit deployment, and/or limitations in material or component supply as a market for a new technology develops. Without phase-in caps, the models may apply technologies at rates that are not representative of what the industry is actually capable of producing, which would suggest that more stringent standards might be feasible than actually would be.
EPA applies the caps on an OEM vehicle platform basis for most technologies. For a given technology with a cap of x%, this means that x% of a vehicle platform can receive that technology. On a fleet average basis, since all vehicle platforms can receive x% of this technology, x% of a manufacturer's fleet can also receive that technology. EVs and PHEVs are an exception to this rule as the agencies limit the availability of these technologies to some subclasses. Unlike other technologies, in order to maintain utility, EPA only allows non-towing vehicle types to be electrified in the OMEGA model. As a result, the PHEV and EV cap was applied so that the average manufacturer could produce to the cap levels. As would be expected, manufacturers that make more non-towing vehicles can have a higher fraction of their fleet converted to EVs and PHEVs, while those that make fewer non-towing vehicles have a lower potential maximum limit on EV and PHEV production.
NHTSA applies phase-in caps in addition to refresh/redesign cycles used in the CAFE model, which constrain the rate of technology application at the vehicle level so as to ensure a period of stability following any modeled technology applications, Unlike vehicle-level cycle settings, phase-in caps, defined on a percent per year basis, constrain technology application at the OEM level. As discussed above phase-in caps are intended to reflect a manufacturer's overall resource capacity available for implementing new technologies (such as engineering and development personnel and financial resources) thereby ensuring that resource capacity is accounted for in the modeling process. At a high level, phase-in caps and refresh/redesign cycles work in conjunction with one another to avoid the CAFE modeling process out-pacing an OEM's limited pool of available resources during the rulemaking time frame, especially in years where many models may be scheduled for refresh or redesign. This helps to ensure technological feasibility and economic practicability in determining the stringency of the standards.
We have a more detailed discussion of phase-in caps in Chapter 3.4 of the joint TSD.
In the proposal, we requested comment on maintenance, repair, and other operating-costs and whether these might increase or decrease with the new technologies. (See 76 FR 74925) We received comments on this topic from NADA. These comments stated that the agencies should include maintenance and repair costs in estimates of total cost of ownership (i.e., in our payback analyses).
For the first time in CAFE and GHG rulemaking, both agencies now include maintenance costs in their benefit-cost analyses and in their respective payback analyses. This analysis is presented in Chapter 3.6 of the joint TSD and the maintenance intervals and costs per maintenance event used by both agencies are summarized in Table II–18. For information on how each agency has folded the maintenance costs into their respective final analyses, please refer to each agency's respective RIA (Chapter 5 of EPA's RIA, Chapter VIII of NHTSA's FRIA).
The agencies' analysis of CAFE and GHG standards for the model years covered by this final rule rely on a range of forecast information, estimates of economic variables, and input parameters. This section briefly describes the sources of the agencies' estimates of each of these values. These values play a significant role in assessing the benefits of both CAFE and GHG standards.
In reviewing these variables and the agencies' estimates of their values for purposes of this final rule, NHTSA and EPA considered comments received in
•
•
Consumer vehicle choice modeling is a method to understand and predict what vehicles consumers might buy. In principle these models can be used to estimate the effects of these rules on vehicle sales and fleet mix. In practice, though, past analyses using such models have not produced consistent estimates of how buyers might respond to improved fuel economy, and it is difficult to decide whether one data source, model specification, or estimation procedure is clearly preferable over another. Thus, for these final rules, the agencies continue to use forecasts of total industry sales, the share of total sales accounted for by passenger cars, and the market shares of individual models for all years between 2010 and 2025 that do not vary among regulatory alternatives.
The agencies requested comment on how to estimate explicitly the changes in vehicle buyers' choices and welfare from the combination of higher prices for new vehicle models, increases in their fuel economy, and any accompanying changes in vehicle attributes such as performance, passenger- and cargo-carrying capacity, or other dimensions of utility. Some
•
•
•
•
•
•
•
•
•
•
•
•
•
Similarly, since the size of the SPR, or other factors affecting the cost of maintaining the SPR, historically have not varied in response to changes in U.S. oil import levels, we exclude changes in the cost of maintaining the SPR from the estimates of the energy security benefits of the program. The agencies continue to examine appropriate methodologies for estimating the impacts on military and SPR costs as U.S. oil imports are reduced.
To summarize, the agencies have included
•
•
•
For the final rule, however, EPA and NHTSA also conducted full scale, photochemical air quality modeling to estimate the change in ambient concentrations of ozone, PM
•
•
Several commenters also recommended presenting monetized estimates of the benefits of reductions in non-CO
•
•
For the reader's reference, Table II–19 and Table II–20 below summarize the values used by both agencies to calculate the impacts of the final standards. The values presented in these tables are summaries of the inputs used for the models; specific values used in the agencies' respective analyses may be aggregated, expanded, or have other relevant adjustments. See the Joint TSD, Chapter 4, and each agency's respective RIA for details.
A wide range of estimates is available for many of the primary inputs that are used in the agencies' CAFE and GHG emissions models. The agencies recognize that each of these values has some degree of uncertainty, which the agencies further discuss in the Joint TSD. The agencies tested the sensitivity of their estimates of costs and benefits to a range of assumptions about each of these inputs, and found that the magnitude of these variations would not have changed the final standards. For example, NHTSA conducted separate sensitivity analyses for, among other things, discount rates, fuel prices, the social cost of carbon, the fuel economy rebound effect, consumers' valuation of fuel economy benefits, battery costs, mass reduction costs, energy security costs, and the indirect cost markup factor. This list is similar in scope to the list that was examined in the proposal, but includes post-warranty repair costs and transmission shift optimizer effectiveness as well. NHTSA's sensitivity analyses are contained in Chapter X of NHTSA's RIA.
Similarly, EPA conducted sensitivity analyses on discount rates, the social cost of carbon, the rebound effect, battery costs, mass reduction costs, the indirect cost markup factor and on the cost learning curves used in this analysis. These analyses are found in Chapters 3, 4, and 7 of the EPA RIA. In addition, NHTSA performed a probabilistic uncertainty analysis examining simultaneous variation in the major model inputs including technology costs, technology benefits, fuel prices, the rebound effect, and military security costs. This information is provided in Chapter XII of NHTSA's RIA.
For the MYs 2012–2016 rule, EPA provided an option for manufacturers to generate credits for complying with GHG standards by incorporating efficiency-improving vehicle technologies that would reduce CO
EPA proposed to continue these credit mechanisms in the MYs 2017–2025 GHG program, and is finalizing these proposals in this notice. EPA also proposed that certain of the A/C credits and the off-cycle credits be included under the CAFE program. See
The agencies expect that, because of the significant credits and fuel consumption improvement values available for improvements to the efficiency of A/C systems (up to 5.0 g/mi for cars and 7.2 g/mi for trucks which is equivalent to a fuel consumption improvement value of 0.000563 gal/mi for cars and 0.000810 gal/mi for trucks), manufacturers will take technological steps to maximize these benefits. Since we project that all manufacturers will adopt these A/C improvements to their maximum extent, EPA has adjusted the stringency of the two-cycle tailpipe CO
EPA, in coordination with NHTSA, is also introducing for MYs 2017–2025 a new incentive for certain advanced technologies used in full-sized pickup trucks. Under its EPCA authority for CAFE and under its CAA authority for GHGs, EPA is establishing GHG credits and fuel economy improvement values for manufacturers that hybridize a significant quantity of their full size pickup trucks, or that use other technologies that significantly reduce CO
We discuss each of these types of credits and incentives, in detail below and throughout Chapter 5 of the Joint TSD. We also discuss and respond to the key comments throughout this section.
After detailed consideration of the comments and other available information, the agencies are finalizing a program of A/C efficiency credits and fuel consumption improvement values. Although the agencies are making some minor changes for the final rule, as described below, we are finalizing the program establishing efficiency credits and fuel consumption improvement values largely in its proposed form. Specifically, efficiency credits will continue to be calculated from a technology “menu” once manufacturers qualify for eligibility to generate A/C efficiency credits through specified A/C CO
The efficiency credits and fuel consumption improvement values in this rule reflect an understanding of the relationships between A/C technologies and CO
The agencies have identified several technologies related to improvements in A/C efficiency. Most of these technologies already exist on current vehicles, but manufacturers can improve the energy efficiency of the technology designs and operation. For example, most of the additional air conditioning related load on an engine is due to the compressor, which pumps the refrigerant around the system loop. The less the compressor operates, the less load the compressor places on the engine, resulting in less fuel consumption and CO
A broad range of stakeholders submitted general comments expressing support for the overall proposed program for A/C efficiency credits and fuel consumption improvement values as an appropriate method of encouraging efficiency-improving technologies. One commenter, Center for Biological Diversity, stated that “[t]echnology that will be available during the rulemaking period and can be incorporated in an economically feasible manner should be built into the standard and not merely used as an `incentive'.” In fact, all of these A/C improvements (for both indirect and direct A/C improvements) are reflected in the standard stringency.
Automaker and auto supplier commenters broadly supported the agencies' assessments of likely A/C efficiency-improving technologies and the credit values assigned to them. Several commenters suggested relatively minor changes in these assessments. One commenter, ICCT, suggested an approach that would attempt to vary A/C efficiency credits based on the degree to which other off-cycle improvements—specifically solar load reductions—may have independently reduced the demand for A/C cooling. ICCT's suggestion was to address what the commenter viewed as a potential for `double-counting.' EPA agrees with the observation that A/C efficiency improvements and solar load improvements are related technically. However, we believe that the added complexity of scaling the established credit values for A/C technologies according to solar load improvements would not be warranted, given relatively small change in the overall credit values that would likely result. We are thus finalizing separate treatment of A/C efficiency and other off-cycle improvements, as proposed. (We summarize and discuss comments on A/C efficiency test procedures below.)
As described in Chapter 5.1.3.2 of the Joint TSD, EPA calculated the total eligible A/C efficiency credits from an analysis of the average impact of air conditioning on tailpipe CO
Specific components and control strategies that are available to manufacturers to reduce the air conditioning load on the engine are listed in Table II–21 below and are discussed in more detail in Chapter 5 of the joint TSD.
Demonstrating the degree of efficiency improvement that a manufacturer's air conditioning systems achieve—thus quantifying the appropriate GHG credit and CAFE fuel consumption improvement value that the manufacturer is eligible for—would ideally involve a performance test. That is, manufacturers would use a test that would directly measure CO
At the time of the final rule for the MYs 2012–2016 GHG program, EPA concluded that a practical, performance-based test procedure capable of quantifying efficiency credits was not yet available. Instead, EPA adopted a specialized new procedure for the more limited purpose of demonstrating that the design improvements for which a manufacturer was earning credits produced actual efficiency improvements. That is, passing the test was a precondition to generating A/C efficiency credits, but the test was not used in measuring the amount of those credits. See 76 FR 74938. EPA's test is fairly simple, performed while the vehicle is at idle, and thus named the A/C Idle Test, or just Idle Test. Beginning with the 2014 model year, manufacturers are required to achieve a certain CO
In meetings since the MYs 2012–2016 final rule was published and during the public comment period for this rule, several manufacturers provided data that raise questions about the ability of the Idle Test to completely fulfill its intended purpose. Especially for smaller, lower-powered vehicles, the data show that it can be difficult to achieve a degree of test-to-test repeatability that manufacturers believe is necessary in order to comply with the Idle Test requirement and generate credits. Similarly, manufacturers and others have stated that the Idle Test does not accurately or sufficiently capture the improvements from many of the technologies listed in the menu. While two commenters (Hyundai and Kia) supported retaining the Idle Test for the purpose of generating A/C credits, most commenters strongly opposed any use of the Idle Test. In some cases, although they recommended that EPA abandon the Idle Test, several manufacturers suggested changes to the test if it is to remain as a part of the program. Specifically, these manufacturers supported the EPA proposals to scale the Idle Test results by engine size and to broaden the ambient temperature and humidity specifications for the Idle Test.
EPA noted many of these concerns in the preamble to the proposed rule, and proposed certain changes to the A/C Idle Test as a result. See 76 FR 74938. EPA also notes that the Idle Test was never meant to directly quantify the credits generated and we acknowledge that it is inadequate to that task. The Idle Test was meant simply to set a threshold in order to access the menu to generate credits (and in some cases to adjust the menu values for partial credit). EPA also discussed that it had developed a more rigorous (albeit more complicated and expensive to perform) test—the AC17 test—which includes the SC03 driving cycle, the fuel economy highway cycle, a preconditioning cycle, and a solar peak period. EPA proposed that the AC17 test would be mandatory in MYs 2017 and following model years, but that the AC Idle Test would continue to be used in MYs 2014–2016 (with the AC17 test used as a report-only alternative in those earlier model years).
Since proposal, EPA has continued to carefully evaluate the concerns and suggestions relating to the Idle Test. The agency recognizes that there are technical shortcomings as well as advantages to this relatively simple and inexpensive test. EPA has concluded that, given that a more sophisticated A/C is now available, the most appropriate course is to maintain the availability of the AC Idle Test through MY 2016, but to also allow manufacturers the option of using the AC17 test to demonstrate that A/C components are indeed functioning effectively. This use of the AC17 test as an alternative to the Idle Test will be allowed, commencing with MY 2014. Thus, for MYs 2014, 2015, and 2016, manufacturers will be able to generate A/C efficiency credits from the technology menu by performing and reporting results from the AC17 test in lieu of passing the Idle Test. During these model years, the level of credit and fuel consumption improvement value manufacturers can generate from the menu will be based on the design of the A/C system. In MYs 2017–2019, eligibility for AC efficiency credits will be determined solely by performing and reporting AC17 test results. During this time, the process for determining the
However, EPA is continuing to allow the Idle Test as a testing option through MY 2016. In addition, EPA is finalizing the modifications that we proposed to the Idle Test, making the threshold for access to the menu a function of engine displacement an option instead of the flat threshold, as well as adjusting the temperature and humidity specifications in the AC Idle Test. We are also finalizing the proposed modification that would allow a partial credit if the Idle Test performance is better than typical performance, based on historic EPA results from Idle Testing. Chapter 5.1.3.5 of the Joint TSD further describes the adjustments that EPA is making to the Idle Test for MYs 2014–2016.
As mentioned above, EPA, working in a joint collaboration with manufacturers (through USCAR) and CARB, has made significant progress in developing a more robust A/C-related emissions test. As noted above, the AC17 test is a four-part performance test, which combines the existing SC03 driving cycle, the fuel economy highway cycle, as well as a pre-conditioning cycle and a solar soak period. As proposed, and as discussed below, EPA will allow manufacturers choosing to generate efficiency credits to report the results of the AC17 test in lieu of the Idle Test requirements for MYs 2014–2016, and will require them to use the AC17 test after MY 2016. Until MY 2019, as for MYs 2014–2016, manufacturers will need to report the results from AC17 testing, but not to achieve a specific CO
EPA is making several technical and programmatic changes to the proposed AC17 test to minimize the number of vehicles that manufacturers will need to test, and to further streamline each test in order to minimize the testing burden. Since the appropriateness of the AC17 test for actually quantifying absolute A/C efficiency improvements (as opposed to demonstrating a relative improvement) is still being evaluated, manufacturers wishing to generate A/C efficiency credits will continue to use the technology menu to quantify the amount of CO
Commenters universally agreed that in most technical respects the AC17 test represents an improvement over the Idle Test. A few commenters suggested specific technical changes, which EPA has considered. Several auto industry commenters suggested that the proposed temperature and humidity tolerances of the test cell conditions may result in voided tests, due to the difficulty they see in maintaining these conditions throughout a 4-hour test interval. However, as discussed in more detail in Chapter 5 of the joint TSD, we are allowing manufacturers to utilize a 30-second moving average for the test chamber temperature; we have concluded that these tolerances are achievable with this revision, and that widening these tolerances would negatively affect the accuracy and repeatability of the test. As a result, we are finalizing the tolerances as originally proposed. Also, one commenter (Enhanced Protective Glass Automotive Association or EPGAA) suggested that for manual A/C systems, the A/C temperature control settings for the test be based on actual cabin temperatures rather than on the duration of lapsed time of the test, as proposed. EPA does not disagree in theory with the purpose of such a change—to attempt to better align the control requirements for a manual A/C system with those for an automatic system. However, the effect on test results of the slightly different control requirements is not large, and we believe that it would be impractical for the technician/driver to monitor cabin temperature and adjust the system accordingly during the test. We are therefore finalizing the automatic and manual A/C system control requirements as proposed.
In several cases, commenters suggested other technical changes to the AC17 test that EPA agrees will make performance of the test more efficient, with no appreciable effect on test accuracy. The relatively minor technical changes that we are finalizing include provisions relating to: the points during the test when cell solar lamps are turned on; establishing a specification for test cell wind speed; and a simplification of the placement requirements for ambient temperature sensors in the passenger cabin. See joint TSD section 5.1.3.5 explaining these changes more fully.
Overall, EPA has concluded that the AC17 test as proposed, with the improvements described above, is a technically robust method for demonstrating differences in A/C system efficiency as manufacturers progressively apply new efficiency-improving technologies.
Beyond technical issues related to the AC17 test itself, many commenters expressed concerns about several related program issues—i.e., how the agency proposed to use the test as a part of determining eligibility for A/C efficiency credits. First, many manufacturers and their trade associations stated that some characteristics of the AC17 test unnecessarily add to the burden on manufacturers of performing each individual test. For example, the roughly 4-hour duration of the AC17 test limits the number of tests that can be performed in a given facility over a period of time. Also, the test requires the use of relatively costly SC03 test
Most of these concerns, however, are direct results of necessary design characteristics of the test. Specifically, the impacts on vehicle efficiency of improved A/C technologies are relatively small compared to total vehicle CO
As discussed above, EPA believes that the AC17 represents a major step toward the eventual goal of performance-based testing that could be used to directly quantify the very significant A/C efficiency credits and fuel consumption improvement values that are available to eligible manufacturers under this program. In this context, EPA believes that the characteristics of the AC17 test identified by the manufacturers in their comments generally tend to be inherent aspects needed for a robust test, and in most respects we are finalizing the requirements for the use of the AC17 as proposed.
In addition to concerns about the effort required to perform each AC17 test, manufacturers also commented on what they understood as a requirement to run an unreasonable number of tests in order to qualify for efficiency credits and improvement values. On the other hand, ICCT commented that they believe that given the frequent changes in A/C technology, one or two tests per year for a manufacturer is too few, and that “each significantly changed model should be tested.” In response to these concerns, EPA has taken several steps in this final rule to clarify how a manufacturer will be able to use the AC17 to demonstrate the effectiveness of its different A/C systems and technologies while minimizing the number of tests that it will need to perform. In general, EPA believes that it is appropriate to limit the number of vehicles a manufacturer must test in any given model year to no more than one vehicle from each platform that generates credits (and CAFE improvement values) during each model year. For the purpose of the AC17 test and generating efficiency credits, EPA will use a definition for “platform” that allows a manufacturer to include several generally similar vehicle models in a single “platform” and to generate credits (or improvement values) for all of the vehicles with that platform based on a limited number of AC17 tests, as described below. This definition is slightly modified from the proposed definition, primarily by making clear that manufacturers need not necessarily associate vehicles that have different powertrains with different platforms for A/C credit purposes. The modified definition follows:
At the same time, EPA believes that if only a limited number of vehicles in a platform are to be tested on the AC17 in any given model year, it is important that vehicles in that platform with substantially different air conditioning designs be included in that testing over time. Thus, manufacturers with vehicles in a platform that are generating credits will need to choose a different vehicle model each year for AC17 testing. Testing will begin with the model that is expected to have highest sales. In the following model year, the manufacturer will choose the model in that platform representing the next-highest expected sales not already tested, and so on. This process will continue either until all vehicles in that platform that are generating credits have been tested (in which case the previous test data can be carried over) or until the platform experiences a major redesign (at which point the AC17 testing process will start over.) We believe that by clarifying the definition of “platform” and more clearly limiting testing to one test per platform per year, we have addressed the manufacturers' concerns about unreasonable test burdens.
Finally, in order to further minimize the number of tests that will be required for A/C efficiency credit purposes, instead of requiring replicate testing in all cases, EPA will allow a manufacturer to submit data from as few as one AC17 test for each instance in which testing is required. A manufacturer concerned about the variability of its testing program may at its option choose to perform additional replicate tests and use of the AC17 test in MYs 2014–2016 is for reporting only) because the data from these initial years will form the basis on which future credits are measured as described below, and a more robust confirmation of test-to-test consistency may be in their interest.
As mentioned above, for MYs 2019 and earlier (including optional AC17 testing prior to MY 2017), AC17 testing will only require reporting of results (and system characteristics) for manufacturers to be eligible to generate credits and improvement values from the technology menu. Beginning in MY 2020, manufacturers will also need to use AC17 testing to demonstrate that the A/C efficiency-improving technologies or systems on which the desired credits are based are indeed reducing CO
In their comments, auto manufacturers raised concerns about the potential difficulty of identifying and testing an acceptable baseline vehicle. EPA has considered these comments, and continues to believe that identifying and testing a baseline vehicle will not be overly burdensome in most cases. However, we agree that establishing an appropriate baseline vehicle can be difficult in some cases, including when the manufacturer has made major technological improvements to the vehicle, beyond the A/C technology improvements in question. Some manufacturers recommended that because of this difficulty and the other issues discussed above, the AC17 test should only be used in a “research” role to validate credit values on the credit
EPA discusses the revised AC17 test in more detail in Chapter 5 (section 5.1.3.8) of the joint TSD, including a graphical flow-chart designed to illustrate how the AC17 test will be used at various points during the implementation of the GHG (and from MY 2017 on, CAFE) programs.
c. Technology “Menu” for Quantifying A/C Efficiency Credits and Fuel Consumption Improvement Values
EPA believes that more testing and development will be necessary before the AC17 test could be used to measure absolute CO
Several comments addressed the technology menu and its use. The Alliance of Automobile Manufacturers said that they believe that projected A/C CO
Honeywell recognized that a performance-based test procedure for quantifying credits is not yet available, but asked EPA to be open to using such a test if one is developed. EPA agrees, and we are making clear that the off-cycle technology provisions discussed in the next section can be applied to A/C technologies if all criteria are met. We will also continue to monitor the quality of A/C efficiency testing procedures as they develop and consider specific revisions to the AC17 as appropriate. Finally, ICCT proposed accounting for any efficiency impact of alternative refrigerants in quantifying efficiency credits. However, because the effect on efficiency of the most likely future alternative refrigerant, HFO–1234yf, is only minimal when the A/C system design is optimized for its use, we are finalizing the technology menu with no adjustments for the use of alternative refrigerants. Here too, however, EPA will monitor the development and use of alternative refrigerants and any data on their impact on A/C efficiency, and consider adjustments in the future as appropriate.
Table II–21 presents the A/C efficiency credits and estimated CAFE fuel consumption improvement values being finalized in this rule for each of the efficiency-improving air conditioning technologies. We provide more detail on the agencies' development of the A/C efficiency credits and CAFE fuel consumption improvement values in Chapter 5 of the Joint TSD. In addition, that Chapter 5 presents very specific definitions of each of the technologies in the table below, definitions intended to ensure that the A/C technologies used by manufacturers correspond with the technologies we used to derive the credits and fuel consumption improvement values.
For the CAFE program, EPA will determine fleet average fuel consumption improvement values in a manner consistent with the way fleet average CO
Although EPA employs a five-cycle test methodology to evaluate fuel economy for fuel economy labeling purposes, EPA uses the established two-cycle (city, highway or correspondingly FTP, HFET) test methodology for GHG and CAFE compliance.
During meetings with vehicle manufacturers prior to the proposal of the MY 2017–2025 standards, manufacturers raised concerns that the approval process in the MYs 2012–2016 rule for generating off-cycle credits was complicated and did not provide sufficient certainty on the amount of credits that might be approved. Commenters also maintained that it is impractical to measure small incremental improvements on top of a large tailpipe measurement, similar to comments received related to quantifying air conditioner efficiency improvements. These same manufacturers believed that such a process could stifle innovation and fuel efficient technologies from penetrating into the vehicle fleet.
In the MYs 2017–2025 proposal, EPA, in coordination with NHTSA, proposed to extend the off-cycle credit program to MY 2017 and later, and to apply the off-cycle credits and equivalent fuel consumption improvement values to both the CAFE and GHG programs.
The proposed default values for these off-cycle credits were largely determined from research, analysis, and simulations, rather than from full vehicle testing, which would have been both cost and time prohibitive. EPA believed that these predefined estimates were somewhat conservative to avoid the potential for windfall credits.
In the NPRM, EPA proposed capping the amount of credits a manufacturer may generate using the defined technology list to 10 g/mile per year on a combined car and truck fleet-wide average basis. EPA also proposed to require minimum penetration rates for several of the listed technologies as a condition for generating credit from the list as a way to further encourage their significant adoption by MY 2017 and later. Based on comments and consideration on the amount of data that are available, we are finalizing the cap of 10 g/mile per year on a combined car and truck fleet-wide average basis. The fleetwide cap is being finalized because the default credit values are based on limited data, and also because EPA recognizes that some uncertainty is introduced when credits are provided based on a general assessment of off-cycle performance as opposed to testing on the individual vehicle models. However, we are not finalizing the minimum penetration rates applicable to certain technologies, primarily based the agencies' agreement with commenters stating that penetration caps might stifle the introduction of fuel economy and GHG improving technologies particularly in cases where manufacturers would normally introduce the technologies because manufacturing capacities are limited or low initial volume reduces risk if consumer acceptance is uncertain. Allowing credits for lower production volumes may encourage manufacturers to introduce more off-cycle technologies and then over several years increase production volumes thereby bringing more of these technologies into the mainstream. These program details are discussed in further in Section III.C.5.b.i.
For the final rule analysis, the agencies have developed estimates for the cost and effectiveness of two off-cycle technologies, active aerodynamics and stop-start. The agencies assumed that these two technologies are available to manufacturers for compliance with the standards, similar to all of the other fuel economy improving technologies that the analysis assumes are available. EPA and NHTSA's modeling and other final rule analyses use the 2-cycle effectiveness values for these technologies and include the additional off-cycle adjustment that reflects the real world effectiveness of the technologies. Therefore, NHTSA has included the assessment of these two off-cycle technologies in the assessment of maximum feasible standards for this final rulemaking. Including these technologies that are on the pre-defined menu recognizes that these technologies have a higher degree of effectiveness in the real-world than reflected in 2-cycle testing. EPA likewise considered the 2-cycle benefits of these technologies in determining the stringency of the final standards. The agencies note that they did not consider the availability of other off-cycle technologies in their modeling analyses for the proposal or for the final rule. There are two reasons for this. First, the agencies have virtually no data on the cost, development time necessary, manufacturability, etc. of these other technologies. The agencies thus cannot project the degree of emissions reduction and fuel economy improvements properly attributable to these technologies within the MYs 2017–2025 timeframe. Second, the agencies have no data on what the penetration rates for these technologies would be during the rule timeframe, even assuming their feasibility. See 76 FR 74944 (agencies need information on “effectiveness, cost, and availability” before considering inclusion of off-cycle technology benefits in determining the standards).
This section provides an overview of the pre-defined technology list being finalized and the key comments the agencies received regarding the technologies on the list and the proposed credit values. Provisions regarding how the pre-defined list fits into the overall off-cycle credit program are discussed in section III.C.5, including the MY 2014 start date for using the list, the 10 g/mile credit cap for the list, and the proposed penetration thresholds for listed technologies. In addition, a detailed discussion of the comments the agencies received regarding the technical details of individual technologies and how the credit values were derived is provided in Chapter 5 of the joint TSD.
In the proposal, the agencies requested comments on all aspects of the off-cycle credit menu technologies and derivations. EPA and NHTSA received many comments and, in addition, several stakeholders including Denso, Enhanced Protective Glass Automotive Association (EPGAA), ICCT and Honda, requested meetings and met with the agencies. Overall, there was general support for the menu based approach and the technologies included in the proposed list, but there were also suggestions to re-evaluate the definition of some of the technologies included in the menu, the calculation and/or test methods for determining the credits values, and recommendations to periodically re-evaluate the menu as technologies emerge or become pervasive.
For most of the listed technologies, the agencies proposed single fixed credit values and for other technologies a step-function (e.g., x amount of credit for y amount of reduction or savings).
Although we are allowing scaling of the credits, we are not accepting a request or granting credit for any level of credit less than 0.05 g/mi CO
In addition to supporting the off-cycle credit program in the MYs 2017–2025 program, comments received from the National Resources Defense Council (NRDC) and ICCT urged the agencies to ensure that off-cycle credits are verifiable via actual testing or reflect real-world in-use data from a statistically representative fleet. These comments also expressed concern that some of the proposed menu technologies would not achieve appreciably greater reductions than measured over the 2-cycle tests, that the off-cycle credit process had not fully assured that there would be component and/or system durability and had not accounted for in-use degradation. These commenters' ultimate concern is that the off-cycle credit flexibility could create windfall credits or avoid cost-effective 2-cycle improvements.
The agencies believe that the off-cycle credit program, as proposed and finalized, legitimately accounts for real-world emission reductions and fuel consumption improvements not measured, or not fully measured, under the two-cycle test methodologies. The off-cycle technologies on the defined list have been assessed by the agencies using the best available data and information at the time of this action to appropriately assign default credit values. The agencies conducted extensive reviews of the proposed credit values and technologies and, based on comments (such as those from ICCT) and analysis, did adjust some credit values and technology descriptions. In addition, the comments from the Alliance of Automobile Manufacturers provided data that aligned with and supported some of the estimated credit default values (discussed in greater detail in Chapter 5 of the joint TSD). As with the proposal and further refinement in these final rules, the agencies have structured the off-cycle credit program extension for MYs 2017–2025 to employ conservative calculation methodologies and estimates for the credit values on the defined technology list. In addition, the agencies will continue, as proposed, to apply a 10 g/mi cap to the total amount of available off-cycle credits to help address issues of uncertainty and potential windfalls. Based on review of the technologies and credits provided for those technologies, the cap balances the goal of providing a streamlined pathway for the introduction of off-cycle technologies while controlling potential environmental risk from the uncertainty inherent with the estimated level of credits being provided. Manufacturers would need to use several listed technologies across a very large portion of their fleet before they would reach the cap. Based on manufacturer comments regarding the proposed sales thresholds, discussed below, the agencies are not anticipating widespread adoption of these technologies, at least not in the early years of the program. Also, the cap is not an absolute limitation because manufacturers have the option of submitting data and applying for credits which would not be subject to the 10 g/mile credit limit as discussed in III.C.5. Therefore, we are confident in the underlying analysis and default values for the identified off-cycle credit technologies, and are finalizing the defined list of off-cycle credit technologies, and associated default values, with minimal changes in this final rule as discussed below.
For off-cycle technologies not on the pre-defined technology list, or to obtain a credit greater than the default value for a menu pre-defined technology, a manufacturer would be required to demonstrate the benefits of the technology via 5-cycle testing or via an alternate methodology that would be subject to a public review and comment process. Further, a manufacturer must certify the in-use durability of the technology for the full useful life of the vehicle for any technologies submitted for off-cycle credit application to ensure enforceability of the credits granted.
The agencies proposed an additive approach where manufacturers could add the credit values for all of the listed technologies employed on a vehicle model (up to the 10 g/mile cap, as discussed in III.C.5). The agencies received comments from ICCT recommending a multiplicative approach where the credit values for each technology on the list is determined by taking the total amount of available credits for off-cycle technologies and distributing it based on each technology's percent contribution to the overall off-cycle benefit (e.g., percent benefit of technology A, B, * * * n × total available credit equals the off-cycle credit for technology A, B, * * * n).
EPA understands ICCT's recommendation, as this is similar how to the calculation methods employed in the EPA Lumped Parameter Model combine the effectiveness of some technologies when the interaction of differing technologies does not yield the combined absolute fuel consumption improvement for each technology, but rather the actual effectiveness is a fractional value of each technology's effectiveness (often described as “synergies”). The agencies carefully evaluated these comments and, as stated previously, held a meeting with ICCT at their request to discuss the comments fully.
The agencies agree there may be synergistic (or non-synergistic) affects, but believe the combination of employing conservative credit value estimates and a 10 g/mi cap to the total amount of available off-cycle credits
As discussed above, the agencies are allowing scaling of the credit values in lieu of fixed values based on the comments received for the following technologies on the menu: high efficiency exterior lighting, waste heat recovery, solar panels and active aerodynamics. In the case of waste heat recovery and active aerodynamics, this did not change the numerical credit values we proposed. For waste heat recovery, 0.7 g/mi CO
In contrast, for high efficiency exterior lighting and solar panels, this required a revision in the methodology to allow for proper scaling. For high efficiency exterior lighting, the comments also requested credit allowance for high efficiency lighting on individual lighting elements rather than on all lighting elements. In the NPRM, our methodology assumed a package approach where each lighting element was weighted based on contribution to the overall electrical load savings, and then this was scaled by our base load reduction estimate for 5-cycle testing (e.g., 3.2 g/mile per 100 watts saved; see TSD 5.2.2). Using this package approach, it is difficult to de-couple the grams per mile CO
The agencies are finalizing the pre-defined technology list for off-cycle credits fundamentally as proposed with the exception of six technologies, primarily in response to the comments received: engine idle start-stop, electric heater circulation pump, high efficiency exterior lighting, solar panels, and active transmission and active engine warm-up.
First, the pre-defined credit values for engine idle start-stop are revised in response to comments questioning some vehicle operation and VMT assumptions and some methods for calculating the pre-defined credit values. More details on these changes can be found in Chapter 5 of the Joint TSD.
Second, the proposed stand-alone credit for an electric heater circulation pump is incorporated into the pre-defined credit for engine stop-start, thus aligning with the integrated nature of these two technologies. As the agencies re-evaluated the pre-defined credit values for engine idle start-stop, we recognized that a substantive amount of the off-cycle benefit attributed to engine stop-start would not be achievable in cold temperature conditions (e.g., temperatures below 40 deg F) without a technology that performs a similar function to the electric heater circulation pump as defined in the NPRM. The agencies believe that a mechanism allowing heat transfer to continue, even after the engine has shut-off, is necessary in order to maintain basic comfort in the cabin especially in colder ambient temperatures. This could occur, for example, when a vehicle is stopped at a multiple lane intersection controlling high traffic volumes. This technology can be an electric heater circulation pump, or some other cabin heat exchanger. Without this technology, the engine would need to continue operating and, therefore, circulating warm engine coolant through the HVAC system to continue providing heat to the cabin. Therefore, two credit values are being finalized for stop-start systems: a higher value (similar to the credits proposed) for systems with an electric heater circulation pump and a lesser value for stop-start systems without a pump or heat transfer mechanism.
Third, the agencies have revised the proposed pre-defined credit values for high-efficiency exterior lighting after evaluation of the numerous industry data provided via comments. The fundamental impetus for the revisions resulted from the research study cited as a basis for many pre-defined values as described in Chapter 5 of the TSD. When reviewing the additional data, the agencies concluded the initially referenced research study (Schoettle, et al.
Fourth, as discussed above, the need for scaling the credit value resulted in a new methodology for solar panels, and, consequently, adjusted credit values. For the NPRM, we assumed a fixed solar panel power output and scaled this according to our base load estimate (e.g., 3.2 g/mile per 100 watts saved; see TSD 5.2.2). However, the rated solar panel power output depends on several factors including the size and efficiency of the panel, and the energy that the panel is able to capture and convert to useful power. Therefore, these factors need to be considered when scaling, and our new methodology takes these factors into account. The agencies also accounted for the possibility of combining solar panels for both energy storage and active ventilation in the scaling algorithm.
Finally, we discuss active transmission and active engine warm-up together (although they are listed separately) since the methodology for them is the same. Chrysler commented that there should be separate car and truck credits for active transmission and active engine warm-up, as formulated for other advanced load reduction technologies (e.g., engine idle start-stop, electric heater circulation pump). In the NPRM, we used the credit value corresponding to a mid-size car to arrive at 1.8 g/mi. After considering these comments, we re-analyzed (using the Ricardo data) the credit values for active transmission and active engine warm-up using expanded vehicle classes on a sales-weighted basis. As a result, there was a clear disparity between the credit values for active transmission and active engine warm-up on cars and trucks. Accordingly, we now have separate car (1.5 g/mi) and truck (3.2 g/mi) active transmission and active engine warm-up credits.
There were no other changes to the off-cycle credit defined technology list other than the expansion or clarification of definitions for certain technologies as discussed in Chapter 5 of the TSD. Many commenters advocated for the inclusion of additional technologies on the off-cycle credit defined technology
Some commenters were opposed to adding any technologies to the menu (CBD) and others suggested some of the proposed values should be re-evaluated (ICCT) or that the values should be based on real test data, not simulation modeling (NRDC).
After reviewing and considering the comments, in general, we did not see evidence at this time to add any of these technologies to the pre-defined technology list. In many cases, there are no consistent, established methods or supporting data to determine the appropriate level of credit. Consequently, there is no reasonable basis or verifiable method for the agencies to substantiate or refute the performance claims used to support a request for pre-assigned, default credit values for such technologies, particularly for systems requiring driver intervention or action.
Therefore, we are not adding any of these technologies we were asked to consider to the pre-defined technology list. In the case of crash avoidance technologies, we are prohibiting off-cycle credits for these technologies under any circumstances. In the case of the other technologies for consideration, we are allowing manufacturers to use the alternate demonstration methods for technologies not on the pre-defined technology list menu as discussed in Section III.C. (see “Demonstration not based on 5-cycle testing”) to request credit. We respond below to the comments urging the agencies to add further technologies to the pre-defined list. Additional responses are found in TSD Chapter 5 and Section 7 of EPA's Response to Comment Document.
In addition, there were substantial comments regarding allowing credits for glazing. Specifically, the comments expressed concerns about incentivizing the use of metallic glazing which may impact signals emanating from within the passenger compartment and the desire for a separate credit for polycarbonate (PC) glazing. This is discussed below as well.
Several commenters from the automobile industry associations, individual manufacturers, and suppliers urged the agencies to include high efficiency alternators on the off-cycle defined technology list.
The Alliance of Automobile Manufacturers stated that the test cycles are performed with the accessories off but that “actual real world driving has average higher loads due to accessory use.” They cited GM testing comparing three different alternators on four vehicles with efficiencies ranging from 61% to 70% using the Verband der Automobilindustrie (VDA; the trade association representing German automobile manufacturers) test procedure that demonstrated a savings of 1.0 grams per mile CO
Two suppliers, Bosch and Denso, also supported adding high efficiency alternators to the defined technology list. Bosch cited testing on a General Motors 2.4 liter 4 cylinder gasoline engine with an increased alternator efficiency from 65%, the level of efficiency assumed in the NPRM, to 75% showed the potential for an increase of 0.7% in fuel economy by increasing alternator efficiency by 10%. Bosch also stated that increases in efficiency up to 82% are possible using existing and new technologies. Denso used performed a similar analysis by simulating an increase in alternator efficiency of 10% (65% to 75%). Using our NPRM values for CO
In response, we agree that high efficiency alternators have the potential to reduce electrical load, resulting in lower fuel consumption and CO
First, we appreciate commenters submitting data but we would need to have similar data from the range of available vehicle categories. With the exception of the data from the Alliance of Automobile Manufacturers that included a Cadillac SRX with, most recently, a 3.6 liter V6 engine, most of the data is from smaller displacement vehicles. Therefore, the range of data would need to be expanded to the mid-size and large car, and large truck to even begin to develop a default credit value.
Second, similar to high efficiency exterior lighting, the type of and number of electrical accessories on the vehicle may cause significant variability in the base electrical load and, consequently, the level of reduction and associated benefit of high efficiency alternator technology. However, unlike high efficiency exterior lighting with a limited amount of components, the vehicle components and accessories that affect high efficiency alternator load are seemingly unlimited. As the information from Denso suggests, there are some typical standard components but the list of standard versus optional components changes depending on manufacturer, nameplate and trim level (e.g., optional accessories on a lower trim level vehicle may be standard on a upper/luxury trim level vehicle). This makes it difficult to develop a default value given this level of variability.
Third, high efficiency alternators present the opportunity for manufacturers to add vehicle content that does not contribute to reducing fuel consumption or CO
A good example of a beneficial use of additional electrical load is the synergy between solar panels and active cabin ventilation. The solar panel can be used to power active cabin ventilation system motors but the amount of power produced by the panel may exceed the motor power requirements. Moreover, the active cabin ventilation system is only effective for the hot/sunny summer portion of the year. Rather than directing this excess power to other
However, unlike a solar panel, the high efficiency alternator supplies power to many vehicle features, and the EPA does not wish to directly regulate the electrical usage on vehicles in order to prevent “load backsliding”. This load backsliding could convert a fuel efficient technology into one that is detrimental to CO
The transmission oil cooler is used on vehicles to cool the transmission fluid under heavy loads, especially by large trucks during towing or large payload operations. As stated by the Alliance, one of the drawbacks is that this system operates continuously even under conditions where faster warm-up, such as cold conditions, would be beneficial. Therefore, the Alliance comments suggested that we add bypass valves for transmission oil coolers to the pre-defined technology list since “a bypass valve for the transmission oil cooler allows the oil flow to be controlled to provide maximum fuel economy under a wide variety of operating conditions.” They suggested a credit of 0.3 g/mi CO
The reason we are not including this technology on the pre-defined technology list is lack of available data and multiple methodologies for implementation that make determining an appropriate credit value difficult. As stated by the Alliance, “bypass valves are not currently commonly used with transmission oil coolers.” As a result, there is very limited data on the performance of such systems other than the engineering data cited by the Alliance. Also, the bypass valve could be implemented passively (e.g., viscosity based), actively (e.g., valve controllers based on temperature or viscosity), or by some other smart design. Consequently, depending on the implementation method, the credit value may not correspond effectively to the level of performance.
However, this technology can be demonstrated using 5-cycle or alternate demonstration methods. Therefore, we recommend that manufacturers seeking credit for this technology separately or in conjunction with active transmission warm-up credits explore this approach.
Porsche stated in their comments that there is “potential GHG benefit for electronic thermostat * * * in configurations which do not include an electric water pump.” In lieu of a traditional mechanical water pump, an electric water pump facilitates engine coolant flow without the penalty of using an energy-sapping belt driven system. However, for systems that use a mechanical water pump, an electronic thermostat could be used in lieu of an electric water pump to optimally control the flow of coolant (e.g., close off coolant flow to the radiator when the engine is cold). Porsche requested that the agencies allow credit for this technology irrespective of the other cooling system specifics (e.g., mechanical or electric water pump).
This technology is not on the pre-defined technology list, nor does this appear to be the intent of Porsche's comments. As such, the electronic thermostat can be demonstrated using 5-cycle or alternate demonstration methods. Therefore, we agree with Porsche and, if a benefit for the electronic thermostat regardless of the type of water pump used can be demonstrated, the electronic thermostat would be eligible under the procedures for evaluating technologies not on the pre-defined technology list.
Honda requested that we consider allowing credit for other electrical relays on the vehicle such as those used for power windows, wiper motors, power tailgate, defroster, and seat heaters. However, Honda states that they are unsure of how to measure the impact suggesting that lifetime usage data might be a basis to support the credit granted.
In response, we feel that granting credits for other vehicle relays is best considered using the demonstration methods for evaluating technologies not on the predefined technology list.
The confounding issue, as Honda points out in their comments, is how to quantify the benefit and, further, how to directly relate this benefit to fuel consumption savings. The complexity of identifying single and multiple relay impact is a daunting task and must be considered when pursuing this path. Further, the use of lifetime usage data only captures activity but does not couple this activity with a gram-per-mile CO
The comments from Bosch advocated for adding brushless motor technology for engine cooling fans to the pre-defined technology list. In their comments, Bosch stated that the current baseline technology is series-parallel brushed motors requiring 149 watts to operate. By switching to a brushless engine cooling fan motor, the wattage requirement is reduced to 68 watts for a savings of 87 watts, according to Bosch. Bosch reduced this number further to 81.2 watts since they considered a range of series-parallel brushed motors with varying wattage values. Based on this savings and Bosch's assumption that reducing electrical load by 30 watts saves 0.1 mile per gallon, Bosch projected a fuel
After consideration of Bosch's comments and the data provided showing potential benefits, it is not clear from the data provided if this would be the actual benefit once this technology is implemented. Absent real-world vehicle data, it is difficult to determine what the baseline and, consequently, the resulting benefit would be. In addition, it is likely that some or all of the benefit of brushless motor technology for engine cooling fans is captured on the 2-cycle test procedures.
Consequently, we are not adding brushless motor technology for engine cooling fans to the pre-defined technology list due to insufficient data on real-world, power requirements, activity profiles, and test data demonstrating the 2-cycle versus 5-cycle benefits. These factors prevent us from determining a default credit value necessary for addition to the off-cycle technology menu. A manufacturer that believes its engine cooling fan brushless motor merits credit can request it using the demonstration methods for technologies not on the predefined technology list.
The Global Automakers and Ford Motor Company encouraged the agencies to consider granting credit for integral fuel saving technologies and advanced combustion concepts (e.g., camless engines, variable compression ratio engines, micro air/hydraulic launch assist devices, advanced transmissions) using demonstration methods for technologies that are not on the predefined technology list. Both parties took issue with our statements in the NPRM Preamble (see 76 FR 75024):
These commenters urged EPA to allow demonstration of benefits using some alternative testing or analytical method, or to provide an opportunity to perform some type of demonstration, for integral fuel saving technologies and advance combustion concepts.
In response, since these methods are integral to basic vehicle design, there are fundamental issues as to whether they would ever warrant off-cycle credits. Being integral, there is no need to provide an incentive for their use, and (more important), these technologies would be incorporated regardless. Granting credits would be a windfall. As we stated in the NPRM Preamble (see 76 FR 75024), these technologies are included in the base vehicle design to meet the standard and it is consequently inappropriate for these types of technologies to receive off-cycle credits. EPA (in coordination with NHTSA) will continue to track the progress of these technologies and attempt to collect data on their effectiveness and use.
As mentioned above, many commenters advocated for the inclusion of additional technologies on the off-cycle credit defined technology list such as congestion avoidance, interactive/driver-based technologies, which provide information to the driver that the driver may use to alter his/her driving route or technique, and driver-selectable technologies, which cause the vehicle to operate in a different manner.
Daimler commented that the agencies should provide “congestion mitigation credits based on crash avoidance technologies,” because crash avoidance technologies can potentially reduce traffic congestion associated with motor vehicle collisions and thus, “similar to off-cycle technologies,” provide “significant CO
In addition to requesting that the agencies create a new category of credits, the comment further addressed means of evaluating and approving applications for such credits. Daimler suggested that NHTSA require manufacturers to submit data “specific to [their] product offerings showing that [their] technology is effective in reducing vehicle collisions,” and that “NHTSA may approve the application and determine the amount of the credit” and determine whether the technology is “robust and effective in terms of crash avoidance and the consequent fuel savings.”
The agencies agree that there is a clear nexus between congestion mitigation and fuel/CO
NHTSA has extensive familiarity with the safety technologies usually associated with crash avoidance, having required some (most notably, electronic stability control) as standard equipment on all newly manufactured light vehicles, and being deeply engaged in research on others, including the
Under the NCAP program, NHTSA tests new vehicles to determine how well they protect drivers and passengers during a crash, and how well they resist rollovers. These vehicles are then rated using a 5-star safety rating system. Five stars indicate the highest safety rating; one star, the lowest. In addition, NHTSA began in model year 2011 identifying on its Web site,
Additional technologies may be added to the NCAP list of crash avoidance technologies when there is sufficient information and analysis to confirm their safety value. NHTSA, for example, is carefully analyzing advanced braking systems of the type discussed in Daimler's comments and could decide in the near future that they are ripe for inclusion in NCAP. Alternatively, NHTSA may conclude that such technologies are sufficiently developed, their safety benefits sufficiently clear, and relevant test procedures sufficiently defined that they should be the subject of a mandatory safety standard. NHTSA could not render a determination on such a request without thoroughly testing the technology as applied in that specific model and developing a specialized benefits analysis. The agency's higher priority would clearly have to be analyzing the technologies it found to offer great safety promise on a broader basis and developing standardized tests for those technologies. Therefore the agencies believe that evaluation of crash avoidance technologies is better addressed under NHTSA's vehicle safety authority than under a case-by-case off-cycle credit process.
Furthermore, the A/C efficiency, off-cycle, and pickup truck credit provisions being finalized by the agencies are premised on the installation of specific technologies that directly reduce the fuel consumption and CO
None of these factors would be satisfied for credits for these types of indirect technologies used for crash avoidance systems, safety-critical systems, or other technologies that may reduce the frequency of vehicle crashes. The agencies are consequently not providing off-cycle credits potentially attributable to crash avoidance systems, safety-critical systems, or technologies that may reduce the frequency of vehicle crashes. . Therefore, the agencies are not providing off-cycle credits for technologies and systems including, but not limited to, Electronic Stability Control, Tire Pressure Monitoring System, Forward Collision Warning, Lane Departure Warning and/or Intervention, Collision Imminent Braking, Dynamic Brake Support, Adaptive Lighting, Blind Spot Detection, Adaptive Cruise Control, Curve Speed Warning, Fatigue Warning, systems that reduce driver distraction, and any other technologies that may reduce the likelihood of crashes.
Thus, manufacturers will not receive credits or fuel economy improvement adjustments for installing these technologies. If a manufacturer has an off-cycle technology that is not included on this list and brings it to the agencies for assessment, NHTSA will determine whether it is ineligible for a credit or adjustment by reason of the agency's judgment that it is related to crash avoidance systems, is related to motor vehicle safety within the meaning of the National Traffic and Motor Vehicle Safety act, as amended, or may otherwise reduce the possibility and or frequency of vehicle crashes.
The agencies believe that the advancement of crash avoidance systems specifically is best left to NHTSA's exercise of its vehicle safety authority. NHTSA looks forward to working with manufacturers and other interested parties on creating opportunities to encourage the general introduction of these technologies in the context of the NCAP program and possible safety standards. To that end, the agency would welcome relevant data and analysis from interested parties.
The agencies also received comments related to other technologies that may reduce CO
At proposal, EPA addressed the possibility of evaluating applications for off-cycle credits for technologies involving driver interaction, indicating that “driver interactive technologies face the highest demonstration hurdle because manufacturers would need to provide actual real-world usage data on driver response rates.” 76 FR 75025. The agencies still believe it to be highly unlikely that off-cycle credits could be justified for these non-safety technologies. This issue is addressed in detail in section III.C.5.ii below. These technologies do not improve the fuel efficiency of the vehicle under any given operating condition, but rather provide information the driver may use to change the driving cycle over which the vehicle overrates which, in turn,
Finally, the agencies requested comments on the treatment of driver selectable technologies as stated in 76 FR 75089: “EPA is requesting comments on whether there is a need to clarify in the regulations how EPA treats driver selectable modes (such as multi-mode transmissions and other user-selectable buttons or switches) that may impact fuel economy and GHG emissions.” If we did not receive comments to the contrary, we also stated that “EPA would apply the same approach to testing for compliance with the in-use CO
The current EPA policy on select-shift transmissions (SSTs) and multimode transmissions (MMT), and shift indicator lights (SILs) is under Manufacturer Guidance Letter CISD–09–19 (December 3, 2009) and supersedes several previous letters on both of these topics. For, SSTs and MMTs, the manufacturer must determine the predominant mode (e.g., 75% of the drivers will have at least 90% of vehicle shift operation performed in one mode, and, on average, 75% of vehicle shift operation is performed in that mode), using default criteria in the guidance letter or a driver survey. If the worst-case mode is determined to be the predominant mode, the manufacturer must test in this mode and use the results with no benefit from the driver-selectable technology reflected in the fuel economy values. If the best-case mode is determined to be the predominant mode, the manufacturer may test in this mode and use the results with the full benefit of the driver-selectable technology reflected in the fuel economy values. If the predominant mode is not discernible, the manufacturer must test in all modes and harmonically average the results (Note: in most cases, there are only two modes so this becomes a 50/50 average between best- and worst-case modes). Based on the EPA decision process under CISD–09–19, both the label and CAFE/GHG could reflect 0, 50, or 100% of the benefit of a driver-selectable device. However, when calculating CAFE, only the 2-cycle test results (e.g., Federal Test Procedure (FTP) and Highway Fuel Economy test (HWFET)) are used. Thus, the higher fuel economy results would only affect the 2-cycle testing values for CAFE purposes. For SILs, the manufacturer must perform an instrumented vehicle survey on a prototype vehicle to determine the appropriate shift schedule to optimize fuel economy. Previous guidance for SILs contained the option for A–B testing with and without the SIL. This has been eliminated in the latest guidance, allowing only an instrumented vehicle survey as the basis for determining SIL related fuel economy improvements. However, for purposes of determining CAFE compliance reporting values, the 2-cycle test results (e.g., Federal Test Procedure
In response to EPA's request for comment on whether the regulatory text should clarify how EPA treats driver-selectable modes, the Alliance stated that it believed there was no need to clarify regulatory text, but that EPA should simply update or refine informal guidance as necessary to address issues as they develop.
On the comments from the Alliance that there is no need to clarify regulatory text and the informal guidance should be updated or refined as necessary, we agree that the current regulations and the latest guidance letter, CISD–09–19, appropriately supersedes previous guidance letters and addresses select-shift transmissions (SSTs) and multimode transmissions, and shift indicator lights (SILs). Therefore, we will not attempt to clarify the regulatory text and we will continue to update our guidance as necessary.
Regarding the comment from MEMA that there is “precedent for providing CAFE credits based on a projected usage factor of a fuel saving device,” citing EPA letters regarding the impact of a shift indicator light on fuel economy, the manufacturer guidance letters referenced by MEMA (CD–82–10 (LD) and CD–83–10(LD)) have been superseded by CISD–09–19. Thus, the procedures in CISD–09–19 would be the applicable guidance for comparison. As previously mentioned, CISD–09–19 requires the manufacturer to 1) determine the potential benefit of a driver selectable feature and 2) discern the predominant mode in-use. This process is very similar and consistent with the process we proposed for demonstrating technologies not on the defined technology list. Therefore, we agree with MEMA that there is a precedent within our current policy to consider the influence of driver-selectable features on test cycle results.
For the comments from the Alliance on the HVAC Eco-Mode
However, we want to emphasize that although we acknowledge the similarities between the procedures under the existing policy in CISD–09–19 and the procedures used in the off-cycle program, our discussion of driver-selectable devices is completely limited to their potential impact on off-cycle credits. The procedures used to conduct FTP and HFET testing for the purpose of determining CAFE and GHG values for a model type are not at issue here. Following our request for comments on how we handle these devices when testing on the FTP and HFET, comments suggested no changes to existing guidance are needed. We agree and will continue to handle these devices on a case-by-case basis consistent with the existing policy in CISD–09–19. In addition, the existing guidance and FTP/HFET testing policy in CISD–09–19 is not applicable in the context of the off-cycle program since driver-selectable technologies will always require the need for estimates of real-world customer usage to receive off-cycle credit. Therefore, in summary we believe that there is a precedent set by the existing policy in CISD–09–19 to determine a usage in-use but that the existing policy in CISD–09–19 has no bearing on the credit determinations in the off-cycle program, and the converse (i.e., the off-cycle credit program affecting existing policy in CISD–09–19). Specifically, the section entitled “Alternative Methods for Determination of Usage Rates” in CISD–09–19 that allows an instrumented vehicle survey or on-board data collection are most consistent with the procedures for the off-cycle program as discussed in III.C.5.iii. and 40 CFR § 86.1869–12(c).
In the context of the off-cycle program, the test values applicable to a vehicle's fuel economy label value are mostly independent from those generated for the CAFE compliance; where the 2-cycle results for compliance and the combination of all 5-cycle test results are used for the fuel economy label. However, as indicated with other technologies included in the finalized pre-defined technology menu, fuel economy improvements are reflected in the 2-cycle test result values used for CAFE compliance revealing the need to account for the improved 2-cycle test results when considering off-cycle credits for driver-selectable technologies. Therefore, if a manufacturer is requesting off-cycle credit but has previously used the improved fuel economy test results under the existing policy in CISD–09–19 for a driver-selectable technology, the manufacturer must use the 2-cycle results determined under CISD–09–19 for both the A and B values of the FTP and HWFET A–B tests to determine the potential benefit of the driver selectable technology when requesting off-cycle credit. This approach effectively negates the 2-cycle results and benefits, and which is consistent with the treatment for the other off-cycle technologies where credit is not granted for improvements reflected on current 2-cycle test procedures.
Accordingly, we are allowing driver-selectable technologies to be eligible for credit in the off-cycle credit program using procedures and processes demonstrating technologies not on the defined technology list using alternative methods and the public process. Under these provisions, the manufacturer must determine the benefit of the driver-selectable technology using approved methodologies and a usage factor for the technology using an instrumented vehicle survey, and applying this factor to the measured benefit to estimate and request credit. As discussed above, if a manufacturer has previously received some fuel economy improvement as a result of the decision process under CISD–09–19, the manufacturer must use the 2-cycle results from that decision process as the A and B values for the 2-cycle A–B tests to estimate the off-cycle credit. Consequently, if a manufacturer uses 5-cycle testing to demonstrate the benefit of a driver selectable technology, the manufacturer must use the previously determined 2-cycle test values for the FTP and HWFET A–B tests, which effectively only captures the benefit from the remaining three cycles of 5-cycle testing (i.e., US06,
While we are allowing credit for driver-selectable and driver interactive technologies (including congestion avoidance), the agencies believe that applicants would face formidable burdens of showing that improvements over baseline are legitimate, reliably quantifiable, certain, and transparently demonstrable as described above. As identified in CISD–09–19, there will need to be an extensive data collection program to show that drivers are using the technology and to generate a reliable usage factor, if this has not previously been established. In addition, the usage factor applied to the benefit from the driver-selectable technology will tend to lower the amount of credit unless a manufacturer can demonstrate 100% usage of a driver-selectable technology. Therefore, depending on the level of benefit, the amount of resulting credit could be minimal compared the effort to generate the necessary, supporting data, and manufacturers should consider this before undertaking this process.
In summary, the agencies are not adding driver-selectable or driver-interactive features to the defined technology list. However, driver-selectable and driver-interactive features are eligible for off-cycle credits using procedures and processes for demonstrating technologies not on the defined technology list under the off-cycle program as discussed above.
Multiple comments were received with concerns regarding the use of metallic glazing from the Crime Victims Unit of California (CVUC), California State Sheriffs, Garmin, Honda and TechAmerica. Many commenters raised concerns the credit for glazing may unintentionally create incentives to use metallic films or small metallic particles to achieve reduced vehicle solar heat loading and access the off-cycle credit. The commenters indicated this type of metallic glazing can potentially interfere with signals for global positioning systems (GPS), cell phones, cellular signal based prisoner tracking systems, emergency and/or electronic 911 (E911) calls or other signals emanating from within or being transmitted to a vehicle's passenger compartment/cabin. In addition, some commenters cited this concern as the reason that the California Air Resources Board (CARB) removed their mandate for metallic glazing from the “Cool Cars” Regulation in California.
To address these concerns, the agencies met with the Enhanced Protective Glass Automotive Association (EPGAA), which represents automotive glass manufacturers and suppliers. The meeting included representatives from the automotive glass suppliers Pittsburgh Glass Works LLC (PGW), Guardian Industries, and Asahi Glass Company (AGC) to discuss the potential concerns with metallic glazing, signal interference and/or radio frequency (RF) attenuation (details of this meeting are available in EPA docket # EPA–HQ–OAR–2010–0799–41752 and docket NHTSA–2010–0131). At this meeting, EPGAA provided data to the agencies that showed: In general, any glazing material can create signal interference and RF attenuation, and depending on the situation, RF attenuation and signal interference can occur without the presence of metallic glazing material; there was no statistically-significant increase in signal interference and RF attenuation when metallic glazing was used. Furthermore, many vehicles in production today are designed with metallic solar control deletion areas or zones around the window edges and/or defined areas in either the front windshield of rear backlight to minimize signal interference and RF attenuation. Following the meeting, EPGAA representatives provided a list of vehicles currently utilizing metallic glazing demonstrating to the agencies that this technology is currently in-use without significant signal interference/RF attenuation issues being raised. EPGAA representatives indicated the technology is especially prevalent in Europe and with no significant consumer complaints.
In addition, the agencies received comments from the California Air Resources Board (CARB) in response to the specific comments submitted to the proposal regarding the California Cool Cars Regulation indicating the program was withdrawn as a result of the metallic solar glazing concerns (see EPA docket #EPA–HQ–OAR–2010–0799). CARB stated the mandate for metallic glazing in the Cool Cars Regulation was withdrawn was primarily related to the timing of when the concerns regarding metallic glazing were raised in relation to the proposed mandate's targeted finalization than to substantive concerns. CARB also clarified that they were not requiring a specific type of glazing and that a performance-based approach ultimately adopted in the Advanced Clean Cars Regulation accomplished the same objectives as proposed under the Cool Cars Regulation without the need for a mandate. In addition, CARB performed testing of signal interference and RF attenuation by CARB (see test results in EPA docket # EPA–HQ–OAR–2010–0799–41752) echoing the findings of the automotive glass industry that there is “[n]o effect of reflective glazing observed on monitoring ankle bracelets or cell phones” and that any “[e]ffects on GPS navigation devices [are] completely mitigated by use of [the] deletion window” placing either the device or the external antennae in this area”. CARB urged EPA to finalize the proposed credit values for glass and glazing as proposed. Finally, CARB issued a formal memorandum
Based on this information, the agencies are finalizing the proposed credit values and calculation procedures for solar control glazing. EPA and NHTSA note further the off-cycle credit is performance-based and not a mandate for vehicle manufacturers. Manufacturers have options to choose from a variety of glazing technologies that meet their desired performance for rejecting vehicle cabin solar loading. We reiterate that the rule is technology neutral and that none of these potential glazing technologies are foreclosed. Second, we did not see evidence contravening the information that the automotive glass industry and CARB presented showing that there would not be significant adverse effects on signal interference and RF attenuation by any of the recognized glazing technologies. However, to address the concerns of other commenters, we will emphasize to manufacturers that they should evaluate the potential for signal interference and RF attenuation when requesting the solar control glazing credit to ensure that their designs do not cause any interference.
As proposed, EPA is finalizing that a CAFE improvement value for off-cycle improvements be determined at the fleet
Finally, the agencies proposed that the pre-approved menu list of off-cycle technologies and default credit values would be predicated on a certain minimum percentage of technology penetration in a manufacturer's domestic fleet. 76 FR 75381. Commenters persuasively argued that such a requirement would discourage introduction and utilization of beneficial off-cycle technologies. They pointed out that new technologies are often introduced on limited model lines or platforms both to gauge consumer acceptance and to gain additional experience with the technology before more widespread introduction. Requiring levels of technology penetration such as the 10 percent proposed for many of the menu technologies could thus create a negative rather than positive incentive to deploy off-cycle technologies. The agencies agree, and note further that having an aggressive penetration rate requirement also raises issues of sufficiency of lead time in the early years of the program. The agencies are therefore not adopting minimum penetration requirements as a prerequisite to claim default credits from the preapproved technology menu.
Table II–22 shows the list of off-cycle technologies and credits and equivalent fuel consumption improvement values for cars and trucks that the agencies are finalizing in today's action. The credits and fuel consumption improvement values for active aerodynamics, high-efficiency exterior lighting, waste heat recovery and solar roof panels are scalable, depending on the amount of respective improvement these systems can generate for the vehicle. The Solar/Thermal control technologies are varied and are limited to a total of 3.0 and 4.3 g/mi (car and truck respectively) The various pre-defined solar/thermal control technologies eligible for off-cycle credit are shown in Table II–22 below.
Chapter 2 of EPA's RIA provides a detailed description of the vehicle simulation tool that EPA had developed and has used for the final rule. This tool is capable of simulating a wide range of conventional and advanced engine, transmission, and vehicle technologies over various driving cycles. It evaluates technology package effectiveness while taking into account synergy (and dis-synergy) effects among vehicle components and estimates GHG emissions for various combinations of
There are other technologies that would result in additional GHG reduction benefits that cannot be fully captured on the combined FTP/Highway cycle test. These technologies typically reduce engine loads by utilizing advanced engine controls, and they range from enabling the vehicle to turn off the engine at idle, to reducing cabin temperature and thus A/C compressor loading when the vehicle is restarted. Examples include Engine Start-Stop, Electric Heater Circulation Pump, Active Engine/Transmission Warm-Up, and Solar Control. For these types of technologies, the overall GHG reduction largely depends on the control and calibration strategies of individual manufacturers and vehicle types. EPA utilized the simulation tool to estimate the default credit values for the engine start-stop technology. Details of the analysis are provided in the chapter 5.2.8.1 of Joint TSD. However, the current vehicle simulation tool does not have the capability to properly simulate the vehicle behaviors that depend on thermal conditions of the vehicle and its surroundings, such as Active Engine/Transmission Warm-Up and Solar Control. Therefore, the vehicle simulation cannot provide full benefits of these technologies on the GHG reductions. For this reason, the agency did not use the simulation tool to generate the default GHG credits for these technologies, though future versions of the model may be more capable of quantifying the efficacy of these off-cycle technologies as well. As described in Chapter 5 of the Joint TSD, the Active Engine/Transmission Warm-up credits were estimated using the results from the Ricardo vehicle simulation results.
In summary, for the MYs 2017 to 2025 GHG final rule, EPA used the simulation tool to quantify the amount of GHG emissions reduced by improvements in A/C systems and to determine the default credit values for some of the off-cycle technologies such as active aerodynamics, electrical load reduction, and engine start-stop. Details of the analysis and values of these scalable credits are described in Chapter 5 of Joint TSD. This simulation tool will not be officially used for credit compliance purposes (as proposed) because EPA has already made several of the credits scalable for the purposes of this final rule. However, EPA may use the tool as part of the case-by-case of off-cycle credit determination process. EPA encourages manufacturers to use this simulation tool in order to estimate the credits values of their off-cycle technologies.
The agencies recognize that the standards for MYs 2017–2025 will be challenging for large vehicles, including full-size pickup trucks that are often used for commercial purposes and have generally higher payload and towing capabilities than other light-duty vehicles. Section II.C and Chapter 2 of the joint TSD describe the adjustments made to the slope of the truck curve compared to the MYs 2012–2016 rule, reflecting these considerations. Sections III.B and IV.E describe the progression of the stringency of the truck standards. Large pick-up trucks represent are a significant portion of the overall light-duty vehicle fleet and generally have higher levels of fuel consumption and GHG emissions than most other light-duty vehicles. Improvements in the fuel economy and GHG emissions of these vehicles can have significant impact on overall light-duty fleet fuel use and GHG emissions. The agencies believe that offering incentives in the earlier years of this program that encourage the deployment of technologies that can significantly improve the efficiency of these vehicles and that also will foster production of those technologies at levels that will help achieve economies of scale, will promote greater fuel savings overall and make these technologies more cost effective and available in the later model years of this rulemaking to assist in compliance with the standards.
The agencies are therefore finalizing the proposed approach to encourage penetration of these technologies both through the standards themselves, but also through various provisions providing regulatory incentives for advanced technology use in full-size pick-up trucks. The agencies' goal is to incentivize the penetration into the marketplace of “game changing” technologies for these pickups, including the marketing of hybrids. For that reason, EPA, in coordination with NHTSA, proposed and is adopting provisions for credits and corresponding equivalent fuel consumption improvement values for manufacturers that hybridize a significant number of their full-size pickup trucks, or use other technologies that significantly reduce CO
Most of the commenters on this issue supported the large truck credit concept. Some OEM commenters argued that it should be extended to other vehicles such as SUVs and minivans. ICCT, Volkswagen, and CBD opposed adopting the proposed incentive, arguing that this vehicle segment is not especially challenged by the proposed standards, that hybrid systems would readily transfer to it from other vehicle classes, and that the credit essentially amounts to an economic advantage for manufacturers of large trucks. CBD also commented that this credit should be eliminated, since they believe hybrid technology should be forced by aggressive standards rather than encouraged through regulatory incentives. Other environmental group commenters also expressed concern about the real-world impacts of offering this credit, and suggested various ways to tailor it to ensure that fuel savings and emissions reductions associated with it are genuine.
We believe that extending the large truck credit to other light-duty trucks such as SUVs and minivans would greatly expand, and therefore dilute, the intended credit focus. The agencies do not believe that providing such incentives for hybridization in these additional categories is necessary, or that the performance levels required of
Arguments made by commenters for not adopting the large truck technology credit are not convincing. Although there may not be inherent reasons for a lack of hybrid technology migration to large trucks, it is clear that this migration has nevertheless been slow to materialize for practical/economic reasons, including in-use duty cycles and customer expectations. These issues still need to be addressed by the designers of large pickups to successfully introduce these technologies in these trucks, and we believe that assistance in the form of a focused, well-defined incentive program is warranted. See section III.D.6 and 7 for further discussion of EPA's justification for this credit program in the context of the stringency of the truck standards.
Volkswagen commented that any HEV or performance-based credits generated by large trucks should not be transferable to other vehicle segments, arguing that if compliance for the large truck segment is really as challenging as predicted, there should be no excess of credits to transfer anyway. This may be the case, but we do not agree that it argues for restricting the use of large pickup truck credits. We think the sizeable technology hurdle involved and the limited model years in which credits are available preclude the potential for credit windfalls. Furthermore, neither the size of the large truck market nor the size of the per-vehicle credit are so substantial that they could lead to a large pool of credits capable of skewing the competition in the lighter vehicle market. As described in Section III.D of this preamble, EPA will continue to monitor the net level of credit transfers from cars to trucks and vice versa in the MYs 2017–2025 timeframe.
As proposed, the agencies are defining a full-size pickup truck based on minimum bed size and hauling capability, as detailed in 86.1866–12(e) of the regulations being adopted. This definition is meant to ensure that the larger pickup trucks, which provide significant utility with respect to bed access and payload and towing capacities, are captured by the definition, while smaller pickup trucks with more limited capacities are not covered. A full-size pickup truck is defined as meeting requirements (1) and (2) below, as well as either requirement (3) or (4) below. A more detailed discussion can be found in section III.C.3.
(1) Bed Width—The vehicle must have an open cargo box with a minimum width between the wheelhouses of 48 inches. And—
(2) Bed Length—The length of the open cargo box must be at least 60 inches. And—
(3) Towing Capability—the gross combined weight rating (GCWR) minus the gross vehicle weight rating (GVWR) must be at least 5,000 pounds. Or—
(4) Payload Capability—the GVWR minus the curb weight (as defined in 40 CFR 86.1803) must be at least 1,700 pounds.
EPA sought comment on extending these credits to smaller pickup trucks, specifically to those with narrower beds, down to 42 inches, but still with towing capability comparable to large trucks. This request for comment produced mixed reactions among truck manufacturers, and some argued that EPA should go further and drop the bed size limit entirely. ICCT and CBD strongly opposed any extension of credits, arguing that adopting the 42″ bed width criterion would allow virtually all pickup trucks to qualify, thereby distorting technology requirements and reducing the benefits of the rule. None of the commenters argued convincingly in favor of the extension and so we are adopting the 48″ minimum requirement as proposed. Chrysler commented that the proposed payload and towing capability minimums are too restrictive, making a sizeable number of Ram 1500 configurations ineligible to earn credits. However, the company provided no sales information to enable the agencies to reassess this issue. Moreover, the agencies did not premise the proposed incentive on every full-size truck configuration being eligible. Manufacturers typically offer a variety of truck options to suit varied customer needs in the work and recreational truck markets, and the fact that one manufacturer (or more) markets to applications lacking the towing and payload demands of the core group of vehicles in this segment does not, in the agencies' view, justify a revision of the hauling requirements that were a fundamental consideration in establishing the credit.
The agencies also sought comment on the definitions of mild and strong hybrids based on energy capture on braking (brake regeneration). Minor modifications to these definitions were made based on these comments as well as new testing performed by the EPA. Due to the detailed nature of these comments, these responses and the description of the testing are included in section 5.3.3 of the Joint TSD.
The program requirements and incentive amounts differ somewhat for mild and strong HEV pickup trucks. As proposed, mild HEVs will be eligible for a per-vehicle credit of 10 g/mi (equivalent to 0.0011 gallon/mile for a gasoline-fueled truck) during MYs 2017–2021. Eligibility also requires that the technology be used on a minimum percentage of a company's full size pickups, beginning with at least 20% of a company's full-size pickup production in 2017 and ramping up to at least 80% in MY 2021. These minimum percentages are lower in MYs 2017 and 2018 than proposed (20% and 30%, respectively, compared to the proposed 30% and 40%), based on our assessment of the comments arguing reasonably that the proposed percentages were too demanding, especially in the initial model years when there is the least lead time. Strong HEV pickup trucks will be eligible for a 20 g/mi CO
Because there are other, non-HEV, advanced technologies that can provide significant reductions in pickup truck GHG emissions and fuel consumption (e.g., hydraulic hybrid), EPA is also adopting the proposed, more generalized, credit provisions for full-size pickup trucks that achieve emissions levels significantly below their applicable CO
These performance-based credits have no specific technology or design requirements; automakers can use any technology or set of technologies as long as the vehicle's CO
The 10 g/mi performance-based credit will be available for MYs 2017 to 2021. In recognition of the nature of automotive redesign sequence, a vehicle model meeting the requirements in a model year will receive the credit in subsequent model years through MY 2021, unless its CO
As with the HEV incentives, eligibility for the performance-based credit and fuel consumption improvement value requires that the technology be used on a minimum percentage of a manufacturer's full-size pickup trucks. That minimum percentage for the 10 g/mi CO
ICCT opposed allowing vehicle models that earn performance-based credits in one year to continue receiving them in subsequent years as the increasingly more stringent standards progressively diminish the vehicle's performance margin compared to the standard. We view the incentive over the longer term, as a multi-year package, intending it to encourage investment in lasting technology shifts. The fact that it is somewhat easier to exceed performance by 15 or 20% in the earlier years, when the bar is set lower, and, once earned, to retain that benefit for a fixed number of years (provided sales remain strong), works to focus the credit as intended—on incentivizing the introduction of new technology as early in the program as possible.
The primary goals of CAFE and GHG standards are to reduce fuel consumption and GHG emissions from the on-road light-duty vehicle fleet, but in addition to these intended effects, the agencies also consider the potential of the standards to affect vehicle safety.
Manufacturers are less likely than they were in the past to reduce vehicle footprint in order to reduce mass for increased fuel economy. The primary mechanism in this rulemaking for mitigating the potential negative effects on safety is the application of footprint-based standards, which create a disincentive for manufacturers to produce smaller-footprint vehicles (see Section II.C.1 above). This is because, as footprint decreases, the corresponding fuel economy/GHG emission target becomes more stringent. We also believe that the shape of the footprint curves themselves is approximately “footprint-
Given that we expect manufacturers to reduce vehicle mass in response to the final rule, and do not expect manufacturers to reduce vehicle footprint in response to the final rule, the agencies must attempt to predict the safety effects, if any, of the final rule based on the best information currently available. This section explained why the agencies consider safety; the following section discusses how the agencies consider safety.
Assessing the effects of vehicle mass reduction and size on societal safety is a complex issue. One part of estimating potential safety effects involves trying to understand better the relationship between mass and vehicle design. The extent of mass reduction that manufacturers may be considering to meet more stringent fuel economy and GHG standards may raise different safety concerns from what the industry has previously faced. The principal difference between the heavier vehicles, especially truck-based LTVs, and the lighter vehicles, especially passenger cars, is that mass reduction has a different effect in collisions with another car or LTV. When two vehicles of unequal mass collide, the change in velocity (delta V) is higher in the lighter vehicle, similar to the mass ratio proportion. As a result of the higher change in velocity, the fatality risk may also increase. Removing more mass from the heavier vehicle than in the lighter vehicle by amounts that bring the mass ratio closer to 1.0 reduces the delta V in the lighter vehicle, possibly resulting in a net societal benefit. This was reinforced by comments to the proposal from Volvo which stated “Everything else being equal, several of the studies presented indicate a significant increase, up to a factor ten, in the fatality risk for the occupants in the lighter vehicle for a two-to-one weight ratio between the colliding vehicles in a head-on crash.”
Another complexity is that if a vehicle is made lighter, adjustments must be made to the vehicle's structure such that it will be able to manage the energy in a crash while limiting intrusion into the occupant compartment. To maintain an acceptable occupant compartment deceleration, the effective front-end stiffness has to be managed such that the crash pulse does not increase as lighter yet stiffer materials are utilized. If the energy is not well managed, the occupants may have to “ride down” a more severe crash pulse, putting more burdens on the restraint systems to protect the occupants. There may be technological and physical limitations to how much the restraint system may mitigate these effects.
The agencies must attempt to estimate now, based on the best information currently available to us for analyzing these CAFE and GHG standards, how the assumed levels of mass reduction without additional changes (i.e. footprint, performance, functionality) might affect the safety of vehicles, and how lighter vehicles might affect the safety of drivers and passengers in the entire on-road fleet. The agencies seek to ensure that the standards are designed to encourage manufacturers to pursue a path toward compliance that is both cost-effective and safe.
To estimate the possible safety effects of the MY 2017–2025 standards, then, the agencies have undertaken research that approaches this question from several angles. First, we are using a statistical approach to study the effect of vehicle mass reduction on safety historically, as discussed in greater detail in section C below. Statistical analysis is performed using the most recent historical crash data available, and is considered as the agencies' best estimate of potential mass-safety effects. The agencies recognize that negative safety effects estimated based on the historical relationships could potentially be tempered with safety technology advances in the future, and may not represent the current or future fleet. Second, we are using an engineering approach to investigate what amount of mass reduction is affordable and feasible while maintaining vehicle safety and functionality such as durability, drivability, NVH, and acceleration performance. Third, we are also studying the new challenges these lighter vehicles might bring to vehicle safety and potential countermeasures available to manage those challenges effectively. Comments to the proposal from the Alliance of Automakers supported NHTSA's approach of using both engineering and statistical analyses to assess the effects of the standards on safety, stating “The Alliance supports NHTSA's intention to examine safety from the perspective of both the historical field crash data and the engineering analysis of potential future Advanced Materials Concept vehicles. NHTSA's planned analysis rightly looks backward and forward.”
The agencies have looked closely at these issues, and we believe that our approach of using both statistical analyses of historical data to assess societal safety effects, and design studies to assess the ability of individual designs to comply with the FMVSS and perform well on NCAP and IIHS tests responds to these concerns.
The sections below discuss more specifically the state of the research on the mass-safety relationship, and how the agencies have integrated that research into our assessment of the safety effects of the MY 2017–2025 CAFE and GHG standards.
Researchers have been using statistical analysis to examine the relationship of vehicle mass and safety in historical crash data for many years, and continue to refine their techniques over time. In the MY 2012–2016 final rule, the agencies stated that we would conduct further study and research into the interaction of mass, size and safety to assist future rulemakings, and start to work collaboratively by developing an interagency working group between NHTSA, EPA, DOE, and CARB to evaluate all aspects of mass, size and safety. The team would seek to coordinate government supported studies and independent research, to the greatest extent possible, to help ensure the work is complementary to previous and ongoing research and to guide further research in this area.
The agencies also identified three specific areas to direct research in preparation for future CAFE/GHG rulemaking in regards to statistical analysis of historical data.
First, NHTSA would contract with an independent institution to review the statistical methods that NHTSA and DRI have used to analyze historical data related to mass, size and safety, and to provide recommendations on whether the existing methods or other methods should be used for future statistical analysis of historical data. This study would include a consideration of potential near multicollinearity in the historical data and how best to address it in a regression analysis. The 2010 NHTSA report was also peer reviewed by two other experts in the safety field—Charles Farmer (Insurance Institute for Highway Safety) and Anders Lie (Swedish Transport Administration).
Second, NHTSA and EPA, in consultation with DOE, would update the MY 1991–1999 database on which the safety analyses in the NPRM and final rule are based with newer vehicle data, and create a common database that could be made publicly available to help address concerns that differences in data were leading to different results in statistical analyses by different researchers.
And third, in order to assess if the design of recent model year vehicles that incorporate various mass reduction methods affect the relationships among vehicle mass, size and safety, the agencies sought to identify vehicles that are using material substitution and smart design, and to try to assess if there is sufficient crash data involving those vehicles for statistical analysis. If sufficient data exists, statistical analysis would be conducted to compare the relationship among mass, size and safety of these smart design vehicles to vehicles of similar size and mass with more traditional designs.
Significant progress has been made on these tasks since the MY 2012–2016 final rule: The independent review of recent and updated statistical analyses of the relationship between vehicle mass, size, and crash fatality rates has been completed. NHTSA contracted with the University of Michigan Transportation Research Institute (UMTRI) to conduct this review, and the UMTRI team led by Paul Green evaluated over 20 papers, including studies done by NHTSA's Charles Kahane, Tom Wenzel of the U.S. Department of Energy's Lawrence Berkeley National Laboratory, Dynamic Research, Inc., and others. UMTRI's basic findings will be discussed below. Some commenters in recent CAFE rulemakings, including some vehicle manufacturers, suggested that the designs and materials of more recent model year vehicles may have weakened the historical statistical relationships between mass, size, and safety. The agencies agree that the statistical analysis would be improved by using an updated database that reflects more recent safety technologies, vehicle designs and materials, and reflects changes in the overall vehicle fleet, and an updated database was created and employed for assessing safety effects in this final rule. The agencies also believe, as UMTRI also found, that different statistical analyses may have produced different results because they each used slightly different datasets for their analyses. In order to try to mitigate this issue and to support the current rulemaking, NHTSA has created a common, updated database for statistical analysis that consists of crash data of model years 2000–2007 vehicles in calendar years 2002–2008, as compared to the database used in prior NHTSA analyses which was based on model years 1991–1999 vehicles in calendar years 1995–2000. The new database is the most up-to-date possible, given the processing lead time for crash data and the need for enough crash cases to permit statistically meaningful analyses. NHTSA made the preliminary version of the new database, which was the basis for NHTSA's 2011 report, available to the public in May 2011, and an updated version in April 2012,
The agencies are aware that several studies have been initiated using the 2011 version or the 2012 version of NHTSA's newly established safety database. In addition to new Kahane studies, which are discussed in section II.G.3.d, other on-going studies include two by Wenzel at Lawrence Berkeley National Laboratory (LBNL) under contract with the U.S. DOE, and one by Dynamic Research, Inc. (DRI) contracted by the International Council on Clean Transportation (ICCT). These studies take somewhat different approaches to examine the statistical relationship between fatality risk, vehicle mass and size. In addition to a detailed assessment of the NHTSA 2011 report, Wenzel considers the effect of mass and footprint reduction on casualty risk per crash, using data from thirteen states. Casualty risk includes both fatalities and serious or incapacitating injuries. Both LBNL studies were peer reviewed and subsequently revised and updated. DRI used models that separate the effect of mass reduction on two components of fatality risk, crash avoidance and crashworthiness. The LBNL and DRI studies are available in the docket for this final rule.
Finally, EPA and NHTSA with DOT's Volpe Center, part of DOT's Research and Innovative Technology Administration, attempted to investigate the implications of “Smart Design,” by identifying and describing the types of “Smart Design” and methods for using “Smart Design” to result in vehicle mass reduction, selecting analytical pairs of vehicles, and using the appropriate crash database to analyze vehicle crash data. The analysis identified several one-vehicle and two-vehicle crash datasets with the potential to shed light on the issue, but the available data for specific crash scenarios was insufficient to produce consistent results that could be used to support conclusions regarding historical performance of “smart designs.” This study is also available in the docket for this final rule.
Undertaking these tasks has helped the agencies come closer to resolving some of the ongoing debates in statistical analysis research of historical crash data. We intend to apply these conclusions going forward in the midterm review and future rulemakings, and we believe that the public discussion of the issues will be facilitated by the research conducted. The following sections discuss the findings from these studies and others in greater detail, to present a more nuanced picture of the current state of the statistical research.
On February 25, 2011, NHTSA hosted a workshop on mass reduction, vehicle size, and fleet safety at the Headquarters of the U.S. Department of Transportation in Washington, DC.
The speakers included Charles Kahane of NHTSA, Tom Wenzel of Lawrence Berkeley National Laboratory, R. Michael Van Auken of Dynamic Research Inc. (DRI), Jeya Padmanaban of JP Research, Inc., Adrian Lund of the Insurance Institute for Highway Safety, Paul Green of the University of Michigan Transportation Research Institute (UMTRI), Stephen Summers of NHTSA, Gregg Peterson of Lotus Engineering, Koichi Kamiji of Honda, John German of the International Council on Clean Transportation (ICCT), Scott Schmidt of the Alliance of Automobile Manufacturers, Guy Nusholtz of Chrysler, and Frank Field of the Massachusetts Institute of Technology.
The wide participation in the workshop allowed the agencies to hear from a broad range of experts and stakeholders. The contributions were particularly relevant to the agencies' analysis of the effects of mass reduction for this final rule. The presentations were divided into two sessions that addressed the two expansive sets of issues: statistical evidence of the roles of mass and size on safety, and engineering realities regarding structural crashworthiness, occupant injury and advanced vehicle design.
The first session focused on previous and ongoing statistical studies of crash data that attempt to identify the relative recent historical effects of vehicle mass and size on fleet safety. There was consensus that there is a complicated relationship with many confounding influences in the data. Wenzel summarized a recent study he conducted comparing four types of risk (fatality or casualty risk, per vehicle registration-years or per crash) using police-reported crash data from five states. This study was updated and finalized in March of 2012.
Although Wenzel's analysis was focused on differences in the four types of risk on the relative risk by vehicle type, he cautioned that, when analyzing casualty risk per crash, analysts should control for driver age and gender, crash location (urban vs. rural), and the state in which the crash occurred (to account for crash reporting biases).
Several participants pointed out that analyses must also control for individual technologies with significant safety effects (e.g., Electronic Stability Control, airbags). It was not always conclusive whether a specialty vehicle group (e.g., sports cars, two-door cars, early crossover SUVs) were outliers that confound the trend or unique datasets that isolate specific vehicle characteristics. Unfortunately, specialty vehicle groups are usually adopted by specific driver groups, often with outlying vehicle usage or driver behavior patterns. Green, who conducted an independent review of 18 previous statistical analyses, suggested that evaluating residuals will give an indication of whether or not a data subset can be legitimately removed without inappropriately affecting the analytical results.
It was recognized that the physics of a two-vehicle crash require that the lighter vehicle experience a greater change in velocity, which, all else being equal, often leads to disproportionately more injury risk. Lund noted persistent historical trends that, in any time period, occupants of the smallest and lightest vehicles had, on average, fatality rates approximately twice those of occupants of the largest and heaviest vehicles, but also predicted that “the sky will not fall” as the fleet downsizes, insofar as we will not see an increase in absolute injury risk because smaller cars will become increasingly protective of their occupants. Padmanaban also noted in her research of the historical trends that mass ratio and vehicle stiffness are significant predictors with mass ratio consistently the dominant parameter when correlating harm. Reducing the mass of any vehicle may have competing societal effects as it increases the injury risk in the lightened vehicle and decreases them in the partner vehicle.
The separation of key parameters was also discussed as a challenge to the analyses, as vehicle size has historically been highly correlated with vehicle mass. Presenters had varying approaches for dealing with the potential multicollinearity between these two variables. Van Auken of DRI stated that there was disagreement on what value of Variance Inflation Factor (VIF, a measure of multicollinearity) that would call results into question, and suggested that a large value of VIF for curb weight might imply “perhaps the effect of weight is too small in comparison to other factors.” Green, of UMTRI, stated that highly correlated variables may not be appropriate for use in a predictive model and that “match[ing] on footprint” (i.e., conducting multiple analyses for data subsets with similar footprint values) may be the most effective way to resolve the issue.
There was no consensus on whether smaller, lighter vehicles maneuver better, and thus avoid more crashes, than larger, heavier vehicles. German noted that lighter vehicles should have improved handling and braking characteristics and “may be more likely to avoid collisions.” Lund presented crash involvement data that implied that, among vehicles of similar function and use rates, crash risk does not go down for more “nimble” vehicles. Several presenters noted the difficulties of projecting past data into the future as new technologies will be used that were not available when the data were collected. The advances in technology through the decades have dramatically improved safety for all weight and size classes. A video of IIHS's 50th anniversary crash test of a 1959 Chevrolet Bel Air and 2009 Chevrolet Malibu graphically demonstrated that stark differences in design and technology can possibly mask the discrete mass effects, while videos of compatibility crash tests between smaller, lighter vehicles and contemporary larger, heavier vehicles graphically showed the significance of vehicle mass and size.
Kahane presented results from his 2010 report
Padmanaban described a series of studies conducted in recent years. She included numerous vehicle parameters including bumper height and several measures of vehicle size and stiffness and also commented on previous analyses that using weight and wheelbase together in a logistic regression model distorts the estimates, resulting in high variance inflation factors with wrong signs and magnitudes in the results. Her results consistently showed that the ratio between the masses of two vehicles involved in a two-vehicle crash was a more important parameter than variables describing vehicle geometry or stiffness. Her ultimate conclusion was that removing mass (e.g., 100 lbs.) from all passenger cars would cause an overall increase in fatalities in truck-to-car crashes while removing the same amount from light trucks would cause an overall decrease in fatalities.
As explained above, NHTSA contracted with the University of Michigan Transportation Research Institute (UMTRI) to conduct an independent review
UMTRI reviewed a set of papers, reports, and manuscripts provided by NHTSA (listed in Appendix A of UMTRI's report, which is available in the docket to this rulemaking) that examined the statistical relationships between fatality or casualty rates and vehicle properties such as curb weight, track width, wheelbase and other variables.
It is difficult to summarize a study of that length and complexity for purposes of this discussion, but fundamentally, the UMTRI team concluded the following:
• Differences in data may have complicated comparisons of earlier analyses, but if the methodology is robust, and the methods were applied in a similar way, small changes in data should not lead to different conclusions. The main conclusions and findings should be reproducible. The database created by Kahane appears to be an impressive collection of files from appropriate sources and the best ones available for answering the research questions considered in this study.
• In statistical analysis simpler models generally lead to improved inference, assuming the data and model assumptions are appropriate. In that regard, the disaggregate logistic regression model used by NHTSA in the 2003 report
• The two-stage logistic regression model in combination with the two-step aggregate regression used by DRI seems to be more complicated than is necessary based on the data being analyzed, and summing regression coefficients from two separate models to arrive at conclusions about the effects of reductions in weight or size on fatality risk seems to add unneeded complexity to the problem.
• One of the biggest issues regarding the various statistical analyses is the historical correlation between curb weight, wheelbase, and track width. Including three variables that are highly correlated in the same model can have adverse effects on the fit of the model, especially with respect to the parameter estimates, as discussed by Kahane. UMTRI makes no conclusions about multicollinearity, other than to say that inferences made in the presence of multicollinearity should be judged with great caution. At the NHTSA workshop on size, safety and mass, Paul Green suggested that a matched analysis, in which regressions are run on the relationship between mass reduction and risk separately for vehicles of similar footprint, could be undertaken to reduce the effect of multicollinearity between vehicle mass and size. Kahane has combined wheelbase and track width into one variable (footprint) to compare with curb weight. NHTSA believes that the 2012 Kahane analysis has done all it can to lessen concerns about multicollinearity, but a concern still exists.
The UMTRI study provided a number of useful suggestions that Kahane considered in updating his 2011 analysis, and that have been incorporated into the safety effects estimates for the current rulemaking.
The relationship between a vehicle's mass, size, and fatality risk is complex, and varies in different types of crashes. NHTSA, along with others, has been examining this relationship for over a decade. The safety chapter of NHTSA's April 2010 final regulatory impact analysis (FRIA) of CAFE standards for
The principal findings of NHTSA's 2010 analysis were that mass reduction in lighter cars, even while holding footprint constant, would significantly increase societal fatality risk, whereas mass reduction in the heavier LTVs would significantly reduce net societal fatality risk, because it would reduce the fatality risk of occupants in lighter vehicles which collide with the heavier LTVs. NHTSA concluded that, as a result, any reasonable combination of mass reductions while holding footprint constant in MYs 2012–2016 vehicles—concentrated, at least to some extent, in the heavier LTVs and limited in the lighter cars—would likely be approximately safety-neutral; it would not significantly increase fatalities and might well decrease them.
NHTSA's 2010 report partially agreed and partially disagreed with analyses published during 2003–2005 by Dynamic Research, Inc. (DRI). NHTSA and DRI both found a significant protective effect for footprint, and that reducing mass
In April 2010, NHTSA, working closely with EPA and the Department of Energy (DOE), commenced a new statistical analysis of the relationships between fatality rates, mass and footprint, updating the crash and exposure databases to the latest available model years, refining the methodology in response to peer reviews of the 2010 report and taking into account changes in vehicle technologies. The previous databases of MYs 1991–1999 vehicles in CYs 1995–2000 crashes had become outdated as new safety technologies, vehicle designs and materials were introduced. The new databases are comprised of MYs 2000–2007 vehicles in CY 2002–2008 crashes with the most up-to-date possible data, given the processing lead time for crash data and the need for enough crash cases to permit statistically meaningful analyses. NHTSA made the first version of the new databases available to the public in May 2011 and an updated version in April 2012,
One way to estimate these effects is the use of statistical analyses of societal fatality rates per vehicle miles traveled (VMT), by vehicles' mass and footprint, for the current on-road vehicle fleet. The basic analytical method used for the 2011–2012 NHTSA reports is the same as in NHTSA's 2010 report: cross-sectional analyses of the effect of mass and footprint reductions on the
The most noticeable change in MYs 2000–2007 vehicles from MYs 1991–1999 has been the increase in crossover utility vehicles (CUV), which are SUVs of unibody construction, sometimes built upon a platform shared with passenger cars. CUVs have blurred the distinction between cars and trucks. The new analyses treat CUVs and minivans as a separate vehicle class, because they differ in some respects from pickup-truck-based LTVs and in other respects from passenger cars. In the 2010 report, the many different types of LTVs were combined into a single analysis. NHTSA believes that this may have made the analyses too complex and might have contributed to some of the uncertainty in the results.
The new database has more accurate VMT estimates than NHTSA's earlier databases, derived from a file of odometer readings by make, model, and model year recently developed by R.L. Polk and purchased by NHTSA.
For the 2011–2012 reports, vehicles are now grouped into five classes rather than four: passenger cars (including both 2-door and 4-door cars) are split in half by median weight; CUVs and minivans; and truck-based LTVs, which
Charles Farmer, Paul E. Green, and Anders Lie, who reviewed NHTSA's 2010 report, again peer-reviewed the 2011 preliminary report.
Only the 1.56 percent risk increase in the lighter-than-average cars is statistically significant. There are nonsignificant increases in the heavier-than-average cars and the lighter-than-average truck-based LTVs, and non-significant societal benefits for mass reduction in CUVs, minivans, and the heavier-than-average truck-based LTVs. The report concludes that judicious combinations of mass reductions that maintain footprint and are proportionately higher in the heavier vehicles are likely to be safety-neutral—i.e., they are unlikely to have a societal effect large enough to be detected by statistical analyses of crash data. The primarily non-significant results are not due to a paucity of data, but because the societal effect of mass reduction while maintaining footprint, if any, is small.
MY 2000–2007 vehicles of all types are heavier and larger than their MY 1991–1999 counterparts. The average mass of passenger cars increased by 5 percent from 2000 to 2007 and the average mass of pickup trucks increased by 19 percent. Other types of vehicles became heavier, on the average, by amounts within this range. There are several reasons for these increases: During this time, some of the lighter make-models were discontinued; many models were redesigned to be heavier and larger; and consumers more often selected stretched versions such as crew cabs in their new-vehicle purchases.
It is interesting to compare the new results to NHTSA's 2010 analysis of MY 1991–1999 vehicles in CY 1995–2000, especially the new point estimate to the “actual regression result scenario” in the 2010 report:
The new results are directionally similar to the 2010 results: Fatality increase in the lighter cars, safety benefit in the heavier LTVs. But the effects may have become weaker at both ends. (NHTSA does not consider this conclusion to be definitive because of the relatively wide confidence bounds of the estimates.) The fatality increase in the lighter cars tapered off from 2.21 percent to 1.56 percent while the societal fatality-reduction benefit of mass reduction in the heaviest LTVs diminished from 1.90 percent to 0.34 percent and is no longer statistically significant.
The agencies believe that the changes may be due to a combination of the characteristics of newer vehicles and revisions to the analysis. NHTSA believes, above all, that several light, small car models with poor safety performance were discontinued by 2000 or during MYs 2000–2007. Also, the tendency of light, small vehicles to be driven in a manner that results in high crash rates is not as strong as it used to be.
The principal difference between the heavier vehicles, especially truck-based LTVs, and the lighter vehicles, especially passenger cars, is that mass reduction has a different effect depending on whether the crash partner is another car or LTV (34 percent of fatalities occurred in crashes involving two light-duty vehicles, and another 6 percent occurred in crashes involving a light-duty vehicle and a heavy-duty vehicle) When two vehicles of unequal mass collide, the delta V is higher in the lighter vehicle, in the same proportion as the mass ratio. As a result, the fatality risk is also higher. Removing some mass from the heavy vehicle reduces delta V in the lighter vehicle, where fatality risk is higher, resulting in a large benefit, offset by a small penalty because delta V increases in the heavy vehicle, where fatality risk is low—adding up to a net societal benefit. Removing some mass from the lighter vehicle results in a large penalty offset by a small benefit—adding up to net harm. These considerations drive the overall result: Fatality increase in the lighter cars, reduction in the heavier LTVs, and little effect in the intermediate groups. However, in some types of crashes, especially first-event rollovers and impacts with fixed objects (which, combined, accounted for 23 percent of fatalities), mass reduction is usually not harmful and often beneficial, because the lighter vehicles respond more quickly to braking and steering. Offsetting this beneficial, is the continuing historical tendency of lighter and smaller vehicles to be driven less well—although it continues to be unknown why that is so, and to what extent, if any, the lightness or smallness of the vehicle contributes to people driving it less safely.
The estimates in Table II–25 of the model are formulated for each 100-pound reduction in mass; in other words, if risk increases by 1 percent for 100 pounds reduction in mass, it would increase by 2 percent for a 200-pound reduction, and 3 percent for a 300-pound reduction (more exactly, 2.01 percent and 3.03 percent, because the effects work like compound interest). Confidence bounds around the point estimates will grow wider by the same proportions.
The regression results are best suited to predict the effect of a small change in mass, leaving all other factors, including footprint, the same. With each additional change from the current environment, the model may become somewhat less accurate and it is difficult to assess the sensitivity to additional mass reduction greater than 100 pounds. The agencies recognize that the light-duty vehicle fleet in the MYs 2017–2025 timeframe will be different from the MYs 2000–2007 fleet analyzed for this study. Nevertheless, one consideration provides some basis for confidence in applying the regression results to estimate the effects of mass reductions larger than 100 pounds or over longer time periods. This is NHTSA's fourth evaluation of the effects of mass reduction and/or downsizing, comprising databases ranging from MYs 1985 to 2007. The results of the four studies are not identical, but they have been consistent up to a point. During this time period, many makes and models have increased substantially in mass, sometimes as much as 30–40 percent.
NHTSA's 2011 preliminary report acknowledged another source of uncertainty, namely that the baseline statistical model can be varied by choosing different control variables or redefining the vehicle classes or crash types, for example. Alternative models produce different point estimates.
From these suggestions and demonstrations, NHTSA garnered 11 more or less plausible alternative techniques that could be construed as sensitivity tests of the baseline model.
For example, in cars weighing less than 3,106 pounds, the baseline estimate associates 100minus;pound mass reduction, while holding footprint constant, with a 1.56 percent increase in societal fatality risk. The corresponding estimates for the 11 sensitivity tests range from a 0.25 to a 3.00 percent increase. The sensitivity tests illustrate both the fragility and the robustness of the baseline estimate. On the one hand, the variation among the alternative estimates is quite large relative to the baseline estimate: In the preceding example of cars < 3,106 pounds, from almost zero to almost double the baseline. In fact, the difference in estimates is a reflection of the small statistical effect that mass reduction has on societal risk, relative to other factors. Thus, sensitivity tests which vary vehicle, driver, and crash factors can appreciably change the estimate of the effect of mass reduction on societal risk in relative terms.
On the other hand, the variations are not all that large in absolute terms. The ranges of the alternative estimates, at least these alternatives, are about as wide as the sampling-error confidence bounds for the baseline estimates. As a general rule, in the alternative models, as in the baseline models, mass reduction tends to be relatively more harmful in the lighter vehicles, and more beneficial in the heavier vehicles. Thus, in all models, the estimated effect of mass reduction is a societal fatality increase (not necessarily a statistically significant increase) for cars < 3,106 pounds, and in all models except one, a societal fatality reduction for LTVs ≥ 4,594 pounds. None of these models suggest mass reduction in small cars would be beneficial. All suggest mass reduction in heavy LTVs would be beneficial or, at least, close to neutral. In general, any judicious combination of mass reductions that maintain footprint and are proportionately higher in the heavier vehicles is unlikely to have a societal effect large enough to be detected by statistical analyses of crash data. NHTSA has conducted a sensitivity analysis to estimate the fatality impact of the alternative models using the coefficients for these 11 test
Four additional comments on NHTSA's 2011 report are addressed in the 2012 report. ICCT noted that DRI's latest analyses are two-stage analyses that subdivide the effect of mass reduction into a fatalities-per-crash component (called “effect on crashworthiness”) and a crashes-per-VMT component (called “effect on crash avoidance”). ICCT believes it counterintuitive that DRI's two-stage analysis using the same independent variables as NHTSA's basic model shows mass reduction harms “crash avoidance”; thus, ICCT prefers DRI's alternative models (using different independent variables) that do not show mass reduction harming crash avoidance. NHTSA's response is that DRI's estimates of separate fatalities-per-crash and crashes-per-VMT components appear to be valid, but, in NHTSA's opinion, these components do not necessarily correspond to the intuitive concepts of “crashworthiness” and “crash avoidance.” Specifically, the fatalities-per-crash component is affected not only by the crashworthiness of the vehicles, but also by how severe their crashes are: a crash-avoidance issue. Farmer recommended that, in the analyses of crashes between two light vehicles, NHTSA estimate the effect of mass reduction in the case vehicle separately for the occupants of that vehicle and for the occupants of the other vehicle. The analysis shows that mass reduction consistently and substantially increases risk for the vehicle's own occupants and substantially lowers it for the occupants of the partner vehicle. Several commenters suggested that NHTSA consider logistic ridge regression as a tool for addressing multicollinearity; NHTSA was unable to acquire software for logistic ridge regression now, but will attempt to acquire it for future analyses. Lie requested—and NHTSA added—a comparison of the estimated safety effects of mass reduction to the effects of safety technologies and the differences in risk between vehicles with good and poor test ratings.
DOE contracted with Tom Wenzel of Lawrence Berkeley National Laboratory to conduct an assessment of NHTSA's updated 2011 study of the effect of mass and footprint reductions on U.S. fatality risk per vehicle miles traveled (LBNL Phase 1 report), and to provide an analysis of the effect of mass and footprint reduction on casualty risk per police-reported crash, using independent data from thirteen states (LBNL Phase 2 report). Both reports have been reviewed by NHTSA, EPA, and DOE staff, as well as by a panel of reviewers.
The LBNL Phase 1 report replicates Kahane's analysis for NHTSA, using the same data and methods, and in many cases using the same SAS programs, in order to confirm NHTSA's results. The LBNL report confirms NHTSA's 2012 finding that mass reduction is associated with a statistically significant 1.55% increase in fatality risk per vehicle miles travelled (VMT) for cars weighing less than 3,106 pounds; for other vehicle types, mass reduction is associated with a smaller increase, or even a small decrease, in risk. Wenzel tested the sensitivity of these estimates to changes in the measure of risk and the control variables and data used in the regression models. Wenzel also concluded that there is a wide range in fatality risk by vehicle model for models that have comparable mass or footprint, even after accounting for differences in drivers' age and gender, safety features installed, and crash times and locations. This section summarizes the results of the Wenzel assessment of the most recent NHTSA analysis.
The LBNL Phase 1 report notes that many of the control variables NHTSA includes in its logistic regressions are statistically significant, and have a much larger estimated effect on fatality risk than vehicle mass. For example, installing torso side airbags, electronic stability control, or an automated braking system in a car is estimated to reduce fatality risk by about 10%; cars driven by men are estimated to have a 40% higher fatality risk than cars driven by women; and cars driven at night, on rural roads, or on roads with a speed limit higher than 55 mph are estimated to have a fatality risk over 100 times higher than cars driven during the daytime on low-speed non-rural roads. While the estimated effect of mass reduction may result in a statistically-significant increase in risk in certain cases, the increase is small and is overwhelmed by other known vehicle, driver, and crash factors.
NHTSA notes these findings are additional evidence that estimating the effect of mass reduction is a complex
For all five vehicle types, the range in estimates from the nineteen alternative models spanned zero, with the individual estimated effects of a 100-pound mass reduction in Table II–28 ranging from a 1.45 percent fatality reduction (cars ≥ 3,106 pounds, alternative 5) up to an increase in risk of 2.74 percent (cars < 3,106 pounds, alternative 3). Nevertheless, for cars weighing less than 3,106 pounds, only one of the 19 alternative regressions estimated a reduction rather than an increase in U.S. fatality risk: Alternative 5, where risk was defined as fatalities per induced exposure crash (rather than fatalities per VMT). Whereas for LTVs ≥ 4,594 pounds, only one of the 19 alternatives estimated an increase in fatality risk, namely the model without CY variables (alternative 10).
NHTSA notes that all of these models suggest mass reduction in small cars would be harmful or, at best, close to neutral; all suggest mass reduction in heavy LTVs would be beneficial or, at worst, close to neutral. The range on these 19 sensitivity tests is similar to the range in the 11 tests included in the Kahane write-up.
First, NHTSA ran a sensitivity case where footprint is not held constant, but rather allowed to vary as mass varies (i.e., NHTSA ran a regression model which includes mass but not footprint.
Second, NHTSA conducted a stratification analysis of the effect of mass reduction on risk by dividing vehicles into deciles based on their footprint, and running a separate regression model for each vehicle and crash type, for each footprint decile (3 vehicle types times 9 crash types times
One limitation of using logistic regression to estimate the effect of mass reduction on risk is that a standard statistic to measure the extent to which the variables in the model explain the range in risk, equivalent to the R
The analysis indicates that, after accounting for all the control variables except vehicle mass and footprint, risk does decrease as mass increases; however, risk and mass are not strongly correlated, with the R
Figure II–2 indicates that some vehicles on the road today have the same, or lower, fatality risk than models that weigh substantially more, and are substantially larger in terms of footprint. After accounting for differences in driver age and gender, safety features installed, and crash times and locations, there are numerous examples of different models with similar weight and footprint yet widely varying fatality risk. The variation of fatality risk among individual models may reflect differences in vehicle design, differences in the drivers who choose such vehicles (beyond what can be explained by demographic variables such as age and gender), and statistical variation of fatality rates based on limited data for individual models.
The figure shows that when the data are aggregated at the make-model level, the combination of differences in vehicle design, vehicle selection, and statistical variations has more influence than mass on fatality rates. The figure perhaps also suggests that, to the extent these variations in fatality rates are due to differences in vehicle design rather than vehicle selection or statistical variations, there is potential for lowering fatality rates through improved vehicle design. This is consistent with NHTSA's opinion that some of the changes in its regression results between the 2003 study and the 2011 study are due to the redesign or removal of certain smaller and lighter models of poor design.
LBNL compared the logistic regression results of NHTSA's analysis of U.S. fatality risk per VMT, replicated in the LBNL Phase 1 report, with an independent analysis of 13-state fatality risk and casualty risk per crash (LBNL Phase 2 report). The LBNL Phase 2 analysis differs from the NHTSA analysis in two respects: first, it analyzes risk per crash, using data on all police-reported crashes from thirteen states, rather than risk per estimated VMT; and second, it analyzes casualty (fatality plus serious injury) risk, as opposed to just fatality risk. There are several good reasons to investigate the effect of mass and footprint reduction on casualty risk per crash. First, risk per VMT includes two components that influence whether a person is killed or seriously injured in a crash: how well a vehicle can be (based on its handling, acceleration, and braking capabilities), or actually is, driven to avoid being involved in a serious crash (crash avoidance), and, once a serious crash has occurred, how well a vehicle protects its occupants from fatality or serious injury (crashworthiness) as well as the occupants of any crash partner (compatibility). By encompassing both of these aspects of vehicle design, risk per VMT gives a complete picture of how vehicle design can promote, or reduce, road user safety. On the other hand, risk per crash isolates the second of these two safety effects, crashworthiness/compatibility, by examining the relationship between mass or footprint and how well a vehicle protects its occupants and others once a crash occurs.
Second, estimating risk on a per crash basis only requires using data on police-reported crashes from states, and does not require combining them with data from other sources, such as vehicle registration data and VMT information, as in NHTSA's 2012 analysis. Only 16 states currently record the vehicle identification number of vehicles involved in police-reported crashes, which is necessary to determine vehicle characteristics, and only 13 states also report the posted speed limit of the roadway on which the crash occurred. Given the limited number of fatality cases in 13 States, extending the analysis to casualties (fatalities plus serious/incapacitating injuries; i.e., level “K” and “A” injuries in police reports, a substantially larger number of cases than fatalities alone) reduces the statistical uncertainty of the results. Finally, a serious incapacitating injury can be just as traumatic to the victim and his or her family, and costly from an economic perspective, as a fatality. Limiting the analysis to the risk of fatality, which is a relatively rare event, ignores the effect vehicle design may have on reducing the large number of incapacitating injuries that occur each year on the nation's roadways. All risks in the report are societal risk, including fatalities and serious injuries in the case vehicle and any crash partners, and include not only driver but passenger casualties as well as non-occupant casualties such as pedestrians.
NHTSA notes that casualty severity is identified by public safety officers at the crash scene prior to examination by medical professionals, and therefore reported casualty severity will inherently have a degree of subjectivity.
The LBNL Phase 2 report estimates that mass reduction increases crash frequency (columns B and E) in all five vehicle types, with larger estimated increases in lighter-than-average cars and light-duty trucks. As a result, mass reduction is estimated to have a more beneficial effect on casualty risk per crash (column F) than on casualty risk per VMT (column G), and on fatality risk per crash (column C) than on fatality risk per VMT (column D). Mass reduction is associated with decreases in casualty risk per crash (column F) in all vehicles except cars weighing less than 3,106 pounds; in two of the four cases these estimated reductions are statistically significant, albeit small. For cars and light trucks, lower mass is associated with a more beneficial effect on fatality risk per crash (column C) than on casualty risk per crash (column F); for CUVs/minivans we estimate the opposite: lower mass is associated with a more beneficial effect on casualty risk than fatality risk per crash.
It is unclear why lower vehicle mass is associated with higher crash frequency, but lower risk per crash, in the regression models. It is possible that including variables that more accurately account for important differences among vehicles and driver behavior would reverse this relationship. For example, adding vehicle purchase price as a control variable reduces the estimated increase in crash frequency as vehicle mass decreases, for all five vehicle types; in the case of cars weighing more than 3,106 pounds, controlling for purchase price even reverses the sign of the relationship: mass reduction is estimated to slightly decrease crash frequency.
The association of mass reduction with 13-state casualty risk per VMT (column G) is quite consistent with that NHTSA estimated for U.S. fatality risk per VMT in its 2012 report (column A), although LBNL estimated the effects on casualty risk to be more detrimental than the effects on fatality risk, for all vehicle types. In contrast with NHTSA's estimates of U.S. fatality risk per VMT (column A), mass reduction is estimated to
As in the LBNL Phase 1 study, replicating NHTSA methodology, many of the control variables included in the logistic regressions are statistically significant, and have a large effect on fatality or casualty risk per crash, in some cases one to two orders of magnitude larger than those estimated for mass or footprint reduction. However, the estimated effect of these variables on risk per crash is not as large as their estimated effect on fatality risk per VMT. LBNL concludes that the estimated effect of mass reduction on casualty risk per crash is small and is overwhelmed by other known vehicle, driver, and crash factors.
NHTSA notes that to estimate the effect of mass reduction on safety requires careful examination of how to model the covariant effects of vehicle, driver, and crash factors.
LBNL states that regarding the control variables, there are several results that, at first glance, would not be expected: side airbags in light trucks and CUVs/minivans are estimated to reduce crash frequency; ESC and ABS, crash avoidance technologies, are estimated to reduce risk once a crash has occurred; and AWD and brand new vehicles are estimated to increase risk once a crash has occurred. In addition, male drivers are estimated to have essentially no effect on crash frequency, but are associated with a statistically significant increase in fatality risk once a crash occurs. And driving at night, on high-speed or rural roads, are associated with higher increases in risk per crash than on crash frequency. A possible explanation for these unexpected results is that important control variables are not being included in the regression models. For example, crashes involving male drivers, in vehicles equipped with AWD, or that occur at night on rural or high-speed roads, may not be more frequent but rather more severe than other crashes, and thus lead to greater fatality or casualty risk. And drivers who select vehicles with certain safety features may tend to drive more carefully, resulting in vehicle safety features designed to improve
As with NHTSA's analysis of fatality risk per VMT, lower mass is not consistently associated with increased casualty risk per crash across all footprint deciles for any combination of vehicle type and crash type. Lower mass is associated with increased casualty risk per crash in a majority of footprint deciles for 9 of the 27 crash and vehicle combinations, but few of these increases are statistically significant. On the other hand, lower mass is associated with decreased risk in a majority of footprint deciles for 12 of the 27 crash and vehicle combinations.
The correlation between mass and the casualty risk per crash by vehicle model is very low, after accounting for all of the control variables in the logistic regression model except for vehicle mass and footprint. Furthermore, when casualty rates are aggregated at the make-model level, there is no significant correlation between the residual, unexplained risk and vehicle weight. Even after accounting for many vehicle, driver, and crash factors, the variation in casualty risk per crash by vehicle model is quite large and unrelated to vehicle weight. That parallels the LBNL Phase 1 report, which found similar variation in fatality rates per VMT at the make-model level. The variations among individual models may reflect differences in vehicle design, differences in the drivers who choose such vehicles, and statistical variation due to the limited data for individual models. To the extent the variations are due to differences in vehicle design rather than vehicle selection or statistical variations, there is potential for lowering fatality or casualty rates through improved vehicle design. To the extent that the variations are due to differences in what drivers choose what vehicles, it is possible that including variables that account for these factors in the regression models would change the estimated relationship between mass or footprint and risk.
NHTSA notes that the statistical variation due to the limited data for individual models is an additional source of uncertainty inherent in the technique of aggregating the data by make and model, a technique whose primary goal is not the estimation of the effect of mass reduction on safety.
The International Council on Clean Transportation (ICCT), the Energy Foundation, and American Honda Motor Co. contracted Mike Van Auken and John Zellner of Dynamic Research Institute (DRI) to conduct a study to update the analysis of the effects of passenger vehicle size and weight on safety, based on the newly released NHTSA 2011 database. As noted earlier, DRI reports its study in three parts: Phase I,
Phase I, which analyzed CY 1995–2000 fatalities in MY 1991–1999 vehicles to replicate the NHTSA 2003 and 2010 studies, has already been discussed and responded to above. The purpose of Phase II was to extend and refined the analytical methods used by DRI in the Phase I of this program to the more recent model year and calendar year data used in the Kahane (2011) analysis, in order to confirm the Kahane (2011) results and to estimate the effects of vehicle weight and size reduction on fatalities per 100 reported crash involvements and reported crash involvements per VMT (which DRI calls, respectively, “effect on crashworthiness/crash compatibility” and “effect on crash avoidance”).
The Phase II study was accomplished by updating the regression analysis tools to use the newer databases for 2000 through 2007 model year light passenger vehicles in the 2002 through 2008 calendar years. The fatal and induced exposure databases were compiled by NHTSA from the U.S. DOT FARS database and accident data files from 13 U.S. States. In addition, police reported accident data files were obtained from 10 states. These 10 states were a subset of the 13 induced-exposure data states which NHTSA used. Data for the other three states were not available to non-government researchers at the time of this analysis.
The main results of the DRI Phase II analyses are as follows:
• The DRI one-stage analysis was able to reproduce NHTSA's baseline results very closely. However, in these analyses, DRI, like NHTSA, defines the induced-exposure cases to be the non-culpable vehicles involved in two-vehicle crashes. Later, in its supplemental report, DRI considers limiting the induced-exposure cases to stopped vehicles.
• The DRI two-stage analysis was able to replicate the DRI and NHTSA one stage results.
• The DRI Phase II two-stage results, which used more recent data were directionally similar to the DRI Phase I two-stage results. They showed an increase in reported crash involvements per VMT for lighter and smaller vehicles, but reductions of fatalities per 100 reported crash involvements. The DRI results for crash avoidance are also similar to those of Wenzel Phase 2 (2011b).
• The two-stage results for passenger cars weighing less than 3,106 pounds indicated that the increase in fatalities attributed to mass reduction was due to an increase in the number of crashes per exposure, more than offsetting a reduction in the number of fatalities per crash. The underlying reasons for these offsetting effects are unknown at this time, but could involve driver, vehicle, environment or accident factors that have not been controlled for in the current analyses. These results are similar to those obtained in Wenzel Phase 2 (2011b).
The overall results from DRI Phase II indicated very close agreement between the DRI and NHTSA one-stage results using the same methods and data. The results also indicate that the DRI one-stage and two-stage results are similar but have some differences due to the number of stages in the regression analysis. It may be possible to reduce these differences in the future by updating the state accident data for the 2008 calendar year, and adding “internal control variables.”
The DRI Supplemental report discusses in further detail two previous key assumptions that were used in the Kahane (2011), Wenzel (2011b), and DRI (2012b) reports, and describes two alternative assumptions. The previous key assumptions were that the effects of vehicle weight and size can be best modeled by curb weight and footprint; and that the crash exposure is best represented by non-culpable vehicle induced-exposure data. The alternative assumptions are that the weight and size can be best modeled by curb weight, wheelbase, and track width; and that the crash exposure is best represented by stopped-vehicle induced-exposure data (because non-culpable vehicle data may underrepresent vehicles and drivers that are better at avoiding crashes, even if they would have been non-culpable in those crashes). Some of the potential advantages and disadvantages of the previous assumptions and these alternative assumptions are described in the DRI supplemental report.
The results in the DRI Supplemental report indicate a range of estimates for the effects of a 100 pound curb mass reduction based on the type of induced-exposure data that is used and the candidate vehicle weight and size model. These results indicate:
• The estimated effects of mass reduction on fatalities are not statistically significant for any vehicle category, if the wheelbase and track model is used with the non-culpable vehicle induced-exposure data. (This assumes the width of confidence bounds is similar to those seen in the Kahane (2011) analyses.)
• The estimated effects of mass reduction on fatalities either result in a statistically significant decrease in fatalities (for truck-based LTVs weighing 4,594 lbs or more), or are not statistically significant (for all other vehicle categories), if the stopped-vehicle induced-exposure data is used (irrespective of the two candidate size models, e.g., the footprint model, or the wheelbase and track width model).
• The estimated effect of curb mass reduction for passenger cars weighing less than 3,106 pounds is a statistically significant increase in fatalities (when compared to the jackknife based confidence intervals) only if the curb weight and footprint model is used with the non-culpable vehicle induced-exposure data.
• All other estimated effects of mass reduction on fatalities are not statistically significant when compared to the jackknife based confidence intervals.
In addition, the variance inflation factors are approximately the same when modeling the independent effects of curb weight, wheelbase and track width as when modeling curb weight and footprint, which suggests there is no adverse effect for modeling with track width and wheelbase in the context of potential overparameterization and excessive multicollinearity. In addition, wheelbase and track width would be expected to have separate, different, physics-based effects on vehicle crash avoidance and crashworthiness/compatibility, which effects are confounded when they are combined into a single variable, footprint.
DRI further recommended that the final version of the Kahane (2011) report include models based on curb weight, wheelbase and track width; and also include results based on non-culpable stopped-vehicle induced-exposure data as well as non-culpable vehicle induced-exposure. DRI concludes that the latter could be addressed by averaging the estimates from both the stopped-vehicle induce-exposure and the non-culpable vehicle induced-exposure, and incorporate the range of estimates into the reported uncertainty in the results (i.e., confidence intervals).
DRI also recommended that NHTSA provide the following additional variables in the current publicly available induced-exposure dataset so that other researchers can reproduce the sensitivity to the induced-exposure definition:
• An additional variable indicating whether each induced-exposure vehicle was moving or stopped at the time of the initial impact. This variable could then be used to derive a non-culpable stopped-vehicle induced-exposure dataset from the non-culpable vehicle induced-exposure dataset.
• Add accident case identifiers to the induced-exposure dataset that are suitable for linking to the original state accident data files, but do not otherwise disclose any private information. This would assist researchers with access to the original accident data in better understanding the induced-exposure data.
As noted in the preceding discussion of the Kahane (2012) and Wenzel (2012a) reports, NHTSA and LBNL have added models based on track width and wheelbase and/or stopped-vehicle induced exposure to the report. Table II–28 (test nos. 1, 2, and 3) and Table II–29 (tests nos. 15, 16, and 17) show results for those models. NHTSA has also made available to the public an induced-exposure database limited to stopped vehicles.
The preceding sections reviewed three groups of reports issued in 2012 that estimated the effect of mass reduction on societal fatality or casualty risk, based on statistical analyses of crash and exposure data for model year 2000–2007 vehicles: NHTSA/Kahane's report and LBNL/Wenzel's Phase 1 report analyze fatality rates per VMT. DRI/Van Auken's reports likewise estimate the overall effect of mass reduction on fatalities per VMT, but they also provide separate sub-estimates of the effect on fatalities per 100 reported crash involvements and on reported crash involvements per VMT (which Van Auken calls “effect on crashworthiness/compatibility” and “effect on crash avoidance”). Wenzel's Phase 2 report analyzes casualty rates per VMT, including sub-estimates of the effects on casualties per 100 crash involvements and crashes per VMT. “Casualties” include fatalities and the highest police-reported level of nonfatal injury (usually called level “A”).
For the final regulatory analysis, like the preliminary analysis, NHTSA and EPA rely on the coefficients in the NHTSA/Kahane study for estimating the potential safety effects of the CAFE and GHG standards for MYs 2017–2025. NHTSA takes this opportunity to summarize and compare the reports and also explain why we continue to rely on the results of our own study in projecting safety effects.
The important common feature of these 2012 reports is that they all support the same principal conclusions—in NHTSA's words:
• The societal effect of mass reduction while maintaining footprint, if any, is small.
• Any judicious combination of mass reductions that maintain footprint and are proportionately higher in the heavier vehicles is [likely to be safety-neutral—i.e., it is] unlikely to have a societal effect large enough to be detected by statistical analyses of crash data.
This greatly contrasts with the disagreement in 2004–2005, based on earlier fatality databases, when DRI estimated a decrease of 1,518 fatalities per 100-pound mass reduction in all vehicles while maintaining wheelbase and track width
Even though the studies now agree more than they disagree, there are still qualitative differences among the results. The baseline NHTSA findings indicate a statistically significant fatality increase for mass reduction in cars weighing less than 3,106 pounds. The NHTSA results do not encourage mass reduction in the lightest cars, at least for the foreseeable future, as long as so many heavy cars and LTVs remain on the road. But DRI's two analyses substituting track width and wheelbase for footprint or stopped-vehicle induced exposure for non-culpable vehicles each reduce the estimate fatality-increasing effect of mass reduction in lighter-than-average cars to a statistically non-significant level, while the simultaneous application of both techniques reduces the effect close to zero.
DRI suggests that track width and wheelbase have more intuitive relationships with crash and fatality risk than footprint and do not aggravate multicollinearity issues, as evidenced by variance inflation factors; and that stopped-vehicle induced-exposure data may be preferable because non-culpable vehicle data may underrepresent vehicles and drivers that are good at avoiding crashes. NHTSA finds DRI's argument plausible and has now included both techniques among the sensitivity tests in its 2012 report. But these sensitivity tests have not replaced NHTSA's baseline analysis. In the regressions for cars and LTVs, wheelbase often did not have the expected relationships with risk and added little information (In the regressions for CUVs and minivans, it was track width that had little relationship with risk). Limiting the induced-exposure data to stopped vehicles is a technique that earlier peer reviewers criticized, eliminates 75 percent of the induced-exposure cases (even more on high-speed roads), and may underrepresent older drivers. Furthermore, Table II–28 shows that some of the other sensitivity tests increase the fatality-increasing effect of mass reduction in light cars to about the same extent that these techniques diminish it. On the whole, NHTSA does not now see adequate justification for mass reduction in light cars, but additional analysis may be considered as the vehicle fleet changes.
Another analysis strategy of DRI and also of Wenzel's Phase 2 report is to obtain separate estimates of the effect of mass reduction on fatalities [or casualties] per reported crash and reported crashes per VMT, as well as the composite estimate of its effect on fatalities per VMT. Van Auken and Wenzel both call the first estimate the “effect on crashworthiness/compatibility” and the second, the “effect on crash avoidance.” NHTSA believes the separate estimates are computationally valid, but these names are inaccurate characterizations that can lead to misunderstandings. For example, ICCT argues that the relationship between mass reduction and crash avoidance observed in the DRI and LBNL Phase 2 studies (i.e., that crash frequency increases as mass decreases) is counterintuitive.
Wenzel's Phase 1 and Phase 2 reports show that when fatality or casualty rates are aggregated at the make-model level, differences between the models “overwhelm” the effect of mass. Likewise, in the basic regression analyses, the effects of many control variables are much stronger than the effect of mass. NHTSA does not dispute the validity of these analyses or disagree with the findings, but they must not be misinterpreted. Specifically, it would be wrong to conclude that the effect of mass reduction should not be estimated at all because other ambient effects are considerably stronger. Researchers must often measure a weak effect in the presence of strong effects—for example: Studying the light from faraway galaxies despite the presence of much stronger light from nearby stars; evaluating a dietary additive based on a sample of test subjects who vary greatly in age, weight, and eating habits. Furthermore, the technique of aggregating the rates by make-model, while useful for graphically depicting the effect of mass relative to other factors, is no substitute for regression analyses on the full database in terms of directly estimating the effects of mass reduction on safety; at best, the analysis aggregated by make-model can indirectly generate less precise estimates of these effects. NHTSA believes the sensitivity tests in Table II–28 and Table II–29 are useful for addressing the effects of other factors, since most of these tests consist of alternative ways to quantify those factors. The tests showed two consistent trends: almost all (18 of Wenzel's 19 and all 11 of Kahane's) estimated a fatality increase for mass reduction in cars weighing less than 3,106 pounds and almost all (18 of Wenzel's and 10 of Kahane's) estimated a societal benefit if mass is reduced in the LTVs weighing 4,594 pounds or more.
Wenzel's Phase 2 report on casualty risk introduces one more source of data-driven uncertainty. To achieve adequate sample size, it must rely on the injury data in State crash files, specifically the highest reported level of nonfatal injury, usually called level “A.” But the coding of injury in police-reported crash databases is usually not based on medical records. “A” injuries do not necessarily correspond to life-threatening or seriously disabling injuries as defined by medical professionals. In 2000–2008 National Automotive Sampling System data, 59% of “A” injuries were in fact medically minor (levels 0 or 1 on the Abbreviated Injury Scale, based on subsequently retrieved medical records), while 39% of the serious (AIS 3) and 27% of life-threatening (AIS 4–5) injuries were not coded “A.” Despite this, Wenzel's composite results for casualties per VMT show about the same effects for mass reduction as Kahane's analyses of fatalities per VMT—e.g., in the lighter cars, the estimated effect of a 100-pound mass reduction is slightly more detrimental for casualties per VMT (1.86% increase
i. Based on this information, what do the Agencies consider to be the current state of statistical research on vehicle mass and safety?
The agencies believe that statistical analysis of historical crash data continues to be an informative and important tool in assessing the potential safety impacts of the proposed standards. The effect of mass reduction while maintaining footprint is a complicated topic and there are open questions whether future vehicle designs will reduce the historical correlation between weight and size. It is important to note that while the updated database represents more current vehicles with technologies more representative of vehicles on the road today, that database cannot fully represent what vehicles will be on the road in the MYs 2017–2025 timeframe. The vehicles manufactured in the 2000–2007 timeframe were not subject to footprint-based fuel economy standards. As explained earlier, the agencies expect that the attribute-based standards will likely facilitate the design of vehicles such that manufacturers may reduce mass while maintaining footprint. Therefore, it is possible that the analysis for MYs 2000–2007 vehicles may not be fully representative of the vehicles that will be on the road in 2017 and beyond.
We recognize that statistical analysis of historical crash data may not be the only way to think about the future relationship between vehicle mass and safety. However, we recognize that other assessment methods are also subject to uncertainties, which makes statistical analysis of historical data an important starting point if employed mindfully and recognized for how it can be useful and what its limitations may be.
NHTSA funded an independent review of statistical studies and held a mass-safety workshop in February 2011 in order to help the agencies sort through the ongoing debates over how statistical analysis of the historical relationship between mass and safety should be interpreted. Previously, the agencies have assumed that differences in results were due in part to inconsistent databases. By creating the updated common database and making it publicly available, we are hopeful that this aspect of the problem has been resolved. Moreover, the independent review of 18 statistical reports by UMTRI suggested that differences in data were probably less significant than the agencies may have thought. UMTRI stated that statistical analyses of historical crash data should be examined more closely for potential multicollinearity issues that exist in some of the current analyses. The agencies will continue to monitor issues with multicollinearity in our analyses, and hope that outside researchers will do the same. And finally, based on the findings of the independent review, the agencies continue to be confident that Kahane's analysis is one of the best for the purpose of analyzing potential safety effects of future CAFE and GHG standards. UMTRI concluded that Kahane's approach is valid, and Kahane has continued and refined that approach for the current analysis. The NHTSA 2012 statistical fatality report finds directionally similar but fewer statistically significant relationships between vehicle mass, size, and footprint, as discussed above. Based on these findings, the agencies believe that in the future, fatalities due to mass reduction will be best reduced if mass reduction is concentrated in the heaviest vehicles. NHTSA considers part of the reason that more recent historical data shows a dampened effect in the relationship between mass reduction and safety is that all vehicles, including traditionally lighter ones, grew heavier during that timeframe (2000s). As lighter vehicles might become more prevalent in the fleet again over the next decade, it is possible that the trend could strengthen again. On the other hand, extensive use of new lightweight materials and optimized vehicle design may weaken the relationship. As the Alliance mentioned in its comments noted above, future updated analyses will be necessary to determine how the effect of mass reduction on safety changes over time.
Both agencies agree that there are several identifiable safety trends already in place or expected to occur in the foreseeable future that are not accounted for in the study, since they were not in effect at the time that the vehicles in question were manufactured. For example, there are two important new safety standards that have already been issued and have been phasing in after MY 2008. FMVSS No. 126 (49 CFR § 571.126) requires electronic stability control in all new vehicles by MY 2012, and the upgrade to FMVSS No. 214 (Side Impact Protection, 49 CFR § 571.214) will likely result in all new vehicles being equipped with head-curtain air bags by MY 2014. Additionally, based on historical trends, we anticipate continued improvements in driver (and passenger) behavior, such as higher safety belt use rates. All of these may tend to reduce the absolute number of fatalities. Moreover, as crash avoidance technology improves, future statistical analysis of historical data may be complicated by a lower number of crashes. In summary, the agencies have relied on the coefficients in the Kahane 2012 study for estimating the potential safety effects of the CAFE and GHG standards for MYs 2017–2025, based on our assumptions regarding the amount of mass reduction that could be used to meet the standards in a cost-effective way without adversely affecting safety. Section II.G.5.a below discusses the methodology used by the agencies in more detail. While the results of the safety effects analysis are less statistically significant than the results in the MYs 2012–2016 final rule, the agencies still believe that any statistically significant results warrant careful consideration of the assumptions about appropriate levels of mass reduction, and have acted accordingly in developing the final standards.
As mass reduction becomes a more important technology option for manufacturers in meeting future CAFE and GHG standards, manufacturers will invest more and more resources in developing increasingly lightweight vehicle designs that meet their needs for manufacturability and the public's need for vehicles that are also safe, useful, affordable, and enjoyable to drive. There are many different ways to reduce mass, as discussed in Chapter 3 of this TSD and in Sections II, III, and IV of the preamble, and a considerable amount of information is available today on lightweight vehicle designs currently in production and that may be able to be put into production in the rulemaking timeframe. Discussion of lightweight material designs from NHTSA's workshop is presented below.
Besides “lightweighting” technologies themselves, though, there are a number of considerations when attempting to evaluate how future technological developments might affect the safety estimates indicated by the historical statistical analysis. As discussed in the first part of this section, for example, careful changes in design and/or materials used might mitigate some of the potential increased risk from mass reduction for vehicle self-protection,
Along with the California Air Resources Board (CARB), the agencies have completed several technical/engineering projects described below to estimate the maximum potential for advanced materials and improved designs to reduce mass in the MY 2017–2021 timeframe, while continuing to meet safety regulations and maintain functionality and affordability of vehicles. Another NHTSA-sponsored study will estimate the effects of these design changes on overall fleet safety. The detailed discussions about these studies can be found in the Joint TSD section 3.3.5.5.
A. NHTSA awarded a contract in December 2010 to Electricore, with EDAG and George Washington University (GWU) as subcontractors, to study the maximum feasible amount of mass reduction of a mid-size car—specifically, a Honda Accord—while maintaining the functionality of the baseline vehicle. The project team was charged to maximize the amount of mass reduction with the technologies that are considered feasible for 200,000 units per year production volume during the time frame of this rulemaking while maintaining the retail price in parity (within ±10% variation) with the baseline vehicle. When selecting materials, technologies and manufacturing processes, the Electricore/EDAG/GWU team utilized, to the extent possible, only those materials, technologies and design which are currently used or planned to be introduced in the near term (MY 2012–2015) on low-volume production vehicles. This approach, commonly used in the automotive industry, is employed by the team to make sure that the technologies used in the study will be feasible for mass production for the time frame of this rulemaking. The Electricore/EDAG/GWU team took a “clean sheet of paper” approach and adopted collaborative design, engineering and CAE process with built-in feedback loops to incorporate results and outcomes from each of the design steps into the overall vehicle design and analysis. The team tore down and benchmarked 2011 Honda Accord and then undertook a series of baseline design selections, new material selections, new technology selections and overall vehicle design optimization. Vehicle performance, safety simulation and cost analyses were run in parallel to the design and engineering effort to help ensure that the design decisions are made in-line with the established project constrains.
While the project team worked within the constraint of maintaining the baseline Honda Accord's exterior size and shape, the body structure was first redesigned using topology optimization with six load cases, including bending stiffness, torsion stiffness, IIHS frontal impact, IIHS side impact, FMVSS pole impact, FMVSS rear impact and FMVSS roof crush cases. The load paths from topology optimization were analyzed and interpreted by technical experts and the results were then fed into low fidelity 3G (Gauge, Grade and Geometry) optimization programs to further optimize for material properties, material thicknesses and cross-sectional shapes while trying to achieve the maximum amount of mass reduction. The project team carefully reviewed the optimization results and built detailed CAD/CAE models for the body structure, closures, bumpers, suspension, and instrumentation panel. The vehicle designs were also carefully reviewed to ensure that they can be manufactured at high volume production rates,
Multiple materials were used for this study. The body structure was redesigned using a significant amount of high strength steel. The closures and suspension were designed using a significant amount of aluminum. Magnesium was used for the instrument panel cross-car beam. A limited amount of composite material was used for the seat structure.
Safety performance of the light-weighted design was compared to the safety rating of the baseline MY2011 Honda Accord for seven consumer information and federal safety crash tests using LS–DYNA.
Overall the complete light weight vehicle achieved a total weight savings of 22 percent (332kg) relative to the baseline vehicle (1480 kg). The study has been peer reviewed by three technical experts from the industry, academia and a DOE national lab. The project team addressed the peer review comments in the report and also composed a response to peer review comment document. The final report, CAE model and cost model are published in docket NHTSA–2010–0131 and can also be found on NHTSA's Web site.
B. EPA, along with ICCT, funded a contract with FEV, with subcontractors EDAG (CAE modeling) and Munro & Associates, Inc. (component technology research) to study the feasibility, safety and cost of 20% mass reduction on a 2017–2020 production ready mid-size
The original 2009/2010 Phase 1 effort by Lotus Engineering was funded by Energy Foundation and ICCT to generate a technical paper which would identify potential mass reduction opportunities for a selected vehicle representing the crossover utility segment, a 2009 Toyota Venza. Lotus examined mass reduction for two scenarios—a low development (20% MR and 2017 production with technology readiness of 2014) and high development (40% MR and 2020 production with technology readiness of 2017). Lotus disassembled a 2009 Toyota Venza and created a bill of materials (BOM) with all components. Lotus then investigated emerging/current technologies and opportunities for mass reduction. The report included the BOM for full vehicle, systems, sub-systems and components as well as recommendations for next steps. The potential mass reduction for the low development design includes material changes to portions of the body in white (underfloor and body, roof, body side, etc.), seats, console, trim, brakes, etc. The Phase 1 project achieved 19% (without the powertrain), 246 kg, at 99% of original cost at full phase-in after peer review comments taken into consideration.
The peer reviewed Lotus Phase 1 study created a good foundation for the next step of analyses of CAE modeling for safety evaluations and in-depth costing (these steps were not within the scope of the Phase 1 study) as noted by the peer reviewer recommendations.
Similar to Lotus Phase 1 study, the EPA Phase 2 study begins with vehicle tear down and BOM development. FEV and its subcontractors tore down a MY 2010 Toyota Venza in order to create a BOM as well as understand the production methods for each component. Approximately 140 coupons from the BIW were analyzed in order to understand the full material composition of the baseline vehicle. A baseline CAE model was created based on the findings of the vehicle teardown and analysis. The model's results for static bending, static torsion, and modal frequency simulations (NVH) were obtained and compared to actual results from a Toyota Venza vehicle. After confirming that the results were within acceptable limits, this model was then modified to create light-weighted vehicle models. EDAG reviewed the Lotus Phase 1 low development BIW ideas and found redesign was needed to achieve the full set of acceptable NVH characteristics. EDAG utilized a commercially available computerized optimization tool called HEEDS MDO to build the optimization model. The model consisted of 484 design variables, 7 load cases (2 NVH + 5 crash), and 1 cost evaluation. The outcome of EDAG's lightweight design optimization included the optimized vehicle assembly and incorporated the following while maintaining the original BIW design: Optimized gauge and material grades for body structure parts, laser welded assembly at shock towers, rocker, roof rail, and rear structure subassemblies, aluminum material for front bumper, hood, and tailgate parts, TRBs on B-pillar, A-pillar, roof rail, and seat cross member parts, design change on front rail side members. EDAG achieved 13% mass reduction in the BIW including closure. If aluminum doors were included then an additional decrease of 28 kg could be achieved for a total of 18% mass reduction from the body structure. All other systems within the vehicle were examined for mass reduction, including the powertrain (engine, transmission, fuel tank, exhaust, etc.). FEV and Munro incorporated the Lotus Phase 1 low development concepts into their own idea matrix. Each component and sub-system chosen for mass reduction was scaled to the dimensions of the baseline vehicle, trying to maximize the amount of mass reduction with cost effective technologies and techniques that are considered feasible and manufacturable in high volumes in MY2017. FEV included a full discussion of the chosen mass reduction options for each component and subsystem.
Safety performance of the baseline and light-weighted designs (Lotus Phase 1 low development and the final EPA Phase 2 design) were evaluated by EDAG through their constructed detailed CAD/CAE vehicle models. Five federal safety crash tests were performed, including FMVSS flat frontal crash, side impact, rear impact and roof crush (using IIHS resistance requirements) as well as Euro NCAP/IIHS offset frontal crash. Criteria including the crash pulse, intrusion and visual crash information were evaluated to compare the results of the light weighted models to the results of the baseline model. The light weighted vehicle achieved equivalent safety performance in all tests to the baseline model with no damage to the fuel tank. In addition, CAE was used to evaluate the BIW vibration modes in torsion, lateral bending, rear end match boxing, and rear end vertical bending, and also to evaluate the BIW stiffness in bending and torsion.
The Phase 2 study 2010 Toyota Venza light weight vehicle achieved, with powertrain, a total weight savings of 18 percent (312 kg) relative to the baseline vehicle (1710 kg) at −$0.43/kg, and the cost figure is near zero at 20 percent. The study report and models have been peer reviewed by four technical experts from a material association, academia, DOE, and a National Laboratory. The peer review comments for this study were generally complimentary, and concurred with the ideas and methodology of the study. A few of the comments required further investigation, which were completed for the final report. The project team addressed the peer review comments in the report and also composed a response to peer review comment document. Changes to the BIW CAE models resulted in minimal differences. The final report is published in EPA's docket EPA–HQ–OAR–2010–0799 and the CAE LS DYNA model files and overview cost model files are found on EPA's Web site
C. The California Air Resources Board (CARB) funded a study with Lotus Engineering to further develop the high development design from Lotus' 2010 Toyota Venza work (“Phase 1”). The CARB-sponsored Lotus “Phase 2” study
The Lotus design achieved a 37% (141 kg) mass reduction in the body structure, a 38% (484kg) mass reduction in the vehicle excluding the powertrain, and a 32% (537 kg) mass reduction in the entire vehicle including the powertrain. The report was peer reviewed by a cross section of experts and the comments were addressed by Lotus in the peer review documents. The comments requiring modification were incorporated into the final document. The documents can be found on EPA's Web site
D. NHTSA has contracted with GWU to build a fleet simulation model to study the impact and relationship of light-weighted vehicle design with injuries and fatalities. This study will also include an evaluation of potential countermeasures to reduce any safety concerns associated with lightweight vehicles in the second phase. NHTSA has included three light-weighted vehicle designs in this study: the one from Electricore/EDAG/GWU mentioned above, one from Lotus Engineering funded by California Air Resource Board for the second phase of the study, evaluating mass reduction levels around 35 percent of total vehicle mass, and one funded by EPA and the International Council on Clean Transportation (ICCT). In addition to the lightweight vehicle models, these projects also created CAE models of the baseline vehicles. To estimate the fleet safety implications of light-weighting, CAE crash simulation modeling was conducted to generate crash pulse and intrusion data for the baseline and three light-weighted vehicles when they crash with objects (barriers and poles) and with four other vehicle models (Chevy Silverado, Ford Taurus, Toyota Yaris and Ford Explorer) that represent a range of current vehicles. The simulated acceleration and intrusion data were used as inputs to MADYMO occupant models to estimate driver injury. The crashes were conducted at a range of speeds and the occupant injury risks were combined based on the frequency of the crash occurring in real world data. The change in driver injury risk between the baseline and light-weighed vehicles will provide insight into the safety performance these light-weighting design concepts. This is a large and ambitious project involves several stages over several years. NHTSA and GWU have completed the first stage of this study. The frontal crash simulation part of the study is being finished and will be peer reviewed. The report for this study will be available in NHTSA–2010–0131. Information for this study can also be found at NHTSA's Web site.
The countermeasures section of the study is expected to be finished in early 2013. This phase of the study is expected to provide information about the relationship of light-weighted vehicle design with injuries and fatalities and to provide the capability to evaluate the potential countermeasures to safety concerns associated with light-weighted vehicles. NHTSA plans to include the following items in future phases of the study to help better understanding the impact of mass reduction on safety.
• Light-weighted concept vehicle to light-weighted concept vehicle crash simulation;
• Additional crash configurations, such as side impact, oblique and rear impact tests;
• Risk analysis for elderly and vulnerable occupants;
• Safety of light-weighted concept vehicles for different size occupants.
• Partner vehicle protection in crashes with other light-weighted concept vehicles;
While this study is expected to provide information about the relationship of light-weighted vehicle design with injuries and fatalities and to provide meaningful information to NHTSA on potential countermeasures to reduce any safety concerns associated with lightweight vehicles, because this study cannot incorporate all of the variations in vehicle crashes that occur in the real world, it is expected to provide trend information on the effect of potential future designs on highway safety, but is not expected to provide information that can be used to modify the coefficients derived by Kahane that relate mass reduction to highway crash fatalities. Because the coefficients from
Global Automakers commented that lightweighting strategies “should be based on real world experience and in reliance upon laboratory test data.”
Thus, even though CAE tools are used heavily, the agencies acknowledge the concerns the Alliance raised in its comments about CAE capabilities for some potential advanced materials for crashworthiness, and have been mindful of this issue in developing our studies. NHTSA's study took a similar approach in vehicle body structure design as the FutureSteelVehicle, but with less aggressive material usage (e.g., using thicker gauges of steel). Only those materials, technologies and design which are currently used or planned to be introduced in the near term (MY 2012–2015) on low-volume production vehicles are used in NHTSA's concept design. This approach is employed by the team to make sure that the technologies used in the study will be feasible for mass production for the time frame of this rulemaking. Even though NHTSA's study is not directly based on laboratory testing of the light-weighted design as Global Automaker suggested, the materials, designs and approaches used in the study are currently employed in mass production vehicles, which gives NHTSA confidence that results from its study are practical and feasible in the rulemaking timeframe. EPA's study used a similar approach. It includes a baseline model which was run through crash simulations and the results were comparable to physical crash data of the vehicle in the same tests. For the light weighted design, the BIW was maintained while various components were lightened through incorporation of high strength steels whose properties reflect those materials commonly used today. The light weighted CAE model crash results were then compared to those from the baseline CAE model crash results. The model run results from the light weighted vehicle had equal or better performance on intrusion, acceleration, etc. The materials, designs and approaches used in the study are currently employed in mass production vehicles, which gives EPA confidence that results from its study are practical, feasible and reasonable in the rulemaking timeframe.
As stated above in section C.2, on February 25, 2011, NHTSA hosted a workshop on mass reduction, vehicle size, and fleet safety at the headquarters of the U.S. Department of Transportation in Washington, DC. The purpose of the workshop was to provide the agencies with a broad understanding of current research in the field and provide stakeholders and the public with an opportunity to weigh in on this issue. The agencies also created a public docket to receive comments from interested parties that were unable to attend. The presentations were divided into two sessions that addressed the two expansive sets of issues. The first session explored statistical evidence of the roles of mass and size on safety, and is summarized in section C.2. The second session explored the engineering realities of structural crashworthiness, occupant injury and advanced vehicle design, and is summarized here. The speakers in the second session included Stephen Summers of NHTSA, Gregg Peterson of Lotus Engineering, Koichi Kamiji of Honda, John German of the International Council on Clean Transportation (ICCT), Scott Schmidt of the Alliance of Automobile Manufacturers, Guy Nusholtz of Chrysler, and Frank Field of the Massachusetts Institute of Technology.
The second session explored what degree of mass reduction and occupant protection are feasible from technical, economic, and manufacturing perspectives. Field emphasized that technical feasibility alone does not constitute feasibility in the context of vehicle mass reduction. Sufficient material production capacity and viable manufacturing processes are essential to economic feasibility. Both Kamiji and German noted that both good materials and good designs will be necessary to reduce fatalities. For example, German cited the examples of hexagonally structured aluminum columns, such as used in the Honda Insight, that can improve crash absorption at lower mass, and of high-strength steel components that can both reduce weight and improve safety. Kamiji made the point that widespread mass reduction will reduce the kinetic energy of all crashes which should produce some beneficial effect.
Summers described NHTSA's plans for a model to estimate fleet wide safety effects based on an array of vehicle-to-vehicle computational crash simulations of current and anticipated vehicle designs. In particular, three computational models of lightweight vehicles are under development. They are based on current vehicles that have been modified or redesigned to substantially reduce mass. The most ambitious was the “high development” derivative of a Toyota Venza developed by Lotus Engineering and discussed by Mr. Peterson. The Lotus light-weighted Venza structure contains about 75% aluminum, 12% magnesium, 8% steel, and 5% advanced composites. Peterson expressed confidence that the design had the potential to meet federal safety standards. Nusholtz emphasized that computational crash simulations involving more advanced materials were less reliable than those involving traditional metals such as aluminum and steel.
Nusholtz presented a revised data-based fleet safety model in which important vehicle parameters were modeled based on trends from current NCAP crash tests. For example, crash pulses and potential intrusion for a particular size vehicle were based on existing distributions. Average occupant deceleration was used to estimate injury risk. Through a range of simulations of modified vehicle fleets, he was able to estimate the net effects of various design strategies for lighter weight vehicles, such as various scaling approaches for vehicle stiffness or intrusion. The approaches were selected based on engineering requirements for modified vehicles. Transition from the current fleet was considered. He concluded that protocols resulting in safer transitions
German discussed several important points on the future of mass reduction. Similar to Kahane's discussion of the difficulties of isolating the impact of mass reduction, German stated that other important variables, such as vehicle design and compatibility factors, must be held constant in order for size or weight impacts to be quantified in statistical analyses. He presented results that the safety impacts of size and weight are small and difficult to quantify when compared to driver, driving influences, and vehicle design influences. He noted that several scenarios, such as rollovers, greatly favored the occupants of smaller and lighter cars once a crash occurred. He pointed out that if size and design are maintained, lower weight should translate into a lower total crash force. He thought that advanced material designs have the potential to “decouple” the historical correlation between vehicle size and weight, and felt that effective design and driver attributes may start to dominate size and weight issues in future vehicle models.
Other presenters noted industry's perspective of the effect of incentivizing mass reduction. Field highlighted the complexity of institutional changes that may be necessitated by mass reduction, including redesign of material and component supply chains and manufacturing infrastructure. Schmidt described an industry perspective on the complicated decisions that must be made in the face of regulatory change, such as evaluating goals, gains, and timing.
Field and Schmidt noted that the introduction of technical innovations is generally an innate development process involving both tactical and strategic considerations that balance desired vehicle attributes with economic and technical risk. In the absence of challenging regulatory requirements, a substantial technology change is often implemented in stages, starting with lower volume pilot production before a commitment is made to the infrastructure and supply chain modifications which are necessary for inclusion on a high-volume production model. Joining, damage characterization, durability, repair, and significant uncertainty in final component costs are also concerns. Thus, for example, the widespread implementation of high-volume composite or magnesium structures might be problematic in the short or medium term when compared to relatively transparent aluminum or high strength steel implementations. Regulatory changes will affect how these tradeoffs are made and these risks are managed.
Koichi Kamiji presented data showing in increased use of high strength steel in their Honda product line to reduced vehicle mass and increase vehicle safety. He stated that mass reduction is clearly a benefit in 42% of all fatal crashes because absolute energy is reduced. He followed up with slides showing the application of certain optimized designs can improve safety even when controlling for weight and size.
A philosophical theme developed that explored the ethics of consciously allowing the total societal harm associated with mass reduction to approach the anticipated benefits of enhanced safety technologies. Although some participants agreed that there may eventually be specific fatalities that would not have occurred without downsizing, many also agreed that safety strategies will have to be adapted to the reality created by consumer choices, and that “We will be ok if we let data on what works—not wishful thinking—guide our strategies.”
As explained above, the agencies consider the latest 2012 statistical analysis of historical crash data by NHTSA to represent the best estimates of the potential relationship between mass reduction and fatality increases in the future fleet. This section discusses how the agencies used NHTSA's 2012 analysis to calculate specific estimates of safety effects of the final rule, based on the analysis of how much mass reduction manufacturers might use to meet the final rule.
The CAFE/GHG standards do not mandate mass reduction, or require that mass reduction occur in any specific manner. However, mass reduction is one of the technology applications available to the manufacturers and a degree of mass reduction is used by both agencies' models to determine the capabilities of manufacturers and to predict both cost and fuel consumption/emissions impacts of more stringent CAFE/GHG standards. To estimate the amount of mass reduction to apply in the rulemaking analysis, the agencies considered fleet safety effects for mass reduction. As shown in Table II–24 and Table II–25, both the Kahane 2011 preliminary report and the Kahane 2012 final report show that applying mass reduction to CUVs and light duty trucks will generally decrease societal fatalities, while applying mass reduction to passenger cars will increase fatalities. The CAFE model uses coefficients from the Kahane study along with the mass reduction level applied to each vehicle model to project societal fatality effects in each model year. NHTSA used the CAFE model and conducted iterative modeling runs varying the maximum amount of mass reduction applied to each subclass in order to identify a combination that achieved a high level of overall fleet mass reduction while not adversely affecting overall fleet safety. These maximum levels of mass reduction for each subclass were then used in the CAFE model for the rulemaking analysis. The agencies believe that mass reduction of up to 20 percent is feasible on light trucks, CUVs and minivans as discussed in the Joint TSD Section 3.3.5.5. Thus, the amount of mass reduction selected for this rulemaking is based on our assumptions about how much is technologically feasible without compromising safety. While we are confident that manufacturers will build safe vehicles and meet (or surpass) all applicable federal safety standards, we cannot predict with certainty that they will choose to reduce mass in exactly the ways that the agencies have analyzed in response to the standards. In the event that manufacturers ultimately choose to reduce mass and/or footprint in ways not analyzed or anticipated by the agencies, the safety effects of the rulemaking may likely differ from the agencies' estimates.
In this final rule analysis, NHTSA utilized the 2012 Kahane study relationships between weight and safety, expressed as percent changes in fatalities per 100-pound mass reduction while holding footprint constant. However, as mentioned previously, there are several identifiable safety trends already occurring, or expected to occur in the foreseeable future, which are not accounted for in the study. For example, the two important new safety standards that were discussed above for electronic stability control and side curtain airbags, have already been issued and began phasing in after MY 2008. The recent shifts in market shares from pickups and SUVs to cars and CUVs may continue, or grow, if gasoline
NHTSA examined the impacts of identifiable safety trends over the lifetime of the vehicles produced in each model year from 2007 through 2020. An estimate of these impacts was contained in a previous agency report that examined the impact of both safety standards and behavioral safety trends on fatality rates.
To estimate the amount of mass reduction to apply in the rulemaking analysis, the agencies considered fleet safety effects for mass reduction. As previously discussed the agencies believe that mass reduction of up to 20 percent is feasible on light trucks, CUVs and minivans,
In order to find a safety neutral compliance path for use in the agencies' final rulemaking analysis given the coefficients from the Kahane 2012 study, the maximum amount of mass reduction applied in the final rule analysis has been modified from the NPRM levels for compact passenger cars and midsize passenger cars as shown in Table II–32. Specifically, the maximum amount of mass reduction for compact passenger cars and compact performance passenger cars is reduced in the agencies' respective models from 2% as used in the NPRM to 0% in the final rule analysis, while for midsize passenger cars and midsize performance passenger cars, it is reduced from 5% as used in the NPRM to 3.5% in the final rule analysis.
For the CAFE model, these percentages apply to a vehicle's total weight, including the powertrain. Table II–33 shows the amount of mass reduction in pounds for these percentage mass reduction levels for a typical vehicle weight in each subclass.
These maximum amounts of mass reduction discussed above were applied in the technology input files for the CAFE model. Within some of the light truck classes, additional limitations were placed on the maximum amount of mass reduction for some of the vehicles based on which Kahane study safety class the vehicles were in, as is explained below. By way of background, NHTSA divides vehicles into classes for purposes of applying technology in the CAFE model in a way that differs from the Kahane study which divides vehicles into classes for purposes of determining safety coefficients. These differences require that the “safety class” coefficients be applied to the appropriate vehicles in the CAFE “technology subclasses.” For the reader's reference, for purposes of this final rule, the safety classes and the technology subclasses relate
In the NPRM analysis, the maximum amount of mass reduction for vehicles that would fall into the light truck safety class and would also fall into the small and midsize light truck technology subclasses was limited to 10%, as shown in Table II–35. In the final rule analysis, in order to find a safety-neutral compliance path using the new safety coefficients, for vehicles in the light truck safety class that also fall into the SmallLT technology subclass, mass reduction was limited to a maximum of 1.5%, as shown in Table II–36. For vehicles in the light truck safety class that also fall into the MidsizeLT technology subclass, the amount of mass reduction applied depends on vehicle mass: if the vehicle curb weight is greater than or equal to 4,000 pounds, the maximum amount of mass reduction allowed is 7.5%; if the vehicle curb weight is less than 4,000 pounds, the maximum amount is 1.5%. Small and midsize light truck (SmallLT and MidsizeLT) that fall in the CUV and Minivan (CM) safety class are allowed up to 20% mass reduction. These changes from the NPRM analysis were incorporated in order to maximize the amount of overall fleet mass reduction in a way that achieved a safety neutral result with the updated coefficients from the Kahane 2012 study.
Table II–37 shows CAFE model results for societal safety for each model year based on the application of the above mass reduction limits.
Using the same coefficients from the 2012 Kahane study, EPA used the OMEGA model to conduct a similar analysis. After applying these percentage increases to the estimated mass reductions per vehicle size by model year assumed in the Omega model, Table II–38 shows the results of EPA's safety analysis separately for each model year. These are estimated increases or decreases in fatalities over the lifetime of the model year fleet. A positive number means that fatalities are projected to increase; a negative number means that fatalities are projected to decrease. For details, see the EPA RIA Chapter 3.
As discussed above, the ways in which future technological advances could potentially mitigate the safety effects estimated for this rulemaking include the following: lightweight vehicles could be designed to be both stronger and not more aggressive; restraint systems could be improved to deal with higher crash pulses in lighter vehicles; crash avoidance technologies could reduce the number of overall crashes; roofs could be strengthened to improve safety in rollovers. As also stated above, however, while we are confident that manufacturers will strive to build safe vehicles, it will be difficult for both the agencies and the industry to know with certainty ahead of time how crash trends will change in the future fleet as light-weighted vehicles become more prevalent. Going forward, we will continue to monitor the crash data as well as changes in vehicle mass and conduct analyses to understand the interaction of vehicle mass and size on safety.
Additionally, we note that the total amount of mass reduction used in the agencies' analysis for this rulemaking was chosen based on our assumptions about how much is technologically feasible without compromising safety. Again, while we are confident that manufacturers are motivated to build safe vehicles, we cannot predict with certainty that they will choose to reduce mass in exactly the ways or amounts that the agencies have analyzed in response to the standards. In the event that manufacturers ultimately choose to reduce mass and/or footprint in ways not analyzed by the agencies, the safety effects of the rulemaking may likely differ from the agencies' estimates.
As discussed in Chapter 2 of the Joint TSD, the agencies note that the standard is flat for vehicles smaller than 41 square feet and that downsizing in this category could help achieve overall compliance, if the vehicles are desirable to consumers. The agencies note that fewer than 10 percent of MY 2008 passenger cars were below 41 square feet, and due to the overall lower level of utility of these vehicles, and the engineering challenges involved in ensuring that these vehicles meet all applicable federal motor vehicle safety standards (FMVSS), we do not expect a significant increase in this segment of the market. Please see Chapter 2 of the Joint TSD for additional discussion.
The agencies acknowledge that this final rule does not prohibit manufacturers from redesigning vehicles to change wheelbase and/or track width (footprint). However, as NHTSA explained in promulgating the MY 2008–2011 light truck CAFE standards and the MY 2011 passenger car and light truck CAFE standards, and as the agencies jointly explained in promulgating the MYs 2012–2016 CAFE and GHG standards and the proposal for this final rule, we believe that such engineering changes are significant enough to be unattractive as a measure to undertake solely to reduce compliance burdens. Similarly, the agencies acknowledge that a manufacturer could, without actually reengineering specific vehicles to increase footprint, shift production toward those that perform well with respect to their footprint-based targets. However, NHTSA and EPA have previously explained, because such production shifts could run counter to market demands, they could also be competitively unattractive. We sought comment on the appropriateness of the overall analytic assumption that the attribute-based aspect of the proposed standards will have no effect on the overall distribution of vehicle footprints. Detailed responses to the comments that the agencies received on this topic can be found in preamble Section II.C. Notwithstanding the agencies' current judgment that such deliberate reengineering or production shifts are unlikely as pure compliance strategies, both agencies are considering the potential future application of vehicle choice models, and anticipate that doing so could result in estimates that market shifts induced by changes in vehicle prices and fuel economy levels could lead to changes in fleet's footprint distribution. However, neither agency is currently able to include vehicle choice modeling in our analysis. So, based on the regulatory design, the analysis assumes this final rule will not have the effects described above. The agencies will monitor the vehicle fleet going forward to see if there are changes in vehicle footprint, weight, or if there are shifts in the production volumes of models that are produced, and consistent with confidentiality and other requirements, the agencies intend to make these data publicly available when they are compiled and will use that information to inform the mid-term review.
The agencies will closely be monitoring the visible effects of CAFE/GHG standards on vehicle safety as these standards are implemented, and will conduct a full analysis of safety impacts as part of NHTSA's future rulemaking to establish final MYs 2022–2025 standards and the mid-term evaluation. We are mindful of the comments submitted by the Alliance and Volvo that there are many uncertainties associated with the agencies' safety analysis in this rulemaking, including the course of development of vehicle technologies (including, but not limited to, light-weighting technologies) to achieve these standards given the timeframe covered by this rulemaking, the composition of the future fleet mix with respect to vehicle weight, vehicle size, vehicle compatibility/incompatibility that could result in response to the standards set in this rulemaking, the continued development of alternative drive trains and their penetration and how those changes interact with changes in vehicle weight, the new development of safety technologies (both active and passive), and the vehicle turn-over rate, which is driven by many factors outside of the agencies' or manufacturers' control. As the Alliance stated in its comments, “Achieving the proposed CAFE and GHG standards will rely on the availability of commercially viable emerging technologies for manufacturers to adopt. Should these technologies fail to mature as
NHTSA acknowledges these concerns and will closely monitor the safety data, the trends in vehicle weight and size, the trends in vehicle mass reduction, as well as the trend for the active and passive vehicle safety during the period between the release of this final rule and the future rulemaking to establish final CAFE standards for MYs 2022–2025 and the mid-term evaluation. Consistent with confidentiality and other requirements, NHTSA intends to make these data publicly available when they are compiled. We agree with the comments by Global Automakers that “with sufficient lead-time, the implementation of vehicle lightweighting strategies can be phased in, making it possible to observe the safety implications in comparison with vehicles in the existing fleet.”
The U.S. Environmental Protection Agency (EPA) is finalizing greenhouse gas (GHG) emissions standards for light-duty vehicles, light-duty trucks, and medium-duty passenger vehicles (hereafter light-duty vehicles) for MYs 2017 through 2025. These vehicle categories, which include cars, sport utility vehicles, minivans, and pickup trucks used for personal transportation, are currently responsible for almost 60% of all U.S. transportation related GHG emissions.
This rule is the second EPA rule to regulate light-duty vehicle GHG emissions under the Clean Air Act (CAA), building upon the GHG emissions standards for MYs 2012–2016 that were established in 2010,
Soon after the completion of the successful MYs 2012–2016 rulemaking in May 2010, the President, with support from the auto manufacturers and the United Auto Workers, requested that EPA and NHTSA work to extend the National Program to MYs 2017–2025 light duty vehicles. The agencies were requested by the President to develop “a coordinated national program under the CAA (Clean Air Act) and the EISA (Energy Independence and Security Act of 2007) to improve fuel efficiency and to reduce greenhouse gas emissions of passenger cars and light-duty trucks of model years 2017–2025.”
From a societal standpoint, the GHG emissions standards are projected to save approximately 2 billion metric tons of GHG emissions and 4 billion barrels of oil over the lifetimes of those light-duty vehicles sold in MYs 2017–2025. These savings come on top of savings that would already be achieved through the continuation of EPA's MYs 2012–2016 standards.
These standards will save consumers significant monies over time. The new technology that will be necessary to meet the CO
For those consumers who purchase a new MY 2025 vehicle with cash, the discounted fuel savings will offset the higher vehicle cost (plus sales tax and higher insurance and maintenance costs up to that time) in about 3.2 years (3% discount rate), i.e., that is the “break-even” point and after that ongoing fuel savings will greatly exceed the small increases in insurance and maintenance costs. Those consumers that buy a new MY 2025 vehicle with a 5-year loan (assuming a 5.35% interest rate) will benefit from a positive monthly cash flow of about $12 (or $140 per year), on average, as the monthly fuel savings more than offsets the higher monthly payment.
EPA projects even more favorable payback and monthly cash flow for used vehicle buyers, as most of the incremental technology cost is paid for by the initial buyer due to depreciation. A consumer who pays cash for a 5 or 10-year old used vehicle will typically reach payback in approximately one year, while the monthly cash flow savings for a credit purchase (assuming a 9.35% interest rate) will typically be around $20 per month.
The standards are designed to allow full consumer choice, in that they are footprint-based, i.e., larger vehicles have higher absolute GHG emissions targets and smaller vehicles have lower absolute GHG emissions targets. While the GHG emissions targets become more stringent each year, the emissions targets have been selected to allow compliance by vehicles of all sizes and with current levels of vehicle attributes such as utility, size, safety, and performance. Accordingly, these standards are projected to allow consumers to choose from the same mix of vehicles that are currently in the marketplace.
Section I above provides a comprehensive overview of the joint EPA/NHTSA rule including the history and rationale for a National Program that allows manufacturers to build a single fleet of light-duty vehicles that can satisfy all federal and state requirements for GHG emissions and fuel economy, the level and structure of the GHG emissions and corporate average fuel economy (CAFE) standards, the compliance flexibilities available to manufacturers, the mid-term evaluation, and a summary of the costs and benefits of the GHG and CAFE standards based on a “model year lifetime analysis.”
In this Section III, EPA provides more detailed information about EPA's GHG emissions standards. After providing an overview of key information in this section (III.A), EPA discusses the standards (III.B); the vehicles covered by the standards, various compliance flexibilities available to manufacturers, and a mid-term evaluation (III.C); the feasibility of the standards (III.D); provisions for certification, compliance, and enforcement (III.E); the projected reductions in GHG emissions due to the standards and the associated effects of these reductions (III.F); the impact of the rule on non-GHG emissions and their associated effects (III.G); the estimated cost, economic, and other impacts of the rule (III.H); and various statutory and executive order issues (III.I).
Greenhouse gases (GHGs) are gases in the atmosphere that effectively trap some of the Earth's heat that would otherwise escape to space. GHGs are both naturally occurring and anthropogenic. The primary GHGs of concern that are directly emitted by human activities include carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride.
These gases, once emitted, remain in the atmosphere for decades to centuries. They become well mixed globally in the atmosphere and their concentrations accumulate when emissions exceed the rate at which natural processes remove GHGs from the atmosphere. The heating effect caused by the human-induced buildup of GHGs in the atmosphere is very likely the cause of most of the observed global warming over the last 50 years. The key effects of climate change observed to date and projected to occur in the future include, but are not limited to, more frequent and intense heat waves, more severe wildfires, degraded air quality, heavier and more frequent downpours and flooding, increased drought, greater sea level rise, more intense storms, harm to water resources, continued ocean acidification, harm to agriculture, and harm to wildlife and ecosystems. All of these findings were recently affirmed by the D.C. Circuit in
Mobile sources represent a significant share of U.S. GHG emissions and include light-duty vehicles, light-duty trucks, medium-duty passenger vehicles, heavy-duty trucks, airplanes, railroads, marine vessels and a variety of other sources. In 2010, mobile sources emitted 30% of all U.S. GHGs, and have been the source of the largest absolute increase in U.S. GHGs since
Light-duty vehicles emit carbon dioxide, methane, nitrous oxide and hydrofluorocarbons. Carbon dioxide (CO
Section 202(a)(1) of the Clean Air Act (CAA) states that “the Administrator shall by regulation prescribe (and from time to time revise) * * * standards applicable to the emission of any air pollutant from any class or classes of new motor vehicles * * *, which in his judgment cause, or contribute to, air pollution which may reasonably be anticipated to endanger public health or welfare.” The Administrator has found that the elevated concentrations of a group of six GHGs in the atmosphere may reasonably be anticipated to endanger public health and welfare, and that emissions of GHGs from new motor vehicles and new motor vehicle engines contribute to this air pollution.
As a result of these findings, section 202(a) requires EPA to issue standards applicable to GHG emissions, and authorizes EPA to revise them from time to time. See
On December 15, 2009, EPA published its findings that elevated atmospheric concentrations of GHGs are reasonably anticipated to endanger the public health and welfare of current and future generations, and that emissions of GHGs from new motor vehicles contribute to this air pollution. Further information on these findings may be found at 74 FR 66496 (December 15, 2009) and 75 FR 49566 (Aug. 13, 2010). As noted, the D.C. Circuit rejected all industry and State challenges to the endangerment finding, holding that EPA's endangerment determination was supported by “substantial scientific evidence”.
This section provides an overview of EPA's final rule. The key public comments are discussed in the sections that follow, which provide the details of the program. A fuller discussion of comments is in EPA's separate Response to Comments document.
The major elements of EPA's final rule are being finalized as proposed, including overall stringency and timing, and the CO
EPA is finalizing new tailpipe carbon dioxide (CO
EPA projects that the tailpipe CO
The following three tables, Table III–1 through Table III–3, summarize EPA's projections of what the standards mean in terms of CO
In each of these tables, the column “Projected CO
The columns under “Incentives” represent the projected emissions impact of the advanced technology multiplier incentives,
The column “Projected Achieved CO
One incentive that is not reflected in these tables is the 0 gram per mile compliance value for EV/PHEV/FCVs. The 0 gram per mile value accurately reflects the tailpipe CO
The columns under “Credits” quantify the projected CO
In the MYs 2012–2016 rule, we estimated the impact of the Temporary Leadtime Allowance Alternative Standards credit in MY 2016 to be 0.1 gram/mile. Due to the small magnitude, we have not included this in the following tables for the MY 2016 base year.
The column “Projected 2-cycle CO
Table III–4 shows the projected real world CO
The real world tailpipe CO
As discussed both in Section I and later in Section III, EPA is finalizing provisions for averaging, banking, and trading of credits, that allow annual credits for a manufacturer's over-compliance with its unique fleet-wide average standard, carry-forward and carry-backward of credits, the ability to transfer credits between a manufacturer's car and truck fleets, and credit trading between manufacturers. EPA is also finalizing a one-time provision allowing credits generated in MYs 2012–2016 to be carried forward through MY 2021. These provisions are not expected to change the emissions reductions achieved by the standards, but should reduce the cost of achieving those reductions. The tables above do not reflect the year to year impact of these provisions. For example, car-to-truck or truck-to-car credit transfers could affect the projected values in Table III–1 and Table III–2, but such credit transfers between cars and trucks would not be expected to change the results for the combined fleet, reflected in Table III–3.
The rule also exempts from the standards a limited set of vehicles: emergency and police vehicles, and (as in the MYs 2012–2016 GHG standards) vehicles manufactured by small businesses. As discussed in Section III.B below, these exclusions have a very limited impact on the total GHG emissions reductions from the light-duty vehicle fleet. We also do not anticipate significant impacts on total GHG emissions reductions from the provisions allowing small volume manufacturers to petition EPA for alternative standards. See Section III.B.5 below.
Section I.C provides a comprehensive discussion of the projected benefits and costs associated with MYs 2017–2025 GHG and CAFE standards based on a “model year lifetime” analysis, i.e., the benefits and costs associated with the lifetime operation of the new vehicles sold in these nine model years. It is important to note that while the incremental vehicle technology costs associated with MY 2017 vehicles will in fact occur in calendar year 2017, the benefits associated with MY 2017 vehicles will be split among all the calendar years from 2017 through the calendar year during which the last MY 2017 vehicle is retired.
Table III–5 provides a summary of the GHG emissions and oil savings associated with the lifetime operation of all the vehicles sold in each model year. Cumulatively, for the nine model years from 2017 through 2025, the standards are projected to save approximately 2 billion metric tons of GHG emissions and nearly 4 billion barrels of oil. These savings come on top of savings that would already be achieved through the continuation of EPA's MYs 2012–2016 standards.
Table III–6 provides a summary of the most important projected economic impacts of the GHG emissions standards based on this model year lifetime analytical approach. These monetized dollar values are all discounted to the first year of each model year, and then are summed up across all model years. With a 3% discount rate, cumulative incremental vehicle program costs for MYs 2017–2025 vehicles are $150 billion (with $136 billion of that being new technology and $14 billion being increased maintenance), fuel savings are $475 billion, other monetized benefits are $126 billion, and program net benefits are projected to be $451 billion. Using a 7% discount rate, the projected program net benefits are $326 billion.
In addition to the model year lifetime analysis projections summarized above, EPA also performs a “calendar year” analysis that projects the environmental and economic impacts associated with the tailpipe CO
Table III–7 provides a summary of the most important projected benefits and costs of the EPA GHG emissions standards based on this calendar year analysis. In calendar year 2025, EPA projects GHG savings of 140 million metric tons and oil savings of 0.76 million barrels per day. These would grow to 569 million metric tons of GHG savings and 3.2 million barrels of oil per day by calendar year 2050. Program net benefits are projected to be $19.3 billion in calendar year 2025, growing to $217 billion in calendar year 2050. Program net benefits over the 34-year period from 2017 through 2050 are projected to have a net present value in 2012 of $616 billion (7% discount rate) to $1.4 trillion (3% discount rate).
More details associated with this calendar year analysis of the GHG standards are presented in Sections III.F (including projected annual GHG savings for CYs 2017–2050) and III.H (including projected annual oil savings for CYs 2017–2050).
The model year lifetime and calendar year analytical approaches discussed above aggregate the environmental and economic impacts across the nationwide light vehicle fleet. EPA has also projected the average impact of the CO
Table III–8 projects, on average, several key consumer impacts associated with the tailpipe CO
EPA projects that the new technology necessary to meet the MY 2025 tailpipe emissions standards would add, on average, an extra $1800 (including markup) to the sticker price of a new
Of course, many vehicles are owned by more than one consumer. The payback period and monthly cash flow approaches are two ways to evaluate the economic impact of the MY 2025 standard on those new car buyers who do not own the vehicle for its entire lifetime. Projected payback periods of 3.2–3.4 years means that, for a consumer that buys a new MY 2025 vehicle with cash, the discounted fuel savings for that consumer would more than offset the total incremental vehicle costs (including technology, sales tax, insurance and maintenance), up to that time, in about 3.3 years. If the consumer owns the vehicle beyond this payback period, the vehicle will save money for the consumer as the ongoing fuel savings greatly exceed the small ongoing incremental insurance and maintenance costs. For a consumer that buys a new MY 2025 vehicle with a 5-year loan, the average monthly cash flow savings of $11 (7% discount rate) or $13 (3% discount rate), or annual savings of $130–$150, shows that the consumer would benefit immediately as the discounted monthly fuel savings more than offsets the higher monthly costs from higher incremental loan payments, plus insurance and maintenance costs.
The consumer impacts are even more favorable for used vehicle buyers, as most of the incremental technology cost is paid for by the original purchaser. EPA projects that the payback period would be 1.1 years for a 5-year old used vehicle, and about 6 months for a 10-year old used vehicle. Consumers that buy a used 5-year old vehicle with a 3-year loan would realize monthly cash flow savings of about $21–23 per month, and these savings would be $23–24 for a buyer of a 10-year old vehicle with a 3-year loan.
The final entries in Table III–8 show the CO
EPA has significant
With respect to CO
EPA, as a part of its joint technology analysis with NHTSA, has performed what we believe is the most comprehensive federal vehicle technology analysis in history. We carefully considered the cost to manufacturers of meeting the standards, estimating costs for all candidate technologies including direct manufacturing costs, cost markups to account for manufacturers' indirect costs, and manufacturer cost reductions attributable to learning. In estimating manufacturer costs, EPA took into account manufacturers' own practices such as making major changes to vehicle technology packages during a planned redesign cycle. EPA then projected the average cost across the industry to employ this technology, as well as manufacturer-by-manufacturer costs. EPA considers the per-vehicle costs estimated by this analysis to be within a reasonable range in light of the emissions reductions and benefits achieved. EPA also projects that the fuel savings over the life of the vehicles will more than offset the increase in cost associated with the technology used to meet the standards.
EPA recognizes that most of the technologies that we are considering for purposes of setting standards under section 202(a) are commercially available and already being utilized to at least a limited extent across the fleet, or will soon be commercialized by one or more major manufacturers. As discussed in Section III.D.7, after accounting for expected improvements in air conditioning systems, many MY 2012 and MY 2013 vehicles would already be able to meet GHG emissions targets for MY 2017 without additional changes in powertrain technology, and some vehicles could meet GHG emissions targets for some later model years as well. The vast majority of the emission reductions that would result from this rule would result from the increased use of currently available technologies such as engines with direct injection, turbocharging, and cooled exhaust gas recirculation, stop-start systems, advanced transmissions with more gears and more efficient gearing mechanisms, and improved tires, aerodynamics, and accessories. Various combinations of these technologies can work for different vehicle models, and typically there are multiple technology paths for achieving compliance for a given model. EPA also recognizes that this rule would enhance the development and commercialization of more advanced technologies, such as PHEVs and EVs and strong hybrids as well. In this technological context, there is no clear cut line that indicates that only one projection of technology penetration could potentially be considered feasible for purposes of section 202(a), or only one standard that could potentially be considered a reasonable balancing of the factors relevant under section 202(a). EPA therefore evaluated several alternative standards, some more stringent than the promulgated standards and some less stringent. Less stringent standards would forego emission reductions which are feasible, cost effective, and cost feasible, with short consumer payback periods. More stringent standards would increase cost—both to manufacturers and to consumers—with the potential for overly aggressive penetration rates for advanced technologies, especially in the face of unknown degree of consumer acceptance of both the increased costs and the technologies themselves. See Section III.D.6 for EPA's analysis of alternative GHG emissions standards.
EPA has also evaluated the impacts of these standards with respect to reductions in GHGs and reductions in oil usage. For the lifetime of the MYs 2017–2025 vehicles we estimate GHG reductions of approximately 2 billion metric tons and fuel reductions of nearly 4 billion barrels of oil. These savings come on top of savings that would already be achieved through the continuation of EPA's MYs 2012–2016 standards.
Under section 202(a), EPA is called upon to set standards that provide adequate lead time for the development and application of technology to meet the standards. EPA's standards satisfy this requirement given the present existence of the technologies on which the rule is predicated and the substantial lead times afforded under the proposal (which by MY 2025 allow for multiple vehicle redesign cycles and so affords opportunities for adding technologies in the most cost efficient manner, see 75 FR 25407). In setting the standards, EPA is called upon to weigh and balance various factors, and to exercise judgment in setting standards that are a reasonable balance of the relevant factors. In this case, EPA has considered many factors, such as cost, impacts on emissions (both GHG and non-GHG), impacts on oil conservation, impacts on noise, energy, safety, and other factors, and has where practicable quantified the costs and benefits of the rule. In summary, given the technical feasibility of the standard, the cost per vehicle in light of the savings in fuel costs over the lifetime of the vehicle, the very significant reductions in emissions and in oil usage, and the significantly greater quantified benefits compared to quantified costs, EPA is confident that the standards are an appropriate and reasonable balance of the factors to consider under section 202(a). See
In August 2011, EPA and NHTSA completed a joint rulemaking to establish a comprehensive Heavy-Duty National Program that will reduce greenhouse gas emissions and fuel consumption for on-road heavy-duty vehicles beginning in MY 2014 (76 FR 57106 (September 15, 2011)). EPA's final carbon dioxide (CO
The agencies estimate that the combined standards will reduce CO
In the May 21, 2010 Presidential Memorandum, in addition to addressing GHGs and fuel economy, the President also requested that EPA examine its broader motor vehicle air pollution control program. The President requested that “
Based on this assessment, in the near future, EPA expects to propose a separate program that would, in general, affect the same set of new vehicles on approximately the same timeline as would the new light-duty vehicle GHG emissions standards. It would be designed to primarily address air quality problems with ozone and PM, which continue to be serious problems in many parts of the country, and light-duty vehicles continue to contribute to these problems.
EPA expects that this program, called “Tier 3” vehicle and fuel standards, would among other things propose tailpipe and evaporative standards to reduce non-GHG pollutants from light-duty vehicles, including volatile organic compounds, nitrogen oxides, particulate matter, and air toxics. EPA's intent, based on extensive interaction to date with the automobile manufacturers and other stakeholders, is to propose a Tier 3 program that would allow manufacturers to proceed with coordinated future product development plans with a full understanding of the major regulatory requirements they will be facing over the long term. This regulatory approach would give manufacturers certainty in planning given the long time period and would allow manufacturers to design their future vehicles so that any technological challenges associated with meeting both the GHG and Tier 3 standards could be efficiently addressed.
It should be noted that under EPA's current regulations, GHG emissions and CAFE compliance testing for gasoline vehicles is conducted using a defined fuel that does not include any amount of ethanol.
EPA is establishing standards to control the emissions of greenhouse gases (GHGs) from MY 2017 and later light-duty vehicles. Carbon dioxide (CO
EPA is also establishing provisions for small and intermediate-sized manufacturers. For small volume manufacturers with less than 5,000 vehicles, EPA is finalizing its proposal to allow these manufacturers to petition EPA for alternative standards, which would be established on a case-by-case basis (see Section III.B. 5). For intermediate-sized limited line manufacturers, EPA had requested comment on whether there is a need for additional lead time, and after considering public comments on this topic, is finalizing provisions providing additional lead time until MY 2021 for manufacturers with sales of less than 50,000 vehicles (see Section III.B.6). As with the MY 2012–2016 light-duty vehicle standards, EPA is exempting manufacturers that meet the Small Business Administration's definition of a small business from the standards (see section III.B. 7). EPA is also finalizing its proposal to exempt police and emergency vehicles from the GHG standards, beginning in MY 2012, consistent with how these vehicles are treated under the CAFE program (see section III.B.8).
The MY 2012–2016 rule established several program elements that will remain in place, without change. EPA is not changing the CH
The opportunity to earn credits toward the fleet-wide average CO
As discussed in section III.C, EPA is finalizing several provisions that allow manufacturers to generate credits for use in complying with the standards or that provide additional incentives for use of advanced technologies. These include credits for technologies that reduce CO
Consistent with the proposal, EPA is establishing standards that are projected to meet an industry-wide average for the light-duty fleet of 163 g/mile of CO
EPA's standards include EPA's projection of average industry wide CO
The tables below show overall fleet average levels for both cars and light trucks that are projected over the phase-in period of these standards. The actual fleet-wide average g/mile level that would be achieved in any year for cars and trucks will depend on the actual production for that year, as well as the use of the various credit and averaging, banking, and trading provisions. For example, in any year, manufacturers would be able to generate credits from cars and use them for compliance with the truck standard, or vice versa. Such transfer of credits between cars and trucks is not reflected in the table below. In Section III.F, EPA discusses the year-by-year estimate of emissions reductions that are projected to be achieved by the standards.
In general, the schedule of standards allows an incremental phase-in to the MY 2025 level, and reflects consideration of the appropriate lead-time and engineering redesign cycles for each manufacturer to implement emission reductions technology across its product line. Note that MY 2025 is the final model year in which the standards become more stringent. The MY 2025 CO
EPA has estimated the overall fleet-wide CO
These estimates were aggregated based on projected production volumes into the fleet-wide averages for cars, trucks, and the entire fleet, shown in Table III–11.
As shown in Table III–11, fleet-wide CO
As noted above, EPA is establishing standards that set increasingly stringent levels of CO
In the MY 2012–2016 final rule, EPA established several provisions which will continue to apply for the MY 2017–2025 standards. Consistent with the requirement of CAA section 202(a)(1) that standards be applicable to vehicles “for their useful life,” the MY 2017–2025 vehicle standards will apply for the useful life of the vehicle. Under section 202(i) of the Act, which
EPA has analyzed the feasibility of achieving the CO
The vast majority of public comments expressed strong support for the stringency levels proposed in the 2017–2025 National Program. Stakeholders in support included environmental NGO's, consumer groups, automakers, automotive suppliers, labor unions, veterans groups and national security organizations, and many private citizens. Notably, there was broad support for the proposed standards by auto manufacturers including BMW, Chrysler, Ford, GM, Honda, Hyundai, Kia, Jaguar/Land Rover, Mazda, Mitsubishi, Nissan, Tesla, Toyota, Volvo as well as the Alliance of Automobile Manufacturers and the Global Automakers.
Several environmental organizations and consumer groups (Center for Biological Diversity, Union of Concerned Scientists, Northeast States for Coordinated Air Use Management, Consumers Union, and American Council for an Energy-Efficient Economy, International Council on Clean Transportation) suggested that alternatives evaluated by the EPA with higher penetration rates of advanced technologies were technically feasible. A description of the EPA's statutory authority under the CAA as it related to the application of technology-based standards to achieve emissions reductions are provided in Section I.D.2. A discussion of the feasibility of this rulemaking and that of alternative scenarios evaluated can be found in III.D.
Some manufacturers that supported the proposed standards noted various challenges in achieving them. Chrysler noted challenges of meeting the standard within the timeframe of product development cycles, BMW suggested that prior adoption of advanced technologies results in fewer options available for compliance, and Nissan expressed concern regarding the uncertainty projecting cost-effective and feasible technologies so far into the future. These comments are addressed in Section III.D.
Porsche, Jaguar Land Rover, and Suzuki raised concerns about feasibility and adequate lead time for intermediate volume, limited line manufacturers. As discussed in section III.B.6, EPA is providing intermediate volume manufacturers with additional lead time in response to these comments. Aston Martin, Lotus and McLaren, three manufacturers who currently qualify as small volume manufacturers under the MY 2012–2016 program, commented in support of EPA's proposal to allow SVMs to petition for manufacturer-specific alternative standards. These manufacturers stressed the unique challenges they would face in meeting the MY 2017–2025 standards due to their extremely limited ability to average across small volume fleets and their disadvantage in the marketplace due to the lack of economies of scale. EPA is finalizing the proposal to allow SVMs to petition EPA for alternative CO
As with the MY 2012–2016 standards, for MYs 2017–2025 EPA is establishing separate car and truck standards; that is, vehicles defined as cars have one set of footprint-based curves, and vehicles defined as trucks have a different set. In general, for a given footprint, the CO
Written in mathematic notation, the function is as follows:
The MY 2017 car curve is similar to the MY 2016 curve in slope. By contrast, the MY 2017 truck curve is steeper relative to the MY 2016 curve.
There were a number of comments on the relative stringency of the car versus truck curves. Several manufacturers noted that the relative stringency of car and truck curves was appropriate (Ford, GM). Of the larger manufacturers, Volkswagen, Toyota, Honda and Mercedes commented that the standards for passenger cars were too stringent relative to light trucks. Volkswagen suggested that the difference in stringency places manufactures that primarily make passenger cars at a disadvantage, and proposed reducing the annual reduction in GHG emissions from passenger cars to 4%. Mercedes noted the standards “are extremely aggressive, especially for a company that traditionally sells in the luxury car market”, and suggested additional flexibilities (off-cycle credits) to account for crash avoidance technologies and to allow for trading between the light-duty and heavy-duty fleets.
Comments from other organizations expressed similar concern that the curves favor trucks over cars (American Council for an Energy-Efficient Economy, Consumers Union, Union of Concerned Scientists). Some commenters suggested that the difference between car and truck curves would lead to gaming, through the reclassification of less-efficient cars as trucks (International Council on Clean Transportation, Consumers Union).
There were also a number of comments on the shape of the car and truck curves. Several commenters proposed that the curves be modified by moving the cutpoints for the smaller vehicles to the left, to discourage
Given the long time frame at issue in implementing standards for MY2022–2025, and given NHTSA's obligation to conduct a separate rulemaking in order to establish final standards for vehicles for those model years, EPA and NHTSA will conduct a comprehensive mid-term evaluation and agency decision-making process as described below. No changes are being made to the mid-term evaluation that was discussed and proposed.
Up to date information will be developed and compiled for the evaluation, through a collaborative, robust and transparent process, including public notice and comment. The evaluation will be based on (1) A holistic assessment of all of the factors considered by the agencies in setting standards, including those set forth in the rule and other relevant factors, and (2) the expected impact of those factors on the manufacturers' ability to comply, without placing decisive weight on any particular factor or projection. The comprehensive evaluation process will lead to final agency action by both agencies.
Consistent with the agencies' commitment to maintaining a single national framework for regulation of vehicle emissions and fuel economy, the agencies fully expect to conduct the mid-term evaluation in close coordination with the California Air Resources Board (CARB). Moreover, the agencies fully expect that any adjustments to the standards will be made with the participation of CARB and in a manner that ensures continued harmonization of state and Federal vehicle standards. In order to align the agencies proceedings for MYs 2022–2025 and to maintain a joint national program, EPA and NHTSA will finalize their actions related to MYs 2022–2025 standards concurrently.
EPA will conduct a mid-term evaluation of the later model year light-duty GHG standards (MY2022–2025). The evaluation will determine whether those standards are appropriate under section 202(a) of the Act. Under the regulations adopted today, EPA would be legally bound to make a final decision, by April 1, 2018, on whether the MY2022–2025 GHG standards are appropriate under section 202(a), in light of the record then before the agency.
EPA, NHTSA and CARB will jointly prepare a draft Technical Assessment Report (TAR) to inform EPA's determination on the appropriateness of the GHG standards and to inform NHTSA's rulemaking for the CAFE standards for MY 2022–2025. The TAR will examine the same issues and underlying analyses and projections considered in the original rulemaking, including technical and other analyses and projections relevant to each agency's authority to set standards as well as any relevant new issues that may present themselves. There will be an opportunity for public comment on the draft TAR, and appropriate peer review will be performed of underlying analyses in the TAR. The assumptions and modeling underlying the TAR will be available to the public, to the extent consistent with law.
EPA will also seek public comment on whether the standards are appropriate under section 202(a),
EPA and NHTSA will consult and coordinate in developing EPA's determination on whether the MY2022–2025 GHG standards are appropriate under section 202(a) and NHTSA's NPRM. In making its determination, EPA will evaluate and determine whether the MY2022–2025 GHG standards are appropriate under section 202(a) of the CAA based on a comprehensive, integrated assessment of all of the results of the review, as well as any public comments received during the evaluation, taken as a whole. The decision making required of the Administrator in making that determination is intended to be as robust and comprehensive as that in the original setting of the MY2017–2025 standards.
In making this determination, EPA will consider information on a range of relevant factors, including but not limited to those listed in the rule
1. Development of powertrain improvements to gasoline and diesel powered vehicles.
2. Impacts on employment, including the auto sector.
3. Availability and implementation of methods to reduce weight, including any impacts on safety.
4. Actual and projected availability of public and private charging infrastructure for electric vehicles, and fueling infrastructure for alternative fueled vehicles.
5. Costs, availability, and consumer acceptance of technologies to ensure compliance with the standards, such as vehicle batteries and power electronics, mass reduction, and anticipated trends in these costs.
6. Payback periods for any incremental vehicle costs associated with meeting the standards.
7. Costs for gasoline, diesel fuel, and alternative fuels.
8. Total light-duty vehicle sales and projected fleet mix.
9. Market penetration across the fleet of fuel efficient technologies.
10. Any other factors that may be deemed relevant to the review.
If, based on the evaluation, EPA decides that the GHG standards are appropriate under section 202(a), then EPA will announce that final decision and the basis for EPA's decision. The decision will be final agency action which also will be subject to judicial review on its merits. EPA will develop an administrative record for that review that will be no less robust than that developed for the initial determination to establish the standards. In the midterm evaluation, EPA will develop a robust record for judicial review that is the same kind of record that would be developed and before a court for judicial review of the adoption of standards.
Where EPA decides that the standards are not appropriate, EPA will initiate a rulemaking to adopt standards that are appropriate under section 202(a), which could result in standards that are either less or more stringent. In this rulemaking EPA will evaluate a range of alternative standards that are potentially effective and reasonably feasible, and the Administrator will propose the alternative that in her judgment is the best choice for a standard that is appropriate under section 202(a).
If EPA initiates a rulemaking, it will be a joint rulemaking with NHTSA. Any final action taken by EPA at the end of that rulemaking is also judicially reviewable. The MY2022–2025 GHG standards will remain in effect unless and until EPA changes them by rulemaking. NHTSA intends to issue conditional standards for MY2022–2025 in the LDV rulemaking being initiated this fall for MY2017 and later model years. The CAFE standards for MY2022–2025 will be determined with finality in a subsequent, de novo notice and comment rulemaking conducted in full compliance with section 32902 of title 49 U.S.C. and other applicable law.
Accordingly, NHTSA's development of its proposal in that later rulemaking will include the making of economic and technology analyses and estimates that are appropriate for those model years and based on then-current information. Any rulemaking conducted jointly by the agencies or by NHTSA alone will be timed to provide sufficient lead time for industry to make whatever changes to their products that the rulemaking analysis deems feasible based on the new information available. At the very latest, the three agencies will complete the mid-term evaluation process and subsequent rulemaking on the standards that may occur in sufficient time to promulgate final standards for MY2022–2025 with at least 18 months lead time, but additional lead time may be provided.
EPA understands that California intends to conduct a mid-term evaluation of its program that is coordinated with EPA and NHTSA and is based on a similar set of factors as outlined above. California submitted a waiver request under the Clean Air Act to EPA on June 27, 2012 for its MYs 2017–2025 standards.
Every automaker and associations representing either auto makers or suppliers who commented on the proposed mid-term evaluation indicated that this evaluation was essential to their support of the proposal and urged the agencies to finalize a comprehensive mid-term evaluation. These commenters included General Motors, Chrysler, Ford, Nissan, Toyota, Hyundai America Technical Center, Mercedes-Benz, Mitsubishi Motors, Volvo Car Corporation, Porsche, Ferrari, KIA, the Alliance of Auto Manufacturers, the Global Automakers, the Motor & Equipment Manufacturers Association (MEMA), National Association of Manufacturers (NAM), EcoMotors International, Inc., and Johnson Controls, Inc. Two automakers, Chrysler and Nissan, specifically predicated their support of the MY2017–2025 National Program on the agencies finalizing the proposed mid-term evaluation. In addition, a number of other organizations including the United Auto Workers (UAW), the International Council on Clean Transportation (ICCT), U.S. Chamber of Commerce, Securing America's Future Energy (SAFE), as well as 112 members of the U.S. House of Representatives (in a letter to both agency heads) expressed strong support for finalizing the proposed mid-term evaluation.
Many environmental and consumer organizations, as well as many private citizens, both at the three public hearings and in written comments, expressed concern that the mid-term evaluation might be used as an opportunity to weaken the standards or to delay the environmental benefits of the National Program. Many stressed the expectation that the mid-term should be used as an opportunity to strengthen the MY2017–2025 standards. These commenters included the Pew Charitable Trust, Sierra Club, Union of Concerned Scientists (UCS), American Medical Association of California, the National Association of Clean Air Agencies (NAACA), the Ecology Center and more than 30,000 individual citizens who submitted letters to the docket. The ICCT expressed their strong support for the mid-term evaluation and NESCAUM in discussing the need to evaluate technology incentives on the overall GHG goals of the program indicated their support of the mid-term review for this purpose.
As discussed above, the mid-term evaluation will be a comprehensive and robust evaluation of all of the relevant factors. EPA is clear that any evaluation of the appropriateness of the standards and any decision to go forward with revising the standards will consider making the standards more or less stringent, whatever is most appropriate under the circumstances at that time. It would be inappropriate to limit EPA's consideration to either just increasing or just reducing the stringency of the standards. Instead, EPA will determine the appropriate course to follow based on all of the information, evidence, and views in front of it, including those provided during public notice and comment.
Two commenters opposed finalizing the mid-term evaluation. Natural Resources Defense Council (NRDC) stated that it was both unnecessary and potentially disruptive to automakers' product planning and would add uncertainty to a nine year period. The National Automobile Dealers Association (NADA) did not support the mid-term evaluation since it did not support the need for the underlying rulemaking “so soon after having set standards for MY2012–2016, and before having had the benefit of learning from how those standards work in the real world.” EPA believes that the evaluation process will not be disruptive to the automakers product planning. Instead it provides a framework that allows manufacturers the certainty to go forward and prepare for these standards, as it both adopts them now as final standards and establishes a mechanism to evaluate and change them in the future, if appropriate. The common support from the manufacturers indicates that this is the case. The opposition by NADA is premised on their opposition to adopting standards in this rulemaking, which is addressed elsewhere.
Ford, Toyota, NRDC and the UCS stressed the importance of a coordinated mid-term evaluation by EPA and NHTSA that should also include the California Air Resources Board (CARB). EPA agrees with this comment, as indicated by the discussion above. In adopting their GHG standards the California Air Resources Board (CARB), directed CARB's Executive Officer to, “participate in U.S. EPA's mid-term review of the 2022 through 2025 model year passenger vehicle greenhouse gas standards * * *” and to also, “continue collaborating with EPA and NHTSA as their standards are finalized and in the mid-term review.”
A number of auto manufacturers submitted comments agreeing that section 202(a) of the Clean Air Act (CAA) authorizes the proposed mid-term evaluation. Chrysler noted that the EPA had a “firm legal basis to conduct the mid-term evaluation under section 307(d) of the Clean Air Act (CAA) and the Administrative Procedures Act to reconsider regulations based on new information as well as under section 202(a) of the CAA under which EPA proposed the mid-term evaluation.” The Global Automakers stated that a mid-term evaluation was, “not only permissible under the Clean Air Act, but also required because of the uncertainties inherent in projecting regulatory requirements nine to twelve years into the future,” continuing that it “would have been arbitrary and capricious for EPA to promulgate GHG emissions standards for model years as far into the future as MY2022–2025 without providing for a mid-term evaluation.” Nissan indicated support for the views expressed by the Global Automakers and stated further that “a robust and comprehensive mid-term review is legally necessary to ensure that the standards for the later model years are supported by substantial evidence and are not arbitrary and capricious. (Citing Motor Vehicle Mfr's Ass'n v. State Farm, 463 U.S. 29,42 (1983) listing examples of arbitrary and capricious agency activity).”
EPA agrees that section 202(a) provides the agency with ample authority to undertake the mid-term evaluation. EPA does not agree that the mid-term evaluation is authorized under CAA section 307(d), as the mid-term evaluation is not a reconsideration of the standards under that provision. Instead the mid-term evaluation will be undertaken under EPA's general authority to establish emissions standards under section 202(a). EPA does not agree that the mid-term evaluation is legally required, or that the standards adopted today would be arbitrary and capricious or without substantial evidence to support them absent such a mid-term evaluation. The final rule and supporting information and analysis amply justify the reasonableness and appropriateness of the final GHG standards adopted by EPA, irrespective of the provisions for a mid-term evaluation. In any case, that issue is not before EPA as EPA is exercising its discretion to adopt provisions for a mid-term evaluation, for the reasons discussed above.
The Center for Biological Diversity (CBD) challenged the basis for the mid-term evaluation and specifically argued that any interim rulemaking should be based on a presumption that the stringencies of the standards will not decrease. As discussed above, the mid-term evaluation will be a robust and comprehensive evaluation, and it would be inappropriate to limit EPA's consideration to either just increasing or just reducing the stringency of the standards. Instead, EPA will determine the appropriate course to follow based on all of the information, evidence, and views in front of it, including those provided during public notice and comment. CBD also raised a concern that EPA would be applying a faulty weighting of the statutory factors under the CAA. CBD stated that highlighting the manufacturers' ability to comply was improper, and instead decisive weighting should be placed on energy conservation. EPA disagrees that it is improper to carefully consider the impact on manufacturers' ability to comply. When EPA conducts the mid-term evaluation, EPA will be evaluating standards that have already been adopted and for which manufacturers are required to comply. The ability to comply is an important part of determining the appropriateness of these standards. For example, ability to comply is directly tied to lead time, a factor EPA is required to consider under section 202(a). EPA does not agree that it is appropriate to assign decisive weighting to any one factor, such as energy conservation. That is contrary to conducting a holistic assessment, where EPA carefully considers all of the relevant factors under section 202(a) and gives them the weight that is appropriate in light of all of the circumstances.
Several automakers, auto suppliers and industry associations (General Motors, Chrysler, Daimler Automotive Group, Hyundai, Alliance of Automobile Manufacturers, Global Automakers, Inc and Johnson Controls) suggested that, in addition to the proposed formal mid-term evaluation, the agencies should also undertake a series of smaller, focused technical evaluations or “check-ins' leading up to and potentially following the mid-term evaluation. Such check-ins, these commenters asserted, would allow the agencies to consider the latest relevant technical information, as well as other key issues. Several environmental organizations (Sierra Club, UCS, NRDC, and CBD) submitted comments opposing these focused technical evaluations or “check-ins,” arguing that these would be time consuming and too premature to judge technology readiness for the MY2022–2025 standards, and would undermine the intent and effectiveness of the mid-term evaluation. A number of environmental organizations also supported periodic updates on technology progress and compliance trends. The Sierra Club, while not supportive of the “check-in” concept, did urge agency transparency and access to data that would allow the public to “effectively and timely monitor compliance trends and technology applications.” The ICCT recommended that EPA and NHTSA conduct periodic updates on technology progress and consider periodic status reports in advance of the mid-term evaluation so that all interested parties could have access to key data that would be important in documenting progress in technology improvements and implementation.
As discussed above, the agencies will conduct a comprehensive mid-term evaluation and agency decision-making process for the MYs 2022–2025 standards as described in the proposal. The agencies expect to continue ongoing stakeholder dialogue, including in depth technical dialogue with automakers on their confidential technology development efforts and product plans for MYs 2022–2025. EPA does not believe that additional or more frequent reports, as suggested by some commenters would be an efficient way to prepare for the mid-term evaluation.
Several auto companies including Ford, Toyota and Porsche noted the importance of the agencies meeting the proposed November 15, 2017, deadline for issuing the draft Technical Assessment Report (TAR) so that there is adequate time for a reasonable public comment period while still insuring that EPA meet its proposed April 1, 2018 deadline for determining whether the standards established for MY2022–2025 are appropriate under CAA section 202(a). The Alliance of Automobile Manufacturers, Global Automakers, and the National Association of Manufacturers also expressed concern with the agencies' proposed schedule for undertaking the mid-term evaluation. These commenters recommended that additional details be written into the final regulatory text to provide more procedural certainty including: a start date for the evaluation, a schedule of major milestones, specific studies the agencies plan to conduct, and details of the peer review process. Toyota, Hyundai and Mercedes-Benz in their comments noted their support for these recommendations as well. Mitsubishi urged the agency to work with stakeholders well in advance of the mid-term to develop a sound review process and framework. Both the Union of Concerned Scientists and NRDC stated that the timing of the mid-term evaluation should be conducted as close as possible to the beginning of MY2022 so that the mid-term evaluation could most accurately capture the status of technology and the vehicle market for those model years under review.
EPA acknowledges the timing and other concerns raised by all commenters and continues to believe that the approach laid out in the proposal provides an appropriate balance between certainty and needed flexibility by providing end dates by which it must issue the draft TAR (November 15, 2017) and determine whether the MY2022–2025 standards are appropriate under section 202(a) of the Clean Air Act (April 1, 2018). Additional regulatory details on the timing or content of the mid-term evaluation are not needed and would not be an efficient way to prepare for and conduct the mid-term evaluation.
In its proposal, EPA indicated that it would consider a range of relevant factors in conducting the mid-term evaluation, including but not limited to those listed in the preamble and proposed regulatory text. Quite a few commenters suggested that EPA expand the list of these high level factors. The Alliance of Automobile Manufactures recommended numerous additions to the list of factors including, “current and expected availability of state and Federal incentives/subsidies for advanced technology vehicles,” “the end-of-life costs associated with advanced technology vehicles,” and “consumer demand for and acceptance of fuel-efficient technologies, and consumer valuation of fuel savings.” Honeywell encouraged the agencies to, “commit * * * to a detailed review of emerging boosting technologies that may considerably advance vehicle emissions and fuel economy performance during the later years of the rulemaking.” The Institute for Policy Integrity commented that the agencies “should amend their list of factors to specifically reflect any potential changes to benefits estimates, in addition to changes to costs or the state of technology.” Mitsubishi Motors commented that the mid-term factors must include an evaluation of the sufficiency of the EV infrastructure, including whether there have been any significant industry-wide economic setbacks making EVs and other overall fuel economy targets impracticable, consumer acceptance of EVs and a thorough evaluation of an EV multiplier in MYs 2022 through 2025 in order to continue EV market penetration. Also, Mitsubishi noted that the mid-term should include consideration of compliance options for OEMs with limited product lines. The National Association of Clean Air Agencies (NACAA) suggested that EPA evaluate the use of credits by automobile manufacturers and the impact of credit use on average fleet performance. The Clean Air Association of the Northeast States for Coordinated Air Use Management (NESCAUM) noted that it expected EPA to monitor upstream emissions from the power grid to determine whether the improvements assumed to occur were realized. Finally, the Sierra Club recommended that the agencies provide the public with data on credit use by manufacturers, technology penetration both overall and by manufacturers, and sales by vehicle footprints. The Alliance for Automakers also indicated that the agencies should seek expert peer-reviewed information including the National Academy of Sciences to answer a number of questions associated with the Mid-term reviews.
A number of other commenters, including Ford, the UCS and ICCT supported the mid-term evaluation provisions as proposed by EPA. Ford commented that they believed the agencies had struck an appropriate balance between an exhaustive list and a high-level approach and pointed to proposed regulatory language “including but not limited to * * *” as critical language that should be maintained in final rule. Ford further noted that factors that turn out to be most important six years from now are not necessarily foreseeable today and not necessarily the ones listed in the proposed rule. The ICCT noted that “it is impossible to define all the criteria for review at this time * * *” And UCS agreed that “a holistic assessment of all of the factors * * * without placing decisive weight on any particular factor or projects” is the correct approach in conducting the mid-term evaluation.”
EPA is finalizing the list of factors as proposed.
As discussed above, the MY2022–2025 GHG standards will remain in effect unless and until EPA changes them by rulemaking. The National Association of Manufacturers (NAM) commented that EPA should not take the default position that the existing 2022–2025 model year standards will remain in place unless changed by
In the MY 2012–2016 rule, EPA adopted credit provisions for credit carry-back, credit carry-forward, credit transfers, and credit trading. These kinds of provisions are collectively termed Averaging, Banking, and Trading (ABT), and have been an important part of many mobile source programs under CAA Title II, both for fuels programs as well as for engine and vehicle programs.
As noted above, the ABT provisions consist primarily of credit carry-back, credit carry-forward, credit transfers, and credit trading. Credit carry-back refers to using credits to offset any deficit in meeting the fleet average standards that had accrued in a prior model year. A manufacturer may have a deficit at the end of a model year (after averaging across its fleet using credit transfers between cars and trucks)—that is, a manufacturer's fleet average level may fail to meet the required fleet average standard. The credit carry-back provisions allow a manufacturer to carry a deficit in its fleet average standards for up to three model years. After satisfying any needs to offset pre-existing debits within a vehicle category, remaining credits may be banked, or saved, for use in future years. This is referred to as credit carry-forward. The EPCA/EISA statutory framework for the CAFE program includes a 5-year credit carry-forward provision and a 3-year credit carry-back provision. In the MYs 2012–2016 program, EPA chose to adopt 5-year credit carry-forward and 3-year credit carry-back provisions as a reasonable approach that maintained consistency between the agencies' provisions. EPA is continuing with this approach for the MY 2017–2025 standards. (A further discussion of the ABT provisions can be found at 75 FR 25412–14 (May 7, 2010)).
Although the credit carry-forward and carry-back provisions generally remain in place for MY 2017 and later, EPA is finalizing its proposal to allow all unused credits generated in MY 2010–2016 (but not MY 2009 early credits) to be carried forward through MY 2021. See § 86.1865–12(k)(6)(ii). This amounts to the normal 5 year carry-forward for MY 2016 and later credits, but provides additional carry-forward years for credits earned in MYs 2010–2015. Extending the life for MY 2010–2015 credits provides greater flexibility for manufacturers in using the credits they have generated. These credits would help manufacturers resolve lead-time issues they might face in the early model years of today's program as they transition from the 2016 standards to the progressively more stringent standards for MY 2017 and later. It also provides an additional incentive for manufacturers to generate credits earlier, for example in MYs 2014 and 2015, because those credits may be used through MY 2021, thereby encouraging the earlier use of additional CO
While this provision provides greater flexibility in how manufacturers use credits they have generated, it would not change the overall CO
EPA did not propose to allow MY 2009 early credits to be carried forward beyond the normal 5 years due to concerns expressed during the 2012–2016 rulemaking that there may be the potential for large numbers of credits that could be generated in MY 2009 for companies that are over-achieving on CAFE and that some of these credits could represent windfall GHG credits.
Transferring credits refers to exchanging credits between the two averaging sets, passenger cars and trucks, within a manufacturer. For example, credits accrued by over-compliance with a manufacturer's car fleet average standard could be used to offset debits accrued due to that manufacturer not meeting the truck fleet average standard in a given year. Finally, accumulated credits may be traded to another manufacturer. EPA is finalizing provisions consistent with MYs 2012–2016 to allow no limits on the amount of credits that may be transferred or traded.
The averaging, banking, and trading provisions are generally consistent with those included in the CAFE program, with a few notable exceptions. As with EPA's approach (except for the provision just discussed above for a one-time extended carry-forward of MY2010–2016 credits), under EISA, credits generated in the CAFE program can be carried forward for 5 model years
EPA received comments from manufacturers, suppliers, and others emphasizing the need for flexibility and supporting the credit programs in general. Manufacturers supported the proposed approach to the ABT program. Manufacturers commented that the one-time carry-forward of greenhouse gas reduction credits through the 2021 model year rewards early investment and provides better flexibility to account for market conditions that may impact year-over-year compliance. NESCAUM commented that allowing credit transfers between a manufacturer's passenger car and light truck fleet will facilitate compliance without reducing the GHG benefits of the program, as do provisions for carry-forward and carry-back of generated credits.
One commenter raised concerns regarding the ABT provisions. CBD commented that the proposed one-time carry forward of GHG credits was contrary to EISA provisions, and unjustified, and recommended that EPA not finalize the provision. CBD further commented similarly that, “the Agencies may not increase the availability of credit transfers between the two fleets, passenger vehicles and light trucks. The existence of statutory caps for these transfers is a strong indication of Congressional disapproval of extending them further, and the Clean Air Act's silence on that issue does not override EISA's statutory restriction.”
EPA does not agree with these comments. The extension of the credit carry-forward provisions supports the ultimate objectives of CAA section 202 (a) by providing flexibility to achieve GHG emission reductions at lower cost, and to reduce the lead time needed to do so. And although the agencies have worked stringently to harmonize the two sets of standards under the different statutory authorities, the National Program also properly takes advantage of the additional flexibilities afforded by the CAA to achieve reductions of GHGs where appropriate to do so. See section I.B and I.D above (noting features such as more flexible credit generating and unlimited transferring mechanisms, and no option to pay fines in lieu of compliance). Since EPA believes that extending the carry-forward provision allows additional flexibility, encourages earlier penetration of emission reduction technologies sooner than might otherwise occur, and does so without reducing the overall effectiveness of the program. EPA is therefore extending the credit carry-forward provision as proposed.
Volkswagen recommended that EPA allow a 5 year carry back of debits, but did not provide supporting rationale as to why such a change is needed. As noted in section I.B above, EPA is retaining a 3 year credit carry-back due to concerns that a five year period could slow progress toward meeting standards, and could lead to situations where some manufacturers find it impossible to make up past year deficits. EPA believes that credit carry-back is an important flexibility because it allows manufacturers to address situations where they fall into a deficit because, for example, their fleet mix at the end of the year is not the same as the fleet mix anticipated at the beginning of the year. EPA is concerned that a longer period may encourage manufacturers to rely on deficits as a primary strategy to comply with the program and would slow the rate of progress manufacturers would make in reducing emissions.
Daimler Automotive Group commented that EPA should allow credits for Class 2b vehicles (heavy duty pickups and vans) generated in the medium duty GHG program to be applied in the light duty truck programs as well. Daimler commented that the medium duty GHG program for these vehicles has an ABT program which is similar to the light duty program and that these similarities should allow credits to be traded between them. In response, EPA believes such a change is outside the scope of the proposal as EPA did not propose any changes that would affect the heavy-duty vehicle standards. EPA believes the suggested approach raises significant issues regarding the potential impact on both programs, including competitiveness issues, which would need to be thoroughly explored through a notice and comment rulemaking process. Only a small portion of light-duty vehicle manufacturers produce vehicles in the heavy-duty category and EPA believes that it is important to maintain a level playing field for light-duty vehicle manufacturers not participating in the heavy-duty vehicle market. Moreover, the standards for heavy duty pickups and vans are based on a different attribute (a work factor attribute which is not determined exclusively by footprint) than the standards for light duty trucks, the projected technology basis for the standards differ, and the programs' model years do not coincide. Furthermore, it is possible that allowing credit transfers between heavy-duty and light-duty vehicles could impact stringency of both the light and heavy-duty standards. ABT provisions are an integral part of establishing appropriate standards under Section 202(a) of the Clean Air Act. In order to properly evaluate the implications of adopting such credit transfers, a detailed analysis would need to be done to assess the potential impacts of these types of credit transfers, with an opportunity for public review and input, and EPA has not performed such an analysis.
EPA is finalizing provisions, as proposed, allowing eligible small volume manufacturers (SVMs) the option to petition EPA to develop an alternative CO
In the MY 2012–2016 program, EPA recognized that for very small volume manufacturers, the CO
EPA continues to believe that these small volume manufacturers face a greater challenge in meeting CO
Prior to EPA's proposal, the agencies held detailed technical discussions with the manufacturers eligible for the exemption under the MY 2012–2016 program and reviewed detailed confidential product plans of each manufacturer. Based on the information provided and subsequent public comments, EPA continues to believe that SVMs would face great difficulty meeting the primary CO
A case-by-case approach for establishing standards for SVMs has been adopted by NHTSA for CAFE, CARB in their GHG program, and the European Union (EU) for European CO
For the California GHG standards for MYs 2009–2016, CARB established a process that would start at the beginning of MY2013, where small volume manufacturers would identify all MY 2012 vehicle models certified by large volume manufacturers that are comparable to the SVM's planned MY 2016 vehicle models.
The EU process allows small manufacturers to apply for a derogation from the primary CO
As proposed, SVMs will become subject to the GHG program beginning with MY 2017. Starting in MY 2017, SVMs will be required to meet the primary program standards unless EPA establishes alternative standards for the manufacturer. In addition, since SVMs will no longer be exempt from the program, they will no longer be required to seek to purchase credits from other manufacturers in order to maintain the exemption. As proposed, eligible manufacturers seeking alternative standards must petition EPA for alternative standards by July 30, 2013, providing the information described below. If EPA finds that the application is incomplete, EPA will notify the manufacturer and provide an additional 30 days for the manufacturer to provide all necessary information. EPA will then publish a notice in the
As proposed, manufacturers may petition for alternative standards for up to 5 model years (i.e., MYs 2017–2021) as long as sufficient information is available on which to base the alternative standards (see application discussion below). This initial round of establishing case-by-case standards may be followed by one or more additional rounds until standards are established for the SVM for all model years up to and including MY 2025. For the later round(s) of standard setting, the SVM must submit their petition 36 months prior to the start of the first model year for which the standards would apply in order to provide sufficient time for EPA to evaluate and set alternative standards (e.g., January 1, 2018 for MY 2022). The 36 month requirement does not apply to new market entrants, discussed in section III.C.5.e below. The subsequent case-by-case standard setting will follow the same notice and comment process as outlined above.
As proposed, if EPA does not establish SVM standards for a manufacturer at least 12 months prior to the start of the model year in cases where the manufacturer provided all required information by the established deadline, the manufacturer may request an extension of the alternative standards currently in place, on a model year by model year basis. See 76 FR 74989. This provides assurance to manufacturers that they will have at least 12 months lead time to prepare for the upcoming model year.
EPA received comments from Aston Martin, Lotus, and McLaren (the three manufacturers potentially eligible for SVM standards based on their status under the MY2012–2016 program) fully supporting EPA's proposed approach to establishing alternative standards through a case-by-case manufacturer petition process. They commented that this approach is not only technically appropriate but that adopting the case-by-case SVM GHG mechanism would align EPA's approach with that of NHTSA, the EU, and CARB, furthering the desirable objective of harmonization.
EPA received comments from the Global Automakers that the standards should be issued at least 18 months prior to the first affected model year. Global Automakers did not provide supporting data or rationale for their comments and EPA did not receive similar comments directly from others, including the SVMs most directly affected. EPA is concerned with the timing suggested by the commenter. EPA expects that the EPA rulemaking process will take about 12 months, which would provide manufacturers with a minimum of 17 months lead time prior to the earliest possible start date for MY 2017, if they submit their petition by the July 30, 2013 deadline (August 1, 2014 to January 1, 2016). EPA views this scenario as worst case in terms of lead time because manufacturers may petition earlier than July 30, 2014 and also may begin their MY 2017 production later than January 1, 2016. EPA expects that in most cases, manufacturers will have more than 18 months lead time. In addition, lead time will be one of the primary considerations in determining the feasibility of potential alternative standards. EPA is retaining the 12 month lead time provisions as proposed, as EPA views the 12 month period as a reasonable balance between the timing constraints of establishing reasonable alternative standards prior to MY 2017 and the need to provide adequate lead time to manufacturers to meet those standards.
EPA requested comments on allowing SVMs to comply early with the MY 2017 SVM alternative standard established for them. As discussed in the NPRM, manufacturers may want to certify to the MY 2017 standards in earlier model years (e.g., MY 2015 or MY 2016). See 76 FR 74989. Under the MY 2012–2016 program, SVMs are eligible for an exemption from the CO
EPA did not receive any critical comments and received supportive comments from the SVMs regarding its request for comment regarding early optional compliance. Therefore, EPA is including in the final program early opt-in provisions for manufacturers, allowing them the option of meeting their MY 2017 standard (i.e. the case-by-case standard adopted pursuant to the standards and procedures described
As described in detail in section I.D.2, EPA establishes motor vehicle standards under section 202(a) that are based on technological feasibility, and considering lead time, safety, costs and other impacts on consumers, and other factors such as energy impacts associated with use of the technology. As proposed, SVMs petitioning EPA for alternative standards must submit the data and information listed below which EPA will use, in addition to other relevant information, in determining an appropriate alternative standard for the SVM. EPA will also consider data and information provided by commenters during the comment process in determining the final level of the individual SVM's standards. EPA did not receive comments on these data requirements.
SVMs must provide the following information as part of their petition for SVM standards:
• MYs that the application covers—up to five MYs. Sufficient information must be provided to establish alternative standards for each year
As proposed, EPA will weigh several factors in determining what CO
As discussed in Section III.B.4, EPA's program includes a variety of credit averaging, banking, and trading provisions. As proposed, these provisions will generally apply to SVM standards as well, with the exception that SVMs meeting alternative standards will not be allowed to trade credits (i.e., sell or otherwise provide) to other manufacturers. SVMs will be able to use credits purchased from other manufacturers generated in the primary program. Although EPA does not expect significant credits to be generated by SVMs due to the manufacturer-specific standard setting approach being finalized, SVMs will be able to generate and use credits internally, under the credit carry-forward and carry-back provisions. Under a case-by-case approach, EPA does not view such credits as windfall credits and not allowing internal banking could stifle potential innovative approaches for SVMs. SVMs will also be able to transfer credits between the car and light trucks categories. EPA did not receive any comments regarding the ABT provisions as they apply to SVMs meeting alternative standards.
The MY 2012–2016 rulemaking limited eligibility for the SVM exemption to manufacturers in the U.S. market in MY 2008 or MY 2009 with U.S. sales of less than 5,000 vehicles per year. After initial eligibility has been established, the SVM remains eligible for the exemption if the rolling average of three consecutive model years of sales remains below 5,000 vehicles. Manufacturers going over the 5,000 vehicle rolling average limit would have two additional model years to transition to having to meet applicable CO
As proposed, EPA is retaining the 5,000 vehicle cut-point and rolling three year average approach which we believe is appropriate as a primary criterion for eligibility as an SVM. The 5,000 vehicle sales threshold allows for some sales growth by SVMs, as the SVMs in the market today typically have annual sales of below 2,000 vehicles. Manufacturers with unusually strong sales in a given year would still likely remain eligible, based on the three year rolling average. However, if a manufacturer expands in the U.S. market on a permanent basis such that they consistently sell more than 5,000 vehicles per year, they would likely increase their rolling average to above 5,000 and no longer be eligible. EPA believes a manufacturer will be able to consider these provisions, along with other factors, in its planning to significantly expand in the U.S. market. EPA did not receive comments on these provisions. As discussed below, EPA is not tying eligibility to having been in the market in MY 2008 or MY 2009, or in any other year, and is instead finalizing eligibility criteria for new SVMs newly entering the U.S. market.
The SVM exemption under the MY 2012–2016 program included a requirement that a manufacturer had to have been in the U.S. vehicle market in MY 2008 or MY 2009. This provision ensured that a known universe of manufacturers would be eligible for the exemption in the short term and manufacturers would not be driven from the market as EPA proceeded to develop appropriate SVM standards. EPA did not propose to include such a provision for the SVM standards eligibility criteria for MY 2017–2025. See 76 FR 74991. EPA believes that with SVM standards in place, tying eligibility to being in the market in a prior year is no longer necessary because SVMs will be required to achieve appropriate levels of emissions control. Also, this type of eligibility condition could serve as a potential market barrier by hindering new SVMs from entering the U.S. market.
For new market entrants, EPA is finalizing the proposed provision allowing a manufacturer the option of applying for an alternative standard for MY2017–2025 pursuant to the criteria and process described above. The new SVM would not be able to certify their vehicles under the alternative standards until those standards are established. As discussed in the proposal, EPA would expect the manufacturer to submit an application as early as possible but at least 30 months prior to when they expect to begin producing vehicles in order to provide enough time for EPA to evaluate the application and develop standards using the public process just described, and to provide necessary lead-time to the manufacturer. EPA received no adverse comments regarding the timing of the process contemplated in the proposal. In addition to the information and data described below, EPA is requiring new market entrants to provide evidence that the company intends to enter the U.S. market within the time frame of the MY2017–2025 SVM standards. Such evidence would include documentation of work underway to establish a dealer network, appropriate financing and marketing plans, and evidence the company is working to meet other federal vehicle requirements such as other EPA emissions standards and NHTSA vehicle safety standards. EPA is concerned about the administrative burden that could be created for the agency by companies with no firm plans to enter the U.S. market submitting applications in order to see what standard might be established for them. This information, in addition to a complete application with the information and data outlined above, will provide evidence of the applicant's legitimacy. As part of this review, EPA reserves the right to not undertake its SVM standards development process for companies that do not exhibit a legitimate and documented effort to enter the U.S. market.
As discussed in the proposal, EPA remains concerned about the potential for gaming by a manufacturer that sells less than 5,000 vehicles in the first year, but with plans for significantly larger sales volumes in the following years. See 76 FR 74991. EPA believes that it would not be appropriate to establish alternative SVM standards for a new market entrant that plans a steep ramp-up in U.S. vehicle sales. Therefore, as proposed for new entrants, U.S. vehicle sales must remain below 5,000 vehicles for the each of its first three years in the market. After the initial three years, the manufacturer must maintain a three year rolling average below 5,000 vehicles (e.g., the rolling average of years 2, 3 and 4, must be below 5,000 vehicles). The certificate(s) of conformity for vehicles sold by new entrant SVMs will be conditioned on staying within the sales threshold, as provided in § 40 CFR 86.1848. If a new market entrant sells more than this number of vehicles for the first five years in the market, vehicles sold above the 5,000 vehicle threshold will not be covered by the alternative standards. In such cases where the resulting fleet average is not in compliance with the standards, the manufacturer will be subject to enforcement action and the manufacturer will also lose eligibility for the SVM standards until it has reestablished three consecutive years of sales below 5,000 vehicles.
By not tying the 5,000 vehicle eligibility criteria to a particular model year, it will be possible for a manufacturer already in the market that drops below the 5,000 vehicle threshold in a future year to attempt to establish eligibility. As proposed, EPA will treat such manufacturers as new entrants to the market for purposes of determining eligibility for SVM standards. However, the requirements to demonstrate that the manufacturer intends to enter the U.S. market obviously would not be relevant in this case, and therefore will not apply. EPA did not receive comments regarding the above provisions for SVM new market entrants.
In determining eligibility for the MY 2012–2016 exemption, sales volumes must be aggregated across manufacturers according to the provisions of 40 CFR 86.1838–01(b)(3), which requires the sales of different firms to be aggregated in various situations, including where one firm has a 10% or more equity ownership of another firm, or where a third party has a 10% or more equity ownership of two or more firms. These are the same aggregation requirements used in other EPA small volume manufacturer provisions, such as those for other light-duty emissions standards.
As we noted at proposal, Ferrari requested in its comments to the proposed 2012–2016 GHG standards that manufacturers be allowed to apply to EPA to establish SVM status based on the independence of its research, development, testing, design, and manufacturing from another firm that has ownership interest in that manufacturer. Ferrari is majority owned by Fiat and would be aggregated with other Fiat brands, including Chrysler, Maserati, and Alfa Romeo, for purposes of determining eligibility for SVM standards; therefore Ferrari does not meet the current eligibility criteria for SVM status. However, Ferrari believed that it would qualify as “operationally independent” under appropriate criteria and would qualify as an SVM for the GHG program if evaluated independent of the other Fiat brands. In the MY 2012–2016 final rule, EPA noted that it would further consider the issue of operational independence and seek public comments on this concept (see 75 FR 25420) and EPA pursued the issue further in this proceeding. See 76 FR 74991–92. Specifically, we sought comment on expanding eligibility for the SVM GHG standards and provisions to manufacturers who would have U.S. annual sales of less than 5,000 if its own vehicles based on a demonstration that they are “operationally independent” of other companies because it operates its research, design, production, and manufacturing independently from the parent company.
In particular, EPA requested comments regarding the degree to which this concept could unnecessarily open up the SVM standards to several smaller manufacturers that are integrated into large companies—smaller companies that may be capable of and planning to meet the CO
All of the comments on this issue supported allowing manufacturers to qualify for alternative standards based on a showing of operational independence. Ferrari commented in full support of the operational independence concept and the criteria laid out in the proposal, stating that the GHG standards could otherwise severely limit Ferrari in the U.S. market. Several Ferrari dealers commented in the support of the operational independence provision, citing potential for loss of sales and jobs at dealerships if this provision were not finalized. Global Automakers also strongly supported the operational independence provisions.
With regard to EPA's request for comments regarding the potential for gaming, Ferrari commented that the criteria considered by EPA, discussed below, will serve as a sufficient safeguard. Ferrari commented that the cost of restructuring a company to separate all design, R&D, production and testing facilities from the parent company, along with the expense of developing completely new powertrains and platforms, would be prohibitively expensive. Ferrari also commented that the requirements for a newly spun-off manufacturer to establish itself as operationally independent over a two year period, during which the company will have to meet the GHG standards in order to remain in the U.S. market, will also discourage potential gaming. Several Ferrari dealers also commented that the criteria will ensure that a manufacturer seeking operational independence is truly independent. The Global Automakers commented that the criteria are sufficiently stringent and there would be virtually no ability for manufacturers to abuse the operational independence provision.
EPA is finalizing the operational independence criteria listed below, which were detailed in the request for comments in the proposal (see 76 FR 74992). These criteria are meant to establish that a company, though owned by another manufacturer, does not benefit operationally or financially from this relationship, and should therefore be considered independent for purposes of calculating the sales volume for determining eligibility for the GHG SVM program. Manufacturers must demonstrate compliance with all of these criteria in order to be found to be operationally independent. By “related manufacturers” below, EPA means all manufacturers that would be aggregated together under the 10 percent ownership provisions contained in EPA's current small volume manufacturer definition (i.e., the parent company and all subsidiaries where there is 10 percent or greater ownership).
As proposed, EPA will determine based on information provided by the manufacturer in its application, if the manufacturer currently meets the following criteria and has met them for at least 24 months preceding the application submittal and is therefore operationally independent:
1. No financial or other support of economic value was provided by related manufacturers for purposes of design, parts procurement, R&D and production facilities and operation. Any other transactions with related manufacturers must be conducted under normal commercial arrangements like those conducted with other parties. Any such transactions shall be at competitive pricing rates to the manufacturer.
2. The applicant maintains separate and independent research and development, testing, and manufacturing/production facilities.
3. The applicant does not use any vehicle engines, powertrains, or platforms developed or produced by related manufacturers.
4. Patents are not held jointly with related manufacturers.
5. The applicant maintains separate business administration, legal, purchasing, sales, and marketing departments as well as autonomous decision making on commercial matters.
6. Overlap of Board of Directors is limited to 25 percent with no sharing of top operational management, including president, chief executive officer (CEO), chief financial officer (CFO), and chief operating officer (COO), and provided that no individual overlapping director or combination of overlapping directors exercises exclusive management control over either or both companies.
7. Parts or components supply agreements between related companies must be established through open market process and to the extent that manufacturer sells parts/components to non-related auto manufacturers, it does so through the open market at competitive pricing.
Volkswagen commented in support of the operational independence provision, but raised concerns that the above criteria are too prescriptive and difficult to apply across all circumstances of captured small volume brands. Volkswagen requested that EPA “consider the operational independence of each manufacturer on an individual basis during the petition process. As such the degree of independence could be part of the negotiation process for setting standards for a particular SVM.” In response, the criteria were not intended to apply to “all circumstances” of captured brands. The criteria were written narrowly to purposely exclude captured brands that are integrated or managed by the parent company in any substantive way. EPA's intention, as described in the proposal, is to include only companies that can be demonstrated to be completely independent, held at arm's length by the parent company without access to the resources of the parent company or related manufacturers. Further, EPA is concerned that broadening the criteria in ways suggested by the commenter would lead to gaming issues EPA is seeking to avoid, as discussed above. EPA believes that it is important to retain the above criteria in order to avoid having to make determinations regarding “degrees” of independence.
In addition to the criteria listed above, EPA is finalizing the following programmatic elements and framework. EPA is requiring the manufacturer applying for operational independence to provide an attest engagement from an independent auditor verifying the accuracy of the information provided in the application.
After EPA approval, the manufacturer will be required to report within 60 days any material changes to the information provided in the application. A manufacturer will lose eligibility automatically after the material change occurs. However, EPA will confirm that the manufacturer no longer meets one or more of the criteria and thus is no longer considered operationally independent, and will notify the manufacturer. In such cases, EPA will provide two full model years lead time after the MY in which the manufacturer loses eligibility for the manufacturer to transition to the primary program standards. For example, if the manufacturer lost eligibility sometime during the manufacturer's model year 2018 (based on when the material change occurs), the manufacturer would need to meet primary program standards in MY 2021. A manufacturer losing eligibility must subsequently meet the criteria for three consecutive years before it would be allowed to petition to re-establish operational independence.
EPA is finalizing provisions to allow additional lead time for intermediate volume manufacturers that sell less than 50,000 vehicles per year, for the first four years of the program (MY 2017–2020). The 2012–2016 GHG vehicle standards include Temporary Lead Time Allowance Alternative Standards (TLAAS) which provide alternative standards to certain intermediate sized manufacturers (those with U.S. sales between 5,000 and 400,000 during model year 2009) to accommodate two situations: manufacturers which traditionally paid civil penalties instead of complying with CAFE standards, and limited line manufacturers facing special compliance challenges due to less flexibility afforded by averaging, banking and trading. The TLAAS includes additional flexibility for manufacturers with MY 2009 sales of less than 50,000 vehicles through MY 2016. For manufacturers with sales of greater than 50,000 vehicles (but less than 400,000), the program ends in MY 2015. See 75 FR 25414–416.
EPA did not propose to continue the TLAAS program for MYs 2017–2025. See 76 FR 74994. First, the allowance was premised on the need to provide adequate lead time, given the (at the time the rule was finalized) rapidly approaching MY 2012 deadline, and given that manufacturers were transitioning from a CAFE regime that allows civil penalties in lieu of compliance, to a Clean Air Act regime that does not. That concern is no longer applicable, given that there is ample lead time before the MY 2017 standards begin. More importantly, the Temporary Lead Time Allowance was just as the name describes—temporary—and EPA provided it to allow manufacturers to transition to full compliance in later model years. See 75 FR 25416. EPA received one comment, from Natural Resources Defense Council, generally supporting EPA's decision not to propose an extension of the TLAAS program.
EPA also requested comment on whether there is a need to provide some type of additional lead time for intermediate volume, limited line manufacturers. Prior to proposal, one company with U.S. sales on the order of 25,000 vehicles per year presented confidential business information indicating that it believes that the CO
Public comments supported the concept of providing additional flexibility for limited line intermediate volume manufacturers. In particular, EPA received comments from Jaguar Land Rover, Porsche, and Suzuki supporting approaches that would provide intermediate volume manufacturers with additional flexibility. These three manufacturers are eligible under the MY 2012–2016 program for the expanded TLAAS provisions through MY 2016, based on their MY 2009 sales of less than 50,000 vehicles.
Jaguar Land Rover (JLR) commented that they will be achieving very significant CO
Porsche commented that the transition from TLAAS to the base standards is a disproportionate burden for niche carmakers, and that the transition cannot be accomplished by gradual incremental improvements. Porsche commented that their development costs for new technology cannot be spread over a large fleet to take advantage of natural economies of scale, and that there is a disproportionate financial impact on small manufacturers, due to higher per unit cost. Porsche further commented that larger competitors can support sports car sales by fleet averaging over a broad range of products, and that their smallest competitors (SVMs) can request alternate CO
Porsche recommended three possible approaches to address their concerns; a fixed alternative standard with a program like TLAAS, case-by-case standards setting based on the performance of competitor vehicles similar to the approach proposed for SVMs, or an alternative phase-in that mitigates the potential 25 percent drop in standards in MY 2017 after TLAAS expires.
Suzuki similarly commented raising concerns that the proposed standards did not adequately recognize the lead time concerns of low-volume, limited line manufacturers like Suzuki. Suzuki commented that “when small-volume manufacturers need to develop new technology and develop a new model/new engine to make the significant improvements necessary to comply with the proposed standards, the per-vehicle cost for the special development that is needed specifically for the U.S. market is much higher than for manufacturers with larger sales volumes.” Suzuki suggested that EPA provide three years additional lead time to manufacturers with average U.S. sales of less than 50,000 vehicles. Under Suzuki's suggestion, such manufacturers would not be required to meet the MY 2017 standards until MY 2020 and would be required to meet MY 2018–2025 standards until MY 2021–2028. Suzuki did not provide any data or information regarding their fleet or plans for technology introduction in support of their comments.
After reviewing the comments and the feasibility issues potentially facing these manufacturers in the early years of the program, EPA is finalizing additional lead time provisions for intermediate volume manufacturers. The additional lead time will help manufacturers transition from the expanded TLAAS program in MY 2016 to the primary standards being adopted for MY 2017–2025, by helping to mitigate the steep increase in standard stringency that would otherwise occur for them in the MY 2016–2017 time frame. As discussed in the feasibility section III.D, the standards will be especially challenging for them. Also, intermediate volume manufacturers have limited ability to average due to their limited product line and will not have credits available from their own fleet due to the credit restrictions included in the TLAAS program. It is possible that the manufacturers could purchase credits from other manufacturers (and eligibility for the expanded TLAAS provisions requires manufacturers to exhaust credit purchasing opportunities), but the availability of credits is highly uncertain due to the competitive nature of the auto industry and the one time carry forward credit provision to 2021.
Manufacturers participating in the expanded TLAAS program in MY 2016 will be eligible for the additional lead time shown in the table below. Manufacturers not eligible for the expanded TLAAS program, including new market entrants, will not be eligible for the additional lead time.
EPA recognizes that the additional lead time being finalized does not provide the full level of relaxation recommended by the commenters and that the standards remain very challenging for these intermediate sized companies. However, EPA believes that the additional lead time provided will be sufficient to ease the transition to more stringent standards in the early years of the 2017–2025 program that could otherwise present a difficult hurdle for them to overcome. In this regard, we received comments, consistent with our assessment, indicating that additional lead time should be sufficient to allow manufacturers to meet the standards. The added lead time will allow manufacturers to better plan the introduction of technologies to bring them into compliance with the primary standards. Also, EPA is not adopting any restrictions on credit banking such as those contained in the MYs 2012–2016 TLAAS program, allowing intermediate volume manufacturers to bank credits in these years to further help smooth the transition from one model year to the next. EPA is, however, prohibiting any intermediate volume manufacturer opting to use these provisions from trading credits
Porsche noted that the company submitted comments under the assumption that they would remain independent from Volkswagen and that if the status of their relationship changed such that a supplement to their comments would be in order, Porsche reserved the possibility that it may submit such comments. On August 1, 2012, VW completed its acquisition of 100 percent of Porsche's automotive business.
EPA is finalizing, as proposed, a provision to exempt small businesses from the MY2017–2025 standards, as well as establishing a voluntary opt-in provision for those small business manufacturers that wish to certify to the GHG standards in order to generate and sell credits.
EPA has identified about 24 entities that fit the Small Business Administration (SBA) size criterion of a small business. EPA estimates there currently are approximately five small manufacturers including three electric vehicle small business vehicle manufacturers that have recently entered the market, eight ICIs, and eleven alternative fuel vehicle converters in the light-duty vehicle market. EPA estimates that these small entities comprise less than 0.1 percent of the total light-duty vehicle sales in the U.S., and therefore the exemption will have a negligible impact on the GHG emissions reductions from the standards. Further detail regarding EPA's assessment of small businesses is provided in Regulatory Flexibility Act Section III.I.3 of this preamble, and in RIA Chapter 9.
At least one small business manufacturer, Fisker Automotive, in discussions with EPA prior to proposal, suggested that small businesses should have the option of voluntarily opting-in to the GHG standards. This manufacturer sells electric vehicles, and sees a potential market for selling credits to other manufacturers. As discussed in the proposal, EPA believes that there could be several benefits to this approach, as it would allow small businesses an opportunity to generate revenue to offset their technology investments and to encourage commercialization of the innovative technology. There would likewise be a benefit to any manufacturer seeking those credits to meet their compliance obligations. EPA proposed and is finalizing allowing small businesses to waive their small entity exemption and opt-in to the primary GHG standards based on this same rationale. This will allow small business manufacturers to earn CO
EPA proposed to make the opt-in available starting in MY 2014, as the MY 2012, and potentially the MY 2013, certification process will have already occurred by the time this rulemaking is finalized. See 76 FR 74994. EPA proposed this timing to avoid retroactively certifying vehicles that have already been produced. EPA proposed, however, that manufacturers certifying to the GHG standards for MY 2014 would be eligible to generate credits for vehicles sold in MY 2012 and MY 2013 based on the number of vehicles sold and the manufacturer's footprint-based standard under the primary program that would have otherwise applied to the manufacturer if it were a large manufacturer. This approach would be similar to that used by EPA for early credits generated in MYs 2009–2011, where manufacturers did not certify vehicles to CO
EPA received comments from Fisker requesting that EPA reconsider the timing of the opt-in provisions. Fisker commented that under EPA's proposal, manufacturers would not be able to generate credits until the end of MY 2014, even for vehicles that are produced in MYs 2012–2013. Fisker commented that this would significantly diminish the revenue generating benefit of these credits, particularly during the critical early years of their company when potential credit revenues would be of most benefit to the company. EPA is persuaded by this reasoning, and the final rule therefore provides that the opt-in provisions begin with MY 2013. See § 86.1801–12(j)(2)(i). The timing of the final rule will allow the GHG requirements to be integrated into the MY 2013 certification process for these small businesses. Once the small business manufacturer opting into the GHG program completes certification for MY 2013, the company will be eligible to generate GHG credits for their MY 2012 production. Manufacturers will not have to wait until the end of MY 2013 to generate MY 2012 credits. EPA believes this provision is responsive to the concerns of the commenter while still ensuring that the manufacturer is certified under the GHG program prior to generating credits.
EPA also received comments from Vehicle Production Group that small business entities are discussed in terms of small volume manufacturers,
EPA is finalizing its proposal to exempt police and other emergency vehicles from the GHG standards, starting in MY2012. Under EPCA, manufacturers are allowed to exclude police and other emergency vehicles from their CAFE fleet and all manufacturers that produce emergency vehicles have historically done so. EPA is adopting an exemption parallel to the EPCA exemption allowing manufacturers to exempt police and emergency vehicles upon sending notification to EPA (the same notification that is sent to NHTSA would suffice). EPA received comments in the MY 2012–2016 rulemaking that these vehicles should be exempt from the GHG emissions standards and EPA committed to further consider the issue in a future rulemaking.
EPA received comments from manufacturers supporting the proposed emergency vehicle exemption and harmonization with the EPCA exemption. Ford further commented that without the exemption, “manufacturers may be forced to choose between (1) deciding whether to degrade the performance of the emergency vehicles, (2) deciding to restrict the sales of its emergency vehicles, potentially even exiting the market altogether, or (3) facing non-compliance with the federal GHG standards.”
As discussed in the proposal, the unique features of these vehicles result in significant added weight including: heavy-duty suspensions, stabilizer bars, heavy-duty/dual batteries, heavy-duty engine cooling systems, heavier glass, bullet-proof side panels, and high strength sub-frame. Police pursuit vehicles are often equipped with specialty steel rims and increased rolling resistance tires designed for high speeds, and unique engine and transmission calibrations to allow high-power, high-speed chases. Police and emergency vehicles also have features that tend to reduce aerodynamics, such as emergency lights, increased ground clearance, and heavy-duty front suspensions.
EPA remains concerned that manufacturers may not be able to sufficiently reduce the emissions from these vehicles, and absent an exemption would be faced with a difficult choice of compromising necessary vehicle features or dropping vehicles from their fleets, as they may not have credits under the fleet averaging provisions necessary to cover the excess emissions from these vehicles as standards become more stringent. EPA continues to believe that without the exemption, there could be situations where a manufacturer is more challenged in meeting the GHG standards simply due to the inclusion of these higher emitting emergency vehicles. Technical feasibility issues go beyond those of other high-performance vehicles, and vehicles with these performance characteristics must continue to be made available in the market. Therefore, EPA is finalizing the proposed exemption for police and emergency vehicles and thus not including these vehicles in the National Program at this time. MY 2012–2016 standards, as well as MY 2017 and later standards would be fully harmonized with CAFE regarding the treatment of these vehicles.
EPA received comments from manufacturers that EPA should exempt police and emergency vehicles from the CH
EPA received comments from Vehicle Production Group that the police and emergency vehicle exemption should be expanded to include vehicles manufactured “for the public good,” which would include vehicles manufactured for the specific purpose of transporting wheelchair users. EPA is not expanding the police and emergency vehicle exemption to include vehicles used “for the public good” as this term is not defined in current regulations and is not included in the EPCA exemption. EPA also does not believe that these other types of vehicles are designed for the severe duty cycles that are experienced by police and emergency vehicles, and therefore do not face the same potential constraints in terms of vehicle design and the application of technology.
EPA is not amending the standards for nitrous oxides (N
For light-duty vehicles, as part of the MY 2012–2016 rulemaking, EPA finalized standards for nitrous oxide (N
After the light-duty standards were finalized, manufacturers raised concerns that for a few of the vehicle models in their existing fleet they were having difficulty meeting the N
In response to these concerns, EPA has already amended the MY 2012–2016 standards (as part of the heavy-duty GHG rulemaking) to allow manufacturers to use CO
Acting on this intention, EPA proposed to extend the option of using CO
EPA also requested comment on establishing an adjustment to the CO
EPA received comments both in support of and against establishing an adjustment factor for the fleet-wide CO
GM commented that a second approach would be to modify the CO
EPA also received comments from Global Automakers regarding the CO
For the N
In the MY 2017–2025 proposal, EPA proposed to extend the ability for manufacturers to use compliance statements based on good engineering judgment in lieu of test data through MY 2016. See 76 FR 74994. Prior to proposal, manufacturers raised concerns that the lead-time provided to begin N
EPA is finalizing the additional lead-time for N
EPA received several comments from manufacturers regarding N
In response, although EPA recognizes manufacturers' concerns about the
At this time we are aware of four manufactures of laser source instruments, and we have evaluated the instruments from three of these manufacturers. Horiba's MEXA–1100QL and Sensors' LASAR systems have performed very well and are suitable for measurement of N
Our evaluations of these N
In an initial evaluation of existing N
With respect to timing, we do not see why it would take 4.5 years to properly install a new N
The Alliance also recommended that the requirement to measure N
The Alliance commented that N
EPA also received comments from the Global Automakers that because N
In the proposal, EPA announced that it is considering revising the procedures for measuring fuel economy and calculating average fuel economy for the CAFE program, effective beginning in MY 2017, to account for three impacts on fuel economy not currently included in these procedures—increases in fuel economy because of increases in efficiency of the air conditioner; increases in fuel economy because of technology improvements that achieve “off-cycle” benefits; and incentives for use of certain hybrid technologies in full size pickup trucks, and for the use of other technologies that help those vehicles exceed their targets, in the form of increased values assigned for fuel economy. EPA is adopting the proposed changes. As discussed in section IV of this Notice, NHTSA has taken these changes into account in determining the maximum feasible fuel economy standard, to the extent practicable. In this section, EPA discusses the legal framework for these changes, and the mechanisms by which these changes will be implemented. EPA is adopting this approach as appropriate after
These changes are the same as program elements that are part of EPA's greenhouse gas performance standards, discussed in section III.B.1 and 2, above. EPA is adopting these changes for A/C efficiency and off-cycle technology because they are based on technology improvements that affect real world fuel economy, and the incentives for light-duty trucks will promote greater use of hybrid technology to improve fuel economy in these vehicles. In addition, adoption of these changes would lead to greater coordination between the greenhouse gas program under the CAA and the fuel economy program under EPCA. As discussed below, these three elements would be implemented in the same manner as in the EPA's greenhouse gas program—a vehicle manufacturer would have the option to generate these fuel economy values for vehicle models that meet the criteria for these “credits,” and to use these values in calculating their fleet average fuel economy.
EPCA provides that:
(c) Testing and calculation procedures. The Administrator [of EPA] shall measure fuel economy for each model and calculate average fuel economy for a manufacturer under testing and calculation procedures prescribed by the Administrator. However * * *, the Administrator shall use the same procedures for passenger automobiles the Administrator used for model year 1975 * * *, or procedures that give comparable results. 49 U.S.C. 32904(c)
Thus, EPA is charged with developing and adopting the procedures used to measure fuel economy for vehicle models and for calculating average fuel economy across a manufacturer's fleet. While this provision provides broad discretion to EPA, it contains an important limitation for the measurement and calculation procedures applicable to passenger automobiles. For passenger automobiles, EPA has to use the same procedures used for model year 1975 automobiles, or procedures that give comparable results.
Compliance by a manufacturer with applicable average fuel economy standards is to be determined in accordance with test procedures established by the EPA Administrator. Test procedures so established would be the procedures utilized by the EPA Administrator for model year 1975, or procedures which yield comparable results. The words “or procedures which yield comparable results” are intended to give EPA wide latitude in modifying the 1975 test procedures to achieve procedures that are more accurate or easier to administer, so long as the modified procedure does not have the effect of substantially changing the average fuel economy standards. H. R. Rep. No. 94–340, at 91–92 (1975).
The fuel economy improvement goals set in section 504 are based upon the representative driving cycles used by the Environmental Protection Agency to determine automobile fuel economies for model year 1975. In the event that these driving cycles are changed in the future, it is the intent of this legislation that the numerical miles per gallon values of the fuel economy standards be revised to reflect a stringency (in terms of percentage-improvement from the baseline) that is the same as the bill requires in terms of the present test procedures. S. Rep. No. 94–179, at 19 (1975).
In Conference, the House version of the bill was adopted, which contained the restriction on EPA's authority.
EPA measures fuel economy for the CAFE program using two different test procedures—the Federal Test Procedure (FTP) and the Highway Fuel Economy Test (HFET). These procedures originated in the early 1970s, and were intended to generally represent city and highway driving, respectively. These two tests are commonly referred to as the “2-cycle” test procedures for CAFE. The FTP is also used for measuring compliance with CAA emissions standards for vehicle exhaust. EPA has made various changes to the city and highway fuel economy tests over the years. These have ranged from changes to dynamometers and other mechanical elements of testing, changes in test fuel properties, changes in testing conditions, to changes made in the 1990s when EPA adopted additional test procedures for exhaust emissions testing, called the Supplemental Federal Test Procedures (SFTP).
When EPA has made changes to the FTP or HFET, we have evaluated whether it is appropriate to provide for an adjustment to the measured fuel economy results, to comply with the EPCA requirement for passenger cars that the test procedures produce results comparable to the 1975 test procedures. These adjustments are typically referred to as a CAFE or fuel economy test procedure adjustment or adjustment factor. In 1985 EPA evaluated various test procedure changes made since 1975, and applied fuel economy adjustment factors to account for several of the test procedure changes that reduced the measured fuel economy, producing a significant CAFE impact for vehicle manufacturers. 50 FR 27172 (July 1, 1985). EPA defined this significant CAFE impact as any change or group of changes that has at least a one-tenth of a mile per gallon impact on CAFE results. Id. at 27173. EPA also concluded in this proceeding that no adjustments would be provided for changes that removed the manufacturer's ability to take advantage of flexibilities in the test procedure and derive increases in measured fuel economy values which were not the result of design improvements or marketing shifts, and which would not result in any improvement in real world fuel economy. EPA likewise concluded that test procedure changes that provided manufacturers with an improved ability to achieve increases in measured fuel economy based on real world fuel economy improvements also would not warrant a CAFE adjustment. Id. at 27172, 27174, 27183. EPA adopted retroactive adjustments that had the effect of increasing measured fuel economy (to offset test procedure changes that reduced the measured fuel economy level) but declined to apply retroactive adjustments that reduced fuel economy.
The D.C. Circuit reviewed two of EPA's decisions on CAFE test procedure adjustments.
The D.C. Circuit rejected CAS' arguments, stating that:
The critical fact is that a procedure that credited reductions in a vehicle's road load power requirements achieved through improved aerodynamic design was available for MY1975 testing, and those manufacturers, however few in number, that found it advantageous to do so, employed that procedure. The manifold intake procedure subsequently became obsolete for other reasons, but its basic function, to measure real improvements in fuel economy through more aerodynamically efficient designs, lived on in the form of the coast down technique for measuring those aerodynamic improvements. We credit the EPA's finding that increases in measured fuel economy because of the lower road load settings obtainable under the coast down method, were increases “likely to be observed on the road,” and were
Some years later, in 1996, EPA adopted a variety of test procedure changes as part of updating the emissions test procedures to better reflect real world operation and conditions. 61 FR 54852 (October 22, 1996). EPA adopted new test procedures to supplement the FTP, as well as modifications to the FTP itself. For example, EPA adopted a new supplemental test procedure specifically to address the impact of air conditioner use on exhaust emissions. Since this new test directly addressed the impact of A/C use on emissions, EPA removed the specified A/C horsepower adjustment that had been in the FTP since 1975. Id. at 54864, 54873. Later EPA determined that there was no need for CAFE adjustments for the overall set of test procedures changes to the FTP, as the net effect of the changes was no significant change in CAFE results.
As evidenced by this regulatory history, EPA's traditional approach is to consider the impact of potential test procedure changes on CAFE results for passenger automobiles and determine if a CAFE adjustment factor is warranted to meet the requirement that the test procedure produce results comparable to the 1975 test procedure. This involves evaluating the magnitude of the impact on measured fuel economy results. It also involves evaluating whether the change in measured fuel economy reflects real word fuel economy impacts from changes in technology or design, or whether it is an artifact of the test procedure or test procedure flexibilities such that the change in measured fuel economy does not reflect a real world fuel economy impact.
In this case, allowing credits for improvements in air conditioner efficiency and off-cycle efficiency for passenger cars would lead to an increase (i.e., improvement) in the fuel economy results for the vehicle model. The impact on fuel economy and CAFE results clearly could be greater than one-tenth of a mile per gallon (the level that EPA has previously indicated as having a substantial impact). The increase in fuel economy results would reflect real world improvements in fuel economy and not changes that are just artifacts of the test procedure or changes that come from closing a loophole or removing a flexibility in the current test procedure. However, these changes in procedure would not have the “critical fact” that the
However, EPA believes a change in approach is appropriate based on the existence of similar EPA provisions for the greenhouse gas emissions procedures and standards. In the past, EPA has determined whether a CAFE adjustment factor for passenger cars would be appropriate in a context where manufacturers are subject to a CAFE standard under EPCA and there is no parallel greenhouse gas standard under the CAA. That is not the case here, as MY2017–2025 passenger cars will be subject to both CAFE and greenhouse gas standards. As such, EPA believes it is appropriate to consider the impact of a CAFE procedure change in this broader context.
The term “comparable results” is not defined in section 32904(c), and the legislative history indicates that it is intended to address changes in procedure that result in a substantial change in the average fuel economy standard. As explained above, EPA has considered a change of one-tenth of a mile per gallon as having a substantial impact, based in part on the one-tenth of a mile per gallon rounding convention in the statute for CAFE calculations. 48 FR 56526, 56528 fn. 14 (December 21, 1983). A change in the procedure that changes fuel economy results to this or a larger degree has the effect of changing the stringency of the CAFE standard, either making it more or less stringent. A change in stringency of the standard changes the burden on the manufacturers, as well as the fuel savings and other benefits to society expected from the standard. A CAFE adjustment factor is designed to account for these impacts.
Here, however, there is a companion EPA standard for greenhouse gas emissions. In this case, the changes would have an impact on the fuel economy results and therefore the stringency of the CAFE standard, but would not appear to have a real world impact on the burden placed on the manufacturers, as the provisions would be the same as provisions in EPA's greenhouse gas standards. Similarly it would not appear to have a real world impact on the fuel savings and other benefits of the National Program which would remain identical. If that is the case, then it would appear reasonable to interpret section 32904(c) in these circumstances as not restricting these changes in procedure for passenger
EPA received a limited number of comments on the proposed changes to the CAFE procedures discussed above. One commenter noted that there are various statutory limitations on the CAFE program as compared to the GHG program, including the limitations discussed above on the CAFE test procedure for passenger cars. The commenter noted that EPA's proposal was a major change from the position EPA and NHTSA took in the MY2012–2016 rulemaking. EPA recognizes that the interpretation and approach discussed above are a major change from the prior interpretation of the statutory limitations on testing and calculation procedures for passenger cars. However there has been a significant change in circumstances that justifies this change in interpretation. As discussed above, EPA is changing its interpretation of when a procedure produces results comparable to the 1975 test procedure based on the effect of a coordinated and harmonized GHG and CAFE program. Because of the National Program, the changes to the CAFE procedures would not have a real world impact on the burden placed on the manufacturers, as the provisions would be the same as provisions in EPA's greenhouse gas standards. Similarly it would not have a real world impact on the fuel savings and other benefits of the National Program which would remain identical. Under these circumstances it is reasonable to interpret section 32904(c) as not restricting adoption of these changes in procedure for passenger automobiles.
Other commenters, largely from the motor vehicle industry, supported EPA's proposal to allow for fuel consumption improvements credits for increases in efficiency of the air conditioner; increases in fuel economy because of technology improvements that achieve “off-cycle” benefits; and incentives for use of certain hybrid technologies in full size pickup trucks, where these credits are comparable to the GHG emissions credits for these technology improvements. The commenters noted that the efficiency improvements are real, they will occur in the real world, and the change will further coordinate and harmonize the CAFE program and the GHG program. EPA agrees with these points, and they support EPA's analysis discussed above.
The discussion above focuses primarily on the procedures for passenger cars, as section 32904(c) only limits changes to the CAFE test and calculation procedures for these automobiles. There is no such limitation on the procedures for light-trucks. The credit provisions for improvements in air conditioner efficiency and off-cycle performance would apply to light-trucks as well. In addition, the limitation in section 32904(c) does not apply to the provisions for credits for use of hybrids in light-trucks, if certain criteria are met, as these provisions apply to light-trucks and not passenger automobiles.
As discussed in section IV, NHTSA has taken these changes in procedure into account in setting the applicable CAFE standards for passenger cars and light-trucks, to the extent practicable. As in EPA's greenhouse gas program, the allowance of AC credits for cars and trucks results in a more stringent CAFE standard than otherwise would apply (although in the CAFE program the AC credits would only be for AC efficiency improvements, since refrigerant improvements do not generally impact fuel economy). The allowance of off-cycle credits and hybrid credits for full size pickup trucks has been considered in setting the CAFE standards for passenger car and light-trucks.
EPA further discusses the criteria and test procedures for determining AC credits, off-cycle technology credits, and hybrid/performance-based credits for full size pickup trucks in Section III.C below.
Air conditioning (A/C) is virtually standard equipment in new cars and trucks today. Over 95% of the new cars and light trucks in the United States are equipped with A/C systems. Given the large number of vehicles with A/C in use in today's light duty vehicle fleet, their impact on the amount of energy consumed and on the amount of refrigerant leakage that occurs due to their use is significant.
In this final rule, EPA is allowing manufacturers to comply with their fleetwide average CO
As in the MY's 2012–2016 final rule, EPA is structuring the A/C provisions as optional credits for achieving compliance, not as separate standards. That is, unlike standards for N
In the time since the analyses supporting the MY's 2012–2016 FRM were completed, EPA has re-assessed its estimates of overall A/C emissions and the fraction of those emissions that might be controlled by technologies that are or will be available to manufacturers.
Achieving GHG reductions in the most cost-effective ways is a primary goal of the program, and EPA believes that allowing manufacturers to comply with the standards by using credits generated from incorporating A/C GHG-reducing technologies is a key factor in meeting that goal.
Manufacturers can make very feasible improvements to their A/C systems to reduce leakage and increase efficiency. Manufacturers can reduce A/C leakage emissions by using components that tend to limit or eliminate refrigerant leakage. Also, manufacturers can significantly reduce the global warming impact of leakage emissions by adopting systems that use an alternative, low-GWP refrigerant, acceptable under EPA's Significant New Alternatives Policy (SNAP) program, as discussed below, especially if systems are also designed to minimize leakage and thus avoid opportunities for owners to recharge the system with less-expensive—but higher GWP—refrigerant.
As with the earlier GHG rule and in the proposal for this one, EPA is finalizing two separate credit approaches to address leakage reductions and efficiency improvements independently. A leakage reduction credit would take into account the various technologies that could be used to reduce the GHG impact of refrigerant leakage, including the use of an alternative refrigerant with a lower GWP. An efficiency improvement credit would account for the various types of hardware and control of that hardware available to increase the A/C system efficiency. To generate credits toward compliance with the fleet average CO
EPA believes that both reducing A/C system leakage and increasing A/C efficiency will be highly cost-effective and technologically feasible for light-duty vehicles in the 2017–2025 timeframe. EPA is maintaining most of the existing framework for quantifying, generating, and using A/C Leakage Credits and Efficiency Credits. EPA expects that most manufacturers will choose to use these A/C credit provisions, although some may choose not to do so. Consistent with the 2012–2016 final rule, the standard reflects this projected widespread penetration of A/C control technology.
The following table summarizes the maximum credits that EPA is making available in the overall A/C program.
The next table shows the credits on a model year basis that EPA projects that manufacturers will generate on average (starting with the ending values from the MY's 2012–2016 final rule). In the MY's 2012–2016 rule, the total average car and total average truck credits accounted for the difference between the GHG and CAFE standards.
The year-on-year progression of credits was determined as follows. The credits are assumed to increase starting from their MY 2016 value at a rate approximately commensurate with the increasing stringency of the MY's 2017–2025 GHG standards, but not exceeding a 20% penetration rate increase in any given year, until the maximum credits are achieved by MY 2021. EPA expects that manufacturers would be changing over to alternative refrigerants at the time of complete vehicle redesign, which occurs about every 5 years. However, in confidential meetings, some manufacturers/suppliers have informed EPA that a modification of the hardware for some alternative refrigerant systems may be able to be installed outside of the redesign cycle, as so could be done more rapidly, between redesign periods. Given the significant number of credits for using low GWP refrigerants, as well as the variety of alternative refrigerants that appear to be available, EPA believes that a total phase-in of alternative refrigerants is likely to begin in the near future and be completed by no later than MY 2021 (as shown in Table III–14 above).
The progression of the average credits (relative to the maximum) also defines the relative year-on-year costs as described in Chapter 5 of the Joint TSD. The costs are apportioned by the ratio of the average credit in any given year to the maximum credit. This is nearly equivalent to apportioning costs to technology penetration rates as is done for all the other technologies. However, because the maximum efficiency credits for cars and trucks have changed since the MY's 2012–2016 rule, apportioning to the credits provides a more realistic and smoother year-on-year sequencing of costs.
In this section, we discuss the A/C leakage credit program. The A/C efficiency credit program is discussed in Section II.F and in Chapter 5 of the Joint TSD. EPA sought comment on all aspects of the A/C credit program, including changes from the current A/C credit program and the details in the Joint TSD. We respond to comments received below, in Section II.F, in the Joint TSD, and in the Response to Comments document.
As previously discussed, EPA is finalizing the proposed leakage credit program, with minor modifications. There was broad support among commenters from the auto and refrigerant supply industries, as well as from other commenters, for the proposed leakage credit program.
Although in general EPA continues to prefer performance-based standards whenever possible, A/C leakage is very difficult to accurately measure in a laboratory test, due to the typical slowness of such leaks and the tendency of leakage to develop unexpectedly as vehicles age. At this time, no appropriate performance test for refrigerant leakage is available. Thus, as in the existing MYs 2012–2016 program, EPA associates each available leakage-reduction technology with associated leakage credit value, which will be added together to quantify the overall system credit, up to the maximum available credit. EPA's Leakage Credit method is drawn from the SAE J2727 method (HFC–134a Mobile Air Conditioning System Refrigerant Emission Chart, February 2012 version), which in turn was based on results from the cooperative “IMAC” study.
In addition to the above “menu” for vehicles using the current high-GWP refrigerant (HFC–134a), EPA also continues to provide the leakage credit calculation for vehicles using an alternative, lower-GWP refrigerant. This provision was also a part of the MYs 2012–2016 rule. As with the earlier rule, the agency is including this provision because shifting to lower-GWP alternative refrigerants will significantly reduce the climate-change concern about HFC–134a refrigerant leakage by reducing the direct climate impacts. Thus, the credit a manufacturer can generate by using an alternative refrigerant is a function of the degree to which the GWP of an alternative refrigerant is less than that of the current refrigerant (HFC–134a).
In recent years, the global automotive industry has given serious attention primarily to three of the alternative refrigerants: HFO–1234yf, HFC–152a, and carbon dioxide (R–744). Work on additional low GWP alternatives continues. HFO1234yf has a GWP of 4, HFC–152a has a GWP of 124 and CO
In the MYs 2012–2016 GHG rule, a manufacturer using an alternative refrigerant would receive no credit for leakage-reduction technologies. At that time, EPA believed that from the perspective of primary climate effect, leakage of a very low GWP refrigerant is largely irrelevant. However, there is reason to believe that the need for repeated recharging (top-off) of A/C systems with another, potentially costly refrigerant could lead some consumers and/or repair facilities to recharge a system designed for use with an alternative, low GWP refrigerant with either HFC–134a or another high GWP refrigerant. Depending on the refrigerant, it may still be feasible, although inappropriate, for systems designed for a low GWP refrigerant to operate on HFC–134a; in particular, the A/C system operating pressures for HFO–1234yf and HFC–152a might allow this type of substitution. Thus, the need for repeated recharging in use could slow the transition away from the high-GWP refrigerant even though recharging with a refrigerant different from that already in the A/C system is not authorized under current Clean Air Act Title VI regulations.
For alternative refrigerant systems, EPA is finalizing as proposed a provision that adds to the existing credit calculation approach for alternative-refrigerant systems a disincentive for manufacturers if systems designed to operate with HFO–1234yf, HFC–152a, R744, or some other low GWP refrigerant incorporated fewer leakage-reduction technologies. This “high leak disincentive” provision will encourage manufacturers to continue to use low-leak components that are in typical use today even with low-GWP alternative refrigerants. We believe that this will help ensure that refrigerant leakage will remain low, avoiding opportunities for vehicle owners to recharge a depleted system with HFC–134a or another refrigerant with a GWP higher than that with which the vehicle was originally equipped (e.g., HFO–1234yf, CO
EPA received a number of comments on this proposed provision. A number of automobile manufacturers and a chemical manufacturer, in particular, raised concerns that the high-leak disincentive was potentially reducing the credits available under the MY's 2012–2016 rules. These commenters said that this would complicate their ability to comply and would penalize early adopters of low GWP refrigerants. Further, some automobile manufacturers stated that they were already making efforts to prevent the replacement of a low GWP alternative refrigerant, such as HFO–1234yf, with the less expensive, high GWP refrigerant HFC–134a. Some commenters stated that there are fittings unique to HFO–1234yf on the air conditioning system that would not allow someone to add HFC–134a into a car designed to use HFO–1234yf. Other commenters stated that it was not fair to penalize automobile manufacturers for activities taken by others who would refill with HFC–134a an A/C system containing HFO–1234yf. ICCT supported such an anti-leak credit, but believed that full credit should be given only where manufacturers demonstrate designs that cause the system to fail operating when recharged with higher GWP refrigerants.
In response to these comments, EPA has maintained as proposed the general approach of a credit deduction to discourage high leak rates for systems designed for use of an alternative, low GWP refrigerant. However, the final rule allows greater flexibility so that the disincentive would only occur if a manufacturer eliminates a significant number of leakage-reduction technologies that are in broad use today. Thus, if a manufacturer takes reasonable care to reduce leaks and thus reduce the opportunity for the illegal top-off or charging of refrigerants not designed for use with low-GWP A/C systems, the manufacturer will be able to take full advantage of the credits for using a low-GWP alternative refrigerant. EPA discusses the final criteria for avoiding the disincentive in Chapter 5.1.2.3.2.5 of the Joint TSD.
As described previously, use of alternative, lower-GWP refrigerants for mobile use reduces the climate effects of leakage or release of refrigerant through the entire life-cycle of the A/C system. Because the impact of direct emissions of such refrigerants on climate is significantly less than that for the current refrigerant HFC–134a, release of these refrigerants into the atmosphere through direct leakage, as well as release due to maintenance or vehicle scrappage, is predictably less of a concern than with the current refrigerant.
For a number of years, the automotive industry has explored lower-GWP refrigerants and the systems required for them to operate effectively and efficiently, taking into account refrigerant costs, toxicity, flammability, environmental impacts, and A/C system costs, weight, complexity, and efficiency. European Union regulations require a transition to alternative refrigerants with a GWP of 150 or less for motor vehicle air conditioning. The European Union's Directive on mobile air-conditioning systems (MAC Directive
The main objectives of the EU MAC Directive are: to control leakage of fluorinated greenhouse gases with a GWP higher than 150 used in this sector; and to prohibit by a specified date the use of higher GWP refrigerants in MACs. The MAC Directive is part of the European Union's overall objectives to meet commitments made under the UNFCCC's Kyoto Protocol. This transition calls with new car models starting in 2011 and continues with a complete transition to manufacturing all new cars with low GWP refrigerant by January 1, 2017.
One alternative refrigerant has generated significant interest in the automobile manufacturing industry and it appears likely to be used broadly in the near future for this application. This refrigerant, called HFO–1234yf, has a GWP of 4. The physical and thermodynamic properties of this refrigerant are similar enough to HFC–134a that auto manufacturers would need to make relatively minor technological changes to their vehicle A/C systems in order to manufacture and market vehicles capable of using HFO–1234yf. Although HFO–1234yf is flammable, it requires a high amount of energy to ignite, and is expected to have flammability risks that are not significantly different from those of HFC–134a or other refrigerants found acceptable subject to use conditions (see 76 FR 17494–17496, 17507; March 29, 2011).
There are some drawbacks to the use of HFO–1234yf. Some vehicle technological changes, such as the addition of an internal heat exchanger in the A/C system and associated packaging issues, may be necessary in order to transition to HFO–1234yf. Also, some vehicle manufacturers may require changes to the refrigerant charging and storage facilities at their vehicle assembly plants to accommodate the use of HFO–1234yf. In addition, the anticipated cost of HFO–1234yf is several times that of HFC–134a. At the time that EPA's Significant New Alternatives Policy (SNAP) program issued its determination allowing the use of HFO–1234yf in motor vehicle A/C systems, the agency cited estimated costs of $40 to $60 per pound, and stated that this range was confirmed by an automobile manufacturer (76 FR 17491; March 29, 2011) and a component supplier.
Manufacturers have seriously considered other alternative refrigerants in recent years. One of these, HFC–152a, has a GWP of 124.
EPA is addressing potential environmental and human health concerns of low-GWP alternative refrigerants through a number of actions. The SNAP program has issued final rules regulating the use of HFC–152a and HFO–1234yf in order to reduce their potential risks (June 12, 2008, 73 FR 33304; March 29, 2011, 76 FR 17488; and March 26, 2012, 77 FR 17344). The SNAP rule for HFC–152a allows its use in new motor vehicle A/C systems where proper engineering strategies and/or safety devices are incorporated into the system. EPA has also recently issued a final rule allowing use of R–744 as a refrigerant in new motor vehicle A/C systems subject to use conditions for motor vehicle A/C systems (June 6, 2012; 77 FR 33315). The SNAP rules for all three alternative refrigerants HFC–152a and HFO–1234yf require meeting safety requirements of the industry standard SAE J639. With HFO–1234yf and HFC–152a, EPA expects that manufacturers conduct and keep on file failure mode and effect analysis for the motor vehicle A/C system, as stated in SAE J1739. Similarly, for CO
Under Section 612(d) of the Clean Air Act, any person may petition EPA to add alternatives to or remove them from the list of acceptable substitutes for ozone depleting substances. The National Resource Defense Council
EPA addresses potential toxicity issues with the use of CO
EPA has issued a proposed rule, proposing to exempt HFO–1234yf from the definition of “volatile organic compound” (VOC) for purposes of preparing State Implementation Plans (SIPs) to attain the national ambient air quality standards for ozone under Title I of the Clean Air Act (October 17, 2011; 76 FR 64059). VOCs are a class of compounds that can contribute to ground level ozone, or smog, in the presence of sunlight. Some organic compounds do not react enough with sunlight to create significant amounts of smog. EPA has already determined that a number of compounds, including the current automotive refrigerant, HFC–134a as well as HFC–152a, are low enough in photochemical reactivity that they do not need to be regulated under SIPs. CO
As discussed above, significant hardware changes could be needed to allow use of HFC–152a or CO
Switching to alternative refrigerants in the U.S. market continues to be an attractive option for automobile manufacturers because vehicles with low GWP refrigerant could qualify for a significantly larger leakage credit. Manufacturers have expressed to EPA that they would plan to place a significant reliance on, or in some cases believe that they would need, alternative refrigerant credits for compliance with GHG fleet emission standards starting in MY 2017.
EPA is aware that another practical factor affecting the rate of transition to alternative refrigerants is their supply. As mentioned above, both HFC–152a and CO
One manufacturer (GM) has announced its intention to begin introducing vehicle models using HFO–1234yf as early as MY 2013.
Table III–14 shows that, starting from MY 2017, EPA projects that virtually all of the expected increase in generated credits would be due to a gradual increase in penetration of alternative refrigerants. In earlier model years, EPA attributes the expected increase in Leakage Credits to improvements in low-leak technologies. These projections are for analytical purposes, and, as described above, this final rule does not in any way require that the auto and refrigerant supply industries transition to alternative refrigerants, or to do so according to any specified timeline.
As discussed above, EPA is planning on issuing a proposed SNAP rulemaking in the future requesting comment on whether to move HFC–134a from the list of acceptable substitutes to the list of unacceptable (prohibited) substitutes. However, the agency has not determined the specific content of that proposal, and the results of any final action are unknowable at this time. EPA recognizes that a major element of that proposal will be the evaluation of the time needed for a transition for automobile manufacturers away from HFC–134a. Thus, there could be multiple scenarios for the timing of a transition considered in that future proposed rulemaking. Should EPA finalize a rule under the SNAP program that prohibits the use of HFC–134a in new vehicles, the agency plans to evaluate the impacts of such a SNAP rule to determine whether it would be necessary to consider revisions to the availability and use of the compliance credit for MY 2017–2025.
EPA is basing this final rule on the current status of refrigerants, where there are no U.S. regulatory requirements for manufacturers to eliminate the use of HFC–134a for newly manufactured vehicles. Thus, the agency expects that the market penetration of alternatives will proceed based on supply and demand and the strong incentives in this final rule. Given the combination of clear interest from automobile manufacturers in switching to an alternative refrigerant, the interest from the manufacturers of the alternative refrigerant HFO–1234yf to expand their capacity to produce and market the refrigerant, and current commercial availability of HFC–152a and CO
There are other factors that could lead to an overall fleet changeover from HFC–134a to alternative refrigerants. For example, the governments of the U.S., Canada, and Mexico have proposed to the Parties to the
In February, the Secretary of State Hillary Rodham Clinton and Administrator Lisa Jackson announced the Climate and Clean Air Coalition to Reduce Short-Lived Climate Pollutants, a new initiative seeking to realize benefits by addressing black carbon, HFCs, and methane.
EPA is finalizing temporary regulatory incentives for electric vehicles (EVs), plug-in hybrid electric vehicles (PHEVs), fuel cell vehicles (FCVs), and dedicated and dual fuel compressed natural gas (CNG) vehicles. This section is divided into four subsections: (a) Introductory context, (b) summary overview of the public comments on this topic, (c) a detailed topic-by-topic discussion of what EPA proposed, major public comments on that proposal, EPA's response to comments, and EPA's final decision, and (d) the projected impact of the temporary regulatory incentives on GHG emissions reductions.
EPA believes that these temporary regulatory incentives are justified under CAA section 202 (a) as they promote the commercialization of technologies that have, or of technologies that can be critical facilitators of next-generation technologies that have, the potential to transform the light-duty vehicle sector by achieving zero or near-zero GHG emissions and oil consumption, but which face major near-term market barriers. However, providing temporary regulatory incentives for certain advanced technologies will decrease the overall GHG emissions reductions associated with the program in the near term. EPA believes it is worthwhile to forego modest additional emissions reductions in the near term in order to lay the foundation for the potential for much larger “game-changing” GHG emissions and oil reductions in the longer term.
The light-duty vehicle greenhouse gas emissions standards for model years (MYs) 2012–2016 provide a regulatory incentive for EVs, FCVs, and for the electric portion of operation of PHEVs. See generally 75 FR 25434–438. This is designed to promote advanced technologies that have the potential to provide “game changing” GHG emissions reductions in the future. This incentive is the use of a 0 grams per mile (g/mi) compliance value (i.e., a compliance value based on measured vehicle tailpipe GHG emissions) up to a cumulative EV/PHEV/FCV production cap threshold for individual manufacturers. There is a two-tier cumulative EV/PHEV/FCV production cap for MYs 2012–2016: the cap is 300,000 vehicles for those manufacturers that sell at least 25,000 EV/PHEV/FCVs in MY 2012, and the cap is 200,000 vehicles for all other manufacturers. For manufacturers that exceed the cumulative production cap over MYs 2012–2016, compliance values for those vehicles in excess of the cap will be based on a full accounting of the net upstream (fuel production and distribution) GHG emissions associated with those vehicles relative to the fuel production and distribution GHG emissions associated with comparable gasoline vehicles. For an electric vehicle, this accounting is based on the vehicle electricity consumption over the EPA compliance tests, an eGRID2007 national average power plant GHG emissions factor, and multiplicative factors to account for electricity grid transmission losses and pre-power plant feedstock GHG related emissions.
The 0 g/mi compliance value decreases the GHG emissions reductions associated with the MYs 2012–2016 standards compared to the same standards and a compliance value that accounts for the upstream GHG emissions associated with these vehicles, compared to conventional vehicles. It is impossible to know the precise number of vehicles that will utilize this approach in MYs 2012–2016. In the preamble to the final rule, EPA projected the decrease in GHG emissions reductions that would be associated with a scenario of 500,000 EVs certified with a compliance value of 0 g/mi during the MYs 2012–2016 timeframe. This likely maximum bounding scenario would result in a projected decrease of 25 million metric tons of GHG emissions reductions, or less than 3 percent of the total projected GHG benefits of the program of 962 million metric tons. This GHG emissions impact could be smaller or larger, of course, based on the actual number of EVs that would certify at 0 g/mi.
EPA proposed the following approach for EVs, PHEVs, and FCVs.
For MYs 2022–2025, EPA proposed the 0 g/mi GHG emissions compliance treatment for EVs, PHEVs (electric operation), and FCVs up to a per-company cumulative production threshold for those model years. EPA proposed a two-tier, per-company cap based on cumulative production in prior years. Thus, for manufacturers that sell 300,000 or more EV/PHEV/FCVs combined in MYs 2019–2021, the proposed cumulative production cap would be 600,000 EV/PHEV/FCVs for MYs 2022–2025. Other manufacturers would have a proposed cumulative production cap of 200,000 EV/PHEV/FCVs in MYs 2022–2025. EPA did not propose multipliers for these later model years. See 76 FR 75012–013.
EPA received many comments in response to these proposals. Almost exclusively, automakers supported these kinds of regulatory incentives for a wide range of advanced technologies, and many automakers preferred larger and/or longer-lasting incentives than those that EPA proposed. On the other hand, environmental public interest groups generally opposed the proposed incentives either out of concern for reduced emissions reductions, or to have a program which is technology-neutral. Electric vehicle advocacy organizations supported incentives for EVs and PHEVs, while natural gas advocacy stakeholders supported adding incentives for dedicated and dual fuel CNG vehicles. Proponents of other fuels often opposed incentives for electric and natural gas vehicles. Representative comments will be addressed in the topic-by-topic discussion below. For a more comprehensive treatment of comments on this topic, see the separate EPA Response to Comments document.
Every automaker that commented on this topic supported some type of regulatory incentives for advanced technologies. Honda's comment is illustrative: “Alternative fuel vehicles and advanced technologies face unique challenges in coming to market: developing appropriate infrastructure and overcoming initial consumer resistance to new, unfamiliar technologies. Incentives that are limited in time and appropriately phased-out
On the other hand, several commenters expressed opposition to the proposed regulatory incentives. The American Petroleum Institute stated: “Regulatory agencies should not be in the business of promoting investments and innovations in government-selected technologies applied to government-selected vehicle categories. Regulators should instead set broad, performance-based targets that reward innovation directed at achieving outcomes, not the implementation of specific technologies. The market, via consumer choice, should then be allowed to select the winners and losers.” The Union of Concerned Scientists “strongly opposed these incentives during the 2012–2016 rulemaking on the grounds that they do not reflect real emissions reductions and thus erode the benefits of the National Program and that there are other, more effective ways of accelerating the market for electric cars (e.g., the California ZEV program, federal tax credits, loan guarantees, and other state and local incentives). We continue to oppose them here for the same reasons, and express grave concern that they, like many auto industry incentives over the years, will again be extended and continue to undermine the goals of the program they serve.” The International Council on Clean Transportation commented that “[w]hile the ICCT strongly supports development of electric and fuel cell vehicles, one of our core principles is that efficiency and greenhouse gas emission standards should be technology neutral.” The Institute for Policy Integrity, New York University School of Law, argued that “subsidization of new technology should be neutral with respect to greenhouse gas emissions * * *. By giving inflated regulatory incentives to a certain type of technology rather than allowing manufacturers to find the most efficient and effective solution, EPA will disincentivize other forms of technology that may be more cost-effective at reducing greenhouse gas emissions.” The Center for Biological Diversity stated that any incentives beyond actual emissions reductions “are inappropriate” and “[w]hile we believe that credits may have provided a valuable incentive for electric vehicles during the 2012–2016 rulemaking to encourage this relatively new technology, such concerns are now misplaced. The 2017–2025 rulemaking years no longer constitute a start-up period for these vehicles.”
EPA is adopting temporary regulatory incentives for MYs 2017–2025 similar to those proposed. Critics of the proposal tended to emphasize three primary arguments: that regulatory incentives are not technology neutral and therefore pick “winners and losers” among the advanced technologies, that they reduce the GHG benefits of the program, and that they are no longer needed for technologies such as EVs. EPA believes that the issue of technology neutrality is a much more complex issue than some commenters suggest. Given that internal combustion engines and petroleum-based fuels have dominated the U.S. light-duty vehicle market for 100 years, with massive sunk investments, there are major barriers for new vehicle technologies and fuels to be able to gain the opportunity to compete on any type of level playing field. In this context, temporary regulatory incentives do not so much “pick winners and losers” (an inefficient or unattractive technology is not going to achieve long-term success based on temporary incentives) as to give new technologies more of an opportunity to compete with the established technologies. The agency recognizes that the temporary regulatory incentives will reduce the short-term benefits of the program, but as noted above believes that it is worth a limited short-term loss of benefits to increase the potential for far-greater game-changing benefits in the longer run. EPA also believes that temporary regulatory incentives may help bring some technologies to market more quickly than in the absence of incentives. Finally, EPA disagrees that such incentives are no longer needed. Although it is true that several EVs and PHEVs are now on the U.S. market, sales of EVs and PHEVs amounted to less than 0.2% of all sales in 2011.
An incentive multiplier allows a vehicle to “count” as more than one vehicle in the manufacturer's compliance calculation.
Overall, public comments about the incentive multipliers for EV/PHEV/FCVs mirrored the general comments on regulatory incentives. Every automaker supported the concept of a multiplier for these vehicles, though some automakers wanted the multiplier to go beyond 2021 (Mitsubishi and Tesla supported incentive multipliers through 2025) and others wanted higher multipliers for some technologies (Mercedes-Benz USA suggested a multiplier of 4.0 for FCVs). The United Auto Workers also supported the multiplier, as did the EV advocacy stakeholders (the Electric Drive Transportation Association also supported extension to 2025). Some environmental organizations explicitly opposed the multipliers, such as the Union of Concerned Scientists and Center for Biological Diversity. The Union of Concerned Scientists was “particularly disappointed by the agency's proposal on incentive multipliers, given its intellectual inconsistency with an EPA determination on the very same issue made only a year and a half earlier” when EPA stated that “the multiplier, in combination with the zero grams/mile compliance value, would be excessive.”
EPA is finalizing the multipliers for EV/PHEV/FCVs as proposed. Consistent with the general rationale just discussed, EPA believes it has struck a reasonable balance in finalizing the multipliers shown in Table III–15 for MYs 2017–2021. EPA believes that it is both reasonable and appropriate to accept some short-term loss of emissions benefits in the short run to increase the potential for far-greater game-changing benefits in the longer run. The agency believes that these multipliers may help bring some technologies to market more quickly than in the absence of incentives. EPA disagrees with the comment by the Union of Concerned Scientists of “intellectual inconsistency” with the MYs 2012–2016 standards in that EPA did not project that advanced technologies like EVs and PHEVs were necessary to meet the MY 2016 standards so that no further incentive was needed. In contrast, EPA projects here that, for some manufacturers, EVs and PHEVs are in fact projected for meeting the much more stringent MY 2025 standards. As EPA stated in the proposal, providing multipliers for MYs 2017–2021 can lay the foundation for commercialization of these technologies that can then contribute toward compliance with standards in MYs 2022–2025. 76 FR 75012. On the other hand, EPA disagrees with those commenters that support higher multipliers and/or multipliers of longer duration, as we believe that such incentives could lead to a significant reduction in program GHG savings, particularly if EV/PHEV/FCV sales increase significantly after MY 2021. In addition, the Agency agrees with the Alliance of Automobile Manufacturers about the possible unintended consequences of a variable multiplier, and is finalizing a fixed multiplier for all PHEVs that meet the eligibility requirements below.
EPA proposed that, in order for a PHEV to be eligible for the multiplier discussed in the previous section, the PHEV be required to be able to complete a full EPA highway test (10.2 miles), without using any conventional fuel, or alternatively, have a minimum equivalent all-electric range of 10.2 miles as measured over the EPA highway cycle. See 76 FR 75012.
EPA received only a few comments on this issue. Both the Alliance of Automobile Manufacturers and Ford supported the 10.2 mile all-electric or equivalent all-electric range eligibility requirement. The only commenter to suggest an alternative approach was Securing America's Future Energy, which recommended that the PHEV eligibility requirement be a minimum battery energy storage capacity of 4 kilowatt-hours, maintaining that this would be simpler to administer and consistent with the current minimum battery capacity for the federal income tax credit for PHEVs.
EPA is finalizing, as proposed, the PHEV multiplier eligibility requirement of 10.2 miles all-electric or equivalent all-electric range. EPA agrees that a 4 kilowatt-hour minimum battery energy storage requirement would be a reasonable alternative, but generally prefers performance-based metrics over design-based metrics, unless there are compelling reasons to prefer the latter. This is because performance-based metrics typically allow maximum flexibility. In this instance, EPA believes that there are no such compelling reasons to prefer a design-based approach.
EPA did not propose multipliers for CNG vehicles, but asked for comment on the merits of providing multipliers for dedicated and/or dual fuel CNG vehicles. See 76 FR 75013.
A large majority of the public commenters on this topic supported providing regulatory incentives in this rule for both dedicated and dual fuel CNG vehicles.
Most natural gas advocacy groups supported both multipliers for CNG vehicles, as well as use of a “0.15 divisor” for GHG emissions compliance values for CNG vehicles. This value comes from EPCA, where it is used to calculate fuel economy for alternative fueled vehicles through MY 2019.
The joint America's Natural Gas Alliance/American Gas Association comment summarized the perspective of the natural gas advocates: “While EPA proposes generous incentives for EVs and PHEVs because they represent `potential for game-changing GHG emissions and oil savings in the long term,' both dedicated and dual fuel NGVs represent actual `game changing GHG emissions and oil savings' right now that justify comparable incentives. Moreover, considering NGVs superior cost-benefit performance in reducing GHGs compared to EVs, EPA should consider an even larger multiplier incentive, perhaps equal to the incentive Congress mandated for NGVs based on their oil-displacement performance * * *. [A]ny GHG multiplier that is less than the fuel economy one essentially negates the Congressional mandate in AMFA to the extent of that difference, a result at odds with the very purpose of this joint rulemaking. We strongly encourage EPA to take into account the fuel economy goals of this joint program in crafting their GHG standards, and the fact that NGVs are more cost-effective than EVs in reducing GHGs should allow EPA to establish a GHG multiplier incentive equivalent to the Congressionally-mandated fuel economy incentive.” This position was echoed by the American Clean Skies Foundation: “All qualified alternative fuel vehicles, including EVs and NGVs, should qualify for these incentives which would use a multiplier to give extra credit for the emission reduction benefits of such vehicles in calculating each manufacturer's fleet averages * * *. Unlike the NHTSA rules, the EPA's new GHG standards contain additional EV-only incentives. These supplemental incentives arbitrarily and capriciously favor EVs over NGVs * * *. EPA's new rules would abolish the benefits NGVs gain under the NHTSA standards from the 0.15 `divisor' incentive.”
NGV America echoed these arguments, and also maintained that CNG vehicles can serve as a potential bridge to hydrogen FCVs: “NGVs also likely will play an important role in facilitating the market penetration of fuel cell electric vehicles (FCEVs) * * *. [t]he development of NGVs—and particularly natural gas refueling infrastructure—has long been recognized as a key bridge technology on a `path to hydrogen.' * * * Due to the chemical and physical similarities of these two gases, they share a number of technology synergies, so that the proliferation of NGVs and natural gas fueling infrastructure will facilitate and accelerate deployment of FCEVs. Indeed, the development of the NGV market serves to reduce or eliminate all four of the near-term market barriers to FCEV adoption identified by the Agencies: low-GHG fuel production and distribution, * * * fuel cost, * * * vehicle cost, and * * * consumer acceptance.” VNG. Co also emphasized the bridge-to-hydrogen theme: “It is critical for the Agencies to provide appropriate support for the natural gas-to-hydrogen path so that both NGVs and FCEVs will be a viable option for consumers and automakers from 2017 to 2025, as well as during the post-2025 period as emission and fuel economy standards become ever more stringent. Keeping this gaseous fuel pathway `open' to automakers is particularly important given the Agencies' acknowledged and well-founded concerns over the consumer acceptance of EV technology due to cost as well as range and refueling issues. It is, simply, too soon to put all of the Nation's eggs in the EV basket—and it would be a clear mistake to overlook the gaseous fuel pathway just as the supplies and economics of natural gas in the US are undergoing a historic transformation. Ultimately, both EVs and FCEVs will be necessary to achieve long-term environmental and energy security goals, and NGVs will play an essential role in reducing ICE vehicle emissions as well as enabling the transition to hydrogen.”
Most automakers that commented on this issue also supported CNG incentive multipliers. Honda, which markets a dedicated Civic CNG vehicle, argued that: “NGVs have similar environmental and energy security benefits compared to EVs and PHEVs, and their marketing challenges (infrastructure and consumer acceptance) are similar, as well. Honda supports the addition of dedicated NGVs to the group of dedicated vehicle multipliers (EVs and FCVs) and bi-fuel NGVs to the bi-fuel vehicle multipliers (PHEVs). A differential in the multiplier for dedicated and bi-fuel natural gas vehicles is fully justified because there is no guarantee that the latter will operate on natural gas all of the time.” Chrysler stated: “NGVs represent a significant opportunity to reduce greenhouse gas emissions and to improve energy independence * * *. However, several roadblocks exist to the widespread adoption of NGVs. These include limited vehicle availability and a lack of public fueling infrastructure * * *. Chrysler recommends that dedicated and “extended range” natural gas vehicles receive at least the same multipliers as electric vehicles, and that dual fuel NGVs receive at least the same multipliers as plug-in hybrid electric vehicles.” Chrysler and the Vehicle Production Group were the two automakers who also supported the use of the 0.15 divisor for GHG emissions compliance, to harmonize with the use of the 0.15 divisor in CAFE compliance. A comment from Boyden Gray and Associates also supported the use of the 0.15 divisor for GHG emissions compliance.
Toyota was the one automaker that provided a different view: “Toyota believes the primary consideration for including any technology in this provision should be its CO
The broad set of comments, briefly summarized above, on CNG incentives raises several relevant issues. EPA disagrees with those comments that suggest that CNG vehicles provide the same GHG emissions reductions as EVs. Table III–16 compares GHG emissions for three MY 2012 vehicles: a Honda Civic gasoline vehicle, the Honda Civic CNG vehicle, and the Nissan Leaf EV (the highest-selling EV in the US market). The tailpipe GHG emissions values for all three vehicles are taken directly from the EPA GHG emissions certification database. The upstream value for the Civic gasoline vehicle was calculated based on a gasoline upstream GHG emissions factor of 2478 grams
The data in Table III–16 support several conclusions. First, CNG vehicles provide a reduction in tailpipe GHG emissions relative to gasoline vehicles. The data from the two Civics suggest that the tailpipe CNG benefit is approximately 20%, primarily due to natural gas' more favorable hydrogen-to-carbon ratio relative to gasoline. Second, based on the latest EPA data for natural gas extraction, processing, and distribution, upstream GHG emissions for a CNG vehicle are slightly higher than those for a comparable gasoline vehicle. Third, it is clear that the Leaf EV is superior to the Civic CNG in terms of both tailpipe only and tailpipe + upstream GHG emissions. Although the Leaf's GHG emissions advantage over the Civic CNG is largest in California and other cleaner-electricity states, the Leaf has demonstrably lower tailpipe + upstream GHG emissions even if EVs are assumed to operate on “national average” electricity.
From a vehicle tailpipe perspective, EVs are a game-changing technology. However, given the current electricity upstream emissions profile, as shown in Table III–16, the full potential for zero or near-zero GHG emissions from EVs will only be realized if and when the electricity sector is transformed so that upstream emissions are lower. Current trends, where lower-GHG natural gas is displacing higher-GHG coal use, will decrease EV upstream GHG emissions, which means that the comparison between the Civic CNG and Leaf EV in Table III–16 above will become more favorable for EVs over time as more electricity is produced with natural gas and less with coal. However, this is not the ultimate pathway for EVs to become a true game-changing technology from a GHG emissions perspective.
EPA agrees with the comment by Toyota that EPA should base its decision on this issue by focusing on GHG emissions performance. Based on the data above, EPA does not believe that CNG vehicles are a game-changing technology in terms of GHG emissions.
Comments raised two other factors relevant to the potential for CNG to be a game-changer with respect to GHG emissions. The first is the potential for the use of biomethane, or methane produced from non-fossil sources, that can yield very low lifecycle GHG emissions. EPA agrees that there will be some production of biomethane, but we believe that biomethane will remain a small part of the overall natural gas market for the foreseeable future, particularly given the remarkable drop in natural gas prices and the likelihood that natural gas prices in the US will remain at relatively low levels for the foreseeable future.
The second is the potential for CNG to be a bridge technology for the commercialization of hydrogen FCVs. EPA agrees that CNG investments have the potential to facilitate the introduction of hydrogen FCVs in several respects. Examples include:
• Innovations with on-board vehicle CNG fuel tanks could translate directly to improved on-board hydrogen fuel tanks, since the primary challenge with both is the safe and economic storage of sufficient gaseous fuel to provide reasonable vehicle range;
• synergistic innovations in tube trailer designs could apply to the delivery of CNG and hydrogen to end users;
• engineering innovations to improve the design of natural gas compressors
• pipelines, including new fiber reinforced polymer (FRP) technology, to natural gas refueling stations could be used for hydrogen refueling, either by carrying hydrogen from central production facilities (while it is not considered feasible to transport pure hydrogen in pipelines designed for natural gas, one active research pathway is transporting natural gas/hydrogen blends and separating the fuels at the refueling station) or by providing the natural gas feedstock for on-site hydrogen production, such as steam methane reforming and combined heat, hydrogen and power (CHHP), at the refueling station.
EPA also agrees with those commenters who argued that CNG vehicles share some of the market barriers faced by technologies for which EPA is providing temporary regulatory incentives; for example, higher vehicle cost, lower vehicle range, the need for new refueling infrastructure, and consumer acceptance. On the other hand, EPA also believes that CNG vehicles do not face the same magnitude of barriers with respect to overall consumer acceptance as EVs, which involve a completely different consumer refueling paradigm compared to both CNG and gasoline vehicles.
On the basis of the above discussion, EPA believes that it is appropriate to provide a temporary regulatory incentive for CNG vehicles, but not to the same extent as EVs, PHEVs, and FCVs. Based on the considerations just discussed, EPA consequently disagrees with comments that distinctions between CNG vehicles and those other advanced technology vehicles, for which EPA is providing temporary regulatory incentives, are arbitrary.
EPA is adopting an incentive multiplier, for both dedicated and dual fuel CNG vehicles, equal to the multipliers for PHEVs: 1.6 in MYs 2017–2019, 1.45 in MY 2020, and 1.3 in MY 2021. As discussed above, EPA believes these multipliers for CNG vehicles are justified because CNG vehicles and infrastructure indirectly support future commercialization of hydrogen FCVs, which are a potential game-changing GHG emissions technology, and because CNG vehicles face significant market barriers such as lack of fueling infrastructure, vehicle cost and range, and consumer acceptance. EPA is finalizing the same incentive multiplier for both dedicated and dual fuel CNG vehicles, rather than a higher multiplier for dedicated vehicles and a lower multiplier for dual fuel vehicles, because we believe that most owners of dual fuel CNG vehicles will use CNG fuel as much as possible. This is because, once a consumer has paid a premium to be able to use CNG fuel, and given the expectation that CNG fuel will continue to be much cheaper than gasoline, there will be a strong economic motivation for consumers to seek out and use CNG fuel. While the CNG incentive multipliers are equal to those for PHEVs, the effective value of the CNG multiplier to an automaker will be lower relative to most (and possibly all) PHEVs because the multipliers will be applied to the vehicles' respective tailpipe emissions, and most CNG vehicles will likely have lower tailpipe GHG emissions reductions (relative to the footprint-based CO
EPA is not adopting additional regulatory incentives for dedicated and dual fuel CNG vehicles beyond the incentive multipliers for MYs 2017–2021. EPA disagrees with those commenters that argued that EPA should provide the same “0.15 divisor” incentive for GHG emissions compliance that is used for the calculation of CAFE credits for alternative fuel vehicles. Congress provided the 0.15 divisor for CAFE compliance because a vehicle that operates on a nonpetroleum fuel (like CNG) consumes zero or near-zero petroleum, and petroleum conservation is a primary objective of the CAFE program. But, as shown above, the tailpipe GHG emissions from CNG vehicles, while approximately 20% lower than from comparable gasoline vehicles, are substantial and do not reflect game-changing GHG emissions performance. The primary focus of the GHG standards is GHG emissions. EPA is not persuaded that adopting the divisor is warranted from a GHG standpoint because there would be a significant reduction of GHG programmatic benefits that is not warranted by these vehicles. As discussed above, the fact that CNG technology can be a helpful, indirect step toward hydrogen FCVs does justify providing an incentive multiplier, but this same rationale is not sufficient to justify a far larger regulatory incentive. We also disagree with those commenters who argued that EPA must adopt the 0.15 divisor in order to not “negate the Congressional mandate” for CAFE credits. The Congressional mandate still applies for CAFE purposes. EPA's GHG program and NHTSA's CAFE program are harmonized in numerous ways, but there are a number of instances where the programs diverge with respect to incentives and flexibilities. See section I.B.4 above. Here, EPA believes that the paramount emission reduction goals of the CAA warrant the difference in approach.
The tailpipe GHG emissions from EVs, from PHEVs operated on grid electricity, and from hydrogen-fueled FCVs are zero, and traditionally the emissions of the vehicle itself are all that EPA takes into account for purposes of compliance with standards set under Clean Air Act section 202(a). Focusing on vehicle tailpipe emissions has not raised any issues for criteria pollutants, as upstream criteria emissions associated with production and distribution of the fuel are addressed by comprehensive regulatory programs focused on the upstream sources of those emissions. At this time, however, there is no such comprehensive program addressing upstream emissions of GHGs,
Original equipment manufacturers currently offer several EVs and PHEVs in the U.S. market. EVs on the market include the Nissan Leaf, Mitsubishi MIEV, Ford Focus EV, Tesla S, Honda Fit EV, and Coda Sedan. PHEVs on the market include the Chevrolet Volt, Toyota Prius PHEV, and Fisker Karma. Some of these models are available nationwide, others are available in selected markets. At this time, no original equipment manufacturer offers FCVs to the general public except for some limited demonstration programs.
EVs and FCVs represent some of the most significant changes in automotive technology in the industry's history.
One of the most successful new automotive powertrain technologies—conventional hybrid electric vehicles like the Toyota Prius—illustrates the challenges involved with consumer acceptance of new technologies, even those that do not involve vehicle attribute tradeoffs. While conventional hybrids have now been on the U.S. market for over a decade, their market share hovers around 2 to 3 percent, even though they offer higher vehicle range than their traditional gasoline vehicle counterparts, involve no significant consumer tradeoffs (other than cost), and have reduced their incremental cost. The cost and consumer tradeoffs associated with EVs, PHEVs, and FCVs are more significant than those associated with conventional hybrids. Given the long leadtimes associated with major transportation technology shifts, there is value in providing incentives for these potential game-changing technologies today if we want to retain the possibility of achieving their major environmental and energy benefits in the future.
In terms of the relative relationship between tailpipe and upstream fuel production and distribution GHG emissions, EVs, PHEVs, and FCVs are very different than conventional gasoline vehicles. Combining vehicle tailpipe and fuel production/distribution sources, gasoline vehicles emit about 80 percent of these GHG emissions at the vehicle tailpipe with the remaining 20 percent associated with “upstream” fuel production and distribution GHG emissions.
Because these upstream GHG emissions values are generally higher than the upstream GHG emissions values associated with gasoline vehicles, and because there is currently no national program in place to reduce GHG emissions from electric power plants, EPA believes it is appropriate to consider the incremental upstream GHG emissions associated with electricity production and distribution for the model years at issue in this rulemaking. But, we also think it is appropriate to encourage the initial commercialization of EV/PHEV/FCVs as well, in order to retain the potential for game-changing GHG emissions and oil savings in the long term.
As noted above, EPA proposed that, for MYs 2017–2021, all EVs, PHEVs (electric operation), and FCVs would have a GHG emissions compliance value of 0 grams per mile (g/mi). For MYs 2022–2025, EPA proposed a compliance value of 0 g/mi for EVs, PHEVs, and FCVs for that vehicle production below a per-company, cumulative production cap threshold for those four model years. The proposed cap had two tiers, consistent with the two-tier cap approach that was adopted in the rulemaking for MYs 2012–2016.
For both the proposed per-company cap and the alternative industry-wide cap, EPA proposed that, for production beyond the cumulative vehicle production cap for a given manufacturer in MYs 2022–2025, compliance values would be calculated according to a methodology that accounts for the full net increase in upstream GHG emissions relative to that of a comparable gasoline vehicle. See Section III.C.2.c.vi below for the details of this methodology.
Finally, EPA also asked for comments on approaches for phasing in from a 0 g/mi value to a full net increase value, e.g., an interim period when the compliance value might be one-half of the net increase.
EPA recognized in the proposal that the use of EVs, PHEVs, and FCVs in the 2017–2025 timeframe, in conjunction with both the incentive multiplier and the 0 g/mi compliance treatment, would decrease the overall GHG emissions reductions associated with the program as the upstream emissions associated with the generation and distribution of national average electricity are higher than the upstream emissions associated with production and distribution of gasoline. EPA accounted for this difference in projections of the overall program's impacts and benefits. In the proposal, EPA projected that, based on plausible assumptions about EV/PHEV/FCV sales, the decrease in GHG emissions reductions due to the temporary regulatory incentives would likely be on the order of 5% or so.
EPA received a large number of comments on the topic of compliance treatment for EV/PHEV/FCVs. Two commenters, the Northeast States for Coordinated Air Use Management and the National Association of Clean Air Agencies, supported the proposal. But the great bulk of commenters opposed the proposed treatment, with opponents approximately split on whether the proposed EV/PHEV/FCV incentives were too much or too little.
The most addressed issue was the proposed 0 g/mi compliance treatment. Almost all automakers strongly supported 0 g/mi as the most appropriate compliance value for EV/PHEV/FCVs and that upstream emissions should never be factored into vehicle GHG emissions compliance values. The Alliance of Automobile Manufacturers summarized many of the themes that were repeated by most automakers: “Automakers should not be required to account for utility GHG emissions * * *. Clearly automakers have no control over the feedstocks that power plants use to create electricity nor do we have control over the conversion or transportation processes, or where and when a vehicle owner recharges a vehicle. * * * [m]aking vehicle manufacturers responsible for emissions over which they have no control is contrary to the Clean Air Act. * * * [t]he attribution of upstream emissions impacts to grid-powered vehicles alone would be arbitrary, capricious and an abuse of discretion * * *. If Americans agree that programs to address upstream GHG emissions are appropriate, then such programs should be put in place through appropriate regulation of electricity generators, not by imposing additional burdens on vehicle manufacturers.” Nissan echoed many of these same themes: “The proposal to focus on tailpipe emissions is consistent with the policy objective of fostering electric vehicles and with the fact that automobile manufacturers only control tailpipe emissions and have no control over the fuel source for electric power * * *. Not only is EPA's proposal to measure EVs as zero grams per mile the best policy decision to promote EV deployment, it is also legally required * * *. Section 202 [of the Clean Air Act] gives EPA discretion to incentivize new technologies, but Section 202 does not give EPA the authority to consider non-vehicle related emissions when setting compliance standards. Doing so would disrupt the careful structure of the CAA * * *. Specifically, Title I of the CAA regulates stationary sources, while Title II of the CAA regulated mobile sources.” Several other automakers made similar arguments. The United Auto Workers “believes that zero grams per mile are the most faithful representation of the tailpipe pollution for a vehicle that in many cases has no tailpipe. Accordingly, while the UAW believes that the proposed caps for zero gram per mile treatment by the EPA for model years 2022–2025 are likely adequate to avoid assigning upstream emissions to large numbers of these vehicles, we urge the EPA to reconsider its stance that the emissions of electricity producers should be assigned to the products that use electricity. The proper place to measure and regulate these emissions is of course where the electricity is produced and the grid system that distributes electricity.” Electric vehicle advocates also echoed these same themes, and the Edison Electric Institute argued that 0 g/mi “is not an `incentive' but a recognition of actual EV emissions which are 0.0 g/mile when measured at the tailpipe.”
Two automakers opposed the use of 0 g/mi. Honda “believes that EPA should separate incentives and credits from the measurement of emissions. Honda believes that without accounting for the upstream emissions of all fuels, inaccurate comparisons between technologies will take place * * *. EPA's regulations need to be comprehensive and transparent. By zeroing out the upstream emissions, EPA is conflating incentives and credits with proper emissions accounting.” EcoMotors International “encourages EPA to drop the 0 g/mile tailpipe compliance value.” Environmental advocacy groups also opposed the 0 g/mi compliance treatment. The Natural Resources Defense Council claimed that 0 g/mi “undermines” the pollution and technology benefits of the program. Along with other environmental groups, the American Council for an Energy Efficient Economy also opposed 0 g/mi, but added that “[m]ost important, however, is that a zero-upstream treatment of plug-in vehicles not be continued indefinitely, and that full upstream accounting be applied to these vehicles by a date certain. EPA's proposed treatment of EVs largely accomplishes this, so we strongly support that aspect of the proposal.” The American Petroleum Institute argued that “[i]gnoring the significant contribution of (and extensive compilation of published literature on) upstream CO
EPA received many fewer comments on the proposed cap on the number of vehicles that would be eligible for the 0 g/mi compliance treatment in MYs 2022–2025. The specific questions here are (1) whether the cap should be a per-company cap where individual
Nissan and BMW were the only individual automakers to comment on this question. Nissan stated that: “[a]ny regulatory cap should be industry based in order to encourage investment in electric powertrains now for use in the coming model years, and the cap should not reserve any volume for manufacturers selling zero electric vehicles in MYs 2019–2021 * * *. The purpose of the proposed incentives is to encourage manufacturer investment in potentially game-changing technologies now to accelerate their adoption rate. Adopting an industry-wide cap will serve that purpose.” On the other hand, BMW “prefers company-based cap. * * * [as it provides] clear planning certainty in the whole time period of the regulation * * * [while the industry-wide cap provides a] big advantage for [high] volume manufacturer.” The Association of Global Automakers stated that “[i]f EPA decides to adopt company-specific caps, we recommend that it adopt a simple linear function based on vehicle sales levels to establish the caps, rather than using the proposed two-step approach.” No other individual automaker addressed this issue. EPA recognizes that almost every automaker supported the permanent adoption of the 0 g/mi compliance treatment, and under that approach the concept of caps is meaningless. Finally, the Electric Drive Transportation Association stated that: “[a]n industry-wide cap is especially problematic, because each manufacturer's cap would depend on that manufacturer's relative share of the market, not its absolute sales volume; a cap based on relative share is very difficult for a manufacturer to predict, because it is tied to decisions made by other manufacturers.”
No commenters suggested any alternatives to basing EV/PHEV/FCV GHG emissions compliance values, for production beyond the cumulative vehicle production cap for a given manufacturer in MY 2022 and later, on the full net increase in upstream GHG emissions relative to that of a comparable gasoline vehicle.
The agency received one comment on the question of whether the transition from a 0 g/mi compliance treatment to a full net increase in upstream GHG emissions, for production beyond the cumulative vehicle production cap in MY 2022 and later. Nissan stated that “[t]he interim period between a zero grams per mile compliance value and full net increase in upstream emissions value should be equal to the number of vehicles each manufacturer can assign a zero grams per mile compliance value for MYs 2022–2025, and the interim period compliance value should be one-half of the net increase.”
EPA is finalizing, as proposed, the 0 g/mi compliance treatment for EV/PHEV/FCVs with a per-company vehicle production cap in MYs 2022–2025 and net upstream GHG emissions compliance beyond the cap. As the above summary shows, there were strong public comments, on both sides, on the proposed approach for the compliance treatment for EV/PHEV/FCVs, beginning with 0 g/mi and transitioning to a full net increase in GHG upstream emissions if and when a manufacturer exceeds its vehicle production cap threshold. But there was no new information or rationales provided to EPA that changes the Agency's perspective on these matters. EPA disagrees with those commenters who believe that compliance values for vehicle GHG emissions standards under section 202(a) cannot take fuel-related upstream GHG emissions into account, and that it is “arbitrary and capricious” to do so and “contrary” to the Clean Air Act. As EPA explained when discussing this issue in the MYs 2012–2016 light duty vehicle GHG rulemaking, “EPA is not directly regulating upstream GHG emissions from stationary sources, but instead is deciding how much value to assign to a motor vehicle for purposes of compliance calculations with the motor vehicle standard. While the logical place to start is the emissions level measured under the test procedure, section 202(a)(1) does not require that EPA limit itself to only that level.” 75 FR 25437. Furthermore, there is a reasoned basis for accounting for upstream GHG emissions here because, as shown in Table III–16 above, upstream GHG emissions attributable to increased electricity production to operate EVs or PHEVs currently exceed the upstream GHG emissions attributable to gasoline vehicles. EPA thus believes that although section 202(a)(1) of the Clean Air Act does not require the inclusion of upstream GHG emissions in these regulations, the discretion afforded under this provision allows EPA to consider upstream GHG emissions, particularly when such emissions from new technologies are higher than those from conventional vehicles. On the other hand, EPA also disagrees with those commenters who claim that, by allowing a 0 g/mi compliance treatment, the Agency is “ignoring” upstream emissions and “not being transparent.” The agency has discussed and quantified the upstream GHG emissions associated with EVs and PHEVs at length in the rulemaking analyses for both the MYs 2012–2016 rule and this rule. EPA also disagrees that the 0 g/mi compliance treatment “undermines” the program, as the Agency believes that it will likely lead to only a small percentage loss of overall program GHG emissions reductions (see Section III.C.2.d for these projections), while creating an important incentive for potentially enormous emissions reductions from these vehicles in the longer term. The broad discretion to set emissions standards under section 202(a)(1) includes authority to structure those standards in a way that provides an incentive to promote advances in emissions control technology, which includes discretion in how to structure
In summary, EPA continues to believe that finalizing the proposed compliance treatment for EV/PHEV/FCVs strikes a reasonable balance between promoting the commercialization of EV/PHEV/FCVs, which have the potential to achieve game-changing GHG emissions reductions in the future, and accounting for upstream emissions once such vehicles reach a reasonable threshold in the market. The mid-term evaluation will provide an opportunity to review the status of advanced vehicle technology commercialization, the status of upstream GHG emissions control programs, and other relevant factors.
EPA is also finalizing, as proposed, the per-company vehicle production caps for MYs 2022–2025. The cumulative per-company caps for MYs 2022–2025 are 600,000 EV/PHEV/FCVs for those manufacturers that produce a total of 300,000 or more EV/PHEV/FCVs in MYs 2019–2021, and 200,000 EV/PHEV/FCVs for all other manufacturers. The central tension in the design of a cap relates to certainty and uncertainty with respect to both individual automaker caps and the overall number of vehicles that may fall under the cap, which determines the maximum decrease in GHG emissions reductions. A per-company cap would provide clear certainty for individual manufacturers at the time of the final rule, but would yield uncertainty about how many vehicles industry-wide would take advantage of the 0 g/mi compliance treatment and therefore the overall impact on GHG emissions. With an industry-wide cap, EPA would establish a finite limit on the total number of vehicles eligible for the 0 g/mi incentive, with a method for allocating this industry-wide cap to individual automakers. An industry-wide cap would provide certainty with respect to the maximum number of vehicles and GHG emissions impact and would reward those automakers who show early leadership. If EPA were to make a specific numerical allocation at the time of the final rule, automakers would have certainty, but EPA is concerned that we may not have sufficient information to make an equitable allocation for a timeframe that is over a decade away. If EPA were to adopt an allocation formula in the final rule that was dependent on future sales, automakers would have much less certainty and leadtime for compliance planning as they would not know their individual caps until some point in the future. Public comments on the relative merits of per-company and industry-wide caps were mixed. EPA has chosen to finalize the per-company cap because of the concern that the uncertainty faced by individual automakers about how they would fare under an industry-wide cap could, in effect, act as a disincentive to pursue advanced vehicle technology commercialization.
Finally, EPA is finalizing the full net upstream GHG emissions approach for the compliance treatment for EV/PHEV/FCVs beyond the per-company vehicle production threshold caps in MYs 2022–2025. EPA is not adopting any type of “phase-in”, i.e., the compliance value will change from 0 g/mi to the full net upstream GHG emissions value once a manufacturer exceeds the cap. EPA believes that the levels of the per-company vehicle production caps in MYs 2017–2025 are high enough to provide a sufficient incentive such that any production beyond those caps should use the full net upstream GHG emissions accounting.
EPA proposed a specific methodology for calculating the net upstream GHG emissions compliance value for EVs (and the electric portion of PHEV operation). This methodology was based on four key inputs: (1) The vehicle electricity consumption over EPA city and highway compliance tests (under EPA test protocols, this accounts for the losses associated in vehicle charging as well), (2) an adjustment to account for electricity losses during electricity grid transmission, (3) a projected 2025 nationwide average electricity upstream GHG emissions rate of 0.574 grams/watt-hour at the power plant, which accounts for both power plant and feedstock GHG emissions, and (4) the upstream GHG emissions of a comparable gasoline vehicle meeting its MY 2025 GHG emissions target. See 76 FR 75014.
The 0.574 grams/watt-hour electricity upstream GHG emissions factor that EPA proposed was based on a nationwide average power plant value for 2025, based on simulations with the EPA Office of Atmospheric Programs' Integrated Planning Model (IPM), and a 1.06 multiplicative factor to account for additional upstream GHG emissions associated with feedstock extraction, transportation, and processing. EPA recognized in the proposal that there were other approaches for projecting a future upstream GHG emissions factor for EVs and PHEVs, and that EPA would be considering running the IPM model with more detailed vehicle and vehicle charging-specific assumptions to generate a more robust electricity upstream GHG emissions factor for EVs and PHEVs in the final rulemaking. Specifically, the Agency discussed its intention to account for the likely regional sales variation for initial EV/PHEV/FCVs, and the likely frequency of daytime and nighttime charging. EPA sought comment on whether there were additional factors that the Agency should try to include in the IPM modeling for the final rulemaking.
All of the relevant comments directly or indirectly supported a more sophisticated approach for determining the electricity upstream GHG emissions factor. Nissan noted that most of its initial Leaf sales have been in California and other states with lower-than-average electricity GHG emissions. It concluded: “By accounting for upstream emissions using a national average, electric vehicle manufacturers would be penalized because their compliance standard will not be reflective of actual upstream emissions.” Edison Electric Institute stated: “[i]t is inappropriate for EPA, now in 2012, to calculate any upstream electricity GHG emissions rate for 2025, as there is no way that this value could reasonably approximate actual electric generating unit (EGU) emissions 13 years in the future * * *. Unless EPA dramatically changes its assumptions about the makeup of the generating fleet in 2025 to better reflect current and expected regulations, any additional IPM runs—even those using updated vehicle and charging assumptions—will be equally unable to provide an upstream electricity GHG emissions rate that has any relationship to actual emissions in 2025. If EPA does decide to conduct additional IPM runs for the final rule, the Agency must do more than update vehicle and charging assumptions * * *. In 2011, California residents purchased more than 60 percent of the Nissan Leafs and about 30 percent of the Chevrolet Volts sold in the U.S. * * *. The Agency would be better served by waiting until MY 2021 to estimate upstream GHG electricity emissions, using actual emissions data and the most up-to-date information about the EGU generating fleet. EPA easily could conduct this analysis concurrently with the planned midterm evaluation of the vehicle standards necessary to support NHTSA's required, separate rulemaking to establish CAFE standards for MY 2022–2025.”
The Electric Drive Transportation Association (EDTA) argued that “[t]his national average—or any national average for that matter—fails to take into account the wide variation in actual `upstream emissions' among different regions, demographic groups, and
EPA agrees with the commenters that developing an appropriate electricity upstream GHG emissions factor for vehicles that will be sold in MYs 2022–2025, and be on the road out to 2040 or even 2050, is a challenging task, due to the many assumptions that must be made to reflect relevant variables. EPA continues to believe that the IPM model is the best tool for making such long-term projections, as it is a long-term capacity expansion and production costing model for analyzing the U.S. electric power sector. EPA has used IPM for most electricity sector analysis for the last 15 years, including for several major EPA power sector regulatory initiatives. While continuing to use the IPM model, EPA has made several refinements in the approach that we are adopting for estimating the electricity upstream GHG emissions for vehicles sold in MYs 2022–2025 subsequent to the proposal. One, we are using a newer IPM version (version 4.10) that is harmonized with new EPA stationary source emissions controls (such as the Mercury and Air Toxics Standards and the Cross-State Air Pollution Rule) and reflects recent economic conditions such as lower natural gas prices and lower electricity demand growth. This newer IPM version should address many of the concerns expressed by the Edison Electric Institute that use of IPM will necessarily overestimate future electricity GHG emissions. Two, as we suggested in the proposal and as supported by public comments, EPA changed from a “national average” electricity GHG emissions factor to one that projects the average electricity GHG emissions factor for the additional electricity demand represented by the EVs and PHEVs that EPA projects will be sold in MYs 2022–2025 and on the road in calendar year 2030. Three, rather than assuming that EVs and PHEVs would be distributed proportionally throughout the U.S., EPA distributed EV and PHEV sales into the 32 IPM regions based on the distribution of hybrid vehicle sales in 2006–2009 (e.g., much higher per capita sales in California, lower per capita sales in Montana). Four, EPA assumed that EVs and PHEVs would charge 25 percent of the time on-peak and 75 percent of the time off-peak, which is consistent with early vehicle charging data from the DOE “EV Project.”
Since the proposal, EPA has also re-evaluated the appropriate multiplicative factor to account for the feedstock-related GHG emissions upstream of the power plant. This is necessary for three reasons: The feedstock mix in the new approach is very different than the national average feedstock mix assumed in the proposal (i.e., natural gas represents a much higher fraction of the projected 2030 feedstock mix under the new approach), there are more recent data on the upstream GHG emissions associated with natural gas production that were not reflected in the 1.06 feedstock factor that was used in the proposal, and EPA recently promulgated a New Source Performance Standard (NSPS) for natural gas operations beginning in 2015.
The overall electricity upstream GHG emissions factor, for the additional electricity needed to reflect the extra demand by EVs and PHEVs in 2030, is the product of the 0.445 grams/watt-hour power plant value and the 1.20 factor for feedstock-related emissions, or 0.534 grams/watt-hour. This is somewhat lower than the 0.574 grams/watt-hour value that was used in the proposal.
Below is an example of the 4-step methodology in today's final rule for calculating the GHG emissions compliance value for vehicle production in excess of the cumulative production cap for an individual automaker for MYs 2022–2025, for an EV that has the same electricity consumption, 238 watt-hours/mile, as the 2012 Nissan Leaf:
• A measured 2-cycle vehicle electricity consumption of 238 watt-hours/mile over the EPA city and highway tests
• Adjusting this watt-hours/mile value upward to account for electricity losses during electricity transmission (dividing 238 watt-hours/mile by 0.935 to account for grid/transmission losses yields a value of 255 watt-hours/mile)
• Multiplying the adjusted watt-hours/mile value by a 2030 EV/PHEV electricity upstream GHG emissions rate of 0.534 grams/watt-hour at the power plant (255 watt-hours/mile multiplied by 0.534 grams GHG/watt-hour yields 136 grams/mile)
• Subtracting the upstream GHG emissions of a comparable midsize gasoline vehicle of 41 grams/mile
The full accounting methodology for FCVs and the portion of PHEV operation on grid electricity would use this same approach. The final regulations adopt EPA's proposed method to determine the compliance value for PHEVs, and EPA will develop a similar methodology for FCVs if and when the need arises based on the fuel production and distribution GHG emissions associated with hydrogen production for various feedstocks and processes.
The final issue raised by the Edison Electric Institute was that it would be better for EPA to wait until the midterm evaluation to adopt an electricity upstream GHG emissions factor. EPA disagrees with this comment. EPA believes it is critical to provide the automobile manufacturers, for their long-term compliance planning, a value that we expect to be used for compliance purposes in MYs 2022–2025, for those manufacturers who exceed their vehicle production caps for EVs and PHEVs. We understand that there are many factors that could lead to an electricity upstream GHG emissions factor for EVs and PHEVs that may be higher or lower, such as future regulations, market forces, regional distribution of EV/PHEV sales, and vehicle charging patterns. EPA will continue to evaluate these factors, including in the mid-term evaluation, and will address these issues there.
The proposal included temporary regulatory incentives for three technologies: EVs, PHEVs, and FCVs. Sections III.C.2.c.ii and III.C.2.c.v discuss the final incentives for EVs, PHEVs, and FCVs. EPA also solicited comment on whether incentives should be provided for CNG vehicles, and Section III.C.2.c.iv discusses the final incentives for those vehicles. The Agency also received comments recommending that other technologies receive regulatory incentives.
The Alliance of Automobile Manufacturers, Association of Global Automakers, and Ford recommended that incentive multipliers be available for manufacturers of liquefied petroleum gas (LPG) vehicles. EPA is not adopting incentive multipliers for LPG vehicles because the Agency does not believe that LPG vehicles promote the commercialization of technologies that have, or technologies whose commercialization can be critical facilitators of next-generation technologies that have, the potential to transform the light-duty vehicle sector by achieving zero or near-zero GHG emissions and oil consumption.
Toyota suggested that conventional hybrid electric vehicles should receive incentive multipliers, if, as is the case, CNG vehicles receive such multipliers. EPA is not adopting incentive multipliers for conventional hybrid vehicles. Although the Agency agrees with Toyota that conventional hybrids share many of the same electric drive components of EVs and PHEVs (e.g., batteries, motors, controllers), with respect to consumer acceptance and barriers to utilization, the Agency believes that conventional hybrids are much more similar to gasoline vehicles than they are to EVs, in that all of the propulsion energy comes from gasoline, vehicle range is improved, and hybrids need no new refueling infrastructure. As such there is not the same degree of market barriers inhibiting increased use of this technology.
Volkswagen also recommended incentives for “advanced technology compression ignition engines,” or what are more commonly referred to as advanced diesel engines. EPA is not adopting an incentive multiplier for advanced diesel vehicles because the Agency does not believe that advanced diesel vehicles promote the commercialization of technologies that have, or technologies whose commercialization can be critical facilitators of next-generation technologies that have, the potential to transform the light-duty vehicle sector by achieving zero or near-zero GHG emissions and oil consumption, nor do advanced diesels face significant barriers with respect to consumer acceptance, relative to EV/PHEV/FCVs and CNG vehicles.
Finally, the Agency received many comments related to a broad set of issues related to biofuels.
The Clean Fuels Development Coalition, Growth Energy, the 25x'25 Alliance (and partners), Volkswagen, and the Association of Global Automakers recommended that EPA provide GHG emissions incentives to automakers that produce vehicles capable of operating on biofuels, such as ethanol and biodiesel, beyond MY 2015 (when incentives under the light-duty vehicle GHG program currently expire) and/or gasoline/biofuels blends. EPA recognizes that the use of certain biofuels has the potential to reduce lifecycle GHG emissions. EPA also recognizes that other programs already either require the increasing use of renewable fuels in the transportation sector or provide incentives for vehicle manufacturers to produce vehicles capable of operating on more than one fuel. In that context, EPA believes it is not appropriate to adopt incentive multipliers, or the 0.15 divisor, in this rule for manufacturers of biofuel-capable vehicles. The tailpipe GHG emissions of biofuel-capable vehicles when operated on biofuels are typically slightly lower than GHG emissions from conventional vehicles, and those GHG emissions performance-based reductions would be accounted for in EPA compliance calculations based on the actual use of biofuels. On the other hand, biofuels-capable vehicles are typically no more expensive than conventional vehicles, they may or may not use a biofuel (since they can operate on conventional fuel), and they do not face significant consumer acceptance barriers since they can, and most often are, operated on fuels with high gasoline content. As noted above, one purpose of the incentive multipliers for vehicles such as EVs, PHEVs, FCVs, and CNG vehicles is to address barriers to the increased use in the marketplace of those vehicles and their fuels. The factors above indicate there are not similar barriers for the increased production of biofuel-capable vehicles. As such, there is not a similar basis for adopting incentive multipliers for biofuel-capable vehicles.
The 25x'25 Alliance (and partners) specifically recommended that EPA adopt a “0.15 multiplier” for CO
Several commenters, including Growth Energy and Plant Oil Powered Diesel Fuel Systems, pointed out that cellulose-based ethanol and other renewable fuels have the potential to yield large lifecycle GHG emissions benefits due to the CO
A related comment from Growth Energy, the 25x'25 Alliance (and partners), the National Corn Growers Association, and the Minnesota Department of Commerce was that, by not providing incentives for ethanol or biofuel vehicles, the proposal was “inconsistent” with the RFS, and, as stated by Growth Energy, “will make the volumetric biofuels requirements of Title II in EISA unachievable.” EPA disagrees with these comments. There is nothing inconsistent between the MYs 2017–2025 GHG program and the RFS program. The MYs 2017–2025 GHG program is designed to achieve GHG emission reductions from vehicle operation as measured at the tailpipe. The RFS program is a standalone program designed to increase the use of renewable fuels and to achieve GHG emission reductions primarily through upstream emission reductions. The RFS program can be achieved independent of the vehicle GHG standards. The RFS program does not mandate any particular type of fuel (or vehicle) and relies on market forces to determine the most cost-effective approaches for meeting the RFS program's volume requirements. Achievement of the RFS volume mandates is largely based on decisions that will be made by the fuel industries about what renewable fuels to produce and how to distribute and market them. The RFS program already contains mechanisms to create market incentives to facilitate such increases. No additional incentives for vehicle manufacturers are needed to do so.
Furthermore, there have been CAFE incentives for automakers that produce ethanol FFVs (and other dual fuel vehicles) for many years (see 75 FR 25432–33), and CAFE incentives will remain in place. Although the GHG emissions incentive under the light-duty vehicle GHG rule, designed to be equivalent to the CAFE incentive, will end in MY 2015, automakers can achieve lower GHG emissions compliance values for ethanol FFVs based on lower tailpipe GHG emissions when operating on E85 and a weighting of E85 and gasoline emissions performance based on actual E85 use, an option that EPA is finalizing. (See Section III.C.4 for more detail on the methodology for calculating GHG emissions from ethanol FFVs.) There are approximately 10 million ethanol FFVs on the road in the U.S. today (far more than any other incentivized technology),
In the proposal, EPA did not propose any restrictions on the use of GHG emissions credits for those vehicles eligible for the 0 g/mi GHG emissions compliance incentive. The Natural Resources Defense Council commented that “if the agencies proceed with their proposed 0 g/mi treatment, other incentives, such as off-cycle credits, should not be available for the portion of an advanced vehicle's driving range that is powered by grid electricity or off-board hydrogen. No vehicles should be allowed to have negative emissions.” EPA is finalizing, as proposed and consistent with the MYs 2012–2016 program, no restrictions on the use of GHG emissions credits for those vehicles eligible for the 0 g/mi GHG emissions compliance treatment, i.e., EV/PHEV/FCVs can earn air conditioner efficiency, air conditioner refrigerant, and off-cycle credits. EPA will be accounting for these credits at the manufacturer fleet level, not at the individual vehicle model level, though we accept the point by NRDC that, in effect, if one were to assess the actual credits earned on a per vehicle basis, the overall compliance value would appear to be negative for this limited set of vehicles. Because of the relatively small number of EV/PHEV/FCVs expected during MYs 2017–2025, EPA expects the fleetwide impact of these additional credits to be very small (see Table III–17), and EPA does not want to discourage improvements in air conditioner and other technologies for EV/PHEV/FCVs that provide real world GHG emissions benefits (including, in the case of air conditioner refrigerants, some of the most potent GHGs).
In the proposal, EPA sought comments on whether any changes should be made for MYs 2012–2016, i.e., whether the compliance value for production beyond the cap should be one-half of the net increase in upstream GHG emissions, or whether the current cap for MYs 2012–2016 should be removed. See 76 FR 75013. EPA received two comments on this topic. Within a broader context of reiterating its support for a 0 g/mi tailpipe-based compliance treatment for EVs, Nissan recommended that if a manufacturer reaches its vehicle production threshold for MYs 2012–2016, there be an “interim period” (for the same volume of vehicles that initially triggers the cap) where the non-0 g/mi compliance value be equal to one-half of the net increase. Alternatively, the Natural Resources Defense Council supported no change in the MYs 2012–2016 regulations. EPA is not adopting changes to the MYs 2012–2016 regulations as we believe that the incentives currently in place for MYs 2012–2016 provide a sufficient incentive.
In this section, EPA projects the potential impact on GHG emissions that will be associated with both the temporary incentive multiplier and the 0 g/mi compliance value for EV/PHEVs over the MYs 2017–2025 timeframe. Since it is impossible to know precisely how many vehicles will be sold in the MYs 2017–2025 timeframe that will utilize the proposed incentives, EPA provides projections for two scenarios: (1) the number of EV/PHEV sales in MYs 2017–2025 that EPA's OMEGA technology and cost model predicts for the most cost-effective way for the industry to meet the standards, and (2) an alternative scenario with a greater number of EV/PHEVs, based not only on compliance with the standards, but on other factors that could affect the market for EV/PHEVs as well.
EPA projects
It is important to note that the above projections of the possible impact of the EV/PHEV incentives on the overall program GHG emissions reductions assumes that there would be no change to the standard even if the EV 0 g/mi incentive were not in effect, i.e., that EPA would promulgate exactly the same standard if the 0 g/mi compliance value were not allowed for any EV/PHEVs. Although EPA has not analyzed such a scenario, it is clear that not allowing a 0 g/mi compliance value would change the technology mix and cost projected for the standards.
Of course, either technology innovation or a future comprehensive program addressing upstream emissions
On the other hand, EPA also recognizes that EV/PHEV sales could be higher than projected, and that there are factors which could increase the appropriate electricity upstream GHG emissions factor in the future, such as greater use of high-power charging, and the possibility that EVs won't displace gasoline vehicle use on a 1:1 basis (i.e., multi-vehicle households may use EVs for more shorter trips and fewer longer trips, which could lead to lower overall travel for typical EVs and higher overall travel for gasoline vehicles).
As explained in section II.C, the agencies recognize that the MY 2017–2025 standards will be challenging for large vehicles, including full-size pickup trucks that are often used for commercial purposes. In Section II.C, and in Chapter 2 of the joint TSD, EPA and NHTSA describe how the slope of the truck curve has been adjusted compared to the 2012–2016 rule to reflect these disproportionate challenges. In Section III.B, EPA describes the progression of the truck standards. In this section, EPA describes advanced technology incentives that were proposed and are being adopted for full-size pickup trucks under both section 202(a) of the CAA and section 32904(c) of EPCA. These incentives are in the form of credits under the EPA GHG program, and fuel consumption improvement values (equivalent to EPA's credits) under the CAFE program.
The agencies' goal is to incentivize the penetration into the marketplace of “game changing” technologies for these pickups, including their hybridization. For that reason, EPA proposed and is adopting per-vehicle credit provisions for manufacturers that hybridize a significant number of their full-size pickup trucks, or use other technologies that comparably reduce CO
As was proposed, the agencies are defining a full-size pickup truck based on minimum bed size and hauling capability, as detailed in 86.1866–12(e) of the regulations being adopted. This definition is meant to ensure that the larger pickup trucks, which provide significant utility with respect to bed access and payload and towing capacities, are captured by the definition, while smaller pickup trucks with more limited capacities are not covered. A full-size pickup truck is defined as meeting requirements (1) and (2) below, as well as either requirement (3) or (4) below. Section II.F.3 includes a discussion of comments received on this definition.
(1) Bed Width—The vehicle must have an open cargo box with a minimum width between the wheelhouses of 48 inches, measured as the minimum lateral distance between the limiting interferences (pass-through) of the wheelhouses, excluding any transitional arc, local protrusions, and depressions or pockets (dimension W202 in SAE Procedure J1100). An open cargo box means a cargo bed without a permanent roof or cover. Vehicles sold with detachable covers are considered “open” for the purposes of these criteria. And—
(2) Bed Length—The length of the open cargo box must be at least 60 inches, as measured at both the top of the body and at the bed floor (dimensions L506 and L505 in SAE Procedure J1100). And—
(3) Towing Capability—the gross combined weight rating (GCWR) minus the gross vehicle weight rating (GVWR) must be at least 5,000 pounds. Or—
(4) Payload Capability—the GVWR minus the curb weight (as defined in 40 CFR 86.1803) must be at least 1,700 pounds.
Full-size pickup trucks using mild hybrid technology will be eligible for a per-truck 10 g/mi CO
Because of their importance in assigning credit amounts, the definitions of mild and strong hybrids for purposes of this credit program must be fair and unambiguous. The proposal included explicit criteria regarding a hybrid's percent efficiency in recovering braking energy (75% to qualify as a strong hybrid, 15% for a mild hybrid). EPA received a number of manufacturer comments on the proposed definitions. Some industry commenters objected to EPA's characterization of the credit provisions as applying to hybrid “gasoline-electric” vehicles. We agree that this would be an overly narrow characterization, and are clarifying that the provisions also apply to non-gasoline (including diesel-, ethanol-, and CNG-fueled) hybrids. Further extension to hybrids employing non-electric battery storage (including hydraulic-, capacitive-, and mechanical-energy storage) is complicated, however, by the difficulty in developing regulatory procedures for all conceivable energy-storage media. We believe that these technologies are not hampered in participating in the large truck credit program because manufacturers using them can take the alternative, performance-based pathway described below to gain the credits.
Ford, Toyota, and the Alliance of Automobile Manufacturers suggested improvements to the proposed procedure for determining whether hybrid technology is categorized as strong, mild, or having energy recovery too minimal to warrant credits. Most importantly, they argued that the proposed approach improperly integrated energy contributions over the entire city cycle FTP, thereby capturing more than just the intended recovered braking energy and creating an opportunity for gaming through tailoring of the direct addition of energy from the engine. They offered alternative procedures and corresponding recovered energy threshold levels based on energy input only during decelerations, with the recovery efficiency cutpoint between strong and mild hybrids correspondingly reduced from 75% to 40%. Chrysler maintained that a 75% energy recovery rate would be challenging for large pickups because of the need to design the braking system for maximum payload and trailer capability while maintaining drivability in the absence of loads. Chrysler's specific recommendation was for a cutpoint of 50% energy recovery rate. Ford and Toyota also suggested an additional metric for qualifying strong HEVs—that at least 10% of the total tractive energy during positive accelerations on the FTP must be from the electric drive with the engine off.
As discussed in detail in section 5.3.3 of the TSD, we have evaluated these
These performance-based credits have no specific technology or design requirements; automakers can use any technology or set of technologies as long as the vehicle's CO
The 10 g/mi performance-based credit will be available for MYs 2017 to 2021. In recognition of the nature of automotive redesign cycles, a vehicle model meeting the requirements in a model year will receive the credit in subsequent model years through 2021 unless its CO
Access to any of these large pickup truck credits requires that the technology be used on a minimum percentage of a manufacturer's full-size pickup trucks. These minimum percentages are set to encourage significant penetration of these technologies, leading to long-term market acceptance. Meeting the penetration threshold in one model year does not ensure credits in subsequent years; if the production level in a model year drops below the required threshold, the credit is not earned for that model year. The required penetration levels are:
• For strong hybrid credits: 10% in each model year 2017 through 2025.
• For mild hybrid credits: 20–30–55–70–80% in model years 2017–2018–2019–2020–2021, respectively.
• For “20 percent better” performance-based credits: 10% in each model year 2017 through 2025.
• For “15 percent better” performance-based credits: 15–20–28–35–40% in model years 2017–2018–2019–2020–2021, respectively.
These are identical to the proposed levels except that the levels for MY 2017 and 2018 vehicles using the mild hybrid credits, 20 and 30%, are lower than the proposed 30 and 40% levels, for reasons explained below.
EPA received a number of comments on the proposed minimum penetration thresholds, primarily from manufacturers arguing that they should be reduced or eliminated. These commenters felt that the requirements run counter to the agencies' goal of incentivizing technology introduction, because they add uncertainty over whether the investment in a technology, a commitment that is made years ahead of time, will reap the credits if a decline in sales causes the production level to fall short of the minimum in a model year. These commenters also noted that new technologies are often phased in at rates lower than the proposed minimum penetration rates in order to gauge consumer interest and acceptance. GM specifically objected to the proposed rapid ramp up of the mild hybrid penetration rate as not being aligned with historic rates of customer acceptance of new and/or advanced technologies. GM requested that the levels be instead cut in half to match those proposed for the “15 percent better” performance-based credits.
Our reason for setting ambitious market penetration thresholds remains—our goal is to create an incentive for manufacturers to commit to the large-scale application of hybrids and other advanced technologies in the challenging large truck sector and specifically that at least mild hybrid or comparable technology become a standard technology feature for large pickup trucks. Eliminating or greatly tempering the minimum penetration requirements might retain the incentive for niche applications but would lose any assurance of widespread “game-changing” technology introduction and substantial penetration. We do agree with comments that the ambitious penetration levels proposed for mild hybrid credits in the initial model years may be counter-productive, as launching a complex new technology on almost a third of first-year sales could be a risky business strategy in this highly competitive large truck market segment. As a result, we are scaling this requirement back to 20 and 30% in model years 2017 and 2018 (compared to the proposed levels of 30 and 40% in MY 2017 and 2018, respectively), to help facilitate the smooth introduction of mild hybrid technology. However, we are retaining the substantial penetration requirements that were proposed for later model years to maintain our focus on encouraging this technology to be more or less standard on large trucks. We note that a manufacturer which is unable to meet these penetration requirements may continue to generate credits through the 2021 model year for mild hybrid trucks under the performance-based credit option, assuming the less aggressive penetration threshold requirements for the performance-based credit provision are satisfied.
This section describes the approaches for determining the compliance values for greenhouse gas (GHG) emissions and fuel economy for those vehicles that can use two different fuels, typically referred to as dual fuel vehicles under the CAFE program.
EPA's underlying principle is to base GHG emissions compliance values on demonstrated vehicle tailpipe CO
PHEVs can operate both on an on-board battery that can be charged by wall electricity from the grid, and on a conventional liquid fuel (such as gasoline or diesel). Depending on how these vehicles are fueled and operated, PHEVs could operate exclusively on grid electricity, exclusively on the conventional fuel, or on a combination of both fuels. EPA can determine the CO
EPA proposed to use the Society of Automotive Engineers (SAE) cycle-specific fleet-based utility factor approach for PHEV compliance calculations first adopted by EPA in the joint EPA/DOT final rulemaking establishing new fuel economy and environment label requirements for MY 2013 and later vehicles.
EPA received a small number of comments on our proposed compliance treatment for PHEVs. The Alliance of Automobile Manufacturers, Fisker Automotive, the Electric Drive Transportation Association, and the American Council for an Energy-Efficient Economy (ACEEE) supported the use of the SAE utility factor methodology for PHEVs. The American Petroleum Institute (API) was the one commenter expressing several concerns, such as whether PHEVs and other dual fuel vehicles will always have a full tank of fuel at the beginning of each day, and whether the driving behavior of early adopters will be similar to those of the average drivers, on which the utility factor methodology is based. Securing America's Future Energy (SAFE) argued that the SAE-based utility factors would be too conservative for PHEVs, because PHEV buyers are more likely to be drivers who will maximize their electricity-to-gasoline use, due to various factors. SAFE also suggested that the agencies should continue to monitor the usage patterns of PHEVs and update the utility factor methodology if appropriate. ACEEE and API recommended that EPA use lower 5-cycle range values for all-electric (or equivalent all-electric) operation in the calculation of the utility factor, to better simulate the relative electric and conventional fuel operation in the real world. ACEEE also recommended that this rule use fleet based utility factors for compliance, rather than the individual based utility factors that are used for fuel economy and environment labels.
EPA is finalizing the PHEV compliance treatment as proposed, which was supported by most of the commenters who addressed this topic. While some of the comments suggest that the utility factors may be too high or favorable to PHEVs (since some PHEVs may not always have a fully charged battery each morning, and use of 2-cycle range in the calculations may not always be appropriate), other comments suggest that the utility factors may be too low or unfavorable to PHEVs (some PHEVs may be charged more than once per day, PHEVs may on average be driven fewer miles than the average
For example, based on the cycle-specific, fleet utility factors, the 2012 Chevrolet Volt PHEV, which has an all-electric range of 50 miles over EPA's 2-cycle tests, has a combined city/highway cycle utility factor of 0.69, meaning that the average Volt driver is projected to drive about 69 percent of miles on grid electricity and about 31 percent of miles on gasoline.
Based on this utility factor approach, EPA calculates the GHG emissions compliance value for an individual PHEV as the sum of 1) the GHG emissions value for charge depleting operation (for all electric operation, either 0 g/mi or a non-zero value reflecting the net upstream GHG emissions accounting depending on whether automaker EV/PHEV/FCV production is below or above its cumulative production cap as discussed in Section III.C.2 above; or a blended value for electric and gasoline/diesel operation) multiplied by the utility factor, and 2) the tailpipe CO
Current dual fuel CNG vehicles operate on either compressed natural gas or gasoline, but not both at the same time, and have separate tanks for the two fuels.
EPA proposed a new approach for dual fuel CNG vehicle GHG emissions compliance based on the fleet-based utility factor approach described above for PHEVs, beginning in MY 2016. In the proposal, EPA suggested that, as with PHEVs, owners of dual fuel CNG vehicles would be expected to preferentially seek to refuel and operate on CNG fuel as much as possible, both because the owner would have to pay a higher vehicle price for the dual fuel capability, and because CNG fuel is considerably cheaper than gasoline on a per mile basis. EPA noted that there are some relevant differences between dual fuel CNG vehicles and PHEVs, some of which might strengthen the case for the use of utility factors and some of which might weaken the case, but in the aggregate EPA believed that the use of utility factors for dual fuel CNG vehicles was appropriate. Further, for dual fuel CNG vehicles in MYs 2012–2015, EPA also proposed to allow the option, at the manufacturer's discretion, to use the utility factor-based methodology. The rationale for providing this option was that, without it, some manufacturers are likely to reach the maximum allowable dual fuel vehicle GHG emissions credits for MYs 2012–2015 (which are consistent with the statutory CAFE credits) through their production of ethanol FFVs, and therefore would not be able to gain any GHG emissions compliance benefit even if they produced dual fuel CNG vehicles that demonstrated superior GHG emissions performance. Finally, EPA also asked for comments on the desirability of additional design or performance-based eligibility constraints for dual fuel CNG vehicles to be able to use the utility factor methodology.
Commenters expressed widespread support for the proposal. Natural gas advocacy groups (including America's Natural Gas Alliance/American Gas Association, American Public Gas Association, Clean Energy, Encana Natural Gas Inc., NGV America, and VNG.Co) supported the use of cycle-specific fleet-based utility factors for dual fuel CNG vehicles, supported the extension of this approach for MYs 2012–2015, and generally argued against any eligibility requirements for the application of utility factors for dual fuel CNG vehicles. One natural gas advocacy group, the American Clean Skies Foundation, recommended a fixed 95% utility factor so as not to “require a case-by-case review.” The Alliance of Automobile Manufacturers also supported the utility factor methodology, and for pulling it ahead to MYs 2012–2015, and proposed a work group to discuss possible eligibility requirements for dual fuel CNG vehicles. Chrysler also supported using utility factors beginning in MY 2012. In addition, several of the natural gas and automobile commenters asked EPA to consider a “separate track” for all dual fuel CNG vehicles (e.g., NGV America), or for “extended range” dual fuel CNG vehicles (e.g., Chrysler), in order to allow manufacturers of dual fuel CNG vehicles the option to benefit from the lower GHG emissions, which otherwise would not be possible for those manufacturers that have “maxed out” with ethanol FFV credits in the MYs 2012–2015 timeframe. The Natural Resources Defense Council (NRDC) also supported the use of utility factors, but was the one commenter to condition its support upon eligibility constraints. It suggested “[t]he agencies should consider prioritizing a minimum requirement for natural gas-to-gasoline range of at least 80 percent on natural gas.” Finally, as with PHEVs, the American Petroleum Institute was the only commenter to express some concerns with the use of utility factors for dual fuel CNG vehicles, but did not suggest an alternative approach.
EPA is finalizing, as proposed, the use of SAE fleet-based utility factors for dual fuel CNG vehicles, and is also finalizing some additional requirements in order for a dual fuel CNG vehicle to be able to use the utility factors. Dual fuel CNG vehicles must meet two requirements in order to use the utility factor approach. One, the vehicle must have a minimum natural gas range-to-gasoline range of 2.0. This is to ensure that there is a vehicle range incentive to encourage vehicle owners to seek to use CNG fuel as much as possible (for
As noted above, there was widespread public support from the commenters for the utility factor approach for dual fuel CNG vehicles. EPA is rejecting the one alternative approach that was suggested, the use of a fixed 95% utility factor, because it would allow a dual fuel CNG vehicle with a small CNG tank to benefit from a very large utility factor. Further, EPA is finalizing the option for manufacturers to begin using this approach in MY 2012, at the manufacturer's discretion. EPA agrees with the arguments from many commenters that, for those manufacturers who are already obtaining maximum dual fuel vehicle GHG emissions credits from the production of ethanol FFVs, there is effectively “no room” for additional GHG emissions credits from dual fuel CNG vehicles, even though these vehicles are likely to provide real world GHG emissions reductions. Allowing these manufacturers to use the utility factor approach, beginning in MY 2012, effectively provides the “separate track” that was requested by several commenters.
Table III–18 shows the utility factors that EPA is adopting, based on the SAE methodology, for use for dual fuel CNG vehicles that meet the eligibility requirements. A dual fuel CNG vehicle with a 150-mile 2-cycle CNG range would result in a compliance assumption of 92.5% percent operation on CNG and 7.5% operation on gasoline.
Ethanol flexible fuel vehicles (FFVs) can operate on E85 (a blend of 85 percent ethanol and 15 percent gasoline, by volume), gasoline, or any blend of the two. There are many ethanol FFVs in the U.S. market today.
In the final rulemaking for MYs 2012–2016, EPA promulgated regulations for MYs 2012–2015 ethanol FFVs that provide significant GHG emissions incentives equivalent to the long-standing “CAFE credits” for ethanol FFVs under EPCA, since many manufacturers had relied on the availability of these credits in developing their compliance strategies.
EPA did not propose to make any changes to this methodology for MYs 2017–2025. In the proposal, the Agency laid out its rationale for not adopting a utility factor-based approach, as discussed above for PHEVs and dual fuel CNG vehicles, for ethanol FFVs. Unlike with PHEVs and dual fuel CNG vehicles, owners of ethanol FFVs do not pay any more for the E85 fueling capability. Unlike with PHEVs and dual fuel CNG vehicles, operation on E85 is not cheaper than gasoline on a per mile basis, it is typically the same or somewhat more expensive to operate on E85. Accordingly, there is no direct economic motivation for the owner of an ethanol FFV to seek E85 refueling, and in some cases there is an economic disincentive. Because E85 has a lower energy content per gallon than gasoline, an ethanol FFV will have a lower range on E85 than on gasoline, which provides an additional disincentive to use E85 fuel. The data confirm that, on a national average basis in 2008, less than one percent of the fuel used in FFVs was E85.
Most commenters who addressed FFVs that can operate on ethanol or other biofuels focused on the need for broader incentives, not the more narrow compliance issues like utility factors that are the focus of this preamble section.
EPA is finalizing its proposed approach of not using utility factors for ethanol FFVs and, instead, to base the relative weighting of gasoline and E85 emissions performance on the actual national average use of E85 in ethanol FFVs, consistent with the provisions in the MYs 2012–2016 standards final rulemaking.
49 U.S.C. 32905 specifies how the fuel economy of dual fuel vehicles is to be calculated for the purposes of CAFE through the 2019 model year. The basic calculation is a 50/50 harmonic average of the fuel economy for the alternative fuel and the conventional fuel, irrespective of the actual usage of each fuel. In addition, the fuel economy value for the alternative fuel is significantly increased by dividing by 0.15 in the case of CNG and ethanol and by using a petroleum equivalency factor methodology that yields a similar overall increase in the CAFE mpg value for electricity.
With the expiration of the specific procedures for dual fueled vehicles, there is less need to base the procedures on whether a vehicle meets the specific definition of a dual fueled vehicle in EPCA. Instead, EPA's focus is on establishing appropriate procedures for the broad range of vehicles that can use both alternative and conventional fuels. For convenience, this discussion uses the term dual fuel to refer to vehicles that can operate separately on both an alternative fuel and on a conventional fuel.
EPA proposed, for PHEVs, dual-fuel CNG vehicles, and FFVs, to apply the same fuel weighting approaches for CAFE purposes as we do for GHG emissions compliance. For PHEVs and dual-fuel CNG vehicles, the Agency proposed that fuel economy weightings would be determined using the SAE utility factor methodology, while for ethanol FFVs, manufacturers could
No commenters specifically addressed utility factors for CAFE beginning in MY 2020, though the general arguments for and against utility factors for CAFE compliance would be the same as those discussed above for GHG emissions compliance. With one exception, commenters supported the proposal to continue to use the 0.15 divisor for CAFE compliance beginning in MY 2020. Nissan summarized the most common argument for retaining the 0.15 divisor for CAFE compliance, stating that the 0.15 divisor “is consistent with the purpose of the CAFE program—to reduce our country's dependence on foreign oil.” The Alliance of Automobile Manufacturers argued that “this approach will maintain consistency between dedicated and dual fuel vehicle calculations and will continue to encourage manufacturers to build vehicles capable of operating on fuels other than petroleum.” There was also support for retaining the 0.15 divisor for the CAFE program from other automakers, natural gas advocacy groups, and ethanol/renewable fuel groups. The one comment against retaining the 0.15 divisor was the American Petroleum Institute. It argued: “Section 32906 of the Energy Independence and Security Act of 2007 phased-out the maximum fuel economy credit attributable to dual fuel vehicles (except electric vehicles) that could be taken by manufacturers of those vehicles such that the credit was reduced from 1.2 mpg in model year 2014 (and previous model years) to 0.2 mpg in model year 2019 to `0 miles per gallon for model years after 2019.' Clearly, the EPA and NHTSA proposed treatment of model year 2020 and later dual fueled natural gas vehicles is overly generous and inconsistent with the intent and will of Congress. It should be set aside.”
EPA is finalizing the CAFE compliance treatment for MY 2020 and later, as proposed, with one change being the addition of eligibility requirements for dual fuel CNG vehicles to be able to use the utility factor approach. For the reasons discussed above for GHG emissions compliance, EPA is adopting the same approaches for weighting the fuel economy compliance values for dual fuel vehicles: using utility factors for PHEVs and dual fuel CNG vehicles (the latter must meet the eligibility requirements), and providing manufacturers the option of using national average E85 usage data, manufacturer-specific E85 usage data, or a 100% gasoline default value for ethanol FFVs. EPA is adopting the 0.15 divisor, and petroleum equivalency factor for PHEVs, for dual fuel vehicle CAFE compliance in MY 2020 and later, for two reasons. One, this approach is directionally consistent with the overall petroleum reduction goals of EPCA and the CAFE program, because it reflects the much lower or zero petroleum content of alternative fuels and continues to encourage manufacturers to build vehicles capable of operating on fuels other than petroleum. Two, the 0.15 divisor and petroleum equivalency factor (PEF) are used under EPCA to calculate CAFE compliance values for dedicated alternative fuel vehicles, and retaining this approach for dual fuel vehicles maintains consistency, for MY 2020 and later, between the approaches for dedicated alternative fuel vehicles and for the alternative fuel portion of dual fuel vehicle operation.
In response to the comment from the American Petroleum Institute, EPA recognizes that use of the 0.15 divisor, and petroleum equivalency factor for PHEVs, will continue to provide a large increase in CAFE compliance values for the vehicles previously covered by the special calculation procedures in 49 U.S.C. 32905, and that Congress chose both to end the specific calculation procedures in that section and over time to reduce the benefit for CAFE purposes of the increase in fuel economy mandated by those special calculation procedures. However, the MY 2020 and later methodology differs significantly in important ways from the special calculation provisions mandated by EPCA. Most importantly, the MY 2020 and later methodology reflects actual usage rates of the alternative fuel and does not use the artificial 50/50 weighting previously mandated by 49 U.S.C. 32905. In practice this means the primary vehicles to benefit from the MY 2020 and later methodology will be PHEVs and dual-fuel CNG vehicles, and not ethanol FFVs, while the primary source of benefit to manufacturers under the statutory provisions came from ethanol FFVs. Changing the weighting to better reflect real world usage is a major change from that mandated by 49 U.S.C. 32905, and it orients the calculation procedure more to the real world impact on petroleum usage, consistent with the statute's overarching purpose of petroleum conservation. In addition, as noted above, Congress maintained the 0.15 divisor in the calculation procedures for dedicated alternative fuel vehicles that result in increased fuel economy values. Finalizing the 0.15 divisor for dual fuel vehicles is consistent with this, as it uses the same approach for calculating fuel economy on the alternative fuel when there is real world usage of the alternative fuel. Since the MY 2020 and later methodology is quite different in effect from the specified provisions in 49 U.S.C. 32905, and is consistent with the calculation procedures for dedicated vehicles that use the same alternative fuel, EPA believes this methodology is an appropriate exercise of discretion under the general authority provided in 49 U.S.C. 32904.
Bosch and the Motor and Equipment Manufacturers Association commented that all types of alternative fuels, including biodiesel, be treated “equivalently” under the CAFE program. EPA agrees with these comments, and all dedicated alternative fuel vehicles will use the 0.15 divisor in CAFE calculations for MY 2020 and later. In addition, vehicles capable of operating on diesel containing at least 85% biodiesel (B85), will also use the 0.15 divisor in CAFE calculations for MY 2020 and later. While B85 may not be considered an alternative fuel under EPCA at this time, 20% biodiesel (B20) is recognized by Congress for purposes of section 32905, and B85 exhibits the same or better petroleum replacement benefits as the 85% alcohol blend alternative fuels currently used in FFVs. The American Council for an Energy-Efficient Economy, Encana Natural Gas, Inc., and NGV America recommended that utility factors be used for CAFE calculations prior to 2020. EPA is rejecting this recommendation, as EPCA requires the Agency to assume 50% use of the conventional fuel and 50% use of the alternative fuel for CAFE calculations through MY 2019. Finally,
For MYs 2012–2016, EPA provided an option for manufacturers to generate credits by employing new and innovative technologies that achieve CO2 reductions which are not reflected on current 2-cycle test procedures. For this final rule, EPA, in coordination with NHTSA, is applying the off-cycle credits, and equivalent fuel consumption improvement values, to both the GHG and CAFE programs for MY 2017 and later. This is a change from the 2012–16 final rule where EPA only provided the off-cycle credits for the GHG program. For MY 2017 and later, manufacturers may continue to use off-cycle credits for GHG compliance and begin to generate and use fuel consumption improvement values (essentially equivalent to EPA credits) for CAFE compliance. In addition, EPA, in coordination with NHTSA, is adopting a list of defined (i.e. default) values for identified off-cycle technologies that would apply unless the manufacturer demonstrates that a different value for its technologies is appropriate.
There are two key changes EPA is making to the proposal based on comments received. First, EPA is allowing the pre-defined list to be used starting in MY 2014, rather than the proposed starting point of MY 2017. This change does not apply to CAFE, where the off-cycle credits program does not begin until MY 2017. Second, EPA is not finalizing the proposed minimum penetration thresholds for technologies on the pre-defined list. For most of the listed technologies, the minimum threshold as proposed would have required manufacturers to use the listed technologies on at least 10 percent of their production before the manufacturer could begin generating credits based on the pre-defined list. All of the changes to the EPA off-cycle credit program for the GHG program are described in Section III.C.5.a–b below, and those for the CAFE program are described in Section III.C.5.c below.
In the MY 2012–2016 final rule, EPA adopted an optional credit opportunity for new and innovative technologies that reduce vehicle CO
In the MY 2012–2016 rule, EPA finalized a two-tiered process for OEMs to demonstrate that CO
If the manufacturer finds that the technology is such that the benefit is not adequately captured using the 5-cycle approach, then the manufacturer would have to develop a robust methodology, subject to EPA approval, to demonstrate the benefit and determine the appropriate CO
EPA has been encouraged by automakers' interest in developing innovative technologies which could be used to generate off-cycle credits. Though it is early in the program, several manufacturers have shown interest in introducing off-cycle technologies which are in various stages of development and testing. EPA believes that continuing the option for off-cycle credits will further encourage innovative strategies for reducing CO
In implementing the program, some manufacturers expressed concern prior to proposal that a drawback to using the program is uncertainty over which technologies may be eligible for off-cycle credits plus uncertainties resulting from a potentially cumbersome case-by-case approval process. See 76 FR 75021. As noted above, EPA eligibility criteria adopted in the MY 2012–2016 final rule require technologies to be new, innovative, and not in widespread use in order to qualify as a source of off-cycle credit generation. Also, the MY 2012–2016 final rule specifies that technologies must not be significantly
In addition, as described below in section III.C.5.b.i, EPA is finalizing a new credit pathway that allows manufacturers to generate credits by using technologies listed on an EPA pre-defined and pre-approved technology list, and to do so starting with MY 2014. These credits will be verified and approved as part of certification with no prior approval process needed. We believe this new option significantly streamlines and simplifies the program for manufacturers choosing to use it and will provide manufacturers with certainty that credits may be generated through the use of pre-evaluated and approved technologies. For credits not based on the pre-defined list, EPA is finalizing as proposed a streamlined and better defined step-by-step process for demonstrating emissions reductions and for applying for credits under the existing credit pathways. EPA is finalizing these procedural changes to the existing case-by-case pathways effective for new credit applications for the MY 2012–2016 program as well as for MY 2017 and later for credits that are not based on the pre-defined list.
As discussed in section II.F and III.B.10, EPA, in coordination with NHTSA, is also finalizing the proposed provision allowing manufacturers to include fuel consumption reductions resulting from the use of off-cycle technologies in their CAFE compliance calculations. This provision would apply starting in MY 2017. Manufacturers may generate “fuel consumption improvement values” essentially equivalent to EPA credits, for use in the CAFE program. The changes to the CAFE program to incorporate off-cycle technologies are discussed below in section III.5.c.
As noted above, EPA proposed and is finalizing a list of off-cycle technologies from which manufacturers can select and by doing so automatically generate a pre-defined level of CO
EPA proposed that manufacturers could begin generating credits based on the pre-defined list beginning in MY 2017. EPA also solicited comment generally on ways to liberalize the pre-2017 MY procedures for obtaining off-cycle CO
EPA agrees that the credits on the pre-defined list are based on conservative estimates of real world off-cycle CO
EPA is allowing use of the credit list starting with MY 2014. For MY 2012–2013, it is too late for the provisions to have the desired effect of encouraging the use of off-cycle technologies on additional vehicle models (MY 2012 is almost complete and MY 2013 is underway). Allowing the pre-defined list to be used in these model years would effectively provide credits for actions manufacturers have already taken for reasons other than gaining off-cycle credits. For manufacturers not pursuing credits under the existing program, they would have already decided to forego potential off-cycle credits in these model years. Providing credits for MY 2012–2013 through the use of the list thus could be viewed as a windfall—providing credits for conduct which would occur anyway rather than creating an incentive to introduce new technologies. EPA therefore is not allowing the list to be used before MY 2014.
Extending the use of the pre-defined list to MYs 2014–2016 is not appropriate for the CAFE program. Although EPA included the off-cycle credit program when adopting the GHG emissions standards for these model years, see 76 FR 75022, NHTSA did not include an off-cycle credit program when adopting the CAFE standards for those model years. Fuel economy improvement values in the CAFE program, and associated comments, are discussed further in section III.5.c, below.
Table III–19 provides the list of the technologies and per vehicle credit levels included in the final rule for cars and light trucks. The manufacturer must demonstrate in the certification process that its technology meets the definition for the listed technology (see § 86.1869–12(d)(1)(iv)). EPA has made changes to some of the technologies and credit values on the list based on comments the agencies received. Section II.F of the preamble provides an overview of the technologies, credit values, and comments the agencies received on the proposed technology list. Chapter 5 of the joint TSD provides a further detailed description of how these technologies
As proposed, EPA is capping the amount of credits a manufacturer may generate using the above list to 10 g/mile per year on a combined car and truck fleet-wide average basis. As proposed, manufacturers wanting to generate credits in excess of the 10 g/mile limit for these listed technologies could do so by generating necessary data and going through the credit approval process described below in Section III.C.5.b.iii and iv. In addition, the cap does not apply on a vehicle model basis, allowing manufacturers the flexibility to focus off-cycle technologies on certain vehicle models and to generate credits for that vehicle model in excess of 10 g/mile. (The vehicle is of course part of the manufacturer's fleet wide average, and further credits from the list could remain available so long as the manufacturer's fleetwide credits remained less than or equal to 10 g/mile.) EPA is finalizing a fleet-wide cap because the default credit values are based on limited data, and also because EPA recognizes that some uncertainty is introduced when credits are provided based on a general assessment of off-cycle performance as opposed to testing on the individual vehicle models.
EPA received several comments regarding the 10 g/mile credit cap for the pre-defined technology list. Some manufacturers commented that the credit cap should be removed, primarily for the following reasons; (1) the credits on the list are based on conservative estimates of real-world reductions and industry should receive credits for all applications without requiring additional testing, and (2) the cap is counterproductive as it discourages the maximum adoption of the pre-defined off-cycle technologies (since there would be less incentive to introduce technologies that would take the manufacturer beyond the cap). NRDC and ICCT commented in support of the 10 g/mile credit cap because some uncertainty is inherent with using estimates rather than vehicle model specific test data. NRDC recommended that EPA fully evaluate the adequacy of the 10 g/mile cap level, given the uncertainties in real, verifiable emissions reductions, and to adopt a lower cap if necessary.
EPA has reviewed the level of credits being provided for listed technologies and the basis for those estimates, as discussed in section II.F, and EPA continues to believe that the 10 g/mile cap is appropriate. The cap balances the goal of providing a streamlined pathway to encourage significant introduction of innovative off-cycle technologies with the environmental risk from the uncertainty inherent with the estimated level of credits being provided. EPA believes that 10 g/mile is substantial relative to the overall emissions reduction obligation of manufacturers (for example, 10 g/mile represents over 11% of the difference between a fleet average of 250 g/mile and 163 g/mile), and that the cap will not be particularly limiting or deter manufacturers from introducing technology. Manufacturers would need to use several listed technologies across a very large portion of their fleet before they would reach the cap. Based on manufacturer comments regarding the proposed penetration thresholds, discussed below, manufacturers in general are not anticipating widespread adoption of these technologies, at least not in the early years of the program. Also, the cap is not an absolute limitation because manufacturers have the option of submitting data and applying for credits which would not be subject to the 10 g/mile credit limit. EPA thus believes credits generated beyond the 10 g/mile credit cap should be based on additional manufacturer-specific data.
In the NPRM, EPA discussed the possibility of adding technologies to the list based on data provided by manufacturers, and other available data, through future rulemaking. EPA received comments supporting revisiting the list annually, or from time to time as data become available, with one commenter recommending that the list be revisited and fully examined during the mid-term review. EPA received one comment objecting to providing additional credits without a rulemaking. EPA also received comment that the 10 g/mile cap discussed above should be revisited if the list is expanded in the future. EPA is not announcing a regular schedule to revisit the list, since it is unclear what the timing might be for other technologies to emerge with sufficient data supporting their consideration. However, EPA plans to monitor the emission reduction potential of off-cycle technologies in coordination with NHTSA. If the CO
EPA also proposed to require minimum penetration rates for several of the listed technologies as a condition for generating credit from the list as a way to further encourage their significant adoption by MY 2017 and later. This proposal was intended to support the programmatic objective of encouraging market penetration of the technologies. See 76 FR 75023. Under the proposed approach, at the end of the model year for which the off-cycle credit is claimed, manufacturers would need to demonstrate that production of vehicles equipped with the technologies for that model year met or exceeded the percentage thresholds in order to receive the listed credit. EPA proposed to set the threshold at 10 percent of a manufacturer's overall combined car and light truck production for some technologies on the list.
EPA received several comments from manufacturers and suppliers recommending that EPA not adopt the proposed penetration thresholds. Commenters provided several reasons for not adopting thresholds, including; (1) actions to reduce emissions should be recognized on a per-vehicle-so-equipped basis, (2) thresholds unfairly withholds credit for actual, real-world emission reductions that are achieved in the early stages of technology roll-out, (3) the minimum threshold does not incentivize the introduction of these technologies, which typically require extensive development at significant cost. Instead, manufacturers may choose not to implement new technologies, or to delay introduction based on the fact that they cannot know with certainty if they will be able to meet the proposed penetration rates. Business cases for some of these new technologies will be based on the ability to achieve expected credit amounts, (4) it is common practice for new automotive technologies to be introduced on a single model, or even single configuration within a model. This low production trial period allows manufacturers to monitor technology performance and reliability, and to gauge consumer acceptance. Achieving a 10 percent market penetration can take a decade or more for certain technologies, (5) new, expensive technologies often are applied first on more expensive, lower volume models. This process has the salutary effect of lowering a manufacturer's risk, (6) a smaller penetration rate would create a correspondingly smaller credit, so we see no problem being created at lower penetration levels, and (7) EPA has failed to demonstrate a clear need for the minimum penetration restriction. EPA did not receive any comments in support of the proposed penetration thresholds.
EPA has decided not to adopt penetration thresholds as a condition for generation credits using the pre-defined list. EPA proposed the thresholds as a way to encourage the widespread adoption of off-cycle technologies by encouraging manufacturers to use the technologies on larger volume models. EPA believes that several points raised by the commenters are persuasive in demonstrating that a penetration threshold could have the opposite effect, dissuading manufacturers from introducing technologies. EPA agrees that in some cases manufacturers would proceed by introducing technologies on lower production volume vehicles in order to gain experience with them and to gauge market acceptance. EPA does not want to discourage this practice. The ability to generate additional credits by increasing the use of the technologies across their fleet will encourage manufacturers to bring off-cycle technologies into the mainstream. In addition, there is no loss of environmental benefits if the thresholds are not adopted.
As discussed above, EPA originally established the off-cycle credit program in the MY 2012–2016 program. EPA expects that the pre-defined list may become the primary pathway for off-cycle credit generation due to the streamlined process the list provides. However, the ability of manufacturers to generate credits beyond or in addition to those included in the pre-defined technology list based on manufacturer test data remains part of the off-cycle credits program under both the MYs 2012–2016 and MY 2017–2025 programs. EPA proposed and is finalizing several changes to the off-cycle credits pathway procedures originally established in the MY 2012–2016 rule.
As proposed, EPA is removing the criteria in the 2012–2016 rule that off-cycle technologies must be `new, innovative, and not in widespread use.' EPA proposed to remove the criteria from the program because these terms are imprecise and have created implementation questions and uncertainty in the program. See 76 FR 75024. For example, under the criteria that technology must be “new” it has been unclear if technologies developed in the past but not used extensively would be considered new, if only the first one or two manufacturers using the technology would be eligible or if all manufacturers could use a technology to generate credits, or if credits for a technology would sunset after a period of time. These criteria have interfered with the goal of providing an incentive for the development and use of off-cycle technology that reduces CO
A further uncertainty in the MY2012–2016 rule was the requirement that off-cycle credits not be significantly measureable over the 2-cycle test. As noted at proposal, this left unclear whether technologies partially measureable over the 2-cycle test but generating significant additional CO
As proposed, technologies included in EPA's assessment in this rulemaking of technology for purposes of developing the standard would not be allowed to generate off-cycle credits, as their cost and effectiveness and expected use are already included in the assessment of the standard (with the exception of stop start and active
EPA received a variety of comments on these aspects of the program. Environmental groups were concerned that there could be double counting of credits if a technology provided 2-cycle emissions reductions. As noted above, only emissions reductions above and beyond those provided over the 2-cycle test may be counted as off-cycle credits. The test data provided by manufacturers, either 5-cycle or through the public process described below, must be sufficient to allow EPA to determine an incremental off-cycle benefit that is significantly greater than the 2-cycle benefit.
Global Automakers commented that eligibility for off-cycle credits should not be limited to add-on technologies. They commented that although it may be that making a credible demonstration of benefits for some integral technologies will be difficult, that is no reason to deny manufacturers the opportunity to do so. If EPA finds such a demonstration to lack credibility, it would be able to deny the manufacturer's credit request. Ford similarly commented that EPA should work with manufacturers to develop methods to demonstrate integral technologies that cannot be turned off or disabled such as advanced combustion concepts, cam-less engines, variable compression ratio engines, air/hydraulic micro hybrids/launch assist devices, and advanced transmissions.
EPA continues to believe it is appropriate to not provide off-cycle credits for technologies that are integral to basic vehicle design. EPA continues to believe it would be very difficult to accurately parse out the off-cycle benefits for some integral technologies such as engine changes and transmission improvements. EPA is also concerned that certain fundamental vehicle design elements may inherently provide better CO
Global Automakers further commented on EPA's proposal that technologies included in the agencies' standard-setting analysis may not generate off-cycle credits (with the exception of active aerodynamic devices and engine stop-start systems). EPA states that allowing such credits for these technologies would amount to “double-counting” of benefits. Global Automakers comment that there may emerge by 2025 advanced levels for current technologies that are capable of achieving greater benefits than current systems. Global Automakers commented that if a manufacturer can demonstrate that an advanced version of one of the technologies that is included in the standard-setting analysis can achieve greater benefits than projected by the agencies, and those benefits are not captured with the current test procedure, there is no justification for excluding these technologies from the off-cycle credit program.
Similarly, MEMA commented that there will very likely be future technologies—in addition to stop/start and active aerodynamics—that could result in both significant on-cycle and off-cycle benefits. MEMA believes that these dual-benefit technologies should not be precluded from consideration. For example, for any of the technologies that are considered in setting the standard (in other words, baseline technologies for the program), there could come a time when an on-cycle technology may evolve and provide a significant off-cycle benefit.
In response to these comments, EPA remains concerned with double counting issues if the program were to allow credits for technologies that EPA has accounted for in establishing the level of the standards. As with 2-cycle technologies which are fundamental to vehicle design, EPA believes the use of these technologies will be driven by the standards. As noted above, the fundamental purpose of the off-cycle credit program is to provide incentive for manufacturers to develop new technologies that provide significantly greater emissions reductions off-cycle than over the 2-cycle test. Therefore, double counting and windfall credits issues remain a concern for technologies EPA already accounts for in establishing the standards and therefore expects manufacturers to use widely to meet the standards. For these reasons, as proposed, EPA is not allowing credits for technologies described in Chapter 3 of the TSD.
As noted in the proposal, by removing the “new, innovative, not widespread use” criteria initially established in the MY 2012–2016 rule, EPA is also making clear that once approved, EPA does not intend to sunset a technology's credit eligibility or to deny credits to other vehicle applications using the technology, as may have been implied by those criteria under the MY 2012–2016 program. EPA believes, at this time, that it should encourage the wider use of technologies with legitimate off-cycle emissions benefits. See 76 FR 75024. Manufacturers demonstrating through the EPA approval process that the technology is effective on additional vehicle models would be eligible for
EPA received comments from manufacturers and suppliers in general support of not sunsetting the off-cycle credits program. EPA received comments from CBD that “the concept of allowing credit for the installation of new and energy efficient technology that cannot be measured by existing testing mechanisms is sound, as long as the duration of the credit period is brief and provides no disincentive to the implementation of other available features.” The commenter did not provide additional rationale as to why the credit period should be brief. For the reasons described above, EPA continues to believe that it is appropriate not to sunset credits for off-cycle technologies.
In those instances when a manufacturer is not using the default credit value provided by the pre-defined menu, EPA is retaining a two-tiered process for demonstrating the CO
The 5-cycle test procedures remain the starting point for manufacturers to demonstrate off-cycle emissions reductions. The MY 2012–2016 rulemaking established general 5-cycle testing requirements and EPA is finalizing several provisions to delineate what EPA expects as part of a 5-cycle based demonstration. EPA has received and approved one off-cycle credit application from a single manufacturer under the 5-cycle testing approach. Manufacturers requested clarification on the amount of 5-cycle testing that would be needed to demonstrate off-cycle credits, and EPA is finalizing the following as part of the step-by-step methodology manufacturers would follow to seek approval of credits. EPA is also finalizing a specific requirement that all applications include an engineering analysis for how the technology provides off-cycle emissions reductions.
As proposed, EPA is specifying that manufacturers would run an initial set of three 5-cycle tests with and without the technology providing the off-cycle CO
EPA proposed that if the initial three sets of 5-cycle results demonstrate a reduction of less than a 3 percent difference in the 5-cycle results with and without the off-cycle technology, the manufacturer would have to run two additional 5-cycle tests with and without the off-cycle technologies and verify the emission reduction using the EPA Light-duty Simulation Tool described in Section II.F. See 76 FR 75024–25. If the simulation tool supports credits that are less than 3 percent of the baseline 2-cycle emissions, then EPA would approve the credits based on the test results. EPA received comments from manufacturers that the additional 5-cycle testing would be burdensome and be unlikely to yield significantly different results. EPA also received comment that the use of the simulation tool should not be required, as it may not be appropriate for some applications. After reviewing the comments, EPA is not adopting an automatic triggering of the additional testing (i.e., the additional two sets of 5-cycle tests) and use of the vehicle simulation tool to verify credits. EPA agrees that there may be instances where additional test data is unnecessary. Instead, EPA will have the discretion to request additional testing in cases where the agency determines that the additional test would provide useful data in verifying credit levels. Further, EPA is not requiring manufacturers to use the EPA simulation tool, but EPA may use the simulation tool as a check to help verify the level of credits as part of the credit approval process. EPA is adopting the requirement for the initial three sets of 5-cycle testing as proposed. As outlined below, credits based on this methodology would be subject to a 60 day EPA review period starting when EPA receives a complete application, and this process based on 5-cycle testing would not include a public review.
EPA received comments that in many cases technologies would reasonably be expected to have no impact on certain test cycles. For example, cold weather technologies would be expected to have no impact on the SCO3 cycle. In these cases, it would be wasteful to require multiple tests for cycles that are not relevant and have no impact on the credits determination. EPA agrees with these comments and will allow manufacturers to submit an engineering analysis demonstrating that the technology has no effect (either positive or negative) on emissions for one or more of the 5-cycle tests. If EPA concurs with the manufacturer's engineering analysis, the manufacturer must submit only one test result for that test cycle, either with or without the off-cycle technology. The value will be held constant and used for all of the 5-cycle weighting calculations. If EPA does not agree with the manufacturer's determination and believes that the test cycles are relevant, EPA may request that the manufacturer conduct the testing and provide the test data.
EPA also received comment from Center for Biological Diversity disagreeing with the agencies' suggestion that even more off-cycle credits should be allowed, without any rulemaking, if some unspecified data supports them. In response, EPA has specified in the final rule (and in fact, in the proposal (76 FR 75024/3)), the data needed under the 5-cycle approach. Manufacturers may generate credits beyond the conservative credit values provided on the pre-defined list only if they provide the required vehicle specific test data supporting the credit application. This is a case by case application process by a manufacturer, and this type of adjudicative process does not require a rulemaking procedure. As discussed below, EPA has included a public review and comment process in cases where manufacturers develop non 5-cycle demonstrations.
In cases where the benefit of a technological approach to reducing CO
EPA has identified two general situations where manufacturers would need to develop their own demonstration methodology. The first is a situation where the technology is active only during certain operating conditions that are not represented by any of the 5-cycle tests. To determine the overall emissions reductions, manufacturers must determine not only the emissions impacts during operation but also real-world activity data to determine how often the technology is utilized during actual, in-use driving on average across the fleet. EPA has identified some of these types of technologies and has calculated a default credit for them, including items such as high efficiency (e.g., LED) lights and solar panels on hybrids. See Table III–19 above. In their demonstrations, manufacturers may be able to apply the same type of methodologies used by EPA as a basis for these default values (see TSD Chapter 5).
The second type of situation where manufacturers would need to develop their own demonstration data would be for technologies that involve action by the driver to make the technology effective in reducing CO
Several manufacturers expressed interested in credit opportunities based on eco driving modes and other driver interactive technologies, as discussed in Section II.F. The Alliance of Automobile Manufacturers commented that eco driving technologies are not sufficiently defined for the Alliance to propose specific credit definitions and criteria at this time, but the industry hopes that it can work with the agencies in the future to create off-cycle credits for these technologies. Commenters encouraged the agencies to consider alternative demonstration pathways and that they look forward to working with the agencies to develop new methodologies. Some manufacturers commented that the non 5-cycle credit pathway remains unclear. In response, EPA continues to believe that the data needed for demonstrating non 5-cycle technologies will likely be highly specific to the candidate technology and does not believe that it is practical to attempt to provide more specificity to the testing and data requirements at this time. EPA plans to work with manufacturers interested in pursuing credits under the non 5-cycle pathway. Upon request, EPA will informally review a manufacturer's planned methodology in coordination with NHTSA early in the process prior to the manufacturer undertaking testing and/or data gathering efforts in support of their application. This informal review would occur prior to the manufacturer submitting a formal application (and therefore would not include a public review process).
EPA requires off-cycle components to be durable in-use and continues to believe that this is an important aspect of the program. See 86.1866–12(d)(1)(iii). The technologies upon which the credits are based are subject to full useful life compliance provisions, as with other emissions controls. Unless the manufacturer can demonstrate that the technology would not be subject to in-use deterioration over the useful life of the vehicle, the manufacturer must account for deterioration in the estimation of the credits in order to ensure that the credits are based on real in-use emissions reductions over the life of the vehicle. In-use requirements apply to technologies generating credits based on the pre-defined list as well as to those based on a manufacturer's demonstration.
Prior to proposal, manufacturers requested clarification of these provisions and guidance on how to demonstrate in-use performance. As discussed in the proposal, EPA is clarifying that off-cycle technologies are considered emissions related components and all in-use requirements apply including defect reporting, warranty, and recall. See 76 FR 75026. OBD requirements do not apply under either the MY 2012–2016 or MY 2017 and later program and EPA did not propose any OBD requirements for off-cycle technologies. Manufacturers may establish maintenance intervals for these components in the same way they would for other emissions related components. The performance of these components would be considered in determining compliance with the applicable in-use CO
EPA received one comment requesting clarification regarding when
As proposed, EPA is finalizing a step-by-step process and timeline for reviewing credit applications and providing a decision to manufacturers. EPA proposed and is finalizing these clarifications and further detailed step-by-step instructions for new MY 2012–2016 credits as well as for MY 2017–2025. EPA believes these additional details are consistent with the general off-cycle requirements adopted in the MY 2012–2016 rule. As discussed above, starting in MY 2014, manufacturers may generate credits using a pre-defined technology list, and these technologies would not be required to go through the approval process described below.
• 5-cycle—Manufacturers would conduct the three sets of A/B 5-cycle testing as described above
• Non 5-cycle—Manufacturers would develop a methodology for non 5-cycle based demonstration and carry-out necessary testing and analysis
○ Manufacturers may opt to meet with EPA to discuss their plans for demonstrating technologies and seek EPA input prior to conducting testing or analysis
• Manufacturers conduct engineering analysis and/or testing to demonstrate in-use durability
The manufacturer application must contain the following:
• Description of the off-cycle technologies and engineering analysis of how they function to reduce off-cycle emissions
• The vehicle models on which the technology will be applied
• Test vehicles selection and supporting engineering analysis for their selection
• Required three sets of A/B 5-cycle test data
• An estimate of off-cycle credits by vehicle model, and fleetwide based on projected vehicle sales
• Engineering analysis and/or component durability testing or whole vehicle test data (as necessary) demonstrating in-use durability of components
• For credits not based on 5-cycle testing, all of the above with the exception of 5-cycle data, plus a complete description of methodology used to estimate credits and supporting data (vehicle test data and activity data)
○ Manufacturer may seek EPA input on methodology prior to conducting testing or analysis
Once EPA receives an application:
• EPA will review the application for completeness and within 30 days will notify the manufacturer if additional information or data is needed
• EPA will review the data and information provided to determine if the application supports the level of credits estimated by the manufacturers
• EPA will consult with NHTSA on the application and the data received in cases where the manufacturer intends to generate fuel consumption improvement values for CAFE in MY 2017 and later
• For 5-cycle based credits:
○ EPA may request additional sets of A/B 5-cycle test data where there is less than a three percent difference in A/B 5-cycle test results
○ EPA may conduct vehicle simulation tool analysis for candidate technology where there is less than a three percent difference in A/B 5-cycle test results
• For non 5-cycle based credits:
○ EPA will make the applications available to the public within 60 days of receiving a complete application
○ The public review period will be 30 day review of the methodology used by the manufacturer to estimate credits, during which time the public may submit comments.
○ Manufacturers may submit a written rebuttal of comments for EPA consideration or may revise their application in response to comments following the end of the public review period.
• For 5-cycle based credits, EPA, after consultation with NHTSA in cases where the manufacturer intends to generate fuel consumption improvement values for CAFE in MY 2017 and later, will notify the manufacturer of its decision within 60 days of receiving a complete application
• For non 5-cycle based applications where the rule does specify public participation and review, EPA will notify the manufacturer of its decision on the application after reviewing public comments.
• EPA will notify manufacturers in writing of its decision to approve or deny the credits application, and provide a written explanation for its action (supported by the administrative record for the application proceeding)
EPA received one comment that it is unclear from the proposal language whether the approval process will be completed and credits will be available in the same year the automaker provides data and requests approval for new off-cycle technologies. In response, EPA clarifies that submitting an application for off-cycle technologies is viewed as independent from the certification application process and off-cycle applications are not required to be submitted prior to the beginning of the model year. EPA has laid out its expectations regarding the timing of its review of credit applications. The specific timing of when credits are awarded will depend on when the agency receives a complete application and has concluded its review. If a manufacturer submits an application late in the model year, the approval process might not be concluded until after the end of the model year. Credits would not be available for use by the manufacturer until the application process has been concluded and credits have been verified. However, manufacturers would generate credits for the model year that has concluded for each vehicle built with the off-cycle technology, as long as the application is submitted prior to the end of the model year.
As proposed, EPA in coordination with NHTSA, will allow manufacturers to generate fuel consumption improvement values equivalent to CO
Manufacturers commented in support of providing equivalent fuel consumption improvement values for off-cycle technologies under the CAFE program, supporting the harmonization of the GHG and CAFE programs to the maximum extent possible. EPA and NHTSA also received comments that fuel consumption improvement values based on the pre-defined list should be available for CAFE in the MY 2012–2016 program. As discussed above, EPA is allowing credits toward the GHG standards to be generated based on the list in MY 2014. EPA believes that this is appropriate because it is a modification to an existing off-cycle credits program, which reduces manufacturer testing associated with the program. In contrast, CAFE does not contain an off-cycle program for MY 2012–2016. NHTSA did not take such credits into account when adopting the CAFE standards for those model years. As such extending the credit program to the CAFE program for those model years would not be appropriate.
The CO
As described in the proposal, EPA is taking the same basic approach in this rulemaking as that taken in the MYs 2012–2016 rulemaking and evaluating emissions control technologies which reduce CO
This focus on efficiency calls for looking at the vehicle as an entire system, and as in the MYs 2012–2016 rule, the final standards reflect this basic paradigm. In addition to fuel delivery, combustion, and aftertreatment technology, any aspect of the vehicle that affects the consumption of energy must also be considered. For example, the efficiency of the transmission system, which transmits mechanical energy from the engine to the wheels, and the rolling resistance of the tires both have major impacts on the amount of energy that is consumed while operating the vehicle. The braking system, the aerodynamics of the vehicle, and the efficiency of accessories, such as the air conditioner, also affect energy consumption. The mass of the vehicle also has a significant impact on its energy consumption.
In evaluating vehicle efficiency, EPA's analysis preserves all existing vehicle utility. That is, in evaluating available technologies and potential compliance pathways, we preserve vehicle utility and thus do not consider fundamental changes in vehicles' utility.
The Center for Biological Diversity commented that “[t]he Agencies have selected standards that value purported consumer choice and the continued production of every vehicle in its current form over the need to conserve energy: as soon as increased fuel efficiency begins to affect any attribute of any existing vehicle, stringency increases cease. That is clearly impermissible and contrary to Congressional purpose.” (CBD Comments p. 4). The commenter is mistaken. In evaluating the costs of the rule, the agencies have included costs to preserve vehicle utility but certainly have not “ceased * * * increases in stringency” in the face of those costs. Indeed, were the commenter correct, the standards for cars and trucks would not increase in stringency each model year. Moreover, “if CBD is advocating a radical reshifting of domestic fleet composition (such as requiring U.S. consumers to purchase much smaller vehicles and requiring U.S. consumers to purchase vehicles with manual transmissions), it is sufficient to say that standards forcing such a result are not compelled under section 202(a), where reasonable preservation of consumer choice remains a pertinent factor for EPA to consider in balancing the relevant statutory factors.” 75 FR 25467 (May 7, 2010). The agencies' approach also makes evident common sense. If vehicles subject to these standards lack the utility that consumers desire, the vehicles will not be purchased and the ultimate goals of decreased GHG emissions and energy conservation will be derogated rather than furthered. See also
This need to focus on the efficient use of energy by the vehicle as a system leads to a broad focus on a wide variety of technologies that affect vehicle design. As discussed below, there are many technologies that are currently available which can reduce vehicle energy consumption. Several of these are advanced technologies and are already being commercially utilized to a limited degree in the current light-duty fleet. Examples include hybrid technologies that use high efficiency batteries and electric motors in combination with or instead of internal combustion engines, plug-in hybrid electric vehicles, and battery-electric vehicles. While already commercialized, these technologies continue to be developed and offer the potential for even more significant efficiency improvements. There are also other advanced technologies under development and not yet on production vehicles, such as 24 and 27 bar BMEP engines with cooled EGR, which offer the potential to move gasoline combustion efficiency closer to its thermodynamic limit. In addition, the available technologies are not limited to powertrain improvements but also include a number of technologies that are expected to continually improve incrementally, such as engine friction reduction, tire rolling resistance reduction, mass reduction, electrical system efficiencies, and aerodynamic improvements.
The large number of possible technologies to consider and the breadth of vehicle systems that are affected mean that consideration of the manufacturer's design, product development and manufacturing process plays a major role in developing the final standards. Vehicle manufacturers typically develop many different models based on a limited number of vehicle platforms. The platform typically consists of a common set of vehicle architecture and structural components.
This final rule affects nine years of vehicle production, model years 2017–2025.
EPA's technical assessment of the final MY2017–2025 standards is described below. EPA has also evaluated a set of alternative standards for these model years, two of which are more stringent and two of which are less stringent than the promulgated standards. The technical assessment of these alternative standards in relation to the final standards is discussed at the end of this section.
Evaluating the appropriateness of these standards includes a core focus on identifying available technologies and assessing their effectiveness, cost, and impact on relevant aspects of vehicle performance and utility. The wide number of technologies which are available and likely to be used in combination requires a sophisticated assessment of their combined cost and effectiveness. An important factor is also the degree that these technologies are already being used in the current vehicle fleet and thus, unavailable for use to reduce GHGs beyond current levels. Finally, we consider the challenge for manufacturers to design
Applying these technologies efficiently to the wide range of vehicles produced by various manufacturers is a challenging task involving dozens of technologies and hundreds of vehicle platforms. In order to assist in this task, as in the MYs 2012–2016 rulemaking, EPA is again using a computerized program called the Optimization Model for reducing Emissions of Greenhouse gases from Automobiles (OMEGA). No comments were received on the use of the OMEGA model. Broadly, OMEGA starts with a description of the future vehicle fleet (i.e. the `reference fleet'; see section II.B above),
The remainder of this section describes the technical feasibility analysis in greater detail. Section III.D.1 describes the development of our reference and control case projections of the MY 2017–2025 fleet. Section III.D.2 describes our estimates of the effectiveness and cost of the control technologies available for application in the 2017–2025 timeframe. Section III.D.3 describes how these technologies are combined into packages that are likely to be applied by manufacturers to comply with the standards. In this section, the overall effectiveness of the technology packages vis-à-vis their effectiveness when adopted individually is described. Section III.D.4 describes EPA's OMEGA model and its approach to estimating how manufacturers will add technology to their vehicles in order to comply with potential CO
In order to calculate the impacts of this final rule, it is necessary to project the GHG emissions characteristics of the future vehicle fleet absent the final regulation. As discussed in Preamble I, for this final rulemaking, EPA has analyzed the costs and benefits of the standards using two different scenarios of the baseline fleet and future fleet projections. EPA is presenting its primary analysis of the standards using essentially the same baseline/future fleet projection that was used in the NPRM (i.e., based on the MY 2008 baseline fleet, AEO2011 interim projection of future fleet sales volume, and the future fleet forecast conducted by CSM).
EPA and NHTSA develop this projection of the future vehicle fleet using a three step process. (1) Develop a set of detailed vehicle characteristics and sales for a specific model year (in this case, 2008). This is called the baseline fleet. (2) Adjust the sales of this baseline fleet using projections made by the Energy Information Administration (EIA) and CSM to account for projected sales volumes in future MYs absent future regulation.
Thus, the analyzed fleet differs from the MY 2008 baseline fleet in both the level of technology utilized and in terms of the sales of any particular vehicle. A similar method is used to analyze both reference (which assume that the MY 2016 standards are maintained indefinitely) and the control cases, with the major distinction being the stringency of the standards.
EPA and NHTSA perform steps one and two above in an identical manner. The development of the characteristics of the baseline 2008 fleet and the sales adjustment to match AEO and CSM forecasts is described in Section II.B above and in greater detail in Chapter 1 of the joint TSD. The two agencies perform step three in a conceptually identical manner, but each agency utilizes its own vehicle technology and emission model to project the technology needed to comply with the reference and final standards. Further, each agency evaluates its own final and MY 2016 standards; neither NHTSA nor
The use of MY 2008 vehicles
In this final rule, EPA is assuming, based on the following rationale and as in the proposal, that in the absence of more stringent GHG and CAFE standards, the reference case fleet in MY 2017–2025 would have fleetwide GHG emissions performance equal to that necessary to meet the MY 2016 standards.
One critical factor supporting the final approach is that AEO2012 Early Release projects relatively stable gasoline prices over the next 13 years. The average actual price in the U.S. for the first four months of 2012 for regular gasoline was $3.68 per gallon
As discussed at proposal, these are reasonable assumptions to make for a reference case. See 76 FR 75030–31. EPA has reviewed the historical record for similar periods when there were relatively stable fuel economy standards and gasoline prices. EPA maintains, and publishes every year, the authoritative reference on new light-duty vehicle CO
Since the MYs 2012–2016 standards are footprint-based, every major manufacturer is expected to be constrained by the new standards in 2016, and manufacturers of small vehicles will not routinely over-comply as they had with the past universal CAFE standards.
While EPA exclusively assumed a “flat” baseline in the proposal, NHTSA used a flat baseline for its primary analysis, but assumed an “increasing” baseline (i.e., a market-driven fuel economy improvement in MYs 2017–2025 beyond the projected 34.1 mpg fleetwide CAFE level in MY 2016) in a sensitivity analysis. The agencies received five comments on this topic. The American Council for an Energy-Efficient Economy stated “[t]here is little historical basis for a scenario in which there is a sustained increase in fuel economy in the absence of increases in standards. Public interest in fuel economy does shift with fuel prices, but even that interest typically has followed from large, rapid changes in price and has been short-lived. The fuel prices on which the various agency analyses are largely based are EIA projections and do not contain dramatic increases in price.” The Environmental Defense Fund “supports EPA's proposal to assume the reference case fleet in MY 2017–2025 would have fleet wide GHG emissions performance no better than that projected to be necessary to meet the MY 2016 standards. Because EPA is using AEO2011 fuel price forecasts, which project relatively stable fuel prices over the next 15 years, it is reasonable to assume that manufacturers will not over comply with the 2016 standards and/or consumers will not demand fuel economy greater than the 2016 standard.” The International Council on Clean Transportation argued that “[t]he proposed 2017–2025 standards follow aggressive increases in standards from 2011 through 2016. Further, the change to a footprint-based standard means that all manufacturers must increase the efficiency of their vehicles to comply, even manufacturers of primarily smaller vehicles. Thus, the 2012–2016 standards have already driven the market beyond the level of efficiency it would have demanded in the absence of standards.” The Natural Resources Defense Council and joint Sierra Club/Environment America/Safe Climate Campaign/Clean Air Council comment echoed these arguments.
In sum, all five comments on this topic supported EPA's exclusive use of a flat baseline, and no comments supported a sensitivity case with an increasing baseline.
Based on the above data-driven rationale for a flat baseline, along with the fact that all of the public comments on this topic support a flat baseline, EPA reaffirms the reasonableness of its assumption in the proposal that, in the absence of more stringent standards, the greenhouse gas emissions performance of MY 2017–2025 vehicles would remain at MY 2016 levels, and therefore has used a “flat” baseline for the analysis in this final rulemaking.
Based on this assessment, the EPA My 2008 based reference case fleet is estimated through the target curves defined in the MY 2016 rulemaking applied to the projected MYs 2017–2025 fleet.
For the emission control scenario (i.e. scenarios where there are standards for MYs 2017–2025 which differ from the MY 2016 standards), EPA modeled the final standard curves discussed in Section III.B, as well as the alternative scenarios discussed in III.D.6.d. Certain flexibilities are also accounted for in the analysis. Air conditioning credits (both leakage and efficiency) discussed in section III.C.1 and III.D.2 are included in the cost and technology analysis described below. Full size pick-up truck HEV credits are also modeled in this final rule analysis. See 76 FR 75082 (noting that modeling for the final rule might include these credits.) The compliance value of 0 g/mile for EVs and the electric portion of PHEVs are also included. In a change from the proposal, we have also included some off-cycle credits (start-stop systems and active aerodynamic improvements) in the cost assessment as these technologies' two-cycle benefits were already assumed in EPA's list of technology packages (i.e. the technology packages modeled by OMEGA). See 76 FR 75022 and section III.C.5 above.
EPA notes that the stringency of the final standards reflects use of air conditioning improvements and use of the 2-cycle values for the stop-start and active aerodynamic off-cycle technologies. These technologies are highly cost effective, and the improvements in GHG emissions attributable to use of these technologies can be reliably quantified.
In order to create future technology projections and enable compliance with the modeled standards, EPA aggregates vehicle sales by a combination of manufacturer, vehicle platform, and engine design for the OMEGA model. As discussed above, manufacturers implement major design changes at vehicle redesign and tend to implement these changes across a vehicle platform (such as large SUV, mid-size SUV, large automobile, etc) at a given manufacturing plant. Because the cost of
EPA and NHTSA worked together to develop information on the effectiveness and cost of most CO
EPA expects all manufacturers will choose to use A/C improvement credit opportunities as a strategy for complying with the CO
Additionally, by MY 2019, EPA estimates that 100% of the A/C efficiency improvements will by fully phased-in. However 85% of these costs are already in the reference fleet, as this is the level of penetration assumed in the MYs 2012–2016 final rule. The penetration of A/C improvements and costs for this final rule can be found in Chapter 5 of the joint TSD.
Individual technologies can be used by manufacturers to achieve incremental CO
As in the proposal, EPA built unique technology packages for each of 19 “vehicle types,” which, as in the MYs 2012–2016 rule and the proposal, provides sufficient resolution to represent the technology of the entire fleet at varying levels of stringency.
Within each of the 19 vehicle types, multiple technology packages were created with increasing technology content and resulting increases in effectiveness. As stated earlier, with few exceptions, each technology package is meant to provide the same driver-perceived performance and utility as the baseline package. Note that we refer throughout this discussion of package building to a “baseline” package. This should not be confused with the baseline fleet, which is the fleet of roughly 16 million 2008MY individual vehicles comprised of over 1,300 vehicle models. In this discussion, when we refer to “baseline” packages we refer to the “baseline” configuration of the given vehicle type. So, we have 19 baseline packages in the context of building packages. Each of those 19 baseline packages is comprised of a port fuel injected engine and a 4 speed automatic transmission, the valvetrain configuration and the number of cylinders changes for each vehicle type in an effort to encompass the diversity in the 2008 baseline fleet as discussed above. We describe this in more detail in Chapter 1 of EPA's RIA.
To develop a set of packages as OMEGA inputs, EPA builds packages consisting of every feasible combination of technology available, subject to constraints.
Table III–23 presents technology costs for a subset of the more prominent technologies in our analysis (note that all technology costs are presented in Chapter 3 of the Joint TSD and in Chapter 1.2 of EPA's RIA). Table III–23 includes technology costs for a V6 dual overhead cam midsize car and a V8 overhead valve large pickup truck. This table is meant to illustrate how technology costs are similar and/or different for these two large selling vehicle classes and how the technology costs change over time due to learning and indirect cost changes as described in section II.D of this preamble and at length in Chapter 3.2 of the Joint TSD. Note that these costs are not package costs but, rather, individual technology costs. We present package costs for the V6 midsize car in Table III–24, below.
As discussed in II.D, we received relatively few detailed comments on technology cost and effectiveness, with the primary comments from NADA and
As detailed in Chapter 1 of EPA's RIA, this master-set of packages is then ranked according to technology application ranking factors (TARFs) to eliminate packages that are not as cost-effective as others.
The OMEGA model can utilize several approaches to determining the order in which vehicles receive technologies. For this analysis, EPA used a “manufacturer-based net cost-effectiveness factor” to rank the technology packages in the order in which a manufacturer is likely to apply them. Conceptually, this approach estimates the cost of adding the technology from the manufacturer's perspective and divides it by the mass of CO
Given this definition, the higher priority technologies are those with the lowest manufacturer-based net cost-effectiveness value (relatively low technology cost or high fuel savings leads to lower values). Because the order of technology application is set for each vehicle, the model uses the manufacturer-based net cost-effectiveness primarily to decide which vehicle receives the next technology addition. Initially, technology package #1 is the only one available to any particular vehicle. However, as soon as a vehicle receives technology package #1, the model considers the manufacturer-based net cost-effectiveness of technology package #2 for that vehicle and so on. In general terms, the equation describing the calculation of manufacturer-based cost effectiveness is as follows:
EPA describes the technology ranking methodology and manufacturer-based cost effectiveness metric in greater detail in the OMEGA documentation.
When calculating the fuel savings in the TARF equation, the full retail price of fuel, including taxes is used. While taxes are not generally included when calculating the cost or benefits of a regulation, the net cost component of the manufacturer-based net cost-effectiveness equation is not a measure of the social cost of this final rule, but a measure of the private cost, (i.e., a measure of the vehicle purchaser's willingness to pay more for a vehicle with higher fuel efficiency). Since vehicle operators pay the full price of fuel, including taxes, they value fuel costs or savings at this level, and OMEGA presumes that manufacturers will consider this when choosing among the technology options.
The values of manufacturer-based net cost-effectiveness for specific technologies will vary from vehicle to vehicle, often substantially. This occurs for three reasons. First, the technology cost, change in ownership fuel costs, and lifetime CO
The result of this TARF ranking process is a “ranked-set” of over 700 packages for use as OMEGA inputs, or roughly 40 per vehicle type. EPA prepares a ranked-set of packages for any MY in which OMEGA is run,
Table III–24 presents the cost and effectiveness values from a 2025MY ranked-set of packages used in the OMEGA model for EPA's vehicle type 3, a midsize or standard car class equipped with a V6 engine. Similar packages were generated for each of the 19 vehicle types and the costs and effectiveness estimates for each of those packages are discussed in detail in Chapter 1 of EPA's RIA.
As discussed, there are many ways for a manufacturer to reduce CO
The OMEGA model utilizes four basic sets of input data. The first is a description of the vehicle fleet. The key pieces of data required for each vehicle are its manufacturer, CO
The second type of input data used by the model is a description of the technologies available to manufacturers, primarily their cost, effectiveness, and any credit value that they accrue during the compliance process. As noted previously, accounting for credit value is a change from the proposal, and allows EPA to more accurately reflect compliance related impacts of technology usage in its cost assessment. This information was described above as well as in Chapter 3 of the Joint TSD and Chapter 1 of EPA's RIA. In all cases, the order of the technologies or technology packages for a particular vehicle type is determined by the model user prior to running the model. The third type of input data describes vehicle operational data, such as annual vehicle scrappage rates and mileage accumulation rates, and economic data, such as fuel prices and discount rates. These estimates are described in Section II.E above, Section III.H below and Chapter 4 of the Joint TSD.
The fourth type of data describes the CO
As mentioned above for the market data input file utilized by OMEGA, which characterizes the vehicle fleet, our modeling accounts for the fact that many baseline vehicles are already equipped with one or more of the technologies discussed in Section III.D.2 above. Because of the choice to apply technologies in packages, and because MY 2008 vehicles are equipped with individual technologies in a wide variety of combinations, accounting for the presence of specific technologies in terms of their proportion of package cost and CO
Thus, EPA developed a method to account for the presence of the combinations of applied technologies in terms of their proportion of the technology packages. This analysis can be broken down into four steps.
The first step in the process is to break down the available GHG control technologies into five groups: (1) Engine-related, (2) transmission-related, (3) hybridization, (4) weight reduction and (5) other. Within each group, each individual technology was given a ranking which generally followed the degree of complexity, cost and effectiveness of the technologies within each group. More specifically, the ranking is based on the premise that a technology on a baseline vehicle with a lower ranking would be replaced by one with a higher ranking which was contained in one of the technology packages which we included in our OMEGA modeling. The corollary of this premise is that a technology on a baseline vehicle with a higher ranking would be not be replaced by one with an equal or lower ranking which was contained in one of the technology packages which we chose to include in our OMEGA modeling. This ranking scheme can be seen in an OMEGA pre-processor (the TEB/CEB calculation macro), available in the docket.
In the second step of the process, these rankings were used to estimate the complete list of technologies which would be present on each baseline vehicle after the application of a technology package. In other words, this step indicates the specific technology on each baseline vehicle after a package has been applied to it. EPA then used the lumped parameter model to estimate the total percentage CO
The third step in this process is to account for the degree to which each technology package's incremental effectiveness and incremental cost is affected by the technology already
As described in Section III.D.3 above, technology packages are applied to groups of vehicles which generally represent a single vehicle platform and which are equipped with a single engine size (e.g., compact cars with four cylinder engine produced by Ford). These groupings are described in Table III–21. Thus, the fourth step is to combine the fractions of the CEB and TEB of each technology package already present on the individual MY 2008 vehicle models for each vehicle grouping. For cost, percentages of each package already present are combined using a simple sales-weighting procedure, since the cost of each package is the same for each vehicle in a grouping. For effectiveness, the individual percentages are combined by weighting them by both sales and base CO
Conceptually, the OMEGA model begins by determining the specific CO
As noted above, EPA estimated separately the cost of the improved A/C systems required to generate the credit. In the reference case fleet that complies with the MY 2016 standards, 85% of vehicles are modeled with improved A/C efficiency and leakage prevention technology.
The model then works with one manufacturer at a time to add technologies until that manufacturer meets its applicable standard.
The following tables present the projected incremental costs and technology penetrations for the final program. The most significant differences between the proposal analysis and the final rulemaking analysis presented below include:
•
•
•
As a result, the projected MY 2025 compliance costs are slightly less than those projected in the proposal (despite the increased cost from less mass reduction). These changes do not change the agency's overall assessment of the appropriateness of the standards we are adopting. As will be discussed later in this section, the proposal analysis using the MY 2008 based fleet projection, the final rulemaking results using the MY 2008 based fleet projection, and the final rulemaking analysis using the MY 2010 based fleet projection, all support EPA's assessment of the appropriateness of the standards.
Analysis results in the remainder of this section are for the MY 2008 based fleet projection only. EPA has additionally replicated many of the analyses discussed in this chapter using the MY 2010 based fleet projection (EPA RIA chapter 10). As noted, the differences in costs, benefits, and technology penetrations between results of the two fleet projections are relatively minor, and do not alter EPA's judgment of the appropriateness of the final standards.
Overall projected per vehicle cost increases relative to the reference fleet (i.e. the MY 2008 based fleet complying with the MY 2016 standard) are $766 in MY 2021 and $1836 in MY 2025. Captured in these costs, we see significant increases in advanced transmission technologies such as the high efficiency gear box and 8 speed transmissions, as well as more moderate increase in turbo downsized, cooled EGR 24 bar BMEP engines. In the control case, 31 percent of the MY 2025 fleet is projected to have strong P2 hybrid or mild hybrid technology (5% P2, 26% MHEV) as compared to 5% in the 2016 reference case (5% P2, 0% MHEV). Similarly, 2% percent of the MY 2025 fleet are projected to be electric vehicles while less than 1% percent are projected to be electric vehicles in the reference case. EPA notes that we have projected one potential compliance path for each company and for the industry as a whole—this does not mean that other potential technology penetrations and pathways are not possible. In fact, it is likely that each firm will plot their own future course to compliance. For example, while we show relatively low levels of EV and PHEV technologies, several firms have announced plans to aggressively pursue EV and PHEV technologies and thus the actual
In this section EPA analyzes the final standards alongside several potential alternative GHG standards. These alternatives (car and truck standards which are 20 g/mile more and less stringent than those adopted) reasonably bound the range of alternatives. All analyses shown in this section are conducted using the MY 2008 based fleet projection. The analysis using the MY 2010 based fleet projection is shown in EPA RIA chapter 10 and leads to the same conclusions.
Table III–30 includes a summary of the final standards and the four alternatives considered by EPA. In this table and for the majority of the data presented in this section, EPA focuses on two specific model years in the MYs 2017–2025 time frame addressed by this final rule. For the purposes of considering alternatives, EPA assessed these two specific years as being reasonably separated in time in order to evaluate a range of meaningfully different standards, rather than analyzing alternatives for each individual model year. Table III–30 presents the projected reference case targets for the fleet in MYs 2021 and 2025, that is the estimated industry wide targets that would be required for the projected fleet in those years by the MY 2016 standards.
Alternatives 1
Using the OMEGA model, EPA evaluated the final standards and each of the alternatives in MY 2021 and in MY 2025. It is worth noting that although Alternatives 1 and 2 consider different truck footprint curves compared to the final rule and Alternatives 3 and 4 evaluate different car footprint curves compared to the final rule, in all cases EPA evaluated the alternatives by modeling both the car and truck footprint curves together (which achieve the fleet targets shown in Table III–30) as this is how manufacturers would view the future standards given the opportunity to transfer credits between their car and truck fleets under the GHG rule.
Table III–31 shows the projected target and projected achieved levels in MY 2025 for the final standards. This accounts for a manufacturer's ability to transfer credits to and from cars and trucks to meet a manufacturer's car and truck targets and consequent standard.
Similar tables for each of the alternatives for MY 2025 and for the alternatives and the final rule for MY 2021 are contained in Chapter 3 of EPA's RIA. With the final standards and for Alternatives 1 and 2, all companies are projected to be able to comply both in MYs2021 and 2025, with the exception of Ferrari, which in each case falls 17 g/mile short of its projected fleet wide obligation in MY 2025.
Table III–31 illustrates the importance of car-truck credit transfer for individual firms. For example, the OMEGA model projects for the final standards that in MY 2025, Daimler would under comply for trucks by 25 g/mile but over comply in their car fleet by 10 g/mile in order to meet their overall compliance obligation. By contrast, the OMEGA model projects that under the final standards Kia's truck fleet would over comply by 22 g/mile and under comply in their car fleet by 6 g/mile in order to meet their compliance obligations. The choice of transferring credits from cars to trucks, or trucks to cars, is dependent on the fleet configuration of the individual manufacturers. Individual manufacturers will be influenced by their relative number of cars and trucks, as well as by the starting technology and emissions performance of those vehicles.
Under the FRM analysis, we project a slightly larger quantity of credit transfer than that which was projected in the proposal. The increase in credit transfer is largely attributable to the FRM modeling of stop start and active aerodynamics off-cycle credits and full-size pick-up truck HEV flexibilities, which were not included in the cost modeling used for the proposal. These credits either offer larger benefits to trucks than to cars (in the case of off-cycle credits), or are not available to cars (the full size pickup HEV flexibilities). However, while the total credit transfer value has increased relative to the proposal analysis, for the fleet as a whole, we project only a relatively small degree of net credit transfers from the truck fleet to the car fleet. From the reference case emission level (sales weighted average of approximately 250) to the control case (sales weighted average of approximately 163) is a drop of approximately 90 grams. Four grams of credit transfer (Table III–31) to the car fleet is relatively small in this context, and demonstrates the appropriate balance between car and truck stringencies. Table III–25 shows that the average costs for cars and trucks are also similar for MY 2021 and MY 2025. For MY 2021, the average cost to comply with the car standards is $767, while it is $763 for trucks. For MY 2025, the average cost to comply with the car standards is $1,726, while it is $2,059 for trucks. These results are consistent with the small degree of net projected credit transfer between cars and trucks. While costs are generally higher for trucks in MY 2025, these higher estimates reflect the degree of credit transfer expected in the fleet, and are not necessarily indicative of a relatively more or less stringent truck standard. One factor in this cost delta is the relatively larger degree of mass reduction modeled for trucks under our analysis of safety impacts (see section II.G.5 above).
After including these factors, the average cost for complying with the truck and car standards are largely similar, even though the level of stringency for trucks is increasing at a slower rate than for cars in the program's initial model years. As described in Section I.B.2 of the preamble, the final car standards are decreasing (in CO
Taken together, EPA's analysis shows that under the final standards, there is relatively little net trading between cars and trucks as a fraction of the overall improvement; average costs for compliance with cars is generally similar to that of trucks in MY 2021 as well as MY 2025; and it is more costly to add technologies to trucks than to cars. These facts corroborate the reasonableness for increasing the slope of the truck curve relative to MY 2016. These observations also lead us to the conclusion that (at a fleet level) starting from MYs 2017–2021, the slower rate of increase for trucks compared to cars (3.5% compared to 5% per year), and the same rate of increase (5% per year) for both cars and trucks for MYs 2022–2025 results in car and truck standards that reflect increases in stringency over time that are comparable from the perspective of the costs born by cars versus trucks.
Many commenters questioned the relative stringency of the car and truck curves, manufacturers whose fleets are dominated by passenger cars generally indicating that the curves favored trucks at the expense of cars, and several groups going so far as maintaining that the difference in stringency and slope created an inherent incentive to upsize the fleet. These comments are not supported by the analysis conducted here. There are no indications that either the truck or car standards will encourage manufacturers to choose technology paths that lead to significant over or under compliance for cars or trucks, on an industry wide level. That is, there is no indication that on average, in light of the truck standard, manufacturers would consistently under or over comply with the car standard, or vice versa. As seen in our final rule modeling, seven manufacturers over-complied on cars, while twelve over-complied on trucks. A consistent pattern across the industry of manufacturers choosing to under or over comply with a car or trucks standard could indicate that the car or truck standard should be evaluated further to determine if the relative stringency is appropriate in light of the technology choices available to manufacturers, and the costs of those technology choices. As just shown, that is not the case for the final car and truck standards. Moreover, as noted above, we project only a relatively small overall degree of net credit transfers from the truck fleet to the car fleet. In addition, as discussed further below, EPA did evaluate the effect of the relative stringency of the car and truck standards using alternative standards and this analysis leads to the same conclusions. EPA thus continues to believe that the relative stringency of the car and truck curves is reasonable and appropriate.
Below we discuss results for the final car and truck standards compared first to the truck alternatives (Alternatives 1 and 2), followed by a comparison to the car alternatives (Alternatives 3 and 4).
Table III–32 presents our projected per-vehicle cost for the average car, truck and for the fleet in model years 2021 and 2025 for the final rule and for Alternatives 1 and 2. All costs are relative to the reference case (i.e. the fleet with technology added to meet the 2016 MY standards). As can be seen, even though only the truck standards vary among these three scenarios, in each case the projected average car and truck costs vary as a result of car-truck credit transfer by individual companies.
Table III–33 presents the per-vehicle cost estimates in MY 2021 by company for the final rule, Alternative 1, and Alternative 2.
Table III–34 presents the per-vehicle cost estimates in MY 2025 by company for the final rule, Alternative 1 and Alternative 2. In general, for most of the companies our projected results show the same trends as for the industry as a whole, with Alternative 1 generally less costly than the final rule, and Alternative 2 generally more costly. Notably, the incremental average cost is higher for the more stringent alternative than for an equally less stringent alternative standard. This is not a surprise as more technologies must be added to vehicles to meet more stringent standards, and these technologies increase in cost in a non-linear fashion.
The previous tables present the costs for the final rule and alternatives 1 and 2 at both the industry and company level. In addition to costs, another key is the technology expected to be needed to meet future standards. The EPA assessment of the final rule, as well as Alternatives 1 and 2, predict the penetration into the fleet of a large number of technologies at various rates. A subset of these technologies are discussed below, while EPA's RIA Chapter 3 includes the details on this much longer list for the passenger car, light-duty truck, and the overall fleet at both the industry and individual company level. Table III–35 and Table III–36 present only a sub-set of the technologies EPA estimates could be used to meet the final standards as well as alternatives 1 and 2 in MY 2021.
Table III–35 shows that in MY 2021, the final rule requires higher levels of penetration for several technologies for trucks than alternative 1. For example for trucks, compared to the final rule, alternative 1 leads to a decrease in the penetration of 24 bar turbo-charged/downsized engines, a decrease in the penetration of cooled EGR, and a decrease in the penetration of gasoline direct injection fuel systems. We also see that due to credit transfer between cars and trucks, the lower level of stringency considered for trucks in alternative 1 also impacts the penetration of technology to the car fleet—with alternative 1 leading to a decrease in penetration of 18 bar turbo-downsized engines, a decrease in penetration of 24 bar turbo-downsize engines, a decrease in penetration of 8 speed dual clutch transmissions, and a decrease in penetration of gasoline direct injection fuel systems in the car fleet. For the more stringent alternative 2, we see increases in the penetration of many of these technologies projected for MY 2021, and we see this for the truck fleet as well as for the car fleet. Table III–36 shows these same overall trends but at the sales weighted fleet level in MY 2021.
Although EPA does not project dramatic differences in technology penetration between the final MY 2021 standards and those modeled in Alternative 2 during these earlier years of the program, EPA remains concerned about lead time relative to rapid increases in truck standard stringency between MYs 2016 and 2021. Several vehicle manufacturers, particularly those who manufacture large trucks, voiced concerns about the increase in stringency during MYs 2012–2016 as described in the NPRM (76 FR 74862–865). In comments on the NPRM, Ford noted that it viewed the MYs 2012–2016 standards as “overly stringent standards imposed on light duty trucks in the 2012–2016 model year regulation.” As discussed in TSD 2.4, EPA does not agree that the MYs 2012–2016 program is overly stringent, however we do acknowledge that it will be challenging for some manufacturers and furthermore, we acknowledge the possibility that it may be more challenging for the larger truck market than the smaller truck or car market. Several issues are unique to the trucks with the largest footprints (pickup trucks in particular). Although no individual vehicle need comply with its target, the large truck segment is dominated by relatively few vehicle platforms with relatively large sales, and this limited number of vehicle platforms makes rapid technology changes a greater challenge than in other market segments. See TSD p. 2–23. The pick-up trucks tend to have longer redesign cycles. Though there may be evidence to show that redesign periods are getting shorter for both cars and pickup trucks, the utility requirements of pick-up trucks relative to smaller vehicles results in longer development times for validation of a new platform. Pick-up truck product validation occurs across a broader range of gross vehicle weights for each platform due to a relatively large payload capacity and can include validation of trailer towing capability for multiple trailer configurations. Consequently, EPA is choosing to provide appropriate lead time in the MY 2017–2021 truck standards.
Further, EPA has carefully weighed the issue of consumer acceptance. As many commenters stressed, without consumer acceptance of these vehicles, the rule's benefits will not accrue. As noted by the U.S. Coalition for Advanced Diesels, battery electric technologies have had limited commercial success in larger trucks.
These issues of consumer acceptance are not as pronounced for smaller light trucks and cars. On an industry basis, single vehicle models do not similarly dominate these segments. Further, hybrid electric technology is more common in both passenger cars and the smaller light truck fleet. Consumer perception of vehicle utility is also significant for the largest trucks, and greater challenges exist in convincing truck buyers that hybrid and even other advanced powertrains can provide equivalent utility, despite these technologies existing in other market segments.
Table III–37 shows that in MY 2025, there is only a small change in many of these technology penetration rates when comparing the final rule standards to alternative 1 for trucks, and most of the change shows up in the car fleet. One important exception is mild hybrid electric vehicles, where the less stringent alternative 1 is projected to be met with a decrease in penetration of mild HEVs compared to the final rule standards. As in MY 2021, we see that due to credit transfer between cars and trucks, the lower level of stringency considered for trucks in alternative 1 also impacts the car fleet penetration—with alternative 1 leading to a decrease in penetration of 24 bar turbo-downsized engines, a decrease in penetration of cooled EGR, a decrease in penetration of mild HEVs, and a decrease in penetration of electric vehicles. For the more stringent alternative 2, we see only small increases in the penetration of many of these technologies projected for MY 2025, with a major exception being a significant increase (more than double) in the penetration of HEVs for trucks compared to the final rule standards, an increase in the penetration of HEVs and MHEVs for cars compared to the final rule standards, and a small increase in the penetration of EVs for cars compared to the final rule standards.
The results are similar for Alternatives 3 and 4, where the truck standard stays at the final rule level and the car stringency varies, +20 g/mile and −20 g/mile respectively. Table III–39 presents our projected per-vehicle cost for the average car, truck and for the fleet in model years 2021 and 2025 for the final rule and for Alternatives 3 and 4. Compared to the final rule, Alternative 3 (with a MYs 2021 and 2025 car target 20 g/mile less stringent then the final rule) is considerably less costly on average than the final rule in MY 2021 and in 2025. Alternative 4 (with a MYs 2021 and 2025 car target 20 g/mile more stringent then the final rule) is considerably more costly on average than the final rule in MY 2021 and in MY 2025. The differences for these alternatives relative to the final rule are even more pronounced than the differences for Alternatives 1 and 2. As in the analysis above, the cost increases are greater for more stringent alternatives than the reduced costs from the less stringent alternatives.
Table III–40 presents the per-vehicle cost estimates in MY 2021 by company for the final rule, Alternative 3, and Alternative 4. In general, for most of the companies our projected results show the same trends as for the industry as a whole, with Alternative 3 being several hundred dollars per vehicle less expensive then the final rule, and Alternative 4 being several hundred dollars per vehicle more expensive (with larger increment for the more stringent alternative than the less stringent alternative). In some cases the differences exceed $1,000 (e.g. BMW, Daimler, Geely/Volvo, Spyker/Saab, Suzuki and Tata).
Table III–41 presents the per-vehicle cost estimates in MY 2025 by company for the final rule, Alternative 3 and Alternative 4. In general, for most of the companies our projected results show the same trends as for the industry as a whole, with Alternative 3 less costly than the final rule, and Alternative 4 more costly. Again these differences are more pronounced for the car alternatives than the truck alternatives.
Table III–42 shows that in MY 2021, for several technologies Alternative 3 leads to lower levels of technology penetration for cars as well as for trucks compared to the final rule. For example, on cars there is a decrease in the 18 bar turbo-charged/downsized engines, a decrease in the penetration of cooled EGR, and a decrease in the penetration of gasoline direct injection fuel systems. We also see that due to credit transfer between cars and trucks, the lower level of stringency considered for cars in alternative 3 also impacts the penetration of technology to the truck fleet—with alternative 3 leading to a decrease in penetration of 24 bar turbo-downsized engines, a decrease in penetration of cooled EGR, and a decrease in penetration of gasoline direct injection fuel systems in the car fleet. For the more stringent alternative 4, we see increases in the penetration of many of these technologies projected for MY 2021, for the truck fleet as well as for the car fleet. Table III–43 shows these same overall trends but at the sales weighted fleet level in MY 2021.
Table III–44 shows that in MY 2025, there are significant differences in technology penetration rates when comparing the final rule to alternative 3 for cars, and additional change shows up in the truck fleet. As compared to the final rule, Alternative 3 would require approximately half the number of MHEVs, HEVs, and EVs As in MY 2021, we see that due to credit transfer between cars and trucks, the lower level of stringency considered for cars in alternative 3 also impacts the truck fleet penetration—with alternative 3 leading to a significant decrease in penetration of HEVs and MHEVs. For the more stringent alternative 4, we see a significant increase in the penetration of EVs, MHEVs and HEVs for cars compared to the final rule., Further, we see a sharp increase (a tripling) in the penetration of HEVs for trucks compared to the final rule.
As stated above, EPA's analysis indicates that there is a technology pathway for all manufacturers to build vehicles that would meet their final standards as well as the alternative standards.
EPA's analysis of the four alternatives indicates that under all of the alternatives the projected response of the manufacturers is to apply technology to both their car and truck fleets. Whether the car or truck standard is being changed, and whether it is being made more or less stringent, the response of the manufacturers is to make changes across their fleet, in light of their ability to transfer credits between cars and trucks. For example, Alternatives 1 and 3 make either car or truck standards less stringent, and keep the other standard as is. For both alternatives, manufacturers' car and truck fleets each increase their projected CO
This demonstrates that the four alternatives are indicative of what would happen if EPA increased the stringency of both the car and truck fleet at the same time, or decreased the stringency of the car and truck fleet at the same time. E.g., Alternative 4 would be comparable to an alternative where EPA made the car standard more stringent by 14 g/mile and the truck standard more stringent by 9 g/mile. Under such an alternative, there would logically be little if any net transfer of credits between cars and trucks. Similarly, the results from alternatives 1 and 3 indicate what would be expected if EPA decreased the stringency of both the car and truck standards, and alternatives 2 and 4 indicate what would happen if EPA increased the stringency of both the car and truck standards. In general, it appears that decreasing the stringency of the standards would lead the manufacturers to comparably increase the CO
EPA is not selecting either alternative 1 or 3 as a final standard. Under these less stringent alternatives, there would be significantly less emission reductions (as shown in section III.F.1), and would therefore forego important benefits that the final standards achieve at reasonable costs and penetrations of technology. EPA judges that there is not a good reason to forego such benefits, and is not adopting less stringent standards such as alternatives 1 and 3. Indeed, although a handful of commenters urged EPA not to establish MYs 2017–2025 standards at all, no commenters endorsed these specific standard stringencies.
Alternatives 2 and 4 increase the per vehicle estimates by roughly $300 and $600, respectively, in MY 2021 and $400 and $700, respectively, in MY2025. This increase in cost relative to the costs of the final rule standards stems from the increases in the costlier electrification technologies, such as HEVs and EVs that we project these standards would effectively force. The following tables and charts show the technology penetrations by manufacturer in greater detail.
Table III–47 and later tables describe the projected penetration rates for the OEMs of some key technologies in MY 2021 and MY2025 under the final standards. TDS27, HEV, MHEV, and PHEV+EV technologies represent the most costly technologies added in the package generation process, and the OMEGA model generally adds them as one of the last technology choices for compliance. They are therefore an indicator of the extent to which the stringency of the standard is pushing the manufacturers to utilize the most costly technology. Cost (as shown above) is a similar indicator.
Table III–47 describes technology penetration for MY2021 under the final rule.
It can be seen from this table that the larger volume manufacturers have levels of the most advanced technologies, such as plug-in and electric vehicles, 27 bar BMEP engines, and hybridization that are significantly below the modeled maximum penetration rates (i.e. the phase-in caps, described in the next table). On the other hand, some of the “luxury” manufacturers tend to require higher levels of these technologies than do the broader market manufacturers.
The caps or limits on the technology phase in rates described in Chapter 3.4.2 of the joint TSD relate to the remainder of this discussion. As a modeling tool, EPA imposes upper limits on the penetration rates allowed under our modeling. These maximum penetration rates may reflect technical judgments about technology feasibility and availability, consumer acceptance, lead time, supplier capacity, up-front investment capital requirements, manufacturability, and other reasons as detailed in Chapter 3 of the Joint TSD. The maximum penetration rates are not a judgment that rates below that cap are practical or reasonable.
Table III–50 shows the technology penetrations for Alternative 2. In MY2021, penetration rates of truck mild and strong HEVs doubles in comparison to the final rule. The Ford truck fleet increases the MHEV penetration significantly relative to the final rule in Alternative 2.
There are other significant increases in the larger manufacturers and even more dramatic increases in the HEV penetration in smaller manufacturers' fleets. There are also now six manufacturers with total fleet PH/EV penetration rates equal to 9% or greater.
The broader market manufacturers have an estimated per vehicle cost of compliance with 2021 alternative 2 standards of roughly $1,000 which is roughly $300 more than under the final standards (see Table III–48, above). The seven “luxury” vehicle manufacturers now have estimated costs in 2021 of roughly $1,950, which is roughly $500 higher than the final standards (See Table III–48, above).
Table III–51 shows the technology penetrations for Alternative 4 for MY 2021. The large volume manufacturer, Ford now has a significant increase compared to the final standards of truck MHEVs and the fleet MHEV penetration has gone up significantly for this company in comparison to the final standards.
Cars for several manufacturers now reach closer to the maximum technology penetration cap of 30% for HEVs. Also, there are now six manufacturers with fleet PH/EV penetration rates greater than 10%.
The broader market manufacturers now have an estimated per vehicle cost of compliance with 2021 alternative 4 standards of roughly $1,200, which is approximately $600 higher than the final standards. The seven “luxury” vehicle manufacturers now have estimated costs of roughly $2,800, which is approximately $1,100 higher than the final standard (See Table III–48, above). For the seven luxury manufacturers, this per vehicle cost in MY 2021 exceeds the full fleet costs under the final rule for complying with the considerably more stringent 2025 standards.
Table III–52 shows the technology penetrations for the final standards in MY 2025. The larger volume manufacturers have levels of advanced technologies that are below the maximum penetration rates though there are some notably high penetration rates for truck HEVs for Ford and Nissan. For the fleet in general, we note a 2% penetration rate of PHEVs and EVs, which coincidentally is similar to the current penetration rate of HEVs. It has taken approximately 10 years for HEV penetration to reach this level, without an increase in the stringency of passenger car CAFE standards. Therefore, EPA believes that there is sufficient lead time for PHEVs and EVs to reach this level of penetration by 2025.
All of the luxury manufacturers have significant MHEV penetrations. Several luxury manufacturers reach the maximum MHEV penetration cap on their truck portion of their fleet. 6 of the 7 luxury vehicle manufacturers also have greater than 10% penetration of PH/EVs (which has a total cap of 29%). Several companies have large penetration rates (>15%) of TDS27, such as Jaguar/LandRover, BMW, and Geely.
The estimated per vehicle cost of compliance with 2025 final standards is roughly $1,800 for the broader market manufacturers and roughly $2,400 for the seven “luxury” vehicle manufacturers.
Table III–53 shows the technology penetrations for Alternative 2 in MY 2025. In this alternative, Chrysler trucks increase their penetration of HEVs. GM has a large increase in truck HEVs, and PHEVs+EVs as well. Toyota also has an increased number of HEVs. In this alternative there are many more companies with a significant number of HEVs. As we noted at proposal when presenting this type of analysis, these penetration rates may well be overly aggressive in the face of uncertain consumer acceptance of both the added costs and the technologies themselves. 76 FR 75082. EPA continues to believe
Table III–54 shows the technology penetrations for Alternative 4 in 2025. In this alternative every company has a significant fraction of MHEVS and HEVs. Many of the large volume manufacturers have even more dramatic increases in the volumes of P/H/EVs than in Alternative 2.
The estimated per vehicle cost of compliance with 2025 alternative 4 standards is roughly $2,600, which is approximately $700 higher than the final standards. The seven luxury vehicle manufacturers now have costs of roughly $3,600, which is approximately $1,200 higher than the final standards. Much of this non-linear increase in cost is due to increased penetration of PHEVs and EVs (more so than HEVs).
As described above, alternatives 2 and 4 would lead to significant increases in the penetration of advanced technologies into the fleet during the time frame of these standards. In general, both alternatives would lead to an increase in the average penetration rate for advanced technologies in MY 2021, in effect accelerating some of the technology penetration that would otherwise occur in the MYs 2022–2025 timeframe. As discussed above, EPA maintains lead time concerns about requiring aggressive technology penetration early in this time period subsequent to the advances in stringency during the MYs 2012–2016. In MY 2025, these alternatives would dramatically affect penetration rates of MHEVs, HEVs, EVs, and PHEVs, in each case leading to significant increases on average for the fleet. Again, Alternative 4 would lead to greater penetration rates than Alternative 2. When one considers the technology penetration rates for individual manufacturers, in MY 2021 the alternatives lead to much higher increases than average for some individual large volume manufacturers. Smaller volume manufacturers start out with higher penetration rates and are pushed to even higher levels. This result is even more pronounced in MY 2025.
This increase in technology penetration rates raises serious concerns about the ability and likelihood manufacturers can smoothly implement the increased technology penetration in a fleet that has so far seen limited usage of these technologies, especially for trucks—and for towing trucks in particular. While this is more pronounced for 2025, the lead time issues discussed previously remain for MY 2021 and earlier years.. Although EPA believes that these penetration rates are, in the narrow sense, technically achievable, it is more a question of judgment whether we are confident at this time that these increased rates of advanced technology usage can be practically and smoothly implemented into the fleet. This concern is one reason the agencies are attempting to encourage more utilization of these advanced technologies with the advanced technology incentive programs but being reasonably prudent in not adopting standards that could as a practical matter force high degrees of penetration of these technologies on towing trucks.
EPA notes that the same concerns support the final decision to steepen the slope of the truck curve in acknowledgement of the special challenges these larger footprint trucks (which in many instances are towing vehicles) would face. Without the steepening, the penetration rates of these challenging technologies would have been even greater.
From a cost point of view, the impacts on cost track fairly closely with the technology penetration rates discussed above. The average cost increases under Alternatives 2 and 4 are significant for 2021 (approximately $300 and $600), and for some manufacturers they result in very large cost increases. For 2025 the cost increases are even higher (approximately $400 and $700). Alternative 4, as expected, is significantly more costly than alternative 2. From another perspective, the average cost of compliance to the industry on average is $12 and $31 billion for the MYs 2021 and 2025 final standards, respectively. Alternative 2 will cost the industry on average $5 and $7 billion in excess, while Alternative 4 will cost the industry on average $9 and $13 billion in excess of the costs for the final standards. These are large increases in percentage terms, ranging from approximately 40% to 70% in MY 2021, and from approximately 20% to 40% in MY 2025.
Under the more stringent alternatives, per vehicle costs would also increase dramatically, including for some of the largest, full-line manufacturers. Under Alternative 2, per vehicle costs for the large volume manufacturers increase roughly 50% to meet the 2021 standards and roughly 20% to meet the 2025 standards (see Table III–48, above). The per-vehicle costs to meet Alternative 4 for these manufacturers are roughly 75% in MY 2021 and 40% in MY 2025 (see Table III–48, above).
As noted, these cost increases are associated especially with increased utilization of advanced technologies. As shown in Figure III–3 below, HEV+PHEV+EV penetration are projected to increase in MY 2025 from 6% in the final standards, to 11% and nearly 13% under Alternatives 2 and 4, respectively, for manufacturers with annual sales above 500,000 vehicles (including Chrysler, Ford, GM, Honda, Hyundai, Nissan, Toyota, and VW). The differences are less pronounced for MY 2021, but still (in alternative 4) over double the penetration level of the final rule. EPA regards these differences as significant, given the factors of expense, consumer cost, consumer acceptance, and potentially (for MY 2021) lead time.
The figures below also do not show the significant penetration of mild hybrid technology into the fleet. Under the primary scenario, we project mild hybrid penetration of approximately 26% for the larger manufacturers, which rises to 33% and 37% under the two more stringent alternatives.
Figure III–4 below shows the HEV+PHEV+EV penetration for manufacturers with sales below 500,000 but exceeding 30,000 (including BMW, Daimler, Volvo, Kia, Mazda, Mitsubishi, Porsche, Subaru, Suzuki, and Jaguar/LandRover while excluding Aston Martin, Ferrari, Lotus, Saab, and Tesla). While the penetration rates of these advanced technologies also increase, the distribution within these are shifting to the higher cost EVs and PHEVs as noted above.
EPA modeled a number of flexibilities when conducting the analysis for the FRM. Unlike in the proposal, where PHEV, EV, and fuel cell vehicle incentive multipliers for 2017–2021, full size pickup truck HEV incentive credits, full size pickup truck performance based incentive credits, and off-cycle credits, were not modeled, we have included the full size pickup truck incentive credits and some off-cycle credits in our cost analysis.
Overall, EPA believes that the characteristics and impacts of these and other alternative standards generally reflect a continuum in terms of technical feasibility, cost, lead time, consumer impacts, emissions reductions and oil savings, and other factors evaluated under section 202(a). In determining the appropriate standard to adopt in this context, EPA judges that the final standards are appropriate and preferable to more stringent alternatives based largely on consideration of cost—both to manufacturers and to consumers—and the potential for overly aggressive penetration rates for advanced technologies relative to the penetration rates seen in the final standards, especially in the face of unknown degree of consumer acceptance of both the increased costs and of the technologies themselves. At the same time, the final rule helps to address these issues by providing incentives to promote early and broader deployment of advanced technologies, and so provides a means of encouraging their further penetration while leaving manufacturers alternative technology choices. EPA thus judges that the increase in technology penetration rates and the increase in costs under the increased stringency for the car and truck fleets reflected in alternatives 2 and 4 are such that it would not be appropriate to propose standards that would increase the stringency of the car and truck fleets in this manner.
The two tables below show the year on year costs as described in greater detail in Chapter 5 of the RIA. These projections show a steady increase in costs from 2017 thru 2025 (as interpolated).
Figure III–5 below shows graphically the year on year average costs presented in Table III–56 with the per vehicle costs on the left axis and the projected CO
Several comments were received on the feasibility of the standards. These comments addressed the standards' technical feasibility, their feasibility for small manufacturers, and the relative stringency of the car and truck standards.
In comments on the overall feasibility of the proposed standards, some organizations, such as American Chemistry Council, Hyundai, Kia, and NADA affirmed the technical feasibility of the proposed standards. Other organizations, such as the Center for Biological Diversity, International Council on Clean Transportation (ICCT), Northeast States for Coordinated Air Use Management (NESCAUM), and the Union of Concerned Scientists commented that more stringent standards would also be technically feasible. Several comments were submitted that the technological feasibility of the full program would not be known until the mid-term evaluation (Mercedes-Benz, Nissan, Alliance, Global Automakers). EPA agrees with commenters that this program is technically feasible and cost-effective. As shown in the analysis earlier in this section, significant reductions can be made in tailpipe GHG emissions with technology that is either currently available, or available in the near term.
Lead time is a significant component of technical feasibility, and several comments were received with regard to the appropriateness of the lead time provided to meet the standards. Consumers' Union, Hyundai, and Kia commented that the amount of lead time provided by this rulemaking was appropriate. In contrast, Mitsubishi, Suzuki and Chrysler commented on the difficulty of forecasting consumer preferences into the future, and were therefore concerned as to the number of model years covered by the rules, even though not questioning that the rules provide sufficient lead time to meet the standards. The ICCT and CBD both commented that the long lead time should virtually eliminate costs of stranded capital. EPA agrees that the long lead time in this rulemaking should provide additional certainty to manufacturers in their product planning. EPA believes that there are several factors that have quickened the pace with which new technologies are being brought to market, and this will also facilitate regulatory compliance. These factors are discussed in Technical
EPA agrees with the commenters that the analyses supporting this final rulemaking have demonstrated the feasibility of these standards, particularly as further supported by the number of vehicles today which meet the MY 2017 (and later) standards (see III.D.8 below). However, as discussed earlier in Section III.D.6, our analyses have shown that increasing the stringency beyond the promulgated levels would add significant cost with diminishing additional benefit, and for light trucks, potentially leading to overly aggressive penetration rates of certain advanced technologies, raising issues of lead time, costs, and consumer acceptance, as well as creating incentives to comply by reducing vehicle utility. As such, EPA has not made changes to increase or decrease the overall stringency across the car and truck fleets from the levels proposed.
Several comments addressed the feasibility of the standards for smaller manufacturers. As an example, Jaguar/Land Rover, and Porsche commented that the technology penetrations the agency projected for their companies were too severe, disproportionate to improvements needed for other companies to comply with the standards, and requested additional lead time to meet the standards. EPA's analyses tend to confirm the thrust of these comments. See, e.g. Table III–47 and Table III–48 and accompanying text above. In light of the comments regarding smaller manufacturers, EPA is finalizing provisions to allow intermediate volume manufacturers some amount of additional lead time out to MY 2021. Details of this alternative standard, and the rationale for it, can be found in Section III.B.6.
The comments on the relative car and truck stringency were largely divided between NGOs and OEMs (typically manufacturers of smaller trucks) that were concerned with the shape and relative rate of increase of the truck curve, and OEMs (typically manufacturers of larger trucks) who expressed concern about their ability to comply with a large truck standard that continued to increase in stringency at the rate of the MY 2016 standard. For example, Ford Motor Company commented: “Ford also believes that the relative stringency levels for the car and truck fleets, as proposed by the agencies, are appropriate * * *. In terms of the product actions necessary to comply, the proposed car and truck standards are roughly equivalent in stringency. This is attributable to the unique attributes expected from trucks—particularly the larger work trucks that constitute a significant portion of our full-line vehicle fleet offering—and also to the overly stringent standards imposed on light duty trucks in the 2012–2016 model year regulation.” General Motors submitted comments that the company “supports the target standard curve shapes, [and] the relative car and truck stringency.” Chrysler submitted similar comments. The UAW commented that “In particular the UAW supports the aspects of the proposals that recognize the importance of balancing the challenges of adding fuel-economy improving technologies to the largest light trucks with the need to maintain the full functionality of these vehicles across a wide range of applications.”
As mentioned above, several commenters raised concerns about the relative stringency between cars and trucks. ACEEE commented that “[t]he weakness of the standards at the large footprint end of the light truck spectrum not only will result in a direct loss in GHG reductions relative to what would have been saved with a uniform five percent annual emissions reduction across all classes, but also runs the risk of pushing production towards that larger end.” Honda commented that it was “concerned that the relative stringency between small footprint light trucks and large footprint light trucks diverge dramatically from one another, and that the stringency increases fall disproportionately on the smaller foot-print light trucks. Consumer's Union stated that “[t]here are several strong indicators that the gap between the curves is too large.” The ICCT wrote: “the 2017–2025 rule increased the gap between cars and light trucks, providing stronger incentives for manufacturers to reclassify cars as light trucks and potentially undermining the benefits of the rule.” The agencies received similar comments from several mass comment campaigns (Union of Concerned Scientists, NACAA, NRDC), and other NGOs. VW, Toyota, and Nissan also expressed similar concerns, with Toyota stating “we remain concerned about two aspects of the proposed standards. First, the targets for trucks require a lower average rate of improvement than for cars. And second, the targets for larger trucks require a lower average rate of improvement than smaller trucks.”
EPA recognizes that significant differences in the year-to-year stringency for cars and trucks could lead to the result of an increasingly widening gap between the car and truck curves and increase the incentives to reclassify cars as light trucks, thus undermining the fuel economy and greenhouse gas reduction benefits of the standards. However, even with reduced stringency of the truck standard in the early model years of the rule, the trend of a gradually widening gap during this period is reversed during the MY 2021–2025 period. As shown in Table III–57, by MY 2025 the gap for larger footprint vehicles is at levels similar to the MY 2012–2016 rule, while for smaller footprint vehicles, the gap is less than during the MY 2012–2016 rule. EPA believes that the increase in stringency for the truck standard in the latter phase of the rule is a reasonable approach for avoiding a large gap between car and truck curves while also taking account of the challenges of implementing efficiency technologies in trucks during the first phase of the rule as explained in Section III.D.6 above.
EPA's determination of the standards was based on considerations of the technical differences between the cars and trucks, as described in Chapter 2 of the Joint TSD and Section II.C of the Preamble. As compared to the MY 2016 standard, the gap between the MY 2025 car and truck targets decreases in the smaller footprint range where these regulatory classes share the most design attributes, and the target curves appropriately reflect differences in the vehicle characteristics at the larger footprint end (see discussion in TSD chapter 2.4.2) As a result, the car and truck curves developed from this analysis exhibit differences in both the relative level of the target at a given footprint, and the overall stringency as standards increase year-to-year. EPA believes that the final standards reasonably balance the issues and address the concerns raised by commenters, resulting in significant CO
With regard to the year-to-year increase in stringency, the promulgated standards encourage manufacturers to apply additional technologies throughout the rulemaking timeframe. The standards are based on footprint, and increase in stringency at all vehicle sizes.
In addition to the analysis discussed above regarding what technologies could be added to vehicles in order to achieve the projected CO
Using publicly available data, EPA compiled a list of current vehicles and their 2-cycle CO
EPA evaluated these vehicles against the final CO
This assessment shows that a significant number of vehicles models sold today (over 100 models) have CO
The number of vehicles available that meet the final MY 2017 targets has already significantly increased since the proposal. In particular, the number of vehicles with conventional gasoline powertrains that meet or exceed the final MY 2017 targets has increased from 27 at the time of proposal to 65 models currently. An additional 58 vehicles currently available with conventional gasoline powertrains are within 5% of the final MY 2017 standards. As the CO
Prior to each model year, EPA receives projected sales data from each manufacturer. Based on this data, approximately 17% of MY 2012 sales will be vehicles that meet or are lower than their vehicle specific MY 2017 targets, requiring only improvements in air conditioning systems. This is more than double the 7% of MY 2011 sales that EPA projected to meet the MY 2017 targets. An additional 12% of projected MY 2012 sales will be within 5% of the MY 2017 footprint CO
With improvements to air conditioning systems, the most efficient gasoline internal combustion engines would meet the MY 2022 footprint targets. After MY 2022, the only current vehicles that continue to meet the footprint-based CO
This assessment of MY 2012 and MY 2013 vehicles makes it clear that HEV technology (and of course EVs and PHEVs) is capable of achieving the MY 2025 standards. However, as discussed earlier in this section, EPA's modeling projects that the MY 2017–2025 standards can primarily be achieved by advanced gasoline vehicles—for example, in MY 2025, we project more than 75 percent of the new vehicles could be advanced gasoline powertrains. The assessment of MY 2012 and MY 2013 vehicles available in the market today indicates advanced gasoline vehicles (as well as diesels) can achieve the targets for the early model years of the program (i.e., model years 2017–2022) with only improvements in air conditioning systems. However, significant improvements in technologies are needed and penetrations of those technologies must increase substantially in order for individual manufacturers (and the fleet overall) to achieve the standards for the early years of the program, and certainly for the later years. These technology improvements are the very technologies EPA and NHTSA describe in detail in Chapter 3 of the Joint Technical Support Document and for which we project penetration rates earlier in this section III.D. These technologies include, for example: Gasoline direct injection fuel systems; downsized and turbocharged gasoline engines (including in some cases with the application of cooled exhaust gas recirculation); continued improvements in engine friction reduction and low friction lubricants; transmissions with an increased number of forward gears (e.g., 8 speeds); improvements in transmission shifting logic; improvements in transmission gear box efficiency; vehicle mass reduction; lower rolling resistance tires, and improved vehicle aerodynamics. In most cases, these technologies are beginning to penetrate the U.S. light-duty vehicle market.
In general, these technologies must go through the automotive product development cycle in order to be introduced into a vehicle. In some cases additional research is needed before the technologies' CO
The majority of these technologies must be integrated into vehicles during the product redesign schedule, which is typically on a 5-year cycle. EPA discussed in the MY 2012–2016 rule the significant costs and potential risks associated with requiring major technologies to be added in-between the typical 5-year vehicle redesign schedule (see 75 FR 25467–68, May 7, 2010). In addition, engines and transmissions generally have longer lifetimes than 5 years, typically on the order of 10 years. Thus, major powertrain technologies generally take longer to penetrate the new vehicle fleet than can be done in a 5-year redesign cycle. As detailed in Chapter 3.4 of the Joint TSD, EPA projects that 8-speed transmissions could increase their maximum penetration in the fleet from 30% in MY 2016 to 80% in MY 2021 and to 100% in MY 2025. Similarly, we project that second generation downsized and turbocharged engines (represented in our assessment as engines with a brake-mean effective pressure of 24 bars) could penetrate the new vehicle fleet at a maximum level of 15% in MY 2016, 30% in MY 2021, and 75% in MY 2025. When coupled with the typical 5-year vehicle redesign schedule, EPA projects that it is not possible for all of the advanced gasoline vehicle technologies we have assessed to penetrate the fleet in a single 5-year vehicle redesign schedule.
Given the status of the technologies we project to be used to achieve the MY 2017–2025 standards and the product development and introduction process which is fairly standard in the automotive industry today, our assessment of the MY 2012 and MY 2013 vehicles in comparison to the standards supports our overall feasibility assessment, and reinforces our assessment of the lead time needed for the industry to achieve the standards.
This section summarizes EPA's comprehensive program to ensure compliance with emission standards for carbon dioxide (CO
Vehicle emission standards established under the CAA apply throughout a vehicle's full useful life. Today's rule establishes two sets of EPA standards: fleet average greenhouse gas standards and in-use standards. Compliance with the fleet average standard in a given model year is determined based on testing performed prior to production and on actual vehicle production in that model year, as with the current CAFE standards. EPA is also establishing in-use standards that apply throughout a vehicle's useful life, with the in-use standard determined by adding an adjustment factor to the emission results used to calculate the fleet average.
Fleet average emission levels can only be determined when a complete fleet profile becomes available at the close of the model year. Therefore, EPA will determine compliance with the fleet average CO
As described in Section III.B above, the fleet average standards will be determined on a manufacturer-by-manufacturer basis, separately for cars and trucks, using the footprint attribute curves. EPA will calculate the fleet average emission level using actual production figures and CO
Final determination of compliance with fleet average CO
EPA will require and use the same test data to determine a manufacturer's compliance with both the CAFE standard and the fleet average CO
CAA section 203(a)(1) prohibits manufacturers from introducing a new motor vehicle into commerce unless the vehicle is covered by an EPA-issued certificate of conformity. Section 206(a)(1) of the CAA describes the requirements for EPA issuance of a certificate of conformity, based on a demonstration of compliance with the emission standards established by EPA under section 202 of the Act. The certification demonstration requires emission testing, and must be done for each model year.
Since compliance with a fleet average standard depends on actual production volumes, it is not possible to determine compliance with the fleet average at the time the manufacturer applies for and receives a certificate of conformity for a test group. Instead, EPA will continue to condition each certificate of conformity for the GHG program upon a manufacturer's demonstration of compliance with the manufacturer's fleet-wide average CO
Section 202(a)(1) of the CAA requires emission standards to apply to vehicles throughout their statutory useful life, as further described in Section III.A. The in-use CO
As described in Section III.C, several credit programs are available under this rulemaking, including some new programs which are not part of the MYs 2012–2016 rule (e.g., credits for certain pickup trucks). Please see Section III.E.5 of the MYs 2012–2016 final rule preamble (75 FR 25477) for a detailed explanation of credit program implementation, sample credit and deficit calculations, and end-of-year reporting requirements.
The enforcement structure EPA promulgated under the MYs 2012–2016 rulemaking remains in place. Please see Section III.E.6 of the MYs 2012–2016 final rule preamble (75 FR 25482) for a discussion of these provisions.
Section 203 of the Clean Air Act describes acts that are prohibited by law. This section and associated regulations apply equally to the greenhouse gas standards as to any other regulated emissions. Acts that are prohibited by section 203 of the Clean Air Act include the introduction into commerce or the sale of a vehicle without a certificate of conformity, removing or otherwise defeating emission control equipment, the sale or installation of devices designed to defeat emission controls, and other actions. EPA finalized language in the 2012 greenhouse gas regulations that details the specific prohibited acts under the Clean Air Act. While these regulations carry no specific regulatory burden and essentially repeat the Clean Air Act language, EPA believed that providing that language was helpful and added clarity to our regulations. We proposed no changes to this language in this rulemaking for the 2017 and later model years, no comments were received, and thus the language will continue to apply to the 2017 and later model years.
EPA's certification program for vehicles allows manufacturers to carry certification test data over and across certification testing from one model year to the next, when no significant changes to models are made. EPA would continue to apply this policy to CO
The CAA allows EPA to collect fees to cover the costs of issuing certificates of conformity for the classes of vehicles covered by this rule.
At this time the extent of any added costs to EPA as a result of this rule is not known. EPA will assess its compliance testing and other activities associated with the rule and may amend its fees regulations in the future to include any warranted new costs.
As discussed in Section III.B.7, businesses meeting the Small Business Administration (SBA) criterion of a small business as described in 13 CFR 121.201 were entirely exempted from the MYs 2012–2016 GHG requirements. However, based on comments from at least one small business, we are including a provision in this final rule that will provide these previously exempted manufacturers with the option of voluntarily opting in to the program. Once opted in, however, such a manufacturer would be fully subject to
As discussed in detail in Section III.B.5, small volume manufacturers with annual sales volumes of less than 5,000 vehicles will be required to meet the primary GHG standards, with the option of petitioning the Agency for alternative standards developed on a case-by-case basis.
As under the current program, EPA will not require CO
As under the current program, vehicles covered by this rule would be required to meet the CO
With the exception of the small business exemption and the conditional exemption for small volume manufacturers available through the 2016 model year, EPA's emission standards, including greenhouse gas standards, will continue to apply as stated in the applicability sections of the relevant regulations. EPA expects that some aftermarket conversion companies will qualify for and seek the small business exemption, but those that do not qualify will be required to meet the applicable emission standards, including the greenhouse gas standards, to qualify for a tampering exemption under 40 CFR subpart F. Because fuel converters are not required to meet a fleet average standard, the new provisions allowing a small volume manufacturer to petition EPA for alternative standards do not apply. Fleet average standards are not generally appropriate for fuel conversion manufacturers because the “fleet” of vehicles to which a conversion system may be applied has already been accounted for under the OEM's fleet average standard. Therefore, EPA is retaining the process promulgated in 40 CFR part 85 subpart F anti-tampering regulations whereby conversion manufacturers demonstrate compliance at the vehicle rather than the fleet level. Fuel converters will continue to show compliance with greenhouse gas standards by submitting data to demonstrate that the conversion emission data vehicle N
EPA emission certification regulations require emission compliance
EPA is also clarifying provisions of the MYs 2012–2016 light duty vehicle GHG standards to address an inadvertent gap in those rules dealing with situations of mergers between non-TLAAS manufacturers and TLAAS manufacturers. By way of background, the TLAAS provisions provide additional lead time for limited volume manufacturers, whereby a specified number of vehicles are subject to a less stringent standard in either MYs 2012–2015, or (for smaller volume manufacturers), MY 2016. See 75 FR 25414–419. Limited volume manufacturers may elect to use the TLAAS provisions, but are not required to do so.
The TLAAS rule provisions address situations where TLAAS manufacturers merge with or are acquired by another manufacturer. See section 86.1818–12(e)(1)(i)(B) and (C). These provisions address two scenarios. The first is when companies merge and the new company exceeds the 400,000 vehicle sale threshold (the eligibility threshold for the base TLAAS program). In such cases, the manufacturer may use TLAAS in the model year underway at the point of the merger, but loses eligibility in the model year following the merger.
EPA received a comment from Volkswagen requesting clarification in cases where the parent company, while eligible for TLAAS, has not elected to use TLAAS and does not plan to use TLAAS for future years. The commenter recommended that in such a case, the parent company should have the option of being treated in the same manner as when the company resulting from the merger exceeds the 400,000 vehicle threshold (i.e., the first scenario described above). The company would no longer be allowed to use TLAAS in the model year following the merger but could use TLAAS for the company being acquired for the model years already underway. EPA recognizes that this was not a scenario specifically contemplated by the existing regulatory language, but we believe that this is a reasonable approach since it brings parity to the transitional merger provisions of a large (non-TLAAS eligible) company compared to those of a TLAAS eligible company that chooses to forgo its opportunity to participate in the TLAAS program. EPA is adding this clarification to the MYs2012–2016 regulations. The revised regulatory text clarifies that in cases where one manufacturer that is eligible for TLAAS but nevertheless elects to forgo the use of TLAAS acquires another company that is already using TLAAS, the parent company is required to end the use of TLAAS for the acquired company in the model year following the merger (whether or not the 400,000 sales threshold is exceeded). The
In addition to treating all non-TLAAS participants identically in this situation, the clarified rule leads to environmental benefits compared to the alternative. Consider the case of a merger between a TLAAS-eligible TLAAS non-participant and a TLAAS manufacturer with sales under 50,000, where the merged entity remains under the 400,000 sales threshold. Without today's clarified rule, the merged entity would have a strong incentive to elect to use TLAAS, because the present rules only provide all-or-nothing alternatives due to the lack of explicit provisions allowing the additional model year of TLAAS for the smaller merger partner. Thus, the merged entity could produce up to 100,000 vehicles (minus the TLAAS allotment already used by the smaller company) through MY 2015 which would be subject to the more lenient TLAAS standards. Under the clarified rule, the merged entity could use the TLAAS allotment for the smaller company for one additional model year, at which point the merged entity would be subject to the principal GHG standards (i.e. just as if the merger exceeded the 400,000 sales threshold, as in present section 86.1818–12 (e)(1) (i)).
This rulemaking would retain warranty, defect reporting, and other emission-related component provisions promulgated in the MY 2012–2016 rulemaking. Please see Section III.E.10 of the MYs 2012–2016 final rule preamble (75 FR 25486) for a discussion of these provisions.
EPA is including a number of noncontroversial amendments and corrections to the existing regulations in this final rule. Because the regulatory provisions for the EPA greenhouse gas program, NHTSA's CAFE program, and the joint fuel economy and environment labeling program are all intertwined in 40 CFR Part 600, this rule presents an opportunity to make corrections and clarifications to all or any of these programs. Consequently, EPA proposed and is now finalizing a number of minor and non-substantive corrections to the regulations that implement these programs. We note that certain provisions of the existing model year 2012–2016 program are repeated in the final regulations for readers' convenience. We are not reopening. reconsidering. or otherwise reexamining those provisions.
Amendments include the following:
We are also finalizing a solution to a situation in which a manufacturer of a clean alternative fuel conversion is attempting to comply with the fuel conversion regulations (see 40 CFR part 85 subpart F) at a point in time before which certain data is available from the original manufacturer of the vehicle. Clean alternative fuel conversions are subject to greenhouse gas standards if the vehicle as originally manufactured was subject to greenhouse gas standards, unless the conversion manufacturer qualifies for exemption as a small business. Compliance with light-duty vehicle greenhouse gas emission standards is demonstrated by complying with the N
One of the factors in a manufacturer's calculation of vehicle footprint is the base tire. Footprint is based on a vehicle's wheel base and track width, and track width in turn is “the lateral distance between the centerlines of the base tires at ground, including the camber angle.”
Vehicle manufacturers were the only parties providing comments on this issue, and they were essentially unanimous in stating a desire for a level playing field, while reiterating that the issue is complex. Several manufacturers pointed out that the proposed NHTSA definition, which includes a connection to a vehicle configuration, may not be workable because the definition of a configuration is independent of vehicle size, or footprint. Several manufacturers suggested that EPA, NHTSA, and the auto companies should postpone action on this issue in this rule and work together to ensure a consistent and complete understanding of the issue. Others agreed that the definition could benefit from some clarification. After consideration of the comments, and a recognition of the importance that the footprint calculation (and therefore all the elements that comprise the footprint calculation) be harmonized across EPA and NHTSA, EPA is finalizing a revised definition in this final rule, which is consistent with the definition being finalized by NHTSA. The revised definition is as follows:
This definition appropriately removes the link to vehicle configuration that was in NHTSA's proposal, and improves upon EPA's existing definition with additional specificity that is consistent with the goal of a footprint-based program, which, as stated by the Alliance of Automobile Manufacturers, is that “All vehicles should be included * * * using a representative footprint based on the physical vehicle * * *” EPA agrees with this broadly stated goal, and we believe that the revised definition offers reasonable clarification that should help ensure a consistent application of the footprint-based standards across manufacturers. This new definition, which is harmonized with the definition being finalized by NHTSA, is also consistent with existing regulatory language that specifies how EPA intends that footprint-based standards be implemented. For example, EPA regulations currently state that “Each CO
EPA requested comments on whether there is a need to clarify in the regulations how EPA treats driver-selectable modes (such as multi-mode transmissions and other user-selectable buttons or switches) that may impact fuel economy and GHG emissions in certification testing. See 76 FR 75089; see also section II.F of this preamble for a discussion of how driver-selectable technologies may be eligible for off-cycle credits under the case-by-case demonstration provisions in the rule. New technologies continue to arrive on the market, with increasing complexity and an increasing array of ways a driver can make choices that affect the fuel economy and greenhouse gas emissions. For example, some start-stop systems may offer the driver the option of choosing whether or not the system is enabled. Similarly, vehicles with ride height adjustment or grill shutters may allow drivers to override those features. Note that this discussion pertains specifically to implementing the testing required on the Federal Test Procedure and the Highway Fuel Economy Test to generate combined City/Highway GHG and MPG values for each model type for use in calculating fleet average GHG and MPG values. For the purpose of assigning off-cycle credit values that may be based on a driver-selectable technology (see section II.F), where determination of an accurate real-world benefit of the technology is a fundamental goal, the policy described here and in current EPA guidance may not be appropriate.
Under the current regulations, EPA draws a distinction between vehicles tested for purposes of CO
When EPA tests vehicles for fuel economy and CO
“All test conditions, except as noted, shall be run according to the manufacturer's recommendations to the ultimate purchaser,
For multi-mode transmissions EPA relies on guidance letter CISD–09–19 (December 3, 2009) to guide the determination of what is “representative of what may reasonably be expected to be followed by the ultimate purchaser under in-use conditions.” If EPA can make a determination that a certain mode is the “predominant” mode (meaning nearly total usage), then testing may be done in that mode. However, if EPA cannot be convinced that a single mode is predominant, then fuel economy and GHG results from each mode are typically averaged with equal weighting. There are also detailed provisions that explain how a manufacturer may conduct surveys to support a statement that a given mode is predominant. However, CISD–09–19 only addresses transmissions, and states the following regarding other technologies:
“Please contact EPA in advance to request guidance for vehicles equipped with future technologies not covered by this document, unusual default strategies or driver selectable features, e.g., hybrid electric vehicles where the multimode button or switch disables or modifies any fuel saving features of the vehicle (such as the stop-start feature, air conditioning compressor operation, electric-only operation, etc.).”
The unique operating characteristics of these technologies often requires that EPA determine fuel economy and CO
EPA requested comment on whether the current approach and regulatory provisions are sufficient, or whether additional regulations or guidance should be developed to describe EPA's process. Manufacturers, who were the only commenters on this issue, commented that the current case-by-case approach is adequate, and EPA agrees. We recognize that no regulation can anticipate all options, devices, and operator controls that may arrive in the future, and adequate flexibility to address future situations is an important attribute for fuel economy and CO
As was the case in the MYs 2012–2016 regulation, EPA received several comments about the need for transparency in its implementation of the greenhouse gas program and specifically about the need for public access to information about Agency compliance determinations. NRDC argued that EPA and NHTSA should publish data on each manufacturer's credit status and technology penetration on an annual basis. They suggested specific data that should be disclosed, by car and truck fleets, including the amount of cumulative credits or debits, the within-manufacturer credit transfers between car and truck fleets, air conditioning credits, use of multipliers for EVs, PHEVs, and FCVs, full size pick-up truck HEV and performance-based credits, and off-cycle technology credits. They further suggested that the Fuel Economy Trends Report and the Fuel Economy Guide and associated online database could be enhanced to include additional vehicle and technology information, by model and manufacturer. The Union of Concerned Scientists (UCS) reiterated these comments, noting that EPA should have a “clear public accounting of credits and program compliance.” They specifically request that data at the “sub-model level” be published regularly, and that such data include the following: model year, make, model/nameplate, engine family, transmission type, criteria pollutant certification levels, number of cylinders, fuel type, drive type, horsepower, footprint, GHG emissions and fuel economy test results, window label fuel economy, sales volume, sales origin, market classification, EPA classification, and whether a vehicle is using the TLAAS program standards. Like NRDC, UCS also requested enhancements to the Light-Duty Automotive Technology, Carbon Dioxide Emissions, and Fuel Economy Trends report by adding information on car/truck designations and vehicle size/footprint.
EPA remains committed to the principle of transparency and to disseminating as much information as we are reasonably and legally able to provide. Not surprisingly, manufacturers have also commented about the need to protect confidential business information, a practice to which we also remain committed. As stated in the MYs 2012–2016 final rule, EPA expects that the dissemination of GHG program data will possibly take place through the annual Fuel Economy Trends report, the annual Compliance Report, or through other means, such as online distribution through
EPA already releases a considerable amount of information regarding fuel economy, emissions, and vehicle characteristics, both at the test level and at the model type level.
This action is an important step towards curbing growth of GHG emissions from cars and light trucks. In the absence of control, GHG emissions worldwide and in the U.S. are projected to continue steady growth. Table III–60 shows emissions of carbon dioxide (CO
This rule
For this
EPA has updated a number of analytic inputs for this final rule analysis, as compared to the proposal. The majority of these changes have small impacts. Two notable changes are a lower VMT projection, corresponding to a lower projection in Annual Energy Outlook (AEO) 2012 as compared to the AEO 2011 estimates used in the NPRM, and new emission factors for electricity, discussed later in this section and in EPA RIA Chapter 4. No significant comments were received on the general methods used for calculating greenhouse gas impacts, including the use of the OMEGA model. All tables in this section contain data from the analysis with the MY 2008 based future fleet projection. For the analysis containing the MY 2010 alternate future fleet projection, please see EPA RIA chapter 10.
Using this approach EPA estimates the standards will reduce annual fleetwide car and light truck vehicle GHG emissions by approximately 220 million metric tons (MMT) CO
EPA projects the total GHG reductions of the program over the full life of model year 2017–2025 vehicles to be about 1,960 MMTCO
Section III.F.1 discusses the emission inventory impacts of this rulemaking, while III.F.2 discusses the climate change impacts of GHGs. The impacts of this rule on atmospheric CO
The modeling of fuel savings and greenhouse gas emissions is substantially similar to the modeling conducted in the proposal as well as in the MYs 2012–2016 rulemaking and the MYs 2017–2025 Interim Joint Technical Assessment Report (TAR). As detailed in EPA RIA chapter 4, EPA estimated calendar year tailpipe CO
As in the MYs 2012–2016 rulemaking, this rule allows manufacturers to earn credits for improvements for controls of both direct and indirect AC emissions. Since these improvements are relatively low cost, EPA again projects that manufacturers will utilize these flexibilities widely, leading to additional reductions from GHG emissions associated with vehicle air conditioning systems. As explained above, these reductions will come from both direct emissions of air conditioning refrigerant over the life of the vehicle and tailpipe CO
Upstream greenhouse gas emission reductions associated with the production and distribution of fuel were estimated using emission factors from the Department of Energy's (DOE's) GREET1.8c model, with modifications as detailed in Chapter 4 of the RIA. These estimates include both international and domestic emission reductions, since reductions in foreign exports of finished gasoline and/or crude make up a significant share of the fuel savings resulting from the GHG standards. Thus, significant portions of the upstream GHG emission reductions will occur outside of the U.S.; a breakdown of projected international versus domestic reductions is included in the EPA RIA.
Electricity emission factors were derived from EPA's Integrated Planning Model (IPM). EPA uses IPM to analyze the projected impact of environmental policies on the electric power sector in the 48 contiguous states and the District of Columbia. IPM is a multi-regional, dynamic, deterministic linear programming model of the U.S. electric power sector. It provides forecasts of least-cost capacity expansion, electricity dispatch, and emission control strategies for meeting energy demand and environmental, transmission, dispatch, and reliability constraints. For the proposal, we derived average national GHG emission factors (EFs) from the IPM version 4.10 base case run for the “Proposed Transport Rule.
EPA received several comments on the use of marginal or incremental emission factors. These comments are discussed extensively in section III.C.2.a.vi, but generally favored the use of marginal power as opposed to national average during the impacts analysis. A national average EF is based on all power in U.S., including existing hydro-electric, coal, and nuclear. Some of these power sources may not be available to electric vehicles, as they are at full capacity with current demands. For this final rulemaking, EPA updated the electricity emission factor in several ways. The final rulemaking emission factors include a newer IPM version that incorporates new EPA stationary source emissions controls (such as the Mercury and Air Toxics Standards and the Cross-State Air Pollution Rule)
Table III–61 shows reductions estimated from these GHG standards assuming a reference case of 2016 MY standards continuing indefinitely beyond 2016, and a post-control case in which 2025 MY GHG standards continue indefinitely beyond 2025. These reductions are broken down by upstream and downstream components, including air conditioning improvements, and also account for the offset from a 10 percent “VMT rebound effect” as discussed in Section III.H.
For selected years, Table III–61 contains the detailed breakdown of the sources contributing to the GHG reductions. Table III–62 contains total GHG impacts and fuel savings for all years.
The total program emission reductions yield significant emission decreases relative to worldwide and national total emissions.
EPA also analyzed the emission reductions over the full life of the 2017–2025 model year cars and light trucks that will be affected by this program.
As noted above and discussed more fully in Section III.H., the effect of a decrease in fuel cost per mile on vehicle use (i.e., the VMT rebound effect) was accounted for in our assessment of economic and environmental impacts of this rule. A 10 percent rebound case was used for this analysis, meaning that VMT for affected model years is modeled as increasing by 10 percent as much as the decrease in fuel cost per mile; i.e., a 10 percent decrease in fuel cost per mile from our standards would result in a 1 percent increase in VMT. Detailed results are shown in Table III–65. (This increase is accounted for in the GHG impacts previously presented in this section). The table below compares the GHG emissions under two different scenarios: One in which the control scenario VMT estimate is entirely insensitive to the cost of travel, and one in which the control scenario is affected by the rebound effect. RIA Chapter 4.5 includes a sensitivity analysis of GHG emissions impacts from this rule assuming higher and lower values of the VMT rebound effect.
EPA analyzed
The impact of GHG emissions on the climate has been reviewed in the NPRM, as well as in the MYs 2012–2016 light-duty rulemaking and the heavy-duty GHG rulemaking. See 76 FR 75096; 75 FR 25491; 76 FR 57294. This section briefly discusses again the issue of climate impacts noting the context of transportation emissions.
Once emitted, GHGs that are the subject of this regulation can remain in the atmosphere for decades to millennia, meaning that (1) their concentrations become well-mixed throughout the global atmosphere regardless of emission origin, and (2) their effects on climate are long lasting. GHG emissions come mainly from the combustion of fossil fuels (coal, oil, and gas), with additional contributions from the clearing of forests, agricultural activities, cement production, and some industrial activities. Transportation activities, in aggregate, were the second largest contributor to total U.S. GHG emissions in 2010 (27 percent of total domestic emissions).
The Administrator relied on thorough and peer-reviewed assessments of climate change science prepared by the Intergovernmental Panel on Climate Change (“IPCC”), the United States Global Change Research Program (“USGCRP”), and the National Research Council of the National Academies (“NRC”)
Based on these assessments, the Administrator determined that greenhouse gases cause warming; that levels of greenhouse gases are increasing in the atmosphere due to human activity; the climate is warming; recent warming has been attributed to the increase in greenhouse gases; and that warming of the climate threatens human health and welfare. The Administrator further found that emissions of well-mixed greenhouse gases from new motor vehicles and engines contribute to the air pollution that endangers
More recent assessments have reached similar conclusions to those of the assessments upon which the Administrator relied. In May 2010, the NRC published its comprehensive assessment, “Advancing the Science of Climate Change.”
In the 2010 report cited above, the NRC stated that some of the largest potential risks associated with future climate change may come not from relatively smooth changes that are reasonably well understood, but from extreme events, abrupt changes, and surprises that might occur when climate or environmental system thresholds are crossed. Examples cited as warranting more research include the release of large quantities of GHGs stored in permafrost (frozen soils) across the Arctic, rapid disintegration of the major ice sheets, irreversible drying and desertification in the subtropics, changes in ocean circulation, and the rapid release of destabilized methane hydrates in the oceans.
On ocean acidification, the same report noted the potential for broad, “catastrophic” impacts on marine ecosystems. Ocean acidity has increased 25 percent since pre-industrial times, and is projected to continue increasing. By the time atmospheric CO
Importantly, these recent NRC assessments represent another independent and critical inquiry of the state of climate change science, separate and apart from the previous IPCC and USGCRP assessments.
Although “EPA need not establish a minimum threshold of risk or harm before determining whether an air pollutant endangers”, and similarly need not condition regulation under section 202(a) “on evidence of a particular level of mitigation”. see
EPA determines that the projected reductions in atmospheric CO
As in the NPRM, EPA estimated changes in the atmospheric CO
The integrated impact of the following non-GHG and GHG emissions changes are considered: CO
MAGICC calculates the forcing response at the global scale from changes in atmospheric concentrations of CO
The International Council on Clean Transportation (ICCT) and the Manufacturers of Emissions Control Association (MECA) mentioned the benefits of black carbon reductions. Since the proposed rule, EPA has recently released a Report to Congress addressing black carbon.
Changes in atmospheric CO
The Institute for Energy Research (IER) argued that the climate sensitivity is likely to be below or in the low end of the range used by the EPA. However, this assertion was based on only two recent studies, while other recent studies have come to different conclusions. The EPA has relied on assessments like those of the National Academies, U.S. Global Change Research Program, and IPCC because assessments cover the full range of the literature and place the individual studies in context. In addition, one of the two specific studies relied on by IER to assert that EPA overestimated the climate sensitivity provided estimates of transient climate sensitivity. Transient sensitivity is a measure of the temperature change precisely at the time of doubling of CO
The results of this modeling, summarized in Table III–69, show quantified reductions in atmospheric CO
The projected reductions are small relative to the change in temperature (1.8–4.8 °C), sea level rise (23–55 cm), and ocean acidity (−0.30 pH units) from 1990 to 2100 from the MAGICC simulations for the GCAM reference case. However, this is to be expected given the magnitude of emissions reductions expected from the program in the context of global emissions. This uncertainty range does not include the effects of uncertainty in future emissions. It should also be noted that the calculations in MAGICC do not include the possible effects of
IER and a number of private citizens asserted that the reductions in temperature and other climate factors are too small to be meaningful. However, as has been stated, no one rule will prevent climate change by itself. As stated in the Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Section 202(a) of the Clean Air Act; final rule (74 FR at 66543), “The commenters' approach, if used globally, would effectively lead to a tragedy of the commons, whereby no country or source category would be accountable for contributing to the global problem of climate change, and nobody would take action as the problem persists and worsens.”
The National Wildlife Federation (NWF), Union of Concerned Scientists, American Medical Association of California, Ceres, Environmental Defense Fund, and several private citizens also discussed the importance of these standards in terms of mitigating climate risks, noting impacts to heat, ozone, extreme events, wildfires, floods, agriculture, coastal regions, droughts, and vulnerable populations. The EPA agrees that the reductions enacted in this rule are an important step towards reducing climate risks over the coming decades and centuries.
A summary of comments on climate change impacts from GHG emissions and other climate-forcing agents as well as changes in global indicators associated with GHG emissions reductions from this rule is available in sections 16.2 and 16.3 of EPA's Response to Comments document. These sections also contain EPA's more detailed responses to these comments.
EPA used the computer program CO2SYS,
As discussed in III.F.2, the 2011 NRC assessment on “Climate Stabilization Targets: Emissions, Concentrations, and Impacts over Decades to Millennia” determined how a number of climate impacts—such as heaviest daily rainfalls, crop yields, and Arctic sea ice extent—would change with a temperature change of 1 degree Celsius (C) of warming. These relationships of impacts with temperature change could be combined with the calculated reductions in warming in Table II–63 to estimate changes in these impacts associated with this rulemaking.
As a substantial portion of CO
EPA's analysis of this rule's impact on global climate conditions is intended to quantify these potential reductions using the best available science. EPA's modeling results show repeatable, consistent reductions relative to the reference case in changes of CO
Although this rule focuses on GHGs, it will also have an impact on the emissions of non-GHG pollutants. Section III.G.1 of this preamble details the criteria pollutant and air toxic inventory impacts of this rule. The subsequent sections, III.G.2 and III.G.3, discuss the health and environmental effects associated with the criteria and toxic air pollutants that are being impacted by this rule. In Section III.G.4, we discuss the potential impact of this rule on concentrations of criteria and air toxic pollutants in the ambient air. The tools and methodologies used in this analysis are substantially similar to those used in the proposal and in the MYs 2012–2016 light duty rulemaking.
In addition to reducing the emissions of greenhouse gases, this rule will influence “non-GHG” pollutants, i.e., “criteria” air pollutants and their precursors, and air toxics. The rule will affect emissions of carbon monoxide (CO), fine particulate matter (PM
As shown in Table III–70, EPA estimates that the light duty vehicle program will result in reductions of NO
We received several comments on the methods used to quantify emissions from advanced technology vehicles. Growth Energy commented that “There is substantial evidence that GDI increases PM mass and PM number emissions compared to the conventional port fuel injection (PFI) technology now in widespread use * * *. Therefore, the final rule should evaluate and consider both the increased PM due to GDI use and the potential for more widespread ethanol use to decrease PM mass and number emissions.” The Clean Fuels Development Coalition submitted similar comments. EPA agrees with the commenter that testing on initial GDI technology, primarily wall-guided systems, has shown an increase in PM emissions over the FTP as compared to conventional PFI gasoline engines. However, the technology is still evolving, making it difficult to predict future PM emission performance of GDI vehicles. Testing on initial spray-guided GDI systems has shown less of a PM increase over the FTP, and even reduced PM emissions over the USO6 compared to PFI vehicles.
For all criteria pollutants the overall impact of the program will be small compared to total U.S. inventories across all sectors. In 2030, EPA estimates that the program will reduce total NO
As shown in Table III–71, EPA estimates that the program will result in similarly small changes for air toxic emissions compared to total U.S. inventories across all sectors. In 2030, EPA estimates the program will increase total 1,3-butadiene and acetaldehyde emissions by 0.1 to 0.2 percent. Total acrolein, benzene and formaldehyde emissions will decrease by similarly small amounts.
As in the MYs 2012–2016 rulemaking and in the proposal, for the downstream analysis, the current version of the EPA motor vehicle emission simulator (MOVES2010a) was used to estimate VOC, CO, NO
This rule assumes that MY 2017 and later vehicles are compliant with the agency's Tier 2 emission standards. This rule does not model any future Tier 3 emission standards, because these standards have not yet been proposed (see Section III.A).
As in the MYs 2012–2016 GHG rulemaking, for this analysis we attribute decreased fuel consumption from this program to petroleum-based fuels only, while assuming no effect on volumes of ethanol and other renewable fuels because they are mandated under the Renewable Fuel Standard (RFS2). For the purposes of this emission analysis, we assume that all gasoline in the timeframe of the analysis is blended with 10 percent ethanol (E10). However, as a consequence of the fixed volume of renewable fuels mandated in the RFS2 rulemaking and the decreasing petroleum consumption predicted here, we anticipate that this rulemaking would in fact increase the fraction of the U.S. fuel supply that is made up by renewable fuels. The impacts of this increase are difficult to project at the present time. Since it is not centrally relevant to the analysis for this rulemaking, we have not included renewable fuel volumes in this analysis beyond the assumption that all gasoline is E10.
In this rulemaking EPA modeled the three impacts on criteria pollutant emissions (VMT rebound driving, changes in fuel production, and changes in electricity production) discussed above.
While electric vehicles have zero tailpipe emissions, EPA assumes that manufacturers will plan for these vehicles in their regulatory compliance strategy for non-GHG emissions standards, and will not over-comply with those standards. Since the Tier 2 emissions standards are fleet-average
To determine the upstream fuel production impacts, EPA estimated the impact of reduced petroleum volumes on the extraction and transportation of crude oil as well as the production and distribution of finished gasoline. For the purpose of assessing domestic-only emission reductions it was necessary to estimate the fraction of fuel savings attributable to domestic finished gasoline, and of this gasoline what fraction is produced from domestic crude. For this analysis EPA estimated that 50 percent of fuel savings is attributable to domestic finished gasoline and that 90 percent of this gasoline originated from imported crude. Emission factors for most upstream emission sources are based on the GREET1.8 model, developed by DOE's Argonne National Laboratory,
As with the GHG emission analysis discussed in section III.F, electricity emission factors were derived from EPA's Integrated Planning Model (IPM). EPA uses IPM to analyze the projected impact of environmental policies on the electric power sector in the 48 contiguous states and the District of Columbia. IPM is a multi-regional, dynamic, deterministic linear programming model of the U.S. electric power sector. It provides forecasts of least-cost capacity expansion, electricity dispatch, and emission control strategies for meeting energy demand and environmental, transmission, dispatch, and reliability constraints. EPA discusses revisions to these emission factors in Section III.F and in RIA chapter 4.
In this section we discuss health effects associated with exposure to some of the criteria and air toxic pollutants impacted by the vehicle standards.
Particulate matter (PM) is a highly complex mixture of solid particles and liquid droplets distributed among numerous atmospheric gases which interact with solid and liquid phases. Particles range in size from those smaller than 1 nanometer (10
Particles span many sizes and shapes and consist of hundreds of different chemicals. Particles are emitted directly from sources and are also formed through atmospheric chemical reactions; the former are often referred to as “primary” particles, and the latter as “secondary” particles. Particle pollution also varies by time of year and location and is affected by several weather-related factors, such as temperature, clouds, humidity, and wind. A further layer of complexity comes from particles' ability to shift between solid/liquid and gaseous phases, which is influenced by concentration and meteorology, especially temperature.
Fine particles are produced primarily by combustion processes and by transformations of gaseous emissions (e.g., sulfur oxides (SO
Scientific studies show ambient PM is associated with a series of adverse health effects. These health effects are discussed in detail in EPA's Integrated Science Assessment (ISA) for Particulate Matter.
The ISA concludes that health effects associated with short-term exposures (hours to days) to ambient PM
For PM
For ultrafine particles, the ISA concludes that there is suggestive evidence of a causal relationship between short-term exposures and cardiovascular effects, such as changes in heart rhythm and blood vessel function. It also concludes that there is suggestive evidence of association between short-term exposure to ultrafine particles and respiratory effects. Data are inadequate to draw conclusions regarding the health effects associated with long-term exposure to ultrafine particles.
Ground-level ozone pollution is typically formed by the reaction of VOC and NO
The science of ozone formation, transport, and accumulation is complex. Ground-level ozone is produced and destroyed in a cyclical set of chemical reactions, many of which are sensitive to temperature and sunlight. When ambient temperatures and sunlight levels remain high for several days and the air is relatively stagnant, ozone and its precursors can build up and result in more ozone than typically occurs on a single high-temperature day. Ozone can be transported hundreds of miles downwind from precursor emissions, resulting in elevated ozone levels even in areas with low local VOC or NO
The health and welfare effects of ozone are well documented and are assessed in EPA's 2006 Air Quality Criteria Document and 2007 Staff Paper.
Nitrogen dioxide (NO
SO
Information on the health effects of NO
Although the weight of evidence supporting a causal relationship is somewhat less certain than that associated with respiratory morbidity, NO
Information on the health effects of SO
Carbon monoxide (CO) is a colorless, odorless gas emitted from combustion processes. Nationally and, particularly in urban areas, the majority of CO emissions to ambient air come from mobile sources.
Information on the health effects of CO can be found in the EPA Integrated Science Assessment (ISA) for Carbon Monoxide.
Human clinical 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 show 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 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 inconsistent neural and behavioral effects following low-level CO exposures. The ISA concludes 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 epidemiologic and animal toxicological studies cited in the ISA have evaluated associations between CO exposure and birth outcomes such as preterm birth or cardiac birth defects. The epidemiologic studies provide limited 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 associations between perinatal CO exposure and decrements in birth weight, as well as other developmental outcomes. The ISA concludes these studies are suggestive of a causal relationship between long-term exposures to CO and developmental effects and birth outcomes.
Epidemiologic studies provide evidence of effects on respiratory morbidity such as changes in pulmonary function, respiratory symptoms, and hospital admissions associated with ambient CO concentrations. A limited number of epidemiologic studies considered copollutants such as ozone, SO
Finally, the ISA concludes that the epidemiologic evidence is suggestive of a causal relationship between short-term exposures to CO and mortality. Epidemiologic studies provide evidence of an association 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 copollutant models contributes to the uncertainty as to whether CO is acting alone or as an indicator for other combustion-related pollutants. The ISA also concludes that there is not likely to be a causal relationship between relevant long-term exposures to CO and mortality.
Light-duty vehicle emissions contribute to ambient levels of mobile source air toxics, which are compounds that are known or suspected as human or animal carcinogens, or that have noncancer health effects.
The 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.
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.
EPA has characterized 1,3-butadiene as carcinogenic to humans by inhalation.
In 1991, EPA concluded that formaldehyde is a carcinogen based on nasal tumors in animal bioassays.
The conclusions by IARC and NTP reflect the results of epidemiologic research published since 1991 in combination with previous 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.
Health effects of formaldehyde in addition to cancer were reviewed by the Agency for Toxics Substances and Disease Registry in 1999
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 in June 2010.
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.
The primary noncancer effects of exposure to acetaldehyde vapors include irritation of the eyes, skin, and respiratory tract.
Acrolein is extremely acrid and irritating to humans when inhaled, with acute exposure resulting in upper respiratory tract irritation, mucus hypersecretion and congestion. The intense irritancy of this carbonyl has been demonstrated during controlled tests in human subjects, who suffer intolerable eye and nasal mucosal sensory reactions within minutes of exposure.
EPA determined in 2003 that the human carcinogenic potential of acrolein could not be determined because the available data were inadequate. No information was available on the carcinogenic effects of acrolein in humans and the animal data provided inadequate evidence of carcinogenicity.
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 below. POM compounds are formed primarily from combustion and are present in the atmosphere in gas and particulate form. Cancer is the major concern from exposure to POM. 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.
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.
In addition to the compounds described above, other compounds in gaseous hydrocarbon and PM emissions from light-duty vehicles will be affected by this rule. Mobile source air toxic compounds that would potentially be impacted include ethylbenzene, propionaldehyde, toluene, and xylene. Information regarding the health effects of these compounds can be found in EPA's IRIS database.
Populations who live, work, or attend school near major roads experience elevated exposure to a wide range of air pollutants, as well as higher risks for a number of adverse health effects. While the previous sections of this preamble have focused on the health effects associated with individual criteria pollutants or air toxics, this section discusses the mixture of different exposures near major roadways, rather than the effects of any single pollutant. As such, this section emphasizes traffic-related air pollution, in general, as the relevant indicator of exposure rather than any particular pollutant.
Concentrations of many traffic-generated air pollutants are elevated for up to 300–500 meters downwind of roads with high traffic volumes.
Populations near major roads experience greater risk of certain adverse health effects. The Health Effects Institute published a report on the health effects of traffic-related air pollution.
The HEI report also concludes that evidence is “suggestive” of a causal association between traffic exposure and all-cause and cardiovascular mortality. There is also evidence of an association between traffic-related air pollutants and cardiovascular effects such as changes in heart rhythm, heart attack, and cardiovascular disease. The HEI report characterizes this evidence as “suggestive” of a causal association, and an independent epidemiological literature review by Adar and Kaufman (2007) concludes that there is “consistent evidence” linking traffic-related pollution and adverse cardiovascular health outcomes.
Some studies have reported associations between traffic exposure and other health effects, such as birth outcomes (e.g., low birth weight) and childhood cancer. The HEI report concludes that there is currently “inadequate and insufficient” evidence for a causal association between these effects and traffic exposure. A review by Raaschou-Nielsen and Reynolds (2006) concluded that evidence of an association between childhood cancer and traffic-related air pollutants is weak, but noted the inability to draw firm conclusions based on limited evidence.
There is a large population in the United States living in close proximity of major roads. According to the Census Bureau's American Housing Survey for 2007, approximately 20 million residences in the United States, 15.6% of all homes, are located within 300 feet (91 m) of a highway with 4+ lanes, a railroad, or an airport.
People living near roads are often socioeconomically disadvantaged. According to the 2007 American Housing Survey, a renter-occupied property is over twice as likely as an owner-occupied property to be located near a highway with 4+ lanes, railroad or airport. In the same survey, the median household income of rental housing occupants was less than half that of owner-occupants ($28,921/$59,886). Numerous studies in individual urban areas report higher levels of traffic-related air pollutants in areas with high minority or poor populations.
Students may also be exposed in situations where schools are located near major roads. In a study of nine metropolitan areas across the United States, Appatova et al. (2008) found that on average greater than 33% of schools were located within 400 m of an Interstate, U.S., or state highway, while 12% were located within 100 m.
Demographic studies of students in schools near major roadways suggest that this population is more likely than the general student population to be of non-white race or Hispanic ethnicity, and more often live in low socioeconomic status locations.
In this section we discuss some of the environmental effects of PM and its precursors such as visibility impairment, atmospheric deposition, and materials damage and soiling, as well as environmental effects associated with the presence of ozone in the ambient air, such as impacts on plants, including trees, agronomic crops and urban ornamentals, and environmental effects associated with air toxics.
Visibility can be defined as the degree to which the atmosphere is transparent to visible light.
EPA is pursuing a two-part strategy to address visibility impairment. First, EPA developed the regional haze program (64 FR 35714) which was put in place in July 1999 to protect the visibility in Mandatory Class I Federal areas. There are 156 national parks, forests and wilderness areas categorized as Mandatory Class I Federal areas (62 FR 38680–38681, July 18, 1997). 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. Second, EPA has concluded that PM
Elevated ozone levels contribute to environmental effects, with impacts to plants and ecosystems being of most concern. Ozone can produce both acute and chronic injury in sensitive species depending on the concentration level and the duration of the exposure. Ozone effects also tend to accumulate over the growing season of the plant, so that even low concentrations experienced for a longer duration have the potential to create chronic stress on vegetation. Ozone damage to plants includes visible injury to leaves and impaired photosynthesis, both of which can lead to reduced plant growth and reproduction, resulting in reduced crop yields, forestry production, and use of sensitive ornamentals in landscaping. In addition, the impairment of photosynthesis, the process by which
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 forest and other natural vegetation can potentially lead to species shifts and loss from the affected ecosystems, resulting in a loss or reduction in associated ecosystem goods and services. Lastly, 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. The final 2006 Ozone Air Quality Criteria Document presents more detailed information on ozone effects on vegetation and ecosystems.
Wet and dry deposition of ambient particulate matter delivers a complex mixture of metals (e.g., mercury, zinc, lead, nickel, aluminum, cadmium), organic compounds (e.g., polycyclic organic matter, dioxins, furans) and inorganic compounds (e.g., nitrate, sulfate) to terrestrial and aquatic ecosystems. The chemical form of the compounds deposited depends on a variety of factors including ambient conditions (e.g., temperature, humidity, oxidant levels) and the sources of the material. Chemical and physical transformations of the compounds occur in the atmosphere as well as the media onto which they deposit. These transformations in turn influence the fate, bioavailability and potential toxicity of these compounds. Atmospheric deposition has been identified as a key component of the environmental and human health hazard posed by several pollutants including mercury, dioxin and PCBs.
Adverse impacts on water quality can occur when atmospheric contaminants deposit to the water surface or when material deposited on the land enters a waterbody through runoff. Potential impacts of atmospheric deposition to waterbodies include those related to both nutrient and toxic inputs. Adverse effects to human health and welfare can occur from the addition of excess nitrogen via atmospheric deposition. The nitrogen-nutrient enrichment contributes to toxic algae blooms and zones of depleted oxygen, which can lead to fish kills, frequently in coastal waters. Deposition of heavy metals or other toxics may lead to the human ingestion of contaminated fish, impairment of drinking water, damage to freshwater and marine ecosystem components, and limits to recreational uses. Several studies have been conducted in U.S. coastal waters and in the Great Lakes Region in which the role of ambient PM deposition and runoff is investigated.
Atmospheric deposition of nitrogen and sulfur contributes to acidification, altering biogeochemistry and affecting animal and plant life in terrestrial and aquatic ecosystems across the United States. The sensitivity of terrestrial and aquatic ecosystems to acidification from nitrogen and sulfur deposition is predominantly governed by geology. 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 nutritional value of preferred prey species, threatening biodiversity 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 include a decline in sensitive forest tree species, such as red spruce (
In addition to the role nitrogen deposition plays in acidification, nitrogen deposition also leads to nutrient enrichment and altered biogeochemical cycling. In aquatic systems increased nitrogen can alter species assemblages and cause eutrophication. 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. For a broader explanation of the topics treated here, refer to the description in Section 6.1.2.3.1 of the RIA.
Adverse impacts on soil chemistry and plant life have been observed for areas heavily influenced by atmospheric deposition of nutrients, metals and acid species, resulting in species shifts, loss of biodiversity, forest decline, damage to forest productivity and reductions in ecosystem services. Potential impacts also include adverse effects to human health through ingestion of contaminated vegetation or livestock (as in the case for dioxin deposition), reduction in crop yield, and limited use of land due to contamination.
Atmospheric deposition of pollutants can reduce the aesthetic appeal of buildings and culturally important articles through soiling, and can contribute directly (or in conjunction with other pollutants) to structural damage by means of corrosion or erosion. Atmospheric deposition may affect materials principally by promoting and accelerating the corrosion of metals, by degrading paints, and by deteriorating building materials such as concrete and limestone. Particles contribute to these effects because of their electrolytic, hygroscopic, and acidic properties, and their ability to adsorb corrosive gases (principally sulfur dioxide).
Emissions from producing, transporting and combusting fuel contribute to ambient levels of pollutants that contribute to adverse effects on vegetation. Volatile organic compounds, some of which are considered air toxics, have long been suspected to play a role in vegetation damage.
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.
Air quality modeling was performed to assess the impact of the vehicle standards on criteria and air toxic pollutants. In this section, we present information on current levels of pollution as well as projections for 2030, with respect to ambient PM
Concentrations that exceed the level of the ozone NAAQS occur in many parts of the country. The primary and secondary NAAQS for ozone are 8-hour standards with a level of 0.075 ppm. The most recent revision to the ozone standards was in 2008; the previous 8-hour ozone standards, set in 1997, had a level of 0.08 ppm. In 2004, the U.S. EPA designated nonattainment areas for the 1997 8-hour ozone NAAQS.
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. Most ozone nonattainment areas are required to attain the 1997 8-hour ozone NAAQS in the 2007 to 2013 time frame and attainment dates for the 2008 8-hour ozone NAAQS are in the 2015 to 2032 timeframe.
EPA has already adopted many emission control programs that are expected to reduce ambient ozone levels. As a result of these and other federal, state and local programs, 8-hour ozone levels are expected to improve in the future. Even so, our air quality modeling projects that in 2030, with all current controls but excluding the impacts of the vehicle standards, up to 10 counties with a population of over 30 million would have projected design values above the level of the 2008 ozone standard of 0.075 ppm (75 ppb). These numbers do not account for those areas that are close to (e.g., within 10 percent of) the 2008 ozone standard. These areas, although not above the standards, will also be impacted by changes in ozone concentrations as they work to ensure long-term maintenance of the ozone NAAQS.
Our modeling indicates that there will be very small changes in ambient ozone concentrations across most of the country. However, there will be small decreases in ozone design value concentrations in some areas of the country and small increases in ozone design value concentrations in other areas.
There are many areas of the country that are currently in nonattainment for the PM
In 2005 EPA designated nonattainment areas for the 1997 PM
States with PM
EPA has already adopted many mobile source emission control programs that are expected to reduce ambient PM levels. As a result of these and other federal, state and local programs, the number of areas that fail to meet the PM
Our modeling indicates that there will be very small changes in ambient PM
The majority of Americans continue to be exposed to ambient concentrations of air toxics at levels which have the potential to cause adverse health effects.
Our modeling indicates that national average ambient concentrations of the modeled air toxics change less than 1 percent across most of the country due to the final standards. Additional detail on the air toxics results can be found in Section 6.2.2.3 of the RIA.
Over the past two decades, the EPA has undertaken numerous efforts to reduce nitrogen and sulfur deposition across the U.S. Analyses of long-term monitoring data for the U.S. show that deposition of both nitrogen and sulfur compounds has decreased over the last 17 years. The data show that reductions were more substantial for sulfur compounds than for nitrogen compounds. In the eastern U.S., where data are most abundant, total sulfur deposition decreased by about 44 percent between 1990 and 2007, while total nitrogen deposition decreased by 25 percent over the same time frame.
Our air quality modeling projects increases in nitrogen deposition in some localized areas across the U.S. along with a few areas of decreases in nitrogen deposition as a result of the GHG standards. The increases in nitrogen deposition are likely due to projected upstream emissions increases in NO
Our air quality modeling also projects both increases and decreases in sulfur deposition as a result of the GHG standards. The decreases in sulfur deposition are likely due to projected upstream emissions decreases from changes in the location of electricity generation and from reduced gasoline production. The increases in sulfur deposition are likely due to projected upstream emissions increases from increased electricity generation. The remainder of the country will experience only minimal changes in sulfur deposition, ranging from decreases of less than 0.5% to increases of less than 0.5%.
For maps of 2030 deposition impacts and additional information on these impacts see Section 6.2.2.4 of the RIA.
As mentioned in Section III.G.4.i, millions of people live in nonattainment areas for the PM
Air quality modeling was used to project visibility conditions in 139 mandatory class I federal areas across the U.S. The results show that in 2030 all the modeled areas would continue to have annual average deciview levels above background.
In the NPRM, EPA sought comment on whether there are any other health and environmental impacts associated with advancements in vehicle GHG reduction technologies that the agency should consider. In particular, EPA requested information on studies or research underway on a vehicle's life-cycle impacts (e.g., materials usage, manufacturing, end of life disposal) beyond issues regarding fuel production and distribution (upstream) discussed in Section III.C.
EPA received a mix of comments on this topic, many highlighting recent or upcoming studies including new research from the University of California, Davis and the University of Michigan. Some commenters argued that EPA should base future GHG standards on life-cycle emissions in order to avoid favoring technologies that have lower emissions during operation or the “use phase,” but higher total greenhouse gas emissions when production and other stages of a vehicle's life are considered. For example, several organizations from the steel industry recommended that EPA and NHTSA consider incorporating life-cycle assessment into vehicle regulations as part of the 2018 mid-term evaluation and outlined one potential framework for establishing such life-cycle based standards.
Other commenters agreed with the agencies' proposal not to consider life-cycle impacts as part of the standards, arguing that life-cycle analysis (LCA) is beyond the intended scope of the rulemaking and that regulating emissions from vehicle operation addresses the majority of GHG emissions. The American Chemistry Council also noted, “Further, this type of rulemaking is not an appropriate place to apply LCA because of the lack of consensus regarding how to calculate inputs and outputs in an LCA evaluation at this time.”
EPA is glad to see the advances in research on this important topic and plans to monitor new work in this area. However, the agency continues to believe that, as of the time of this rulemaking, there is too much uncertainty about the life-cycle impacts of future advanced technologies to conduct the type of detailed, vehicle-specific assessments that would be needed in a regulatory context. See the EPA Response to Comments document for a more detailed discussion on this topic and a fuller summary of comments received.
In this section, EPA presents the costs and impacts of the GHG standards. It is important to note that NHTSA's CAFE standards and EPA's GHG standards will both be in effect, and each will lead to average fuel economy increases and CO
This section outlines the basis for assessing the benefits and costs of the GHG standards and provides estimates of these costs and benefits. Some of these effects are private, meaning that they affect consumers and producers directly in their sales, purchases, and use of vehicles. These private effects include the increase in vehicle prices due to costs of the technology, fuel savings, and the benefits of additional driving and reduced refueling. Other costs and benefits affect people outside the markets for vehicles and their use; these effects are termed external, because they affect people in ways other than the effect on the market for and use of new vehicles and are generally not taken into account by the purchaser of the vehicle. The external effects include the climate impacts, the effects on non-GHG pollutants, energy security impacts, and the effects on traffic, accidents, and noise due to additional driving. The sum of the private and external benefits and costs is the net social benefits of the standards.
There is some debate about the behavior of private markets in the context of these standards: if consumers optimize their purchases of fuel economy, with full information and perfect foresight, in perfectly efficient markets, they should have already
The net benefits of EPA's rule consist of the effects of the standards on:
• The vehicle costs;
• Fuel savings associated with reduced fuel usage resulting from the program;
• Greenhouse gas emissions;
• Other air pollutants;
• Other impacts, including noise, congestion, accidents;
• Energy security impacts;
• Changes in refueling events;
• Increased driving due to the VMT “rebound” effect.
EPA also presents the cost per ton of GHG reductions associated with the GHG standards on a CO
The total present value of monetized benefits (excluding fuel savings) under the standards are projected to be between $257 to $743 billion, using a 3 percent discount rate and depending on the value used for the social cost of carbon. With a 7 percent discount rate, the total present value of monetized benefits (excluding fuel savings) under the standards are projected to be between $118 to $604 billion, depending on the value used for the social cost of carbon. These benefits are summarized below in Table 103. The present value in 2012 of technology and maintenance costs of the standards are estimated to be between $247 to $561 billion for new vehicle technology (assuming a 7 and 3 percent discount rate, respectively, and costs through 2050), less $607 to $1,600 billion in savings realized by consumers through fewer fuel expenditures (calculated using pre-tax fuel prices and using a 7 and 3 percent discount rate, respectively, and fuel savings through 2050). These costs are summarized below in Table III–101 and the fuel savings are summarized in Table III–102. The total net present value of net benefits under the standards are projected to be between $1,290 and $1,780 billion, using a 3 percent discount rate and depending on the value used for the social cost of carbon. With a 7 percent discount rate, the total net present value of net benefits under the standards are projected to be between $478 billion to $964 billion, depending on the value used for the social cost of carbon. The estimates developed here use as a baseline for comparison the greenhouse gas performance and fuel economy associated with MY 2016 standards. To the extent that greater fuel economy improvements than those assumed to occur under the baseline may have occurred due to market forces alone (absent these standards), the analysis overestimates private and social net benefits.
While NHTSA and EPA each modeled their respective regulatory programs, the analyses were generally consistent and featured similar parameters. For this rule, EPA has not conducted an overall uncertainty analysis of the impacts associated with its regulatory program, though it did conduct sensitivity analyses of individual components of the analysis (e.g., alternative SCC estimates, VMT rebound effect, battery costs, mass reduction costs, the indirect cost markup factor, and cost learning curves); these analyses are found in Chapters 3, 4, and 7 of the EPA RIA. NHTSA, however, conducted a Monte Carlo simulation of the uncertainty associated with its regulatory program. The focus of the simulation model was variation around the chosen uncertainty parameters and their resulting impact on the key output parameters, fuel savings, and net benefits. Because of the similarities between the two analyses, EPA references NHTSA RIA Chapters X and XII as indicative of the relative magnitude, uncertainty and sensitivities of parameters of the cost/benefit analysis. EPA has also analyzed the potential impact of this rule on vehicle sales and employment. These impacts are not included in the analysis of overall costs and benefits of the standards. Further information on these and other aspects of the economic impacts of EPA's rule are summarized in the following sections and are presented in more detail in the RIA for this rulemaking.
For this rule, EPA projects significant private gains to consumers in three major areas: (1) reductions in spending on fuel; (2) for gasoline-fueled vehicles, time saved due to less refueling; and (3) additional driving that results from the VMT rebound effect. In combination, these private benefits, mostly from fuel savings, appear to outweigh the costs of the standards, even without accounting for externalities.
Admittedly, these findings pose an economic conundrum. On the one hand, consumers are expected to gain significantly from the rules, as the increased cost of fuel-efficient cars is smaller than the fuel savings. Yet many of these technologies are readily available; financially savvy consumers could have sought vehicles with improved fuel efficiency, and auto makers seeking those customers could have offered them. Assuming full information, perfect foresight, perfect competition, and financially rational consumers and producers, standard economic theory suggests that normal market operations would have provided the private net gains to consumers, and the only benefits of the rule would be due to external benefits. If our analysis projects net private benefits that consumers have not realized in this perfectly functioning market, then, with the above assumptions, there must be additional costs of these private net benefits that are not accounted for. This calculation assumes that consumers accurately predict and act on all the fuel-saving benefits they will get from a new vehicle, and that producers market products providing those benefits. The estimate of large private net benefits from this rule, then, suggests either that the assumptions noted above do not hold, or that EPA's analysis has missed some factor(s) tied to improved fuel economy that reduce(s) consumer welfare.
This subsection discusses the economic principles underlying the assessment of impacts on consumer well-being due to the changes in the vehicles. Because conventional gasoline- and diesel-fueled vehicles have quite different characteristics from alternatively fueled vehicles (especially electric vehicles), the principles for these different kinds vehicles are discussed separately below.
For conventional vehicles, the estimates of technology costs developed for this rule take into account the cost needed to ensure that vehicle utility (including performance, reliability, and size) stay constant, except for fuel economy and vehicle price, with some minor exceptions (e.g., see the discussion of the “Atkinson-cycle” engine and towing capacity in III.D.5). For example, using a 4-cylinder engine instead of a 6-cylinder engine reduces fuel economy, but also reduces performance; turbocharging the 4-cylinder engine, though, produces fuel savings while maintaining performance. The cost estimates assume turbocharging accompanies engine downsizing. As a result, if the market for fuel economy is efficient and these
We sought comments that identify any such changed qualities omitted from the analysis. Some comments asserted that these costs must exist, because it is implausible that the market would otherwise not provide all the cost-effective fuel savings found in the rule. In the absence of identified impacts, though, the conundrum remains. A number of comments discussed consumer acceptance of the vehicles that will be built in response to this rule; some expressed worry that people would not want them, and that they will find their choices of vehicles limited; others expressed confidence that people will want more fuel-efficient vehicles and note the increase in choices that will be available to consumers. We note that the footprint-based standards are intended to preserve the current range of choice of vehicles, and the costs of the rule take into account the costs of preserving the current attributes of those vehicles (see RIA Chapter 1.3). Some comments suggested that auto makers would substitute improvements in fuel economy for improvements in other vehicle attributes, such as power. Though that tradeoff may be true for a given engine or vehicle cost, those comments do not take into account that it is possible to have improvements in both fuel economy and other attributes through applications of additional technologies. Those combinations would increase vehicle costs. The costs of this rule have been estimated for vehicles with maintained power, size, and other attributes. Because increases in power or changes in other vehicle attributes are voluntary design choices by auto makers, we have not included the costs of those changes in the rule. If those changes would have taken place in the absence of the rule, and if those changes would be more expensive for vehicles with increased fuel economy, then there may be some incremental costs of these technologies not accounted for in the rule—the difference in cost, for instance, for greater power with and without higher fuel economy. In the absence of data to estimate this effect, we rely on our cost estimates based on holding those other attributes constant.
The central conundrum observed in this market, that consumers appear not to purchase products featuring levels of energy efficiency that are in their economic self-interest, has been referred to as the Energy Paradox in this setting (and in several others).
• Consumers might be “myopic” and hence undervalue future fuel savings in their purchasing decisions.
• Consumers might lack the information necessary to estimate the value of future fuel savings, or not have a full understanding of this information even when it is presented.
• Consumer may be accounting for uncertainty in future fuel savings when comparing upfront cost to future returns.
• Consumers may consider fuel economy after other vehicle attributes and, as such, not optimize the level of this attribute (instead “satisficing”—that is, selecting a vehicle that is acceptable rather than optimal—or selecting vehicles that have some sufficient amount of fuel economy).
• Consumers might be especially averse to the short-term losses associated with the higher prices of energy efficient products relative to the future fuel savings (the behavioral phenomenon of “loss aversion”).
• Consumers might associate higher fuel economy with inexpensive, less well designed vehicles.
• When buying vehicles, consumers may focus on visible attributes that convey status, such as size, and pay less attention to attributes such as fuel economy that do not visibly convey status.
• Even if consumers have relevant knowledge, selecting a vehicle is a highly complex undertaking, involving many vehicle characteristics. In the face of such a complicated choice, consumers may use simplified decision rules.
• In the case of vehicle fuel efficiency, and perhaps as a result of one or more of the foregoing factors, consumers may have relatively few choices to purchase vehicles with greater fuel economy once other characteristics, such as vehicle class, are chosen.
A great deal of work in behavioral economics identifies and elaborates factors of this sort, which help account for the Energy Paradox.
EPA discussed this issue at length in the MYs 2012–2016 light duty rulemaking and in the medium- and heavy-duty greenhouse gas rulemaking (see 75 FR 25510–13; 76 FR 57315–19), as well in as the NPRM and in RIA Chapter 8.1.2.6. Considerable research indicates that the Energy Paradox may be a real and significant phenomenon, although the literature has not reached a consensus about the reasons for its existence. Studies regularly show that fuel economy plays a role in consumers' vehicle purchases, but modeling that role is still in development, and there is no consensus that most consumers make fully informed tradeoffs.
EPA requested and received a number of comments discussing the role of the Energy Paradox in consumer vehicle
EPA and NHTSA recently revised the fuel economy label on new vehicles in ways intended to improve information for consumers.
If there is a difference between expected fuel savings and consumers' willingness to pay for those fuel savings, the next question is, which is the appropriate measure of consumer benefit? Fuel savings measure the actual monetary value that consumers will receive after purchasing a vehicle; the willingness to pay for fuel economy measures the value that, before a purchase, consumers place on additional fuel economy. As noted, there are a number of reasons that consumers may incorrectly estimate the benefits that they get from improved fuel economy, including risk or loss aversion, and poor ability to calculate savings. Also as noted, fuel economy may not be as salient as other vehicle characteristics when a consumer is considering vehicles. If these arguments are valid, then there will be significant gains to consumers of the government mandating additional fuel economy. Several commenters specifically supported this argument in support of using expected future fuel savings in the benefit-cost analysis. Other comments argued that consumers are willing to pay only 25 percent of expected future fuel savings, and that that value should be used in the benefit-cost analysis,
While acknowledging the conundrum, EPA continues to value fuel savings from the standards using the projected market value over the vehicles' entire lifetimes, and to report that value among private benefits of the rule. Improved fuel economy will significantly reduce consumer expenditures on fuel, thus benefiting consumers. Real money is being saved and accrued by the initial buyer and by subsequent owners. We note that comments arguing for use of less than fuel savings did not dispute the existence of those fuel savings, but only how to estimate their value; we continue to use the market valuation rather than the subjective preference at the time of vehicle purchase. In addition to these other factors, using a measure based on consumer consideration at the time of vehicle purchase would involve a very wide range of uncertainty, due to the lack of consensus in the relevant literature on the value of additional fuel economy. Due partly to this factor, it is true that limitations in modeling affect our ability to estimate how much of these savings would have occurred in the absence of the rule. For example, some of the technologies predicted to be adopted in response to the rule may already be in the deployment process due to shifts in consumer demand for fuel economy, or due to expectations by auto makers of future GHG/fuel economy standards. It is possible that some of these savings would have occurred in the absence of the standards.
Consumer vehicle choice models estimate what vehicles consumers buy based on vehicle and consumer characteristics. In principle, such models could provide a means of understanding both the role of fuel economy in consumers' purchase decisions and the effects of this rule on the benefits that consumers will get from vehicles. Helfand and Wolverton discuss the wide variation in the structure and results of these models.
In order to develop greater understanding of these models, EPA has developed a preliminary vehicle choice model. As described in the NPRM, it uses a “nested logit” structure common in the vehicle choice modeling literature. “Nesting” refers to the decision-tree structure of buyers' choices among vehicles the model employs, and “logit” refers to the specific pattern by which buyers' choices respond to differences in the overall utility that individual vehicle models and their attributes provide.
In the peer review of EPA's model, the reviewers found the basic structure of the model to be reasonable, while pointing out, first, that its use in policy analysis depended on its integration with OMEGA, and second, that conducting uncertainty analysis would be important given the uncertainties around the model's parameters.
In the NPRM, EPA asked for comments on the use of vehicle choice modeling for predicting changes in sales mix, and on methods to test the predictive abilities of models. See 76 FR 75116. Several commenters expressed concern that consumer choice models are too uncertain to be used in policy making. One comment argued that the rulemaking should not continue if the agencies do not use vehicle choice models that have been subject to public comment and peer review, to reflect consumer acceptability. As discussed in greater detail in Section 18.1 of the Response to Comment Document, we disagree that the rulemaking requires the use of vehicle choice models. Because the predictive ability of these models has not been well tested, the quality of the information that would come from a vehicle choice model is not well understood. Instead, we provide here and in Section III.H.11(a) thorough discussion of the effects of the rule on consumer welfare and on vehicle sales.
EPA agrees with some commenters that there is yet much to learn about consumer vehicle choice models and their predictive abilities. EPA is therefore not using its preliminary consumer choice model in this rulemaking because we believe it needs further development and testing before we have confidence in its use and results. As the peer review noted, it has not yet been integrated with OMEGA, an important step for ensuring that changes in the vehicle fleet estimated by the model will result in a fleet compliant with the standards. In addition, concerns remain that vehicle choice models have rarely been validated against real-world data. In response to these concerns, we would expect any use of the model to involve, at the least,
The next issue is the potential for loss in consumer welfare due to the rule. As mentioned above (and discussed more thoroughly in Section III.D.3 of this preamble), the technology cost estimates developed here for conventional vehicles take into account the costs to hold other vehicle attributes, such as size and performance, constant.
The analysis of this rule finds that alternative-fuel vehicles, especially electric vehicles (EVs), may form a part (albeit limited) of some manufacturers' compliance strategies. The following discussion will focus on EVs, because they are expected to play more of a role in compliance than vehicles with other alternative fuels, but related issues may arise for other alternative fuel vehicles. It should be noted that EPA's projection of the penetration of EVs in the MY 2025 fleet is very small (under 3%).
Electric vehicles (EVs), at the time of this rulemaking, have very different refueling infrastructures than conventional gasoline- or diesel-fueled vehicles: refueling EVs requires either access to electric charging facilities or battery replacement. In addition, because of the expense of increased battery capacity, EVs commonly have a smaller driving range than conventional vehicles. Because of these differences, the vehicles cannot be considered conventional vehicles unmodified except for cost and fuel economy. As a result, the consumer welfare arguments presented above may need adjustments to account for these differences.
Comments differed on consumer attitudes toward EVs. The National Automobile Dealers Association and some fuels-related organizations argued that consumers are likely to hesitate to buy even hybrid electric vehicles, in part because they like vehicles that are familiar to them, and it is risky to depend on EVs to meet the standards of this program. Some fuels organizations pointed to low sales of existing EVs and plug-in hybrid electric vehicles (PHEVs) as evidence of consumer unwillingness to consider these vehicles, and thus as evidence that the standards are too stringent because they rely on electrification. We note that electrification is an option for compliance but is not required under this rule (and indeed, EPA projects minimal penetration of electrification as the likely compliance path even for the MY 2025 standards, as documented in section III.D.6.c above). Others note the expense of EVs. Environmental and consumer organizations argue that there are reasons to be optimistic about consumer adoption of these vehicles because consumers may appreciate their low or zero gasoline consumption. EPA recognizes all these as possibilities in response to this rule. Many of the organizations skeptical of EVs expressed concern that the rule would reduce vehicle choices for consumers, by requiring people to buy more fuel-efficient vehicles when they might otherwise not choose them. Those optimistic about EVs said that choices were expected to increase, because consumers could choose between conventional and alternative fuel vehicles.
A first important point to observe in response to these concerns is that, although auto makers are required to comply with the standards, producing EVs as a compliance strategy is not required. Auto makers will choose to provide EVs either if they have few alternative ways to comply, or if EVs are, for some range of production, likely to be more profitable (or less unprofitable) than other ways of complying.
From the consumer perspective, it is important to observe that there is no mandate for any consumer to choose any particular kind of vehicle. An individual consumer will buy an EV only if the price and characteristics of the vehicle make it more attractive to her than other vehicles. If the range of vehicles in the conventional fleet does not shrink, the availability of EVs should not reduce consumer welfare compared to a fleet with no EVs: increasing options should not reduce consumer well-being, because other existing options still are available. On the other hand, if the variety of vehicles in the conventional market does change, there may be consumers who may need to substitute to alternative vehicles. The use of the footprint-based standard is intended in part to help maintain the diversity of vehicle sizes. Because the agencies do not expect any vehicle classes to become unavailable, consumers who buy EVs therefore are expected to choose them voluntarily, in preference to the other vehicles available to them.
From a practical perspective, the key issue is whether the consumer demand for EVs is large enough to absorb all the EVs that automakers will produce in order to comply with these standards, or whether automakers will need to increase consumer purchases by providing subsidies to consumers. If enough consumers find EVs more attractive than other vehicles, and automakers therefore do not need to subsidize their purchase, then both consumers and producers will benefit from the introduction of EVs. On the other hand, it is possible that automakers will find EVs to be part of a cost-effective compliance technology but nevertheless need to price them below cost them to sell sufficient numbers. If so, then there is a welfare loss associated with the sale of EVs beyond those that would be sold in the free market. While it is theoretically possible to quantify such a welfare loss, the data needed to support such a calculation is not available at this time. To quantify this value, the deadweight loss can be approximated as one-half of the size of the subsidy needed for the
A number of factors will affect the likelihood of consumer acceptance of EVs. People with short commutes may find little obstacle in the relatively short driving range, but others who regularly drive long distances may find EVs' ranges limiting. The reduced tailpipe emissions and reduced noise may be attractive features to some consumers.
Because range is a major factor in EV acceptability, it is starting to draw attention in the research community. For instance, several studies have examined consumers' willingness to pay for increased vehicle range. Results vary, depending on when the survey was conducted (studies from the early 1990s have much higher values than more recent studies) and on household income and other demographic factors; some find range to be statistically indistinguishable from zero, while others find the value of increasing range from 150 to 300 miles to be as much as $59,000 (2010$) (see RIA Chapter 8.1.2.7 for more discussion).
Other research has examined how the range limitation may affect driving patterns. Pearre et al. observed daily driving patterns for 484 vehicles in the Atlanta area over a year.
EVs themselves are expected to change over time, as battery technologies and costs develop. In addition, consumer interest in EVs is likely to change over time, as early adopters share their experiences. The initial research in the area suggests that consumers put a high value on increased range, though this value appears to be changing over time. The research also suggests that some segments of the driving public may experience little, if any, restriction on their driving due to range limitations if they were to purchase EVs. At this time we do not estimate whether the number of people who will choose to purchase EVs at private-market prices will be more or less than the number that auto makers are expected to produce to comply with the standards. As noted above, our projections of technology penetrations indicate that a very small portion (fewer than 3 percent) of new vehicles produced in MY 2025 will need to be EVs. For the purposes of the analysis presented here for this rule, we assume that the consumer market will be sufficient to absorb the number of EVs expected to be used for compliance under this rule.
The Energy Paradox, also known as the efficiency gap, raises the question, why do private markets not provide energy savings that engineering technology cost analyses find are cost-effective? Though a number of hypotheses have been raised to explain the paradox, studies have not been able at this time to identify the relative importance of different explanations. As a result, it is not possible at this point to state with any degree of certainty whether the market for fuel efficiency is operating efficiently, or whether the market has failings.
For conventional vehicles, the key implication is that the there may be two different estimates of the value of fuel savings. One value comes from the engineering estimates, based on consumers' expected driving patterns over the vehicle's lifetime; the other value is what the consumer factors into the purchase decision when buying a vehicle. Although economic theory suggests that these two values should be the same in a well functioning market, if engineering estimates accurately measure fuel savings that consumers will experience, the available evidence does not provide support for that theory. The fuel savings estimates presented here are based on expected consumers' in-use fuel consumption rather than the value they estimate at the time that they consider purchasing a vehicle. Though
For electric vehicles, and perhaps for other advanced-technology vehicles, other vehicle attributes are not expected to be held constant. In particular, their ranges and modes of refueling will be different from those of conventional vehicles. From a social welfare perspective, the key question is whether the number of consumers who will want to buy EVs at their private-market prices will exceed the number that auto makers are expected to produce to comply with the standards. If too few consumers are willing to buy them at their private-market prices, then auto makers may have to subsidize their prices, if they have no other less costly technologies available to meet the standards. Though current research finds that consumers typically have a high value for increasing the range of EVs (and thus would consider a shorter range a cost of an EV), current research also suggests that some consumers may find ways to adapt to the shorter range so that it is less constraining. The technologies, prices, infrastructure, and consumer experiences associated with EVs are all expected to evolve between now and when the MY 2017–25 standards take effect. The analysis in this rule assumes that the consumer market is sufficient to absorb the expected number of EVs without subsidies.
In this section, EPA presents our estimate of the costs associated with the vehicle program. The presentation here summarizes the vehicle level costs associated with the new technologies expected to be added to meet the GHG standards, including hardware costs to comply with the A/C credit program. The analysis summarized here provides our estimate of incremental costs on a per vehicle basis and on an annual total basis.
The presentation here summarizes the outputs of the OMEGA model that was discussed in some detail in Section III.D of this preamble. For details behind the analysis such as the OMEGA model inputs and the estimates of costs associated with individual technologies, the reader is directed to Chapter 1 of the EPA's final RIA and Chapter 3 of the Joint TSD. For more detail on the outputs of the OMEGA model and the overall vehicle program costs summarized here, the reader is directed to Chapters 3 and 5 of EPA's RIA.
With respect to the aggregate cost estimations presented here, EPA notes that there are a number of areas where the results of our analysis may be conservative and, in general, EPA believes we have directionally overestimated the costs of compliance with these new standards, especially in not accounting for the full range of credit opportunities available to manufacturers. For example, some cost saving programs are considered in our analysis, such as full car/truck trading, while others are not, such as the full suite of available off-cycle credits.
To develop technology costs per vehicle, EPA has used the same methodology as that used in the recent 2012–2016 final rule, the 2010 TAR and the proposal for this rule. Individual technology direct manufacturing costs have been estimated in a variety of ways—vehicle and technology tear down, models developed by outside organizations, and literature review—and indirect costs have been estimated using the updated and revised indirect cost multiplier (ICM) approach that was first developed for the 2012–2016 final rule.
We requested comment on all aspects of our technology cost analysis—the DMCs themselves, the ICMs, learning effects, etc. We received a comment from NADA that our ICMs were too low and that we should use a Retail Price Equivalent (RPE) approach to estimating indirect costs rather than the ICM approach.
We received comments from ICCT that our ICM approach was more appropriate than an RPE approach, and that our updated method of applying ICMs to estimate indirect costs was much more appropriate than our old approach (i.e., delinking indirect costs and learning effects).
We did not receive comments on our approach to manufacturer learning. We did not receive any specific comments suggesting that our estimates of technology direct manufacturing costs were inappropriately high or low.
EPA used the technology costs to build GHG and fuel consumption reducing packages of technologies for each of 19 different vehicle types meant to fully represent the range of baseline vehicle technologies in the marketplace (i.e., number of cylinders, valve train
The results, including costs associated with the air conditioning program and estimates of stranded capital as described in Chapter 3 of the joint TSD, are shown in Table III–72. Not included in the costs presented in Table III–72 are costs associated with maintenance. We discuss maintenance costs in Section III.H.2.b, below.
The costs presented here represent the incremental costs for newly added technology to comply with the program. Together with the projected increases in car and truck sales, the increases in per-car and per-truck average costs shown in Table III–72, above result in the total annual costs presented in Table III–73 below. Note that the costs presented in Table III–73 do not include the fuel savings that consumers would experience as a result of driving a vehicle with improved fuel economy. Those impacts are presented in Section III.H.4. Similarly, the costs presented in Table III–73 do not include the maintenance costs that we have estimated in this final rule. Maintenance costs, presented below, were not included in the proposal. Note also that the costs presented here represent costs estimated to occur presuming that the MY 2025 standards would continue in perpetuity. Any changes to the standards would be considered as part of a future rulemaking. In other words, the standards would not apply only to 2017–2025 model year vehicles—they would, in fact, apply to all 2025 and later model year vehicles.
Looking at these costs by model year gives us the technology costs as shown in Table III–74.
New for this final rule is consideration and quantification of maintenance costs associated with the new technologies added to comply with the standards. In the proposal, we requested comment on maintenance and repair costs and whether they might increase or decrease with the new technologies. We did not receive many comments, but NADA did comment that the agencies should include maintenance and repair costs in estimates of total cost of ownership (i.e., in our payback analyses).
Here we summarize what we have done for the final rule with respect to maintenance costs. To make clear, we distinguish maintenance from repair costs as follows: maintenance costs are those costs that are required to keep a vehicle properly maintained and, as such, are usually recommended to occur by auto makers on a regular, periodic schedule. Examples of maintenance costs are oil and air filter changes, tire replacements, etc. Repair costs are those costs that are unexpected and, as such, occur randomly and uniquely for every driver, if at all. Examples of repair costs would be parts replacement following an accident, turbocharger replacement following a mechanical failure, etc.
In the joint TSD (see Chapter 3.6), we present our estimates for maintenance cost impacts along with how we derived them. For most technologies that we expect will be added to comply with the final standards, we expect no impact on maintenance costs. In other words, the new technologies have identical maintenance intervals and identical costs per interval as the technologies they will replace. However, for a few technologies, we do expect some maintenance costs changes. As detailed in the Joint TSD, those technologies expected to result in a change in maintenance costs are low rolling resistance tires levels 1 and 2 since they cost more than traditional tires and must be replaced at similar intervals, diesel fuel filters since they must be replaced more frequently and at higher cost than gasoline fuel filters, and several items for full EVs (oil changes, air filter changes, engine coolant flushes, spark plug replacements, etc.) since they do not need to be done on full EVs.
Using the maintenance costs and intervals presented in the Joint TSD, we can estimate the annual maintenance cost increases/decreases for each of these technologies relative to their reference case gasoline counterparts. Clearly, while in the year 2017 roughly 15–16 million vehicles will be sold, very few of those vehicles will experience any maintenance costs during their first year despite the fact that all will have low rolling resistance tires 1 or 2 (the typical replacement interval for tires is 40,000 miles). As such, the estimated maintenance costs are comparitively low in the year 2017. As more compliant vehicles enter the market in subsequent years, the annual maintenance costs increase as maintenance intervals begin to result in increasing numbers of vehicles incurring costs. The results are shown in Table III–75. We provide details of these maintenance costs in Chapter 5 of our RIA.
We can also look at the costs on a model year basis by looking at the net present value of costs and savings over the full lifetime of each model year of vehicles. The net present value lifetime costs and savings for each MY 2017–2025 are shown in Table III–76.
Annual costs of the vehicle program are the annual technology costs shown in Table III–73 and the annual maintenance costs shown in Table III–75. Those results are shown in Table III–77.
Model year lifetime costs of the vehicle program are the lifetime technology costs shown in Table III–74 and the lifetime maintenance costs shown in Table III–76. Those results are shown in Table III–78.
EPA has calculated the cost per ton of GHG reductions associated with the GHG standards on a CO
The CO
The expected impacts on fuel consumption are shown in Table III–80. The gallons reduced and kilowatt hours increased (kWh) as shown in the tables reflect impacts from the CO
Using the fuel consumption estimates presented in Section III.H.4.a, EPA can calculate the monetized fuel savings associated with the standards. To do this, we multiply reduced fuel consumption in each year by the corresponding estimated average fuel price in that year, using the reference case taken from the AEO 2012 Early Release.
As shown in Table III–81, the agencies are projecting that consumers would realize very large fuel savings as a result of the standards. As discussed further in the introductory paragraphs of Section III.H.1, it is a conundrum from an economic perspective that these large fuel savings have not been provided by automakers and purchased by consumers. A number of behavioral and market phenomena may lead to this disparity between the fuel economy that makes financial sense to consumers and the fuel economy they purchase. Regardless how consumers make their decisions on how much fuel economy to purchase, EPA expects that, in the aggregate, they will gain these fuel savings, which will provide actual money in consumers' pockets.
The VMT rebound effect refers to the increase in vehicle use that results if an increase in fuel efficiency lowers the cost per mile of driving. Consistent with the proposal, EPA is using an estimate of 10 percent for the VMT rebound effect for this final rule (i.e., we assume a 10 percent decrease in fuel cost per mile from our standards would result in a 1 percent increase in VMT).
As we discussed in the proposed rule, in the MYs 2012–2016 rulemaking, and more fully in Chapter 4 of the Joint TSD, this value was not derived from a single point estimate or from a particular study, but instead represents a reasonable compromise between historical estimates and projected future estimates. This value is consistent with the VMT rebound estimate for the most recent time period analyzed in the Small and Van Dender 2007 paper,
We received four comments suggesting values both lower and higher than our proposed value of the VMT rebound effect. The Consumer Federation of America suggested that we use 5 percent in our national analysis since it would better reflect the income effect (consumers having more money in their pockets to spend on driving) and not the price effect (consumers wanting to drive more because it costs less) associated with lower driving costs. The International Council for Clean Transportation (ICCT) suggested we should rely solely on projected estimates that account for future incomes and fuel prices, which tend to be lower than 10 percent for the years covered by this rule. The Defour Group suggested using an estimate of 20 percent or higher; it commented that it believes there are potential methodological shortcomings in recent studies and suggested using the elasticity of demand for gasoline as a basis for estimating the VMT rebound effect. Finally Plant Oil Powered Diesel Fuel Systems, Inc. (POP Diesel) cited a recent study in Germany based on household survey data as evidence that EPA had underestimated the VMT rebound effect. POP Diesel also suggested that EPA should account for the energy and GHG emissions impact associated with the so-called “indirect rebound effects” of consumers using their increased disposable income from fuel savings to purchase goods and services that were produced with energy or that consume energy. POP Diesel also commented that there is a potential for consumers to shift to larger, more powerful vehicles that are less fuel-efficient in response to our standards. POP Diesel described this as a direct rebound effect; however, since this behavior does not influence VMT, we would classify it as another type of indirect effect unrelated to the direct VMT rebound effect.
Commenters did not provide any persuasive new data or analysis that justify revising the 10 percent value at this time. We relied on a wide range of peer-reviewed literature to inform our estimate of the VMT rebound effect (as discussed above and in Chapter 4 of the Joint TSD), including recent studies and projected estimates as well as a larger body of historic literature using both aggregate and household level data. Most of the literature we reviewed controls for income (since all sources of income, not just income associated with fuel savings, can influence VMT) and, therefore, only captures the price effect. We recognize the merit of projected estimates of the VMT rebound effect that take into account future incomes, fuel efficiency, and fuel prices over the period impacted by our rulemaking, particularly since recent studies have found evidence that the VMT rebound effect is declining over time. Estimates of the elasticity of demand for gasoline, while a useful point of comparison, are not appropriate for measuring the VMT rebound effect because they reflect consumer selection of vehicle fuel efficiency in addition to VMT.
We are not aware of any data on potential indirect rebound effects (distinct from the VMT rebound effect), if any, from this rule associated with consumer purchase of energy-intensive goods and services with the disposable income they gain from fuel savings. Research on indirect rebound effects is nascent and POP Diesel did not provide analysis in its comments indicating an appropriate method or value to use to estimate these putative effects from our rule. We believe it is unreasonable to consider potential indirect rebound effects, if any, from our rule based on
We sought comment on the potential that the VMT rebound effect could be lower than estimates in the literature if drivers respond more to changes in fuel prices than fuel efficiency, price rises than decreases, and price shocks than gradual changes (discussed more fully in Chapter 4.2.5.2 of the Joint TSD), but we did not receive any comments on these topics. See 76 FR 75126.
We also sought comment on whether there may be differences in the way consumers respond to changes in the cost per mile of driving that result from driving an electric-powered vehicle instead of a conventional gasoline vehicle. We did not receive any comments on this topic and therefore continue to assume in this final rule that the VMT rebound effect will be the same whether a consumer is driving a conventional gasoline vehicle or a vehicle powered by grid electricity.
Chapter 4.2.5 of the Joint TSD reviews the relevant literature and discusses in more depth the reasoning for the VMT rebound value used here. The VMT rebound effect is also discussed in Section II.E of the preamble. A summary of comments on the rebound effect and our more detailed response to those comments is available in section 15 of EPA's Response to Comments document.
Here we look at the cost of owning a new vehicle complying with the standards and the payback period—the point at which savings exceed costs. For example, a new 2025 MY vehicle is estimated to cost roughly $1,800 more (on average, and relative to the reference case vehicle) due to the addition of new GHG reducing/fuel economy improving technology. This new technology will result in lower fuel consumption and, therefore, savings in fuel expenditures. But how many months or years would pass before the fuel savings exceed the upfront costs?
Table III–82 presents our estimate of increased costs associated with owning a new 2025MY vehicle. The table uses annual miles driven (vehicle miles traveled, or VMT) and survival rates consistent with the emission and benefits analyses presented in Chapter 4 of the Joint TSD. The control case includes fuel savings associated with A/C controls. Newly included here as opposed to our proposed analysis, are estimated maintenance costs that owners of these vehicles will likely incur. Further, this analysis does not include other private impacts, such as reduced refueling events, or other societal impacts, such as the potential rebound miles driven or the value of driving those rebound miles, or noise, congestion and accidents, since the focus is meant to be on those factors consumers think about most while in the showroom considering a new car purchase and those factors that result in more or fewer dollars in their pockets. To estimate the upfront vehicle cost (i.e., the lifetime increased cost discounted back to purchase), we have included not only the sales tax on the new car purchase but also the increased insurance premiums that would result from the more valuable vehicle. Car/truck fleet weighting is handled as described in Chapter 1 of the Joint TSD. The present value of the increased vehicle costs shown in the table are $2,389 at a 3% discount rate and $2,300 at a 7% discount rate.
However, most people purchase a new vehicle using credit rather than paying cash up front. A common car loan today is a five year, 60 month loan. The national average interest rate for a 4 or 5 year new car loan was 5.35 percent.
The above discussion covers costs, but what about the fuel savings side. Of course, fuel savings are the same whether a vehicle is purchased using cash or credit. Table III–84 shows the fuel savings for a 2025MY vehicle while excluding rebound driving.
We can now compare the cumulative discounted costs to the cumulative discounted fuel savings to determine the point at which savings begin to exceed costs. This comparison is shown in Table III–85 for the 3% discounting case and in Table III–86 for the 7% discounting case.
Table III–85 shows that early in the 4th year of ownership (3.2 years), the savings have started to outweigh the costs of the cash purchase. More interestingly, the savings immediately outweigh the cost of a credit purchase and, in fact, this is true even in the first month of ownership when the increased cost on the monthly car loan payment at $42 and the first month's fuel savings are $59 and, presumably, no maintenance costs have yet been incurred (none of these values are shown since the tables present annual values). So, for a new car purchaser who does not keep the vehicle for the full lifetime, the increased costs will payback within 4 years. For that rare owner that keeps the vehicle for its full life, the payback period would be the point at which the savings outweigh the full lifetime costs which occurs somewhat later since more costs are being included. For this case, referring again to Table III–85, we want the point at which the fuel savings exceed $2,389 or $2,583 for cash and credit purchases, respectively. Those payback periods would be 3.7 years for the cash purchase and 4.1 years for the credit purchase. Note that the full lifetime net savings amount to $5,013 for the cash purchase and $4,819 for the credit purchase. These very large net savings may not be realized by many individual owners since very few people keep vehicles for their full lifetime. However, those savings would be realized in combination by all owners of the vehicle.
Table III–86 shows the same information using a 7 percent discount rate. Here, the fuel savings being to outweigh the costs in 3.4 years for the cash purchase and within the first year for the credit purchase. For the full lifetime owner, the lifetime payback period would be 3.9 years for the cash purchase and 4.0 years for the credit purchase. The full lifetime net savings would be $3,375 for the cash purchase and $3,330 for the credit purchase.
Note that throughout this consumer payback discussion, the analysis reflects the average number of vehicle miles traveled per year. Drivers who drive more miles than the average would incur fuel-related savings more quickly and, therefore, the payback would come sooner. Drivers who drive fewer miles than the average would incur fuel related savings more slowly and, therefore, the payback would come later.
Note also that the insurance costs and sales taxes included here in the cost of ownership analysis have not been included in the benefit-cost analysis (BCA) because those costs are transfer payments and have no net impact on the societal costs of interest in a BCA. Likewise, the fuel savings presented here include taxes since those are the cost incurred by drivers. However, fuel taxes are not included in the BCA since, again, they are transfer payments. Lastly, in this cost of ownership analysis, we have not included rebound miles in determining maintenance costs or fuel savings, and we have not included other private benefits/costs such as the value of driving rebound miles or reduced time spent refueling since we do not believe that consumers consider such impacts in their daily lives. In the BCA, we always include rebound miles in estimating maintenance costs and fuel savings, and we include the other private benefits/costs listed here.
EPA has assigned a dollar value to reductions in CO
The interagency group selected four SCC values for use in regulatory analyses, which we have applied in this analysis: $5, $22, $37, and $68 per metric ton of CO
The SCC increases over time because future emissions are expected to produce larger incremental damages as physical and economic systems become more stressed in response to greater climatic change. Note that the interagency group estimated the growth rate of the SCC directly using the three integrated assessment models rather than assuming a constant annual growth rate. This helps to ensure that the estimates are internally consistent with other modeling assumptions. Table III–87 presents the SCC estimates used in this analysis.
When attempting to assess the incremental economic impacts of carbon dioxide emissions, the analyst faces a number of serious challenges. A recent report from the National Academies of Science points out that any assessment will suffer from uncertainty, speculation, and lack of information about (1) future emissions of greenhouse gases, (2) the effects of past and future emissions on the climate system, (3) the impact of changes in climate on the physical and biological environment, and (4) the translation of these environmental impacts into economic damages.
The interagency group noted a number of limitations to the SCC analysis, including the incomplete way in which the integrated assessment models capture catastrophic and non-catastrophic impacts, their incomplete treatment of adaptation and technological change, uncertainty in the extrapolation of damages to high temperatures, and assumptions regarding risk aversion. The limited amount of research linking climate impacts to economic damages makes the interagency modeling exercise even more difficult. As noted in the SCC TSD, the interagency group hopes that over time researchers and modelers will work to fill these gaps and that the SCC estimates used for regulatory analysis by the Federal government will continue to evolve with improvements in modeling.
The Environmental Defense Fund (EDF), the Institute for Policy Integrity (IPI), and the Natural Resources Defense Council (NRDC) discussed these limitations and stated that EPA should update the SCC estimates. These commenters provided specific methodological recommendations that focused on issues such as discount rate selection, evaluation of catastrophic impacts and non-monetized impacts, and risk aversion. EPA has considered each of the commenters' recommendations to update the SCC estimates and to modify the methodology in the context of this rulemaking. However, EPA has determined that these recommendations require additional research, review, and public comment before we can apply them to a rulemaking context. EPA has therefore continued to use the SCC estimates developed through the 2009–2010 interagency process in this rulemaking, consistent with the proposal. See the EPA Response to Comments document, Section 18.4.1, for detailed responses to these recommendations.
On the other hand, the Institute for Energy Research disagreed with the use of SCC in general to value GHG benefits, describing it as an unsupportable metric. EPA disagrees with this comment and notes that the SCC estimates were developed through an extensive, interagency process using a defensible set of input assumptions that are grounded in the existing literature. In this way, key uncertainties and model differences more transparently and consistently inform the range of SCC estimates used in the rulemaking process. In addition, these estimates have been subject to public comment through multiple rulemaking processes.
Another limitation of the primary benefits analysis is that it does not include the valuation of non-CO
Recognizing that non-CO
While the GWP approach would provide an approximation of the monetized value of the non-CO
A limited number of studies in the published literature explore the implications of using a GWP versus a direct estimation approach to quantify the benefits of changes in non-CO
In the absence of direct model estimates from the interagency analysis, EPA has used the GWP approach to estimate the dollar value of the non-CO
Applying the global SCC estimates, shown in Table III–87, to the estimated reductions in CO
We also apply the GWP approach in a sensitivity analysis to estimate the benefits associated with reductions of three non-CO
This section presents EPA's analysis of the criteria pollutant-related health and environmental impacts that will occur as a result of the final standards. Light-duty vehicles and fuels are significant sources of mobile source air pollution such as direct PM, NO
As many commenters noted, it is important to quantify the health and environmental impacts associated with the final rule because it allows us to more accurately assess the net costs and benefits of the standards. Moreover, co-pollutant impacts tend to accrue in the near term, while any effects from reduced climate change mostly accrue over a time frame of several decades or longer.
This section is split into two sub-sections: the first presents the PM- and ozone-related health and environmental impacts associated with the final rule in calendar year (CY) 2030; the second presents the PM-related dollar-per-ton values used to monetize the PM-related co-benefits associated with the model year (MY) analysis (i.e., over the lifetimes of the MY 2017–2025 vehicles) of the final rule.
EPA did receive adverse comments regarding the omission of some non-GHG impacts in the proposal. In that analysis, we used “dollar-per-ton” estimates to monetize the health-related impacts of reduced exposure to PM
This analysis reflects the impact of the final light-duty GHG rule in 2030 compared to a future-year reference scenario without the rule in place.
We estimate that the final rule will lead to a small net reduction in PM
The air quality modeling also projects a very small increase in ozone concentrations in many areas (population-weighted maximum 8-hour average ozone increases by 0.0009 ppb). While the ozone-related impacts are very small, the increase in population-weighted national average ozone exposure results in a very small increase in ozone-related health impacts.
We base our analysis of the final rule's impact on human health in 2030 on peer-reviewed studies of air quality and human health effects.
The range of total monetized ozone- and PM-related health impacts is presented in Table III–90. We present total benefits (the sum of morbidity-related benefits and mortality-related benefits) based on the PM- and ozone-related premature mortality function used. The benefits ranges therefore reflect the addition of each estimate of ozone-related premature mortality (across six selected studies, each with its own row in Table III–90) to each estimate of PM-related premature mortality (based on either Pope et al., 2002 or Laden et al., 2006), along with all morbidity-related benefits. These estimates represent EPA's preferred approach to characterizing a best estimate of monetized impacts. As is the nature of Regulatory Impact Analyses (RIAs), the assumptions and methods used to estimate air quality impacts evolve to reflect the Agency's most current interpretation of the scientific and economic literature.
The monetized impacts in Table III–90 include all of the human health impacts we are able to quantify and monetize at this time. However, the full complement of human health and welfare effects associated with PM, ozone and other criteria pollutants remain unquantified because of current limitations in methods or available data. We have not quantified a number of known or suspected health effects linked with ozone, PM and other criteria pollutants for which appropriate health impact functions are not available or which do not provide easily interpretable outcomes (e.g., changes in heart rate variability). Additionally, we are unable to quantify a number of known welfare effects, including reduced acid and particulate deposition damage to cultural monuments and other materials, and environmental benefits due to reductions of impacts of eutrophication in coastal areas. These are listed in Table III–91. As a result, the health benefits quantified in this section do not reflect the full range of possible impacts attributable to the final rule.
While there will be impacts associated with air toxic pollutant emission changes that result from the final rule, we do not attempt to monetize those impacts. This is primarily because currently available tools and methods to assess air toxics risk from mobile sources at the national scale are not adequate for extrapolation to incidence estimations or benefits assessment. The best suite of tools and methods currently available for assessment at the national scale are those used in the National-Scale Air Toxics Assessment (NATA). The EPA Science Advisory Board specifically commented in their review of the 1996 NATA that these tools were not yet ready for use in a national-scale benefits analysis, because they did not consider the full distribution of exposure and risk, or address sub-chronic health effects.
EPA is also unaware of specific information identifying any effects on listed endangered species from the small fluctuations in pollutant concentrations associated with this rule (see Section III.G.4). Furthermore, our current modeling tools are not designed to trace fluctuations in ambient concentration levels to potential impacts on particular endangered species.
Table III–92 and Table III–93 present the annual PM
Using EPA's preferred estimates, based on the American Cancer Society (ACS) and Six-Cities studies and no threshold assumption in the model of mortality, we estimate that the final rule will reduce between 110 and 280 cases of PM
Table III–94 presents the estimated monetary value of changes in the incidence of ozone and PM
Every benefit-cost analysis examining the potential effects of a change in environmental protection requirements is limited to some extent by data gaps, limitations in model capabilities (such as geographic coverage), and uncertainties in the underlying scientific and economic studies used to configure the benefit and cost models. Limitations of the scientific literature often result in the inability to estimate quantitative changes in health and environmental effects, such as potential increases in premature mortality associated with increased exposure to carbon monoxide. Deficiencies in the economics literature often result in the inability to assign economic values even to those health and environmental outcomes which can be quantified. These general uncertainties in the underlying scientific and economics literature, which can lead to valuations that are higher or lower, are discussed in detail in the RIA and its supporting references. Key uncertainties that have a bearing on the results of the benefit-cost analysis of the final rule include the following:
• The exclusion of potentially significant and unquantified benefit categories (such as health, odor, and ecological benefits of reduction in air toxics, ozone, and PM);
• Errors in measurement and projection for variables such as population growth;
• Uncertainties in the estimation of future year emissions inventories and air quality;
• Uncertainty in the estimated relationships of health and welfare effects to changes in pollutant concentrations including the shape of the concentration-response function, the
• Uncertainties in exposure estimation; and
• Uncertainties associated with the effect of potential future actions to limit emissions.
As Table III–94 indicates, total benefits are driven primarily by the reduction in premature mortalities each year. Some key assumptions underlying the premature mortality estimates include the following, which may also contribute to uncertainty:
• Inhalation of fine particles is causally associated with premature death at concentrations near those experienced by most Americans on a daily basis. Although biological mechanisms for this effect have not yet been completely established, the weight of the available epidemiological, toxicological, and experimental evidence supports an assumption of causality. The impacts of including a probabilistic representation of causality were explored in the expert elicitation-based results of the 2006 p.m. NAAQS RIA.
• All fine particles, regardless of their chemical composition, are equally potent in causing premature mortality. This is an important assumption, because PM produced via transported precursors emitted from stationary sources may differ significantly from PM precursors released from mobile sources and other industrial sources. However, no clear scientific grounds exist for supporting differential effects estimates by particle type.
• The C–R function for fine particles is approximately linear within the range of ambient concentrations under consideration. Thus, the estimates include health benefits from reducing fine particles in areas with varied concentrations of PM, including both regions that may be in attainment with PM
• There is uncertainty in the magnitude of the association between ozone and premature mortality. The range of ozone impacts associated with the final standards is estimated based on the risk of several sources of ozone-related mortality effect estimates. In a 2008 report on the estimation of ozone-related premature mortality published by the National Research Council, a panel of experts and reviewers concluded that short-term exposure to ambient ozone is likely to contribute to premature deaths and that ozone-related mortality should be included in estimates of the health benefits of reducing ozone exposure.
Acknowledging the data limitations and uncertainties, we present a best estimate of the total monetized health impacts based on our interpretation of the best available scientific literature and methods supported by EPA's technical peer review panel, the Science Advisory Board's Health Effects Subcommittee (SAB–HES). The National Academies of Science (NRC, 2002) has also reviewed EPA's methodology for analyzing the health benefits of measures taken to reduce air pollution. EPA addressed many of these comments in the analysis of the final PM NAAQS.
As described in Section III.G, the final standards will in some cases increase and other cases decrease emissions of several criteria and toxic air pollutants and precursors. In the MY analysis, EPA estimates the economic value of the human health impacts associated with PM
The MY analysis uses a “dollar-per-ton” method to estimate a selected suite of PM
The agency did receive adverse comments regarding the omission of these impacts in the analysis, however, no “dollar-per-ton” method exists for ozone or toxic air pollutants due to complexity associated with atmospheric chemistry (for ozone and toxics) and a lack of economic valuation data/methods (for air toxics). However, EPA also conducted full scale, photochemical air quality modeling to estimate the change in ambient concentrations of both ozone and PM
The dollar-per-ton estimates used in this analysis are provided in Table III–95. In the summary of costs and benefits, Section III.H.10 of this preamble, EPA presents the monetized value of PM-related improvements associated with the rule.
The dollar-per-ton technique has been used in previous analyses, including EPA's recent Ozone National Ambient Air Quality Standards (NAAQS) RIA,
Consistent with the NO
Readers interested in reviewing the complete methodology for creating the dollar-per-ton estimates used in this analysis can consult the Technical Support Document (TSD)
As described in the documentation for the dollar-per-ton estimates cited above, national per-ton estimates were developed for selected pollutant/source category combinations. The per-ton values calculated therefore apply only to changes in tons from those specific pollutant/source combinations (e.g., NO
The dollar-per-ton estimates are subject to a number of assumptions and uncertainties.
○ Dollar-per-ton estimates do not reflect local variability in population density, meteorology, exposure, baseline health incidence rates, or other local factors that might lead to an overestimate or underestimate of the actual impacts of fine particulates. In Section III.G, we describe the full-scale air quality modeling conducted for the 2030 calendar year analysis in an effort to capture this variability.
○ There are several health impact categories that EPA was unable to quantify in the MY analysis due to limitations associated with using dollar-per-ton estimates. Because NO
○ The dollar-per-ton estimates used in this analysis incorporate projections of key variables, including atmospheric conditions, source level emissions, population, health baselines and incomes, technology. These projections introduce some uncertainties to the dollar-per-ton estimates.
As mentioned above, emissions changes and dollar-per-ton estimates alone are not a good indication of local or regional air quality and health impacts, as there may be localized impacts associated with this rulemaking. Additionally, the atmospheric chemistry related to ambient concentrations of PM
The GHG standards require improvements in light-duty vehicle fuel efficiency which, in turn, will reduce overall fuel consumption and help to reduce U.S. petroleum imports. Reducing U.S. petroleum imports lowers both the financial and strategic risks caused by potential sudden disruptions in the supply of imported petroleum to the U.S. The economic value of reductions in these risks provides a measure of improved U.S. energy security. This section summarizes EPA's estimates of U.S. oil import reductions and energy security benefits from this rule. Additional discussion of this issue can be found in Chapter 4.2.8 of the Joint TSD.
In 2011, the United States imported 45 percent of the petroleum it consumed,
Based on analysis of historical and projected future variation in U.S. petroleum consumption and imports, EPA estimates that approximately 50 percent of the reduction in fuel consumption resulting from adopting improved GHG emission standards is likely to be reflected in lower U.S. imports of refined fuel, while the remaining 50 percent is expected to be reflected in reduced domestic fuel refining. Of this latter figure, 90 percent is anticipated to reduce U.S. imports of crude petroleum for use as a refinery feedstock, while the remaining 10 percent is expected to reduce U.S. domestic production of crude petroleum. Thus, on balance, each gallon of fuel saved as a consequence of our final standards is anticipated to reduce total U.S. imports of petroleum by 0.95 gallons.
U.S. consumption of imported petroleum products imposes costs on the domestic economy that are not reflected in the market price for crude oil, or in the prices paid by consumers of petroleum products such as gasoline (i.e., energy security costs). These costs include (1) higher prices for petroleum products resulting from the effect of increased U.S. demand for imported oil on the world oil price (“monopsony effect”); (2) the expected costs associated with the risk of disruptions to the U.S. economy caused by sudden reductions in the supply of imported oil to the U.S. (i.e., “macroeconomic disruption and adjustment costs”); and (3) expenses for maintaining a U.S. military presence to secure imported oil supplies from unstable regions, and for maintaining the strategic petroleum reserve (SPR) to cushion the U.S. economy against the effects of oil supply disruptions (i.e., “military/SPR costs”).
In order to understand the energy security implications of reducing U.S. petroleum imports, EPA worked with Oak Ridge National Laboratory (ORNL), which has developed approaches for evaluating the energy security implications of oil use. The energy security estimates or “premiums” provided below are based upon a methodology developed in a peer-reviewed study entitled, “
When conducting its analysis, ORNL estimated energy security premiums by quantifying two components of the economic cost of importing petroleum into the U.S. (in addition to the purchase price of petroleum itself): Monopsony and macroeconomic disruption costs. For this rule, EPA worked with ORNL to update the energy security premiums by incorporating the AEO 2012 Early Release oil price forecasts and market trends.
Numerous private citizens and commenters from a large number of consumer groups, environmental organizations, and energy security advocacy organizations expressed strong support in both written comments and at the agencies' public hearings that these standards will have significant benefits for U.S. energy and national security, including energy independence. For example, the BlueGreen Alliance commented that “[s]trong standards will keep more of the dollars here in the United States * * *” and “[t]hey will also set the stage for weaning America off oil dependence * * *” Similarly, a Michigan State Senator, District 18 commented that “[g]reater fuel economy benefits all of us in four ways: firstly, it benefits our environment by reducing greenhouse gas emissions; secondly, it secures our energy independence; thirdly, its saves us money at the pump; and finally, it creates high-quality U.S. jobs that strengthen the economy.” The Pew Charitable Trusts stated that “[o]ur bipartisan poll commissioned in July 2011 found that 91 percent of Americans identify U.S. dependence on foreign oil as a threat to our national security, and significant bipartisan majorities in every region of the country believe that adopting stronger fuel economy standards is the best way to lessen that dependence.” Finally, the Union of Concerned Scientist estimated that “* * * the cumulative oil savings of the National Program (MYs 2012–2025) could result in a total reduction in U.S. oil consumption of nearly 3.5 mbd in 2030, nearly double the amount the U.S. currently imports from the entire Persian Gulf. No other federal policy has delivered greater oil savings, energy security benefits, or greenhouse gas emissions reductions to the country.”
In contrast, the Defour Group commented that there is no relationship between the energy security benefits of the U.S. and reduced oil consumption by the U.S., since the world economies are all tied together, thus calling into question estimates of the energy security benefits of the rule. Moreover, the Defour Group believes there is too much uncertainty in generating energy security premiums.
EPA sponsored an extensive peer review of the methodology on which the proposed energy security benefits for this rule were based. The peer reviewers were generally highly supportive of the energy security methodology developed by ORNL and used by EPA. Also, EPA used this same energy security methodology in a number of previous rulemakings including the MYs 2012–2016 light duty vehicle GHG rule and the MYs 2014–2018 medium- and heavy-duty vehicle GHG rule, with numerous commenters to those rules supporting the use of the methodology. Thus, while EPA considered all these comments, we continue to believe that the peer-reviewed, well scrutinized methodology used at proposal is reasonable and we are continuing to use it in this final rule for estimating the energy security benefits of this rule.
EPA also solicited comments in the proposal on how to estimate the energy security benefits of the wider use of PHEVs and EVs including any relevant studies or research that have been published on these issues. Tesla Motors, Inc. commented that “[r]educing our dependence on petroleum in the transportation sector is a national imperative.” They go on to state that shifting the transportation sector to electricity would lessen the U.S. dependence on foreign oil and increase national security. However, no commenter provided EPA with a robust methodology for estimating the energy security benefits of the wider use of PHEVs and EVs as a result of this rule. Thus, due to timing constraints and the technical complexity of examining this issue, EPA was unable to conduct such an analysis for this rule. This is an issue that EPA will continue to study and will evaluate as part of the midterm review work.
The literature on energy security for the last two decades has routinely combined the monopsony and the macroeconomic disruption components when calculating the total value of the energy security premium. However, in the context of using a global social cost of carbon (SCC) value (discussed in III.H.6), the question arises: how should the energy security premium be determined when a global perspective is taken? Monopsony benefits represent avoided payments by the United States to oil producers in foreign countries that result from a decrease in the world oil price as the U.S. reduces its consumption of imported oil. Although there is clearly a benefit to the U.S. when considered from a domestic perspective, the decrease in price due to reduced demand in the U.S. also represents a loss to other countries. Given the redistributive nature of this monopsony effect from a global perspective, EPA excluded monopsony costs from the quantified energy security benefits for the proposed rule. The Union of Concerned Scientists recommended that the monopsony benefits of the rule be included in EPA's overall estimates of the energy security benefits, since it is a benefit to the U.S. EPA continues to view energy security from a global perspective, and therefore excludes monopsony benefits to the U.S. in this final rule since these benefits are offset by losses to foreign oil producers. However, we present the monopsony energy security premiums in Table III–97 to show the general magnitude of their effects.
One potential result of the potential decline in the world price of oil as a result of this rule would be an increase in the consumption of petroleum products, particularly outside the U.S. In addition, other fuels could be displaced from the increasing use of oil worldwide. For example, if a decline in the world oil price causes an increase in oil use in China, India, or another country's industrial sector, this increase in oil consumption may displace natural gas usage. Alternatively, the increased oil use could result in a decrease in coal used to produce electricity. An increase in the consumption of petroleum products particularly outside the U.S., could lead to a modest increase in emissions of GHGs, criteria air pollutants, and airborne toxics from their refining and use. However, lower usage of, for example, displaced coal would result in a decrease in GHG emissions. Therefore, any assessment of
In contrast to monopsony costs, the macroeconomic disruption and adjustment costs that arise from sudden reductions in the supply of imported oil to the U.S. do not have offsetting impacts outside of the U.S., so we include the estimated reduction in their expected value stemming from reduced U.S. petroleum imports in our energy security benefits estimated for this rule (as discussed in sections III.H.8.b and III.H.8.f).
The energy security benefits EPA presented in the NPRM from reducing U.S. oil imports did not include an estimate of potential reductions in costs for maintaining a U.S. military presence to help secure stable oil supply from potentially vulnerable regions of the world because attributing military spending to particular missions or activities is difficult. A number of commenters, including consumer advocacy and environmental organizations (e.g. Consumer Federation of America, Environmental Defense Fund, and National Wildlife Federation), natural gas organizations (e.g. America's Natural Gas Alliance, and American Gas Association), as well as energy security advocates (Center for Naval Analysis) and numerous private individuals, felt that EPA should quantify, to the extent possible, a military component of the energy security benefits associated with this rulemaking. These commenters felt that, although they understand that EPA would have difficulties in determining a point estimate of the energy security benefits from reduced military costs as a result of the rule, that even ranges would be useful. The American Petroleum Institute commented that military expenditures will not likely change with a reduction in U.S. oil imports, and therefore should not be included in the assessment of this rulemaking.
Like most of the commenters, EPA believes that there is an evident connection between U.S. oil imports and a military presence to secure those imports and that this presence is influenced by the extent of importing. As Lt. Gen (Ret.) Zilmer stated at the Philadelphia public hearing on the proposed rule: “The United States uses about 20 million barrels of oil a day, 11 million of that is imported” and “its often imported from customers who would rather not have to work with you * * * We have not gotten any closer to energy independence, and it becomes an increasing national security issue when we have to constantly have forces deployed in that region of the world, the Middle East and southwest Asia.”
EPA has examined methodologies for estimating the military component of the energy security benefits of our rule and has faced two major challenges: “attribution” and “incremental” analysis. The attribution analysis challenge is to determine which military programs and expenditures can properly be attributed to oil supply protection, rather than to some other objective. The incremental analysis challenge is to estimate how much the supply protection costs might vary if U.S. oil use is reduced or eliminated.
We reviewed a number of recent studies that attempt to overcome these challenges.
A further potential component of the full economic costs of oil imports is the costs of building and maintaining the Strategic Petroleum Reserve (SPR). The SPR is clearly related to U.S. oil use and imports. Indeed, a stated purpose of the Energy Policy Conservation Act is “to provide for the creation of a Strategic Petroleum Reserve capable of reducing the impact of severe energy supply interruptions”, a provision enacted following the 1973–74 Arab oil embargo.
To summarize, EPA has included
Using our fuel consumption analysis in conjunction with the macroeconomic disruption and adjustment cost component of ORNL's energy security premium estimates,
There are other impacts associated with the CO
In this section, the agencies present a summary of costs, benefits, and net benefits of the final program. Table III–101 shows the estimated annual monetized costs of the final program for the indicated calendar years. The table also shows the net present values of those costs for the calendar years 2012–2050 using both 3 percent and 7 percent discount rates.
Table III–103 presents estimated annual monetized benefits for the indicated calendar years. The table also shows the net present values of those benefits for the calendar years 2012–2050 using both 3 percent and 7 percent discount rates. The table shows the benefits of reduced CO
In addition, these monetized GHG benefits exclude the value of net reductions in non-CO
Table III–104 presents estimated annual net benefits for the indicated calendar years. The table also shows the net present values of those net benefits for the calendar years 2012–2050 using both 3 percent and 7 percent discount rates. The table includes the benefits of reduced CO
EPA also conducted a separate analysis of the total benefits over the model year lifetimes of the 2017 through 2025 model year vehicles. In contrast to the calendar year analysis presented above in Table III–101 through Table III–104, the model year lifetime analysis below shows the impacts of the final program on vehicles produced during each of the model years 2017 through 2025 over the course of their expected lifetimes. The net societal benefits over the full lifetimes of vehicles produced during each of the nine model years from 2017 through 2025 are shown in Table III–105 and Table III–106 at both 3 percent and 7 percent discount rates, respectively.
Predicting the effects of this rule on vehicle sales entails comparing two effects. On the one hand, the vehicles designed to meet the standards will become more expensive, which would, by itself, discourage sales. On the other hand, the vehicles will have improved fuel economy and thus lower operating costs due to significant fuel savings, which could encourage sales. Which of these effects dominates for potential vehicle buyers when they are considering a purchase will determine the effect on sales. Assessing the net effect of these two competing effects is uncertain, as it rests on how consumers value fuel savings at the time of purchase and the extent to which manufacturers and dealers reflect technology costs in the purchase price. The empirical literature does not provide clear evidence on how much of the value of fuel savings consumers consider at the time of purchase. It also generally does not speak to the efficiency of manufacturing and dealer pricing decisions. Thus, we do not provide quantified estimates of potential sales impacts in this final rule.
An additional source of uncertainty in the analysis is understanding what would happen in the absence of this rule. Standard economic theory would suggest that, if automakers could profitably increase sales by adding more fuel-saving technologies to their vehicles, then manufacturers' profit motives would lead them to voluntarily
Although it is possible that manufacturers would not find it profitable to add at least some of the vehicle technologies in the absence of the rule (see Section III.H.1.a for a discussion), there may be the potential for increases in vehicle sales as a result of the rule. These explanations focus on conditions where the rule stimulates investments that would not happen in the rule's absence. The explanations posed below raise possibilities that the rule, by requiring all automakers to meet the standards, may lead to mutually beneficial outcomes that might not happen in the absence of the rule. Consumers would then have the opportunity to purchase vehicles that would not be available in the absence of the rule; if consumers consider at least as many years of fuel savings when buying new vehicles as the payback period for the new technologies, and if manufacturers nonetheless would not have produced these vehicles in the absence of the rule, positive sales impacts could occur as a result of these final standards. The three possibilities we suggest for such outcomes are promotion of social learning, reduction of risk and uncertainty for manufacturers, and promotion of innovation.
For many years, fuel economy standards did not change (see Preamble III.D.1).
Today's rule, combined with the new and easier-to-understand fuel economy labels required to be on all new vehicles in MY 2013, may increase sales by hastening this very type of consumer learning. As more consumers experience the savings in time and expense from owning more fuel efficient vehicles, demand may shift yet further in the direction of the vehicles with improved fuel economy and reduced GHG emissions mandated under the rule. This social learning can take place both within and across households, as consumers learn from one another. First and most directly, the time and fuel savings associated with operating more fuel efficient vehicles may be more salient to individuals who own them, which might cause their subsequent purchase decisions to shift closer to minimizing the total cost of ownership over the lifetime of the vehicle. Second, this appreciation may spread across households through word of mouth, marketing and advertising, and other forms of communications. Third, as more motorists experience the time and fuel savings associated with greater fuel efficiency, the price of used cars may better reflect such efficiency, further reducing the cost of owning more efficient vehicles for the buyers of new vehicles (since the resale price may increase). If these induced learning effects are strong, the rule could potentially increase total vehicle sales over time. This effect may be speeded or slowed by other factors that enter into a consumer's valuation of fuel efficiency in selecting vehicles.
The possibility that the rule could (after a lag for consumer learning) increase sales need not rest on the assumption that automobile manufacturers are failing to pursue profitable opportunities to supply the vehicles that consumers demand. In the absence of the rule, no individual automobile manufacturer would find it profitable to move toward more efficient vehicles to increase consumer learning because no individual company can fully internalize the potential future boost to demand. If one company were to make more efficient vehicles, counting on consumer learning to enhance demand in the future, that company would capture only a fraction of the extra sales so generated, because the learning at issue is not specific to any one company's fleet. Many of the extra sales could accrue to that company's competitors.
In other words, consumer learning about the benefits of fuel efficient vehicles involves positive externalities (spillovers) from one company to the others.
As discussed in Preamble III.H.1.a, there appears to be a great deal of uncertainty about how consumers will respond to increases in fuel economy. Automakers may be cautious about adding more fuel-saving technology to vehicles if they are uncertain how buyers will respond. Even if they believe that buyers will respond positively, if a company is risk-averse, it may nevertheless hesitate to make the substantial major investments in new technologies and in research that would lead to increases in fuel economy across its fleet.
In addition, there may be risk aversion on the consumer side. The simultaneous investment by all companies may also encourage consumer confidence in the new technologies. If only one company adopted new technologies, early adopters might gravitate toward that company, but early adopters tend to be a relatively small portion of the public. More cautious buyers, who are likely to be more numerous, might wait for greater information before moving away from well-known technologies. If all companies adopt advanced technologies at the same time, though, potential buyers may perceive the new technologies as the new norm rather than as a risky innovation. They will then be more willing to move to the new technologies. As some commenters have pointed out, simultaneous action required by the rule may change buyers' expectations (their reference points) for fuel economy, and investing in more fuel economy may seem less risky than in the absence of the rule.
The rule, then, may reduce manufacturers' risk of making significant investments in fuel-saving technologies by requiring that all companies produce more fuel-efficient vehicles. Under this outcome, it is possible for the rule to facilitate investment that would not happen in the absence of the rule, and vehicle sales could increase as a result of the rule.
Research among multiple parties can be a synergistic process: Ideas by one researcher may stimulate new ideas by others, and more and better results occur than if the one researcher operated in isolation.
An additional aspect of the standards is the possibility of greater standardization. As more companies adopt new technologies, the incentives increase for additional suppliers and more availability of after-market replacement parts; these suppliers would be likely to find ways to increase compatibility across vehicle types. For example, though electric vehicles (EVs) are not expected to be more than a few percent of the vehicles produced in response to this rule, their adoption depends on such factors as batteries and charging methods that are compatible across different companies. These are examples of “network externalities,” where use of a technology by one party has greater benefits if more people are also using the technology. In this case, just as the ability to buy gasoline from any station facilitates owning a gasoline-based vehicle, the ability to recharge an EV or get replacement parts easily facilitates ownership of an EV. In the absence of the rule, fewer companies would be pursuing this technology, and it would be considered a specialty product; the incentives to coordinate might be low. If EVs become more common, though, compatible infrastructure and batteries may become more desirable, as potential buyers are likely to be encouraged toward this technology if they can easily find places to charge batteries.
Thus, the rule may direct and promote innovation and standardization that would not happen in the absence of this rule. Such changes could reduce the cost increases associated with the rule and improve the qualities of the technologies, which could result in an
Several commenters requested that we conduct a quantitative vehicle sales analysis. As discussed in the proposal, in previous rulemakings, EPA and NHTSA conducted vehicle sales analyses by comparing the up-front costs of the vehicles with the present value of five years' worth of fuel savings; the direction of vehicle sales would depend on whether up-front costs exceeded fuel savings (in which case sales would be expected to decline), or vice versa (in which case sales would be expected to increase).
This rule takes effect for MY 2017–2025. In the intervening years, it is possible that the assumptions underlying a quantitative analysis, as well as market conditions, might change. As the United Auto Workers points out, the state of the economy is a major, if not the primary, determinant of total vehicle sales. The impact of the rule on sales may therefore depend, among other factors, on changes in the state of the economy. Other commenters discussed the importance of consumer confidence, fuel prices, and even of publicity over fuel prices, in consumers' interest in additional fuel economy. Sales could be negatively affected if gasoline prices are lower than expected or technology costs are higher than expected. In these cases, it is possible that the standards could require manufacturers to produce cars with higher levels of fuel economy than consumers would wish to buy. On the other hand, manufacturers' marketing of increased fuel economy levels is also likely to play a role in consumer response to these vehicles. EPA agrees that these factors are important, but we are not sufficiently confident in quantitative estimates of the impacts of those factors to develop numerical estimates. We instead provide this qualitative assessment to highlight the factors important for understanding the effects of this rule on vehicle sales.
As several commenters point out, the effect of this rule on the use and scrappage of older vehicles will be related to its effects on new vehicle prices, the fuel efficiency of new vehicle models, the fuel efficiency of used vehicles, and the total sales of new vehicles. If the value of fuel savings resulting from improved fuel efficiency to the typical potential buyer of a new vehicle outweighs the average increase in new models' prices, sales of new vehicles could rise, the used vehicle market may increase in volume as new vehicle buyers sell their older vehicles, and scrappage rates of used vehicles may increase slightly. This will cause both an influx of more efficient vehicles into the used vehicle market and an increase in the turnover of the vehicle fleet (i.e., the retirement of used vehicles and their replacement by new models), thus accentuating the anticipated effect of the rule on fleet-wide fuel consumption and CO
Consumer, environmental, and investor organizations, the United Auto Workers, as well as a citizens' campaign suggested that the rule will help the domestic auto industry, including the domestic supply base, compete in the global marketplace, through its encouragement of advanced technologies that may be useful in meeting emissions standards and consumer demands in foreign markets. We agree that this is likely for all global automakers, as generally the emission standards established in this rule are similar in stringency to emissions and fuel economy standards being considered by Japan, the European Union, South Korea, Canada, China and other international markets. Global manufacturers also design vehicles using a common platform in order to reduce costs. Vehicles built on these common platforms are sold in many markets around the world. To the extent the domestic OEMs and suppliers can focus their limited research and product development efforts on the same technologies for the U.S. market as for international markets, this should enable the companies to compete more effectively outside the U.S.
Chapter 8 of EPA's RIA has further discussion of methods for examining the effects of this rule on vehicle sales.
Several organizations provided comments about the effect of the rule on the affordability of new vehicles, as well as the impacts of the rule specifically on low-income households.
Comments from Consumer Federation of America (CFA) and 23 other consumer groups, as well as Consumers Union (CU) and several environmental organizations, argued that low-income households will benefit from the rule. These commenters cite Bureau of Labor Statistics data that low-income households spend more on fuel than they do on new vehicles each year and are thus more vulnerable to fuel costs. CU comments that low-income households pay a disproportionately large portion of their income on fuel and are thus most vulnerable to price spikes in gasoline. CFA reported that in 2010, households with incomes below $20,000 spent 7.3 times as much on gasoline as on new car payments, compared with 1.2 times as much for households with incomes above $70,000. This commenter believes that consumers will benefit greatly from the fuel savings that come with improved fuel economy. These organizations note that low-income households account for a very small portion of new car buyers, since they primarily purchase used cars, and are therefore less affected by the up-front costs of the more efficient vehicles than those who buy new vehicles. CU further comments that Consumers Reports survey data show that low-income households support improved fuel economy. In a recent survey, 71% of low-income households responded that they expect to choose a model with better fuel economy, compared to 59% of moderate and high-income respondents. In addition, 79% of low-income respondents to the survey reported that they were willing to pay extra for a more fuel efficient vehicle if they can recover the additional cost through lower fuel costs within five years, compared to 86% of moderate and high-income respondents.
In addition, these commenters agreed with EPA's assessment in the NPRM that consumers who buy their vehicles with loans save more in fuel each month than they do in increased loan payments. CU points out that this is especially true for buyers of future, more fuel-efficient used vehicles: The increase in up-front cost is much lower on a used vehicle, due to depreciation, while the fuel economy of the vehicle is unlikely to change over time. Because low-income households disproportionately buy used vehicles, they will benefit from this more rapid cost recovery. Because most of the increased vehicle cost depreciates after five years, the payback period for improved fuel economy in used MY 2017 and later vehicles will be shorter than the payback period for these vehicles when newly purchased (under two years for some examples). EPA agrees that more efficient vehicles will reduce operating costs for buyers of used vehicles as well as new vehicles, because the fuel-saving technologies maintain their effectiveness over time; indeed, GHG standards continue to apply in-use. As shown in RIA Chapter 5.5, our estimate of the payback period for five-year-old MY 2025 vehicles is approximately 1.1 years, less than the payback period of about 3.2–3.4 years for new MY 2025 vehicles. We also note that depreciation rates may be affected by the rule: increases in reliability would decrease depreciation, and decreases in reliability would increase depreciation. Finally, CU points out that some auto lenders take into consideration the fuel economy of new vehicles, and offer discounted rates for more efficient vehicles.
The National Automobile Dealers Association (NADA) and the Institute for Energy Research emphasized that the increase in the up-front vehicle costs would be a factor in consumers' abilities to purchase. In particular, they stated that, if vehicle buyers are not able to get loans for vehicles that have become more expensive as a result of new standards, because they cannot get access to credit for the additional cost, then they will be unable to participate in the new vehicle market even if the new vehicles offer significant fuel savings. This argument is based on the statement from NADA that auto lenders do not take into account the fuel economy of the vehicles when they are deciding on providing loans; the lenders consider only consumers' debt-to-income ratios. NADA provided an analysis that concludes that 6.8 million licensed drivers may no longer have access to new vehicles. According to NADA's analysis, this estimate is the number of licensed drivers who live in the 3.1–4.2 million households that could borrow $11,750, the loan amount for the least expensive new vehicle in 2011 after a $1000 down payment, but could not borrow $14,750.
In assessing these comments, EPA finds that the NADA study does not provide a usable estimate of those consumers in the market for new vehicles who might have trouble getting loans, and is not a usable estimate of the impacts of the rule on the new vehicle market. Because the NADA study does not separate consumers who might consider new vehicles from consumers who are not in the market for new vehicles, the 6.8 million licensed driver figure significantly overestimates any impact of this rule on the new vehicle market.
The NADA study suffers from a number of inaccuracies and weaknesses. First, it is important to understand what NADA's 6.8 million estimate actually represents. NADA simply looked at the 113 million households in the U.S. who could afford to borrow $11,750 and estimated which ones of those could not afford to take out a loan of $14,750.
Second, the NADA estimate is based, not on people who are considering purchasing new vehicles, but on the number of licensed drivers in households in the U.S. who could theoretically qualify to borrow $11,750, but not $14,750, based purely on debt-to-income ratio.
Third, NADA's assumption of a $3,000 cost increase per vehicle is based on summing the costs of MY 2011, MY 2012–16, and MY 2017–25 rules. This estimate does not correspond to EPA's estimate, an average cost of about $1,800 per vehicle by MY 2025, in several ways. For analyzing the effects of this rulemaking, it is appropriate to focus on the costs and benefits associated with this rulemaking, not those of previous rulemakings. The impacts of the other rules are included in the reference case for this rule. The NADA cost estimate, based on a MY 2011 vehicle, appears to double-count MY 2011 costs, because those should already be included in the price of the MY 2011 vehicle used in its study. Further, the costs of meeting MY 2016 standards in 2025 are expected to be lower than the costs of meeting those standards in 2016, the value used by NADA, due to manufacturer learning. Moreover, EPA's costs estimates are based on industry-wide averages, not applicable to specific vehicle models. As discussed further below, impacts of the rule on the prices of low-price vehicles may well be less than these averages.
Fourth, the estimate does not take into account, as pointed out by CU and as EPA has documented, that some lenders currently give discounts for loans to purchase more fuel-efficient vehicles.
Fifth, the NADA analysis is based on the cost of the least expensive vehicle in the MY 2011 market, but the market size for low-priced vehicles is only about one-tenth the size of NADA's estimate of 6.8 million affected people. The agencies' baseline estimates of the vehicle fleet in 2025 finds that total sales of vehicles costing less than $15,000 (a price point that low income consumers in the new car market would most likely be pursuing) in the absence of the rule are estimated to be well below 1 million in MY 2025; there is also no relationship between the NADA estimate and the potential impact of this rule on sales of low-priced vehicles.
Sixth, if NADA's estimate reflected a measurable effect of the rule, that effect would be reflected in a commensurate reduction in vehicle sales. Yet there is no connection between any vehicle sales estimates provided in comments on this rule and the NADA estimate. As discussed in section III.H.11.a, many commenters predict an increase in vehicle sales as a result of the rule, though others predict decreases.
For these reasons, we find the NADA study does not provide a usable estimate of consumers in the market for new vehicles who might have trouble getting new vehicle loans, nor do we find it a usable estimate of the impacts of the rule on the new vehicle market.
It is possible that future trends in the auto loan market may affect future vehicle sales. It is also possible that some people who have significant debt loads may not be able to get financing for some of these new vehicles; they may have to buy different vehicles (including used vehicles) or delay purchase. For others who borrow on credit, though, as discussed in Section III.H.5, the fuel savings are expected to outweigh the increased loan costs from the time of vehicle purchase. As some comments suggest, the rule thus may make vehicles more affordable to the public, by reducing consumers' vulnerability to fuel price jumps. Some comments raised concerns about the impacts of the rule specifically on low-priced vehicles. EPA agrees that vehicles in the low-priced (economy-class) segment will bear technology costs needed to meet the new standards, but it is not known how manufacturers will decide to pass on these costs across their vehicle fleets, including in the low-priced vehicle segment. If manufacturers decide to pass on the full cost of compliance in this segment, then it is possible that consumers who might barely afford new vehicles may be priced out of the new-vehicle market or may not have access to loans. As just discussed, the rule's impacts on availability of loans are unclear, because some lenders do factor fuel economy into their loans, and it is possible that this trend may expand. In addition, as the Union of Concerned Scientists comments, auto makers have some flexibility in how both technologies and price changes are applied to these vehicles; auto makers have ways to keep some vehicles in the low-priced vehicle segment if they so choose. Though the rule is expected to increase the prices of these vehicles, the degrees of price increase and the impacts of the price increases, especially when combined with the fuel savings that will accompany these changes, are much less clear.
The Defour Group suggests that the standards are regressive, with adverse impacts falling disproportionately on low-income households, and possibly limiting their ability to obtain employment because of limited mobility. The commenter's regressivity assessment is based on a study of a non-footprint-based fuel economy program;
In summary, the net effect of the rule on low-income households depends on several factors: The way that manufacturers choose to translate cost increases into price increases; the effects on sales of used vehicles, which depend on the effects on sales of new vehicles; the fuel savings that the new (and used) vehicles will provide; and any effects on access to credit for new and used vehicles. For reasons outlined above, we do not at this time have quantitative assessments of how these effects interact and affect low-income households. However, due to the significant effect of the rule on fuel savings, especially for used vehicles (see RIA Chapter 5.5), we expect low-income households to benefit from the more rapid payback period for used vehicles, though some of this benefit may be affected by the net effect of this rule on the prices and availability of used vehicles, which we have not estimated.
In addition, the net effect of the rule on low-priced vehicles is difficult to assess; though we expect the prices of these vehicles to increase, it is also possible that auto makers may find ways to preserve the entry-vehicle segment, by adding less additional technology to these vehicles or through pricing strategies. The net effect of the rule on access to credit is also difficult to assess: though some consumers may find themselves credit-constrained, some auto lenders are already giving interest rate discounts for more fuel-efficient vehicles, and the loan market may continue to evolve.
Although analysis of employment impacts is not part of a cost-benefit analysis (except to the extent that labor costs contribute to costs), employment impacts of federal rules are of particular concern in the current economic climate of sizeable unemployment. When President Obama requested that the agencies develop this program, he sought a program that would “strengthen the [auto] industry and enhance job creation in the United States.”
This rule is expected to affect employment in the United States through the regulated sector—the auto manufacturing industry—and through several related sectors, specifically, industries that supply the auto manufacturing industry (e.g., vehicle parts), auto dealers, the fuel refining and supply sectors, and the general retail sector. According to the U.S. Bureau of Labor Statistics, in 2010, about 677,000 people in the U.S. were employed in Motor Vehicle and Parts Manufacturing Sector (NAICS 3361, 3362, and 3363). About 129,000 people in the U.S. were employed specifically in the Automobile and Light Truck Manufacturing Sector (NAICS 33611), the directly regulated sector, since it encompasses the auto manufacturers that are responsible for complying with the standards.
When the economy is at full employment, an environmental regulation is unlikely to have much impact on net overall U.S. employment; instead, labor would primarily be shifted from one sector to another. These shifts in employment impose an opportunity cost on society, approximated by the wages of the employees, as regulation diverts workers from other activities in the economy. In this situation, any effects on net employment are likely to be transitory as workers change jobs (e.g., some workers may need to be retrained or require time to search for new jobs, while shortages in some sectors or regions could bid up wages to attract workers).
On the other hand, if a regulation comes into effect during a period of high unemployment, a change in labor demand due to regulation may affect net overall U.S. employment because the labor market is not in equilibrium. In such a period, both positive and negative employment effects are possible.
It is assumed that the official unemployment rate will have declined to 5.3 percent by the time by the time this rule takes effect and so the effect of the regulation on labor will be to shift workers from one sector to another.
Measuring the employment impacts of a policy depend on a number of inputs and assumptions. For instance, as discussed, assumptions about the overall state of unemployment in the economy play a major role in measured job impacts. The inputs to the models commonly are the changes in quantities or expenditures in the affected sectors; model results may vary in different studies depending on the assumptions about the levels of those inputs, and which sectors receive those changes. Which sectors are included in the study can also affect the results. For instance, a study of this program that looks only at employment impacts in the refinery sector may find negative effects, because consumers will purchase less gasoline; a study that looks only at the auto parts sector, on the other hand, may find positive impacts, because the program will require redesigned or additional parts for vehicles. In both instances, these would only be partial perspectives on the overall change in national employment due to Federal regulation.
The NPRM included a discussion of different methods for conducting employment analysis (see the discussion in RIA Chapter 8.2.2), including computable general equilibrum models, input-output models, hybrid models, and single-sector models, and requested comment on those methods. See 76 FR 75155–156. That discussion noted that all potential methods of estimating employment impacts of a rule have advantages and limitations. We did not receive comments about methods, except for some support for EPA's approach in the NPRM, and some support (discussed further below) for including multiplier impacts.
We received a number of comments (from the Defour Group and from some private individuals) asserting that there will be decreases in employment as a result of the costs of the rule, and a number of comments (from the United Auto Workers, environmental organizations, sustainable business groups, some private individuals, and others) asserting increases in employment, based on the development of advanced technologies and the reduction in net costs due to fuel savings. An assessment by the Defour Group predicts a loss of 155,000 jobs in manufacturing and supply, plus another 50,000 in distribution.
After considering these comments, EPA is continuing with the employment approach in the NPRM, though with some updating of quantitative impacts in the auto sector. For impacts in the auto sector, EPA uses a conceptual framework that identifies employment impacts due to changes in vehicle sales, changes in costs, and changes in the labor intensity of production. For impacts in related sectors, EPA presents qualitative discussions. We do not quantify multiplier effects, due to uncertainty over the state of the economy at the time this rule takes effect as well as the market evolutions that are likely to occur between now and implementation.
A study by Morgenstern, Pizer, and Shih
According to the authors, the “demand effect” is expected to have a negative effect on employment,
The authors conclude that increased abatement expenditures generally have not caused a significant change in employment in those sectors. More specifically, their results show that, on average across the industries studied, each additional $1 million spent on pollution abatement results in a (statistically insignificant) net increase of 1.5 jobs.
This approach to employment analysis has the advantage of carefully controlling for many possibly confounding effects in order to separate the effect of changes in regulatory costs on employment. It was, however, conducted for only four sectors. It could also be very difficult to update the study for other sectors, because one of the databases on which it relies, the Pollution Abatement Cost and Expenditure survey, has been conducted infrequently since 1994, with the last survey conducted in 2005. The empirical estimates provided by Morgenstern et al. are not relevant to the case of fuel economy standards, which are very different from the pollution control standards on industrial facilities that were considered in that study. In addition, it does not examine the effects of regulation on employment in sectors related to but outside of the regulated sector. Nevertheless, the theory that Morgenstern et al. developed continues to be useful in this context for examining the impacts of the rule on the auto sector.
As mentioned above, this program is expected to affect employment in the regulated sector (auto manufacturing) and other sectors directly affected by the rule: auto parts suppliers, auto dealers, and the fuel supply market (which will face reduced petroleum production due to reduced fuel demand but which may see additional demand for electricity or other fuels). Changes in consumer expenditures due to higher vehicle costs and lower fuel expenses will also affect employment. In addition, as the discussion above suggests, each of these sectors could potentially have ripple effects in the rest of the economy. These ripple effects depend much more heavily on the state of the macroeconomy than do the direct effects. At the national level, employment may increase in one industry or region and decrease in another, with the net effect being smaller than either individual-sector effect. EPA does not attempt to quantify the net effects of the regulation on overall national employment.
The discussion that follows provides a partial, bottom-up quantitative estimate of the effects of this rule on the regulated sector (the auto industry; for reasons discussed below, we include some quantitative assessment of effects on suppliers to the industry, although they are not regulated directly). It also includes qualitative discussion of the effects of the rule on other sectors. Focusing quantification of employment impacts on the regulated sector has some advantages over quantifying all impacts. The analysis relies on data generated as part of the rulemaking process, which focuses on the regulated sector; as a result, what is presented here is based on internally consistent assumptions and estimates made in this rule. Focusing on the regulated sector provides insight into employment effects in that sector without having to make assumptions about the state of the economy when this rule has its impacts. We include a qualitative discussion of employment effects in other sectors to provide a broader perspective on the impacts of this rule.
As noted above, in a full-employment economy, any changes in employment will result from people changing jobs or voluntarily entering or exiting the workforce. In a full-employment economy, employment impacts of this rule will change employment in specific sectors, but it will have small, if any, effect on aggregate employment. This rule would take effect in 2017 through 2025; by then, the current high unemployment may be moderated or ended. For that reason, this analysis does not include multiplier effects, but instead focuses on employment impacts in the most directly affected industries. Those sectors are likely to face the most concentrated employment impacts.
Following the Morgenstern et al. conceptual framework for the impacts of regulation on employment in the regulated sector, we consider three effects for the auto sector: The demand effect, the cost effect, and the factor shift effect. However, we are only able to offer quantitative estimates for the cost effect. We note that these estimates, based on extrapolations from current data, become more uncertain as time goes on.
The demand effect depends on the effects of this rule on vehicle sales. If vehicle sales increase, then more people will be required to assemble vehicles and their components. If vehicle sales decrease, employment associated with these activities will unambiguously decrease. Unlike in Morgenstern et al.'s study, where the demand effect decreased employment, there are countervailing effects in the vehicle
The demand effect measures employment changes due to new vehicle sales only. The cost effect measures employment impacts due to the development, manufacturing, and installation by auto suppliers and manufacturers of the new or additional technologies needed for vehicles to comply with the standards. As RIA Chapter 8.2.3.1.2 explains, we estimate the cost effect by multiplying the costs of rule compliance by ratios of workers to each $1 million of expenditures in that sector. The magnitude and relative size of these ratios depends on the sectors' labor intensity of the production process. Several commenters mentioned the importance of this rule in encouraging employment related to the technologies expected to be used to comply with this rule. We received no comments criticizing the approach used here; the UAW commended EPA for it.
The use of these ratios has both advantages and limitations. It is often possible to estimate these ratios for quite specific sectors of the economy; as a result, it is not necessary to extrapolate employment ratios from possibly unrelated sectors. On the other hand, these estimates are averages for the sectors, covering all the activities in those sectors; they may not be representative of the labor required when expenditures are required on specific activities, as the factor shift effect (discussed below) indicates. In addition, these estimates do not include changes in sectors that supply these sectors, such as steel or electronics producers. They thus may best be viewed as the effects on employment in the auto sector due to the changes in expenditures in that sector, rather than as an assessment of all employment changes due to these changes in expenditures.
Some of the costs of this rule will be spent directly in the auto manufacturing sector, but some of the costs will be spent in the auto parts manufacturing sector. Because we do not have information on the proportion of expenditures in each sector, we separately present the ratios for both the auto manufacturing sector and the auto parts manufacturing sector. These are not additive, but should instead be considered as a range of estimates for the cost effect, depending on which sector adds technologies to the vehicles to comply with the regulation.
We use several public sources for estimates of employment per $1 million expenditures: The U.S. Bureau of Labor Statistics' (BLS) Employment Requirements Matrix (ERM);
While we estimate
The factor shift effect looks at the effects on employment due to changes in labor intensity associated with a regulation. As noted above, the estimates of the cost effect assume constant labor per $1 million in expenditures, though the new technologies may be either more or less labor-intensive than the existing ones. An estimate of the factor shift effect would either increase or decrease the estimate used for the cost effect.
We are not quantifying the factor shift effect here, for lack of data on the labor intensity of all the possible technologies that manufacturers could use to comply with the standards. As discussed in RIA Chapter 8.2.3.1.3, for a subset of the technologies, EPA-sponsored research (discussed in Chapter 3.1.1.1 of the Joint TSD), which compared new technologies to existing ones at the level of individual components, found that labor use for those new technologies increased: those new fuel-saving technologies use more labor than the baseline technologies. For instance, switching from a conventional mid-size vehicle to a hybrid version of that vehicle involves an additional $395.85 in labor costs, which we estimate to require an additional 8.6 hours per vehicle.
While we are not able to quantify the demand or factor shift effects, the cost effect results show that the employment effects of the increased spending in the regulated sector (and, possibly, the parts sector) are expected to be positive and on the order of a few thousand in the initial years of the program. As noted above, the motor vehicle and parts manufacturing sectors employed about 677,000 people in 2010, with automobile and light truck manufacturing accounting for about 129,000 of that total.
The effects of the standards on employment for auto dealers depend principally on the effects of the standards on light duty vehicle sales: increases in sales are likely to contribute to employment at dealerships, while reductions in sales are likely to have the opposite effect. In addition, auto dealers may be affected by changes in maintenance and service costs. Increases in those costs are likely to increase labor demand in dealerships, and reductions are likely to decrease labor demand.
The Defour Group as part of its employment estimate (discussed in III.H.12.a) expressed concern about employment in this sector, due to the potential impacts of the rule on vehicle sales; they provide an estimate of 35,000 jobs lost at auto dealers due to their predicted sales reductions for MY 2025.
Although this rule predicts very small penetration of plug-in hybrids and electric vehicles, the uncertainty on consumer acceptance of such technology vehicles is even greater. As discussed in Section III.H.1.b, consumers may find some characteristics of electric vehicles and plug-in hybrid electric vehicles, such as the ability to fuel with electricity rather than gasoline, attractive; they may find other characteristics, such as the limited range for electric vehicles, undesirable. As a result, some consumers will find that EVs will meet their needs, but other buyers will choose more conventional vehicles. Auto dealers may play a major role in explaining the merits and disadvantages of these new technologies to vehicle buyers. There may be a temporary need for increased employment to train sales staff in the new technologies as the new technologies become available. We agree with the comment that consumer information has the potential to play an important role in consumer acceptance of vehicles subject to this rule.
As discussed in the context of employment in the auto industry, some vehicle parts are made in-house by auto manufacturers; others are made by independent suppliers who are not directly regulated, but who will be affected by the standards as well. The additional expenditures on technologies are expected to have a positive effect on employment in the parts sector as well as the manufacturing sector; the breakdown in employment between the two sectors is difficult to predict. The effects on the parts sector also depend
In addition to the effects on the auto manufacturing and parts sectors, these rules will result in changes in fuel use that lower GHG emissions. Fuel saving, principally reductions in liquid fuels such as gasoline and diesel, will affect employment in the fuel suppliers industry sectors throughout the supply chain, from refineries to gasoline stations. To the extent that the standards result in increased use of electricity, natural gas, or other fuels, employment effects will result from providing these fuels and developing the infrastructure to supply them to consumers.
Expected petroleum fuel consumption reductions can be found in Section III.H.4. While those figures represent fuel savings for purchasers of fuel, it represents a loss in value of output for the petroleum refinery industry, fuel distribution, and gasoline stations. The loss of expenditures to petroleum fuel suppliers throughout the petroleum fuel supply chain, from the petroleum refiners to the gasoline stations, is likely to result in reduced employment in these sectors. Comments from the United Auto Workers (UAW), Blue-Green Alliance, environmental organizations, and Investor Network on Climate Risk suggested that, because other sectors are more labor-intensive than gasoline production and sales, reducing expenditures on gasoline and making them available for other consumer goods may increase employment. EPA has not estimated this effect.
This rule is also expected to lead to increases in electricity consumption by vehicles, as discussed in Section III.H.4. This new fuel may require additional infrastructure, such as electricity charging locations. Providing this infrastructure will require some increased employment. In addition, the generation of electricity will also require some additional labor. We have insufficient information at this time to predict whether the increases in labor associated with increased infrastructure provision and fuel generation for these newer fuels will be greater or less than the employment reductions associated with reduced demand for petroleum fuels.
As a result of these standards, consumers will pay a higher up-front cost for the vehicles, but they will recover those costs in a fairly short payback period (see Section III.H.5); indeed, people who finance their vehicles are expected to find that their fuel savings per month exceed the increase in the loan cost (except at very high interest rate levels). As a result, consumers will have additional money to spend on other goods and services (for those consumers who pay cash for their vehicles, it will occur after the initial payback period). These increased expenditures will support employment in those sectors where consumers spend their savings.
These increased expenditures will occur in 2017 and beyond. If the economy returns to full employment by that time, any change in consumer expenditures would primarily represent a shift in employment among sectors. If, on the other hand, the economy still has substantial unemployment, these expenditures would contribute to employment through increased consumer demand.
Environmental organizations, CFA, the National Association of Clean Air Agencies, American Council for an Energy-Efficient Economy (ACEEE), UAW, Business for Innovative Climate & Energy Policy (BICEP), Ceres, and some private citizens suggested in written comments and in public hearings that this rule would increase economic growth in the U.S. The Center for Biological Diversity, International Council for Clean Transportation, Natural Resources Defense Council, and Union of Concerned Scientists (UCS) recommended that EPA include an analysis of the economy-wide impacts of the rule, including impacts on U.S. gross domestic product (GDP) and consumption patterns. ACEEE, Ceres, BICEP, and UCS suggested that fuel savings from the rule would allow consumers to increase their spending on other goods and services in more productive sectors of the economy, which would likely increase GDP and consumption in the U.S. CFA specifically recommended that EPA use a GDP multiplier approach that recognizes that national output would increase from the rule as a result of reducing U.S. oil imports. Ceres, BICEP, UCS, and the National Wildlife Federation cited a report for Ceres by Management Information Services, Inc. that found that a 4% annual improvement in fuel economy would increase U.S. gross economic output by $21.3 billion, personal income by $14.2 billion, and revenue for federal, state, and local governments by $12.7 billion in 2030.
The primary employment effects of this rule are expected to be found throughout several key sectors: Auto manufacturers, auto dealers, auto parts manufacturing, fuel production and supply, and consumers. This rule initially takes effect in model year 2017, a time period sufficiently far in the future that the current sustained high unemployment at the national level may be moderated or ended. In an economy with full employment, the primary employment effect of a rulemaking is likely to be to move employment from one sector to another, rather than to increase or decrease employment. For that reason, we focus our partial quantitative analysis on employment in the regulated sector, to examine the impacts on that sector directly. We discuss the likely direction of other impacts in the regulated sector as well as in other directly related sectors, but we do not quantify those impacts, because they are more difficult to quantify with reasonable accuracy, particularly so far into the future.
For the regulated sector, we have not quantified the demand effect. The cost effect is expected to increase employment by 700–3,200 jobs-year in 2017 depending on the share of that employment that is in the auto manufacturing sector compared to the auto parts manufacturing sector. As mentioned above, some of these job
Changes in vehicle sales are expected to affect labor needs in auto dealerships and in parts manufacturing. Increased expenditures for auto parts are expected to require increased labor to build parts, though this effect also depends on any changes in the labor intensity of production; as noted, the subset of potential compliance technologies for which data are available show increased labor requirements. Reduced fuel production implies less employment in the petroleum sectors. Finally, consumer spending is expected to affect employment through changes in expenditures in general retail sectors; net fuel savings by consumers are expected to increase demand (and therefore employment) in other sectors.
Under section 3(f)(1) of Executive Order 12866 (58 FR 51735, October 4, 1993), this action is an “economically significant regulatory action” because it is likely to have an annual effect on the economy of $100 million or more. Accordingly, EPA submitted this action to the Office of Management and Budget (OMB) for review under Executive Orders 12866 and 13563 (76 FR 3821, January 21, 2011) and any changes made in response to OMB recommendations have been documented in the docket for this action as required by CAA section 307(d)(4)(B)(ii).
In addition, EPA prepared an analysis of the potential costs and benefits associated with this action. This analysis is contained in the Final Regulatory Impact Analysis, which is available in the docket for this rulemaking and at the docket internet address listed under
The information collection requirements in this rule have been submitted for approval to the Office of Management and Budget (OMB) under the Paperwork Reduction Act, 44 U.S.C. 3501
The Agency is finalizing 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 Clean Air Act 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 Clean Air Act.
As shown in Table III–108, the total annual reporting burden associated with this rule is about 5,700 hours and $1.4 million, based on a projection of 33 respondents. The estimated burden for vehicle manufacturers is a total estimate for new reporting requirements. 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; develop, acquire, install, and utilize technology and systems for the purposes of collecting, validating, and verifying 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.
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 in 40 CFR are listed in 40 CFR part 9. In addition, EPA is amending the table in 40 CFR part 9 of currently approved OMB control numbers for various regulations to list the regulatory citations for the information requirements contained in this final rule.
The American Petroleum Institute commented that EPA must seek approval for the paperwork burden associated with the information collection that the 2017 car rule could impose on stationary sources newly subject to permitting requirements. In response, this rule does not contain any paperwork requirements for entities other than the auto manufacturers discussed above.
The Regulatory Flexibility Act (RFA) generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act or any other statute unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small organizations, and small governmental jurisdictions.
For purposes of assessing the impacts of this rule on small entities, small entity is defined as: (1) A small business as defined by the Small Business Administration's (SBA) regulations at 13 CFR 121.201 (see table below); (2) a small governmental jurisdiction that is a government of a city, county, town, school district or special district with a population of less than 50,000; and (3) a small organization that is any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.
Table III–109 provides an overview of the primary SBA small business categories included in the light-duty vehicle sector:
After considering the economic impacts of today's rule on small entities, EPA certifies that this action will not have a significant economic impact on a substantial number of small entities. Consistent with the MY 2012–2016 GHG standards, EPA is exempting manufacturers meeting SBA's definition of small business as described in 13 CFR 121.201 due to unique issues involved with establishing appropriate GHG standards for these small businesses and the potential need to develop a program that would be structured differently for them (which would require more time), and the extremely small emissions contribution of these entities.
Potentially affected small entities fall into three distinct categories of businesses for light-duty vehicles: small volume manufacturers (SVMs), independent commercial importers (ICIs), and alternative fuel vehicle converters. Based on our preliminary assessment, EPA has identified a total of about 24 entities that fit the Small Business Administration (SBA) criterion of a small business. There are about 5 small manufacturers; including three electric vehicle manufacturers, 8 ICIs, and 11 alternative fuel vehicle converters in the light-duty vehicle market which are small businesses (no major vehicle manufacturers meet the small-entity criteria as defined by SBA). EPA estimates that these small entities comprise less than 0.1 percent of the total light-duty vehicle sales in the U.S., and therefore the exemption will have a negligible impact on the GHG emissions reductions from the standards.
As discussed in Section III.B.7, EPA is allowing small businesses to waive their small entity exemption and optionally certify to the GHG standards. This will allow small business manufacturers to earn CO
The American Petroleum Institute commented that EPA is obligated under the RFA to consider indirect impacts of the rules in assessing impacts on small businesses, in particular potential impacts on stationary sources that would not be directly regulated by the rule. EPA disagrees. When considering whether a rule should be certified, the RFA requires an agency to look only at the small entities to which the rule will apply and which will be subject to the requirement of the specific rule in question. 5 U.S.C. § 603, 605 (b);
Since the rule regulates exclusively large motor vehicle manufacturers and small vehicle manufacturers are exempted from the standards, EPA is properly certifying that the 2017–2025 standards will not have a significant economic impact on a substantial number of small entities directly subject to the rule or otherwise would have a positive economic effect on all of the small entities opting in to the rule.
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), P.L. 104–4, establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector.
This rule contains no Federal mandates (under the regulatory provisions of Title II of the UMRA) for State, local, or tribal governments. The rule imposes no enforceable duty on any State, local or tribal governments. This action is also not subject to the requirements of section 203 of UMRA because EPA has determined that this rule contains no regulatory requirements that might significantly or uniquely affect small governments. EPA has determined that this rule contains a Federal mandate that may result in expenditures of $100 million or more for the private sector in any one year. EPA believes that the rule represents the least costly, most cost-effective approach to revise the light duty vehicle standards as authorized by section 202(a)(1). The costs and benefits associated with the rule are discussed above and in the Final Regulatory Impact Analysis, as required by the UMRA.
This action does not have federalism implications. It will not have substantial
In the spirit of Executive Order 13132, and consistent with EPA policy to promote communications between EPA and State and local governments, EPA specifically solicited comments on the action from State and local officials. A number of State and local governments submitted public comments on the rule, the majority of which were supportive of the EPA's proposed action. However, these entities did not provide comments indicating there would be a substantial direct effect on State or local governments resulting from this rule.
This action does not have tribal implications, as specified in Executive Order 13175 (65 FR 67249, November 9, 2000). This rule will be implemented at the Federal level and impose compliance costs only on vehicle manufacturers. Tribal governments will be affected only to the extent they purchase and use regulated vehicles; tribal governments that purchase new model year 2017 and later vehicles will enjoy substantial fuel savings from these more fuel efficient vehicles. Thus, Executive Order 13175 does not apply to this rule.
This action is subject to EO 13045 (62 FR 19885, April 23, 1997) because it is an economically significant regulatory action as defined by EO 12866, and EPA believes that the environmental health or safety risk addressed by this action may have a disproportionate effect on children. Climate change impacts, and in particular the determinations of the Administrator in the Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Section 202(a) of the Clean Air Act (74 FR 66496, December 15, 2009), are summarized in Section III.F.2. In making those Findings, the Administrator placed weight on the fact that certain groups, including children, are particularly vulnerable to climate-related health effects. In those Findings, the Administrator determined that the health effects of climate change linked to observed and projected elevated concentrations of GHGs include the increased likelihood of more frequent and intense heat waves, increases in ozone concentrations over broad areas of the country, an increase of the severity of extreme weather events such as hurricanes and floods, and increasing severity of coastal storms due to rising sea levels. These effects can all increase mortality and morbidity, especially in vulnerable populations such as children, the elderly, and the poor. In addition, the occurrence of wildfires in North America have increased and are likely to intensify in a warmer future. PM emissions from these wildfires can contribute to acute and chronic illnesses of the respiratory system, including pneumonia, upper respiratory diseases, asthma, and chronic obstructive pulmonary disease, especially in children.
EPA has estimated reductions in projected global mean surface temperature and sea level rise as a result of reductions in GHG emissions associated with the standards finalized in this action (Section III.F.3). Due to their vulnerability, children may receive disproportionate benefits from these reductions in temperature and the subsequent reduction of increased ozone and severity of weather events.
Executive Order 13211
The action establishes passenger car and light truck fuel economy standards that will significantly reduce the consumption of petroleum, achieve energy security benefits, and have no adverse energy effects (Section III.H.8). In fact, this rule has a positive effect on energy supply and use. Because the GHG emission standards finalized today result in significant fuel savings, this rule encourages more efficient use of fuels. Accordingly, this rulemaking action is not designated as a significant energy action as defined by E.O. 13211.
Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (“NTTAA”), Public Law 104–113, 12(d) (15 U.S.C. 272 note) directs EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., materials, specifications, test methods, sampling procedures, and business practices) that are developed or adopted by voluntary consensus standards bodies. NTTAA directs EPA to provide Congress, through OMB, explanations when the Agency decides not to use available and applicable voluntary consensus standards.
This rulemaking involves technical standards. Therefore the Agency conducted a search to identify potentially applicable voluntary consensus standards. For CO
Executive Order (EO) 12898 (59 FR 7629 (Feb. 16, 1994)) establishes federal executive policy on environmental justice. Its main provision directs federal agencies, to the greatest extent practicable and permitted by law, to make environmental justice part of their mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or
With respect to GHG emissions, EPA has determined that this final rule will not have disproportionately high and adverse human health or environmental effects on minority or low-income populations because it increases the level of environmental protection for all affected populations without having any disproportionately high and adverse human health or environmental effects on any population, including any minority or low-income population. The reductions in CO
For non-GHG co-pollutants such as ozone, PM
The Congressional Review Act, 5 U.S.C. 801 et. seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the
Statutory authority for the vehicle controls finalized today is found in section 202(a) (which authorizes standards for emissions of pollutants from new motor vehicles which emissions cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare), 202(d), 203–209, 216, and 301 of the Clean Air Act, 42 U.S.C. 7521(a), 7521(d), 7522, 7523, 7524, 7525, 7541, 7542, 7543, 7550, and 7601. Statutory authority for EPA to establish CAFE test procedures is found in section 32904(c) of the Energy Policy and Conservation Act, 49 U.S.C. 32904(c).
The National Highway Traffic Safety Administration (NHTSA) is establishing Corporate Average Fuel Economy (CAFE) standards for passenger automobiles (passenger cars) and nonpassenger automobiles (light trucks) for model years (MY) 2017–2021. NHTSA's final CAFE standards would, on average, require manufacturers' passenger car and light truck fleets to achieve a combined 40.3–41.0 mpg in MY 2021. This represents an average annual increase of 3.3–3.5 percent from the estimated 34.3–34.5 mpg expected to be required, on average, in MY 2016. NHTSA is also presenting what we are describing as “augural” standards for MYs 2022–2025 in this final rule and accompanying regulatory documents. The National Program, of which this final rule is a part, covers 9 model years of standards—2017–2025—but NHTSA is directed by statute to set CAFE standards for “at least 1, but not more than 5” model years at a time.
For brevity, information about the impacts of the standards will be provided throughout the document without distinguishing between the final standards and the augural standards, but we emphasize that the augural standards are not final, and that a future full rulemaking consistent with all applicable law will be necessary in order for NHTSA to establish final CAFE standards for MYs 2022–2025 passenger cars and light trucks.
Because the overarching goal of the CAFE program is energy conservation, two of the most important impacts of the standards are reductions in U.S. petroleum consumption and the corresponding benefits to society of avoiding that petroleum consumption. Due to the combined final and augural standards, we project total fuel savings of approximately 180–184 billion gallons over the lifetimes of the vehicles sold in model years 2017–2025, with corresponding net societal benefits of over $498–507 billion using a 3 percent discount rate,
While NHTSA has been setting fuel economy standards since the 1970s, as discussed in Section I, NHTSA's final MYs 2017–2021 CAFE standards and augural MYs 2022–2025 CAFE standards are part of a National Program made up of complementary regulations by NHTSA and the Environmental Protection Agency. Today's standards build upon the success of the first phase of the National Program, finalized on May 7, 2010, in which NHTSA and EPA set coordinated CAFE and greenhouse gas (GHG) standards for MYs 2012–2016 passenger cars and light trucks. Because of the very close relationship between improving fuel economy and reducing
Improving vehicle fuel economy has been long and widely recognized as one of the key ways of achieving energy independence, energy security, and a low carbon economy.
John Podesta, Todd Stern and Kim Batten, “Capturing the Energy Opportunity; Creating a Low-Carbon Economy,” Center for American Progress (November 2007), pp. 2, 6, 8, and 24–29, available at:
Sarah Ladislaw, Kathryn Zyla, Jonathan Pershing, Frank Verrastro, Jenna Goodward, David Pumphrey, and Britt Staley, “A Roadmap for a Secure, Low-Carbon Energy Economy; Balancing Energy Security and Climate Change,” World Resources Institute and Center for Strategic and International Studies (January 2009), pp. 21–22; available at:
Alliance to Save Energy et al., “Reducing the Cost of Addressing Climate Change Through Energy Efficiency” (2009), available at:
John DeCicco and Freda Fung, “Global Warming on the Road; The Climate Impact of America's Automobiles,” Environmental Defense (2006) pp. iv–vii; available at:
“Why is Fuel Economy Important?,” a Web page maintained by the Department of Energy and Environmental Protection Agency, available at
Robert Socolow, Roberta Hotinski, Jeffery B. Greenblatt, and Stephen Pacala, “Solving The Climate Problem: Technologies Available to Curb CO
In 1975, Congress enacted the Energy Policy and Conservation Act (EPCA), mandating that NHTSA establish and implement a regulatory program for motor vehicle fuel economy to meet the various facets of the need to conserve energy, including ones having energy independence and security, environmental, and foreign policy implications. Improving our energy and national security by reducing our dependence on foreign oil has been a national objective since the first oil price shocks in the 1970s, and the need to reduce energy consumption is even more crucial today than it was when EPCA was enacted. Net petroleum imports accounted for approximately 45 percent of U.S. petroleum consumption in 2011.
Gasoline consumption in the U.S. has historically been relatively insensitive to fluctuations in both price and consumer income, and people in most parts of the country tend to view gasoline consumption as a non-discretionary expense. Thus, when gasoline's share in consumer expenditures rises, the public experiences fiscal distress. Recent tight global oil markets led to prices over $100 per barrel, with gasoline reaching as high as $4 per gallon in many parts of the U.S., causing financial hardship for many families and businesses. This fiscal distress can, in some cases, have macroeconomic consequences for the economy at large.
Additionally, since U.S. oil production is only affected by fluctuations in prices over a period of years, any changes in petroleum consumption (as through increased fuel economy levels for the on-road fleet) largely flow into changes in the quantity of imports. Since petroleum imports account for about 2 percent of GDP, increases in oil imports can create a discernible fiscal drag. As a consequence, measures that reduce petroleum consumption, like fuel economy standards, will directly benefit the balance-of-payments account, and strengthen the U.S. economy to some degree. And finally, U.S. foreign policy has been affected by decades by rising U.S. and world dependency on crude oil as the basis for modern transportation systems, although fuel economy standards have at best an indirect impact on U.S. foreign policy.
CO
Fuel economy gains since 1975, due both to the standards and to market factors, have resulted in saving billions of barrels of oil and avoiding billions of metric tons of CO
During the public comment period for the MY 2012–2016 proposed rulemaking, many stakeholders encouraged NHTSA and EPA to begin working toward standards for MY 2017 and beyond in order to maintain a single nationwide program. After the publication of the final rule establishing MYs 2012–2016 CAFE and GHG standards, President Obama issued a Memorandum on May 21, 2010 requesting that NHTSA, on behalf of the Department of Transportation, and EPA work together to develop a national program for model years 2017–2025.
The Presidential Memorandum stated “
The National Program is both needed and possible because the relationship between improving fuel economy and reducing CO
NHTSA believes that the benefits of the National Program extend far beyond the potential future reduction in global temperature that can be associated with the standards being finalized today. The fuel savings and related CO
One aspect of this phase of the National Program that is unique for NHTSA, however, is that the passenger car and light truck CAFE standards presented in this final rule for MYs 2022–2025 are augural, while EPA's standards for those model years will be legally binding when adopted in this round. As noted above, EISA requires NHTSA to issue CAFE standards for “at least 1, but not more than 5, model years.” To maintain the harmonization benefits of the National Program, NHTSA has finalized standards for MYs 2017–2021 and presented standards for MYs 2022–2025, but the last 4 years of standards are not legally binding as part of this rulemaking. The passenger car and light truck CAFE standards for MYs 2022–2025 will be determined with finality in a subsequent,
To facilitate that future rulemaking effort, NHTSA and EPA will concurrently conduct a comprehensive mid-term evaluation. Up to date information will be developed and compiled for the evaluation, through a collaborative, robust, and transparent process, including notice and comment. Toyota commented that it supported the participation of the California Air Resources Board (CARB) in the mid-
Section I above covers the chronology of events in considerable detail, and we refer the reader there.
The CAFE standards proposed in the NPRM and presented in this final rule are based on much more analysis conducted by the agencies since the TAR, including in-depth modeling analysis by DOT/NHTSA to support the CAFE standards, and further refinement of a number of our baseline, technology, and economic assumptions used to evaluate the standards and their impacts. While much of the analytical basis for the proposed standards was carried forward into the final rule analysis, some aspects of the final rule are different from the proposal, such as the following:
• As discussed above and in more detail in Section IV.E below, NHTSA is clarifying in this final rule that the standards for MYs 2022–2025 are augural, and will be finalized in a future
• Fuel consumption improvements due to A/C efficiency improvements—menu: the agencies had originally proposed that manufacturers must perform the A-to-B “AC17” test and report their full results in order to access the credit/fuel consumption improvement menu. For the final rule, manufacturers are required to report only results of the AC17 “B” testing for MY 2017–2019 in order to access the full menu credit for installed technologies. For MY 2020 and beyond, AC17 “A” test results or engineering analysis and AC17 “B” test results must be submitted to determine actual credit availability.
• As proposed, a manufacturer could obtain credit for installation of off-cycle technologies but had to meet a 10% penetration threshold requirement. The minimum penetration rate requirements have been eliminated for this final rule.
• NHTSA is adding to its regulations a description of the process it plans to use provide its views to EPA related to manufacturers' applications to use off-cycle technologies to improve their average CAFE performance values.
• To obtain credits for implementation of mild hybrids on large pick-up trucks, the installation rate has been reduced in the final rule from 30% and 40% to 20% and 30% for MYs 2017 and 2018, respectively.
○ Certain proposed definitions have been revised to address comments and add further clarification:
○ The base tire definition is revised to better align with the approach manufacturers use to determine model type target standards.
○ Mild hybrid and strong hybrid vehicle definitions are no longer limited to gasoline-electric vehicles but may include non-gasoline (i.e., diesel, ethanol, and CNG-fueled) hybrid vehicles.
• Proposed Part 537 reporting requirements have been revised to address comments and add further clarification:
○ Manufacturers will be required to submit pre- and mid-model year reports containing purported confidential business information on CD–ROM (2-copies) versus email to a secure agency email address as stated in the NPRM.
○ Aspects of the proposed requirement that manufacturers of light trucks provide specific data in the pre-model year report substantiating classification decisions have been clarified.
○ Manufacturers taking advantage of technology incentives (A/C efficiency, off-cycle and large pick-up hybrid and efficiency improvement technology) are required to report cumulatively for the application of its vehicles versus for each vehicle configuration as was proposed.
○ Modified requirements to include the provision that manufacturers can optionally report target standard values for each reported unique model type/footprint combination.
• NHTSA and EPA have revised the 2008-based baseline market forecast to correct some errors in the version used for the NPRM, and added a 2010-based baseline market forecast. Analysis throughout the NHTSA rulemaking documents reflects both forecasts.
• Battery costs: Argonne National Laboratories (ANL) updated its “BatPaC” battery cost model to include cost estimates of options for liquid or air thermal management with adequate surface area and cell spacing, the option of parallel subpacks or modules battery configuration, and NHTSA-estimated costs for a battery discharging system. Using these updates, EPA updated the battery costs for strong hybrids, PHEVs, and EVs, and the results are used in both agencies' analyses.
• Work with ANL: Between the NPRM and the final rule, DOT/NHTSA contracted with ANL (separately from the battery cost work described above) to study some aspects of advanced
• Amount of mass reduction: Between the NPRM and the final rule, NHTSA updated the amount of mass reduction applied in the CAFE model as a result of updates to the safety coefficients from the most recent Kahane study, in order to achieve the maximum amount of mass reduction while maintaining a safety-neutral outcome.
• Updates to economic inputs:
○ Fuel prices are now based on EIA's AEO 2012 Early Release forecasts
○ VMT schedules and vehicle survival rates have been updated
○ Changes to benefits associated with reduced refueling time
○ Accounting for maintenance costs during the warranty period (sensitivity analysis to consider repair costs beyond the warranty period)
○ Accounting for financing costs and insurance costs from the consumer perspective
○ Updating all costs and benefits to 2010$
• Changes to the CAFE model:
○ Corrections to incremental accounting for cost of diesel engines
○ For purposes of selecting among available options to add technology incrementally, corrections to model to look at fuel prices during years following vehicle's sale, rather than before vehicle's sale
○ Corrections to accounting for the fuel economy of dual-fueled E85-capable vehicles (often called “flexible fuel vehicles” or “FFVs”) to recognize technologies' fuel economy effectiveness when operating on E85
○ Corrections to accounting for on-road energy consumption by EVs and PHEVs by removing Petroleum Equivalency Factor from on-road equivalent fuel economy
○ Corrections to account for mobility benefit (value of travel) to account for value of fuel for travel attributable to the rebound effect
○ Other changes to implement the analytic and programmatic changes listed above
This final rule, the joint TSD, and NHTSA's FRIA and EPA's RIA contain much more information about the analysis underlying the final standards. The following sections in this preamble provide the basis for NHTSA's final passenger car and light truck CAFE standards for MYs 2017–2021 and augural standards for MYs 2022–2025, the standards themselves, the estimated impacts of the standards, and much more information about the CAFE program relevant to the 2017–2025 timeframe.
As also discussed in Section II.B above, in order to determine what levels of stringency are feasible in future model years, the agencies must project what vehicles will exist in those model years, and then evaluate what technologies can feasibly be applied to those vehicles in order to raise their fuel economy and lower their CO
After determining the reference fleet, a third step is needed to account for technologies (and corresponding increases in cost and reductions in fuel consumption and CO
As explained in Chapter 1 of the joint TSD, both agencies used baseline vehicle fleets constructed beginning with EPA fuel economy certification data for the 2008 and 2010 model years, the latter being the most recent model year for which final data is currently available from manufacturers. These data were used as the source for MY 2008 and MY 2010 production volumes and some vehicle engineering characteristics, such as fuel economy compliance ratings, engine sizes, numbers of cylinders, and transmission types.
Some information important for analyzing new CAFE standards is not contained in the EPA fuel economy certification data. EPA staff estimated vehicle wheelbase and track widths using data from Motortrend.com and Edmunds.com. This information is necessary for estimating vehicle footprint, which is required for the analysis of footprint-based standards.
Considerable additional information regarding vehicle engineering characteristics is also important for estimating the potential to add new technologies in response to new CAFE standards. In general, such information helps to avoid “adding” technologies to vehicles that already have the same or a more advanced technology. Examples include valvetrain configuration (
After the baseline was created the next step was to project the sales volumes for 2017–2025 model years. For the MY 2008-based forecast, the agencies used projected car and truck volumes for this period from Energy Information Administration's (EIA's) 2011 Interim Annual Energy Outlook (AEO).
The processes for constructing the MY 2008 and MY 2010 baseline vehicle fleets and subsequently adjusting sales volumes to construct the MY 2017–2025 baseline vehicle fleets are presented in detail in Chapter 1 of the joint TSD accompanying today's final rule.
In the main analysis, the agencies assume that without adoption of the proposed rule, manufacturers will not improve fuel economy levels during the 2017–2025 period beyond the levels required in the MY 2016 standards. However, it is possible that manufacturers may be driven by market forces to raise the fuel economy of their fleets. The recently-adopted fuel economy and environment labels (“window stickers”), for example, may make consumers more aware of the benefits of higher fuel economy, and may cause them to demand more fuel-efficient vehicles during that timeframe. Moreover, the agencies' analysis indicates that some fuel-saving technologies may save money for manufacturers. In Chapter X of the FRIA, NHTSA examines the impact of an alternative “market-driven” baseline, which estimates the potential that, insofar as sufficiently cost-effective opportunities to add technology are available, manufacturers might increase fuel economy beyond levels required by the MY 2016 standards. In the NPRM, NHTSA sought comment on what assumptions about fuel economy increases are most likely to accurately predict what would happen in the absence of the proposed rule. As discussed at greater length below in Section IV.G, some environmental organizations submitted comments relevant to this question, including (1) suggestions that buyers value fuel much more highly than assumed by NHTSA in either the main analysis or in the sensitivity analysis with the market-driven baseline; (2) suggestions that given stable standards, manufacturers might voluntarily increase fuel efficiency; (3) claims that the historical record indicates manufacturers would not voluntarily increase fuel economy; and (4) arguments that NHTSA should not account for voluntary fuel economy increase because doing so would reduce benefits attributable to the new standards. Having considered these comments, our central analysis follows the approach followed for the NPRM—that is, our central analysis and majority of our sensitivity analyses assume that manufacturers will never (
In the NPRM, NHTSA also invited comment on the process used to develop the market forecast, and on whether the agencies should consider alternative approaches to producing a forecast at the necessary level of detail. While the agencies received comments on the characteristics of the market forecast supporting the NPRM, NHTSA did not receive any responses to our request for comments on the process for developing the market forecast. At this time, NHTSA, like EPA, is making use of market forecasts developed using the same process as applied for the NPRM and the MYs 2012–2016 rulemaking. However, NHTSA expects to revisit the market forecast development process during the future rulemaking to develop final standards for MYs 2022–2025 and the concurrent mid-term evaluation.
The development of the baseline fleets for this rulemaking utilizes the same procedures used in the development of the baseline fleet for the proposed rule and, previously, the MY 2012–2016 rulemaking. For this final rule, we are using two baseline fleets. The first, as in the NPRM, is basically the same MY 2008 based file as the starting point in the MY 2012–2016 analysis, and simply using an updated AEO forecast and an updated CSM forecast (and, relative to the NPRM, correcting some erroneous footprint values, as discussed in Chapter 1 of the joint TSD). The second baseline used to analyze today's final rule was developed using essentially the same process, but making use of MY 2010 CAFE certification data (rather than MY 2008), the AEO 2012 Early Release version of NEMS (rather than AEO 2011), and a manufacturer- and segment-level forecast provided to EPA in 2011 by LMC (rather than the forecast provided to EPA in 2009 by CSM). Of those, most differences (relative to the baseline supporting the MY 2012–2016 rulemaking) are in input assumptions rather than the basic approach and methodology. These include changes in various macroeconomic assumptions underlying the AEO, CSM, and LCM forecasts and the use of results obtained by using DOE's National Energy Modeling System (NEMS) to repeat the AEO 2011 and AEO 2012 analysis without forcing increased passenger car volumes, and without assuming post-MY 2016 increases in the stringency of CAFE standards.
As discussed above, the current baselines were developed from adjusted MY 2008 and MY 2010 compliance data, respectively, and cover MY 2017–2025. This section describes, for the reader's comparison, some of the differences between the current baselines and baseline supporting the NPRM. These comparisons provide a basis for understanding general characteristics and measures of the difference between the three baselines. The current MY 2008-based baseline, while largely identical to that supporting the NPRM, reflects corrections to the footprint of some vehicle models, and corrections to the regulatory classification of a few General Motors vehicle models. The MY 2010-based baseline reflects use of MY 2010 certification data, a newer commercially-available forecast purchased by EPA in 2011 from LMC (formerly J.D. Power), and total passenger car and light truck volumes based on use of EIA's National Energy Modeling System (NEMS) for AEO 2012. The differences are in input assumptions rather than the basic approach and methodology.
The fleetwide sales forecasts, based on the Energy Information Administration's (EIA's) Early Annual Energy Outlooks for 2011 and 2012 (Interim AEO 2011 and Early Release AEO 2012), used in the current MY 2008-based and MY 2010-based baselines, respectively, indicate that the total number of light vehicles expected to be sold during MYs 2017–2025 is 143–146 million, or about 15.9–16.2 million vehicles annually. NHTSA's NPRM forecast, also based on AEO 2011, of the total number of light vehicles likely to be sold during MY 2012 through MY 2016 was 146 million, or about 16.2 million vehicles annually. Light trucks are expected to make up 34–35 percent of the MY 2017–2025 baseline market forecast in the current baselines, compared to 35 percent of the baseline market forecast in the proposed rule.
Table IV–1 shows the agency's sales forecasts for passenger cars and light trucks under the current baselines and NPRM baseline. The MY 2008-based baseline is nearly identical to the NPRM baseline. The MY 2010-based baseline exhibits several significant differences, including, but not limited to, the following: A significant increase in Chrysler's market share; declines in some other manufacturers' (
Table IV–2, below, compares unadjusted average fuel economy levels (
As discussed below in Section IV.G, when evaluating the potential impacts of new CAFE standards, NHTSA considered the potential that, depending on how the cost and effectiveness of available technologies compare to the price of fuel, manufacturers would add more fuel-saving technology than might be required solely for purposes of complying with CAFE standards. This reflects that agency's consideration that there could, in the future, be at least
Beyond the sensitivity analysis discussed above, NHTSA is also in the process of developing a vehicle choice model to estimate the extent to which sales volumes would shift in response to changes in vehicle prices and fuel economy levels. As discussed in IV.C.4 of the NPRM, the agency is currently sponsoring research directed toward developing such a model. However, that effort is still underway, so the agency has not integrated such a model into the CAFE modeling system. The agency may do so in the future, and use the integrated system for future analysis of potential CAFE standards. If the agency does so, we expect that the vehicle choice model would impact estimated fleet composition not just under new CAFE standards, but also under baseline CAFE standards.
For today's rulemaking, the agency has, for purposes of the probabilistic uncertainty analysis documented in the accompanying FRIA, considered uncertainty regarding the future relative shares of passenger cars and light trucks. As discussed in the FRIA, we applied an approach relating these shares to, among other things, the price of fuel, such that shares varied as we varied fuel price, leading to changes in estimated outcomes such as fuel consumption and CO
As discussed above in Section II.D, for developing the technology inputs for the proposed MYs 2017–2025 CAFE and GHG standards, which have been carried over largely unchanged since the NPRM, the agencies primarily began with the technology inputs used in the MYs 2012–2016 CAFE final rule and in the 2010 TAR. For the NPRM, the agencies also updated information based on newly completed FEV tear-down studies and new vehicle simulation work conducted by Ricardo Engineering, both of which were contracted by EPA. The agencies also relied on a model developed by Argonne National Laboratory to estimate hybrid, plug-in hybrid and electric vehicle battery costs, which was updated between the NPRM and final rule. As another update for the final rule analysis, NHTSA used information from vehicle simulation work conducted by Argonne National Laboratory, which was contracted by the U.S. DOT Volpe Center to support CAFE rulemaking analyses. The Argonne work was used to inform several technology effectiveness estimates. More detail is available regarding how the agencies developed the technology inputs for the final rule above in Section II.D, in Chapter 3 of the Joint TSD, and in Chapter V of NHTSA's FRIA.
For purposes of this final rule and as discussed in greater detail in the Joint TSD, NHTSA and EPA built upon the list of technologies used by the agencies for the MYs 2012–2016 CAFE and GHG standards. Section II.D.1 above describes the fuel-saving technologies considered by the agencies that manufacturers could use to improve the fuel economy of their vehicles during MYs 2017–2025. Many of the technologies described in this section are readily available, well known, and could be incorporated into vehicles once production decisions are made. Other technologies, added for this rulemaking analysis, are considered that are not currently in production, but are beyond the initial research phase, under development and are expected to be in production in the next 5–10 years. These new technologies include higher BMEP turbocharged and downsized engines, advanced diesel engines, higher efficiency transmissions, additional mass reduction levels, PHEVs, EVs, etc. As discussed, the technologies considered fall into five broad categories: engine technologies, transmission technologies, vehicle technologies, electrification/accessory technologies, and hybrid technologies. We note that one technology has been added since the NPRM—Integrated Starter Generator (or Mild Hybrid)—based on the Argonne work. This addition is discussed in more detail in Chapter V of the FRIA.
Table IV–4 below lists all the technologies considered and provides the abbreviations used for them in the
Building on the estimates developed for the MYs 2012–2016 CAFE and GHG final rule and the 2010 TAR, the agencies incorporated new cost and effectiveness estimates for the new technologies being considered and some of the technologies carried over from the MYs 2012–2016 final rule and 2010 TAR. This joint work is reflected in Chapter 3 of the Joint TSD and in Section II of this preamble, as summarized below. For more detailed information on the effectiveness and cost of fuel-saving technologies, please refer to Chapter 3 of the Joint TSD and Chapter V of NHTSA's FRIA.
For costs, the FEV tear-down work was expanded between the 2012–2016 final rule and the proposal to include an 8-speed DCT, a power-split hybrid, which was used to determine a P2 hybrid cost, and a mild hybrid with stop-start technology; the estimates based on this work were carried forward into the final rule. Battery costs were revised between the 2012–2016 final rule and the NPRM using Argonne National Laboratory's battery cost model, which allows users to estimate unique battery pack cost using user customized input sets for different hybridization applications, such as strong hybrid, PHEV and EV. Argonne updated the model and EPA updated costs for battery packs between the NPRM and this final rule to account for air cooling (for HEVs) and parallel battery modules. EPA and NHTSA also modified how the indirect costs (using ICM factors) were derived and applied for the NPRM based on staff input and public feedback, and carried this change forward into the final rule. The updates are discussed at length in Chapter 3 of the Joint TSD and in Chapter V of NHTSA's FRIA.
Some of the effectiveness estimates for technologies applied in MYs 2012–2016 and 2010 TAR have remained the same. However, nearly all of the effectiveness estimates for carryover technologies have been updated based on a newer version of EPA's lumped parameter model, which was calibrated by the vehicle simulation work performed by Ricardo Engineering. The Ricardo simulation study was also used to estimate the effectiveness for the technologies newly considered for this proposal, like higher BMEP turbocharged and downsized engine, advanced transmission technologies, and P2 hybrids. For the final rule, NHTSA conducted a vehicle simulation project with Argonne National Laboratory (ANL), described in more detail in NHTSA's FRIA, that performed additional analyses on mild hybrid technologies and advanced transmissions to help NHTSA develop effectiveness values better tailored for the CAFE model's incremental structure. The effectiveness values that were developed by ANL for the mild hybrid vehicles were applied by both agencies for the final rule. Additionally, NHTSA updated the effectiveness values of advanced transmissions when coupled with naturally-aspirated engines based on ANL's simulation work for the final rule. While NHTSA and EPA apply technologies differently, the agencies have sought to ensure that the resultant effectiveness of applying technologies is consistent between the two agencies.
NHTSA notes that, in developing technology cost and effectiveness estimates, the agencies have made every effort to hold constant aspects of vehicle performance and utility typically valued by consumers, such as horsepower, carrying capacity, drivability, durability, noise, vibration and harshness (NVH) and towing and hauling capacity. For example, NHTSA includes in its analysis technology cost and effectiveness estimates that are specific to performance passenger cars (
With respect to the cost estimates employed in the NPRM analysis, ICCT commented that technology costs continue to drop in the agencies' assessments over the past several rulemakings, which is evidence that technology will be even cheaper in the future.
With respect to battery costs, ICCT commented that future versions of the BatPaC model should include the option to select either air or liquid cooling.
With respect to the cost estimate for mass reduction, ICCT commented that it expected costs to drop in the future as computer modeling improves manufacturers' ability to reduce mass.
As discussed in Section II.D above and Chapter 3 of the joint TSD, as well as in Chapter V of NHTSA's RIA, however, the agencies are continuing to employ the NPRM estimates for mass reduction costs in this final rule. The agencies considered updating cost estimates based on the studies that were underway when the NPRM was issued. Those studies included the EPA/ICCT funded Phase 2 Toyota Venza Low Development project and the NHTSA funded Honda Accord mass reduction project, which are described in the section titled “
The agency notes that the technology costs included in this final rule for the central analysis take into account only those associated with the initial build of the vehicle. Although comments were received to the MYs 2012–2016 rulemaking that suggested there could be additional maintenance required with some new technologies (
For some of the technologies, NHTSA's inputs, which are designed to be as consistent as practicable with EPA's, indicate negative incremental costs. In other words, the agency is estimating that some technologies, if applied in a manner that holds performance and utility constant, will, following initial investment (for,
The agencies received several comments on the approach used to estimate indirect costs in the proposal. NADA argued that the ICM approach was not valid and an RPE approach was the only appropriate approach, and that the RPE factor should be 2.0 x direct costs
With respect to technology effectiveness, ICCT commented generally in support of simulation modeling, but argued that the Ricardo work resulted in conservative effectiveness estimates because it is restricted to currently-available data and engine maps, and cannot account for future improvements that might result from CAD used in technology design and on-board vehicle controls that will increase technology effectiveness.
The tables below provide examples of the incremental cost and effectiveness estimates employed by the agency in developing this final rule, according to the decision trees used in the CAFE modeling analysis. Thus, the effectiveness and cost estimates are not absolute to a single reference vehicle, but are incremental to the technology or technologies that precede it.
NHTSA relies on several inputs and data files to conduct the compliance analysis using the CAFE model, as discussed further below and in Chapter V of the FRIA. For the purposes of applying technologies, the CAFE model primarily uses three data files, one that contains data on the vehicles expected to be manufactured in the model years covered by the rulemaking and identifies the appropriate stage within the vehicle's life-cycle for the technology to be applied, one that contains data/parameters regarding the available technologies the model can apply, and one that contains economic assumption inputs for calculating the costs and benefits of the standards. The inputs for the first two data files are discussed below.
As discussed above, the CAFE model begins with an initial state of the domestic vehicle market, which in this case is the market for passenger cars and light trucks to be sold during the period covered by the proposed standards. The vehicle market is defined on a year-by-year, model-by-model, engine-by-engine, and transmission-by-transmission basis, such that each defined vehicle model refers to a separately defined engine and a separately defined transmission. Comparatively, EPA's OMEGA model defines the vehicle market using representative vehicles at the vehicle platform level, which are binned into 5 year timeframes instead of year-by-year.
For the current standards, which cover MYs 2017–2025, the light-duty vehicle (passenger car and light truck) two sets of market forecast were developed jointly by NHTSA and EPA staff using MY 2008 and 2010 CAFE compliance data. The 2008 data was used in the NPRM analysis, while both the 2008 and 2010 data are used in the final rule analysis. The MY 2008 compliance data includes about 1,100 vehicle models, about 400 specific engines, and about 200 specific transmissions, which is a somewhat lower level of detail in the representation of the vehicle market than that used by NHTSA in prior CAFE analyses—previous analyses would count a vehicle as “new” in any year when significant technology differences are made, such as at a redesign.
In addition to containing data about each vehicle, engine, and transmission, this file contains information for each technology under consideration as it pertains to the specific vehicle (whether the vehicle is equipped with it or not), the estimated model year the vehicle is undergoing a refresh or redesign, and information about the vehicle's subclass for purposes of technology application. In essence, the model considers whether it is appropriate to apply a technology to a vehicle.
The market forecast file provides NHTSA the ability to identify, on a technology-by-technology basis, which technologies may already be present (manufactured) on a particular vehicle, engine, or transmission, or which technologies are not applicable (due to technical considerations or engineering constraints) to a particular vehicle, engine, or transmission. These identifications are made on a model-by-model, engine-by-engine, and transmission-by-transmission basis. For example, if the market forecast file indicates that Manufacturer X's Vehicle Y is manufactured with Technology Z, then for this vehicle Technology Z will be shown as used. Additionally, NHTSA has determined that some technologies are only suitable or unsuitable when certain vehicle, engine, or transmission conditions exist. For example, secondary axle disconnect is only suitable for 4WD vehicles and cylinder deactivation is unsuitable for any engine with fewer than 6 cylinders. Similarly, comments received to the 2012–2016 NPRM indicated that cylinder deactivation could not likely be applied to vehicles equipped with manual transmissions during the rulemaking timeframe, due primarily to the cylinder
Whether a vehicle can be equipped with a particular technology could also theoretically depend on certain technical considerations related to incorporating the technology into particular vehicles. For example, GM commented on the MY 2012–2016 NPRM that there are certain issues in implementing turbocharging and downsizing technologies on full-size trucks, like concerns related to engine knock, drivability, control of boost pressure, packaging complexity, enhanced cooling for vehicles that are designed for towing or hauling, and noise, vibration and harshness. NHTSA stated in response that we believed that such technical considerations are well recognized within the industry and it is standard industry practice to address each during the design and development phases of applying turbocharging and downsizing technologies. The cost and effectiveness estimates used in the final rule for MYs 2012–2016, as well as the cost and effectiveness estimates employed in this final rule, are based on analysis that assumes each of these factors is addressed prior to production implementation of the technologies. NHTSA sought comment on whether the engineering constraints should be used to address concerns like these (and if so, how), or alternatively, whether some of the things that the agency currently treats as engineering constraints should be (or actually are) accounted for in the cost and effectiveness estimates through assumptions like those described above, and whether the agency might be double-constraining the application of technology. The Pennsylvania Department of Environmental Protection and Clean Fuel Development Coalition both commented that the agencies should evaluate the benefits of higher octane fuels and whether or not they are required for some of the advanced engine technologies like turbocharging and downsizing. While the agencies agree that higher octane ratings could provide additional benefits, the agencies relied in the rulemaking analyses on the Ricardo simulation study, which assumed certification gasoline which typically has a Research Octane Number (RON) of approximately 95 versus approximately 91 RON for regular grade 87 anti-knocking index gasoline, to determine the effectiveness of engine technologies. We note, however, that in the Ricardo simulation cooled EGR was included on higher BMEP engines and it as assumed that all of the 27-bar BMEP engine packages with cooled EGR would allow for the use of 91 RON (regular grade) fuels while reducing the need for enrichment and spark retard to prevent the onset of knocking combustion.
Manufacturers typically plan vehicle changes to coincide with certain stages of a vehicle's life cycle that are appropriate for the change, or in this case the technology being applied. In the automobile industry there are two terms that describe
Some technologies (
NHTSA has previously received comments stating that manufacturers do not necessarily adhere to strict five-year redesign cycles, and may add significant technologies by redesigning vehicles at more frequent intervals, albeit at higher costs. Conversely, other comments received stated that as compared to full-line manufacturers, small-volume manufacturers in fact may have 7- to 8-year redesign cycles.
Once the model indicates that a technology should be applied to a vehicle, the model must evaluate which technology should be applied. This will depend on the vehicle subclass to which the vehicle is assigned; what technologies have already been applied to the vehicle (
As part of its consideration of technological feasibility, the agency evaluates whether each technology could be implemented on all types and sizes of vehicles, and whether some differentiation is necessary in applying certain technologies to certain types and sizes of vehicles, and with respect to the cost incurred and fuel consumption and CO
NHTSA similarly differentiates vehicles by “subclass” for the purpose of applying technologies to “like” vehicles and assessing their incremental costs and effectiveness. NHTSA assigns each vehicle manufactured in the rulemaking period to one of 12 subclasses: for passenger cars, Subcompact, Subcompact Performance, Compact, Compact Performance, Midsize, Midsize Performance, Large, and Large Performance; and for light trucks, Small SUV/Pickup/Van, Midsize SUV/Pickup/Van, Large SUV/Pickup/Van, and Minivan. The agency sought comment on the appropriateness of these 12 subclasses for the MYs 2017–2025 timeframe. The agency also sought comment on the continued appropriateness of maintaining separate “performance” vehicle classes or if as fuel economy stringency increases the market for performance vehicles will decrease. NHTSA did not receive any comments on this issue.
For this final rule, as in the NPRM, NHTSA divides the vehicle fleet into subclasses based on model inputs, and applies subclass-specific estimates, also from model inputs, of the applicability, cost, and effectiveness of each fuel-saving technology. The model's estimates of the cost to improve the fuel economy of each vehicle model thus depend upon the subclass to which the vehicle model is assigned. Each vehicle's subclass is stored in the market forecast file. When conducting a compliance analysis, if the CAFE model seeks to apply technology to a particular vehicle, it checks the market forecast to see if the technology is available and if the refresh/redesign criteria are met. If these conditions are satisfied, the model determines the vehicle's subclass from the market data file, which it then uses to reference another input called the technology input file. NHTSA reviewed its methodology for dividing vehicles into subclasses for purposes of
For the reader's reference, the subclasses and example vehicles from the market forecast file are provided in Table IV–7 and Table IV–8.
NHTSA's methodology for technology analysis evaluates the application of individual technologies and their incremental costs and effectiveness. Individual technologies are assessed relative to the prior technology state, which means that it is crucial to understand what technologies are already present on a vehicle in order to determine correct incremental cost and effectiveness values. The benefit of the incremental approach is transparency in accounting, insofar as when individual technologies are added incrementally to individual vehicles, it is clear and easy to determine how costs and effectiveness add up as technology levels increase and explicitly account for any synergies that exist between technologies which are already present on the vehicle and new technologies being applied.
To keep track of incremental costs and effectiveness and to know which technology to apply and in which order, the CAFE model's architecture uses a logical sequence, which NHTSA refers to as “decision trees,” for applying fuel economy-improving technologies to individual vehicles. For purposes of this proposal, NHTSA reviewed the MYs 2012–2016 final rule's technology sequencing architecture, which was based on the MY 2011 final rule's decision trees that were jointly developed by NHTSA and Ricardo, and, as appropriate, updated the decision trees to include new technologies that have been defined for the MYs 2017–2025 timeframe.
In general, and as described in great detail in Chapter V of the current FRIA,
Each technology within the decision trees has an incremental cost and an incremental effectiveness estimate associated with it, and estimates are specific to a particular vehicle subclass (
The MY 2011 final rule discussed in detail the revisions and improvements made to the CAFE model and decision trees during that rulemaking process, including the improved handling and accuracy of valve train technology application and the development and implementation of a method for accounting path-dependent correction factors in order to ensure that technologies are evaluated within the proper context. The reader should consult the MY 2011 final rule documents for further information on these modeling techniques, all of which continued to be utilized in developing this proposal.
Some of technologies considered are available on vehicles today, and thus will be available for application (albeit in varying degrees) in the model starting in MY 2017. Other technologies, however, will not become available for purposes of NHTSA's analysis until later in the rulemaking time frame. When the model is considering whether to add a technology to a vehicle, it checks its year of availability—if the technology is available, it may be added; if it is not available, the model will consider whether to switch to a different decision tree to look for another technology, or will skip to the next vehicle in a manufacturer's fleet. The year of availability for each technology is provided above in Table IV–4.
The agency has received comments previously stating that if a technology is currently available or available prior to the rulemaking timeframe that it should be immediately made available in the model. In response, as discussed above, technology “availability” is not determined based simply on whether the technology exists, but depends also on whether the technology has achieved a level of technical viability that makes it appropriate for widespread application. This depends in turn on component supplier constraints, capital investment and engineering constraints, and manufacturer product cycles, among other things. Moreover, even if a technology is available for application, it may not be available for every vehicle. Some technologies may have considerable fuel economy benefits, but are not applied to some vehicles due to technological constraints—for example, cylinder deactivation has not been applied to vehicles with current 4-cylinder engines (because operating on three or fewer cylinders can cause unacceptable noise, vibration and harshness) or on vehicles with manual transmissions within the rulemaking timeframe. The agencies have provided for increases over time to reach the mpg level of the MY 2025 standards precisely because of these types of constraints, because they have a real effect on how quickly manufacturers can apply technology to vehicles in their fleets. NHTSA sought comment on the appropriateness of the assumed years of availability. As discussed above, VW raised concerns with the viability of high BMEP engines.
Besides the refresh/redesign cycles used in the CAFE model, which constrain the rate of technology application at the vehicle level so as to ensure a period of stability following any modeled technology applications, the other constraint on technology application employed in NHTSA's analysis is “phase-in caps.” Unlike vehicle-level cycle settings, phase-in caps constrain technology application at the vehicle manufacturer level.
NHTSA has been developing the concept of phase-in caps for purposes of the agency's modeling analysis over the course of the last several CAFE rulemakings, as discussed in greater detail in the MY 2011 final rule,
For purposes of this final rule, as in the MY 2011 and MYs 2012–2016 final rules, NHTSA combines phase-in caps for some groups of similar technologies, such as valve phasing technologies that are applicable to different forms of engine design (SOHC, DOHC, OHV), since they are very similar from an engineering and implementation standpoint. When the phase-in caps for two technologies are combined, the maximum total application of either or
In developing phase-in cap values for purposes of this final rule, NHTSA reviewed the MYs 2012–2016 final rule's phase-in caps, which for the majority of technologies were set to reach 85 or 100 percent by MY 2016, although more advanced technologies like diesels and strong hybrids reach only 15 percent by MY 2016. The phase-in caps used in the MYs 2012–2016 final were developed to harmonize with EPA's proposal and consider the fact that manufacturers, as part of the information shared during the discussions that occurred during summer 2011, appeared to be anticipating higher technology application rates than assumed in prior rules. NHTSA determined that these phase-in caps for MY 2016 were still reasonable and thus used those caps as the starting point for the MYs 2017–2025 phase-in caps. For many of the carryover technologies this means that for MYs 2017–2025 the phase-in caps are assumed to be 100 percent. NHTSA along with EPA used confidential OEM submissions, trade press articles, company publications and press releases to estimate the phase-in caps for the newly defined technologies that will be entering the market just before or during the MYs 2017–2025 time frame. For example, advanced cooled EGR engines have a phase-in cap of 3 percent per year through MY 2021 and then 10 percent per year through 2025. The agency sought comment on the appropriateness of both the carryover phase-in caps and the newly defined ones proposed in this NPRM. The only comment received on phase-in caps was from AFPM, who stated that the agencies should use lower phase-in caps for electrification technologies, and consider the 2011 NAS report in developing them. In our analyses for the final rule, the penetration of electrification technologies (from strong hybrid to EV) was significantly below the phase-in caps; thus, changing the phase-in caps would not affect the analysis. The agencies will continue to monitor the application of electrification technologies and will revisit the levels of the phase-in caps for the future rulemaking to develop final standards for MYs 2022–2025 and the concurrent mid-term evaluation.
In the past two rulemakings NHTSA has explicitly accounted for the cost reductions a manufacturer might realize through learning achieved from experience in actually applying a technology. These cost reductions, due to learning effects, were taken into account through two kinds of mutually exclusive learning, “volume-based” and “time-based.” NHTSA and EPA included a detailed description of the learning effect in the MYs 2012–2016 final rule and the more recent heavy-duty rule.
Most studies of the effect of experience or learning on production costs appear to assume that cost reductions begin only after some initial volume threshold has been reached, but not all of these studies specify this threshold volume. The rate at which costs decline beyond the initial threshold is usually expressed as the percent reduction in average unit cost that results from each successive doubling of cumulative production volume, sometimes referred to as the learning rate. Many estimates of experience curves do not specify a cumulative production volume beyond which cost reductions would no longer occur, instead depending on the asymptotic behavior of the effect for learning rates below 100 percent to establish a floor on costs.
In past rulemaking analyses, as noted above, both agencies have used a learning curve algorithm that applied a learning factor of 20 percent for each doubling of production volume. NHTSA has used this approach in analyses supporting recent CAFE rules. In its analyses, EPA has simplified the approach by using an “every two years” based learning progression rather than a pure production volume progression (
In the MYs 2012–2016 final rule, the agencies employed an additional learning algorithm to reflect the volume-based learning cost reductions that occur further along on the learning curve. This additional learning algorithm was termed “time-based” learning simply as a means of distinguishing this algorithm from the volume-based algorithm mentioned above, although both of the algorithms reflect the volume-based learning curve supported in the literature. To avoid confusion, we are now referring to this learning algorithm as the “flat portion” of the learning curve. This way, we maintain the clarity that all learning is, in fact, volume-based learning, and that the level of cost reductions depend only on where on the learning curve a technology's learning progression is. We distinguish the flat portion of the curve from the “steep portion” of the curve to indicate the level of learning taking place in the years following implementation of the technology. The agencies have applied the steep portion learning algorithm for those technologies considered to be newer technologies likely to experience rapid cost reductions through manufacturer learning, and the flat portion learning algorithm for those technologies considered to be mature technologies likely to experience only minor cost reductions through manufacturer learning. The agencies employ a number of different learning curves, depending on the nature of the technology. As an example, as noted above, the steep portion learning algorithm results in 20 percent lower costs after two full years of implementation (
Technologies assumed to be on the steep portion of the learning curve are hybrids and electric vehicles, while no learning is applied to technologies likely to be affected by commodity costs (LUB, ROLL) or that have loosely-
When two or more technologies are added to a particular vehicle model to improve its fuel efficiency and reduce CO
As the complexity of the technology combinations is increased, and the number of interacting technologies grows accordingly, it becomes increasingly important to account for these synergies. NHTSA and EPA determined synergistic impacts for this proposed rule using EPA's “lumped parameter” analysis tool, which EPA describes at length in Chapter 3 of the joint TSD. The lumped parameter tool is a spreadsheet model that represents energy consumption in terms of average performance over the fuel economy test procedure, rather than explicitly analyzing specific drive cycles. The tool begins with an apportionment of fuel consumption across several loss mechanisms and accounts for the average extent to which different technologies affect these loss mechanisms using estimates of engine, drivetrain and vehicle characteristics that are averaged over the 2-cycle CAFE drive cycle. Results of this analysis were generally consistent with those of full-scale vehicle simulation modeling performed in 2010–2011 for EPA by Ricardo, Inc.
For the current rulemaking, NHTSA is using an updated version of lumped parameter tool that incorporates results from simulation modeling performed in 2010–2011 by Ricardo, Inc. NHTSA and EPA incorporate synergistic impacts in their analyses in slightly different manners. Because NHTSA applies technologies individually in its modeling analysis, NHTSA incorporates synergistic effects between pairings of individual technologies. The use of discrete technology pair incremental synergies is similar to that in DOE's National Energy Modeling System (NEMS).
NHTSA notes that synergies that occur within a decision tree are already addressed within the incremental values assigned and therefore do not require a synergy pair to address. For example, all engine technologies take into account incremental synergy factors of preceding engine technologies, and all transmission technologies take into account incremental synergy factors of preceding transmission technologies. These factors are expressed in the fuel consumption improvement factors in the input files used by the CAFE model.
For applying incremental synergy factors in separate path technologies, the CAFE model uses an input table (see the tables in Chapter 3 of the TSD and in the FRIA) that lists technology pairings and incremental synergy factors associated with those pairings, most of which are between engine technologies and transmission/electrification/hybrid technologies. When a technology is applied to a vehicle by the CAFE model, all instances of that technology in the incremental synergy table which match technologies already applied to the vehicle (either pre-existing or previously applied by the CAFE model) are summed and applied to the fuel consumption improvement factor of the technology being applied. Many of the synergies for the strong hybrid technology fuel consumption reductions are included in the incremental value for the specific hybrid technology block since the model applies all available electrification, engine and transmission technologies before applying strong hybrid technologies.
As discussed in the proposal, the U.S. DOT Volpe Center has entered into a contract with Argonne National Laboratory (ANL) to provide full vehicle simulation modeling support for this MYs 2017–2025 rulemaking. While modeling was not complete in time for use in the NPRM, the ANL results were available for the final rule and were used to define the effectiveness of mild hybrids for both agencies, and NHTSA used the results to update the effectiveness of advanced transmission technologies coupled with naturally-aspirated engines for the CAFE analysis.
Much more detailed information is provided in Chapter 5 of the FRIA, and a discussion of how NHTSA and EPA jointly reviewed and updated technology assumptions for purposes of this final rule is available in Chapter 3 of the TSD. Additionally, all of NHTSA's model input and output files are now public and available for the reader's review and consideration. The technology input files can be found in the docket for this final rule, Docket No. NHTSA–2010–0131, and on NHTSA's Web site. And finally, because much of NHTSA's technology analysis for purposes of this final rule builds on the work that was done for the MY 2011 and MYs 2012–2016 final rules, we refer readers to those documents as well for background information concerning how NHTSA's methodology for technology application analysis has evolved over the past several rulemakings, both in response to comments and as a result of the agency's growing experience with this type of analysis.
NHTSA's analysis of alternative CAFE standards for the model years covered by this rulemaking relies on a range of forecast variables, economic assumptions, and parameter values. This section describes the sources of these forecasts, the rationale underlying each assumption, and the agency's choices of specific parameter values. These economic values play a significant role in determining the benefits of alternative CAFE standards, as they have for the last several CAFE rulemakings. Under those alternatives where standards would be established by reference to their costs and benefits, these economic values also affect the levels of the CAFE standards themselves. Some of these variables have more important effects on the level of CAFE standards and the benefits from requiring alternative increases in fuel economy than do others, and the following discussion places more emphasis on these inputs.
In reviewing these variables and the agency's estimates of their values for purposes of this final rule, NHTSA considered comments received on the NPRM and also reviewed newly available literature. Many of the estimates have been carried forward from the NPRM without substantive change, and were based then on the agency's reconsideration of comments it had previously received on the NPRM for MYs 2012–16 CAFE standards and to the NOI/Interim Joint TAR, and newly available literature at that time. The agency elected to revise some of its economic assumptions and parameter estimates for this rulemaking, while retaining others.
Between the final rule establishing CAFE standards for MY 2012–16 passenger cars and light trucks and the proposed rule for MY 2017–25, the agency extensively revised its method for estimating benefits from less frequent refueling of vehicles with higher fuel economy, and also revised its forecasts of fuel prices and future growth in total vehicle use to be consistent with those reported in Annual Energy Outlook 2011. For this final rule, NHTSA made several changes to the economic assumptions it used to analyze the impacts of its proposed rule, including revising its technology cost estimates to reflect more recently available data; updating the estimated cost of owning a vehicle based to include additional categories of ownership costs and utilize newer data; updating its fuel price and transportation demand forecasts to be consistent with those presented in the Annual Energy Outlook (AEO) 2012 Early Release; and updating and revising its estimates of vehicle use (VMT) schedules, survival rates, and methods for projecting total VMT in future years. For the reader's reference, Table IV–9 below summarizes the values used to calculate the economic benefits from each alternative.
Building on cost estimates developed for the MYs 2012–2016 CAFE and GHG final rule and the 2010 TAR, the agencies incorporated new cost estimates in the NPRM for the new technologies considered for the proposal and for some of the technologies carried over from the MYs 2012–2016 final rule and 2010 TAR. This joint work is described in Chapter 3 of the joint TSD and in Section II of this preamble, as summarized below. For more detailed information on cost of fuel-saving technologies, please refer to Chapter 3 of the joint TSD and Chapter V of NHTSA's FRIA.
The technology cost estimates used in this analysis are intended to represent manufacturers' direct costs for high-volume production of vehicles with these technologies. NHTSA explicitly accounts for the cost reductions a manufacturer might realize through learning achieved from experience in actually applying a technology, which means that technologies become cheaper over the rulemaking time frame; learning effects are described above and in Chapter 3 of the joint TSD and Chapters V and VII of NHTSA's FRIA. NHTSA notes that, in developing technology cost estimates, the agencies have made every effort to hold constant aspects of vehicle performance and utility typically valued by consumers, such as horsepower, carrying capacity, drivability, durability, noise, vibration and harshness (NVH) and towing and hauling capacity. For example, NHTSA includes in its analysis technology cost estimates that are specific to performance passenger cars (
Additionally, NHTSA recognizes that manufacturers' actual costs for employing these technologies include additional outlays for accompanying design or engineering changes to models that use them, development and testing of prototype versions, recalibrating engine operating parameters, and integrating the technology with other attributes of the vehicle. Manufacturers' indirect costs for employing these technologies also include expenses for product development and integration, modifying assembly processes and training assembly workers to install them, increased expenses for operation and maintaining assembly lines, higher initial warranty costs for new technologies, any added expenses for selling and distributing vehicles that use these technologies, and manufacturer and dealer profit. These indirect costs have been accounted for in this rulemaking through use of ICMs, which have been revised for this rulemaking as discussed above, in Chapter 3 of the joint TSD, and in Chapters V and VII of NHTSA's FRIA. NHTSA also sought and received comments to the NPRM on the use of ICMs; those comments and the agency's response are presented above in Section IV.C.2 and in Chapter V of NHTSA's FRIA.
An important concern is whether achieving the fuel economy improvements required by the final CAFE standards will require manufacturers to modify the performance, carrying capacity, safety, or comfort of some vehicle models. To the extent that compliance with the standards requires such modifications, the resulting sacrifice in the value of those models represents an additional cost of achieving the required improvements in fuel economy. (This possibility is addressed in detail in Section IV.G.6.) Although exact dollar values that potential buyers attach to specific vehicle attributes are difficult to infer, differences in vehicle purchase prices and buyers' choices among competing models that feature varying
NHTSA and EPA approached this potential problem by developing cost estimates for fuel economy-improving technologies that are intended to include any additional manufacturing costs that would be necessary to maintain the originally planned levels of performance, comfort, carrying capacity, and safety of any light-duty vehicle model to which those technologies are applied. In doing so, the agencies followed the precedent established by the 2002 NAS Report, which estimated “constant performance and utility” costs for fuel economy technologies. NHTSA has followed this precedent in its efforts to refine the technology costs it uses to analyze alternative passenger car and light truck CAFE standards for MYs 2017–2025. Although the agency has reduced its estimates of manufacturers' costs for most technologies for use in this rulemaking, these revised estimates are still intended to represent costs that would allow manufacturers to maintain the performance, carrying capacity, and utility of vehicle models while improving their fuel economy.
As NHTSA stated in the NPRM, while we believe that our cost estimates for fuel economy-improving technologies include adequate provisions for accompanying costs that are necessary to prevent any degradation in other vehicle attributes, it is possible that they do not include adequate allowance to prevent sacrifices in these attributes on all vehicle models. If this is the case, the true economic costs of achieving higher fuel economy should include the opportunity costs to vehicle owners of any accompanying reductions in vehicles' performance, carrying capacity, and utility, and omitting these will cause the agency's estimated technology costs to underestimate the true economic costs of improving fuel economy.
It would be desirable to estimate explicitly the changes in vehicle buyers' welfare from the combination of higher prices for new vehicle models, increases in their fuel economy, and any accompanying changes in other vehicle attributes. The
Actual fuel economy levels achieved by light-duty vehicles in on-road driving fall somewhat short of their levels measured under the laboratory-like test conditions used by EPA to establish its published fuel economy ratings for different models. In analyzing the fuel savings from alternative CAFE standards, NHTSA has previously adjusted the actual fuel economy performance of each light truck model downward from its rated value to reflect the expected size of this on-road fuel economy “gap.” On December 27, 2006, EPA adopted changes to its regulations on fuel economy labeling, which were intended to bring vehicles' rated fuel economy levels closer to their actual on-road fuel economy levels.
In that final rule, however, EPA acknowledged that actual on-road fuel economy for light-duty vehicles averages approximately 20 percent lower than published fuel economy levels, somewhat larger than the 15 percent shortfall it had previously assumed. For example, if the overall EPA fuel economy rating of a light truck is 20 mpg, EPA estimated that the on-road fuel economy actually achieved by a typical driver of that vehicle is expected to be only 80 percent of that figure, or 16 mpg (20*.80). NHTSA employed EPA's revised estimate of this on-road fuel economy gap in its analysis of the fuel savings resulting from alternative CAFE standards evaluated in the MY 2011 final rule.
In the course of developing its CAFE standards for MY 2012–16, NHTSA conducted additional analysis of this issue. The agency combined data on the number of passenger cars and light trucks of each model year that were registered for use during calendar years 2000 through 2006, average rated fuel economy for passenger cars and light trucks produced during each model year, and estimates of average miles driven per year by cars and light trucks of different ages. It used these data to develop estimates of the average fuel economy that the U.S. light-duty vehicle fleet
Table IV–10 compares NHTSA's estimates of fleet-wide average fuel economy under test conditions for 2000 through 2006 to the Federal Highway Administration's (FHWA) published estimates of actual on-road fuel economy achieved by passenger cars and light trucks during each of those years.
The comparisons reported in this table must be interpreted with some caution, however, because the estimates of annual car and truck use used to develop these estimates are submitted to FHWA by individual states, which use differing definitions of passenger cars and light trucks. (For example, some states classify minivans as cars, while others define them as light trucks.) At the same time, while total gasoline consumption can be reasonably estimated from excise tax receipts, separate estimates of gasoline consumption by cars and trucks are not available. For these reasons, NHTSA has chosen not to rely on its separate estimates of the on-road fuel economy gap for cars and light trucks. However, the agency stated in the NPRM that we do believe that these results confirm that the 20 percent on-road fuel economy discount represents a reasonable estimate for use in evaluating the fuel savings likely to result from CAFE standards for both cars and light trucks. NHTSA employed this value for vehicles operating on liquid fuels (gasoline, diesel, and gasoline/alcohol blends), and used it to analyze the impacts of proposed CAFE standards for model years 2017–25 on the use of these fuels.
In the 2010 TAR, EPA and NHTSA assumed that the overall energy shortfall for the vehicles employing electric drivetrains, including plug-in hybrid and battery-powered electric vehicles, is 30 percent. This value was derived from the agencies' engineering judgment based on the limited available information. During the stakeholder meetings conducted prior to the technical assessment, confidential business information (CBI) was supplied by several manufacturers which indicated that electrically powered vehicles had greater variability in their on-road energy consumption than vehicles powered by internal combustion engines, although other manufacturers suggested that the on-road/laboratory differential attributable to electric operation should approach that of liquid fuel operation in the future. Second, data from EPA's 2006 analysis of the “five cycle” fuel economy label as part of the rulemaking discussed above supported a larger on-road shortfall for vehicles with hybrid-electric drivetrains, partly because real-world driving tends to have higher acceleration/deceleration rates than are employed on the 2-cycle test. This diminishes the fuel economy benefits of regenerative braking, which can result in a higher test fuel economy for hybrids than is achieved under normal on-road conditions.
One of the most significant factors responsible for the difference between test and on-road fuel economy is the use of air conditioning. While the air conditioner is turned off during the FTP and HFET tests, drivers often use air conditioning under warm, humid conditions. The air conditioning compressor can also be engaged during “defrost” operation of the heating system.
In the MY 2012–2016 rule, EPA estimated that 85 percent of MY 2016 vehicles would reduce their tailpipe CO
NHTSA received only two comments to the NPRM regarding the on-road fuel economy gap. The Sierra Club commented that the agencies had pledged in the final rule establishing the MYs 2012–2016 standards to address the disparity between the standards and on-road mileage, but that given the timing of this rulemaking for MYs 2017–
Future fuel prices are the single most important input into the economic analysis of the benefits of alternative CAFE standards because they determine the value of future fuel savings, which account for approximately 90 percent of the total economic benefits from requiring higher fuel economy. NHTSA relies on the most recent fuel price projections from the U.S. Energy Information Administration's (EIA)
As compared to the gasoline prices used in the NPRM, the AEO 2012 Early Release Reference Case fuel prices are slightly higher through the year 2020, but slightly lower for most years thereafter. Expressed in constant 2010 dollars, the AEO 2012 Early Release Reference Case forecast of retail gasoline prices (which include federal, state, and local taxes) during 2017 is $3.62 per gallon, rising gradually to $4.08 by the year 2035. However, valuing fuel savings over the full lifetimes of passenger cars and light trucks affected by the standards proposed for MYs 2017–25 requires fuel price forecasts that extend through 2060, approximately the last year during which a significant number of MY 2025 vehicles will remain in service.
The value of fuel savings resulting from improved fuel economy to buyers of light-duty vehicles is determined by the retail price of fuel, which includes Federal, State, and any local taxes imposed on fuel sales. Because fuel taxes represent transfers of resources from fuel buyers to government agencies, however, rather than real resources that are consumed in the process of supplying or using fuel, NHTSA deducts their value from retail fuel prices to determine the real economic value of fuel savings resulting from more stringent CAFE standards to the U.S. economy.
NHTSA follows the assumptions used by EIA in AEO 2012 Early Release that State and local gasoline taxes will keep pace with inflation in nominal terms, and thus remain constant when expressed in constant dollars. In contrast, EIA assumes that Federal gasoline taxes will remain unchanged in
EIA also includes forecasts reflecting high and low global oil prices in each year's complete AEO, which reflect uncertainties regarding OPEC behavior as well as future levels of oil production and demand. However, the Early Release versions of AEO, including the AEO 2012 Early Release relied upon by NHTSA for this analysis, does not include alternative forecasts reflecting high and low global oil price scenarios. In their absence, NHTSA constructed high and low fuel price forecasts that were consistent with the Reference Case forecast of fuel prices from the AEO 2012 Early Release, as well as with the relationship of the high and low fuel price forecasts to the Reference Case forecast in AEO 2011. These alternative scenarios project retail gasoline prices that range from a low of $2.46 to a high of $4.90 per gallon during 2020, and from $2.53 to $5.12 per gallon during 2035 (all figures in 2010 dollars). In conjunction with our assumption that fuel taxes will remain constant in real or inflation-adjusted terms over this period, these forecasts imply pre-tax values of saving fuel ranging from $2.07 to $4.51 per gallon during 2020, and from $2.18 to $4.77 per gallon in 2035 (again, all figures are in constant 2010 dollars). In conducting the analysis of uncertainty in benefits and costs from
Many environmental and consumer group commenters argued that the fuel price estimates employed in the NPRM were too low. Consumers Union
In keeping with its usual practice of employing fuel price forecasts from the most recently published version of AEO, NHTSA has elected to use the Reference Case fuel price forecast from the AEO 2012 Early Release in its analysis of benefits form this final rule. As suggested by some commenters, NHTSA has also conducted sensitivity analyses using the high and low fuel price forecasts it constructed to be consistent with the AEO 2012 Early Release Reference Case forecast, although the agency notes that this is also its usual practice. The agency accounts separately for the economic costs associated with the potential for rapid increases in fuel prices (“price spikes”) or interruptions in the supply of petroleum products as part of the macroeconomic disruption costs of U.S. petroleum imports; these costs are discussed in Section IV.C.3.k.ii.
The agency uses slightly different assumptions about the length of time over which potential vehicle buyers consider fuel savings from higher fuel economy, and about how they discount those future fuel savings, in different aspects of its analysis. For most purposes, the agency assumes that buyers value fuel savings over the first five years of a new vehicle's lifetime; the five-year figure represents approximately the current average term of consumer loans to finance the purchase of new vehicles.
To simulate manufacturers' assessment of the net change in the value of an individual vehicle model to prospective buyers from improving its fuel economy, NHTSA discounts fuel savings over the first five years of its lifetime using a 7 percent rate. The resulting value is deducted from the technology costs that would be incurred by its manufacturer to improve that model's fuel economy, in order to determine the change in its value to potential buyers. Since this is also the amount by which its manufacturer could expect to change that model's selling price, this difference can also be viewed as the “effective cost” of the improvement from its manufacturers' perspective. The CAFE model uses these estimates of effective costs to identify the sequence in which manufacturers are likely to select individual models for improvements in fuel economy, as well as to identify the most cost-effective technologies for doing so.
The effective cost to its manufacturer for increasing the fuel economy of a model also represents the change in its value from the perspective of potential buyers. Under the assumption that manufacturers change the selling price of each model by this amount, the effective cost of improving its fuel economy also represents the average change in its net or effective price to would-be buyers. As part of our sensitivity case analyzing the potential for manufacturers to over-comply with CAFE standards—that is, to produce a lineup of vehicle models whose sales-weighted average fuel economy exceeds that required by prevailing standards—NHTSA used the extreme assumption that potential buyers value fuel savings only during the first year they expect to own a new vehicle. This assumption produces an extremely conservative estimate of the extent to which manufacturers are likely to over-comply with the prevailing CAFE standard.
Several commenters addressed the issue of payback periods. EDF commented that the payback period should be 5 years or greater, in order to “accurately reflect the current and forecasted buying trends of consumers,” including increases in the average length of ownership of new vehicles since the 2008 recession.
After considering these comments, the agency has elected to retain the five-year payback period for use in most aspects of its analysis. In addition, NHTSA has elected to include increases in financing, insurance, and other components of the cost of vehicle ownership that would be expected to increase in proportion to increases in vehicle purchase prices in its analysis of the rule's impacts on individual buyers, as well as in its analysis of potential changes in total sales of new vehicles.
The agency notes that these varying assumptions about future time horizons and discount rates for valuing fuel savings are used only to analyze manufacturers' responses to requiring higher fuel economy and buyers' behavior in response to manufacturers' compliance strategies. When estimating the aggregate value to the U.S. economy of fuel savings resulting from alternative increases in CAFE standards—or the “social” value of fuel savings—the agency includes fuel savings over the
The procedure the agency uses for calculating lifetime fuel savings is discussed in detail in the following section, while a more detailed analysis of the time horizon over which potential buyers may consider fuel savings in their vehicle purchasing decisions is provided in Section IV.G.6 below.
NHTSA's analysis of fuel savings and related benefits from adopting more stringent fuel economy standards for MYs 2017–2025 passenger cars and light trucks begins by estimating the resulting changes in fuel use over the entire lifetimes of the affected vehicles. The change in total fuel consumption by vehicles produced during each model year is calculated as the difference between their total fuel use over their lifetimes with a higher CAFE standard in effect, and their total lifetime fuel consumption under a baseline in which CAFE standards remained at their MY 2016 levels. The first step in estimating lifetime fuel consumption by vehicles of each model year is to calculate the number of vehicles originally produced during that model year that are expected to remain in service during each subsequent year.
As discussed in more detail in Section II.B.3 and in Chapter 1 of the TSD, to estimate production volumes of passenger cars and light trucks for individual manufacturers, NHTSA relied on a baseline market forecast constructed by EPA staff beginning with MY 2008 CAFE certification data. After constructing a MY 2008 baseline, EPA and NHTSA used projected car and truck volumes for this period from Energy Information Administration's (EIA's) Annual Energy Outlook (AEO) 2011 in the NPRM analysis.
To estimate sales of individual car and light truck models produced by each manufacturer, EPA purchased data from CSM Worldwide (for the MY 2008-based market forecast) and LMC (for the MY 2010-based fleet) and used these firms' projections of the number of vehicles of each type (car or truck) that will be produced and sold by manufacturers in model years 2011 through 2025.
To estimate the number of passenger cars and light trucks originally produced during model years 2017 through 2025 that will remain in use during subsequent years, the agency applied age-specific survival rates for cars and light trucks to its forecasts of passenger car and light truck sales for each of those model years. For use in this final rule, NHTSA updated its previous estimates of car and light truck survival rates using registration data for vehicles produced for model years through 2010 from R.L. Polk, Inc, in order to ensure that they reflected recent increases in the durability and expected life spans of cars and light trucks. However, the agency does not attempt to forecast changes in those survival rates over the future.
The next step in estimating fuel use is to calculate the total number of miles that cars and light trucks will be driven each year they remain in use. To estimate the total number of miles vehicles produced in a model year are
The estimates of annual miles driven by vehicles of different vehicle ages during 2008 were also adjusted to reflect projected future growth in average use of vehicles over their entire lifetimes. Increases in average annual use of cars and light trucks, which have averaged approximately 1 percent annually over the past two decades, have been an important source of historical growth in the total number of miles they are driven each year. To estimate future growth in their average annual use for purposes of this rulemaking, NHTSA calculated the rate of growth in the adjusted mileage schedules derived for 2008 that would be necessary for
Finally, the agency estimates total fuel consumption by passenger cars and light trucks remaining in use each year by dividing the total number of miles surviving vehicles are driven by the fuel economy they are expected to achieve under each alternative CAFE standard. Each model year's total lifetime fuel consumption is the sum of fuel use by the cars or light trucks produced during that model year over their life span. In turn, the
The fuel economy rebound effect refers to the fact that some of the fuel savings expected to result from higher fuel economy, including increases in fuel economy required by the adoption of higher CAFE standards, may be offset by additional vehicle use. The increase in vehicle use occurs because higher fuel economy reduces the fuel cost of driving, which is typically the largest single component of the monetary cost of operating a vehicle, and vehicle owners respond to this reduction in operating costs by driving more. Even with higher fuel economy, this additional driving consumes some fuel, so this effect reduces the fuel savings that result when raising CAFE standards requires manufacturers to improve fuel economy. The rebound effect refers to the fraction of fuel savings expected to result from increased fuel economy that is offset by additional driving.
The magnitude of the rebound effect is an important determinant of the actual fuel savings that are likely to result from adopting stricter CAFE standards. Research on the magnitude of the rebound effect in light-duty vehicle use dates to the early 1980s, and generally concludes that a significant rebound effect occurs when vehicle fuel efficiency improves.
Other studies have relied on econometric analysis of annual U.S. data on vehicle use, fuel efficiency, fuel prices, and other variables influencing aggregate travel demand to estimate the response of total or average vehicle use to changes in fleet-wide average fuel economy or fuel cost per mile driven. More recent studies have analyzed yearly variation in vehicle ownership and use, fuel prices, and fuel economy among states over an extended time period in order to measure the response of vehicle use to changing fuel costs per mile.
It is also important to note that many studies attempting to measure the rebound effect using aggregate data on vehicle use actually quantify the price elasticity of gasoline demand, or the elasticity of VMT with respect to the per-gallon price of gasoline, rather than the elasticity of VMT with respect to fuel efficiency or the fuel cost per mile of driving. Because neither of these measures actually corresponds to the definition of the fuel economy rebound effect, these studies provide limited evidence of its actual magnitude. Another important distinction among studies of the rebound effect is whether they assume that the effect is constant, or instead allow it to vary in response to changes in fuel costs, personal income, or vehicle ownership. Most studies using aggregate annual data for the U.S. assume a constant rebound effect, although some of these studies test whether the effect varies as changes in retail fuel prices or average fuel efficiency alter fuel cost per mile driven. Studies using household survey data estimate significantly different rebound effects for households owning varying numbers of vehicles, with most concluding that the rebound effect is larger among households that own more vehicles. Finally, recent studies using state-level data conclude that the rebound effect varies directly in response to changes in personal income, the degree of urbanization of U.S. cities, and differences in traffic congestion levels, as well as fuel costs. Many studies conclude that the long-run rebound effect is significantly larger than the short-term response of vehicle use to increased fuel efficiency. Although their estimates of the time required for the rebound effect to reach its long-run magnitude vary, this long-run effect is probably more appropriate for evaluating the fuel savings likely to result from adopting stricter CAFE standards for future model years.
In order to provide a more comprehensive overview of previous estimates of the rebound effect, NHTSA has updated its previous review of published studies of the rebound effect to include those conducted as recently as 2011. The agency performed a detailed analysis of several dozen separate estimates of the long-run rebound effect reported in these studies, which is summarized in Table IV–11 below.
Some recent studies provide evidence that the rebound effect has been declining over time. This result appears plausible for two reasons: first, the responsiveness of vehicle use to variation in fuel costs would be expected to decline as they account for a smaller proportion of the total monetary cost of driving, which has been the case until recent years. Second, rising personal incomes would be expected to reduce the sensitivity of vehicle use to fuel costs as the hourly value of time spent driving—which is likely to be related to income levels—accounts for a larger fraction of the total cost of automobile travel. At the same time, however, rising incomes are strongly associated with higher auto ownership levels, which increase households' opportunities to substitute among those vehicles in response to varying fuel prices and differences in their fuel economy levels. This effect is likely to increase the sensitivity of households' overall vehicle use to differences in the fuel economy levels of
Small and Van Dender combined annual time series data on aggregate vehicle use, fuel prices, average fuel economy, and other variables for individual states to estimate the rebound effect, allowing its magnitude to vary in response to fuel prices, fleet-wide average fuel economy, the degree of urbanization of U.S. cities, and personal income levels.
More recently, Hymel, Small and Van Dender extended the previous analysis to incorporate the effect on vehicle use of traffic congestion levels in urbanized areas.
Recent research by Greene (under contract to EPA) using U.S. national time-series data for the period 1966–2007 lends further support to the hypothesis that the rebound effect is declining over time.
More recent research provides contrasting evidence on the magnitude of the rebound effect. Bento
West and Pickrell used a sample of nearly 300,000 vehicles from the 2009 National Household Travel Survey to analyze vehicle use decisions among households owning different numbers of vehicles.
In light of findings from recent research, the agencies judged that the apparent decline over time in the magnitude of the rebound effect justified using a value that is lower than previous estimates, which are concentrated within the 15–30 percent range. Thus, as we elected to do in our previous analysis of the effects of raising CAFE standards for MY 2012–16 cars and light trucks, NHTSA used a 10 percent rebound effect in its analysis of fuel savings and other benefits from the proposed CAFE standards that would apply to MY 2017–25 cars and light trucks. The 10 percent estimate lies between the 10–30 percent range of estimates for the rebound effect reported in most previous research, and is at the upper end of the 5–10 percent range of estimates for the future rebound effect reported in recent studies. Thus the 10 percent value was not derived from a single estimate or particular study, but instead represented a compromise between historical estimates and projected future estimates. Recognizing the wide range of uncertainty surrounding its correct value, however, the agency also employed estimates of the rebound effect ranging from 5 to 20 percent in its sensitivity testing.
In their comments on the analysis of the proposed standards for MY 2017–25,
In response to the comments offered by CFA and ICCT, the agency notes that the effect of future growth in income levels on the magnitude of the rebound effect is uncertain, because rising incomes are associated with higher vehicle ownership levels, and there is evidence that the rebound effect is larger among households owning multiple vehicles. In addition, AEO 2012 and the agencies' extrapolation of its forecasts anticipate rising fuel prices throughout the lifetimes of cars and light trucks subject to this final rule, which by themselves would be expected to increase the magnitude of the rebound effect. Further, as the previous summary of published estimates of the rebound effect indicates, the Small-Van Dender and Greene studies must be considered in the context of many other studies of the fuel economy rebound effect that have published over the past three decades. In that context, these studies represent lower outliers in the distribution of reported estimates of the rebound effect, and for that reason should not be relied upon
In response to the observation by CFA, the agency notes that its analysis of the consumer impacts of the rule accounts for fuel consumption and fuel costs associated with increased driving due to the fuel economy rebound effect. At the same time, this analysis also accounts for the benefits that vehicle buyers derive from that additional travel, which clearly exceed the increased fuel costs they pay because they voluntarily elect to drive more. The nature of these benefits and the procedure the agency uses to estimate their value are described in the following section. Thus on balance, the additional vehicle use stemming from the rebound effect increases the welfare of individual vehicle buyers, and is properly included in the agency's analysis. NHTSA continues to include both the consumer benefits and higher fuel costs associated with additional vehicle use in its analyses of the individual (or private) and economy-wide (or social) impacts of this final rule.
The increase in vehicle use resulting from the fuel economy rebound effect provides additional benefits to their users, who make more frequent trips or travel farther to reach more desirable destinations. This additional travel provides benefits to drivers and their passengers by improving their access to social and economic opportunities away from home. As evidenced by their decisions to make more frequent or longer trips when improved fuel economy reduces their costs for driving, the benefits from this additional travel exceed the fuel and other costs drivers and passengers incur in traveling these additional distances.
The agency's analysis estimates the economic benefits from increased rebound-effect driving as the sum of fuel costs drivers incur plus the consumer surplus they receive from the additional accessibility it provides.
Direct estimates of the value of extended vehicle range are not available in the literature, so the agencies instead calculate the reduction in the required annual number of refueling cycles due to improved fuel economy, and assess the economic value of the resulting benefits. Chief among these benefits is the time that owners save by spending less time both in search of fueling stations and in the act of pumping and paying for fuel.
The economic value of refueling time savings was calculated by applying DOT-recommended valuations for travel time savings to estimates of how much time is saved.
The estimates
The agencies
This analysis of refueling benefits considers only those refueling trips which interview respondents indicated the primary reason was due to a low
As an illustration of how we estimate the value of extended refueling range, assume a small light truck model has an average fuel tank size of approximately 20 gallons, and a baseline actual on-road fuel economy of 24 mpg (its assumed level in the absence of a higher CAFE standard for the given model year). TPMS survey data indicate that drivers who indicated the primary reason for their refueling trips was a low reading on the gas gauge typically refuel when their tanks are 35 percent full (
In the central analysis, this calculation was repeated for each future calendar year that light-duty vehicles of each model year affected by the standards considered in this rule would remain in service. The resulting cumulative lifetime valuations of time savings account for both the reduction over time in the number of vehicles of a given model year that remain in service and the reduction in the number of miles (VMT) driven by those that stay in service. We also adjust the value of time savings that will occur in future years both to account for expected annual growth in real wages
Since a reduction in the expected number of annual refueling trips leads to a decrease in miles driven to and from fueling stations, we can also calculate the value of consumers' fuel savings associated with this decrease. As shown in Table IV–14, the typical incremental round-trip mileage per refueling cycle is 1.08 miles for light trucks and 0.97 miles for passenger cars. Going back to the earlier example of a light truck model, a decrease of 1.6 in the number of refuelings per year leads to a reduction of 1.73 miles driven per year (= 1.6 refuelings × 1.08 miles driven per refueling). Again, if this model's actual on-road fuel economy was 24 mpg, the reduction in miles driven yields an annual savings of approximately 0.07 gallons of fuel (= 1.73 miles/24 mpg), which at $3.77/gallon
The annual savings to each consumer shown in the above example may seem like a small amount, but the reader should recognize that the valuation of the cumulative lifetime benefit of this
Special mention must be made with regard to the value of refueling time savings benefits to owners of electric and plug-in electric (both referred to here as EV) vehicles. EV owners who routinely drive daily distances that do not require recharging on-the-go may eliminate the need for trips to fueling or charging stations. It is likely that early adopters of EVs will factor this benefit into their purchasing decisions and maintain driving patterns that require once-daily at-home recharging (a process which takes two to six hours for a full charge). However, EV owners who regularly or periodically need to drive distances further than the fully-charged EV range may need to recharge at fixed locations. A distributed network of charging stations (
Increased vehicle use associated with the rebound effect also contributes to increased traffic congestion, motor vehicle accidents, and highway noise. To estimate the economic costs associated with these consequences of added driving, NHTSA applies estimates of per-mile congestion, accident, and noise costs caused by increased use of automobiles and light trucks developed previously by the Federal Highway Administration.
Based on a detailed analysis of differences in fuel consumption, petroleum imports, and imports of refined petroleum products among alternative scenarios presented in AEO 2011,
U.S. consumption and imports of petroleum products impose costs on the domestic economy that are not reflected in the market price for crude petroleum, or in the prices paid by consumers of refined petroleum products such as gasoline. These costs include (1) higher prices for petroleum products resulting from the effect of U.S. petroleum demand on the world oil price; (2) increased risk of disruptions to the U.S. economy caused by sudden reductions in the supply of imported oil to the U.S.; and (3) expenses for maintaining a U.S. military presence to secure imported oil supplies from unstable regions, and for maintaining the strategic petroleum reserve (SPR) to cushion against
The first component of the external costs imposed by U.S. petroleum consumption and imports (often termed the “monopsony cost” of U.S. oil imports), measures the increase in payments from domestic oil consumers to foreign oil suppliers
ACEEE stated that not including an estimate for monopsony value was a “departure from previous rules,” and argued that monopsony effects should be counted among the final rule's economic benefits, because (1) reduction in the price of petroleum would bring a net benefit in terms of job creation due to the low labor intensity of the energy sector, and (2) reduced demand means that the most expensive sources of petroleum are not used, which also reduces the price of all petroleum.
In response to ACEEE, NHTSA previously excluded any reduction in these monopsony costs resulting from lower U.S. fuel consumption in its analyses of CAFE standards for MY 2008–11 light trucks, MY 2011 passenger cars and light trucks, and MY 2012–16 cars and light trucks. The rationale for doing so—namely that these costs represent a financial transfer rather than a use of real economic resources, and that reducing them does not provide a savings in the use of economic resources—is thus well-established, remains sound, and is consistent with the global perspective of NHTSA's analysis of this final rule. The agency also notes that job “creation” is not among the economic benefits attributable to higher CAFE standards (and in any case increased employment represents the consumption of additional economic resources, which is an economic
In response to the assertion by CFA, the monopsony effect does not meet the definition of a consumption externality, because it is transmitted completely through the price mechanism and does not directly affect the welfare of individuals or the production functions of firms. Further, the economic benefit resulting from any decline in production levels of crude petroleum is already accounted for in the agency's estimates of the (pre-tax) value of fuel savings. Finally, by excluding any reduction in monopsony payments from its analysis of benefits from higher fuel economy, the agency is simply being consistent with the usual principles of economic analysis and with OMB guidelines for conducting regulatory analysis, and is thus in no way failing to meet its statutory responsibilities. With respect to the comment by UCS, NHTSA agrees that the overarching purpose of EPCA/EISA is energy conservation, but disagrees that the statute requires us to include the monopsony effect in our calculation of benefits associated with higher fuel economy standards, particularly when the level of the standards is not driven by benefit-cost considerations. As explained above, NHTSA has consistently excluded the monopsony value in its rulemakings since it has used a global SCC value, and continues to believe that doing so is appropriate for this final rule. With respect to the comments by DOE about including a monopsony effect in future analyses, we reiterate that any future analyses will represent a totally fresh look at all relevant factors. If the situation in future rulemaking changes such that including a value for the monopsony effect is appropriate, NHTSA would certainly consider one at that time.
The second component of external costs imposed by U.S. petroleum consumption and imports reflects the potential costs to the U.S. economy from disruptions in the supply of imported petroleum. These costs arise because interruptions in the supply of petroleum products reduce U.S. economic output while (and potentially after) they occur, as well as because firms incur real economic costs in attempting to adjust prices, output levels, and their use of
Several environmental group and other NGO commenters suggested that the standards would have significant energy security benefits in terms of avoiding macroeconomic disruption. UCS stated that “No other federal policy has delivered greater oil savings, energy security benefits, or greenhouse gas emissions reductions to the country,” and requested that we monetize improved energy security through reduced oil consumption and lower carbon emissions for the final rule analysis.
In response to these comments, the agency notes that its estimate of benefits from reducing U.S. petroleum consumption and imports incorporates both the potential economic cost of oil supply disruptions and the reduced probability that such disruptions will occur, exactly as advocated by UCS and other commenters. In addition, the agency analyzes the sensitivity of its benefit estimates to plausible variation in the per-gallon value of reduced macroeconomic disruption costs that result from lowering U.S. petroleum consumption and imports. The agency relies on estimates of this value and the range of uncertainty surrounding it prepared by Oak Ridge National Laboratories, which are described in detail in Chapter 4 of the joint TSD accompanying this rulemaking.
The third component of external costs imposed by U.S. petroleum consumption and imports includes expenses for maintaining a U.S. military presence to secure imported oil supplies from unstable regions, and for maintaining the strategic petroleum reserve (SPR) to cushion against resulting price increases. NHTSA recognizes that potential national and energy security risks exist due to the possibility of tension over oil supplies. Much of the world's oil and gas supplies are located in countries facing social, economic, and demographic challenges, thus making them even more vulnerable to potential local instability. Because of U.S. dependence on oil, the military could be called on to protect energy resources through such measures as securing shipping lanes from foreign oil fields. Thus, to the degree to which the proposed rules reduce reliance upon imported energy supplies or promote the development of technologies that can be deployed by either consumers or the nation's defense forces, the United States could expect benefits related to national security, reduced energy costs, and increased energy supply.
As discussed in the NPRM, although NHTSA recognizes that there would clearly be significant economic benefits from eliminating the nation's dependence on foreign oil, no serious analysis has been able to estimate the potential reduction in U.S. military activity and spending that is likely to result exclusively from the fuel savings and reductions in U.S. petroleum imports this final rule is expected to produce by itself. Two principal difficulties that have prevented researchers from developing credible estimates of the potential reduction in military activity that might accompany a significant reduction in U.S. oil imports are isolating the specific missions that are intended to secure foreign oil supplies and transportation routes, and anticipating how extensively they would be scaled back in response to a decline in U.S. petroleum imports. Analysts have been unable to answer either of these questions with sufficient confidence to produce reliable estimates of potential savings in U.S. military outlays. As a consequence, the agency has included
Similarly, while the costs for building and maintaining the SPR are more clearly attributable to U.S. petroleum consumption and imports, these costs have not varied historically in response to changes in U.S. oil import levels. Thus the agency has not estimated the potential reduction in the cost for maintaining the SPR that might result from lower U.S. petroleum imports, or to include an estimate of this value among the benefits of reducing petroleum consumption through higher CAFE standards.
Comments addressing the potential benefits from a reduced military presence as a result of higher CAFE standards were mixed. While API agreed with NHTSA's discussion in the NPRM and supported a reiteration of such discussion for the final rule (and sensitivity analysis in the FRIA),
The agency believes that eliminating or significantly reducing U.S. consumption and imports of petroleum would provide an opportunity to reduce military activities that are dedicated to the purposes of securing oil supplies in unstable regions of the globe, and protecting international transportation routes. However, NHTSA has been unable to identify research that reports credible estimates of the extent to which these opportunities would arise and be acted upon as a consequence of reductions in U.S. petroleum consumption of the magnitude projected to result from this final rule, either alone or in conjunction with its previous actions to establish higher CAFE standards. This conclusion was echoed in a recent study conducted for EPA by Oak Ridge National Laboratory, the results of which are described in detail in Chapter 4 of the Final TSD accompanying this rulemaking. Thus as indicated previously, NHTSA's analysis of benefits from adopting this final rule includes
In analyzing benefits from its recent actions to increase light truck CAFE standards for model years 2005–07 and 2008–11, NHTSA relied on a 1997 study by Oak Ridge National Laboratory (ORNL) to estimate the value of reduced economic externalities from petroleum consumption and imports.
Criteria air pollutants include carbon monoxide (CO), hydrocarbon compounds (usually referred to as “volatile organic compounds,” or VOC), nitrogen oxides (NO
With the exception of SO
Emissions of criteria air pollutants also occur during each phase of fuel production and distribution, including crude oil extraction and transportation, fuel refining, and fuel storage and transportation. NHTSA estimates the reductions in criteria pollutant emissions from producing and distributing fuel that would occur under alternative CAFE standards using emission rates obtained by EPA using Argonne National Laboratories' Greenhouse Gases and Regulated Emissions in Transportation (GREET) model, which provides estimates of air pollutant emissions that occur during different phases of fuel production and distribution
NHTSA used the resulting emission rates, together with its previous estimates of how reductions in total fuel use would be reflected in reductions in domestic fuel refining and crude petroleum production, to calculate emissions of each criteria pollutant that would occur during domestic fuel production, as well as in the distribution of domestic and imported fuel within the U.S. The agency's analysis assumes that reductions in imports of refined fuel would reduce domestic emissions of criteria pollutants during the fuel storage and distribution stages only. Reductions in domestic fuel refining using imported crude oil are assumed to reduce emissions during fuel refining, as well as during fuel storage and distribution. Finally, reduced domestic fuel refining using domestically-produced crude oil is assumed to reduce emissions during all phases of fuel production and distribution.
Finally, NHTSA calculated the net changes in domestic emissions of each criteria pollutant by combining the increases in emissions projected to result from increased vehicle use with the reductions anticipated to result from lower domestic fuel refining and distribution.
The net changes in direct emissions of fine particulates (PM
These values do not include a number of unquantified benefits, such as reductions in the impacts of PM
EPA projects that the per-ton values for reducing emissions of criteria pollutants from both mobile sources (including motor vehicles) and stationary sources such as fuel refineries and storage facilities will increase rapidly over time. These projected increases reflect rising income levels, which are assumed to increase affected individuals' willingness to pay for reduced exposure to health threats from air pollution. They also reflect expected future population growth, which is anticipated to increase population exposure to potentially harmful levels of air pollution.
The commenter Growth Energy urged the agency to evaluate the effect of increased use of gasoline direct injection technology on emissions of fine particulate matter, as well as the potential for more widespread ethanol use and after-treatment technologies to decrease such emissions. In response, NHTSA reiterates that this final rule does not require vehicle manufacturers to employ specific technologies; instead, it specifies the fuel economy levels they must achieve, while leaving decisions about the use of available technologies to individual manufacturers. In making these choices, manufacturers must continue to comply with EPA's standards for emissions of fine particulate matter and other criteria air pollutants, and this requirement limits the potential impact of their choices on
Emissions of carbon dioxide and other greenhouse gases (GHGs) occur throughout the process of producing and distributing transportation fuels, as well as from fuel combustion itself. Emissions of GHGs also occur in generating electricity, which NHTSA's analysis anticipates will account for a small but growing share of energy consumption by cars and light trucks produced in the model years that would be subject to the final standards. By reducing the volume of fuel consumed by passenger cars and light trucks, higher CAFE standards will reduce GHG emissions generated by fuel combustion, as well as throughout the fuel supply system. Lowering these emissions is likely to slow the projected pace and reduce the ultimate extent of future changes in the global climate, thus reducing future economic damages that changes in the global climate are expected to cause. By reducing the probability that climate changes with potentially catastrophic economic or environmental impacts will occur, lowering GHG emissions may also result in economic benefits that exceed the resulting reduction in the expected future economic costs caused by more gradual changes in the earth's climatic systems.
Quantifying and monetizing benefits from reducing GHG emissions is thus an important step in estimating the total economic benefits likely to result from establishing higher CAFE standards. Because carbon dioxide emissions account for nearly 95 percent of total GHG emissions that result from fuel combustion during vehicle use, NHTSA's analysis of the effect of higher CAFE standards on GHG emissions focuses mainly on estimating changes in emissions of CO
NHTSA estimates emissions of CO
As with other effects of alternative CAFE standards, the reductions in emissions of CO
NHTSA takes the economic benefits from reducing CO
NHTSA estimates the value of the reductions in emissions of CO
Reductions in CO
NHTSA's evaluates the economic benefits from reducing CO
The interagency group convened on a regular basis over the period from June 2009 through February 2010, to explore technical literature in relevant fields and develop key inputs and assumptions necessary to generate estimates of the SCC. Agencies participating in the interagency process included the Environmental Protection Agency and the Departments of Agriculture, Commerce, Energy, Transportation, and Treasury. This process was convened by the Council of Economic Advisers and the Office of Management and Budget, with active participation and regular input from the Council on Environmental Quality, National Economic Council, Office of Energy and Climate Change, and Office of Science and Technology Policy.
The interagency group's main objective was to develop a range of SCC values using clearly articulated input assumptions grounded in the existing scientific and economic literatures, in conjunction with a range of models that employ different representations of climate change and its economic impacts. The group clearly acknowledged the many uncertainties that its process identified, and recommended that its estimates of the SCC should be updated periodically to incorporate developing knowledge of the science and economics of climate impacts. The group ultimately selected four SCC values for use in federal regulatory analyses. Three values were based on the average of SCC estimates developed using three different climate economic models (referred to as integrated assessment models), using discount rates of 2.5, 3, and 5 percent. The fourth value, which represents the 95th percentile SCC estimate from the combined distribution of values generated by the three models at a 3 percent discount rate, represents the possibility of extreme climate impacts from the accumulation of GHGs in the earth's atmosphere, and the consequently larger economic damages.
Table IV–15 summarizes the interagency group's estimates of the SCC during various future years, which the agency has updated to 2010 dollars to correspond to the other values it uses to estimate economic benefits from the alternative CAFE standards considered in this final rule.
As Table IV–15 shows, the four SCC estimates selected by the interagency group for use in regulatory analyses are $6, $26, $41, and $79 per metric ton (in 2010 dollars) for emissions that occurr during the year 2017. The value that the interagency group centered its attention on is the average SCC estimate developed using different models and a 3 percent discount rate, which corresponds to the $26 per metric ton figure shown in the table for 2017. To capture the uncertainties involved in regulatory impact analysis, however, the group emphasized the importance of considering the full range of estimated SCC values. As the table also shows, the SCC estimates also rise over time; for example, the average SCC at the 3 percent discount rate increases to $27 per metric ton of CO
Details of the process used by the interagency group to develop its SCC estimates, complete results including year-by-year estimates of each of the four values, and a thorough discussion of their intended use and limitations is provided in the document
The agencies received a number of lengthy, detailed comments on the SCC values recommended by the interagency group, as well as on the process the group used to develop them. Most of these comments addressed the topics of incorporating updated knowledge about climate impacts, more fully considering the potential for catastrophic impacts of future climate change, valuing the population's presumed aversion to the risk of significant climate impacts on economic well-being, and the discount rate used to convert distant future economic impacts to their present values. EDF, NRDC, and IPI each urged the agency to revise its estimates of the SCC to incorporate recent improvements in understanding the range and severity of economic impacts from climate change. NRDC and EDF noted that the three integrated assessment models used
All three commenters also urged the agency to revise its SCC estimates to more fully reflect the potential for catastrophic economic damages resulting from future climate change. NRDC recommended doing so by integrating such damages directly into the three integrated assessment models used by the interagency group, while IPI recommended adjusting those models' estimates of benefits from reducing GHG emissions to account for their undervaluation of the risk and magnitude of catastrophic damages. EDF urged revisions to the mathematical form of the models' functions relating GHG accumulations to changes in global climate indicators and resulting economic damages, in order to remedy what EDF views as their underestimation of the probability that such damages will result. NRDC also recommended that the agency report the magnitude of extremely low-probability economic damages in order to inform the public and decision-makers about the impact of catastrophic scenarios. NRDC also urged the agency to conduct sensitivity analysis of the SCC using various “equity weights,” which would increase the value of climate damages likely to be experienced by lower-income regions of the world.
IPI, EDF, and NRDC each urged the agency to incorporate the economic value of the population's aversion to the risk of large losses in welfare in its SCC estimates. Specifically, the commenters recommended that the SCC be revised to include a measure of the typical consumer's willingness to sacrifice current income to avoid being exposed to the risk of a large welfare loss from potential climate change. Including such a “risk premium,” which would be in addition to the conventional expected value of damages from different degrees of potential climate change, could increase the agency's estimates of the SCC significantly. IPI noted that such a risk premium could be approximated by reducing the discount rate applied to future climate-related economic damages if it could not be estimated directly, while NRDC referred the agency to published research describing a recently-developed alternative method for incorporating the value of risk aversion.
Finally, all three of the same commenters urged NHTSA to base its estimates of the SCC on lower discount rates than those the interagency group applied to future economic damages, which would increase the agency's SCC values. NRDC noted that OMB Circular A–4 recommends a 1% rate as a lower bound for discounting where future benefits or costs will be experienced by future generations, and also pointed out that short-term interest rates are currently well below this figure. As an alternative, NRDC recommended using declining future discount rates to account for more fully for long-run uncertainty about interest rates than the procedure used by the interagency group. EDF similarly encouraged the agency to reduce the discount rates incorporated in the interagency group's SCC estimates below 3%, and also to consider using declining discount rates to account more appropriately for scientific and economic uncertainty surrounding the correct social discount rate for use over long time periods.
Finally, NRDC noted than an alternative to using the SCC to value reductions in GHG emissions would be to estimate the cost of achieving the final reduction in emissions necessary to reach a target emissions level (or “marginal abatement cost”) that is consistent with the maximum acceptable degree of climate change. While NRDC acknowledged that the determination of what constitutes an acceptable degree of climate change would ultimately be a political decision, the associated level of emissions and the marginal cost of reducing emissions to that level from today's baseline could be determined scientifically with reasonable accuracy and allowing some margin for error.
The agency appreciates the careful thought and detailed analyses that are reflected in the extensive comments it received on the SCC. In the time frame for evaluating and adopting this final rule, however, NHTSA judged that it would be impractical to replicate the detailed process the federal interagency group used to produce its recommended values for the SCC, and to develop the updated input assumptions and revised modeling procedures advocated by the commenters. Additionally, other federal agencies use the SCC estimates to analyze benefits of rulemakings, and consistency across government analyses is useful in this regard. If the SCC estimates are to be updated in the future, an interagency-group approach is likely to be a more fruitful way of accomplishing that than NHTSA attempting the process on its own. Recognizing this, the agency has elected to continue using the interagency group's recommended SCC values to estimate the economic benefits stemming from the reductions in GHG emissions that are projected to result from this final rule.
Discounting future fuel savings and other benefits is intended to account for the reduction in their value when they are deferred or will not occur until some future date, rather than received immediately. The value of benefits that are not expected to occur until the future is lower partly because people value current consumption more highly than equivalent consumption at some future date—stated simply, they are impatient—and partly because they expect their living standards to be higher in the future, so the same amount of additional consumption will improve their well-being by more today than it will in the future. The discount rate expresses the percent decline in the value of these benefits—as viewed from today's perspective—for each year they are deferred into the future. In evaluating the benefits from alternative increases in CAFE standards for MY 2017–2025 passenger cars and light trucks, NHTSA employs discount rates of both 3 and 7 percent per year, in accordance with OMB guidance.
While we present results that reflect both discount rates, NHTSA believes that the 3 percent rate is more appropriate for discounting future benefits from increased CAFE standards, because the agency expects that most or all of vehicle manufacturers' costs for complying with higher CAFE standards will ultimately be reflected in higher selling prices for their new vehicle models. By increasing sales prices for new cars and light trucks, CAFE regulations will thus primarily affect
Current OMB guidance further indicates that savers appear to discount future consumption at an average real (that is, adjusted to remove the effect of inflation) rate of about 3 percent when they face little risk about the future. Since the real interest rate that savers require to persuade them to defer consumption into the future represents a reasonable estimate of consumers' rate of time preference, NHTSA believes that the 3 percent rate is more appropriate for discounting projected future benefits and costs resulting from higher CAFE standards.
Because there is some uncertainty about whether vehicle manufacturers will completely recover their costs for complying with higher CAFE standards by increasing vehicle sales prices, however, NHTSA also presents benefit and cost estimates discounted using a higher rate. To the extent that manufacturers are unable to recover their costs for meeting higher CAFE standards by increasing new vehicle prices, these costs are likely to displace other investment opportunities available to them. OMB guidance indicates that the real economy-wide opportunity cost of capital is the appropriate discount rate to apply to future benefits and costs when the primary effect of a regulation is “* * * to displace or alter the use of capital in the private sector,” and OMB estimates that this rate currently averages about 7 percent.
UCS supported the agencies' use of 3 and 7 percent discount rates in the analysis for the final rule,
One important exception to the agency's use of 3 percent and 7 percent discount rates is arises in discounting benefits from reducing CO
In analyzing the uncertainty surrounding its estimates of benefits and costs from alternative CAFE standards, NHTSA considers alternative estimates of those assumptions and parameters that are subject to the most uncertainty, and where alternative values are likely to have the largest effect. These include the distribution of sales of MY 2017–25 vehicles between passenger cars and light trucks, expected lifetime utilization of cars and light trucks, the payback period assumed by manufacturers when choosing to adopt fuel economy technologies, projected costs of fuel economy-improving technologies and their anticipated effectiveness in reducing fuel consumption, forecasts of future fuel prices, the magnitude of the rebound effect, the value of reducing CO
The uncertainty analysis was conducted by assuming either independent normal or beta probability distributions for each of these variables, using the low and high estimates for each variable as the limits between which 90 percent of observed values are expected to fall. In cases where the data on the possible distribution of parameters was relatively sparse, making the choice of distributions difficult, a beta distribution is commonly employed to give more weight to both tails than would be the case had a normal distribution been employed. Each trial of the uncertainty analysis employed a set of values randomly drawn from these probability distributions, under the assumption that the value of each variable is independent from those of the others. Benefits and costs of each alternative standard were estimated using each combination of variables, and a total of nearly 40,000 trials were used to estimate the likely range of estimated benefits and costs for each alternative standard.
Much more detailed information is provided in Chapter VIII of the FRIA, and a discussion of how NHTSA and EPA jointly reviewed and updated economic assumptions for purposes of this final rule is available in Chapter 4 of the Joint TSD. In addition, all of NHTSA's model input and output files are now public and available for the reader's review and consideration. The economic input files can be found in the docket for this final rule, NHTSA–2010–0131, and on NHTSA's Web site.
Finally, because much of NHTSA's economic analysis for purposes of this final rule builds on the work that was done for the final rule establishing CAFE standards for MYs 2012–16, we refer readers to that document as well. It contains valuable background information concerning how NHTSA's assumptions regarding economic inputs for CAFE analysis have evolved over the past several rulemakings, both in response to comments and as a result of
In developing today's CAFE standards, NHTSA has made significant use of results produced by the CAFE Compliance and Effects Model (commonly referred to as “the CAFE Model” or “the Volpe model”), which DOT's Volpe National Transportation Systems Center developed, expanded, and refined over time specifically to support NHTSA's CAFE rulemakings. The model, which has been constructed specifically for the purpose of analyzing potential CAFE standards, integrates the following core capabilities:
(1) Estimating how manufacturers could apply technologies in response to new fuel economy standards,
(2) Estimating the costs that would be incurred in applying these technologies,
(3) Estimating the physical effects resulting from the application of these technologies, such as changes in travel demand, fuel consumption, and emissions of carbon dioxide and criteria pollutants, and
(4) Estimating the monetized societal benefits of these physical effects.
An overview of the model follows below. Separate model documentation provides a detailed explanation of the functions the model performs, the calculations it performs in doing so, and how to install the model, construct inputs to the model, and interpret the model's outputs. Documentation of the model, along with model installation files, source code, and sample inputs are available at NHTSA's Web site.
As discussed above, the agency uses the CAFE model to estimate how manufacturers could attempt to comply with a given CAFE standard by adding technology to fleets that the agency anticipates they will produce in future model years. This exercise constitutes a simulation of manufacturers' decisions regarding compliance with CAFE standards.
This compliance simulation begins with the following inputs: (a) the baseline and reference market forecasts discussed above in Section IV.C.1 and Chapter 1 of the TSD, (b) technology-related estimates discussed above in Section IV.C.2 and Chapter 3 of the TSD, (c) economic inputs discussed above in Section IV.C.3 and Chapter 4 of the TSD, and (d) inputs defining baseline and potential new CAFE standards. For each manufacturer, the model applies technologies in a sequence that follows a defined engineering logic (“decision trees,” discussed in the MY 2011 final rule and in the model documentation) and a cost-minimizing strategy in order to identify a set of technologies the manufacturer could apply in response to new CAFE standards.
(1) The manufacturer's fleet achieves compliance
(2) The manufacturer “exhausts”
(3) For manufacturers estimated to be willing to pay civil penalties, the manufacturer reaches the point at which doing so would be more cost-effective (from the manufacturer's perspective) than adding further technology.
As discussed below, the model has also been modified in order to—as an option—apply more technology than may be necessary for a manufacturer to achieve compliance in a given model year, or to facilitate compliance in later model years. This ability to simulate “market-driven overcompliance” reflects the potential that manufacturers will apply some technologies to some vehicles if doing so would be sufficiently inexpensive compared to the expected reduction in owners' outlays for fuel.
The model accounts explicitly for each model year, applying most technologies when vehicles are scheduled to be redesigned or freshened, and carrying forward technologies between model years once they are applied (until, if applicable, they are superseded by other technologies). The CAFE model accounts explicitly for each model year because EPCA/EISA requires that NHTSA make a year-by-year determination of the appropriate level of stringency and then set the standard at that level, while ensuring ratable increases in average fuel economy.
The model also calculates the costs, effects, and benefits of technologies that it estimates could be added in response to a given CAFE standard.
The CAFE model has other capabilities that facilitate the development of a CAFE standard. The integration of (a) compliance simulation and (b) the calculation of costs, effects, and benefits facilitates the agency's analysis of the sensitivity of results to model inputs. The model can also be used to evaluate many (
As discussed in the most recent CAFE rulemaking, while nothing in EPCA requires NHTSA to use the CAFE model, and in principle, NHTSA could perform all of these tasks through other means, the model's capabilities have greatly increased the agency's ability to rapidly, systematically, transparently, and reproducibly conduct key analyses relevant to the formulation and evaluation of new CAFE standards.
NHTSA notes that the CAFE model not only has been formally peer-reviewed and tested and reviewed through three rulemakings (not include the current rulemaking), but also has some features especially important for the analysis of CAFE standards under EPCA/EISA. Among these are the ability to perform year-by-year analysis, and the ability to account for engineering differences between specific vehicle models.
EPCA requires that NHTSA set CAFE standards for each model year at the level that would be “maximum feasible” for that year. This requires the ability to analyze each model year covered by the regulatory period to account for the interdependency in terms of the appropriate levels of stringency for every model year. Also, as part of the evaluation of the economic practicability of the standards, as required by EPCA, NHTSA has traditionally assessed the annual costs and benefits of the standards. In response to comments regarding an early version of the CAFE model, DOT modified the CAFE model in order to account for dependencies between model years and to better represent manufacturers' planning cycles, in a way that still allowed NHTSA to comply with the statutory requirement to determine the appropriate level of the standards for each model year.
The CAFE model is also able to account for important engineering differences between specific vehicle models by combining technologies incrementally and on a model-by-model basis, and thus reduce the risk of creating unlikely technology combinations by applying technologies that may be incompatible with or already present on a given vehicle model. The CAFE model produces a single vehicle-level output file that, for each vehicle model, shows which technologies were present at the outset of modeling, which technologies were superseded by other technologies, and which technologies were ultimately present at the conclusion of modeling. For each vehicle, the same file shows resultant changes in vehicle weight, fuel economy, and cost. This provides for efficient identification, analysis, and correction of errors, a task with which members of the public can assist the agency if they are so inclined, since all inputs and outputs are public.
Such considerations, as well as those related to the efficiency with which the CAFE model is able to analyze attribute-based CAFE standards and changes in vehicle classification, and to perform higher-level analysis such as stringency estimation (to meet predetermined criteria), sensitivity analysis, and uncertainty analysis, lead the agency to conclude that the model remains the best available to the agency for the purposes of analyzing potential new CAFE standards.
Between promulgation of the MY 2012–2016 CAFE standards and last year's proposal regarding MY 2017–2025 standards, the CAFE model was revised to make some minor improvements, and to add some significant new capabilities: (1) Accounting for electricity used to charge electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs), (2) accounting for use of ethanol blends in flexible-fuel vehicles (FFVs), (3) accounting for costs (
To support evaluation of the effects that electric vehicles (EVs) and plug-in hybrid vehicles (PHEVs) could have on energy consumption and associated costs and environmental effects, DOT expanded the CAFE model to estimate the amount of electricity that would be required to charge these vehicles (accounting for the potential that PHEVs can also run on gasoline), taking into account input assumptions regarding the share of PHEV operation that would rely on electricity. The model calculates the cost of this electricity, as well as the accompanying upstream criteria pollutant and greenhouse gas emissions. Related inputs applied for today's analysis are presented in chapters V and VIII of the FRIA.
Similar to this expansion to account for the potential that PHEVs can be refueled with gasoline or recharged with electricity, DOT expanded the CAFE model to account for the potential that other flexible-fuel vehicles (FFVs) can be operated on multiple fuels. In particular, the model can account for ethanol FFVs consuming E85 or gasoline, taking into account input assumptions regarding the share of FFV operation that would rely on E85 (see chapters V and VIII of the FRIA), and report consumption of both fuels, as well as corresponding costs and upstream emissions.
Among the concerns raised in the past regarding how technology costs are estimated has been one that stranded capital costs be considered. Capital becomes “stranded” when capital equipment is retired or its use is discontinued before the equipment has been fully depreciated and the equipment still retains some value or usefulness. DOT modified the CAFE model to apply a stream of costs representing the stranded capital cost of a replaced technology when that technology is replaced by a newly applied technology, if specified for a given technology. This cost is in addition to the cost for producing the newly applied technology in the first year of production. Stranded capital costs are discussed more generally in Section II.D above, in Chapter 3 of the joint TSD, and in Chapter V of NHTSA's FRIA.
As documented in prior CAFE rulemakings and in Chapter V of NHTSA's FRIA, the CAFE model applies “phase-in caps” to constrain technology application at the vehicle manufacturer level. These caps are intended to reflect a manufacturer's overall resource capacity available for implementing new technologies (such as engineering and development personnel and financial resources), thereby ensuring that resource capacity is accounted for in the modeling process. This helps to ensure technological feasibility and economic practicability in determining the stringency of the standards. In the MY 2012–2016 rulemaking analysis, the model performed the relevant test by comparing a given phase-in cap to the amount (
The CAFE model requires inputs defining the technology-specific cost and effectiveness (
For the MYs 2012–2016 CAFE rulemaking analysis, DOT modified the CAFE model to accommodate specification and accounting for credits a manufacturer is assumed to earn by producing flexible fuel vehicles (FFVs). Although NHTSA cannot consider such credits when determining maximum feasible CAFE standards, the agency presented an analysis that included FFV credits, in order to communicate the extent to which use of such credits might cause actual costs, effects, and benefits to be lower than estimated in NHTSA's primary analysis. As DOT explained at the time, it was unable to account for other EPCA credit mechanisms, because attempts to do so had been limited by complex interactions between those mechanisms and the multi-year planning aspects of the CAFE model. DOT subsequently modified the CAFE model to provide the ability to account for any or all of the following flexibilities provided by EPCA: FFV credits, credit carry-forward and carry-back (between model years), credit transfers (between passenger car and light truck fleets), and credit trades (between manufacturers). The model accounts for EPCA-specified limitations applicable to these flexibilities (
NHTSA is today promulgating CAFE standards reflecting EPA's changing fuel economy calculation procedures such that a vehicle's fuel consumption improvement will be accounted for if the vehicle has technologies that reduce the amount of energy needed to power the air conditioner. To facilitate analysis of these standards, DOT modified the CAFE model to account for these adjustments, based on inputs specifying the average amount of improvement anticipated, and the estimated average cost to apply the underlying technology. Similarly, NHTSA's new CAFE standards reflect EPA's further changing fuel economy calculation procedures to account for some other technologies that reduce fuel consumption under conditions not represented by the city or highway test procedures. While DOT was not able to modify the CAFE model
Considering that past CAFE rulemakings indicate that most of the benefits of CAFE standards are realized by vehicle owners, DOT modified the CAFE model prior to the NPRM in order to estimate not just social benefits, but also private benefits. The model accommodates separate discount rates for these two valuation methods (
Since 2003, the CAFE model, and its predecessors, have provided the ability to estimate the extent to which a manufacturer with a history of paying civil penalties allowed under EPCA might decide to add some fuel-saving technology, but not enough to comply with CAFE standards. In simulating this decision-making, the model considers the cost to add the technology, the calculated reduction in civil penalties, and the calculated present value (at the time of vehicle purchase) of the change in fuel outlays over a specified “payback period” (
In its analysis supporting MY 2012–2016 standards adopted in 2010, NHTSA estimated the extent to which reductions in vehicle mass might lead to changes in the number of highway fatalities occurring over the useful life of the MY 2012–2016 fleet. At that time, NHTSA performed these calculations outside the CAFE model (using vehicle-specific mass reduction calculations from the model), based on agency analysis of relevant highway safety data. DOT has since modified the CAFE model to perform these calculations based on the underlying statistical analysis of the safety impacts of vehicle mass reductions discussed in Section II.G above and in Chapter IX of the FRIA. The model also applies an input value indicating the economic value of a statistical life, and includes resultant benefits (or disbenefits) in the calculation of total social benefits.
In comments on recent NHTSA rulemakings, some reviewers have suggested that the CAFE model should be modified to estimate the extent to which new CAFE standards would induce changes in the mix of vehicles in the new vehicle fleet. NHTSA agrees that a “market shift” model, also called a consumer vehicle choice model, could provide useful information regarding the possible effects of potential new CAFE standards. NHTSA has contracted with the Brookings Institution (which has subcontracted with researchers at U.C. Davis and U.C. Irvine) to develop a vehicle choice model estimated at the vehicle configuration level that can be implemented as part of DOT's CAFE model. As discussed further in Chapter V of the FRIA for MYs 2012–2016, past efforts by DOT staff demonstrated that a vehicle could be added to the CAFE model, but did not yield credible coefficients specifying such a model. While the NHTSA-sponsored effort is still underway and was not completed in time to incorporate in the analysis for this final rule, if a suitable and credibly calibrated vehicle choice model becomes available in the future, DOT may integrate a vehicle choice model into the CAFE model to support future rulemakings.
NHTSA anticipates this integration of a vehicle choice model would be structurally and operationally similar to the integration we implemented previously. As in today's analysis, the CAFE model would begin with an agency-estimated market forecast, estimate to what extent manufacturers might apply additional fuel-saving technology to each vehicle model in consideration of future fuel prices and baseline or alternative CAFE standards and fuel prices, and calculate resultant changes in the fuel economy (and possibly fuel type) and price of individual vehicle models. With an integrated vehicle choice model, the CAFE model would then estimate how the sales volumes of individual vehicle models would change in response to changes in fuel economy levels and prices throughout the light vehicle market, possibly taking into account interactions with the used vehicle market. Having done so, the model would replace the sales estimates in the original inputted market forecast with those reflecting these model-estimated shifts, repeating the entire modeling cycle until converging on a stable solution.
Based on past experience, we anticipate that this recursive simulation will be necessary to ensure consistency between sales volumes and modeled fuel economy standards, because achieved CAFE levels depend on sales mix and, under attribute-based CAFE standards, required CAFE levels also depend on sales mix. NHTSA anticipates, therefore, that application of a vehicle choice model would impact estimates of all of the following for a given schedule of CAFE standards: overall market volume, individual manufacturer market shares and product mix, required and achieved CAFE levels, technology application rates and corresponding incurred costs, fuel consumption, greenhouse gas emissions, and criteria pollutant emissions, changes in highway fatalities, and economic benefits.
Past testing by DOT/NHTSA staff did not indicate major shifts in broad measures (
NHTSA invited comment on changes made to the CAFE model prior to the NPRM's release, and regarding the above-mentioned prospects for inclusion of a vehicle choice model. The agency only received comments regarding the possibility of utilizing a vehicle choice model. Two environmental organizations—the
As mentioned above, we do not yet have available a credible vehicle choice model suitable for integration with our CAFE modeling system. However, we disagree with NRDC's comment that vehicle choice models are not useful toward evaluation of standards that drive the adoption of technology: market effects are among the range of consequences that—intended or not—could be real, important, and warranting evaluation. NHTSA also disagrees with NRDC's suggestion that that choice models based on current vehicles cannot reasonably be applied to future vehicle markets, and with UCS's suggestion that application of a choice model should be rejected out of hand. While we acknowledge that future consumer preferences could be different from those evidenced by currently-available data, we disagree that these potential differences provide an
Nor do we agree with AFPM that the proposed standards were beyond maximum feasible; the agency's assessment of why the final standards, which are identical to the proposed standards, are maximum feasible is discussed below in Section IV.F. We do not agree with AFPM that a choice model would, by definition, indicate less reliance on HEVs, PHEVs, or EVs: a choice model could show shifts either toward such technologies or away from such technologies, based on a range of model inputs and on comparative implications for specific vehicle models. In any event, we also disagree with AFPM's suggestion that such shifts would necessarily indicate that maximum feasible standards would be less stringent than we proposed in the NPRM and are promulgating today, just as we disagree with NRDC's suggestion that application of a choice model would lead the agency to promulgate less stringent standards.
We agree with the Alliance that NHTSA should continue efforts to develop a vehicle choice model suitable for integration with the CAFE modeling system and application toward informing the planned mid-term evaluation and future rulemaking for MYs 2022–2025. NHTSA considers it possible that a vehicle choice model would be informed by consideration of economic theory regarding “positional goods,” and has provided copies of IPI's comments on this theory to the U.C. Davis and U.C. Irvine researchers supporting NHTSA. However, in our judgment, IPI's comments prejudge the applicability, relevance, and implications of such theory in this context. Section IV.G, below, discusses IPI's comments regarding the theory's relevance to estimates of consumer benefits of fuel economy standards.
The researchers supporting NHTSA in the development of a vehicle choice model suitable for use in the analysis of CAFE standards have made significant progress collecting and integrating data to support the estimation of a choice model, developing options for structuring such a model in a manner that allows for integration with DOT's CAFE modeling system, and developing and testing algorithms to statistically estimate coefficients defining a choice model. NHTSA is hopeful that continuation of this effort will lead to development of a vehicle choice model that can be integrated with the CAFE modeling system and used for CAFE rulemaking analysis.
In preparation for today's analysis, DOT also made some further (
Since NHTSA began using the CAFE model in CAFE analysis, some commenters have interpreted the agency's use of the model as the way by which the agency chooses the maximum feasible fuel economy standards. As the agency explained in the final rule establishing CAFE standards for MYs 2012–2016, this is incorrect.
Model documentation, which is publicly available in the rulemaking docket and on NHTSA's Web site, explains how the model is installed, how the model inputs (all of which are available to the public)
Because the model is available on NHTSA's Web site, the agency has no way of knowing how widely the model has been used. The agency is, however, aware that the model has been used by other federal agencies, vehicle manufacturers, private consultants, academic researchers, and foreign governments. Some of these individuals have found the model complex and challenging to use. Insofar as the model's sole purpose is to help DOT staff efficiently analyze potential CAFE standards, DOT has not expended significant resources trying to make the model as “user friendly” as commercial software intended for wide use, but we continue to encourage interested parties to contact the agency if they encounter difficulties using the model or have questions about it that are not answered here or in the model documentation.
NHTSA arranged for a formal peer review of an older version of the model, has responded to reviewers' comments, and has considered and responded to model-related comments received over the course of four CAFE rulemakings. In the agency's view, this steady and expanding outside review over the course of nearly a decade of model development has helped DOT to significantly strengthen the model's capabilities and technical quality, and has greatly increased transparency, such that all model code is publicly available, and all model inputs and outputs are publicly available in a form that should allow reviewers to reproduce the agency's analysis. NHTSA plans to arrange for a formal peer review of the CAFE model after the pending integration of a vehicle choice model. All relevant materials will be docketed as part of that peer review, and NHTSA expects to re-release a new version of the integrated CAFE model once the peer review is completed.
EPCA, as amended by EISA, contains a number of provisions regarding how NHTSA must set CAFE standards. NHTSA must establish separate CAFE standards for passenger cars and light trucks
Besides the requirement that standards be maximum feasible for the fleet in question, EPCA/EISA also contains several other requirements. The standards must be attribute-based and expressed in the form of a mathematical function: NHTSA has thus far based standards on vehicle footprint, and for this rulemaking has expressed them in the form of a constrained linear function that generally sets higher (more stringent) mpg targets for smaller-
Commenters raised a number of issues regarding NHTSA's authority to set CAFE standards under EPCA/EISA, which will be discussed throughout this section. For example, Securing America's Energy Future (SAFE) commented that NHTSA should consider setting CAFE standards in gallons per mile rather than miles per gallon, because consumers often do not understand mpg and the agency could more effectively incentivize alternative fuel vehicles by using gallons per mile, since the numerator of “gallons” would be zero.
Two commenters, CBD and ICCT, stated that the agencies should set a single footprint curve for both passenger cars and light trucks, to avoid manufacturers deliberately classifying their vehicles as light trucks in order to obtain a less stringent target.
CBD also expressed concern that the fleet would not meet the required 35 mpg average in 2020 because the standards would encourage manufacturers to build larger passenger cars and light trucks, which would lower the overall achieved levels given the attribute-based nature of the standards.
Moreover, NHTSA has the authority to revise CAFE standards at any time, up or down, given sufficient lead-time. If the market changes to the extent feared by CBD, it is well within NHTSA's authority to revise the standards to ensure that the 35 mpg fleetwide achieved levels occur—indeed, we believe that is what Congress intended. Thus, we disagree that the final standards would be likely to result in fleetwide average fuel economy levels that fall below the 35-in-2020 requirement.
CBD further commented that NHTSA's proposed truck standards did not increase ratably, because the targets for the largest light trucks remain the same for several years, and because the average increase in stringency for light trucks is “a mere 0.6 mpg * * * per year from 2017 to 2020,” and then “jump[s] to 2.1 mpg in 2021, a near four-fold increase, and stays in a higher
The following sections discuss the statutory factors behind “maximum feasible” in more detail.
As none of the four factors is defined in EPCA and each remains interpreted only to a limited degree by case law, NHTSA has considerable latitude in interpreting them. NHTSA interprets the four statutory factors as set forth below.
“Technological feasibility” refers to whether a particular technology for improving fuel economy is available or can become available for commercial application in the model year for which a standard is being established. Thus, the agency is not limited in determining the level of new standards to technology that is already being commercially applied at the time of the rulemaking. It can, instead, set technology-forcing standards,
CBD commented that given the extended timeframe of the rulemaking, NHTSA
NHTSA agrees with CBD that given the timeframe of the rulemaking, the technological feasibility factor may encourage the agency to look toward more technology-forcing standards, which could certainly be appropriate given EPCA's overarching purpose of energy conservation depending on the rulemaking. For example, in the analysis for this final rule, the agency is projecting that manufacturers could meet the standards by using research-stage high Brake Mean Effective Pressure engines across a significant portion of the fleet by MY 2021. At the same time, however, it would not be reasonable for the agency to predicate stringency on completely unforeseen future improvements in unknown technologies. It is important to remember that technological feasibility must also be balanced with the other of the four statutory factors. Thus, while “technological feasibility” can drive standards higher by assuming the use of technologies that are not yet commercial, “maximum feasible” is still also defined in terms of economic practicability, for example, which might caution the agency against basing standards (even fairly distant future standards)
“Economic practicability” refers to whether a standard is one “within the financial capability of the industry, but not so stringent as to” lead to “adverse economic consequences, such as a significant loss of jobs or the unreasonable elimination of consumer choice.”
At the same time, however, the law does not preclude a CAFE standard that poses considerable challenges to any individual manufacturer. The Conference Report for EPCA, as enacted in 1975, makes clear, and the case law affirms, “(A) determination of maximum feasible average fuel economy should not be keyed to the single manufacturer which might have the most difficulty achieving a given level of average fuel economy.”
Consequently, “economic practicability” must be considered in the context of the competing concerns associated with different levels of standards. Prior to the MY 2005–2007 rulemaking, the agency generally sought to ensure the economic practicability of standards in part by setting them at or near the capability of the “least capable manufacturer” with a significant share of the market,
Whether the standards maximize net benefits has thus been a touchstone in the past for NHTSA's consideration of economic practicability. Executive Order 12866, as amended by Executive Order 13563, states that agencies should “select, in choosing among alternative regulatory approaches, those approaches that maximize net benefits * * *.” In practice, however, agencies, including NHTSA, must consider situations in which the modeling of net benefits does not capture all of the relevant considerations of feasibility. In this case, the NHTSA balancing of the statutory factors, discussed in Section IV.F below, suggests that the maximum feasible stringency for this rulemaking points to another level besides the modeled net benefits maximum, and such a situation is well within the guidance provided by Executive Orders 12866 and 13563.
The agency's consideration of economic practicability depends on a number of factors. Expected availability of capital to make investments in new technologies matters; manufacturers' expected ability to sell vehicles with new technologies matters; likely consumer choices matter; and so forth. NHTSA's analysis of the impacts of this rulemaking does incorporate assumptions to capture aspects of consumer preferences, vehicle attributes, safety, and other factors relevant to an impacts estimate; however, it is difficult to capture every such constraint. Therefore, it is well within the agency's discretion to deviate from the level at which modeled net benefits are maximized in the face of evidence of economic impracticability, and if the agency concludes that the level at which modeled net benefits are maximized would not represent the maximum feasible level for future CAFE standards. Economic practicability is a complex factor, and like the other factors must also be considered in the context of the overall balancing and EPCA's overarching purpose of energy conservation. Depending on the conditions of the industry and the assumptions used in the agency's analysis of alternative stringencies, NHTSA could well find that standards that maximize net benefits, or that are higher or lower, could be at the limits of economic practicability, and thus potentially the maximum feasible level, depending on the other factors to be balanced.
Comments varied on whether the proposed standards were at, or above or below, the limits of economic practicability. CBD suggested that the proposed standards were below the economically practicable levels, commenting that NHTSA had unduly focused on consumer choice in tentatively determining the proposed maximum feasible standards, and that the agency should not be seeking through its stringency determination to preserve the same mix of vehicles that are currently in the marketplace or the current mix of vehicle attributes available to consumers.
Growth Energy (a biofuels company) and NADA, in contrast, argued that the standards may be beyond the limits of economic practicability. Growth Energy argued that the proposed standards' feasibility depended heavily on sales of grid-electricity-powered vehicles, the cost of which Growth Energy argued the agencies had underestimated.
NHTSA agrees that many variables are involved in assessing economic practicability, and, as required by statute, is setting final standards only for MYs 2017–2021. That said, NHTSA does not believe that the consideration of consumer demand for fuel economy during the rulemaking timeframe leads, in any way, to the standards being below the maximum feasible level. As the Ninth Circuit has noted, NHTSA may consider consumer demand, as long as it does not “rely on consumer demand to such an extent that it ignore[s] the overarching goal of energy conservation.”
NHTSA also notes that Growth Energy's comment is misplaced—grid-electricity-powered vehicles do not play such a significant role in the agency's analysis. In fact, our analysis assumes that in order to meet the standards, the industry as a whole need produce no grid-powered PHEVs or EVs in MY 2021, and only up to 3 percent in MY 2025. Moreover, NHTSA is statutorily prohibited from considering the fuel economy of dedicated alternative fuel vehicles like EVs in determining the maximum feasible levels of the standards, so manufacturers' ability to sell EVs is actually irrelevant to our determination of stringency. Thus, NHTSA disagrees that the standards are not economically practicable because they “rely too heavily” on PHEVs and EVs.
“The effect of other motor vehicle standards of the Government on fuel economy,” involves an analysis of the effects of compliance with emission, safety, noise, or damageability standards on fuel economy capability and thus on average fuel economy. In previous CAFE rulemakings, the agency has said that pursuant to this provision, it considers the adverse effects of other motor vehicle standards on fuel economy. It said so because, from the CAFE program's earliest years
The “other motor vehicle standards” consideration has thus in practice functioned in a fashion similar to the provision in EPCA, as originally enacted, for adjusting the statutorily-specified CAFE standards for MY 1978–1980 passengers cars.
The “other motor vehicle standards” provision is broader than the Federal standards fuel economy reduction provision. Although the effects analyzed to date under the “other motor vehicle standards” provision have been negative, there could be circumstances in which the effects are positive. In the event that the agency encountered such
In the wake of
NHTSA sought comment on whether and in what way the effects of the California and EPA standards should be considered under EPCA/EISA,
“The need of the United States to conserve energy” means “the consumer cost, national balance of payments, environmental, and foreign policy implications of our need for large quantities of petroleum, especially imported petroleum.”
Projected future fuel prices are a critical input into the economic analysis of alternative CAFE standards, because they determine the value of fuel savings both to new vehicle buyers and to society, which is related to the consumer cost (or rather, benefit) of our need for large quantities of petroleum. In this rule, NHTSA relies on fuel price projections from the U.S. Energy Information Administration's (EIA) Annual Energy Outlook (AEO) 2012 Early Release for this analysis. Federal government agencies generally use EIA's projections in their assessments of future energy-related policies. A number of commenters discussed our use of the AEO in the proposal, generally stating that we should use a higher price forecast; these comments and NHTSA's response are discussed fully in Section IV.C.3 above.
U.S. consumption and imports of petroleum products impose costs on the domestic economy that are not reflected in the market price for crude petroleum, or in the prices paid by consumers of petroleum products such as gasoline. These costs include (1) higher prices for petroleum products resulting from the effect of U.S. oil import demand on the world oil price; (2) the risk of disruptions to the U.S. economy caused by sudden reductions in the supply of imported oil to the U.S.; and (3) expenses for maintaining a U.S. military presence to secure imported oil supplies from unstable regions, and for maintaining the strategic petroleum reserve (SPR) to provide a response option should a disruption in commercial oil supplies threaten the U.S. economy, to allow the United States to meet part of its International Energy Agency obligation to maintain emergency oil stocks, and to provide a national defense fuel reserve. Higher U.S. imports of crude oil or refined petroleum products increase the magnitude of these external economic costs, thus increasing the true economic cost of supplying transportation fuels above the resource costs of producing them. Conversely, reducing U.S. imports of crude petroleum or refined fuels or reducing fuel consumption can reduce these external costs. A number of commenters raised the issue of petroleum consumption and import externalities; these comments and NHTSA's response are discussed fully in Section IV.C.3 above.
While reductions in domestic fuel refining and distribution that result from lower fuel consumption will reduce U.S. emissions of various pollutants, additional vehicle use associated with the rebound effect
NHTSA has considered environmental issues, both within the context of EPCA and the National Environmental Policy Act, in making decisions about the setting of standards from the earliest days of the CAFE program. As courts of appeal have noted in three decisions stretching over the last 20 years,
The agency historically has considered the potential for adverse safety consequences in setting CAFE standards. This practice is recognized approvingly in case law. As the courts have recognized, “NHTSA has always examined the safety consequences of the CAFE standards in its overall consideration of relevant factors since its earliest rulemaking under the CAFE program.”
Under the universal or “flat” CAFE standards that NHTSA was previously authorized to establish, manufacturers were encouraged to respond to higher standards by building smaller, less safe vehicles in order to “balance out” the larger, safer vehicles that the public generally preferred to buy, which resulted in a higher mass differential between the smallest and the largest vehicles, with a correspondingly greater risk to safety. Under the attribute-based standards being established today, that risk is reduced because building smaller vehicles would tend to raise a manufacturer's overall CAFE obligation, rather than only raising its fleet average CAFE, and because all vehicles are required to continue improving their fuel economy. In prior rulemakings, NHTSA limited the application of mass reduction in our modeling analysis to vehicles over 5,000 lbs GVWR,
EPCA also provides that in determining the level at which it should set CAFE standards for a particular model year, NHTSA may not consider the ability of manufacturers to take advantage of several EPCA provisions that facilitate compliance with the CAFE standards and thereby reduce the costs of compliance.
The effect of the prohibitions against considering these statutory flexibilities in setting the CAFE standards is that the flexibilities remain voluntarily-employed measures. If the agency were instead to assume manufacturer use of those flexibilities in setting new standards, that assumption would result in higher standards and thus tend to require manufacturers to use those flexibilities. By keeping NHTSA from including them in our stringency determination, the provision ensures that the statutory credits described above remain true compliance flexibilities.
On the other hand, NHTSA does not believe that flexibilities other than those expressly identified in EPCA are similarly prohibited from being included in the agency's determination of what standards would be maximum feasible. In order to better meet EPCA's overarching purpose of energy conservation, the agency has therefore considered manufacturers' ability to increase the calculated fuel economy levels of their vehicles through A/C efficiency improvements, as finalized by EPA, in the presented CAFE stringency levels for passenger cars and light trucks for MYs 2017–2025. NHTSA similarly considers manufacturers' ability to raise their fuel economy using off-cycle technologies as potentially relevant to our determination of maximum feasible CAFE standards, but because we and EPA did not believe that we could reasonably predict an average amount by which manufacturers will take advantage of this opportunity, the agencies did not include off-cycle credits in our stringency determination for the proposal. Since the proposal, the agencies have developed estimates for the cost and effectiveness of two off-cycle technologies, active aerodynamics and stop-start. For the final rule analysis, NHTSA assumed that these two technologies are available to manufacturers for compliance with the standards, similar to all of the other fuel economy-improving technologies that the analysis assumes are available. The costs and benefits of these technologies are included in the analysis, similar to all other available technologies, and NHTSA has consequently included the assessment of some amount of off-cycle credits in the determination of the maximum feasible standards.
Additionally, because we interpret the prohibition against including the defined statutory credits in our determination of maximum feasible standards as applying only to the flexibilities expressly identified in 49 U.S.C. 32902(h), NHTSA must, for the first time in this rulemaking, determine how to consider the fuel economy of dual-fueled automobiles after the statutory credit sunsets in MY 2019. Once there is no statutory credit to protect as a compliance flexibility, it does not seem reasonable to NHTSA to continue to interpret the statute as prohibiting the agency from setting maximum feasible standards at a higher level, if possible, by considering the fuel economy of dual-fueled automobiles as measured by EPA. The overarching purpose of EPCA is better served by
49 U.S.C. 32905(b) and (d) state that the special fuel economy measurement prescribed by Congress for dual-fueled automobiles applies only “in model years 1993 through 2019.” 49 U.S.C. 32906(a) also provides that the section 32905 calculation will sunset in 2019, as evidenced by the phase-out of the allowable increase due to that credit; it is clear that the phase-out of the allowable increase in a manufacturer's CAFE levels due to use of dual-fueled automobiles relates
NHTSA has therefore considered the fuel economy of plug-in hybrid electric vehicles, which are the only dual-fueled automobiles that we predict in significant numbers in MY 2020 and beyond; E85-capable FFVs are not predicted in great numbers after the statutory credit sunsets, and we do not have sufficient information about potential dual-fueled CNG/gasoline vehicles to make reasonable estimates now of their numbers in that time frame in determining the maximum feasible level of the MY 2020–2025 CAFE standards for passenger cars and light trucks.
As discussed further below in Section IV.F, NHTSA has broad discretion in balancing the above factors in determining the appropriate levels of average fuel economy at which to set the CAFE standards for each model year. Congress “specifically delegated the process of setting * * * fuel economy standards with
EPCA neither requires nor precludes the use of any type of cost-benefit analysis as a tool to help inform the balancing process. As discussed above, while NHTSA used marginal cost-benefit analysis in the first two rulemakings to establish attribute-based CAFE standards, it was not required to do so and is not required to continue to do so. Regardless of what type of analysis is or is not used, considerations relating to costs and benefits remain an important part of CAFE standard setting.
Because the relevant considerations and factors can reasonably be balanced in a variety of ways under EPCA, and because of uncertainties associated with the many technological and cost inputs, NHTSA considers a wide variety of alternative sets of standards, each reflecting a different balancing of those policies and concerns, to aid it in discerning the maximum feasible fuel economy levels. Among the alternatives providing for an increase in the standards in this rulemaking, the alternatives range in stringency from a set of standards that increase, on average, 2 percent annually to a set of standards that increase, on average, 7 percent annually.
The minimum domestic passenger car standard was added to the CAFE program through EISA, when Congress gave NHTSA explicit authority to set universal standards for domestically-manufactured passenger cars at the level of 27.5 mpg or 92 percent of the average fuel economy of the combined domestic and import passenger car fleets in that model year, whichever was greater.
NHTSA proposed minimum standards for domestically-manufactured passenger cars in Section IV.E of the NPRM, but we also sought
In the MY 2011 final rule, having received comments split fairly evenly between support and opposition to additional backstop standards, NHTSA noted Congress' silence with respect to minimum standards for imported passenger cars and light trucks and “accept[ed] at least the possibility that * * * [it] could be reasonably interpreted as permissive rather than restrictive,” but concluded, based on the record for that rulemaking as a whole, that additional minimum standards were not necessary for MY 2011, given the lack of leadtime for manufacturers to change their MY 2011 vehicles, the apparently-growing public preference for smaller vehicles, and the anti-backsliding characteristics of the footprint-based curves.
In the MYs 2012–2016 final rule where NHTSA declined to set minimum standards for imported passenger cars and light trucks, the agency did so not because we believed that we did not have authority to do so, but because we believed that our assumptions about the future fleet mix were reliable within the rulemaking time frame, and that backsliding was very unlikely and would not be sufficient to warrant the regulatory burden of additional minimum standards for those fleets.
Unless the backstop was at a very weak level, above the high end of this range, then some percentage of manufacturers would be above the backstop even if the performance of the entire industry remains fully consistent with the emissions and fuel economy levels projected for the final standards. For these manufacturers and any other manufacturers who were above the backstop, the objectives of an attribute-based standard would be compromised and unnecessary costs would be imposed. This could directionally impose increased costs for some manufacturers. It would be difficult if not impossible to establish the level of a backstop standard such that costs are likely to be imposed on manufacturers only when there is a failure to achieve the projected reductions across the industry as a whole. An example of this kind of industry-wide situation could be when there is a significant shift to larger vehicles across the industry as a whole, or if there is a general market shift from cars to trucks. The problem the agencies are concerned about in those circumstances is not with respect to any single manufacturer, but rather is based on concerns over shifts across the fleet as a whole, as compared to shifts in one manufacturer's fleet that may be more than offset by shifts the other way in another manufacturer's fleet. However, in this respect, a traditional backstop acts as a manufacturer-specific standard.
NHTSA explained in the NPRM that the agency continued to believe that the risk of additional minimum standards imposing inequitable regulatory burdens on certain manufacturers is real, but at the same time, to recognize that given the time frame of the current rulemaking, the agency cannot be as certain about the unlikelihood of future market changes. Depending on the price of fuel and consumer preferences, the “kind of industry-wide situation” described in the MYs 2012–2016 rule could be possible in the 2017–2025 time frame, particularly in the later years.
Thus, because the agency did not have sufficient information at the time of the NPRM regarding what tradeoffs might be associated with additional minimum standards, specifically, whether the risk of backsliding during MYs 2017–2025 sufficiently outweighed the possibility of imposing inequitable regulatory burdens on certain manufacturers, we sought comment in the NPRM on these issues but did not propose additional minimum standards. We also sought comment on how to structure additional minimum standards (
Industry commenters opposed the inclusion of additional backstop standards for imported passenger cars and for light trucks. The Alliance commented that it disagreed that NHTSA might have authority to adopt backstop standards for those other fleets, and argued that doing so would be inconsistent with the principle of attribute-based standards, because they could “unduly limit[ ] consumer choice and hamper[ ] the industry's ability to achieve the goals of continuing the national program as cost-effectively as possible.”
Environmental and consumer group commenters, on the other hand, strongly supported the inclusion of additional backstop standards for imported passenger cars and light trucks. CBD expressed concern that without a backstop, manufacturers would be encouraged by the footprint-based target curves to increase the size of their vehicles and would take advantage of numerous available flexibilities, and thus undermine the anticipated fuel economy and GHG gains estimated by the agencies.
As proposed, the agency will not be establishing any additional backstop standards as part of this final rule. We continue to agree with the environmental and consumer group commenters that we have authority to adopt additional backstop standards if we deem it appropriate to do so. However, we also continue to conclude that insufficient time has passed in which manufacturers have been subject to the attribute-based standards to assess whether or not backstops would in fact help ensure that fuel savings anticipated by the agency at the time of the final rule are met, and even if they did, whether the benefits of that insurance outweigh potential impacts consumer choice that could occur by heading down the road that Congress rejected when it required CAFE standards to be attribute-based. If we determined that backstops for imported passenger cars and light trucks were necessary, it would be because consumers are choosing different (likely larger) vehicles in the future than the agencies assumed in this rulemaking analysis. Imposing additional backstop standards for those fleets would require manufacturers to build vehicles which the majority of consumers (under this scenario) would presumably not want. Vehicles that cannot be sold are the essence of economic impracticability, and vehicles that do not sell cannot save fuel or reduce emissions, because they are not on the roads, and thus do not meet the need of the nation to conserve fuel.
On the other hand, based on the assumptions underlying the analysis for this rulemaking, consumers will experience significant benefits as a result of buying the vehicles manufactured to meet these standards. We have no reason to expect that consumers will turn a blind eye to these benefits, and recent trends indicate that fuel economy is rising in importance as a factor in vehicle purchasing decisions. We thus conclude, for purposes of this final rule, that imposing additional backstop standards for imported passenger cars and light trucks would be premature. As stated in the NPRM, NHTSA will continue to monitor vehicle sales trends and manufacturers' response to the standards, and we will revisit this issue as part of the future rulemaking to develop final standards for MYs 2022–2025.
Because EPCA states that standards must be set for “* * * automobiles manufactured by manufacturers,”
Two commenters, Daimler and Volkswagen, requested that both NHTSA and EPA consider allowing manufacturers to meet an “alternate stringency pathway” for the passenger car standards. Both defined the alternate pathway in terms of a “slower ramp-up” in stringency, with lower increases in stringency in early years and higher increases in later years (which Volkswagen clarified would only occur “should technology and market factors make this feasible”).
NHTSA continues to interpret EPCA, as amended by EISA, as directing the agency to set only one passenger car and one light truck standard for each model year that applies to the fleet as a whole, with the exception of the small volume manufacturer standards permitted by 49 U.S.C. 32902(d) and the minimum standard for domestically manufactured passenger cars required under 49 U.S.C. 32902(b)(4). While there have been instances in the past when NHTSA allowed multiple standards for light trucks to co-exist in a given model year, such as the “flat” and “Reformed” options for the MYs 2008–2010 light truck standards, or the different light truck standards for 2WD, 4WD, and captive import light trucks in MYs 1979–1981, NHTSA believes that those situations are distinguishable from the “alternate pathway” standards sought by Daimler and Volkswagen for several reasons.
First, when NHTSA previously allowed different classes of light trucks to meet different standards, or when NHTSA allowed different options for complying with light truck standards, we did that under statutory language that expressly authorized the agency to set multiple standards for light trucks if the agency deemed that appropriate.
Second, the fact patterns under which NHTSA previously set multiple standards for a compliance category in the same model year are different from the fact pattern presented in the current rulemaking for the “alternate pathway” standards. In the most recent example, the MYs 2008–2011 rulemaking, NHTSA was changing both the structure of CAFE standards (from the flat MY 2007 standard to the attribute-based MY 2011 standard) and changing the technical approach to determining maximum feasible stringency (from a “stage analysis”/“least-capable” approach in MY 2007 to an industry-wide net benefit maximizing approach in MY 2011). To manage this change, the “flat” and “reformed” light truck standards co-existing during MYs 2008–2010 were set with reference to each other: specifically, the agency first used the “stage analysis” approach to determine the maximum feasible “flat” standard in each model year, and then used the CAFE model to set the stringency of the “reformed” standard in each model year at a level producing approximately the same level of cost to the industry as a whole. After this transition period, the MY 2011 standard was promulgated as a single attribute-based standard, the stringency of which was set at a level estimated to maximize net benefits to society. This cost equalization between the two sets of standards established for MYs 2008–2010 helped ensure that the reformed standards would be feasible for the industry as a whole, and was intended to avoid a situation in which one form of the standards would be so much easier to meet than the other that all manufacturers would choose that form and not gain experience with the other. Both sets of standards, thus, were designed to require a similar “lift” from the industry as a whole in any given model year. The fact pattern for the “alternate pathway” would be designed to require exactly the opposite: the “alternate pathway” standards would be much easier in some years, and much more difficult in others, than the “main pathway” standards. EPCA/EISA expressly requires that standards must be maximum feasible in each separate model year. Based on the suggestions from Daimler and Volkswagen, there is no indication that the “main pathway” and “alternate pathway” standards would be similar in any given year in terms of costs, technology required, fuel saved, or any other metric that NHTSA considers for determining maximum feasible. It is difficult to see how two completely different standards can both be maximum feasible for the industry as a whole in the same model year.
And finally, NHTSA did not suggest in the NPRM that it might be considering setting multiple “maximum feasible” passenger car standards for MYs 2017–2021, and nothing in NHTSA's past practice
For these reasons, NHTSA is not finalizing the “alternate pathway” approach requested by the commenters. If commenters wish to pursue this issue again in the future rulemaking to develop final standards for MYs 2022–2025, NHTSA again requests that they provide legal analysis of EPCA/EISA in support of their position.
To be upheld under the “arbitrary and capricious” standard of judicial review in the APA, an agency rule must be rational, based on consideration of the relevant factors, and within the scope of the authority delegated to the agency by the statute. The agency must examine the relevant data and articulate a satisfactory explanation for its action including a “rational connection between the facts found and the choice made.”
Statutory interpretations included in an agency's rule are subjected to the two-step analysis of
If an agency's interpretation differs from the one that it has previously adopted, the agency need not demonstrate that the prior position was wrong or even less desirable. Rather, the agency would need only to demonstrate that its
As discussed above, EPCA requires the agency to determine the level at which to set CAFE standards for each model year by considering the four factors of technological feasibility, economic practicability, the effect of other motor vehicle standards of the Government on fuel economy, and the need of the United States to conserve energy. The National Environmental Policy Act (NEPA) directs that environmental considerations be integrated into that process.
To explore the environmental consequences of the agency's action in depth, NHTSA has prepared a Final Environmental Impact Statement (“Final EIS”). The purpose of an EIS is to “provide full and fair discussion of significant environmental impacts and [to] inform decisionmakers and the public of the reasonable alternatives which would avoid or minimize adverse impacts or enhance the quality of the human environment.” 40 CFR 1502.1.
NEPA is “a procedural statute that mandates a process rather than a particular result.”
The agency must identify the “environmentally preferable” alternative, but need not adopt it. “Congress in enacting NEPA * * * did not require agencies to elevate environmental concerns over other appropriate considerations.”
This final rule contains the Record of Decision (ROD) for NHTSA's rulemaking action, pursuant to NEPA and the Council on Environmental Quality's (CEQ) implementing regulations, in Section IV.J.
Each of the CAFE standards that NHTSA is promulgating today for passenger cars and light trucks is expressed as a mathematical function that defines a fuel economy target applicable to each vehicle model and, for each fleet, establishes a required CAFE level determined by computing the sales-weighted harmonic average of those targets.
As discussed above in Section II.C, NHTSA has determined passenger car fuel economy targets using a constrained linear function defined according to the following formula:
Here, TARGET is the fuel economy target (in mpg) applicable to vehicles of a given footprint (FOOTPRINT, in square feet), b and a are the function's lower and upper asymptotes (also in mpg), respectively, c is the slope (in gallons per mile per square foot) of the sloped portion of the function, and d is the intercept (in gallons per mile) of the sloped portion of the function (that is, the value the sloped portion would take if extended to a footprint of 0 square feet). The MIN and MAX functions take the minimum and maximum, respectively, of the included values.
NHTSA is establishing, consistent with the standards for MYs 2011–2016, that the CAFE level required of any given manufacturer be determined by calculating the production-weighted harmonic average of the fuel economy targets applicable to each vehicle model:
The final standards for passenger cars are, therefore, specified by the four coefficients defining fuel economy targets:
For light trucks, NHTSA is defining fuel economy targets in terms of a mathematical function under which the target is the maximum of values determined under each of two constrained linear functions. The second of these establishes a “floor” reflecting the MY 2016 standard, after accounting for estimated adjustments reflecting increased air conditioner efficiency. This prevents the target at any footprint from declining between model years. The resultant mathematical function is as follows:
The final standards for light trucks are, therefore, specified by the eight coefficients defining fuel economy targets:
For passenger cars, NHTSA is establishing CAFE standards for MYs 2017–2021 and presenting augural standards for MYs 2022–2025 defined by the following coefficients:
For reference, the coefficients defining the MYs 2012–2016 passenger car standards are also provided below:
Section II.C above and Chapter 2 of the Joint TSD discusses how the coefficients in Table IV–16 were developed for this final rule. The coefficients result in the footprint-dependent targets shown graphically below for MYs 2017–2025. The MY 2012–2016 final standards are also shown for comparison.
As discussed, the CAFE levels ultimately required of individual manufacturers will depend on the mix of vehicles they produce for sale in the United States. Based on the market forecasts of future sales that NHTSA has used to examine today's final and augural CAFE standards, the agency currently estimates that the target curves shown above will result in the following average required fuel economy levels for individual manufacturers during MYs 2017–2025 (an updated estimate of the average required fuel economy level under the final MY 2016 standard is also shown for comparison).
Because a manufacturer's required average fuel economy level for a model year under the final standards will be based on its actual production numbers in that model year, its official required fuel economy level will not be known until the end of that model year. However, because the targets for each vehicle footprint will be established in advance of the model year, a manufacturer should be able to estimate its required level accurately. Readers should remember that the mpg levels describing the “estimated required standards” shown throughout this section are not necessarily the ultimate mpg level with which manufacturers will have to comply, for the reasons explained above, and that the mpg level designated as “estimated required” is exactly that, an estimate.
EISA expressly requires each manufacturer to meet a minimum flat fuel economy standard for domestically manufactured passenger cars in addition to meeting the standards set by NHTSA. According to the statute (49 U.S.C. 32902(b)(4)), the minimum standard shall be the greater of (A) 27.5 miles per gallon; or (B) 92 percent of the average fuel economy projected by the Secretary for the combined domestic and nondomestic passenger automobile fleets manufactured for sale in the United States by all manufacturers in the model year. The agency must publish the projected minimum standards in the
As discussed in the final rule establishing the MYs 2012–2016 CAFE standards, because 49 U.S.C. 32902(b)(4)(B) states that the minimum domestic passenger car standard shall be 92 percent of the projected average fuel economy for the passenger car fleet, “which projection shall be published in the
However, we note that we do not read this language to preclude any change, ever, in the minimum standard after it is first promulgated for a model year. As long as the 18-month lead-time requirement of 49 U.S.C. 32902(a) is respected, NHTSA believes that the language of the statute suggests that the 92 percent should be determined anew any time the passenger car standards are revised. This issue will be particularly relevant for the current rulemaking, given the considerable lead-time involved and the necessity of a new rulemaking to develop and establish the MYs 2022–2025 standards. We sought comment in the NPRM on this interpretation, and on whether or not the agency should consider instead for MYs 2017–2025 designating the minimum domestic passenger car standards proposed as “estimated,” just as the passenger car standards are “estimated,” and waiting until the end of each model year to finalize the 92 percent mpg value. While NHTSA received a number of comments on the topic of “backstops” generally, no commenters addressed this particular question. We are therefore finalizing the approach proposed, but we will continue to monitor this issue going forward to assess whether the difference between the final required passenger car standards and the minimum standards promulgated today grows over time.
We note also that in the MYs 2012–2016 final rule, we interpreted EISA as indicating that the 92 percent minimum standard should be based on the estimated required CAFE level rather than, as suggested by the Alliance, the estimated achieved CAFE level (which would likely be lower than the estimated required level if it reflected manufacturers' use of dual-fuel vehicle credits under 49 U.S.C. 32905, at least in the context of the MYs 2012–2016 standards). No comments were received on this position as stated in the NPRM, and NHTSA continues to believe that this interpretation is appropriate for the final rule.
The determination of the minimum domestic passenger car standard is complicated somewhat in this final rule by the fact that the 92 percent calculation depends on the agency's assessment of the estimated required passenger car mpg level in a given model year—with two baseline market forecasts, the estimated required mpg levels are presented throughout this document as a range. The minimum domestic passenger car standard, however, must be a single mpg level. Given the uncertainty associated with the baseline market forecasts that led the agencies to use both for the final rule analysis, the agency concluded that it would be reasonable to determine 92 percent of the estimated required level in each year under both the MY 2008-based market forecast and the MY 2010-based market forecast, and average the two. Table IV–19 below shows the 92 percent mpg levels for both forecasts:
The final minimum standards for domestically manufactured passenger cars for MYs 2017–2021 and the augural standards for MYs 2022–2025 (and, for comparison, the final MY 2016 minimum domestic passenger car standard) are presented below in Table IV–20.
As discussed in Section IV.D, NHTSA also sought comment on whether to consider, for the final rule, the possibility of minimum standards for imported passenger cars and light trucks. Although we did not propose such standards, we explored this concept again in the NPRM in light of the considerable amount of time between now and 2017–2025 (particularly the later years), and the accompanying uncertainty in our market forecast and other assumptions, which we explained might make such minimum standards relevant to help ensure that currently-expected fuel economy improvements occur during that time frame. Comments received on this question were decidedly mixed; NHTSA's full discussion of this issue is presented in Section IV.D. In summary, NHTSA believes it is likely most prudent to wait until we are able to observe potential market changes during the implementation of the MYs 2012–2016 standards and to consider additional minimum standards in a future rulemaking action. Any additional minimum standards for MYs 2022–2025 that may be set in the future would, like the primary standards, be a part of the future rulemaking concurrent with the mid-term evaluation, and potentially revised at that time.
For light trucks, NHTSA is promulgating final CAFE standards for MYs 2017–2021 and presenting augural standards for MYs 2022–2025 defined by the following coefficients:
For reference, the coefficients defining the MYs 2012–2016 light truck standards (which did not include a “floor” term, defined by coefficients
The coefficients result in the footprint-dependent targets shown graphically below for MYs 2017–2025. MYs 2012–2016 final standards are shown for comparison.
Again, given these targets, the CAFE levels required of individual manufacturers will depend on the mix of vehicles they produce for sale in the United States. Based on the market forecasts that NHTSA has used to examine today's final and augural CAFE standards, the agency currently estimates that the target curves shown above will result in the following average required fuel economy levels for individual manufacturers during MYs 2017–2025 (an updated estimate of the average required fuel economy level under the final MY 2016 standard is shown for comparison).
As discussed above with respect to the estimated final passenger cars standards, we note that a manufacturer's required light truck fuel economy level for a model year under the ultimate final standards will be based on its actual production numbers in that model year.
The discussion that follows is necessarily complex, but the central points are straightforward. NHTSA has concluded that the standards presented above in Section IV.E are the maximum feasible standards for passenger cars and light trucks in MYs 2017–2021. EPCA/EISA requires NHTSA to consider four statutory factors in determining the maximum feasible CAFE standards in a rulemaking: specifically, technological feasibility, economic practicability, the effect of other motor vehicle standards of the Government on fuel economy, and the need of the nation to conserve energy. The agency considered a number of regulatory alternatives in its analysis of potential CAFE standards for those model years, including several that increase stringency on average at set percentages each year, one that approximates the point at which the modeled net benefits are maximized in each model year, and one that approximates the point at which the modeled total costs equal total benefits in each model year. Some of those alternatives represent standards that would be more stringent than the final standards,
As discussed above in Section IV.D, NHTSA sets CAFE standards under EPCA, as amended by EISA, and is also subject to the APA and NEPA in developing and promulgating CAFE standards.
NEPA requires the agency to develop and consider the findings of an Environmental Impact Statement (EIS) for “major Federal actions significantly affecting the quality of the human environment.” NHTSA has prepared an EIS to inform its development and consideration of the final standards. The agency has evaluated the environmental impacts of a range of regulatory alternatives in the Final EIS and this final rule, and integrated the results of that consideration into our balancing of the EPCA/EISA factors, as discussed below.
The APA and relevant case law requires our rulemaking decision to be rational, based on consideration of the relevant factors, and within the scope of the authority delegated to the agency by EPCA/EISA. The relevant factors are those required by EPCA/EISA and the additional factors approved in case law as those historically considered by the agency in determining the maximum feasible CAFE standards, such as safety. The statute requires us to set standards at the maximum feasible level for passenger cars and light trucks for each model year, and the agency concludes that the final standards would satisfy this requirement. NHTSA has carefully examined the relevant data and other considerations, as discussed below in the explanation of our conclusion that the final standards are the maximum feasible levels for MYs 2017–2021 based on our evaluation of the information before us for this final rule.
As discussed in Section IV.D, EPCA/EISA requires that NHTSA establish separate passenger car and light truck standards at “the maximum feasible average fuel economy level that it decides the manufacturers can achieve in that model year,” based on the agency's consideration of four statutory factors: technological feasibility, economic practicability, the effect of other standards of the Government on fuel economy, and the need of the nation to conserve energy.
The agency thus balances the relevant factors to determine the maximum feasible level of the CAFE standards for each fleet, in each model year. The next section discusses briefly how the agency balanced the factors for the proposal, and why we tentatively concluded at that time that the proposed standards were the maximum feasible; the following section discusses the comments received on that tentative conclusion; and the final section discusses how the agency balanced the factors for this final rule and why the agency believes that the final standards are, indeed, maximum feasible.
In the NPRM, the agency explained that there are numerous ways in which the relevant factors can be balanced to determine what standards would be maximum feasible, depending on the information and the policy priorities before the agency at the time. We explained that standards that may meet the objectives of one factor, such as technological feasibility, may not meet the objectives of other factors, such as economic practicability, and may thus not be maximum feasible. We discussed the preliminary analysis conducted following the first SNOI and prior to the second SNOI—thus, between the end of 2010 and July 2011, in which the agency tentatively concluded that the 5%, 6%, 7%, MNB, and TC=TB alternatives were likely beyond the level of economic practicability based on the information available to the agency at the time, but that the alternatives including up to 4% per year for cars and 4% per year for trucks should reasonably remain under consideration. We further discussed the intensive discussions with stakeholders, including many individual manufacturers, between June 21, 2011 and July 27, 2011, to determine whether additional information would aid NHTSA in further consideration. Manufacturer stakeholders provided
Regarding passenger cars, in meetings prior to the NPRM, manufacturers generally suggested that the most significant challenges to meeting a constant 4% (or faster) year-over-year increase in the passenger car standards related to their ability to implement the new technologies quickly enough to achieve the required levels, based on the following considerations: their need to implement fuel economy improvements in both the passenger car and light truck fleets concurrently; challenges related to the cadence of redesign and refresh schedules; the pace at which new technology can be implemented considering economic factors such as availability of engineering resources to develop and integrate the technologies into products; and the pace at which capital costs can be incurred to acquire and integrate the manufacturing and production equipment necessary to increase the production volume of the technologies. Manufacturers often expressed concern that the 4% levels could require greater numbers of advanced technology vehicles than they thought they would be able to sell in that time frame, given their belief that the cost of some technologies was much higher than the agencies had estimated and their observations of current consumer acceptance of and willingness to pay for advanced technology vehicles that are available now in the marketplace. A number of manufacturers argued that they did not believe that they could create a sustainable business case under passenger car standards that increased at the rate required by the 4% alternative.
Most manufacturers expressed significantly greater concerns over the 4% alternative for light trucks than for passenger cars. Many argued that increases in light truck standard stringency should be slower than increases in passenger car standard stringency, based on, among other things, the greater payload, cargo capacity and towing utility requirements of light trucks, and what they perceived to be lower consumer acceptance of certain (albeit not all) advanced technologies on light trucks. Many also commented that redesign cycles are longer on trucks than they are on passenger cars, which reduces the frequency at which significant changes can be made cost-effectively to comply with increasing standards, and that the significant increases in stringency in the MY 2012–2016 program
Prior to the NPRM, other stakeholders, such as environmental and consumer groups, consistently stated that stringent standards are technologically achievable and critical to important national interests, such as improving energy independence, reducing climate change, and enabling the domestic automobile industry to remain competitive in the global market. Labor interests stressed the need to carefully consider economic impacts and the opportunity to create and support new jobs, and consumer advocates emphasized the economic and practical benefits to consumers of improved fuel economy and the need to preserve consumer choice. In addition, a number of stakeholders stated that the standards under development should not have an adverse impact on safety.
We thus explained in the NPRM that, in collaboration with EPA and in coordination with CARB, NHTSA carefully considered the inputs received from all stakeholders, conducted additional independent analyses, and deliberated over the feedback received on the agencies' analyses. Based on our own analysis of manufacturers' capabilities and based on that feedback, particularly as it concerned consumer acceptance of some advanced technologies and consumers' willingness to pay for improved fuel economy, we tentatively concluded that the agency's preliminary analysis supporting consideration of standards that increased up to 4%/year may not have captured fully the level of uncertainty that surrounds economic practicability in these future model years. Nevertheless, while we believe there may be
NHTSA explained in the NPRM that we were concerned that requiring manufacturers to invest that capital to meet higher standards in MYs 2017–2021, rather than allowing them to increase fuel economy in those years slightly more slowly, would reduce the levels that would be feasible in the second phase of the program by diverting research and development resources to those earlier model years. Thus, after considerable deliberation with EPA and consultation with CARB, NHTSA tentatively selected the preferred alternative as the maximum feasible alternative for MYs 2017–2025 passenger cars based on consideration of inputs from manufacturers and the agency's independent analysis, which reaches the stringency levels of the 4% alternative in MY 2025, but has a slightly slower ramp up rate in the earlier years.
Regarding light trucks, we explained that while NHTSA did not agree with the manufacturer's overall cost assessments and believed that our technology cost and effectiveness methodology allowed manufacturers to preserve all necessary vehicle utility, the agency also believed there was merit to some of the concerns raised in stakeholder feedback. Specifically, concerns about longer redesign schedules for trucks, compounded by the need to invest simultaneously in raising passenger car fuel economy, may not have been fully captured in NHTSA's preliminary analysis, which could lead manufacturers to implement technologies that do not maintain vehicle utility, based on the cadence of the standards under the 4% alternative. A number of manufacturers repeatedly stated, in providing feedback, that the MYs 2012–2016 standards for trucks, while feasible, required significant investment to reach the required levels, and that given the redesign schedule for trucks, that level of investment throughout the entire MYs 2012–2025 time period was not sustainable. Based on the confidential business information that manufacturers provided to the agencies through that feedback, NHTSA explained that we believed that this point may be valid. If the agency pushes CAFE increases that require considerable sustained investment at a faster rate than industry redesign cycles, adverse economic consequences could ensue. The best information that the agency had at the NPRM, therefore, indicated that requiring light truck fuel economy improvements at the 4% annual rate could create potentially severe economic consequences. Our NRPM analysis indicated that the preferred alternative had 48 percent lower cost than the 4% alternative (estimated total costs were $44 billion for the preferred alternative and $83 billion for the 4% alternative), and the total benefits of the preferred alternative were 30 percent lower ($87 billion lower) than the 4% alternative (estimated total benefits were $206 billion for the preferred alternative and $293 billion for the 4% alternative), spread across the entire lifetimes of all vehicles subject to the standards. The analysis also showed that the lifetime cumulative fuel savings was 42 percent higher for the 4% alternative than the preferred alternative (the estimated fuel savings was 69 billion gallons for the preferred alternative, and 98 billion gallons for the 4% alternative). At the same time, the increase in average vehicle cost in MY 2025 in the NPRM was 54 percent higher for the 4% alternative (the estimated cost increase for the average vehicle was $1,578 for the preferred alternative, and $2,423 for the 4% alternative).
Thus, evaluating the inputs from stakeholders and the agency's independent analysis, the agency also considered further how it thought the factors should be balanced to determine the maximum feasible light truck standards for MYs 2017–2025. Based on that consideration of the information before the agency and how it informs our balancing of the factors, NHTSA tentatively concluded in the NPRM that 4%/year CAFE stringency increases for light trucks in MYs 2017–2021 were likely beyond maximum feasible, and in fact, in the earliest model years of the MY 2017–2021 period, that the 3%/year and 2%/year alternatives for trucks were also likely beyond maximum feasible. NHTSA therefore tentatively concluded that the preferred alternative, which would in MYs 2017–2021 increase on average 2.6%/year, and in MYs 2022–2025 would increase on average 4.6%/year, was the maximum feasible level that the industry can reach in those model years. For the overall MY 2017–2025 period, the maximum feasible stringency curves would increase on average 3.5%/year.
The agency also explained that NHTSA had accounted for the effect of EPA's standards in light of the agencies' close coordination and the fact that both sets of standards were developed together to harmonize as part of the National Program. Given the close relationship between fuel economy and CO
Of the several hundred thousand commenters, including industry and union commenters, environmental and consumer groups, national security interest groups, U.S. senators and representatives, State legislators, State and local government organizations and representatives, and many individual citizens, the considerable majority supported the proposed levels of stringency, citing the significant benefits associated with the standards.
However, many commenters urged the agencies to set more stringent standards. Individual commenters sent in thousands of form letters calling on the agencies to set standards that require 60 mpg in 2025, which they described as equivalent to a 6 percent/year rate of
CBD provided extensive comments regarding why it thought the final standards should be more stringent, commenting that the most stringent alternative analyzed by NHTSA was the maximum feasible alternative, since that is the only alternative that CBD believed would actually reduce emissions.
Other commenters argued that the final standards should be less stringent than what was proposed. AFPM argued that because the agencies had not employed a vehicle choice model in the NPRM analysis, the agencies had chosen an alternative that required too much in the way of electrification technologies, stating that “[t]he agency predicts that annual sales of hybrids, plug-in hybrids and all electric vehicles could represent 15% of new sales by 2025,” while “[i]n reality, EVs, HEVs, etc have been a huge disappointment for automakers.”
The Alliance commented that its members supported the proposed increases in stringency, but that consumers had to purchase the vehicles that were made to meet those standards,
Many commenters focused on the stringency of the truck standards. Some argued that the truck standards should be more stringent, and suggested that the agencies should have required more improvements in the largest trucks rather than implementing the curve adjustments and technology incentives proposed for those vehicles. Many of these commenters focused on the relative burden of the standards on small trucks versus large trucks, or on
Toyota
CBD commented that the proposed standards “substantially and improperly favor light trucks, particularly the largest and least fuel efficient trucks,” and argued that the shape of the curves and the rate of increase of the truck standards would encourage manufacturers to build more and larger trucks, thus undermining the goals of the program.
In contrast, some commenters described the MYs 2022–2025 targets for the largest light trucks as especially challenging, arguing that the cost feasibility of applying the advanced technologies necessary to meet the standards in that time frame may be limited, given the cost sensitivity of buyers in that market segment, and suggesting that sales may be impacted.
And finally, a number of industry commenters commented that NHTSA's standards would harmonize better with EPA's standards if NHTSA allowed additional credit flexibilities or modified its curves to make the standards less difficult in case manufacturers were relying heavily on the flexibilities provided by EPA. For example, the Alliance argued that because NHTSA does not offer certain flexibilities that EPA offers, “While the impact of the program differences is relatively small in the early years of the program, it will increase with the passage of time, particularly as manufacturers rely more and more on vehicle electrification in order to comply with the standards.”
The relevant factors (and thus the weight given to each factor) can be balanced in many different ways depending on the agency's policy priorities and on the information before the agency regarding any given model year. The agency thus considered a range of alternatives that represent different regulatory options that seemed potentially reasonable for purposes of this rulemaking. For this final rule, as for the proposal, the agency considered nine regulatory alternatives, including what we describe as the “preferred alternative” in the Draft and Final EIS, which is what the agency proposed and is finalizing. The other regulatory alternatives include six in which fuel economy levels increase annually, on average, at set rates as follows:
• 2%/year,
• 3%/year,
• 4%/year,
• 5%/year,
• 6%/year, and
• 7%/year.
We considered these alternatives because analysis of these various rates of increase effectively encompasses the entire range of fuel economy improvements that, based on information currently available to the agency, could conceivably fall within the statutory boundary of “maximum feasible” standards. The regulatory alternatives also include two that are based on benefit-cost criteria: one in which standards would be set at the point where the modeled net benefits would be maximized for each fleet in each year (“MNB”), and another in which standards would be set at the point at which total costs would be most nearly equal to total benefits for each fleet in each year (“TC=TB”).
This approach to selecting regulatory alternatives clearly communicates the level of stringency of each alternative and allows us to identify alternatives that would represent different ways to balance the relevant factors. Each of the alternatives represents, in part, a different way in which NHTSA could conceivably balance different policies and considerations in setting the standards that achieve the maximum feasible levels. For example, the 2% Alternative, the least stringent alternative, (other than No Action), would represent a balancing in which economic practicability—which include concerns about availability of technology, capital, and consumer preferences for vehicles built to meet the future standards—weighs more heavily in the agency's consideration, and other factors weigh less heavily. In contrast, under the 7% Alternative, one of the most stringent, the need of the nation to conserve energy—which includes energy conservation and climate change considerations—would weigh more heavily in the agency's consideration, and other factors would weigh less heavily. Whether different alternatives may be maximum feasible can also be influenced by differences and uncertainties in the way in which key economic factors (
This is the first CAFE rulemaking in which the agency has looked this far into the future, which makes our traditional approach to balancing more challenging than in past (even recent past) rulemakings. The following discussion explains what we believe each factor means in the context of this rulemaking, and how the agency therefore balanced the factors for determining the maximum feasible final and augural passenger car and light truck standards.
Technological feasibility, as the agency defines it, is less constraining in this rulemaking than it has been in the past in light of the rulemaking time frame. “Technological feasibility” refers to whether a particular method of improving fuel economy can be available for commercial application in the model year for which a standard is being established. In previous CAFE rulemakings, it has been more difficult for the agency to say that the most advanced technologies would be available for commercial application in the model years in question. For this longer term rulemaking, NHTSA has considered all types of technologies that improve real-world fuel economy, including air-conditioner efficiency and other off-cycle technology, PHEVs, EVs, and highly-advanced internal combustion engines not yet in production. The agencies expect all of these to be commercially applicable by the rulemaking time frame. In terms of what would be technologically feasible, then, on the one hand, we recognize that some technologies that currently have limited commercial use cannot be deployed on every vehicle model in MY 2017, but require a realistic schedule for widespread commercialization to be feasible. On the other hand, however, based on our analysis, all of the alternatives appear as though they could narrowly be considered
Many commenters agreed with this assessment, and urged the agency to set more stringent standards than those we proposed. If the technology exists or is projected to exist, and if the agency's assessment is that benefits (fuel savings and emissions avoided) only increase as
“Economic practicability” refers to whether a standard is one “within the financial capability of the industry, but not so stringent as to lead to adverse economic consequences, such as a significant loss of jobs or the unreasonable elimination of consumer choice.” Consumer acceptability is also an element of economic practicability, one that is particularly difficult to gauge during times of uncertain fuel prices.
The agency does not believe that there is necessarily a bright-line test for whether a regulatory alternative is economically practicable, but there are several metrics that we discuss below that we find useful for making the assessment, as follows:
• Compliance “shortfalls”—The difference between the required fuel economy level that applies to a manufacturer's fleet and the level of fuel economy that the agency projects the manufacturer would achieve in that year, based on our analysis, is called a “compliance shortfall.”
• Application rate of technologies—even if shortfalls are not extensive, whether it appears that a regulatory alternative would impose undue burden on manufacturers in either or both the near and long term in terms of how much and which technologies might be required. For example, NHTSA currently estimates that the cumulative effect of CAFE standards promulgated under the previous and current administrations will require considerable technology and cost beyond that reflected by technology present in the most recent fleet (MY 2010) for which complete transparent information is available.
• Other technology-related considerations—related to the application rate of technologies, whether it appears that the burden on several or more manufacturers might cause them to respond to the standards in ways that compromise, for example, vehicle safety, or other aspects of performance that are important to consumer acceptance of new products.
• Cost of meeting the standards—even if the technology exists and it appears that manufacturers can apply it consistent with their product cadence, if meeting the standards will raise per-vehicle cost more than we believe consumers are likely to accept, which could negatively impact sales and employment in this sector, the standards may not be economically practicable.
• Uncertainty and consumer acceptance of technologies—considerations not accounted for expressly in our modeling analysis, but important to an assessment of economic practicability given the time frame of this rulemaking.
We discuss below how some of the alternatives compare in terms of these metrics.
As discussed in Section IV.D above, “other motor vehicle standards of the government” involves an analysis of the effects of compliance with emission, safety, noise, or damageability standards on fuel economy capability and thus on average fuel economy. In addition to the expected and possible NHTSA safety standards and known EPA emissions standards, in developing this joint final rule with EPA, NHTSA has also sought to harmonize the final and augural standards with EPA's.
“The need of the United States to conserve energy” means “the consumer cost, national balance of payments, environmental, and foreign policy implications of our need for large quantities of petroleum, especially imported petroleum.” Environmental implications principally include those associated with reductions in emissions of criteria pollutants, mobile source air toxics, and GHGs (including CO
A number of commenters raised environmental and energy security concerns as paramount for the agency's consideration, and urged the agency both to quantify impacts related to these concerns and to set as stringent standards as possible to address them. The need of the nation to conserve energy has long operated to push the balancing toward more stringent standards, given that the overarching purpose of EPCA is energy conservation.
If the need of the nation to conserve energy always pushes the balancing toward greater stringency and technological feasibility is not particularly limiting in a given rulemaking, then maximum feasible standards would be represented by the mpg levels that we could require of the industry before we reach a tipping point that presents risk of significantly adverse economic consequences. While determination of that tipping point is within the agency's discretion to balance the relevant factors, standards that are lower than that point would likely not be maximum feasible, because such standards would leave fuel-saving technologies on the table unnecessarily; standards that are higher than that point would likely be beyond what the agency would consider economically practicable, and therefore beyond what we would consider maximum feasible, even if they might be technologically feasible or better meet the need of the nation to conserve energy. The agency does not believe that standards are balanced if they weight one or two factors so heavily as to ignore another.
The question of the tipping point is slightly different in the context of the final standards and augural standards. The final standards for MYs 2017–2021 are nearer-term, albeit still several years away; the augural standards for MYs 2022–2025, clearly, are even more distant, and the inputs that inform our balancing are less certain. Based on the information currently before the agency, we continue to believe that the standards as proposed are maximum feasible for MYs 2017–2025.
For the final standards, the annual rate of increase in the passenger car and light truck standards is as follows (in terms of average required fuel economy levels estimated using the MY 2010-based market forecast):
For the augural standards, the annual rate of increase in the passenger car and light truck standards is as follows:
As the tables show, in terms of the average rate of increase over the MYs 2017–2021 period, the final passenger car standards fall between the 3/yr and 4/yr alternatives, while the final light truck standards fall between the 2/yr and the 3/yr alternatives. The average rate of increase for the augural passenger car and light truck standards for MYs 2022–2025 falls between the 4/y and 5/y alternatives.
The overall average annual rate of increase over the different periods covered by this rulemaking, for the reader's reference, is thus as follows:
Part of the way that we try to evaluate economic practicability, and thus where the tipping point in the balancing of factors might be for a given model year, is through a variety of model inputs, such as phase-in caps (the annual rate at which we estimate that manufacturers can increase the percentage of their fleet that employ a particular type of fuel-saving technology) and redesign schedules to account for needed lead time. These inputs limit how much technology can be applied to a manufacturer's fleet in the agency's analysis, which attempts to simulate a way for the manufacturer to comply with different regulatory alternatives. If a sufficient number of manufacturers do not appear able to meet the standards in a given model year; if the amounts of technology or per-vehicle cost increases required to meet the standards appear to be beyond what we believe the market would bear, or if the limits (and technology cost-effectiveness) prevent enough manufacturers from meeting the required levels of stringency,
In looking at the projected compliance shortfall results from our modeling analysis, the agency concludes, based on the information before us at the time, that for both passenger car and for light trucks, the MNB and TC=TB alternatives, 6/Year and 7/Year alternatives do not appear to be economically practicable, and are thus likely beyond maximum feasible levels for MYs 2017–2025. In other words, despite the theoretical technological feasibility of achieving these levels, various manufacturers would likely lack the financial and engineering resources and sufficient lead time to do so.
For purposes of passenger cars, the agency's analysis indicates the following levels of compliance shortfall, by manufacturer and by model year, for the following regulatory alternatives (a dash indicating cases where the manufacturer exceeds a standard):
Thus, for alternatives that increase at 6%/y and faster, the majority of the industry would face compliance shortfalls for passenger cars, according to our analysis, which seems to indicate economic impracticability.
For purposes of light trucks, the agency's analysis indicates the
For light trucks, the 5%/y alternative appears to present significant risk of several manufacturers facing shortfalls in most model years. Thus, for alternatives that increase at 5%/y and faster, the majority of the industry would face compliance shortfalls for light trucks, according to our analysis, which indicates economic impracticability. Standards that increase less rapidly, such as under the 4%/y and slower alternatives, thus remain under consideration for being economically practicable for light trucks. Again, we note that the maximizing net benefits alternative, while showing relatively little shortfalling by industry in later years of the rulemaking time frame, shows considerable shortfalling for a number of major manufacturers' light truck fleets early in the program. This is due to the fact that the maximizing net benefits standards are fairly front-loaded and require more rapid increases at first, which we believe would be exceedingly difficult for manufacturers following the challenging MYs 2012–2016 standards, as discussed further below, and likely beyond economically practicable levels.
As discussed above, when considering the economic practicability of a regulatory alternative in terms of how much technology manufacturers have to apply in order to meet it, the agency must consider both which technologies appear to be necessary and when they would have to be applied, given manufacturers' product redesign cadence. While the need of the nation to conserve energy encourages the agency to be more technology-forcing in its balancing, and while technological feasibility is arguably less limiting in this rulemaking given its time frame, regulatory alternatives that require extensive application of very advanced technologies (that may have known or unknown consumer acceptance issues) or that require manufacturers to apply additional technology in earlier model years, in which meeting the standards is already challenging, may not be economically practicable, and thus may be beyond maximum feasible.
The first issue is timing of technology application. The MYs 2012–2016 standards, in the agency's view, are feasible but challenging, and represent some of the most rapid increases in stringency in the history of the CAFE program. In NHTSA's judgment, technology deployment necessitated by these baseline standards poses a considerable challenge to the industry, at least through MY 2016. Most manufacturers indicated during meetings with the agency that, even considering flexibilities (
Although NHTSA's analysis is intended to estimate ways manufacturers
Given that technology that could be applied in response to the baseline standards poses a considerable challenge to the industry, at least through MY 2016, NHTSA is concerned that regulatory alternatives more stringent than the Preferred Alternative would require even further application of technology, including much in earlier model years—beyond levels the agency judges economically practicable. This is the second issue described above: that greater and earlier application of advanced technologies (which may have known or unknown consumer acceptance issues) could affect the economic practicability of certain alternatives. For example, under the 4%/Year Alternative for passenger cars, the agency's analysis indicates that currently-experimental high BMEP engines might need to appear a year earlier and on twice as many vehicles in MY 2020 as under the Preferred Alternative; that diesels and strong hybrids might need to be added beginning MY 2019, versus not at all under the Preferred Alternative; that many more advanced transmissions (
Much as for passenger cars, NHTSA's analysis indicates that regulatory alternatives more stringent than the Preferred Alternative for light trucks might also need to entail significant increases in technology application—including in earlier model years—beyond that reflected by the Preferred Alternative and, even more so, the baseline standards. In addition to many of the technologies discussed above (
This assessment of technology application is important in response to comments suggesting that if technology to meet future standards exists today, and if vehicles currently on the market might be able to meet or exceed their targets in future model years, that must mean that the standards defining such targets are feasible. There is a significant difference in the level of capital and resources required to implement one or more new technologies on a single vehicle model, and the level of capital and resources required to implement those same technologies across the entire vehicle fleet. NHTSA's analysis tries to estimate both manufacturers' redesign cadence which affects when significant new technologies may be most economically added to individual vehicle models as well as the capital, engineering, and manufacturing capacity resource constraints that affect how quickly new technologies may be expanded across manufacturers' products. As illustrated in the discussion of compliance shortfalls, when considering these resource constraints, it would not be economically practicable to expand some the most advanced technologies to every vehicle in the fleet within the rulemaking timeframe, although it should be possible to increase the application of advanced technologies across the fleet in a progression that accounts for those resource constraints. That is what NHTSA's analysis tries to do.
The discussion above covers application of technology that the agency projects manufacturers may use to meet the standards defined by different regulatory alternatives, but the agency emphasizes that it models only one path to compliance, and we recognize that each manufacturer will pursue their own path which may or may not align with the one we model for them, as they may focus on a different mix of technologies. In terms of how manufacturers will meet the passenger car standards under different alternatives, the agency is concerned that increasing the stringency of passenger cars beyond the Preferred Alternative would increase the risk that manufacturers might reduce the mass of passenger cars beyond the safety-neutral levels evaluated by the agency. Tables IV–37 through IV–40 show the agency's estimates of the rates at which a number of key technologies could be applied in response to standards defined by the No-Action Alternative, the Preferred Alternative, and alternatives specified as annual rates of increase ranging from 2% to 6%. Most of these technologies are already in use on some vehicles available for sale today in the United States (a few, notably high-BMEP (27 bar) cooled EGR engines, are not). However, these technologies are not currently applied throughout the light vehicle fleet and in meetings with the agency manufacturers have expressed concern regarding the potential to increase application rates given constraints such as component supply, engineering resources, and consumer acceptance. While, in the agency's judgment, most of these technologies can become common in the marketplace by MY 2025, we expect that there are limitations on the rates at which adoption of these technologies can be increased, and we consider the outlook for widespread adoption through MY 2025 to be uncertain. At stringencies that require the application of several, but not all, advanced technologies, if a given technology is not as successful as currently assumed in NHTSA's analysis, manufacturers could likely compensate by substituting one or more of the other advanced technologies, and apply mass reduction levels more in line with NHTSA's analysis. However, for regulatory alternatives more stringent than the Preferred Alternative, the agency is concerned that there would be less “headroom,” increasing the risk that some manufacturers would resort to mass reduction in ways that could compromise highway safety. This suggests that passenger car standards defined by the 4%/year and faster (in terms of the pace of stringency increases) regulatory alternatives may not be economically practicable, and thus may be beyond the maximum feasible levels for MYs 2017–2025.
Similarly, for light trucks, while many of these powertrain technologies are already achieving notable marketplace success, some (
Another consideration for economic practicability is the extent to which new standards could increase the average cost to acquire new vehicles, because even insofar as the underlying application of technology leads to reduced outlays for fuel over the useful lives of the affected vehicles, these per-vehicle cost increases provide both a measure of the degree of challenge faced by manufacturers, and also the degree of adjustment, in the form of potential vehicle price increases, that will ultimately be required of vehicle purchasers. Tables IV–41 through IV–44, below, show the agency's estimates of average cost increase under the Preferred Alternative for passenger cars and light trucks. Because our analysis includes estimates of manufacturers' indirect costs and profits, as well as civil penalties some manufacturers (as allowed under EPCA/EISA) might elect to pay in lieu of achieving compliance with CAFE standards, we report cost increases as estimated average increases in vehicle price (as MSRP). These are average values, and the agency does not expect that the prices of every vehicle would increase by the same amount; rather, the agency's underlying analysis shows unit costs varying widely between different vehicle models. For example, while our analysis shows (as indicated below) an average cost increase of $1,400 for Fiat/Chrysler's MY 2019 passenger cars under the Preferred Alternative, that $1,400 value is the production-weighted average of values ranging from $0 to $3,282. While we recognize that manufacturers might distribute regulatory costs throughout their fleet in order to maximize profit, we have not attempted to estimate strategic pricing. To provide an indication of potential increase relative to today's vehicles, we report increases relative to the market forecast using technology in the MY 2010 fleet—the most recent actual fleet for which we have information sufficient for use in our analysis. We provide results starting in MY 2014 in part to illustrate the cost impacts in the first model year that we believe manufacturers might actually be able to change their products in preparation for compliance with standards in MYs 2017 and beyond:
Relative to current vehicles (as represented here by technology in the MY 2010 fleet, the most recent for which NHTSA has complete data), NHTSA judges these cost increases to be significant, but considering the accompanying fuel savings, likely to be accepted by consumers well enough to avoid undue distortion (
However, relative to the Preferred Alternative, NHTSA noted significant further cost increases for several major manufacturers—even in MY 2016—under the 3%/y and 4%/y alternatives for light trucks. Tables IV–45 and IV–46 below show additional costs estimated to be incurred under the 3%/y and 4%/y alternatives as compared to the preferred alternative:
For example, in MY 2016, NHTSA estimates that compliance with already-promulgated light truck CAFE standards could increase average MSRP by $1,053, as mentioned above; under the preferred alternative, we estimate that cumulative compliance costs increase to $1,159 due to early application of technology in order to meet future anticipated standards; under the 3%/y and 4%/y alternatives, we estimate this amount would increase to $1,333 and $1,405, respectively. For some manufacturers (
The above considerations relate to matters of technological feasibility and economic practicability—two of the factors NHTSA must take into account when determining the maximum feasible stringency of each standard in each model year. The agency must also consider the need of the nation to conserve energy. Two of the regulatory alternatives the agency has considered—the maximum net benefit (MNB) and total cost = total benefit (TC=TB) alternatives—are defined in terms of explicit quantitative means of weighing all the social costs NHTSA has attempted to quantify against all of the corresponding monetized social benefits (
Through MY 2021, the Preferred Alternative for passenger cars is more stringent than the 2%/Year and 3%/Year alternatives. In MY 2021, the Preferred Alternative for light trucks is more stringent than the 2%/Year alternative, but it is less stringent than the 2%/Year alternative in earlier model years. During MYs 2022–2025, the preferred alternatives for passenger cars and light trucks are both more than the corresponding 2%/Year and 3%/Year alternatives.The tables above show that, according to our analysis, the Preferred Alternative for passenger cars achieves considerably more in fuel savings through MY 2021 and during MYs 2022–2025 than the less stringent alternatives, still at a cost that the agency deems to be economically practicable if it was passed directly on to consumers in the form of MSRP increases. For light trucks, the agency's analysis indicates that, through MY 2012, the Preferred Alternative achieves fuel savings very similar to the 2%/Year alternative, while incurring early-MY costs the agency considers economically practicable. During MYs 2022–2025, our analysis indicates the Preferred Alternative for light trucks achieves greater fuel savings than the 3%/Year alternative, while still incurring costs the agency considers economically practicable.
Based on recent EIA estimates of future fuel prices, the fuel savings presented above will significantly reduce future outlays for fuel purchases, and will significiantly reduce future CO
Our analysis indicates that both through MY 2021 and during MYs 2022–2025, the Preferred Alternative for passenger cars yields significantly greater net benefits than the 3%/Year alternative, and yields almost as much net benefit as the 4%/Year alternative. Through MY 2021, our analysis indicates that the Preferred Alternative for light trucks yields greater net benefits that the 2%/Year alternative, at similar social cost. Our analysis also indicates net benefits through MY 2021 would be higher under the 3%/Year alternative for light trucks, but the social
Alternatives less stringent than the Preferred Alternatives would still be economically practicable, but in terms of the technology that they might leave on the table, the agency concludes that they would not meet the need of the nation to conserve energy, and would thus be below maximum feasible.
In evaluating economic practicability, while NHTSA considered individual manufacturers' redesign cycles and, where available, the level of technologies planned for their future products that improve fuel economy, as well as some estimation of the resources that would likely be needed to support those plans and the potential future standards, the agency also considered whether we agreed with manufacturers that there could conceivably be compromises to vehicle utility depending on the technologies chosen to meet the potential new standards. NHTSA considered feedback on consumer acceptance of some advanced technologies and consumers' willingness to pay for improved fuel economy. In addition, the agency carefully considered whether manufacturer assertions about potential uncertainties in the agency's technical, economic, and consumer acceptance assumptions and estimates were potentially valid, and if so, what the potential effects of these uncertainties might be on economic practicability.
Regarding passenger cars, after considering the feedback from stakeholders received prior to and in response to the NPRM, the agency considered further how it thought the factors should be balanced to determine the maximum feasible passenger car standards for MYs 2017–2025. Based on that consideration of the information before the agency and how it informs our balancing of the factors, NHTSA concludes that the points raised by stakeholders support NHTSA's careful consideration of the factors described above, which take into account a level of uncertainty that surrounds economic practicability in these future model years. We believe the level of uncertainty that we have factored into the analysis is reasonable and do not agree that uncertainty levels are nearly as significant as a number of manufacturers maintained, especially for passenger cars that would suggest that the preferred alternative is not economically practicable. The most persuasive information received from stakeholders for passenger cars concerned practicability issues in MYs 2017–2021, which the agency's analysis generally supports. We are concerned that requiring manufacturers to invest that capital to meet higher standards in MYs 2017–2021, rather than allowing them to increase fuel economy in those years slightly more slowly, would impact their ability to also support the development and implementation of technologies across their light truck fleet, and well as to conduct the engineering development and future investment necessary comply with the preferred alternative's more stringent standards in the later years. Thus, after considerable deliberation, we conclude that the stringency levels required by the Preferred Alternative for passenger cars, which increase on average 3.6%/y in MYs 2017–2021 (only slightly different from the 4%/y levels) are economically practicable, but that the 4%/y alternative and higher alternatives are likely not economically practicable.
Regarding light trucks, while NHTSA does not agree with the manufacturers' overall cost assessments expressed to us last summer prior to issuance of the NPRM, and believes, based on our analysis using our technology cost and effectiveness assumptions, that manufacturers should be able to preserve all necessary vehicle utility. NHTSA does believe there is merit to some of the concerns raised in stakeholder feedback. Specifically, concerns about longer redesign schedules for trucks, compounded by the need to invest simultaneously in raising passenger car fuel economy, and we have incorporated those considerations into our assessment for this final rule. Based on our assessment, we believe that alternatives more stringent than the preferred alternative could lead manufacturers to implement technologies that do not maintain vehicle utility, based on the cadence of the standards under the more stringent alternatives. As discussed above, a number of manufacturers repeatedly stated, in providing feedback, that the MYs 2012–2016 standards for trucks, while feasible, required significant investment to reach the required levels, and that given the redesign schedule for trucks, that level of investment throughout the entire MYs 2012–2025 time period was not sustainable. Based on the confidential business information that manufacturers provided to us, we believe that this point is valid. If the agency pushes CAFE increases that require considerable sustained investment at a faster rate than industry redesign cycles, adverse economic consequences could ensue. Especially for light trucks, these risks appear most pronounced during MYs 2017–2021, as evidenced by the agency's analysis indicating that, given our expectations regarding manufacturers' product cadence (
Thus, evaluating the inputs from stakeholders and the agency's independent analysis, the agency also considered further how it thought the factors should be balanced to determine the maximum feasible light truck standards for MYs 2017–2021. Based on that consideration of the information before the agency and how it informs our balancing of the factors, NHTSA has concluded for the final standards for MYs 2017–2021 that 4%/y CAFE stringency increases for passenger cars and 3%/y stringency increases for light trucks are economically impracticable. NHTSA therefore concludes that the preferred alternative, which would in MYs 2017–2021 increase on average 3.8%/y for passenger cars and 2.5%/y for light trucks, is the most stringent alternative that is still economically practicable in those model years.
As discussed above, the question of the tipping point is slightly different in the context of the final standards and augural standards. The augural standards for MYs 2022–2025 are distant, and while manufacturers benefit from regulatory certainty, no manufacturer has begun to plan in earnest for vehicles that they expect to produce in that time frame. Moreover, the inputs that inform our balancing are less certain. We reiterate that the agency's assessment of what augural standards would be maximum feasible is based on the best, most transparent information available to the agency today, and that the final standards for
Recognizing that the augural standards are distant, and that manufacturers do not yet have fixed plans for those model years, the agency believes that despite considerable uncertainty, economic practicability may not necessarily be as limiting for MYs 2022–2025 as we conclude it is for MYs 2017–2021. Our analysis showed that shortfalls did not begin to accrue for the passenger car standards until the 5%/y alternative, for example, as the table below demonstrates. For light trucks, the analysis showed increasing shortfall risk for more manufacturers in MYs 2022–2025 under the 5%/y alternative. Other indicators of economic practicability confirmed that the 5%/y alternative was likely not economically practicable in MYs 2022–2025, but that the 4%/y and slower alternatives would likely leave technology on the table unnecessarily. NHTSA therefore concludes that the preferred alternative, which would in MYs 2022–2025 increase on average 4.7%/y for passenger cars and 4.8%/y for light trucks, is the most stringent alternative that would still be economically practicable in those model years.
The reader will likely note that in most model years, the difference between the final/augural standards and the next most stringent alternative is minor. The agency grappled with whether the 4%/y alternative for the final passenger car standards, the 3%/y alternative for the final light truck standards, and the 5%/y alternative for the augural standards might be maximum feasible, given that they would save 5–7% and 8–11% more fuel, respectively, for passenger cars and light trucks, respectively, for 5–8% and 5–15% more cost, respectively, as compared to the final and augural standards presented here.
As discussed above, while consideration of future model years in isolation might suggest manufacturers have ample lead time to make further improvements, that is not how industry responds to standards, and NHTSA thus tries to account for manufacturers' product cadence and use of multiyear planning in its analysis in order to improve how accurately we reflect practicability. NHTSA now has standards in place for MY 2012, the current model year, through MY 2016, is finalizing standards for MYs 2017–2021, and is presenting a potential road map of standards for MYs 2022–2025. Manufacturers will be making concurrent and continual fuel economy improvements to both their car and truck fleets in response to these standards for well beyond their current product plans. The agency's analysis includes an assumption of market-driven improvements to fuel economy across a manufacturer's fleet (
With regard to the augural standards for MYs 2022–2025, the time frame and the uncertainty makes evaluation of maximum feasible levels more challenging, but NHTSA believes that the provisions for incentives for advanced technologies to encourage their development and implementation, and the agencies' expectation that some of the uncertainties surrounding consumer acceptance of new technologies in light trucks should have resolved themselves by that time frame based on consumers' experience with the advanced technologies, will enable considerable increases in stringency by then, and help to ensure most of the substantial improvements in fuel efficiency initially envisioned over the entire period and supported by other stakeholders. This helps give NHTSA more confidence that a balancing that weights the need of the nation to conserve energy slightly more heavily and economic practicability slightly less heavily in MYs 2022–2025 is maximum feasible for the augural standards.
The final and augural standards also account for the effect of EPA's standards, in light of the agencies' close coordination and the fact that both sets of standards were developed together to harmonize as part of the National Program. Given the close relationship between fuel economy and CO
We note, however, that the alignment is based on the assumption that manufacturers implement the same level of direct A/C system improvements as EPA currently forecasts for those model years, and on the assumption of PHEV, EV, and FCV penetration at specific levels. If a manufacturer implements a higher level of direct A/C improvement technology (although EPA predicts 100% of manufacturers will use substitute refrigerants by MY 2021, and the GHG standards assume this rate of substitution) and/or a higher penetration of PHEVs, EVs and FCVs,
Thus, NHTSA has concluded that the standards represented by the preferred alternative are the maximum feasible standards for passenger cars and light trucks in MYs 2017–2021, and that the augural standards presented for MYs 2022–2025 would be maximum feasible in those model years, based on the information currently before the agency, had we the authority to finalize them at this time. We recognize that higher standards would help the need of the nation to conserve more energy and might potentially be technologically feasible (in the narrowest sense) during those model years, but based on our analysis and the evidence presented by the industry, we conclude that higher standards would not represent the proper balancing for MYs 2017–2025 cars and trucks.
As discussed above, the CAFE level required under an attribute-based standard depends on the mix of vehicles produced for sale in the U.S. Based on the market forecast that NHTSA and EPA have used to develop and analyze the final and augural CAFE and CO
Accounting for differences between fuel economy levels under laboratory conditions and operating conditions in the real world, NHTSA estimates that these requirements would translate into the following required average on-road fuel economy levels using on-road fuel economy:
For the reader's reference, these mpg levels would translate to the following in gallons per mile:
If manufacturers apply technology only as far as necessary to comply with CAFE standards, NHTSA estimates that, setting aside factors the agency cannot consider for purposes of determining maximum feasible CAFE standards,
For the reader's reference, these mpg levels would translate to the following in gallons per mile:
The estimated achieved average fuel economy levels presented above all derive from analysis that does not attempt to estimate the potential that today's attribute-based standards might induce shifts in vehicle footprint—shifts that would change manufacturers' average required and achieved fuel economy levels. As discussed above in Sections II.C and IV.D, the agency judges today's standards unlikely to induce significant shifts in vehicle footprint. We note, however, that comments by CBD, ACEEE, NACAA, and an individual, Yegor Tarazevich, referenced a 2011 study by Whitefoot and Skerlos, “Design incentives to increase vehicle size created from the U.S. footprint-based fuel economy standards.”
Were NHTSA to use the Whitefoot and Skerlos methodology (
Regarding the cost impacts of footprint increases, that authors make an
Regarding the fuel economy impacts of footprint increases, the authors present a regression analysis based on which increases in footprint are estimated to entail increases in weight which are, in turn, estimated to entail increases in fuel consumption. However, this relationship was not the relationship the agencies used to develop the MY 2014 standards the authors examine in that study. Where the target function's slope is similar to that of the tendency for fuel consumption to increase with footprint, fuel economy should tend to decrease approximately in parallel with the fuel economy target, thereby obviating the “benefit” of deliberate increases in vehicle footprint. NHTSA's analysis supporting today's final rule indicates relatively wide ranges wherein the relationship between fuel consumption and footprint may reasonably be specified. The underlying slopes selected for purposes of defining MY 2017 and beyond standards fall toward the flatter end of those reasonable ranges. Therefore, while the agencies expect the standards to have little tendency to induce deliberate changes in vehicle size, the agencies would have more reason to expect that such changes would be slightly in the direction of
Nonetheless, NHTSA considers the concept of the authors' investigation to have merits. In support of today's rulemaking, NHTSA considered including footprint increases as a “technology” available in its analysis, such that its CAFE model would increase footprint in cases where the cost to do so would be attractive considering both the accompanying decrease in the fuel economy target (if the vehicle is not on the flat portion of the target function) and the accompanying decrease in vehicle fuel economy. However, NHTSA was unable to estimate the underlying cost function and complete and test this approach in time to support today's final rule. In support of future NHTSA rulemakings, NHTSA plans to further investigate methods to estimate the potential that standards might tend to induce changes in the footprint.
Accounting for differences between fuel economy levels under laboratory conditions and real-world driving behavior, NHTSA estimates that these requirements would translate into the following achieved average on-road fuel economy levels:
Setting aside the potential to produce additional EVs (or, prior to MY 2020, PHEVs) or take advantage of EPCA's provisions regarding CAFE credits, NHTSA estimates that today's final standards could increase achieved fuel economy levels by average amounts of up to 0.7 mpg during the few model years leading into MY 2017, as manufacturers apply technology during redesigns leading into model years covered by today's new standards.
Within the context EPCA requires NHTSA to apply for purposes of determining maximum feasible stringency of CAFE standards (
The agency also estimates that these new CAFE standards would lead to corresponding reductions of CO
Under the assumption that CAFE standards at least as stringent as those being presented today for MY 2025 would be established for subsequent model years, the effects of the standards on fuel consumption and GHG emissions will continue to increase for many years. This will occur because over time, a growing fraction of the U.S. light-duty vehicle fleet will be comprised of cars and light trucks that meet at least the MY 2025 standard. The impact of the new standards on fuel use and GHG emissions would therefore continue to grow through approximately 2060, when virtually all cars and light trucks in service will have met standards as stringent as those established for MY 2025.
As Table IV–67 shows, NHTSA estimates that the fuel economy increases resulting from the final standards will lead to reductions in total fuel consumption by cars and light trucks of 3 billion gallons during 2020, increasing to a range from 38 billion to 44 billion gallons by 2060. Over the period from 2017, when the final standards would begin to take effect, through 2060, cumulative fuel savings would total between 1,080 billion and 1,190 billion gallons, as Table IV–67 also indicates.
The energy security analysis conducted for this rule estimates that the world price of oil will fall modestly in response to lower U.S. demand for refined fuel. One potential result of this decline in the world price of oil would be an increase in the consumption of petroleum products outside the U.S., which would in turn lead to a modest increase in emissions of greenhouse gases, criteria air pollutants, and airborne toxics from their refining and use. While additional information would be needed to analyze this “leakage effect” in detail, NHTSA provides a sample estimate of its potential magnitude in its Final EIS. This analysis indicates that the leakage effect is likely to offset only a very small fraction of the reductions in fuel use and emissions projected to result from the rule.
As a consequence of these reductions in fleet-wide fuel consumption, the agency also estimates that the new CAFE standards for MYs 2017–2025 would lead to corresponding reductions in CO
These reductions in fleet-wide CO
Under the assumption that CAFE standards at least as stringent as those presented for MY 2025 would be established for subsequent model years, the effects of the new standards on air quality and its associated health effects will continue to be felt over the foreseeable future. This will occur because over time a growing fraction of the U.S. light-duty vehicle fleet will be comprised of cars and light trucks that meet the MY 2025 standard, and this growth will continue until approximately 2060.
Increases in the fuel economy of light-duty vehicles required by the new CAFE standards will cause a slight increase in the number of miles they are driven, through the fuel economy “rebound effect.” In turn, this increase in vehicle use will lead to increases in emissions of criteria air pollutants and some airborne toxics, since these are products of the number of miles vehicles are driven.
At the same time, however, the projected reductions in fuel production and use reported in Tables IV–65 and IV–67 above will lead to corresponding reductions in emissions of these pollutants that occur during fuel production and distribution (“upstream” emissions). For most of these pollutants, the reduction in upstream emissions resulting from lower fuel production and distribution will outweigh the increase in emissions from vehicle use, resulting in a net decline in their total emissions.
Table IV–70 and Table IV–71 report estimated reductions in emissions of selected criteria air pollutants (or their chemical precursors) and airborne toxics expected to result from the final and augural standards during calendar year 2040. By that date, cars and light trucks meeting the MY 2025 CAFE standards will account for the majority of light-duty vehicle use, so these reductions provide a useful index of the long-term impact of the final standards on air pollution and its consequences for human health. In the tables below, positive values indicate increases in emissions, while negative values indicate reductions.
In turn, the reductions in emissions reported in the tables above are projected to result in significant declines in the adverse health effects that result from population exposure to these pollutants. Table IV–72 reports the estimated reductions in selected PM
There may be localized air quality and health impacts associated with this rulemaking that are not reflected in the estimates of aggregate air quality changes and health impacts reported in this analysis. Emissions changes and dollar-per-ton estimates alone are not necessarily a good indication of local or regional air quality and health impacts, because the atmospheric chemistry governing formation and accumulation of ambient concentrations of PM
NHTSA estimates that the final and augural standards could entail significant additional technology beyond the levels that could be applied under baseline CAFE standards (
Technology costs are assumed to change over time due to the influence of cost learning and the conversion from short- to long-term ICMs. Table IV–73 represents the CAFE model inputs for MY 2012, MY 2017, MY 2021 and MY 2025 approximate net (accumulated)
In order to pay for this additional technology (and, for some manufacturers, civil penalties), NHTSA estimates that the cost of an average passenger car will increase relative to levels resulting from compliance with baseline (MY 2016) standards by between $244 and $364 in MY to between $1,577 and $1,826 in MY 2025. Similarly, light truck prices are estimated to rise from between $77 and $147 in MY 2017 to between $1,185 and $1,228 in MY 2025. The following tables summarize the agency's estimates of average cost increases for each manufacturer's passenger car, light truck, and overall fleets (with corresponding averages for the industry):
These cost estimates reflect the potential that a given manufacturer's efforts to minimize overall regulatory costs could focus technology where the most fuel can be saved at the least cost, and not necessarily, for example, where the cost to add technology would be smallest relative to baseline production costs. Therefore, if average incremental vehicle cost increases (including any civil penalties) are measured as increases relative to baseline prices (estimated by adding baseline costs to MY 2008 prices), the agency's analysis shows relative cost increases declining as baseline vehicle price increases. Figure IV–4 shows the trend for MY 2025, for vehicles with estimated baseline prices up to $100,000:
If manufacturers pass along these costs rather than reducing profits, and pass these costs along where they are incurred rather than “cross-subsidizing” among products, the quantity of vehicles produced at different price levels would change. Shifts in production may potentially occur, which could create marketing challenges for manufacturers that are active in certain segments. We recognize, however, that many manufacturers do in fact cross-subsidize to some extent, and take losses on some vehicles while continuing to make profits from others. NHTSA has no evidence to indicate that manufacturers will inevitably shift production plans in response to these final standards, but nevertheless believes that this issue is worth monitoring in the market going forward. NHTSA continues to seek comment on potential market effects related to this issue.
As mentioned above, these estimated costs derive primarily from the additional application of technology under the final and augural standards. The following three tables summarize the incremental extent to which the agency estimates technologies could be added to the passenger car, light truck, and overall fleets in each model year in response to the standards. Percentages reflect the technology's additional application in the market, relative to the estimated application under baseline standards (
Based on the agencies' estimates of manufacturers' future sales volumes, and taking into account early outlays attributable to multiyear planning effects (discussed above), the cost increases associated with this additional application of technology will lead to a total of between $134 billion and $140 billion in incremental outlays during MYs 2017–2025 (and model years leading up to MY 2017) for additional technology attributable to the final and augural standards:
NHTSA notes that these estimates of the economic costs for meeting higher CAFE standards omit certain potentially important categories of costs, and may also reflect underestimation (or possibly overestimation) of some costs that are included. For example, although the agency's analysis is intended—with very limited
Finally, while NHTSA is confident that the cost estimates are the best available and appropriate for purposes of this final rule, it is possible that the agency may have underestimated or overestimated manufacturers' direct costs for applying some fuel economy technologies, or the increases in manufacturer's indirect costs associated with higher vehicle manufacturing costs. In either case, the technology outlays reported here will not correctly represent the costs of meeting higher CAFE standards.
Since the NPRM, NHTSA has revised its analysis to incorporate the social cost associated with the incremental cost of maintaining more technologically advanced vehicles. Table IV–85 below summarizes these incremental costs by regulatory class, and illustrates that increased maintenance costs contribute about another $10 billion to the cost of the rule.
Similarly, NHTSA's estimates of increased costs of congestion, accidents, and noise associated with added vehicle use are drawn from a 1997 study, and the correct magnitude of these values may have changed since they were developed. If this is the case, the costs of increased vehicle use associated with the fuel economy rebound effect will differ from the agency's estimates in this analysis. Thus, like the agency's estimates of economic benefits, estimates of total compliance costs reported here may underestimate or overestimate the true economic costs of the final standards.
However, offsetting these costs, the achieved increases in fuel economy will also produce significant benefits to society. Most of these benefits are attributable to reductions in fuel consumption; fuel savings are valued using forecasts of pretax prices in EIA's reference case forecast from the AEO 2012 Early Release. The total benefits also include other benefits and dis-benefits, examples of which include the social values of reductions in CO
As Tables IV–86 and IV–87 show, NHTSA estimates that at the discount rates of 3 percent prescribed in OMB guidance for regulatory analysis, the present value of total benefits from the final and augural CAFE standards over the lifetimes of MY 2017–2025 (and, accounting for multiyear planning effects discussed above, model years leading up to MY 2017) passenger cars and light trucks will be in a range from $671 billion to $688 billion.
The tables
For both the passenger car and light truck fleets, NHTSA estimates that the benefits of today's standards will exceed the corresponding costs in every model year, so that the
As Tables IV–90 and IV–91 show, over the lifetimes of the affected (MY 2017–2025, and MYs leading up to MY 2017) vehicles, the agency estimates that when the benefits of the standards are discounted at a 3 percent rate, they will exceed the costs of the final and augural standards by between $498 billion and $507 billion:
As indicated previously, when fuel savings and other future benefits resulting from the standards are discounted at the 7 percent rate prescribed in OMB guidance, they are about 20% lower than when the 3 percent discount rate is applied. Nevertheless, Tables IV–92 and IV–93 show that the net benefits from requiring passenger cars and light trucks to achieve higher fuel economy are still substantial even when future benefits are discounted at the higher rate, totaling $372–377 billion over MYs 2017–25. Net benefits are thus about a quarter lower when future benefits are discounted at a 7 percent annual rate than at a 3 percent rate.
NHTSA's estimates of economic benefits from establishing higher CAFE standards are subject to considerable uncertainty. Most important, the agency's estimates of the fuel savings likely to result from adopting higher CAFE standards depend critically on the accuracy of the estimated fuel economy levels that will be achieved under both the baseline scenario, which assumes that manufacturers will continue to comply with the MY 2016 CAFE standards, and under alternative increases in the standards that apply to MYs 2017–25 passenger cars and light trucks. Specifically, if the agency has underestimated the fuel economy levels that manufacturers would have achieved under the baseline scenario—or is too optimistic about the fuel economy levels that manufacturers will actually achieve under the standards—its estimates of fuel savings and the resulting economic benefits attributable to this rule will be too large.
Another major source of potential overestimation in the agency's estimates of benefits from requiring higher fuel economy stems from its reliance on the Reference Case fuel price forecasts reported in AEO 2012, Early Release. Although NHTSA believes that these forecasts are the most reliable that are available, they are nevertheless significantly higher than the fuel price projections reported in most previous editions of EIA's Annual Energy Outlook, and reflect projections of world oil prices that are well above forecasts issued by other firms and government agencies. If the future fuel prices projected in AEO 2012 prove to be too high, the agency's estimates of the value of future fuel savings—the major component of benefits from this rule—will also be too high.
However, it is also possible that NHTSA's estimates of economic benefits from establishing higher CAFE standards underestimate the true economic benefits of the fuel savings the standards would produce. If the AEO 2012 Early Release projections of fuel prices prove to be too low, for example, NHTSA will have underestimated the value of fuel savings that will result from adopting higher CAFE standards for MY 2017–25. As another example, the agency's estimate of benefits from reducing the threat of economic damages from disruptions in the supply of imported petroleum to the U.S. applies to calendar year 2020. If the magnitude of this estimate would be expected to grow after 2015 in response to increases in U.S. petroleum imports, growth in the level of U.S. economic activity, or increases in the likelihood of disruptions in the supply of imported petroleum, the agency may have underestimated the benefits from the reduction in petroleum imports expected to result from adopting higher CAFE standards.
NHTSA's benefit estimates could also be too low because they exclude or understate the economic value of certain potentially significant categories of benefits from reducing fuel consumption. As one example, EPA's estimates of the economic value of reduced damages to human health resulting from lower exposure to criteria air pollutants includes only the effects of reducing population exposure to PM
Similarly, the agency's estimate of the value of reduced climate-related economic damages from lower emissions of GHGs excludes many sources of potential benefits from reducing the pace and extent of global climate change.
The following tables present itemized costs and benefits for the combined passenger car and light truck fleets for each model year affected by the standards and for all model years combined, using both discount rates prescribed by OMB regulatory guidance. Tables IV–94 and IV–95 report technology outlays, each separate component of benefits (including costs associated with additional driving due to the rebound effect, labeled “dis-benefits”), the total value of benefits, and net benefits using the 3 percent discount rate. (Numbers in parentheses represent negative values.)
Similarly, Tables IV–96 and IV–97 below report technology outlays, the individual components of benefits (including “dis-benefits” resulting from additional driving) and their total and net benefits using the 7 percent discount rate. (Again, numbers in parentheses represent negative values.)
These benefit and cost estimates do not reflect the availability and use of certain flexibility mechanisms, such as compliance credits and credit trading, because EPCA prohibits NHTSA from considering the effects of those mechanisms in setting CAFE standards. However, the agency notes that, in reality, manufacturers are likely to rely
As discussed in the FRIA, NHTSA has performed an analysis to estimate costs and benefits taking into account EPCA's provisions regarding EVs, PHEVs produced before MY 2020, FFV credits, and other CAFE credit provisions. Accounting for these provisions indicates that achieved fuel economies would be 1.4–2.1 mpg lower than when these provisions are not considered:
As a result, NHTSA estimates that, when EPCA AFV and credit provisions are taken into account, fuel savings will total about 170 billion gallons, as compared to the 180–184 billion gallons estimated when these flexibilities are not considered:
The agency similarly estimates CO
This analysis further indicates that significant reductions in outlays for additional technology will result when EPCA's AFV and credit provisions are taken into account. Tables IV–104 and IV–105 below show that, total technology costs are estimated to decline to about $120 billion as a result of manufacturers' use of these provisions, as compared to the $134–140 billion estimated when excluding these flexibilities:
Because NHTSA's analysis indicated that these EPCA provisions will modestly reduce fuel savings and related benefits, the agency's estimate of the present value of total benefits is $629–639 billion when discounted at a 3 percent annual rate, as Tables IV–106 and IV–107 below report. This estimate of total benefits is lower than the $671–688 billion reported previously for the analysis that excluded these provisions:
Similarly, NHTSA estimates that the present value of total benefits will decline modestly from its previous estimate when future fuel savings and other benefits are discounted at the higher 7 percent rate. Tables IV–108 and IV–109 report that the present value of benefits from requiring higher fuel economy for MY 2017–25 cars and light trucks will total $502–510 billion when discounted using a 7 percent rate, as compared to the previous $536–549 billion estimate of total benefits when FFV credits were not permitted:
Although the discounted present value of total benefits will be modestly lower when EPCA AFV and credit provisions are taken into account, the agency estimates that these provisions will reduce net benefits by a smaller proportion. As Tables IV–110 and IV–111 show, the agency estimates that these will reduce net benefits from the CAFE standards to $475–483 billion from the previously-reported estimate of $498–507 billion without those credits.
Similarly, Tables IV–112 and IV–113 below show that NHTSA estimates manufacturers' use of EPCA AFV and credit provisions will reduce net benefits from requiring higher fuel economy for MY 2017–25 cars and light trucks—to $356–362 billion—if a 7 percent discount rate is applied to future benefits. This estimate is approximately 4% less than the previously-reported $372–377 billion estimate of net benefits without the availability of EPCA AFV and credit provisions using that same discount rate.
For this final rule, NHTSA has included an analysis that accounts for the cumulative costs and benefits of the final fuel economy standards that affect MY 2011–2021 vehicles and the augural standards that affect MY 2022–2025 vehicles. This analysis enables the agency to assess the cumulative effects of previously adopted CAFE standards for MY 2011 and MY 2012–2016, as well as the final standards for MY 2017–2021 and augural standards for MY 2022–2025 that this final rule presents. The table below shows the total fuel savings, reductions in carbon dioxide emissions, and social costs and benefits resulting from the sequence of CAFE standards established for MYs 2011–21, as well as program totals with the inclusion of the augural standards for MY 2022–2025. Each of these impacts is measured against a baseline that assumes the CAFE standards for MY 2010 would have been extended to
As is the case elsewhere in this preamble, the table below represents the estimated impact of the CAFE rules based on required fuel economy levels, excluding consideration of credit banking, transfers and trading, dedicated alternative fuel vehicles, and dual fuel vehicles operating on alternative fuels, as required under EPCA/EISA. The technology costs reported in the table represent the costs of technologies used by manufacturers to increase fuel economy to the levels required by the higher standards. (These cost estimates are the same whether we use a 3 percent or 7 percent discount rate to discount future benefits or costs, because they occur at the time the vehicle is purchased, so no discounting is involved.) The discounted social costs include the technology costs associated with the sequence of standards, as well monetized social costs associated with any increases in traffic congestion, noise, accidents and fatalities that occur in response to the increases in fuel economy resulting from compliance with the standards.
Instead of using the estimated impacts from previous regulatory analyses accompanying the standards for MY 2011 and MYs 2012–16, the costs and benefits provided in this analysis are estimated using the current version of the CAFE model. Thus, they are based on the agency's most up-to-date estimates of the costs of technologies that are available to improve fuel economy. All costs from previous years are adjusted to 2010 dollars using the implicit price deflator for gross domestic product (GDP).
Table IV–114 illustrates that the combined effects of the previously established CAFE standards for MY 2011 and MY 2012–2016, together with the final CAFE standards for MY 2017–2021 and augural CAFE standards for MY 2022–2025 presented in this final rule, would be to save 450–520 billion gallons of fuel, reduce CO
The agency performed a number of sensitivity analyses to examine important assumptions. All sensitivity analyses were based on the “standard setting” output of the CAFE model, and are based solely upon the 2010 baseline fleet. We examine sensitivity with respect to the following economic parameters:
In the NPRM central analysis, EPA developed direct manufacturing costs (DMC) for battery systems using ANL's BatPaC model. For this sensitivity analysis, NHTSA scaled these central battery system costs by the percentages shown in Table IV–115, per guidance from DOE and ANL experts on reasonable ranges for these costs.
Figures IV–4 to IV–8 show these battery system DMCs in terms of $/kW for HEV and $/kWh for 20-mile range PHEV (PHEV20), 40-mile range PHEV (PHEV40), 75-mile range EV (EV75), 100-mile range EV (EV100) and 150-mile range EV (EV150). We note that battery system cost varies with vehicle subclasses and driving range. Smaller batteries tend to be relatively more expensive per kWh because the cost for the battery management system, disconnect units and baseline thermal management system is the same from vehicle to vehicle for each type of electrification system, such as HEV, PHEV and EV (but varies between different electrification systems) and this cost is spread over fewer kWh for smaller vehicle. For example, the battery system cost for EVs ranges from $221/kWh for subcompact cars for EV75, to $160/kWh for large trucks for EV150 in MY 2021. Note: the agencies do not apply PHEV or EV technology to large MPVs/minivans or large trucks; however, the estimated costs of such a system are shown here for completeness.
For the reader's reference, this sensitivity was conducted using what the agency refers to as “standard setting” analytical runs, in which the agency restricts the operation of the model consistent with statutory requirements related to how the agency may determine maximum feasible CAFE standards (for example, the standard setting runs do not include EVs, because NHTSA may not consider the fuel economy of EVs when setting maximum feasible CAFE standards, nor do they consider PHEVs prior to MY 2020, for the same reason), as compared to the “real-world” analysis, in which the agency attempts to model how manufacturers might respond to the standards (and regulatory alternatives) taking account of all available technologies and compliance flexibilities. NHTSA used the “standard setting” runs for this sensitivity analysis to show the regulatory impact of the battery cost. In the “standard setting” runs, NHTSA included 30-mile range PHEV (PHEV30) only after MY 2019 to represent all PHEVs, the cost of which is the average cost of PHEV20 and PHEV40. NHTSA did not apply any EVs in this analysis.
• Mass reduction cost: Due to the wide range of mass reduction cost as stated in TSD Chapter 3, a sensitivity analysis was performed examining the impact of the cost of vehicle mass reduction to the total technology cost. The direct manufacturing cost (DMC) for mass reduction is represented as a linear function between the unit DMC versus percent of mass reduction as shown in Figure IV–10. The slope of this line used for NPRM central analysis is $4.36 (2010$) per pound per percent of mass reduction. The slope of the line is varied ± 40% as the upper and lower bound for this sensitivity study. The values for the range of mass reduction cost are shown in Table IV–116.
• Market-driven response: The baseline for the central analysis is based on the MY 2016 CAFE standards and assumes that manufacturers will make no changes in the fuel economy from that level through MY 2025. A sensitivity analysis was performed to simulate potential increases in fuel economy over the compliance level required if MY 2016 standards were to remain in place. The assumption is that the market would drive manufacturers to put technologies into their vehicles that they believe consumers would value and be willing to pay for. Using parameter values consistent with the central analysis, the agency simulated a market-driven response baseline by applying a payback period of one year for purposes of calculating the value of future fuel savings when simulating whether manufacturers would apply additional technology to an already CAFE-compliant fleet. In other words we assumed that manufacturers that were above their MY 2016 CAFE level would compare the cost to consumers to the fuel savings in the first year of operation and decide to voluntarily apply those technologies to their vehicles when benefits for the first year exceeded costs for the consumer. For a manufacturer's fleet that that has not yet achieved compliance with CAFE standards, the agency continued to apply a five-year payback period. In other words, for this sensitivity analysis the agency assumed that manufacturers that have not yet met CAFE standards for future model years will apply technology as if buyers were willing to pay for the technologies as long as the fuel savings throughout the first five years of vehicle ownership exceeded their costs. Once having complied with those standards, however, manufacturers are assumed to consider making further improvements in fuel economy as if buyers were only willing to pay for fuel savings to be realized during the first year of vehicle ownership. The `market-drive response' analysis assumes manufacturers will overcomply if additional technology is sufficiently cost effective. Because this assumption has a greater impact under the baseline standards, its application reduces the incremental costs, effects, and benefits attributable to the new standards. This does not mean costs, effects, and benefits would actually be smaller with a market-driven response; rather it means costs, effects, and benefits would be at least as great, but would be partially attributable not to the new standards, but instead to the market.
• Transmission shift optimization technology disabled: As part of the simulation work for the final rule, ANL attempted to replicate the shift optimizer technology but was not able to identify any significant fuel consumption reductions. For this reason a sensitivity case analysis was conducted with the transmission shift optimizer technology disabled.
Varying each of the above 10 parameters in isolation results in a variety of economic scenarios. These are listed in Table IV–117 below along with the preferred alternative.
The basic results of these sensitivity analyses are contained in Chapter X of the FRIA, but several selected findings are as follows:
• Varying the economic assumptions has almost no impact on achieved mpg. The mass reduction cost sensitivities, battery cost reduction sensitivities, market-based baseline sensitivity, and no shift optimization sensitivity cases are the only instances in which achieved mpg differs from the reference case of the Preferred Alternative. None of these alter the outcome by more than 0.3 mpg for either fleet.
• Varying the economic assumptions has, at most, a small impact on per-vehicle costs, with only the no shift optimization variation affecting the per-vehicle cost by more than 10 percent from the central analysis level. Similarly, fuel saved and CO
• The category most affected by variations in the economic parameters considered in these sensitivity analyses is net benefits. The sensitivity analyses examining the AEO low and high fuel price scenarios demonstrate the potential to negatively impact net benefits by up to 38 percent or to increase them by about 32 percent relative to those of the Preferred Alternative. Other large impacts on net benefits occurred with the $68/ton CO
• Even if consumers value the benefits achieved at 50% of the main analysis assumptions, total benefits still exceed costs, with net benefits greater than $135 billion.
Regarding the lower fuel savings and CO
The agency performed two additional sensitivity analyses presented in Tables IV–118 through IV–120. First, the agency analyzed the impact that having a retail price equivalent (RPE) factor of 1.5 for all technologies would have on the various alternatives instead of using the indirect cost methodology (ICM). The ICM methodology results in an overall markup factor of 1.2 to 1.25 compared to the RPE markup factor from variable cost of 1.5. Next, the agency conducted a separate sensitivity analysis using values that were derived from the 2011 NAS report.
For today's rulemaking analysis, as for the NPRM, the agency has also performed a sensitivity analysis where manufacturers are allowed to voluntarily apply more technology than would be required to comply with CAFE standards for each model year. Manufacturers are assumed to do so as long as applying each additional technology would increase vehicle production costs (including markup) by less than it would reduce buyers' fuel costs during the first year they own the vehicle. This analysis makes use of the “voluntary overcompliance” simulation capability DOT has recently added to its CAFE model. This capability, which is discussed further above in section IV.C.4.c and in the CAFE model documentation, is a logical extension of the model's simulation of some manufacturers' decisions to respond to EPCA by paying civil penalties once additional technology becomes economically unattractive. It attempts to simulate manufacturers' responses to buyers' demands for higher fuel economy levels than prevailing CAFE standards would require when fuel costs are sufficiently high, and technologies that manufacturers have not yet fully utilized are available to improve fuel economy at relatively low costs.
NHTSA introduced this analysis for the NPRM because some stakeholders commenting on the recently-promulgated standards for medium- and heavy-duty vehicles had indicated that it would be unrealistic for the agency to
In the NPRM, NHTSA invited comment on this sensitivity analysis, in particular regarding the reasonableness of the assumption that manufacturers might consider further fuel economy improvements, depending on technology costs and fuel prices; the reasonableness of the agency's approach (comparing technology costs to the present value of fuel savings over some payback period) to simulating such decisions; and what payback period (or periods) would most likely to reflect manufacturers' decisions regarding technology application through MY2025.
Several environmental organizations submitted comments on NHTSA's analysis. The Center for Biological Diversity (CBD) commented that the agency's baseline “suggests a much lower fuel efficiency increase driven solely by market forces than actual experience demonstrates occurs.”
In addition, several stakeholders on the “payback period” NHTSA should apply in its analysis. EDF indicated that any payback period shorter than five years would not accurately reflect the current and forecasted buying trends of consumers. The Sierra Club also submitted comments suggesting a five-year payback period. Volkswagen commented that buyers' preferences will suggest payback periods of less than four years. The International Council on Clean Transportation (ICCT) commented that analysis in 2010 by David Greene supported an average payback period of three years.
NHTSA recognizes the uncertainty inherent in forecasting whether and to what extent the average fuel economy level of light-duty vehicles will continue to increase beyond the level necessary to meet regulatory standards. However, because market forces could independently result in changes to the future light-duty vehicle fleet even in the absence of agency action, to the extent they can be estimated, those changes should be incorporated into the baseline. As a result, today's final rule continues to present impacts in terms of two sets of analyses: one assuming that the average fleetwide fuel economy for light-duty vehicles will not exceed the minimum level necessary to comply with CAFE standards, and one assuming continued improvement in average fleetwide fuel economy for light-duty vehicles due to higher market demand for fuel-efficient vehicles.
From a market-driven perspective, there is considerable historical evidence that manufacturers have an economic incentive to improve the fuel economy of their fleets beyond the level of the CAFE standards when they are able to do so. Although there was an historical period of stagnation in average fuel economy starting in the 1990s, when manufacturers allocated efficiency improvements to weight and power, it was accompanied by a prolonged period of historically low gasoline prices, where real prices remained below $1.50 per gallon for nearly 15 years. Even during that period, passenger car fuel economy exceeded CAFE standards every year and light-truck fuel economy exceeded standards in most years. This trend supports the proposition that consumers have historically recognized the benefits that accrue from operating vehicles with greater fuel efficiency even in an environment of low fuel prices.
In recent years, overcompliance with standards has increased, likely in response to higher fuel prices, with the market shifting toward more fuel-efficient models and toward passenger cars rather than trucks, even in the absence of regulatory pressure. This suggests that, at the fuel prices that have been prevalent in recent years, consumers are placing a greater value on fuel economy than the longer term historical average. Consumers appear to be recognizing the value of purchases based not only on initial costs but also on the total cost of owning and operating a vehicle over its lifetime. The fuel economy of the combined car and light-truck fleet has increased since 2005, with the largest increase in 2009. NHTSA also expects the new fuel economy labels will increase awareness of the consumer savings that result from purchasing a vehicle with higher fuel economy and will impact consumer demand for more fuel-efficient vehicles. NHTSA discusses how consumers value fuel savings in Chapter VIII of the FRIA accompanying today's notice.
Consumer demand for fuel-efficient vehicles is expected to continue in the future. Increasing uncertainty about future fuel prices and growing concern for the energy security and environmental impacts of petroleum use are likely to have an increasing impact on the vehicle market. In response, a number of manufacturers have announced plans to introduce technology beyond what is necessary to meet the MY 2016 standards. This evidence aligns with the AEO 2012 Early Release, which shows continued fuel economy improvements in the Reference Case through 2035 in the absence of the MY 2017–2025 standards.
NHTSA performed today's analysis by simulating potential overcompliance under the no-action alternative, the
In other words, for this sensitivity analysis the agency assumed that manufacturers that have not yet met CAFE standards for future model years will apply technology as if buyers were willing to pay for fuel savings throughout the first five years of vehicle ownership. Once having complied with those standards, however, manufacturers are assumed to consider making further improvements in fuel economy as if buyers were only willing to pay for fuel savings to be realized during the first year of vehicle ownership. This reflects the agency's assumptions for this sensitivity analysis, that (1) civil penalties, though legally available, carry a stigma that manufacturers will strive to avoid, and that (2) having achieved compliance with CAFE standards, manufacturers will avoid competitive risks entailed in charging higher prices for vehicles that offer additional fuel economy, rather than offering additional performance or utility.
Since CAFE standards were first introduced, some manufacturers have consistently exceeded those standards, and the industry as a whole has consistently overcomplied with both the passenger car and light truck standards. Although the combined average fuel economy of cars and light trucks declined in some years, this resulted from buyers shifting their purchases from passenger cars to light trucks, not from undercompliance with either standard. Even with those declines, the industry still overcomplied with both passenger car and light truck standards. In recent years, between MYs 1999 and 2009, fuel economy overcompliance has been increasing on average for both the passenger car and the light truck fleets. NHTSA considers it impossible to say with certainty why past fuel economy levels have followed their observed path. If the agency could say with certainty how fuel economy would have changed in the absence of CAFE standards, it might be able to answer this question; however, NHTSA regards this “counterfactual” case as simply unknowable.
NHTSA has, however, considered other relevant indications regarding manufacturers' potential future decisions. Published research regarding how vehicle buyers have previously viewed fuel economy suggests that they have only a weak quantitative understanding of the relationship between fuel economy and future fuel outlays, and that potential buyers value fuel economy improvements by less than theoretical present-value calculations of lifetime fuel savings would suggest. These findings are generally consistent with manufacturers' confidential and, in some cases, public statements. Manufacturers have tended to communicate not that buyers absolutely “don't care” about fuel economy, but that buyers have, in the past, not been willing to pay the full cost of most fuel economy improvements. Manufacturers have also tended to indicate that sustained high fuel prices would provide a powerful incentive for increased fuel economy; this implies that manufacturers believe buyers are willing to pay for some fuel economy increases, but that buyers' willingness to do so depends on their expectations for future fuel prices. In their confidential statements to the agency, manufacturers have also tended to indicate that in their past product planning processes, they have assumed buyers would only be willing to pay for technologies that “break even” within a relatively short time—generally the first two to four years of vehicle ownership.
NHTSA considers it not only feasible but appropriate to simulate such effects by calculating the present value of fuel savings over some “payback period.” The agency also believes it is appropriate to assume that specific improvements in fuel economy will be implemented voluntarily if manufacturers' costs for adding the technology necessary to implement them to specific models would be lower than potential buyers' willingness to pay for the resulting fuel savings. This approach takes fuel costs directly into account, and is therefore responsive to manufacturers' statements regarding the role that fuel prices play in influencing buyers' demands and manufacturers' planning processes. Under this approach, a short payback period can be employed if manufacturers are expected to act as if buyers place little value on fuel economy. Conversely, a longer payback period can be used if manufacturers are expected to act as if buyers will place comparatively greater value on fuel economy.
NHTSA cannot be certain to what extent vehicle buyers will, in the future, be willing to pay for fuel economy improvements, or to what extent manufacturers would, in the future, voluntarily apply more technology than needed to comply with fuel economy standards. The agency is similarly hopeful that future vehicle buyers will be more willing to pay for fuel economy improvements than has historically been the case. In meetings preceding today's standards, two manufacturers stated they expected fuel economy to increase two percent to three percent per year after MY 2016, absent more stringent regulations. And in August 2010, one manufacturer stated its combined fleet would achieve 50 mpg by MY 2025, supporting that at a minimum some manufacturers believe that exceeding fuel economy standards will provide them a competitive advantage. The agency is hopeful that future vehicle buyers will be better-informed than has historically been the case, in part because recently-promulgated requirements regarding vehicle labels will provide clearer information regarding fuel economy and the dollar value of resulting fuel savings. The agency is similarly hopeful that future vehicle buyers will be more willing to pay for fuel economy improvements than past buyers. In meetings preceding today's standards, many manufacturers indicated significant shifts in their product plans—shifts consistent with expectations that compared to past buyers, future buyers will “care more” about fuel economy.
Nevertheless, considering the uncertainties mentioned above, NHTSA continues to consider it appropriate to conduct its central rulemaking analysis in a manner that ignores the possibility that in the future, manufacturers will voluntarily apply more technology than the minimum necessary to comply with CAFE standards. Also, in conducting its sensitivity analysis to simulate voluntary overcompliance with the standards, the agency has applied the conservative assumption that when considering whether to employ “extra” technology, manufacturers will act as if buyers' value the resulting savings in fuel costs only during their first year of ownership (
Results of the agency's analysis simulating this potential for voluntary overcompliance are summarized below. Compared to results from the agencies' central analysis presented above, differences are greatest for the baseline scenario (
With no change in standards after MY 2016, while combined average fuel economy is the same in MY 2017 both with and without simulated voluntary overcompliance, differences grow over time, reaching nearly 3 mpg by MY 2025. In other words, without simulating voluntary overcompliance, the agency estimated that combined average achieved fuel economy would reach 34.7–35.4 mpg in MY 2025, whereas the agency estimates that it would reach 37.6–38.1 mpg in that year if voluntary overcompliance occurred.
In contrast, the effect on achieved fuel economy levels of allowing voluntary overcompliance with the standards was minimal. Allowing manufacturers to overcomply with the standards for MY 2025 led to combined average achieved fuel economy levels approximately equal to levels of values obtained without simulating voluntary overcompliance:
As a result, NHTSA estimates that, when the potential for voluntary overcompliance is taken into account, fuel savings attributable to more stringent standards will total 131–133 billion gallons, as compared to the 180–184 billion gallons estimated when potential voluntary overcompliance is not taken into account:
The agency is not projecting, however, that fuel consumption will be greater when voluntary overcompliance is taken into account. Rather, under today's final and augural standards, the agency's analysis shows
The agency further estimates CO
This analysis further indicates smaller or similar incremental outlays for additional technology under the standards when potential voluntary overcompliance is taken into account. Table IV–129 and Table IV–130 below show that total incremental technology costs attributable to today's standards are estimated at $127–140 billion, as compared to the $134–140 billion estimated when potential voluntary overcompliance was not taken into account:
Because NHTSA's analysis indicated that voluntary overcompliance with baseline standards will reduce the share of fuel savings attributable to today's standards, the agency's estimate of the present value of total benefits will be $484–495 billion when discounted at a 3 percent annual rate, as Tables IV–131 and IV–132 following report. This estimate of total benefits is lower than the $671–687 billion reported previously for the analysis in which potential voluntary overcompliance was not taken into account:
Similarly, when accounting for potential voluntary overcompliance, NHTSA estimates that the present value of total benefits will decline from its previous estimate when future fuel savings and other benefits are discounted at the higher 7 percent rate. Tables IV–133 and IV–134 report that the present value of benefits from requiring higher fuel economy for MY 2017–25 cars and light trucks will total $387–395 billion when discounted using a 7 percent rate, as compared to the previous $525–536 billion estimate of total benefits when potential voluntary overcompliance is not taken into account:
Similarly, Tables IV–137 and IV–138 below show that NHTSA estimates voluntary overcompliance could reduce net benefits attributable to today's standards to $235–242 billion if a 7 percent discount rate is applied to future benefits. This estimate is lower than the previously-reported $372–377 billion estimate of net benefits when potential voluntary overcompliance is not taken into account, using that same discount rate.
As discussed above, these reductions in fuel savings and avoided CO
For more detailed information regarding NHTSA's sensitivity analyses for this final rule, please see Chapter X of NHTSA's FRIA.
Additionally, due to the uncertainty and difficulty in projecting technology cost and efficacy through 2025, and consistent with Circular A–4, NHTSA conducted a full probabilistic uncertainty analysis, which is included in Chapter XII of the FRIA.
•
•
•
•
The effect of this rule on sales of new vehicles depends largely on how potential buyers evaluate and respond to its effects on vehicle prices and fuel economy. The rule will make new cars and light trucks more expensive, as manufacturers attempt to recover their costs for complying with the rule by raising vehicle prices. At the same time, the rule will require manufacturers to improve the fuel economy of many of their models, which will lower the operating costs of those models. While the initial purchase price of those vehicles will increase, the overall cost of owning them—including their operating
The agency anticipates that consumers will place some value on improved fuel economy, both because it reduces the operating cost of the vehicles, and because recently promulgated EPA and DOT regulations require vehicles sold during 2017 through 2025 to display labels that more clearly communicate to potential buyers the fuel savings, economic, and environmental benefits of owning more fuel-efficient vehicles. We recognize that the magnitude of this effect cannot be predicted at this time, and that how consumers value fuel economy is a subject of ongoing debate. We also expect that consumers may consider other factors besides direct purchase price increases that affect the costs they pay for new vehicles, and have included these factors in the analysis.
There is a broad consensus in the economic literature that the price elasticity of demand for automobiles is approximately –1.0,
There is considerable uncertainty in the economics literature about the extent to which consumers value fuel savings from increased fuel economy, and there is still more uncertainty about possible changes in consumer behavior over time (especially with the likelihood of consumer learning) and the extent to which this final rule could affect consumer behavior. In addition, consumers' valuation of fuel economy improvements depends upon the price of gasoline, which has recently been very volatile. On balance, the effect of this final rule on vehicle sales will depend upon whether the value that potential buyers place on the increased fuel economy that this rule requires is greater or less than the increase in vehicle prices that results from the rule, as well as on how automakers interpret buyers' likely responses to higher prices and increased fuel economy. Additional data would enhance the accuracy of predictions on these issues. In addition, it would be helpful to assess important emerging trends, such as the degree that longer financing terms affect consumers' decisionmaking as they weigh operating costs versus upfront costs, and the degree to which extreme and continued volatility itself in gas prices affects assumptions about likely returns on upfront technology investments.
The first question to evaluate is how consumers value fuel economy, or more accurately, how they value fuel savings attributable to increased fuel economy. Two interrelated economic concepts are commonly used to summarize how consumers appear to value future fuel savings that result from higher fuel economy. The first relates to the length of time that consumers consider when valuing fuel savings, or “payback period,” while the second relates to the discount rate that consumers apply to future savings. Although either of these two concepts can be used by itself to indicate how buyers value future fuel savings, our analysis uses a combination of the two to characterize consumers' valuation of future fuel savings.
The length of time that consumers consider when valuing future fuel savings can significantly affect their comparisons of fuel savings to the increased cost of purchasing a vehicle that offers higher fuel economy. For example, there will be a significant difference in aggregate fuel savings if consumers consider 1 year, 3 years, 5 years, 10 years, or the lifetime of the vehicle as the relevant payback period. The discount rate that consumers use to discount future fuel savings to their present value can also have a significant impact; higher discount rates will reduce the importance of future fuel savings relative to a vehicle's initial purchase price. If consumers value fuel savings over a short payback period, such as 1 to 2 years, then the discount rate will be less important, but if consumers consider fuel savings over a longer period, then the discount rate will become important.
The payback period and discount rate are conceptual proxy measures for consumer decisions that may often be made without any explicit quantitative analysis. For example, some buyers choosing among a set of vehicles may know what they have been paying recently for fuel, what they are likely to pay to buy each of the vehicles considered, and some attributes—including labeled fuel economies—of those vehicles. However, these buyers may then make a choice without actually trying to estimate how much they would pay to fuel each of the vehicles they are considering buying; for such buyers, the idea of a payback period and discount rate may have no explicit meaning. This does not, however, limit the utility of these concepts for the agency's analysis. If, as a group, buyers behave
Information regarding the number of years that consumers value fuel savings comes from several sources. In past analyses, NHTSA has used five years as representing the average payback period, because this is the average length of time of a financing agreement.
The effective discount rate that consumers have used in the past to value future fuel economy savings has been studied in many different ways and by many different economists. Greene examined and compiled many of these analyses and found: “Implicit consumer discount rates were estimated by Greene (1983) based on eight early multinomial logit choice models. * * *The estimates range from 0 to 73% * * * Most fall between 4 and 40%.” Greene added: “The more recent studies exhibit as least a wide a range as the earlier studies.”
This is an extremely broad range. With such uncertainty about how consumers value future fuel savings and the discount rates they might use to determine the present value of future fuel savings, NHTSA chose for purposes of this analysis to utilize the standard 3 and 7 percent social discount rates recommended by OMB guidance to evaluate the costs and benefits of regulation. To the extent that some consumers appear to apply higher discount rates, the analysis of likely sales consequences would be different. This review leads us to conclude that consumer valuation of future fuel savings is highly uncertain, leading to different potential scenarios for vehicle sales. A negative impact on sales is possible if consumers don't value the fuel savings or desire very short payback periods, because the final rule will lead to an increase in the perceived ownership cost of vehicles. In addition, sales decreases are possible if gasoline prices are lower than projected by manufacturers and the agencies or technology costs are higher than projected. A positive impact on sales is also possible, because the final rule will lead to a significant decrease in the lifetime cost of vehicles, and with consumer learning over time, this effect may produce an increase in sales. Whether a change in sales will result from this final rule, or will result from other factors that affect the way drivers consider fuel economy in their purchasing decisions, is subject to uncertainty.
Although some manufacturers have indicated in public remarks or confidential statements to NHTSA that their plans to apply fuel-saving technology depend on fuel prices and consumers' willingness to pay for fuel economy improvements, the agency does not have specific and robust information regarding how manufacturers interpret consumers' valuation of fuel savings. Based on our review of the literature and available evidence, it is not clear how accurately manufacturers are accounting for consumer valuation of fuel economy in making their pricing decisions, nor how that accuracy will be affected in the future as manufacturers' costs to produce vehicles rise in response to the final standards. In standard economic theory, if manufacturers believe that consumers value the fuel savings at a higher dollar level than the technology costs, then manufacturers' profit motives would lead them to voluntarily add the cost-effective technologies to their vehicles in the absence of government mandates, in the belief that their sales and profits would increase.
This concept ties into the basic question of whether manufacturers are providing the amount of fuel economy that consumers wish to purchase—whether there is matching between consumers' demand for fuel economy and the firms' supply of fuel economy. It is possible that the light-duty vehicle market is currently operating according to standard economic assumptions, and manufacturers are providing approximately the amount of fuel economy that consumers wish to purchase, because they correctly interpret consumers' valuation of fuel economy. On the other hand, it is possible that manufacturers are providing more or less fuel economy than consumers wish to purchase, because they do not correctly understand consumers' valuation of fuel economy. Because NHTSA does not know which scenario is correct today, and cannot predict which will apply in the future, we evaluate the response of sales under both scenarios in the following sections in order to assess the range of potential impacts that could be attributable to this final rule.
As discussed above, it is very difficult to determine how consumers will react to fuel economy improvements, and manufacturers presumably face this same challenge. Consumer consideration of fuel economy appears to evolve based on a variety of factors (fuel price, recessions, marketing), and consumers can react quickly to changes in these factors, sometimes more rapidly than the industry is able to change its product offerings. There have been examples of periods when demand for fuel efficient vehicles exceeded the available supply of highly efficient vehicles, and other periods where very efficient vehicle models were introduced into the market but sales stalled. If manufacturers did not
In addition, there is reason to believe there may be risk aversion on the consumer side. The simultaneous investment by all companies may also encourage consumer confidence in the new technologies. If only one company adopted new technologies, early adopters might gravitate toward that company, but early adopters tend to be a relatively small portion of the public. More cautious buyers, who are likely to be more numerous, might wait for greater information before moving away from well-known technologies. If all companies adopt advanced technologies at the same time, though, potential buyers may perceive the new technologies as the new norm rather than as a risky innovation. They will then be more willing to move to the new technologies. As some commenters have pointed out, simultaneous action required by the rule may change buyers' expectations (their reference points) for fuel economy, and investing in more fuel economy may seem less risky than in the absence of the rule.
Further, the certainty of the regulations reduces the costs of meeting them, because there will be a) more economies of scale and more learning curve benefits due to greater cumulative production of fuel-efficient technologies and b) more incentive for automakers and suppliers to invest in R&D to create future fuel-efficient technologies.
Given the considerable uncertainty associated with consumer valuation of fuel savings and manufacturers' understanding of that valuation, NHTSA sought to assess potential sales impacts under two possible basic scenarios: first, one in which the light-duty vehicle market is currently operating according to standard theoretical economic principles, and manufacturers are providing
For years, consumers have been learning about the benefits that accrue to them from owning and operating vehicles with greater fuel efficiency. This type of learning is expected to continue before and during the model years affected by this rule, particularly given the new fuel economy labels that clarify potential economic effects and should therefore reinforce that learning. Therefore, some increase in the demand for, and production of, more fuel efficient vehicles is incorporated in the market driven baseline.
The fuel savings associated with operating more fuel efficient vehicles will be more salient to individuals who own them, causing their subsequent purchase decisions to shift closer to minimizing the total cost of ownership over the lifetime of the vehicle. Second, this appreciation may spread across households through word of mouth and other forms of communications. Third, as more motorists experience the time and fuel savings associated with greater fuel efficiency, the price of used cars will better reflect such efficiency, further reducing the cost of owning more efficient vehicles for the buyers of new vehicles (since the resale price will increase). If these induced learning effects are strong, the rule could potentially increase total vehicle sales over time. These increased sales would not occur in the model years first affected by the rule, but they could occur once the induced learning takes place. It is not possible to quantify these learning effects years in advance and that effect may be speeded or slowed by other factors that enter into a consumer's valuation of fuel efficiency in selecting vehicles.
The possibility that the rule will (after a lag for consumer learning) increase sales need not rest on the assumption that automobile manufacturers are failing to pursue profitable opportunities to supply the vehicles that consumers demand. In the absence of the rule, no individual automobile manufacturer would find it profitable to move toward the more efficient vehicles mandated under the rule. In particular, no individual company can fully internalize the future boost to demand resulting from the rule. If one company were to make more efficient vehicles, counting on consumer learning to enhance demand in the future, that company would capture only a fraction of the extra sales so generated, because the learning at issue is not specific to any one company's fleet. Many of the extra sales would accrue to that company's competitors.
In the language of economics, consumer learning about the benefits of fuel efficient vehicles involves positive externalities (spillovers) from one company to the others.
The agency examined a number of cases to illustrate these scenarios. Sales impacts were determined for 6 cases that are combinations of manufacturers' beliefs of how consumers value fuel savings and consumers' valuation of fuel savings. The first two cases assume a flat baseline (no voluntary improvement in fuel economy above the MY 2016 standards by manufacturers absent new regulations), consistent with the agency's main analysis in this rulemaking. In these first two cases we assume consumers value fuel savings for a 3 year period or a 5 year period (the average length of a loan), and we also determine the breakeven point of consumer valuation of fuel savings, where there would be no impact on sales, assuming all other factors remain constant. As can be seen in Table IV–140 below, with a flat baseline and assuming that consumers consider fuel economy benefits over a 3 or 5 year period, benefits exceed costs to the point that consumers will purchase more vehicles and sales will increase. NHTSA estimates a break-even point of 2.35 years for scenarios with a flat baseline; that is, if consumers value fuel savings over an average 2.35 years, neither an increase nor a decrease in sales is expected.
The next 4 cases assume that manufacturers will, absent new regulations, implement technologies in response to their belief that consumers have either a 1 year, 3 year, or 5 year payback period, and for 3 of these scenarios where the consumer also values fuel economy over the same payback periods assumed by manufacturers. For example, the agency also examined the impact on sales and employment under the sensitivity analysis assumption that the baseline fleet included the manufacturers voluntarily implementing any technology that had a 1 year or less payback period for consumers. In this analysis, the least expensive technologies relative to their effects on fuel economy improvement (those that had a consumer payback where fuel savings over the first year of use were higher than new vehicle price increases) were assumed to be voluntarily implemented by manufacturers, resulting in improved fuel economy in the baseline case which would have occurred without adoption of this rule. The same methodology was used in the cases where both manufacturers and consumers value fuel savings over either a 3 year period or a 5 year period. All three of these cases result in reductions in sales, with the impact decreasing as the manufacturer's baseline increases from 1 year to 3 year to 5 years. In a final case we assume that manufacturers voluntarily implement any technology that had a 1 year or less payback period for consumers, but that consumers value fuel savings over a 3 year period.
Under that case, the breakeven point for consumers is about 3.1 years—meaning that if consumers valued their fuel savings over 3.1 years in this scenario, there would be no impact on sales; in other words if the payback period of the fuel saving technologies was less than 3.1 years, then the vehicle sales would increase and vice versa.
For the reader's reference, Table IV–139 below shows the included combinations of payback periods assumed—for these different cases—to represent consumers' and manufacturers' decisions. The agency considered these different cases to represent an illustrative range of possible outcomes under the scenarios described above.
For the analysis for each of these cases, NHTSA makes several assumptions. For the fuel savings part of the equation, as shown in the table, we assumed that the average purchaser considers the fuel savings they would receive over a 1, 3, or 5 year timeframe. The present values of these savings were calculated using a 3 and 7 percent discount rate. We used a fuel price forecast that included taxes, because this is what consumers must pay. Fuel savings were calculated over the first 1, 3, or 5 years and discounted back to a present value.
The agency believes that consumers may consider several other factors over the 5 year horizon when contemplating the purchase of a new vehicle. The agency added some of these factors into the calculation to represent how an increase in technology costs might affect consumers' buying considerations.
First, consumers might consider the sales taxes they have to pay at the time of purchasing the vehicle. As these costs are transfer payments, they are not included in the societal cost of the program, but they are included as one of the increased costs to the consumer for these standards. We took the most recent auto sales tax by state
Second, we considered insurance costs over the 5 year period. More expensive vehicles will require more expensive collision and comprehensive (
Third, we considered that 70 percent of new vehicle purchasers take out loans to finance their purchase.
Fourth, we considered the residual value (or resale value) of the vehicle after 5 years and expressed this as a percentage of the new vehicle price. If the price of the vehicle increases due to fuel economy technologies, the resale value of the vehicle will go up proportionately. The average resale price of a vehicle after 5 years is about 35 percent
A recent study on the effects on sales, attributable to NHTSA regulatory programs, including the fuel economy program was undertaken by the Center for Automotive Research (CAR).
There are many factors that go into the CAR analysis of sales. CAR assumes a 22.0 mpg baseline, two gasoline price scenarios of $3.50 and $6.00 per gallon, VMT schedules by age, and a rebound rate of 10 percent (although it appears that the CAR report assumes a rebound effect even for the baseline and thus negates the impact of the rebound effect). Fuel savings are assumed to be valued by consumers over a 5 year period at a 10 percent discount rate. The impact on sales varies by scenario, the estimates of the cost of technology, the price of gasoline, etc. At $3.50 per gallon, the net change in consumer savings (costs minus the fuel savings valued by consumers) is a net cost to consumers of $359 for the 3% scenario, a net cost of $1,644 for the 4% scenario, a net cost of $2,858 for the 5% scenario, and a net consumer cost of $6,525 for the 6% scenario. At $6.00 per gallon, the net change in consumer savings (costs minus the fuel savings valued by consumers) is a net savings to consumers of $2,107 for the 3% scenario, a net savings of $1,131 for the 4% scenario, a net savings of $258 for
Figure 13 on page 44 of the CAR report shows a graph of historical automotive labor productivity, indicating that there has been a long term 0.4 percent productivity growth rate from 1960–2008, to indicate that there will be 12.26 vehicles produced in the U.S. per worker in 2025 (which is higher than NHTSA's estimate—see below). In addition, the CAR report discusses the jobs multiplier. For every one automotive manufacturing job, they estimate the economic contribution to the U.S. economy of 7.96 jobs
CAR uses econometric estimates of the sensitivity of new vehicle purchases to prices and consumer incomes and forecasts of income growth through 2025 to translate these estimated changes in net vehicle prices to estimates of changes in sales of MY 2025 vehicles; higher net prices—which occur when increases in vehicle prices exceeds the value of fuel savings—reduce vehicle sales, while lower net prices increase new vehicle sales in 2025. We do not have access to the statistical models that CAR develops to estimate the effects of price and income changes on vehicle sales. CAR's analysis assumes continued increases in labor productivity over time and then translates the estimated impacts of higher CAFE standards on net vehicle prices into estimated impacts on sales and employment in the automobile production and related industries.
The agency disagrees with the cost estimates in the CAR report for new technologies, the addition of safety mandates into the costs, and various other assumptions. Many commenters stated that they expected vehicle sales to increase as a result of the final rule, and cited an analysis conducted by Ceres and Citigroup Global Markets Inc.
The UAW, along with NRDC and the National Wildlife Foundation, also submitted reports indicating their assessment that the additional technology content needed to meet higher fuel economy standards would lead to considerable sales and employment growth. For example, the 2010 UAW/NRDC/Center for American Progress study, “Driving Growth,” concluded that if 75 percent of the
While NHTSA conducted and considered a variety of vehicle sales “cases” as presented above, we do not believe that we can state with certainty that any given case is “correct” for the rulemaking timeframe. Given that this final rule affects multiple years, many years in the future, and that during that time there will be a dynamic situation occurring with dramatically changing fuel economy levels and technology being added to vehicles, we anticipate that consumers' consideration of fuel economy will evolve over time. NHTSA believes that there is much uncertainty in how much consumers' consideration of fuel economy will change as a result of this final rule alone, as compared to other rules such as the MYs 2012–2016 CAFE and GHG emissions rules and the Fuel Economy Labeling rule, or manufacturers' marketing efforts. We anticipate that manufacturers will be tracking consumers' behavior and marketing their products to affect consumer behavior, as they always have. We have made several simplifying assumptions in order to estimate the potential impact on sales, but as discussed above, there are uncertainties in how this final rule will affect sales and employment. We note, as is likely evident in the table above, that the impact on sales in this analysis is heavily impacted by the difference between manufacturers' beliefs of how consumers value fuel savings and consumers' valuation of fuel savings.
This uncertainty, however, supports our conclusion in Section IV.F of the preamble that higher standards than the ones finalized in this rulemaking may not be economically practicable. The agency has tried to grapple with potential sales impacts as an important aspect of economic practicability, but reaching no definitive conclusion, believes that a conservative approach will be most likely to help us avoid setting standards that are beyond what would be economically practicable, and thus beyond the maximum feasible levels. NHTSA will monitor sales trends going forward, and anticipates that the intervening years between this final rule and the future rulemaking to develop and establish final standards for MYs 2022–2025 will provide significant additional insight into the questions of how consumers value fuel savings associated with increased fuel economy, how manufacturers believe consumers value that fuel savings, and corresponding effects on vehicle sales attributable to CAFE standards.
As discussed elsewhere in the preamble and FRIA, the literature provides mixed evidence that consumers consistently value future fuel savings consistent with shorter payback periods and/or higher discount rate than the full lifetime value of fuel savings over the useful life of vehicles discounted as the social discount rates. That also provides an explanation for one of the potential reasons that manufacturers do not voluntarily provide all of the fuel saving technologies that are cost-effective and available, on a societal basis considered over the lifetime of the vehicle. In the past, consumers have not been willing to pay the additional price for such fuel economy improvements. One question is whether consumers will place a greater value on fuel savings as a result of this rule, and only as a result of this rule. In the past, large spikes in gasoline prices and consistently high gasoline prices have spurred consumers to consider fuel economy more prevalent in their purchasing decisions. The agency believes that the new and improved fuel economy labels and the large increase in fuel economy required as a result of the MY 2012–2016 fuel economy standards, may all have an impact on consumer valuation of fuel savings. However, these effects are not due to this rule. This final rule with its very large increase in average fuel economy, as well as manufacturers marketing these increased fuel economy levels, should also have a significant effect on consumers' realization that fuel economy is changing rapidly and significantly. As a result, we believe consumers will pay more attention to fuel savings as a result of this final rule assuming that fuel prices do not decrease significantly, but there is uncertainty whether all sales impacts will be the result of this final rule alone. It is possible that consumers will not demand increased fuel economy even when such increases would reduce overall costs for them. Some vehicle owners may also react to persistently higher vehicle costs by owning fewer vehicles, and keeping existing vehicles in service for somewhat longer. For these consumers, the possibility exists that there may be permanent sales losses, compared with a situation in which vehicle prices are lower. There is a wide variety in the number of miles that owners drive per year. Some drivers only drive 5,000 miles per year and others drive 25,000 miles or more. Rationally those that drive many miles have more incentive to buy vehicles with high fuel economy levels. In summary, there are a variety of types of consumers that are in different financial situations and drive different mileages per year. Since consumers are different and use different reasoning in purchasing vehicles, and we do not yet have an account of the distribution of their preferences or how that may change over time as a result of this rulemaking, the answer is quite ambiguous. Some may be induced by better fuel economy to purchase vehicles more often to keep up with technology, some may purchase no new vehicles because of the increase in vehicle price, and some may purchase fewer vehicles and hold onto their vehicles longer. There is great uncertainty about how consumers value fuel economy, and for this reason, the impact of this fuel economy proposal on sales is uncertain.
While it is difficult to determine how consumers will react to fuel economy improvements attributable to the final rule, we believe that it is likely that consumers will learn more about and increasingly value fuel economy improvements in the future, but we also believe that manufacturers and consumers are unlikely to place identical valuation on fuel economy benefits. We believe for the reasons discussed above that manufacturers will behave more conservatively in their assumptions of how consumers value fuel economy than how on average consumers will actually behave.
Some commenters stated that sales will increase as a result of the rule, as evidenced above in the above discussion of comments from Ceres and the UAW. Others, including NADA, expressed concern that sales may fall.
NHTSA is currently sponsoring work to develop a vehicle choice model for potential use in the agency's future rulemaking analyses—this work may help to better estimate the market's effective valuation of future fuel economy improvements. This rule did not rely on a vehicle choice model. With an integrated market share model, the CAFE model would estimate how the sales volumes of individual vehicle models would change in response to changes in fuel economy levels and prices throughout the light vehicle market, possibly taking into account interactions with the used vehicle market. Having done so, the model would replace the sales estimates in the original market forecast with those reflecting these model-estimated shifts, repeating the entire modeling cycle until converging on a stable solution. We sought comment on the potential for this approach to help the agency estimate sales effects. Several commenters wanted the agency to either have the vehicle choice model go through a full peer review (the Alliance) or to be provided for public comment and review (NRDC) before being used. There was wide disparity in the comments on the concept of using a vehicle choice model to estimate the impacts on sales. The Alliance supported the use of a vehicle choice model. The American Fuel and Petrochemical Manufacturers
NRDC stated that a consumer choice model could only rely on stated or revealed preferences based on existing vehicles in the market place and such a model is inappropriate for standards that drive the use of new technology. In response, NHTSA agrees that further work on the vehicle choice model is necessary, and is continuing to develop it. Section IV.C.4 of the preamble discusses the current progress with the choice model and next steps, and we refer the reader there for more information.
There are three potential areas of employment in the automotive industry that fuel economy standards could affect.
• The first is the hiring of additional engineers by automobile companies and their suppliers to do research and development and testing on new technologies to determine their capabilities, durability, platform introduction, etc. The agency anticipates that there may be some level of additional job creation due to the added research and development, overall program management, and subsequent sales efforts required to market vehicles that have been redesigned for significant improvements in fuel economy, especially for revolutionary technologies such as hybrid and electric vehicles. In this respect, the final rule will likely have a positive effect on employment. At the same time, the levels of added employment are uncertain. In addition, it is not clear how much of this effort will be accomplished by added employment and how much by diverting existing employees to focus on CAFE instead of other company priorities such as improved acceleration performance, styling, marketing, new vehicle concepts, etc.
• The second area is the impact that new technologies would have on production employment, both at suppliers and at auto assemblers. Added parts, like turbochargers, or complexity of assembly could have a positive impact on employment. The use of more exotic steels, aluminum, or other materials to save weight could affect the number of welds or attachment methods. It is uncertain to what extent new CAFE technologies would require added steps in the assembly process that would necessitate new hiring, but generally when content is added, the number of employees in the supplier industry and on the assembly line goes up.
• The third area is the potential impact that sales gains or losses could have on production employment. This area is potentially much more sensitive to change than the first two areas discussed above, although for reasons discussed above its estimation is highly uncertain. An increase in sales, produced for example by consumer attention to overall costs and learning over time, would have a positive effect on employment. A decrease in sales, produced by increases in initial costs, would have a negative effect.
We received a number of comments (from the Defour Group and some private individuals) asserting that there will be decreases in employment as a result of the costs of the rule, and a number of comments (from the United Auto Workers, environmental organizations, sustainable business groups, some private individuals, and others) asserting increases in employment, based on the development of advanced technologies and the reduction in net costs due to fuel savings. An assessment by the Defour Group predicts a loss of 155,000 jobs in manufacturing and supply, plus another 50,000 in distribution.
Estimates of decreases in employment commonly come from studies that use cost estimates higher than those estimated by the agencies, and sometimes lower benefits estimates, resulting in reductions in vehicle sales. For instance, some comments from individuals cite the National Automobile Dealers Association and Center for Automotive Research for cost estimates of $5,000 to $6,000 per vehicle, much higher than those
In order to obtain an estimate of potential job increases per unit sales increase, we examined recent U.S. employment (original equipment manufacturers and suppliers) and U.S. production. Total employment in 2000 reached a peak in the Motor Vehicle and Parts Manufacturing sector of the economy averaging 1,313,500 workers (NAICS codes of 3361, 2, 3). Then there was a steady decline to 1,096,900 in 2006 and more rapid decreases in 2008, and 2009. Employment in 2009 averaged 664,000, employment in 2010 averaged 675,000 and employment in the first six months of 2011 has averaged 699,000. Table VII–19 shows how many vehicles are produced by the average worker in the industry. Averaging the information shown for the even years of 2000–2010, the average U.S. domestic employee produces 11.3 vehicles (the same number as in 2008 and 2010). Thus, assuming that a projected sales gain or loss divided by 11.3 would be one method of estimating the potential employment gain or loss in any one year. This provides a measurement in job years. This method underestimates the number of jobs per vehicle sold under the rule, because it does not take into account the additional employment associated with the additional fuel-saving technologies.
We also examined the employment impact for production and non-supervisory workers from the Bureau of Labor Statistics to see if there was a more direct link between their employment level and production than the white collar workers. There is a closer link between light vehicle production in the U.S. and the number of production and non-supervisory workers (for example, from 2002 to 2010, production fell by 44 percent; the number of production and non-supervisory workers in the industry fell by 44 percent and the number of white collar workers fell by 31 percent). However, in some years (2004 and 2006) the white-collar jobs had a higher percentage loss than the blue-collar jobs. In this analysis, the agency examines all jobs in the industry.
The Administration
This rule would take effect in 2017 through 2025; by then, the current high unemployment may be moderated or ended. The Congressional Budget Office has predicted full employment by 2018.
Table IV–143 shows the potential cumulative impact on auto sector employment over the MY 2017–2025 period in job years, without considering or quantifying the ripple effect. This table takes the results from sales and divides by 11.3 to obtain the impact on auto sector employment. To estimate the proportion of domestic employment affected by the change in sales, we use data from Ward's Automotive Group for total car and truck production in the U.S. compared to total car and truck sales in the U.S. For the period 2001–2010, the proportion is 66.7 percent. We thus weight sales by this factor to get an estimate of the effect on U.S. employment in the motor vehicle manufacturing sector due to this rule. As in the sales analysis, the table shows the potential impact for the preferred alternative for both the MY 2010 baseline and for the MY 2008 baseline at the 3 percent and 7 percent discount rates for 6 different cases.
Since the impact of this final rule on sales is very difficult to predict, and sales have the largest potential effect on employment, the impact of this final rule on employment is also very difficult to predict. As with sales, the impact on employment is heavily affected by the difference between manufacturers' investments in fuel-saving technologies
The effect of this rule on the use and scrappage of older vehicles will be related to its effects on new vehicle prices, the fuel efficiency of new vehicle models, and the total sales of new vehicles. If the value of fuel savings resulting from improved fuel efficiency to the typical potential buyer of a new vehicle outweighs the average increase in new models' prices, sales of new vehicles will rise, while scrappage rates of used vehicles will increase slightly. This will cause the “turnover” of the vehicle fleet—that is, the retirement of used vehicles and their replacement by new models—to accelerate slightly, thus accentuating the anticipated effect of the
Because the agencies are uncertain about how the value of projected fuel savings from the final rules to potential buyers will compare to their estimates of increases in new vehicle prices, we have not attempted to estimate explicitly the effects of the rule on scrappage of older vehicles and the turnover of the vehicle fleet.
There are two viewpoints for evaluating the costs and benefits of the increase in CAFE standards: the private perspective of vehicle buyers themselves on the higher fuel economy levels that the rule would require, and the economy-wide or “social” perspective. In order to appreciate how these viewpoints can diverge, it is important to distinguish between costs and benefits that are borne privately by those who would have purchased new vehicles in the absence of the rule, and costs and benefits that are distributed broadly throughout the economy. The agency's analysis of benefits and costs from requiring higher fuel efficiency, presented in detail above, includes several categories of benefits (identified as “social benefits”) that are not limited to automobile buyers, and instead extend throughout the U.S. (and global) economy. Examples of these benefits include reductions in the energy security costs associated with U.S. petroleum imports, and in the economic damages expected to result from climate change and local air pollution. In contrast, other categories of benefits—principally future fuel savings projected to result from higher fuel economy, but also, for example, the value of less frequent refueling—will be experienced exclusively by the initial purchasers and subsequent owners of vehicle models whose fuel economy manufacturers elect to improve (and are thus referred to as “private benefits”).
While the economy-wide or social benefits from increased fuel economy represent a small but important share of the total economic benefits from raising CAFE standards, NHTSA estimates that benefits
The comparisons above immediately raise the question of why buyers would not purchase vehicles with the higher fuel economy levels the rule requires manufacturers to achieve in future model years even if NHTSA did not adopt it. They also raise the question of whether it is appropriate to assume that manufacturers would not elect to provide higher fuel economy even in the absence of increases in CAFE standards, since the comparisons in Tables IV–144 and IV–145 suggest that doing so would increase the prices that potential buyers would be willing to pay for many new vehicle models by far more than it would raise their manufacturers' costs of produce them. In other words, these comparisons suggest that increasing fuel economy would be an effective strategy for many manufacturers to expand their sales of new vehicles and increase profits. More specifically, why would potential buyers of new vehicles hesitate to purchase models offering higher fuel economy, when doing so would produce the substantial economic savings implied by the comparisons presented in Tables IV–144 and IV–145? And why would manufacturers voluntarily forego opportunities to increase the attractiveness, value, and competitive positioning of their car and light truck models—and thus their own profits—by improving their fuel economy?
One explanation for why this might arise is that the market for vehicle fuel economy does not appear to work perfectly, and that higher CAFE standards are necessary to require manufacturers to produce—and potential buyers to purchase—models with higher fuel economy. One source of such market imperfections might be limited availability of information to consumers about the savings from purchasing models that offer higher fuel economy. However, such information is increasingly available and has become easier to obtain, and new fuel economy labels will provide a wide range of information about the economic and environmental benefits of increased fuel economy.
While Tables IV–144 and IV–145 illustrate large net (discounted) savings from reduced fuel expenditures over the useful life of the vehicle, fuel expenditures are not the only relevant operating cost associated with vehicle ownership. By forcing manufacturers to add new fuel economy technologies to their vehicle offerings, this rule creates additional costs that will be borne by the purchasers of those vehicles. By model year 2025, buyers of new passenger cars and light trucks will face an average increase of $80 per vehicle in additional taxes and fees at the time of purchase and registration. Over the vehicle's useful life, buyers of MY 2025 new vehicles will spend an additional $225 in financing charges, $280 in the cost of insurance, and another $130 in vehicle maintenance costs. These costs combine to add over $700 (discounted) to the cost of ownership, and further erode the savings in fuel expenditures. However, Tables IV–144 and IV–145 suggest much larger net savings, even accounting for ancillary ownership costs.
Many commenters noted that recent poll results and changes in attitudes suggest that consumers are becoming more aware of the importance and value of fuel economy, and that this will increasingly be reflected in their future vehicle purchasing decisions. NRDC, the Sierra Club, Consumer Federation of America, and Consumers' Union each cited recent polls indicating that consumers are increasingly concerned about fuel prices and U.S. energy security, and are increasingly aware that purchasing vehicles with higher fuel economy can reduce both their gasoline costs and U.S. dependence on imported petroleum. Some of these commenters also noted that recent polls have shown growing support for higher CAFE standards as a strategy for increasing the range of vehicle models offering high fuel economy, and increased willingness of vehicle buyers to pay for improved fuel economy and advanced technologies such as electric vehicles.
The agency agrees that there appears to be growing awareness of fuel economy generally and increased interest in higher fuel economy among vehicle buyers, but notes that some of this may reflect the persistence of high fuel prices in recent years. Thus if fuel prices decline from recent high levels, some of this increased awareness and willingness to pay for higher fuel economy could erode. In addition, if significant failures in the market for fuel economy—such as those identified in the preceding discussion—exist, then increased consumer awareness of and interest in fuel economy may be inadequate by themselves to result in the levels of fuel economy that would be economically desirable. In this case, increased CAFE standards are still likely to be necessary to require manufacturers to supply—and buyers to demand—the higher fuel economy levels that can be economically justified on the basis of their benefits and costs.
Other potential sources of market failure include phenomena highlighted by the field of behavioral economics, including loss aversion, inadequate consumer attention to long-term effects of their decisions, or a lack of salience of benefits such as fuel savings to consumers at the time they make purchasing decisions. For example, some research suggest that many consumers are unwilling to make energy-efficiency investments that appear likely to pay off in the relatively short-term, in part because they are deterred by the prospect that those investments require immediate, known outlays but produce deferred and uncertain returns.
Another possible explanation for manufacturers' unwillingness to offer models with improved fuel economy is that many consumers appear to undervalue potential savings in gasoline costs when purchasing vehicles. Fuel costs may be a “shrouded” attribute in consumers' decisions, because it may simply not be in many shoppers' interest to spend the time and effort necessary to determine the economic value of higher fuel economy, to isolate the component of a new vehicle's selling price that is related to its fuel economy, and compare these two. It may also be difficult for potential buyers to disentangle the cost of purchasing a more fuel-efficient vehicle from its overall purchase price, or to isolate the value of higher fuel economy from accompanying differences in more prominent features of new vehicles, such as passenger and cargo-carrying capacity, performance, or safety. Some recent research finds that because of these or other reasons, many buyers are unwilling to pay $1 more to purchase a vehicle that offers a $1 reduction in the discounted present value of its future gasoline costs.
Other research suggests that the manufacturers' hesitance to offer e more fuel efficient vehicles stems from consumers' inability to value future fuel savings correctly. For example, Larrick and Soll (2008) find evidence that consumers do not understand how to translate changes in fuel economy, which is denominated in miles per gallon (MPG), into resulting changes in fuel consumption and fuel costs per mile driven or in a time period.
Another possible reconciliation of the large net benefits the agency projects for individual buyers and its assumption that producers would not offer the level of fuel economy this final rule requires is that many of the technologies projected by the agency to be available beginning in MY 2017 offer significantly improved efficiency per unit of cost, but are not available for application to new vehicles sold currently. Still another is that the actual value of future fuel savings resulting from the standards will vary widely among potential vehicle buyers. These differences primarily reflect variation in the amount they drive, but differences in their driving styles may also affect the fuel economy they expect to achieve, and buyers undoubtedly have varying expectations about future fuel prices. Thus while the agency's assertion that fuel savings for the
Constraints on the combinations of fuel economy, carrying capacity, and performance that current technologies allow manufacturers to offer in individual vehicle models undoubtedly limit the range of fuel economy available within certain vehicle classes, particularly those including larger vehicles. However, it is also possible that deliberate decisions by manufacturers further limit the range of fuel economy available within individual vehicle market segments, if they underestimate the premiums that prospective buyers of those models are willing to pay for improved fuel economy. As an illustration, the range of highway fuel economy ratings among current minivan models extends only from 23 to 28 mpg, while their combined city and highway ratings ranges only from 19 to 24 mpg.
Some commenters endorsed the agency's analysis of the potential for various sources of market failure to inhibit manufacturers from supplying adequate fuel economy levels, and to cause potential buyers to underestimate the value of purchasing models that offer higher fuel economy. Consumer Federation of America endorsed the agency's focus on sources of manufacturers' hesitance to offer models with higher fuel economy, as well as on the more commonly cited market failures that can make buyers unwilling to invest in higher fuel economy. CFA also submitted more detailed discussions of some of these sources of potential market failure in support of its general comments. ICCT noted that the combination of uncertainty about the cost and effectiveness of new technologies to improve fuel economy with buyers' aversion to potential losses from purchasing higher-priced vehicles offering uncertain fuel savings was sufficient to explain the underinvestment in fuel economy, and to justify higher fuel economy standards. ICCT also argued that by removing consumers' option to buy low fuel economy vehicles, higher fuel economy standards minimize the effect of aversion on buyers' willingness to invest in higher fuel economy.
A fundamentally different explanation for buyers' apparent unwillingness to invest in higher fuel economy when it appears to offer such large financial returns is that NHTSA's estimates of private benefits and costs from requiring manufacturers to improve fuel efficiency do not match potential buyers' assessment of the likely benefits and costs from purchasing models with higher fuel economy ratings. This could occur because the agency's underlying assumptions about some of the factors that affect the value of fuel savings differ from those made by potential buyers, because NHTSA has used different estimates for some benefits from saving fuel than do buyers, or simply because the agency has failed to account for some potential costs of achieving higher fuel economy. For example, buyers may not value increased fuel economy as highly as the agency's calculations suggest, because they have shorter time horizons than the full vehicle lifetimes NHTSA uses in these calculations, or because they discount future fuel savings using higher rates than those prescribed by OMB for evaluating Federal regulations. Potential buyers may also anticipate lower fuel prices in the future than those forecast by the Energy Information Administration, or may expect larger differences between vehicles' MPG ratings and their own actual on-road fuel economy than the 20 percent gap (30 percent for HEVs) the agency estimates.
To illustrate the first of these possibilities, Table IV–146 shows the effect of differing assumptions about vehicle buyers' time horizons on their assessment of the value of future fuel savings. Specifically, the table reports the value of fuel savings consumers might consider when purchasing a MY 2025 car or light truck that features the higher fuel economy levels required by the final rule, when those fuel savings are evaluated over different time horizons. The table then compares these values to the agency's estimates of the increases in these vehicles' prices that are likely to result for MY 2025. This table shows that when fuel savings are evaluated over the average lifetime of a MY 2025 car (approximately 14 years) or light truck (about 16 years), their present value (discounted at 3 percent) exceeds the estimated average price increase by $2,900–3,300 for cars and by $4,400–4,900 for light trucks.
If buyers are instead assumed to consider fuel savings over only a 10-year time horizon, Table IV–146 shows that this reduces the difference between the present value of fuel savings and the projected price increase for a MY 2025 car to $2,100–2,500, and to about $3,300–3,600 for a MY 2025 light truck. Finally, Table IV–146 shows that if buyers consider fuel savings only over the length of time for which they typically finance new car purchases (slightly more than 5 years during 2011), the value of fuel savings exceeds the estimated increase in the price of a MY 2025 car by only about $550–830, while the corresponding difference is reduced to $1,500–1,700 for a MY 2025 light truck.
Potential vehicle buyers may also discount future fuel savings using higher rates than those typically used to evaluate Federal regulations. OMB guidance prescribes that future benefits and costs of regulations that mainly affect private consumption decisions, as will be the case if manufacturers' costs for complying with higher fuel economy standards are passed on to vehicle buyers, should be discounted using a consumption rate of time preference.
Table IV–147 shows the effects of higher discount rates on vehicle buyers' evaluation of the fuel savings projected to result from the CAFE standards presented in this final rule, again using MY 2025 passenger cars and light trucks as an example. As Table IV–146 showed previously, average future fuel savings discounted at the OMB 3 percent consumer rate exceed the agency's estimated price increases by $2,900–3,300 for MY 2025 passenger cars and by $4,400–4,900 for MY 2025 light trucks. If vehicle buyers instead discount future fuel savings at the typical new-car loan rate prevailing during 2011 (approximately 5.2 percent), however, these differences decline to $2,500–2,800 for cars and $3,800–4,200 for light trucks, as Table IV–147 illustrates. This is a plausible alternative assumption, because buyers are likely to finance the increases in purchase prices resulting from compliance with higher CAFE standards as part of the process of financing the vehicle purchase itself.
Finally, as the table also shows, discounting future fuel savings using a consumer credit card rate (which averaged about 13 percent during 2011) reduces these differences to $1,100–1,500 for a MY 2025 passenger car and $2,200–2,500 for the typical MY 2025 light truck. Even at these significantly higher discount rates, however, the table shows that the private net benefits from purchasing new vehicles with the levels of fuel economy this rule would require—rather than those that would result from simply extending the MY 2016 CAFE standards to apply to future model years—remain large.
Some evidence also suggests that vehicle buyers may employ combinations of high discount rates and short time horizons in their purchase decisions. For example, consumers surveyed by Kubik (2006) reported that fuel savings would have to be adequate to pay back the additional purchase price of a more fuel-efficient vehicle in less than 3 years to persuade them to purchase it, and that even over this short time horizon they were likely to discount fuel savings using credit card-like rates.
As these comparisons illustrate, reasonable alternative assumptions about how consumers might evaluate future fuel savings, the major private benefit from requiring higher fuel economy, can significantly affect the benefits they consider when deciding whether to purchase more fuel-efficient vehicles. Readily imaginable combinations of shorter time horizons, higher discount rates, and lower expectations about future fuel prices or annual vehicle use and fuel savings could make some potential buyers hesitant—or perhaps even unwilling—to
If consumers' views about critical variables such as future fuel prices or the appropriate discount rate differ sufficiently from the assumptions used by the agency, some potential vehicle buyers might conclude that the value of fuel savings and other benefits from higher fuel economy they are considering are not sufficient to justify the increase in purchase prices they expect to pay. In conjunction with the possibility that manufacturers misinterpret potential buyers' willingness to pay for improved fuel economy, this might explain why the current choices among available models do not result in average fuel economy levels approaching those this rule would require.
Another possibility is that achieving the fuel economy improvements required by stricter fuel economy standards might lead manufacturers to forego planned future improvements in performance, carrying capacity, safety, or other features of their vehicle models that provide important sources of utility to their owners, even if manufacturers could—at some cost—retain those other features while improving fuel economy. Although the specific economic values that buyers attach to individual vehicle attributes such as fuel economy, performance, or passenger- and cargo-carrying capacity are difficult to infer from vehicle prices or buyers' choices among competing models, changes in vehicle attributes can significantly affect the overall utility that vehicles offer. Thus if requiring manufacturers to provide higher fuel economy leads them to sacrifice improvements in these or other highly-valued attributes, potential buyers are likely to view these sacrifices as an additional cost of improving fuel economy. If the range of models offered ensures that vehicles with those attributes continue to be available, then vehicle buyers will still have the opportunity to purchase them, although only at higher costs than they were previously available.
As indicated in its previous discussion of technology costs, NHTSA has approached this problem by attempting to develop cost estimates for fuel economy-improving technologies that include allowances for any additional costs necessary to maintain the reference fleet (or baseline) levels of performance, comfort, capacity, and safety of light-duty vehicle models. Although NHTSA has revised its estimates of manufacturers' costs for some technologies significantly for use in this rulemaking, these revised estimates are still intended to allow manufacturers to maintain the performance, safety, carrying capacity, and utility of vehicle models while improving their fuel economy, in the majority of cases. The agency's continued specification of footprint-based CAFE standards also addresses this concern, by establishing less demanding fuel economy targets for larger cars and light trucks.
Finally, vehicle buyers may simply prefer the choices of vehicle models they now have available to the combinations of price, fuel economy, and other attributes that manufacturers are likely to offer when required to achieve the higher overall fuel economy levels presented in this final rule. If this is the case, their choices among models—and even some buyers' decisions about whether to purchase a new vehicle—will respond accordingly, and their responses to these new choices will reduce their overall welfare. Some may buy models with combinations of price, fuel efficiency, and other attributes that they consider less desirable than those they would otherwise have purchased, while others may simply postpone buying a new vehicle.
As the foregoing discussion makes clear, the agency cannot offer a complete answer to the question of why the apparently large differences between its estimates of private benefits from requiring higher fuel economy and manufacturers' costs for providing it would not result in fuel economy levels comparable to those required by the rule even in its absence. One explanation is that these estimates are reasonable, but that for some combination of the reasons outlined above, the market for fuel economy is not responding efficiently to these potential economic returns. NHTSA believes the existing literature offers some support for the view that various failures in the market for fuel economy prevent an economically desirable outcome, which implies that there are likely to be substantial private gains from the final rule.
NHTSA acknowledges the possibility that it has incorrectly characterized the impact on the market of the CAFE standards this rule proposes, and that this could cause its estimates of benefits and costs to misrepresent the effects of the final rule. To recognize this possibility, this section presents an alternative accounting of the benefits and costs of CAFE standards for MYs 2017–2025 passenger cars and light trucks and discusses its implications. Table IV–148 and Table IV–149 display the aggregate economic impacts of the rule as viewed from the perspective of potential buyers.
As the table shows, the final rule's total benefits to vehicle buyers (line 4) consist of the value of fuel savings over vehicles' full lifetimes measured using retail fuel prices (line 1), the economic value of vehicle occupants' savings in refueling time (line 2), and the economic benefits from added rebound-effect driving (line 3). As the zero entries in line 5 of the table suggest, no losses in consumer welfare from changes in vehicle attributes (other than those from increases in vehicle prices) are assumed to occur. The only reduction in the total private benefits to vehicle owners occurs as a result of the increased cost of maintaining the more technologically sophisticated vehicles that this rule forces manufacturers to produce and consumers to buy. Thus, the net private benefits to vehicle buyers (line 7) are equal to total private benefits (reported previously in line 4) minus the estimated incremental maintenance costs (line 6). The decline in fuel tax revenues (line 8) that results from reduced fuel purchases offsets the savings in fuel tax payments by vehicle buyers, which was previously included in the retail value of fuel savings (line 1). The offsetting savings in tax payments to vehicle buyers and tax revenue loss to government agencies is simply a transfer of funds between consumers and government, and thus does not represent a net social cost.
Line 15 of Table IV–148 and Table IV–149 shows manufacturers' technology outlays for meeting higher CAFE standards for passenger cars and light trucks, which represent the principal private and social cost of requiring higher fuel economy. The net social benefits (line 16 of the table) resulting from the final rule consist of the sum of private (line 7) and external (line 14) benefits, minus technology costs (line 15). As expected, the figures reported in line 16 of the table are identical to those reported previously. Table IV–148 and Table IV–149 highlight several important features of this rule's economic impacts. First, comparing the rule's net private benefits (line 7) to its external effects (lines 8 through 14) makes it clear that a very large proportion of the final rule's benefits would be experienced by vehicle buyers, while only the small remaining fraction would be extend beyond vehicle buyers themselves. In turn, the vast majority of private benefits resulting from the higher fuel economy levels the final rule would require stem from fuel savings to vehicle buyers. Net external benefits from the final rule (line 14) are actually projected to be small, because losses in tax revenue and external costs from added driving combine to exceed the value of reductions in environmental and energy security externalities. As a consequence, the net
As discussed in detail previously, NHTSA believes that the aggregate benefits from this final rule amply justify its total costs, but it remains possible that the agency has overestimated the value of fuel savings to buyers and subsequent owners of the cars and light trucks to which the higher CAFE standards it establishes would apply. It is also possible that the agency has failed to include adequate cost allowances to allow manufacturers to maintain other vehicle attributes as part of their efforts to achieve higher fuel economy. To acknowledge these possibilities, NHTSA has examined their potential impact on its estimates of the final rule's benefits and costs. This analysis, which appears in Chapter VIII of the Final RIA accompanying this rule, shows the rule's economic impacts under alternative assumptions about the private benefits from higher fuel economy, and the value of potential changes in other vehicle attributes. An important conclusion of this analysis is that even if the private savings are significantly overstated, the benefits of the final and augural standards continue to exceed the costs.
In addition to the quantified benefits and costs of fuel economy standards, the final standards established by this rule will have other impacts that we have not quantified in monetary terms. The decision on whether or not to quantify a particular impact depends on several considerations:
• How likely is it to occur, and can the magnitude of the impact reasonably be attributed to the outcome of this rulemaking?
• Would quantification of its physical magnitude or economic value help NHTSA and the public evaluate the CAFE standards that may be set in rulemaking?
• Is the impact readily quantifiable in physical terms?
• If so, can it readily be translated into an economic value?
• Is this economic value likely to be material?
• Can the impact be quantified with a sufficiently narrow range of uncertainty so that the estimate is useful?
NHTSA expects that this rulemaking will have a number of genuine, material impacts that have not been quantified due to one or more of these considerations. In some cases, further research may yield estimates that are useful for future rulemakings.
The final rule will improve the fuel economy of the U.S. new vehicle fleet, but it will also increase the cost (and presumably, the price) of new passenger cars and light trucks built during MYs 2017–2025. We anticipate that the cost, scope, and duration of this rule, as well as the steadily rising standards it requires, will cause automakers and suppliers to devote increased attention to methods of improving vehicle fuel economy.
This increased attention will stimulate additional research and engineering, and we anticipate that, over time, innovative approaches to reducing the fuel consumption of light duty vehicles will emerge. These innovative approaches may reduce the cost of the final rule in its later years, and also increase the set of feasible technologies in future years. We have attempted to estimate the effect of learning effects on the costs of producing known technologies within the period of the rulemaking, which is one way that technologies become cheaper over time, and may reflect innovations in application and use of existing technologies to meet the future standards.
However, we have not attempted to estimate the extent to which not-yet-invented technologies will appear, either within the time period of the current rulemaking or that might be available after MY 2016. Nor have we projected whether technologies that were considered but not applied in the current rulemaking because of concerns about the likelihood of their commercialization during its timeframe, will in fact be helped towards commercialization as a result of the final standards.
Actions that increase the cost of new vehicles could subsequently make such vehicles more costly to maintain, repair, and insure. In general, NHTSA expects that this effect to be a positive linear function of vehicle costs. In its central analysis, NHTSA estimates that the final rule could raise average vehicle technology costs by over $1,500 by 2025, and for some manufacturers, average costs will increase by more than $2,500 (for some specific vehicle models, we estimate that the final rule could increase technology costs by more than $10,000). Depending on the retail price of the vehicle, this could represent a significant increase in the overall vehicle cost and subsequently increase insurance rates, operation costs, and maintenance costs. Comprehensive and collision insurance costs are likely to be directly related to price increases, but liability premiums will go up by a smaller proportion because the bulk of liability coverage reflects the cost of personal injury. Also, although they represent economic transfers, sales and excise taxes would also increase with increases in vehicle prices (unless rates are reduced). NHTSA has attempted to quantify these increased costs in detail, as reported in the previous discussion of the rule's likely impacts on vehicle sales.
The impact on operation and maintenance costs is less clear, because the maintenance burden and useful life of each technology are not known. However, one of the common consequences of using more complex or innovative technologies is a decline in vehicle reliability and an increase in maintenance costs. These costs are borne in part by vehicle manufacturers (through warranty costs, which are included in the indirect costs of production), and in part by vehicle owners. NHTSA believes that this effect may be significant, but has been unable to quantify these costs for purposes of this final rule.
To the extent that the final standards require manufacturers to build and sell more PHEVs and EVs, vehicle manufacturers and owners may face additional costs for charging infrastructure and battery disposal. While Chapter 3 of the final Joint TSD discusses the costs of charging infrastructure, neither of these costs have been incorporated into the rulemaking analysis.
While NHTSA has estimated the impact of the rebound effect on the use of MY 2017–25 vehicles, we have not estimated how a change in new vehicle sales would impact aggregate vehicle use. Changes in new vehicle sales may be accompanied by complex but difficult-to-quantify effects on overall vehicle use and its composition by vehicle type and age, because the same factors affecting sales of new vehicles are also likely to influence their use, as well as how intensively older vehicles are used and when they are retired from service. These changes may have important consequences for total fleet-wide fuel consumption. NHTSA has been unable to quantify these effects for purposes of this final rule.
To the extent that manufacturers pass on costs to buyers by raising prices for
The effect of this rule on the lifetimes, use, and retirement dates of older vehicles will be related to its effects on new vehicle prices, the fuel efficiency of new vehicle models, and total sales of new vehicles. If the value of fuel savings resulting from improved fuel efficiency to the typical potential buyer of a new vehicle outweighs the average increase in new models' prices, sales of new vehicles will rise while retirement rates of used vehicles will increase slightly. This will cause the “turnover” of the vehicle fleet—that is, the retirement of used vehicles and their replacement by new models—to accelerate slightly, thus accentuating the anticipated effect of the rule on fleet-wide fuel consumption and CO
Because the agencies are uncertain about how the value of projected fuel savings from the final rules to potential buyers will compare to their estimates of increases in new vehicle prices, we have not attempted to estimate explicitly the effects of the rule on retirement of older vehicles and the turnover of the vehicle fleet.
EPAct, as amended by EISA, creates a Renewable Fuels Standard that sets targets for greatly increased usage of renewable fuels over the next decade. The law requires fixed volumes of renewable fuels to be used—volumes that are not linked to actual usage of transportation fuels.
Ethanol and biodiesel (in the required volumes) may increase or decrease the cost of blended gasoline and diesel, depending on crude oil prices and tax subsidies offered for renewable fuels. The potential extra cost of renewable fuels would be borne through a cross-subsidy: the price of every gallon of blended gasoline could rise sufficiently to pay for any extra cost of using renewable fuels in these blends. However, if the price of gasoline or diesel increases enough, the consumer could actually realize a savings through the increased usage of renewable fuels. By reducing total fuel consumption, the CAFE standards in this rule could tend to increase any necessary cross-subsidy per gallon of fuel, and hence raise the market price of transportation fuels, while there would be no change in the volume or cost of renewable fuels used.
These effects are indirectly incorporated in NHTSA's analysis of the final CAFE standards, because they are reflected in EIA's projections of future gasoline and diesel prices in the Annual Energy Outlook, which incorporates in its baseline both a Renewable Fuel Standard and higher CAFE standards.
The net effect of incorporating an RFS then might be to slightly reduce the benefits of the rule, because affected vehicles might be driven slightly less if the RFS makes blended gasoline relatively more expensive, and because fuels blended with more ethanol emit slightly fewer greenhouse gas emissions per gallon. In addition, there might be corresponding benefit losses from the induced reduction in VMT. All of these effects are difficult to estimate, because of uncertainty in future crude oil prices, uncertainty in future tax policy, and uncertainty about how petroleum marketers will actually comply with the RFS, but they are likely to be small, because the cumulative deviation from baseline fuel consumption induced by the final rule will itself be small.
The agency's analysis of the final rule reports impacts only as nationwide aggregate or per-vehicle average values. NHTSA also shows the effects of the EIA high and low fuel price forecasts on the aggregate benefits in its sensitivity analysis. Generally, this final rule would have its largest effects on individuals who purchase new vehicles produced during the model years it would affect (2017–25). New vehicle buyers who drive more than the agency's estimates of average vehicle use will experience larger fuel savings and economic benefits than the average values reported in this final rule, while those who drive less than our average estimates will experience smaller fuel savings and benefits.
Vehicle classification, for purposes of the CAFE program, refers to manufacturers' decisions regarding whether a vehicle is a passenger car or a light truck and whether NHTSA agrees; the vehicle would then be subject to the applicable passenger car or the light truck standards.
Under EPCA, there are two general groups of automobiles that qualify as non-passenger automobiles or light trucks: (1) Those defined by NHTSA in its regulations as other than passenger automobiles due to their having design features that indicate they were not manufactured “primarily” for transporting up to ten individuals; and (2) those expressly excluded from the passenger category by statute due to their capability for off-highway operation, regardless of whether they might have been manufactured primarily for passenger transportation.
Since the original passage of EPCA, and consistently through the passage of EISA, Congress has expressed its intent that different vehicles with different characteristics and capabilities should be subject to different CAFE standards in two ways: first, through whether a vehicle is classified as a passenger car or as a light truck, and second, by requiring NHTSA to set separate standards for passenger cars and for light trucks.
• If the stringency of the standards that NHTSA establishes seems to favor either cars or trucks, manufacturers may have incentive to change their vehicles' characteristics in order to reclassify them and average them into the “easier” fleet; and
• “Like” vehicles, such as the 2WD and 4WD versions of the same CUV, may have generally similar fuel economy-achieving capabilities, but different target standards due to differences in the car and truck curves.
NHTSA recognizes that manufacturers may have an incentive to classify vehicles as light trucks if the fuel economy target for light trucks with a given footprint is less stringent than the target for passenger cars with the same footprint. This is often the case given the current fleet. Because of characteristics like 4WD and towing and hauling capacity (and correspondingly, although not necessarily, heavier weight), the vehicles in the current light truck fleet are generally less capable of achieving higher fuel economy levels as compared to the vehicles in the passenger car fleet. 2WD SUVs and CUVs are the vehicles that could be most readily redesigned so that they can be “moved” from the passenger car to the light truck fleet. A manufacturer could do this by adding a third row of seats, for example, or boosting GVWR over 6,000 lbs for a 2WD SUV or CUV that already meets the ground clearance requirements for “off-road capability.” A change like this may only be possible during a vehicle redesign, but since vehicles are redesigned, on average, every 5 years, at least some manufacturers could possibly choose to make such changes before or during the model years covered by this rulemaking, either because of market demands or because of interest in changing the vehicle's classification.
In the NPRM, the agency stated that it continues to believe that the definitions as they currently exist are consistent with the text of EISA and with Congress' original intent. However, the time frame of this rulemaking is longer than any CAFE rulemaking that NHTSA has previously undertaken, and no one can predict with certainty how the market will change between now and 2025. The agency therefore has less assurance than in prior rulemakings that manufacturers will not have greater incentives and opportunities during that time frame to make more deliberate redesign efforts to move vehicles out of the car fleet and into the truck fleet in order to obtain the lower target, and potentially reducing overall fuel savings. Recognizing this possibility, NHTSA sought comment on how best to avoid it while still classifying vehicles appropriately based on their characteristics and capabilities.
One of the potential options that we explored in the MYs 2012–2016 rulemaking for MYs 2017 and beyond was changing the definition of light truck to remove paragraph (5) of 49 CFR 523.5(a), which allows vehicles to be classified as light trucks if they have three or more rows of seats that can either be removed or folded flat to allow greater cargo-carrying capacity. NHTSA has received comments in the past arguing that vehicles with three or more rows of seats, unless they are capable of transporting more than 10 individuals, should be classified as passenger cars rather than as light trucks because they would not need to have so many seats if they were not intended primarily to carry passengers.
In the NPRM for MYs 2017 and beyond, NHTSA explained that we recognize that there are arguments both for and against maintaining the definition as currently written. The agency continues to believe that three or more rows of seats that can be removed or folded flat is a reasonable proxy for a vehicle's ability to provide expanded cargo space, consistent with the agency's original intent in developing the light truck definitions that expanded cargo space is a fundamentally “truck-like” characteristic. Much of the public reaction to this definition, which is mixed, tends to be visceral and anecdotal—for example, for parents with minivans and multiple children, the ability of seats to fold flat to provide more room for child-related cargo may have been a paramount consideration in purchasing the vehicle, while for CUV owners with cramped and largely unused third rows, those extra seats may seem to have sprung up entirely in response to the regulation, rather than in response to the consumer's need for utility. If we believe, for the sake of argument, that the agency's decision might be reasonable from both a policy and a legal perspective whether we decided to change the definition or to leave it alone, the most important questions in making the decision become (1) whether removing 523.5(a)(5), and thus causing vehicles with three or more rows to be classified as passenger cars in the future, will save more fuel, and (2) if more fuel will be saved, at what cost.
In considering these questions in the MYs 2012–2016 rulemaking, NHTSA conducted an analysis in that final rule to attempt to consider the impact of moving these vehicles. We identified all of the 3-row vehicles in the baseline (MY 2008) fleet,
As the agency found, however, moving the vehicles reduced the stringency of the passenger car standards by approximately 0.8 mpg on average for the five years of the rule, and reduced the stringency of the light truck standards by approximately 0.2 mpg on average for the five years of the rule, but it also resulted in approximately 676 million fewer gallons of fuel consumed (equivalent to about 1 percent of the reduction in fuel consumption under the final standards) and 7.1 mmt fewer CO
Looking forward, however, and given the considerable uncertainty regarding the incentive to reclassify vehicles in the MYs 2017 and beyond timeframe, the agency considered whether a fresh attempt at this analysis would be warranted, but did not believe that it would be informative given the uncertainty. One important point to note in the comparative analysis in the MYs 2012–2016 rulemaking is that, due to time constraints, the agency did not attempt to refit the respective fleet target curves or to change the intended required stringency in MY 2016 of 34.1 mpg for the combined fleets. If we had refitted curves, considering the vehicles in question, we might have obtained a somewhat steeper passenger car curve, and a somewhat flatter light truck curve, which could have affected the agency's findings. NHTSA explained in the NPRM that the same is true for MYs 2017 and beyond. Without refitting the curves and changing the required levels of stringency for cars and trucks, simply moving vehicles from one fleet to another would not inform the agency in any substantive way as to the impacts of a change in classification. Moreover, even if we did attempt to make those changes, the results would be somewhat speculative; for example, a MY 2008 baseline (or for that matter, a MY 2010 baseline) may have limited utility for predicting relatively small changes (moving only 40 vehicles, as noted above) in the fleet makeup during the rulemaking timeframe. As a result, NHTSA did not attempt in the NPRM to quantify the impact of such a reclassification of 3-row vehicles, but sought comment on whether and how we should do so for the final rule. If commenters believed that we should attempt to quantify the impact, we specifically sought comment on how to refit the footprint curves and how the agency should consider stringency levels under such a scenario.
Another potential option that we explored in the MYs 2012–2016 rulemaking for MYs 2017 and beyond was classifying “like” vehicles together. Many commenters objected in the rulemaking for the MY 2011 standards to NHTSA's regulatory separation of “like” vehicles. Industry commenters argued that it was technologically inappropriate for NHTSA to place 4WD and 2WD versions of the same SUV in separate classes. They argued that the vehicles are the same except for their drivetrain features, thus giving them similar fuel economy improvement potential. They further argued that all SUVs should be classified as light trucks. Environmental and consumer group commenters, on the other hand, argued that 4WD SUVs and 2WD SUVs that are “off-highway capable” by virtue of a GVWR above 6,000 pounds should be classified as passenger cars, since they are primarily used to transport passengers. In the MY 2011 rulemaking, NHTSA rejected both of these sets of arguments. NHTSA concluded that 2WD SUVs that were neither “off-highway capable” nor possessed “truck-like” functional characteristics were appropriately classified as passenger cars. At the same time, NHTSA also concluded that because Congress explicitly designated vehicles with GVWRs over 6,000 pounds as “off-highway capable” (if they meet the ground clearance requirements established by the agency), NHTSA did not have authority to move these vehicles to the passenger car fleet.
NHTSA explained in the NPRM that the agency continues to believe that this would not be an appropriate solution for addressing either the risk of gaming or perceived regulatory inequity going forward. As explained in the MYs 2012–2016 final rule, with regard to the first argument, that “like” vehicles should be classified similarly (
Few commenters provided much substantive analysis in response to the agency's request. Industry commenters generally opposed any changes to the car and truck definitions. The Alliance commented that the existing definitions for classifying vehicles are consistent with the statutes and Congress' intent, and that while NHTSA's adjustments to
Global Automakers similarly argued that if NHTSA adjusted definitions to make 3-row vehicles passenger cars rather than light trucks, it would “likely necessitate changes to the * * * standards to make [them] less stringent to accommodate these vehicles, potentially reducing fuel savings.”
Environmental group commenters generally supported changes to the definitions. CBD expressed concern that manufacturers will be encouraged to redesign 2WD versions of SUVs and CUVs by giving them 4WD and other “off-highway features” to obtain the lower light truck curve target, particularly given the “even greater disparity in mileage standards between trucks and passenger cars created by the NPRM.”
NRDC also stated that manufacturers could easily add 4WD technology to vehicles to reclassify them as light trucks rather than as cars, and the decision would be “influenced by whether or not the cost to add the 4WD technology is less than adding the fuel efficiency and emissions technology necessary to stay compliant on the car curve.”
In response, NHTSA agrees with the point raised by industry commenters that the underlying analysis for this final rule was premised on the passenger car and light truck fleets being defined per the current definitions in 49 CFR Part 523, and we recognize that any change to those definitions in this final rule could conceivably require a fresh analysis and determination of what standards are maximum feasible for the separate car and truck fleets in each model year. If the determination of maximum feasible standards is based on a balancing of factors that accounts, in part, for the unique capabilities of a given fleet, then any changes to that fleet that affect its overall capabilities could presumably change the balancing, and thus the level of stringency that is maximum feasible. Thus, the following discussion is directed toward the future,
A number of commenters expressed concern that manufacturers would convert passenger car 2WD SUVs and CUVs to 4WD versions, or add a third row, in order to obtain the lower target under the light truck curves. Industry commenters maintain that the decision to make such a change to a vehicle model is driven by consumer demand and not by regulations; in fact, Global argued, a vehicle may be better off as a car than as a truck in terms of how its fuel economy compares to its target, insofar as a third row adds cost and weight that may obviate the benefit of the lower target by making it harder to meet it. This contrasts with NRDC's argument that a manufacturer is likely to add 4WD to obtain the light truck target if doing so is cheaper than adding the technology necessary to meet the passenger car target. As discussed above, the agency does not have sufficient information at this time to evaluate the seriousness of this risk. We expect that the calculus of vehicle classification will vary significantly between manufacturers and between model years, and we agree with the suggestion by industry that consumer demand is likely the primary driver of decisions such as 4WD or a third row. Industry cannot remain profitable if it provides too many vehicles that the public does not want; public demand for features such as 2WD and cargo space currently appears to be just as robust as demand for 4WD and third rows, and we have no reason to think
That said, while EPCA continues to be clear that some vehicles are to be passenger cars and some to be light trucks, the agency agrees with environmental and consumer group commenters that the question of what makes a vehicle “off-road capable” and what functional characteristics make a vehicle “truck like” are within the agency's discretion to resolve. We appreciate and will consider further the suggestions by UCS with regard to greater specification of what factors may be appropriate for the regulatory definition of “off-road capable,” even though we are not implementing them as part of this final rule for the reasons discussed above. We will continue to monitor this issue and will revisit it in the future rulemaking to develop final standards for MYs 2022–2025. During the interim, if interested parties compile information on these issues that they believe may be helpful to the agency's future consideration, we welcome them to contact us.
The final issue under the category of vehicle classification was raised by Ford: A discussion of whether aerodynamic components (often referred to as “strakes”) made of flexible plastic and affixed in front of wheels, prevent a vehicle from meeting the running clearance requirements for being “off-road capable.” That question was answered by NHTSA in a letter of interpretation dated July 30, 2012, and thus does not need further discussion as part of this preamble.
NHTSA's CAFE enforcement program is largely established by statute—unlike the CAA, EPCA, as amended by EISA, is very prescriptive with regard to enforcement. EPCA and EISA also clearly specify a number of flexibilities that are available to manufacturers to help them comply with the CAFE standards. Some of those flexibilities are constrained by statute—for example, while Congress required that NHTSA allow manufacturers to transfer credits earned for over-compliance from their car fleet to their truck fleet and vice versa, Congress also limited the amount by which manufacturers could increase their CAFE levels using those transfers.
Furthermore, to achieve the level of standards described in this final rule for the 2017–2025 program, NHTSA expects automakers to continue increasing the use of innovative and advanced technologies as they evolve. The additional incentive programs finalized will encourage early adoption of these innovative and advanced technologies and help to maximize both compliance flexibility and energy conservation. These incentive programs for CAFE compliance are not under NHTSA's EPCA/EISA authority, but under EPA's EPCA authority—as discussed in more detail below and in Section III of this preamble, EPA measures and calculates a manufacturer's compliance with the CAFE standards, and it will be in the calculation of fuel economy levels that the additional incentives are applied. Specifically, what is being finalized in the CAFE program, as proposed by EPA: 1) Fuel economy performance adjustments due to improvements in air conditioning system efficiency; 2) utilization of “game changing” technologies installed on full size pick-up trucks including hybridization; and 3) installation of “off-cycle” technologies. In addition, for model years 2020 and later, EPA will utilize calculation methods for dual-fueled vehicles, to fill the gap left in EPCA/EISA by the expiration of the dual-fuel incentive. A more thorough description of the basis for the new incentive programs can be found in Sections II.F, III.C, and Chapter 5 of the joint TSD.
The following sections explain how NHTSA determines whether manufacturers are in compliance with the CAFE standards for each model year, and how manufacturers may address potential non-compliance situations through the use of compliance flexibilities or fine payment. The following sections also explain, for the reader's reference, the new incentives and calculations finalized, but we also refer readers to Section III.C for EPA's explanation of its authority and more specific detail regarding these changes to the CAFE program.
NHTSA begins to determine CAFE compliance by reviewing projected estimates in pre- and mid-model year reports submitted by manufacturers pursuant to 49 CFR part 537, Automotive Fuel Economy Reports.
Throughout the model year, NHTSA audits manufacturers' reports and conducts vehicle testing to confirm the accuracy of track width and wheelbase measurements as a part of its footprint validation program,
NHTSA's determination of CAFE compliance is fairly straightforward: After testing, EPA verifies the data submitted by manufacturers and issues final CAFE reports sent to manufacturers and to NHTSA in a pdf format between April and October of each year (for the previous model year), and NHTSA then identifies the manufacturers' compliance categories (fleets) that do not meet the applicable CAFE fleet standards. NHTSA plans to construct a new, more automated database system in the near future to store manufacturer data and the EPA data. The new database is expected to simplify data submissions to NHTSA, improve the quality of the agency's data, expedite public reporting, improve audit verifications and testing, and enable more efficient tracking of manufacturers' CAFE credits with greater transparency.
NHTSA uses the verified data from EPA to compare fleet average standards with performance. A manufacturer complies with NHTSA's fuel economy standard if its fleet average performance is greater than or equal to its required standard, or if it is able to use available compliance flexibilities to resolve its non-compliance difference. NHTSA calculates a cumulative credit status for each of a manufacturer's vehicle compliance categories according to 49 U.S.C. 32903. If a manufacturer's compliance category exceeds the applicable fuel economy standard, NHTSA adds credits to the account for that compliance category. The amount of credits earned in a given year are determined by multiplying the number of tenths of an mpg by which a manufacturer exceeds a standard for a particular category of automobiles by the total volume of automobiles of that category manufactured by the manufacturer for that model year. Credits may be used to offset shortfalls in other model years, subject to the three year “carry-back” and five-year “carry-forward” limitations specified in 49 U.S.C. 32903(a); NHTSA does not have authority to allow credits to be carried forward or back for periods longer than that specified in the statute. A manufacturer may also transfer credits to another compliance category, subject to the limitations specified in 49 U.S.C. 32903(g)(3), or trade them to another manufacturer. The value of each credit received via trade or transfer, when used for compliance, is adjusted using the adjustment factor described in 49 CFR 536.4, pursuant to 49 U.S.C. 32903(f)(1). As part of this rulemaking, NHTSA proposed and is finalizing the VMT values that are part of the adjustment factor for credits earned in MYs 2017–2025 at a single level that does not change from model year to model year, as discussed further below.
If a manufacturer's vehicles in a particular compliance category fall below the standard fuel economy value, NHTSA will provide written notification to the manufacturer that it has not met a particular fleet standard. The manufacturer will be required to confirm the shortfall and must either submit a plan indicating it will allocate existing credits, or if it does not have sufficient credits available in that fleet, how it will earn, transfer and/or acquire credits, or pay the appropriate civil penalty. The manufacturer must submit a plan or payment within 60 days of receiving agency notification. Credit allocation plans received from the manufacturer will be reviewed and approved by NHTSA. NHTSA will approve a credit allocation plan unless it finds the proposed credits are unavailable or that it is unlikely that the plan will result in the manufacturer earning sufficient credits to offset the subject credit shortfall. If a plan is approved, NHTSA will revise the manufacturer's credit account accordingly. If a plan is rejected, NHTSA will notify the manufacturer and request a revised plan or payment of the appropriate fine.
In the event that a manufacturer does not comply with a CAFE standard even after the consideration of credits, EPCA provides for the assessment of civil penalties. The Act specifies a precise formula for determining the amount of civil penalties for noncompliance.
Unlike the National Traffic and Motor Vehicle Safety Act, EPCA does not provide for recall and remedy in the event of a noncompliance. The presence of recall and remedy provisions
In contrast, a CAFE standard applies to a manufacturer's entire fleet for a model year. It does not require that a particular individual vehicle be equipped with any particular equipment or feature or meet a particular level of fuel economy. It does require that the manufacturer's fleet, as a whole, comply. Further, although under the attribute-based approach to setting CAFE standards fuel economy targets are established for individual vehicles based on their footprints, the vehicles are not required to comply with those targets on a model-by-model or vehicle-by-vehicle basis. However, as a practical matter, if a manufacturer chooses to design some vehicles so they fall below their target levels of fuel economy, it will need to design other vehicles so they exceed their targets if the manufacturer's overall fleet average is to meet the applicable standard.
Thus, under EPCA, there is no such thing as a noncompliant vehicle, only a noncompliant fleet. No particular
After enforcement letters are sent, NHTSA continues to monitor receipt of credit allocation plans or civil penalty payments that are due within 60 days from the date of receipt of the letter by the vehicle manufacturer, and takes further action if the manufacturer is delinquent in responding. If NHTSA receives and approves a manufacturer's carryback plan to earn future credits within the following three years in order to comply with current regulatory obligations, NHTSA will defer levying fines for non-compliance until the date(s) when the manufacturer's approved plan indicates that credits will be earned or acquired to achieve compliance, and upon receiving confirmed CAFE data from EPA. If the manufacturer fails to acquire or earn sufficient credits by the plan dates, NHTSA will initiate compliance proceedings. 49 CFR part 536 contains the detailed regulations governing the use and application of CAFE credits authorized by 49 U.S.C. 32903.
NHTSA allows vehicles defined as emergency vehicles to be exempted from complying with CAFE standards. The NHTSA definition for emergency vehicle was established in 1972 by EPCA and is defined for NHTSA in 49 U.S.C. 32902(e)
(A) as an ambulance or combination ambulance-hearse;
(B) by the United States Government or a State or local government for law enforcement; or
(C) for other emergency uses prescribed by regulation by the Secretary of Transportation.
At this time, NHTSA does not believe that it has sufficient information to create a regulatory definition for “emergency vehicles” that is different from the text in EPCA. The Alliance provided no definitions, examples, or testing data on the model types of fire suppression, search and rescue and other emergency type vehicles which could be analyzed to determine whether sufficient need exists to add them to the definition and allow for their exclusion. Without this information, amending the definition as requested by the Alliance could inadvertently allow for the exclusion of vehicles that are capable of complying with the CAFE standards, which would be contrary to the overarching purpose of EPCA, energy conservation. Therefore, NHTSA will retain the use of the EPCA definition for the CAFE program, which is already harmonized with EPA's proposed definition of “emergency vehicle” for the GHG program. While we expect to examine this issue further, our initial understanding is that harmonizing exempted vehicles between EPA's criteria emissions program and the CAFE/GHG programs may not be necessary. The most fundamental issue underlying the Alliance comment is concern over a loss in vehicle performance caused by the operation of the criteria emission control system on diesel vehicles. However, to comply with the final CAFE and GHG emission standards, the agencies do not believe that manufacturers would need to implement technologies that would reduce vehicle performance. In the agencies' analyses of the how the industry could comply with the standards, the CAFE and OMEGA models applied technologies that were projected to maintain vehicle performance. Therefore, it is not expected that broadening the definition of emergency vehicles for the CAFE program would affect vehicle performance. NHTSA notes, however, that should a manufacturer wish to exempt a vehicle that falls outside the coverage provided by EPCA, such as the “other types of emergency vehicles” identified by the Alliance, 49 U.S.C. 32902(e)(1)(C) allows DOT to undertake rulemaking to consider adding other vehicles to this category.
There are three basic flexibilities outlined by EPCA/EISA that manufacturers can currently use to achieve compliance with CAFE standards beyond applying fuel economy-improving technologies: (1) Building dual- and alternative-fueled vehicles; (2) banking (carry-forward and carry-back), trading, and transferring credits earned for exceeding fuel economy standards; and (3) paying civil penalties. We note that while these flexibility mechanisms will reduce compliance costs to some degree for most manufacturers, 49 U.S.C. 32902(h) expressly prohibits NHTSA from considering the availability of statutorily-established credits (either for building dual- or alternative-fueled vehicles or from accumulated transfers or trades) in determining the level of the standards. Thus, NHTSA may not raise CAFE standards because manufacturers have enough of those credits to meet higher standards. This is an important difference from EPA's authority under the CAA, which does not contain such a restriction, and which allows EPA to set higher standards as a result.
EPCA/EISA sets forth statutory provisions for manufacturers building alternative-fueled and dual- (or flexible-) fueled vehicles by providing special fuel economy calculations for “dedicated” (that is, 100 percent) alternative fueled vehicles and “dual-fueled” (that is, capable of running on both the alternative fuel and gasoline/diesel) vehicles. Consistent with the overarching purpose of EPCA/EISA, these statutory provisions establish incentives to help reduce petroleum usage and thus improve our nation's energy security.
By statute, the fuel economy of a dedicated alternative fuel vehicle is determined by dividing its fuel economy in equivalent miles per gallon of gasoline or diesel fuel by 0.15.
Considering a similar example for an alternative fueled vehicle powered by natural gas, a vehicle averaging 25 miles per 100 ft
EISA prescribes the incentive for dual-fueled automobiles not only as an adjustment to the vehicle but also limits the overall impact of these vehicles on a manufacturer's fleet performance. A cap for the overall impact of dual-fueled vehicles is specified through MY 2019, but progressively phases-out between MYs 2015 and 2019.
We note additionally and for the reader's reference that EPA will be treating dual- and alternative-fueled vehicles under its GHG program similarly to the way EPCA/EISA provides for CAFE through MY 2015, but for MY 2016, EPA established CO
49 CFR part 538 codifies in regulation the statutory alternative-fueled and dual-fueled automobile manufacturing incentives.
Given that the statutory incentive for dual-fueled vehicles in 49 U.S.C. 32906 and the measurement methodology specified in 49 U.S.C. 32905(b) and (d) expire in MY 2019, NHTSA questioned how the fuel economy of dual-fueled vehicles should be determined for CAFE compliance in MYs 2020 and beyond. NHTSA and EPA believe that the expiration of the dual-fueled vehicle measurement methodology in the statute leaves a gap to be filled that must be addressed to avoid the inappropriate result of dual-fueled vehicles' fuel economy being measured like that of conventional gasoline vehicles, with no recognition of their alternative fuel capability, which would be contrary to the intent of EPCA/EISA. The need for such a method is of greater importance for future model years when the number of plug-in hybrid electric vehicles is expected to increase in MYs 2020 and beyond. If the overarching purpose of the statute is energy conservation and reducing petroleum usage, the agencies believe that that goal is best met by continuing to reflect through CAFE calculations the reduced petroleum usage that dual-fueled vehicles achieve through their alternative fuel usage.
Therefore, after the expiration of the special calculation procedures in 49 U.S.C. 32905 for dual fuel vehicles, the agencies proposed for model years 2020 and later vehicles that the general provisions authorizing EPA to establish testing and calculation procedures would provide discretion to set the CAFE calculation procedures.
Consistent with this approach, however, EPA's proposal did not extend the utility factor method to flexible fueled vehicles (FFVs) that use E–85 and gasoline, since there is not a significant cost differential between an FFV and conventional gasoline vehicle and historically consumers have only fueled these vehicles with E85 a very small percentage of the time. Therefore, for CAFE compliance in MYs 2020 and beyond, EPA will continue treatment of E85 and other FFVs (other than PHEVs and CNG) as finalized in the MY 2016 GHG program, based on the relative weighting of gasoline and E85 (or other fuels) emissions performance on the actual national average use of E85 (or other fuels) in ethanol FFVs or optionally the manufacturer-specific data showing the percentage of miles that are driven on E85 vis-à-vis gasoline for that manufacturer's FFVs. For clarification in our regulations, NHTSA proposed, and is adding, Part 536.10(d) which states that for model years 2020 and beyond a manufacturer must calculate the fuel economy of dual-fuel vehicles in accordance with 40 CFR 600.510–12(c), (2)(v) and (vii), the sections of EPA's calculation regulations where EPA is proposing to incorporate these changes.
Additionally, to avoid manufacturers being encouraged to build only dedicated alternative fuel vehicles (which may be harder to refuel in some instances) because of the incentive of the continued statutory 0.15 CAFE divisor under 49 U.S.C. 32905(a) and the calculation for EV fuel economy under 49 U.S.C. 32904, and being discouraged from building dual-fuel vehicles which might not get a similar bonus, EPA proposed and is finalizing the use of the Petroleum Equivalency Factor (PEF) and a 0.15 divisor for calculating the fuel economy of PHEVs' electrical operation and for natural gas operation of CNG-gasoline vehicles. This is consistent with the statutory approach for dedicated alternative fuel vehicles, and continues to incentivize the usage of alternative fuels and reduction of petroleum usage, but when combined with the utility factor approach described above, does not needlessly
As an example, for MYs 2020 and beyond, the calculation procedure for a dual-fuel vehicle that uses both gasoline and CNG (and meets the two criteria for using the “utility factor” method) could result in a combined fuel economy value of 150 mpg for CAFE purposes. This assumes that (1) the “utility factor” for the alternative fuel is found to be 95 percent, and so the vehicle operates on gasoline for the remaining 5 percent of the time; (2) fuel economy while operating on natural gas is 203 mpg [(25/100) * (100/.823)*(1/0.15)] as shown above utilizing the PEF and the .15 incentive factor; and (3) fuel economy while operating on gasoline is 25 mpg. Thus:
As discussed in Section III.C, the agencies received favorable comments on the proposals for dual fuel and alternative fuel vehicles (with most focusing on PHEVs and dual fuel CNG vehicles). The Alliance of Automobile Manufacturers, Fisker Automotive, the Electric Drive Transportation Association, and the American Council for an Energy-Efficient Economy (ACEEE) supported the use of the SAE utility factor methodology for PHEVs. The natural gas advocacy groups (including America's Natural Gas Alliance/American Gas Association, American Public Gas Association, Clean Energy, Encana Natural Gas Inc., NGV America, and VNG.Co) and the Natural Resources Defense Council (NRDC) supported the use of cycle-specific fleet-based utility factors for dual fuel CNG vehicles, and supported the extension of this approach for MYs 2012–2015, but generally argued against any eligibility requirements for the application of utility factors for dual fuel CNG vehicles. NRDC suggested that EPA adopt the additional constraints on the design of dual-fuel CNG vehicles that were suggested in the NPRM to ensure that these vehicles operate preferentially on CNG. The groups opposing the use of the SAE utility factor did not necessarily reject its use, but rather argued that the values were too conservative. The American Petroleum Institute (API) and Securing America's Future Energy (SAFE) argued that agencies were underestimating the behavior of owners in maximizing tank refills and the likelihood of PHEV buyers to maximize their electricity vs. gasoline use. Other comments included ACEEE's and API's recommendation that EPA use lower 5-cycle range values for all-electric (or equivalent all-electric) operation in the calculation of the utility factor, and ACEEE's recommendation that fleet based utility factors be used for compliance, rather than the multiple-day individual utility factors (MDIUFs) that are used for fuel economy and environment labels.
Commenters generally supported the proposal for FFVs. The Alliance of Automobile Manufacturers, Ford, and General Motors supported the NPRM proposal as presented. The Renewable Fuels Association commented that the agencies should instead consider utility factors for ethanol FFVs, supporting its position by possibility of higher fuel prices than gasoline on a per mile basis (i.e., due to prices increasing with demand or limited refueling access) for CNG and PHEVs. The National Corn Growers Association argued that “[t]he concern for high relative cost of mid or high level ethanol blends does not seem to be justified in the term of the CAFE/GHG and RFS2 rules since at some point in the renewable fuel volume ramp-up of RFS2, market forces would result in competitive prices for ethanol and gasoline in order for the required volumes to be sold.”
In consideration of the comments received, EPA and NHTSA are finalizing the proposed requirements for dual fuel PHEV and for alternative fueled vehicles, with the exception of adopting the use of a fleet based utility factor for PHEVs, as suggested by ACEEE (see 40 CFR 600.116(b)(1)). The bases for arguments opposing adoption were not substantial enough to deviate for the proposal compliance treatment of these vehicles (see Section III.C for further explanations).
As mentioned above, EPA and NHTSA are finalizing, as proposed, the use of SAE fleet-based utility factors for dual fuel CNG vehicles, and are also finalizing some additional requirements in order for a dual fuel CNG vehicle to be able to use the utility factors. Dual fuel CNG vehicles must meet two requirements in order to use the utility factor approach. One, the vehicle must have a minimum natural gas range-to-gasoline range of 2.0. This is to ensure that there is a vehicle range incentive to encourage vehicle owners to seek to use CNG fuel as much as possible (for example, if a vehicle had equal or greater range on gasoline than on natural gas, the agency is concerned that some owners would fuel more often on gasoline). While NRDC suggested a minimum natural gas range-to-gasoline range of 4.0, the agency believes that a ratio of 2.0, in concert with a (currently) much less expensive fuel, is very strong incentive to use natural gas fuel. Two, the vehicle must be designed such that gasoline can only be used when the CNG tank is empty, though the agencies are permitting a de minimis exemption for those dual fuel vehicle designs
As noted above, there was widespread public support from the commenters for the utility factor approach for dual fuel CNG vehicles. The agencies are rejecting the one alternative approach that was suggested, the use of a fixed 95% utility factor, because it would allow a dual fuel CNG vehicle with a small CNG tank to benefit from a very large utility factor.
NHTSA and EPA are finalizing the proposed approach without changes for ethanol-capable dual-fueled vehicles. The agencies disagree with using utility factors for these vehicles. NHTSA supports EPA's positions that ethanol FFVs will primarily use gasoline fuel, as there was no extra vehicle cost, E85 fuel is no cheaper and in fact usually more expensive per mile, and use of E85 reduces overall vehicle range since there is only one fuel tank (as opposed to PHEVs and dual fuel CNG vehicles which have two fuel storage devices and therefore the use of the alternative fuel raises overall vehicle range). Data compiled by EPA shows that approximately 10 million ethanol FFVs in the US car and light truck fleet, fuel use data demonstrate that ethanol FFVs only use E85 less than one percent of the time. Therefore, NHTSA agrees with EPA to finalize FFVs compliance relative to the weighting of gasoline and E85 emissions performance on the actual national average use of E85 in ethanol FFVs, consistent with the provisions in the MYs 2012–2016 standards for GHG compliance.
As part of the MY 2011 final rule, NHTSA created 49 CFR part 536 for credit trading and transfer. Part 536 implements the provisions in EISA authorizing NHTSA to establish by regulation a credit trading program and directing it to establish by regulation a credit transfer program.
In the NPRM, NHTSA proposed that the VMT estimates used in the credit adjustment factor should be 195,264 miles for passenger car credits and 225,865 miles for light truck credits for all over-compliance credits earned in MYs 2017–2025. NHTSA did not propose to change the VMT estimates used for these purposes for MYs 2012–2016. NHTSA proposed these values in the interest of harmonizing with EPA's GHG program, and sought comment on this approach as compared to the prior approach of adjustment factors with VMT estimates that vary by year. Additionally, NHTSA proposed to include VMT estimates for MY 2011, which the agency had not included in Part 536 as part of the MYs 2012–2016 rulemaking. The proposed MY 2011 VMT value for passenger cars was 152,922 miles, and for light trucks was 172,552 miles. The Alliance supported the fixed value VMT approach for MYs 2017–2025, and requested that NHTSA also revise the VMT values for MYs 2012–2016 to harmonize with EPA. NHTSA is finalizing the VMT value approach as proposed. With respect to the Alliance's comment regarding the VMT values for credits earned in MYs 2012–2016, the agency expressly did not propose to make this change, and we do not believe that the benefits of harmonization in this particular aspect for these model years outweigh the potential fuel savings losses that may occur if a change is made at this time.
If a manufacturer's average miles per gallon for a given compliance category (domestic passenger car, imported passenger car, light truck) falls below the applicable standard, and the manufacturer cannot make up the difference by using credits earned or acquired, the manufacturer is subject to penalties. The penalty, as mentioned, is $5.50 for each tenth of a mpg that a manufacturer's average fuel economy falls short of the standard for a given model year, multiplied by the total volume of those vehicles in the affected fleet, manufactured for that model year. NHTSA has collected $818,724,551.00 to date in CAFE penalties, the largest ever being paid by DaimlerChrysler for its MY 2006 import passenger car fleet, $30,257,920.00. For their MY 2010 fleets, five manufacturers paid CAFE fines for not meeting an applicable standard—Fiat, which included Ferrari and Maserati; Daimler (Mercedes-Benz); Porsche; Tata (Jaguar Land Rover) and Volvo—for a total of $23,803,411.50. As mentioned above, civil penalties paid for CAFE non-compliance go to the U.S. Treasury, and not to DOT or NHTSA.
NHTSA recognizes that some manufacturers may use the option to pay civil penalties as a CAFE compliance flexibility—presumably, when paying civil penalties is deemed more cost-effective than applying additional fuel economy-improving technology, or when adding fuel economy-improving technology would fundamentally change the characteristics of the vehicle in ways that the manufacturer believes its target consumers would not accept. NHTSA has no authority under EPCA/EISA to prevent manufacturers from turning to payment of civil penalties if they choose
NHTSA has grappled repeatedly with the issue of whether civil penalties are motivational for manufacturers, and whether raising them would increase manufacturers' compliance with the standards. EPCA authorizes increasing the civil penalty very slightly up to $10.00, exclusive of inflationary adjustments, if NHTSA decides that the increase in the penalty “will result in, or substantially further, substantial energy conservation for automobiles in the model years in which the increased penalty may be imposed; and will not have a substantial deleterious impact on the economy of the United States, a State, or a region of a State.” 49 U.S.C. 32912(c).
To support a decision that increasing the penalty would result in “substantial energy conservation” without having “a substantial deleterious impact on the economy,” NHTSA would likely need to provide some reasonably certain quantitative estimates of the fuel that would be saved, and the impact on the economy, if the penalty were raised. Comments received on this issue in the past have not explained in clear quantitative terms what the benefits and drawbacks to raising the penalty might be. Additionally, it may be that the range of possible increase that the statute provides,
All of the CAFE compliance incentives discussed below are being finalized by EPA under its EPCA authority to calculate fuel economy levels for individual vehicles and for fleets. We refer the reader to Section III for more details, as well as Chapter 5 of the Joint TSD for more information on the precise mechanics of the incentives, but we present them here in summary form so that the reader may understand more comprehensively what compliance options will be available for manufacturers meeting MYs 2017–2025 CAFE standards.
As mentioned above with regard to EPA's finalized changes for the calculation of dual-fueled automobile fuel economy for MYs 2020 and beyond, NHTSA is modifying its own regulations to reflect the fact that these incentives may be used as part of the determination of a manufacturer's CAFE level. The requirements for determining the vehicle and fleet average performance for passenger cars and light trucks inclusive of the proposed incentives are defined in 49 CFR 531 and 49 CFR 533, respectively. Part 531.6(a) specifies that the average fuel economy of all passenger automobiles that are manufactured by a manufacturer in a model year shall be determined in accordance with procedures established by the Administrator of the Environmental Protection Agency under 49 U.S.C. 32904 of the Act and set forth in 40 CFR part 600. Part 533.6(b) specifies that the average fuel economy of all non-passenger automobiles is required to be determined in accordance with the procedures established by the Administrator of the Environmental Protection Agency under 49 U.S.C. 32904 and set forth in 40 CFR Part 600. The final changes to these sections simply clarify that in model years 2017 to 2025, manufacturers may adjust their vehicle fuel economy performance values in accordance with 40 CFR Part 600 for improvements due to the new incentives.
EPA is adopting two new types of incentives for improving the fuel economy performance of full size pickup trucks. The first incentive provides a credit to manufacturers that employ significant quantities of hybridized full size pickup trucks. The second incentive is a performance-based incentive for full size pickup trucks that achieve a significant reduction in fuel consumption as compared to the applicable fuel economy target for the vehicle in question. These incentives are designed to promote technologies improving fuel economy and GHG performance for addressing the significant difficulty full size pickup trucks have in meeting CAFE standards while still maintaining the levels of utility to which consumers have become accustomed, which require higher payload and towing capabilities and greater cargo volumes than other light-duty vehicles. Technologies that provide substantial fuel economy benefits are often not attractive to manufacturers of full size pickups and other large trucks due to these tradeoffs in utility purposes, and therefore have not been utilized to the same extent as they have in other vehicle classes. The goal of these incentives is to facilitate the application of these “game changing” technologies for large pickups, both to save more fuel and to help provide a bridge for industry to future more stringent light truck standards. As manufacturers gain experience with applying more fuel-saving technology for these vehicles and consumers become more accustomed to certain advanced technologies in pickup trucks, the agencies anticipate that higher CAFE levels will be more feasible for the fleet as a whole.
EPA and NHTSA proposed adopting the eligibility criteria for the incentives by adding definitions with the characteristics for: (1) Full size pickup trucks; (2) mild hybrid electric pickup trucks, and; (3) strong hybrid electric pickup trucks. NHTSA is finalizing these definitions by reference to 40 CFR 86.1803–01 in its regulation 49 CFR 523, “Vehicle Classification.” The agencies proposed that trucks meeting an overall bed width and length as well as a minimum towing or payload capacity could be qualified as full size pickup trucks. Part 523 was established by NHTSA to include its regulatory definitions for passenger automobiles and trucks and to guide the agency and manufacturers in classifying vehicles. NHTSA believes these references are necessary to help explain to readers that the characteristics of full size pickup trucks make them eligible to gain fuel economy improvement values after a manufacturer meets either a minimum penetration of hybridized technologies or has other technologies that
EPA proposed criteria that would provide an adjustment to the fuel economy of a manufacturer's full size pickup trucks if the manufacturer employs certain defined hybrid technologies for a significant quantity of its full size pickup trucks. After meeting minimum production percentages, manufacturers would gain an adjustment to the fuel economy performance for each “mild” or “strong” hybrid full size pickup truck it produces. EPA is finalizing that manufacturers producing mild hybrid pickup trucks would gain a 0.0011 gal/mi (10 g/mi CO
The fuel economy adjustment for each mild and strong hybrid full size pickup would be a decrease in measured fuel consumption. These adjustments are consistent with the GHG credits under EPA's program for mild and strong hybrid pickups. A manufacturer would then be allowed to adjust the fuel economy performance of its light truck fleet by converting the benefit gained from those improvements in accordance with the procedures specified in 40 CFR Part 600.
A number of comments were received in response to the proposed definitions for mild and strong hybrids. EPA had proposed that a 75 percent brake energy recovery criteria would be needed to qualify as a strong hybrid and a 15 percent recovery for a mild hybrid; the Alliance, Ford, Chrysler, Toyota, and MEMA recommended changing the criteria for determining whether a hybrid pickup truck is categorized as strong or mild by the percentage of energy recovery achieved during braking. GM also provided late oral comments to the agencies suggesting revisions to those percentage definitions, meeting with the agencies and providing a hybrid pickup truck for EPA's use in testing. Other industry commenters objected to EPA's characterization of the credit provisions as applying to only hybrid “gasoline-electric” vehicles, and requested that hybrids be defined more broadly. EPA and NHTSA agree that the provisions should not be applicable only to “gasoline-electric” vehicles and are clarifying in this final rule that the provisions also apply to non-gasoline (including diesel-, ethanol-, and CNG-fueled) hybrids. EPA also agreed with manufacturers that defining strong hybrids based upon the proposed percent efficiency in recovering braking energy is inappropriate. As identified through recent testing by EPA, the only large hybrid truck currently marketed would not satisfy the proposed 75 percent metric. Therefore, EPA is finalizing changes to the criteria, as discussed in Sections II and III above, such that now a 65 percent threshold instead of 75 percent is required for a pickup truck to qualify as a strong hybrid. NHTSA is finalizing the same definitions as EPA by referencing EPA's definitions in Part 523.
Another proposed incentive that is being finalized for full size pickup trucks will provide an adjustment to the fuel economy of a manufacturer's full sized pickup truck if it achieves a fuel economy performance level significantly above the CAFE target for its footprint. This incentive recognizes that not all manufacturers may wish to pursue hybridization for their pickup trucks, but still rewards them for applying fuel-saving technologies above and beyond what they might otherwise do. The incentive will allow a performance-based credit without the need for a specific technology or design requirements. A manufacturer can use any technology or set of technologies as long as the vehicle's CO
The 0.0011 gal/mi performance-based adjustment would be available for MYs 2017 to 2021, and a vehicle model meeting the requirement in a given model year would continue to receive the credit until MY 2021—that is, the credit remains applicable to that vehicle model if the target is exceeded in only one model year—unless its fuel consumption increases from one year to the next or its sales drop below the penetration threshold. The 0.0023 gal/mi adjustment would be available for a maximum of 5 consecutive years within model years 2017–2025, provided the vehicle model's fuel consumption does not increase. As explained above for the hybrid incentive, a manufacturer would then be allowed to adjust the fuel economy performance of its light truck fleet by converting the benefit gained from those improvements in accordance with the procedures specified in 40 CFR Part 600.
Comments received to the NPRM primarily concerned the minimum penetration thresholds for full size pickup truck incentives requesting to reduce or eliminate the thresholds. Manufacturers cited multiple reasons for lower thresholds based upon prevailing production needs, unfamiliarity with new technology, and customer acceptance rates. EPA discusses in section III.C.3 that the goal of the “game changing” credits is to incentivize the widespread adoption of advanced technologies. Therefore, EPA has decided to finalize the penetration requirements as proposed, citing that eliminating or greatly reducing the minimum penetration requirements might retain the incentive for niche applications but would lose any assurance of widespread “game-changing” technology introduction and substantial penetration.
Air conditioning (A/C) use places excess load on an engine, which results in additional fuel consumption. A number of methods related to the A/C system components and their controls can be used to improve A/C system efficiencies. EPA proposed to allow manufacturers, starting in MY 2017, to include fuel consumption reductions resulting from the use of improved A/C systems in their CAFE calculations. This will more accurately account for achieved real-world fuel economy improvements due to improved A/C technologies, and better fulfill EPCA's overarching purpose of energy conservation. Manufacturers would not be allowed to claim CAFE-related benefits for reducing A/C leakage or switching to an A/C refrigerant with a lower global warming potential, because while these improvements reduce GHGs consistent with the purpose of the CAA, they generally do not relate to fuel economy and thus are not relevant to the CAFE program. This proposal to allow manufacturers to consider A/C efficiency improvement technologies for determining CAFE performance values is being finalized in this final rule.
Based upon comments received to the proposal, EPA is making several technical and programmatic changes to the proposed “AC17” test. The A/C 17 test is a more extensive test than the “idle test” used for MYs 2012–2016 and has four elements, including two drive cycles, US03 and the highway fuel economy cycle, which capture steady state and transient operating conditions. It also includes a solar soak period to measure the energy required to cool down a car that has been sitting in the sun, as well as a pre-conditioning cycle. The A/C 17 test cycle will be able to capture improvements in all areas related to efficient operation of a vehicle's A/C system. The A/C 17 test cycle measures CO
Industry and industry representatives—including the Alliance, BMW, Ford, Toyota, Honda, Hyundai, Honeywell, and others—asked that an AC17 baseline configuration test in addition to an AC17 test of a vehicle with an improved A/C system not be required in 2017 since few or no baseline vehicles will be available in that time period. In response, EPA is finalizing that from 2017 to 2019 manufacturers will be eligible to receive GHG credits and fuel consumption improvement values from the menu simply by reporting the results of the AC17 test. In addition, a number of commenters, including the Alliance, Volvo, BMW, Ford, and others, asked the agencies to change the required AC17 test conditions—such as temperature, humidity, and solar soak period—to improve repeatability and reduce test burden. In response, EPA has altered some of the test condition requirements. A number of manufacturers commented that the definition of vehicle platform would require many vehicles to be tested, and asked for clarification on which vehicles are required to be tested, and on aspects of the test procedure, such as which instrumentation can be used during the test. In response, EPA has defined vehicle platform more clearly to minimize the testing burden. More detail on the technical and programmatic changes along with the comments received are provided in section II.F.
The details of the A/C efficiency performance provision are discussed as follows and in greater detail in Sections II.F, III.C, and Chapter 5 of the joint TSD.
For MYs 2017–2019, eligibility for A/C efficiency fuel consumption improvement values will be determined solely by completion of the AC17 testing on vehicles with more efficient A/C systems. Manufacturers can earn the A/C efficiency GHG credit and fuel consumption improvement values between 2017 and 2019 by running the A/C 17 test procedure on the highest sales volume vehicle in a platform that incorporates the new technologies, with the A/C system off and then on, and then report these test results to the EPA. In addition to reporting the test results, EPA will require that manufacturers provide detailed vehicle and A/C system information for each vehicle tested (
Starting in MY 2020, however, AC17 test results will be used not only to determine eligibility for AC efficiency fuel consumption improvement values, but will also play a part in calculating the amount of the value that can be claimed. From 2020 to 2025, the AC17 test would be run on the highest sales volume vehicle in a platform to validate that the performance and efficiency of a vehicle's A/C technology is commensurate with the level of improvement value that is being earned. To determine whether the efficiency improvements of these technologies are being realized, the results of an AC17 test performed on a new vehicle model will be compared to a “baseline” vehicle which does not incorporate the efficiency-improving technologies. The baseline vehicle is defined as one with characteristics which are similar to the new vehicle, only it is not equipped with efficiency-improving technologies (or they are de-activated). The difference between the test of the baseline vehicle and the vehicle with new A/C technologies will determine the fuel consumption improvement value that can be included in the CAFE calculations. The manufacturer will be eligible for GHG credits and fuel consumption improvement values if the test results show an improvement over the baseline vehicle. If the test result comparisons indicate an emission and fuel consumption reduction greater than or equal to the maximum menu-based credit/fuel consumption improvement value, then the manufacturer will generate the appropriate maximum value based on the menu. However, if the test result does not demonstrate the full menu-based potential of the technology, then only partial GHG credit and fuel consumption improvement value can be earned.
Manufacturers take the results of the AC17 test(s) and access a credit menu (shown in the table below) to determine A/C related fuel consumption improvement values. The maximum value possible is limited to 0.000563 gal/mi for cars and 0.000810 gal/mi for trucks. As an example, a manufacturer uses two technologies listed in the table, for which the combined improvement value equals 0.000282 gal/mi. For model years 2020 and later, if the results of the AC17 tests for the baseline and vehicle with improved A/C system demonstrates a 0.000282 gal/mi or greater improvement, then the full fuel consumption improvement value provided in the table for those two technologies can be taken. If the AC17 test result falls short of the improvement value for the two technologies, then a fraction of the improvement value may be counted in CAFE calculations. The improvement value fraction is calculated in the following way: the AC17 test result for both the baseline vehicle and the vehicle with an
As stated above, if more than one technology is utilized by a manufacturer for a given vehicle model, the A/C fuel consumption improvement values can be added, but the maximum value possible is limited to 0.000563 gal/mi for cars and 0.000810 gal/mi for trucks. More A/C related fuel consumption improvement values are discussed in the off-cycle credits section of this chapter. The approach for determining the manufacturers adjusted fleet fuel economy performance due to improvements in A/C efficiency is described in 40 CFR Part 600.
For model years 2020 and later if a vehicle with new A/C technologies is tested and the result is not commensurate with the expected level of fuel consumption reduction for technologies included on the vehicle, an engineering analysis can be submitted by the manufacturer to justify a claim for the fuel consumption improvement values.
For MYs 2012–2016, EPA provided an optional credit for new and innovative “off-cycle” technologies that reduce vehicle CO
EPA has been encouraged by automakers' interest in off-cycle credits since the program was finalized for the MYs 2012–2016 GHG program and concluded that extending the program to MY 2017 and beyond may continue to encourage automakers to invest in off-cycle technologies that could have the benefit of realizing additional reductions in the light-duty fleet over the longer-term. Therefore, EPA proposed to extend the off-cycle credits program to 2017 and later model years. EPA also proposed, under its EPCA authority, to make available a comparable off-cycle technology incentive under the CAFE program beginning in MY 2017. However, instead of manufacturers gaining credits as done under the GHG program, a direct adjustment would be made to the manufacturer's fuel economy fleet performance value. The proposed off-cycle incentive for the CAFE program is being finalized for MYs 2017 and later as discussed below.
Starting with MY 2017, manufacturers will be able to generate fuel economy improvements by applying technologies listed on a pre-defined and pre-approved technology list. These credits would be verified and approved as part of certification, with no prior approval process needed. The “pick list” option will significantly simplify the program for manufacturers and provide certainty that improvement values may be generated through the use of pre-approved technologies. For improvements from technologies not on
EPA and NHTSA are finalizing the off-cycle program as proposed with the exception of two differences made in response to comments received. The first change applies to EPA only and allows the pre-defined list to be used starting in MY 2014, rather than the proposed starting point of MY 2017. This change does not apply to CAFE, where the off-cycle credits program does not begin until MY 2017. Second, the agencies are deleting the minimum sales thresholds for technologies on the pre-defined list. For further explanation of the changes for the GHG program, see Section III.C.5.a and Section III.C.5.b, and for the CAFE program, see Section III.C.5.c. The agencies are also finalizing the step-by-step process and timeline for reviewing credit applications and providing a decision to manufacturers. The agencies plan to coordinate approvals whereas EPA will consult with NHTSA on the application and the data received in cases where the manufacturer intends to generate fuel consumption improvement values for CAFE in MY 2017 and later. The details of the testing protocols used for determining off-cycle technology benefits and the step-by-step EPA review and approval process are detailed more thoroughly in Section III.C.5.b.iii and Section III.C.5.b.v. The agencies are also clarifying, for purposes of the off-cycle program for CAFE, how consultation and coordination as required by 49 U.S.C. 32904(e) will occur. NHTSA has added regulatory text in 49 CFR 531.6 and 533.6 explaining that NHTSA will consult with EPA on manufacturer applications under 40 CFR 86.1869–12 and provide its views on the specific off-cycle technology under consideration to ensure its impact on fuel economy and the suitability of using the off-cycle technology to adjust the fuel economy performance. NHTSA's evaluation and review will consider whether the technology has a direct impact upon improving fuel economy performance; whether the technology is related to crash-avoidance technologies, safety critical systems or systems affecting safety-critical functions, or technologies designed for the purpose of reducing the frequency of vehicle crashes; information from any assessments conducted by EPA related to the application, the technology and/or related technologies; and other relevant factors. NHTSA also notes that since the off-cycle program for CAFE does not begin until MY 2017, but manufacturers may obtain approval for off-cycle credits in the GHG program prior to that model year which they wish to carry into the CAFE program, clarification is needed to explain what manufacturers should do in those circumstances. In those cases, manufacturers must concurrently submit a copy to NHTSA of the application that is being submitted to EPA if manufacturers anticipate seeking fuel consumption improvements for CAFE beginning in MY 2017 to ensure the smooth functioning of the program.
The changes finalized today by the agencies respond to issues raised by commenters. The agencies received several comments supporting the proposal to establish a pre-defined and pre-approved technology list for the CAFE program. Manufacturers who supported the list stated that it is a necessary element to streamline and simplify the off-cycle program for EPA and NHTSA. There were no comments received objecting to the pre-defined list, but comments were received on various aspects of the list, as discussed in detail in Section II.F. EPA has made changes to some of the technologies and credit values on the list as a result of these comments. Based on received information and meetings with manufacturers, the agencies are also clarifying the proposed credit values and calculation procedures for active transmission warmup, solar panels and solar control glazing in the final rule. These clarified values are presented in Table III–19 and the calculation methods described in detail in the Joint TSD Chapter 5.
Section II.F of the preamble provides an overview of the technologies, credit values, and comments the agencies received on the proposed technology list. Table IV–152 provides the list of the technologies and per vehicle credit levels for the CAFE program that are being adopted for the final rule.
Since one purpose of the off-cycle improvement incentive is to encourage market penetration of the technologies (see 75 FR 25438), EPA proposed to require minimum penetration rates for non-hybrid based listed technologies as a condition for generating improvements from the list as a way to further encourage their widespread adoption by MY 2017 and later. At the end of the model year for which the off-cycle improvement is claimed, manufacturers would need to demonstrate that production of vehicles equipped with the technologies for that model year exceeded the percentage thresholds in order to receive the listed improvement. EPA proposed to set the threshold at 10 percent of a manufacturer's overall combined car and light truck production for all technologies not specific to HEVs. Ten percent seemed to be an appropriate threshold as it would encourage manufacturers to develop technologies for use on larger volume models and bring the technologies into the mainstream. For solar roof panels and electric heat circulation pumps, which are specific to HEVs, PHEVs, and EVs, EPA is not proposing a minimum penetration rate threshold for credit generation. Hybrids may be a small subset of a manufacturer's fleet, less than 10 percent in some cases, and EPA does not believe that establishing a threshold for hybrid-based technologies would be useful and could unnecessarily complicate the introduction of these technologies. The agencies requested comments on applying this type of threshold, the appropriateness of 10 percent as the threshold for listed technologies that are not P/H/EV-specific, and the proposed treatment of hybrid-based technologies.
The agencies received comments from several manufacturers and suppliers recommending not to adopt the proposed sales thresholds. Commenters argued, for example, that a sales threshold would impede the development of these early stage technologies because manufacturers typically introduce new, expensive technologies on high-end, low-volume models, and requiring a technology across a certain percentage of the fleet in order to allow access to credits would create incentives for the manufacturer simply to forego the technology, if no credit is available, and focus instead on other ways to improve fuel economy. The agencies believe these issues have merit and consequently for the final rule have decided not to adopt sales thresholds as a condition. The agencies believe that several points raised by the commenters are persuasive in demonstrating that a sales threshold could have the opposite effect, dissuading manufacturers from introducing technologies.
The agencies also proposed in the NPRM to impose a cap on the amount of improvement a manufacturer could generate to 0.001125 gal/mile per year on a combined car and truck fleet-wide average basis for the CAFE program. As proposed, the cap would not have applied on a vehicle model basis, allowing manufacturers the flexibility to focus off-cycle technologies on certain vehicle models and generate improvements for that vehicle model in excess of 0.001125 gal/mile. Additionally, if manufacturers wished to generate improvements in excess of the 0.001125 gal/mile limit using listed technologies, they could do so by generating necessary data and going through the approval process.
The agencies are finalizing the proposed technology cap as specified in the NPRM. Some commenters had argued that the cap is too conservative or, conversely, that it may discourage the maximum adoption of the pre-defined off-cycle technologies, but the agencies believe that the cap is sufficient enough and appropriately structured. The cap is appropriate because the default credit values are based on limited data, and also because the agencies recognize that some uncertainty is introduced when credits are provided based on a general assessment of off-cycle performance as opposed to testing on the individual vehicle models. Furthermore, the agencies are finalizing the approach discussed above by which manufacturers may generate credits beyond the cap limitation through the agency approval process. Comments were also received requesting to change the approach for adding technologies in meeting the cap limitation. The agencies view these issues as beyond the scope of this rulemaking, and expect to review these issues further and address them as a part of the future NHTSA rulemaking to develop final standards for MYs 2022–2025 and concurrent mid-term evaluation.
As proposed, EPA is finalizing that a CAFE improvement value for off-cycle improvements be determined at the fleet level by converting the CO
NHTSA proposed in the NPRM to modify 49 CFR Part 537 to eliminate the current option for manufacturers to mail hardcopy submissions of CAFE reports to NHTSA and proposed to receive all reports electronically. 49 CFR Part 537 requires light vehicle manufacturers to submit pre-model year (PMY), mid-model year (MMY), and supplemental reports to NHTSA containing projected estimates of how manufacturers plan to comply with NHTSA standards. Manufacturers are required to submit pre-model year reports by December prior to each year, mid-model reports by July of the model year and a supplemental report whenever changes are needed to a previously submitted CAFE report. After the end of the model year, EPA verifies manufacturers' end-of-the-year data and sends the final verified values to NHTSA. In general, manufacturers' pre and mid model reports contain projected estimates of the manufacturers' CAFE standards, the average fuel economy for each fleet, and, primarily in the PMY report, more specific information about the vehicles in each manufacture's fleet, such as loaded vehicle weight, engine displacement, horsepower and other defining characteristics of the vehicle. Manufacturers currently may provide reports either by hardcopy or CD-ROM including 5 copies of reports mailed to the NHTSA Administrator or electronically sending reports to a secure email address,
Having examined the issue more closely, NHTSA has discovered that there are complications with the amendment to Part 537 in the MYs 2012–2016 final rule allowing confidential pre- and mid-model year reports to be submitted via email. The regulation governing NHTSA's determinations of confidentiality, 49 CFR Part 512, currently states that if a manufacturer wishes to submit information that it claims to be confidential to the agency electronically, the only acceptable electronic format is a “physical medium such as a CD-ROM.”
Thus, unless and until the agency undertakes rulemaking to include submission of confidential CAFE data by email within Part 512, NHTSA will have to continue to accept such data in electronic format by CD-ROM only. Because manufacturers are required under Part 537 to submit both confidential and non-confidential (
The only comments that were received on the question of electronic CAFE reporting were from Ford, who supported the concept of electronic reporting and NHTSA's move to all electronic reporting in an Excel format. However, Ford argued that when the agency eventually made that transition, it should continue to allow manufacturers to submit data in formats to which they are already accustomed, such as the current (totally unrestricted) formats allowed for hardcopy submissions under Part 537, or the same format as required by EPA's “VERIFY” database. Ford argued that manufacturers have spent significant time and resources updating their databases to conform to EPA's new VERIFY requirements commencing in model year 2009,
In response, we reiterate that NHTSA's intent in the NPRM proposal was not to impact the format of the existing reports but simply to require manufacturers to submit CD-ROMs rather than paper. No changes are being made at this time to the format of the Part 537 submissions. However, as discussed in the NPRM and as supported by comments, the agency does intend to continue investigating the possibility of reducing industry's reporting burdens even further through a long term goal of developing a means to receive electronic submissions through the NHTSA Web site using an XML schema. NHTSA will consider the existing formats of the EPA VERIFY system as it moves forward towards this goal. We note, however, that while NHTSA is currently aware of a number of data requirements that NHTSA and EPA already share in common where the EPA VERIFY system format could be used for receiving data, at the same time, NHTSA has unique data requirements not collected by EPA that may require additional information to be independently reported to NHTSA. For example, only NHTSA requires manufacturers to report information on the criteria used to classify an automobile as a non-passenger vehicle or a light truck. Any future changes to the Part 537 reporting requirements would, of course, occur through rulemaking, and we continue to invite manufacturer feedback as the agency develops its ideas for modernizing this data collection system.
In the NPRM, NHTSA proposed to restructure and clarify how manufacturers report information used to make the determination that an automobile can be classified as a light truck for CAFE purposes, and sought comments on the proposed change. The agency felt that this proposed change was necessary because the previous requirements in 49 CFR Part 537 specified that manufacturers must provide information on some, but not all, of the functions and features used to classify an automobile as a light truck, and it is important for compliance reasons to understand and be able to readily verify the methods used to ensure manufacturers are classifying vehicles correctly. In addition, the regulation required that the information be distributed in different locations throughout a manufacturer's report, making it difficult for the agency to clearly determine exactly what functions or features a manufacturer is using to classify a vehicle as a light truck. For the NPRM, NHTSA proposed to relocate the language requesting manufacturers to provide their vehicle classification determination information in Sections 537.7(c)(4)(xvi)(B)(1) and(2), (xvii) and (xviii) into a revised Section 537.7(c)(5) consolidating all the required information. NHTSA believed that by incorporating all the requirements into one section, the classification determination process would be significantly more accurate and easily identifiable.
In response, Ford commented in support of the proposed consolidation of all truck classification determination data into one location, but argued that the proposed regulatory text had duplicative requirements for reporting light truck cargo-carrying volumes in sections 537.7(c)(4)(xix)(B)(2) and (5)(i)(D). Ford requested that NHTSA allow manufacturers to streamline their reporting, as long as all the data required for NHTSA to confirm CAFE calculations, fleet classification, and NHTSA's fleet analyses are present and easily identified.
Upon further review of the proposed regulatory text, we believe that our intentions were not clearly articulated. In the proposal, NHTSA intended for sections 537.7(c)(4)(xix)(B)(1) and (2) to require manufacturers to provide the passenger-carrying volume and cargo-carrying volume values, respectively, and for section 537.7(c)(5)(i)(D) to require the difference between the two volumes and an indication whether a vehicle's cargo volume is larger than its passenger volume. However, after reviewing Ford's comment, we now understand how these requirements could be interpreted as duplicative. Therefore, for the final rule, NHTSA is revising section 537.7(c)(5)(i)(D) to clarify that the manufacturer must indicate whether the cargo-carrying volume is greater than the passenger-carrying volume; if so it must also provide the difference between the two values. Finally, Ford requested that NHTSA allow manufacturers to streamline their reporting, as long as all the data required to confirm CAFE calculations, fleet classification, and NHTSA's fleet analyses are present and easily identified. NHTSA agrees that streamlining its reporting requirements is important, and believes that the changes finalized in this rule to Part 537 will help to accomplish that. With these changes, manufacturers can provide the agency with all the necessary data in a
The CAFE standards are attribute-based, and thus each manufacturer has its own “standard,” or compliance obligation, defined by the vehicles it produces for sale in each fleet in a given model year. A manufacturer calculates its fleet standard from the attribute-based target curve standards derived from the unique footprint values, which are the products of the average front and rear vehicle track width and wheelbase dimensions, of the vehicles in each model type. Vehicle track width dimensions are determined with a vehicle equipped with “base tires,” which NHTSA currently defines in 49 CFR Part 523 as the tire specified as standard equipment by a manufacturer on each vehicle configuration of a model type.
The calculation of footprint, and thus the definition of base tire, is important in the CAFE program because they ultimately affect a manufacturer's compliance obligation, and consistency in how manufacturers' compliance obligations are determined is vital for predictability and fairness of the program. In the NPRM (
The agencies received several comments in response to the NPRM. Global Automakers agreed with NHTSA that clarification would help avoid different interpretations of “base tire” by different manufacturers, but the Alliance, Toyota and GM requested that the agency defer the decision on changing the base tire definition and discuss the issue further with industry before making changes. The Alliance argued that because the highest sales tire can change throughout the model year based on many factors beyond a manufacturer's control or foresight, NHTSA should therefore use a definition which allows all vehicles to be included in the fleet average “using a representative footprint based on the physical vehicle, not a footprint based on a moving target of sales.” The Alliance, and Ford individually, stated that specifying that base tire (and thus footprint measurement) could vary by vehicle configuration was “confusing” because footprint is a physical measurement and unrelated to vehicle configuration, which the manufacturers implied was a defined term for purposes of fuel economy. The Alliance and Ford requested that NHTSA adopt EPA's definition of “base tire,” Global Automakers requested that NHTSA and EPA simply adopt the same definition of “base tire,” and Hyundai supported NHTSA's proposed definition. Additionally, the Alliance warned that a decision by NHTSA to adopt its proposed definition could impact manufacturer acceptance of the final standards, since all manufacturers had assessed their ability to comply with the standards in July 2011 based on their own interpretation and understanding of what base tire means.
In response, again, any changes to NHTSA's definition for base tire are in the interest of ensuring consistency in how manufacturers' compliance obligations are determined, to boost the predictability and fairness of the program. With respect to the comments on determining a base tire for each vehicle configuration, NHTSA agrees that the factors defining a vehicle configuration (engine, transmission, fuel system, axle ratio and inertial weight) may not necessarily define a unique footprint. For example, it is possible for a single “vehicle configuration” to contain all cab/bed/wheelbase variations of a pick-up truck, from a standard cab with a short wheelbase to a crew cab with a long bed and long wheelbase. In this example, one vehicle configuration can have multiple unique wheelbases and associated footprints. Thus, using “vehicle configuration” in the definition of base tire does not clearly address the agency's interest in maximizing consistency, because if a vehicle configuration includes multiple footprints, it is not clear which footprint a manufacturer should use for designating the base tire associated with that configuration, nor is it clear how the other footprints would be incorporated into the manufacturer's calculation of its compliance obligation. NHTSA will therefore be removing the concept of vehicle configuration from its definition for base tire.
NHTSA also agrees with the commenters' theme that in order to be most effective, a definition for base tire must be related to footprint. If “vehicle configuration” in the CAFE context is not particularly related to footprint, and thus to base tire, perhaps another term is better related. Since the NPRM, NHTSA has analyzed base tires and the related footprint dimensions submitted by manufacturers in their pre-model year (PMY) reports
With respect to the comments objecting to NHTSA's proposal to tie the “base tire” definition to the vehicle configuration of the “highest production sales volume,” the agency does not believe that using the highest tire sales volume to select base tires creates any more difficulty for manufacturers when the supply and volume of other vehicle components, or vehicles themselves, can unexpectedly change throughout the model year. As with any other model year, unexpected or adjusted volume level changes could have an impact on reported base tires and fleet average standard calculations which we would expect to be revised accordingly in a manufacturer's final year-end report.
However, in considering the issue further, NHTSA recognizes that utilizing the highest production sales volume tire instead of “the tire used as standard equipment” may lead to standards
As mentioned, the Alliance and GM suggested that the agency defer the decision on changing the base tire definition until further analysis and discussions with industry could take place. The Alliance explained that various options exist and stated that each one had its own risks, but did not provide any details or recommendations. The Alliance argued that changing the definition now could create a rule that would not be acceptable by some manufacturers because any change could negatively impact fleet standard projections. GM also commented that additional time be taken to make any decisions in order to minimize the potential for any unnecessary complications and unintended consequences resulting from revising the definition. Global, Ford and Toyota stated that the agencies should harmonize any final definitions. The agency agrees with manufacturers that it should move in the direction of harmonization with EPA on the base tire definition. We also agree with manufacturers that the agency should evaluate all the potential risks on fleet standards associated with the available options manufacturers have for selecting base tires. The agency believes that a proper evaluation of the various options will require additional time and effort beyond the scope of this rulemaking.
For this final rule, the agency has decided to modify the NPRM base tire definition by removing the terms “highest production sales volume” and “vehicle configuration” in response to the concerns raised by commenters. In addition, to align the definition more closely with EPA's, we have added back the term “standard equipment.” For clarification purposes, we are adding language to ensure that manufacturers provide a base tire size for each combination of a vehicle's footprint and model type.
For the final rule, the definition for base tire will therefore be as follows: “the tire size specified as standard equipment by the manufacturer on each unique combination of a vehicle's footprint and model type.” For purposes of harmonization, EPA is adopting this same definition in its final rule (see preamble section III.E.10 and 40 CFR 600.002). Standard equipment would mean those features or equipment which are marketed on a vehicle over which the purchaser can exercise no choice, in accordance with the EPA definition in 40 CFR 86.1803–01. NHTSA believes these changes will harmonize both agencies' definitions and will allow manufacturers to use the same approach for calculating attribute-based standards for NHTSA's Parts 531 and 533 and EPA's GHG programs. In addition, each unique footprint and model type combination must be used to calculate a manufacturer's target and fleet standards. Therefore, NHTSA expects manufacturers to report these projected values in their PMY reports. These revised reporting requirements for base tire are a part of the provisions that are being finalized in the following section. Allowing manufacturers to group and report vehicles within a model type by similar footprints reduces the burden that would otherwise exist by having to identify the multiple “vehicle configurations” that exist within each model type. As such, manufacturers can submit the EPA calculator, or similar formatted data as specified in Part 537.7, with an additional column reporting the base tire sizes for each table line entry.
NHTSA does not believe that this definition represents any material change in the reporting requirements already present in the CAFE program. Manufacturers are already required to report base tires under Part 537 beginning in MY 2010, and have been required to calculate their footprint values since model year 2008 for light trucks, optionally,
As discussed in the NPRM, because Part 537 as currently written requires only a breakdown of footprint values by vehicle configurations rather than by each unique model type and footprint combination, NHTSA is currently unable to verify manufacturers' reported target standards. To remedy that, the agency proposed to harmonize the NHTSA and EPA reporting requirements relating to the derivation of a manufacturer's fleet standards. The agency proposed to accomplish this by relocating paragraphs
Because no comments were received on this issue, and because NHTSA continues to believe that the change will be beneficial, NHTSA is finalizing the proposal as specified with one addition. To harmonize further with EPA and standardize the data content and format that can be submitted to both agencies, NHTSA is adding an optional requirement, shown below in the regulatory text for paragraphs § 537.7(b)(3)(i)(E) and (ii)(E), for manufacturers to provide the calculated target standard along with each required unique model type and footprint combination listing used to calculate the fleet standard. This information would be beneficial to NHTSA for assisting in the validation of the manufacturer's calculated fleet standards, and the agency believes that optionally requesting this information in Part 537 does not constitute a material change to the existing reporting requirements and should require no additional work on the part of manufacturers, because this information will already be submitted to EPA. If manufacturers choose not to provide this optional data to NHTSA along with the related required data, NHTSA may consider changing this to a mandatory requirement in a future rulemaking.
Several commenters in response to the NPRM requested that NHTSA consider expanding the amount of CAFE information it provides to the public each year. NACAA commented that once the program is in place, it is critical that agencies closely track the progress of manufacturers in meeting standards. NRDC stated that EPA and NHTSA should create greater public transparency by annually publishing data on each manufacturer's credit status and technology penetration rates to ensure greater public confidence in the program's effectiveness. NRDC further commented that the agencies should publish an annual public report that includes at a minimum the following for each manufacturer's passenger car and light truck fleets: the amount of cumulative credits or deficits; the amount of transfers; the amount of traded credits and the name of the receiving party; the amount of credits generated from A/C, pickup credits, dedicated and dual fuel, and off-cycle.
UCS commented that the agencies could further improve transparency by having a clear public accounting of credits and program compliance explaining that over the years it has been exceedingly difficult to independently verify whether manufacturers are compliant with their CAFE obligations. Given the numerous compliance flexibility mechanisms being proposed by the agencies as well as a multitude of opportunities for trading, transferring, banking, and borrowing of credits, USC believes that it is critical that manufacturers' compliance ledgers be documented, publicly available, and sufficiently granular to assess by which measures companies are complying with the regulations. USC urged the agencies to undertake an effort to provide clear public accounting of credits and program compliance. UCS also stated that in order for it and other public interest groups to effectively assess industry compliance and behavior, the agencies should expand the public availability and quality of disaggregated vehicle data. Because of the new attribute-based standards, USC argued that it is critical that sub-model level data be regularly published that includes not only fuel economy and greenhouse gas emissions performance specifications, but at a minimum, finalized sales, vehicle footprint, regulatory vehicle classification, and other listed technical data. Additional comments similar to USC were also received from the Sierra Club. Sierra Club requested that public information for model years 2017 to 2025 be expanded to include enough detail to sufficiently assess manufacturers' credits balances and activities, compliance margins and vehicle model type characteristics and performance.
In response to the commenters' requests to increase the transparency of CAFE compliance data, we are continuing to consider this issue as we develop the new CAFE database discussed above. We also note that as part of the MY 2011 CAFE final rule, NHTSA issued 49 CFR part 536 to implement a new CAFE credit trading and transfer program as authorized by EISA. In Paragraph 536.5(e) of the regulation, NHTSA adopted new provisions for periodically publishing the names and credit holdings of all credit holders. Credit holdings will include a manufacturer's credit balance accounting for all transferred and traded credit transactions which have occurred over a specified transaction period. NHTSA plans to make manufacturer's credit balances available to the public on the NHTSA Web site before the end of calendar year 2012.
NHTSA also already publishes a report on its Web site titled, “The Summary of Fuel Economy Report,” which provides a bi-annual status report on CAFE fleet standards, performance values and production volumes by manufacturer, and makes manufacturers' pre-model and mid-model year CAFE reports publicly available at the end of each current calendar year in dockets at
The agency proposed in the NPRM to add requirements in 537.7(c)(4) for manufacturers to report air conditioning efficiency, full-size pickup truck and off-cycle technology improvements used to acquire the incentives in 40 CFR 86.1866, and the amount of each incentive. As proposed, the technology credits or incentives would need to be reported for each vehicle configuration making up the model types used to determine a manufacturer's fleet average performance.
Ford argued that these particular types of vehicle characteristics—those necessary to earn fuel economy adjustment values for air conditioning efficiency, full-size pickup truck and off-cycle technology improvements—will not vary by fuel economy configuration and will likely only vary by vehicle line. Ford requested instead that manufacturers be allowed to delineate the credit applicability specifically, as needed, but for cases where credits apply across a much broader section of vehicles, manufacturers should be allowed to report on that level rather than being required to report at the vehicle configuration level.
Upon further consideration, NHTSA agrees that these technology improvements likely need not be specified at the vehicle configuration level because the fuel economy adjustment incentive is derived based upon the technology and is not necessarily affected by being applied to
This final rule constitutes the Record of Decision (ROD) for NHTSA's final rule for CAFE standards for model years 2017 and beyond, pursuant to the National Environmental Policy Act (NEPA) and the Council on Environmental Quality's (CEQ) implementing regulations.
As required by CEQ regulations, this ROD sets forth the following: (1) The agency's decision; (2) alternatives considered by NHTSA in reaching its decision, including the environmentally preferable alternative; (3) the factors balanced by NHTSA in making its decision, including considerations of national policy; (4) how these factors and considerations entered into its decision; and (5) the agency's preferences among alternatives based on relevant factors, including economic and technical considerations and agency statutory missions. This ROD also briefly addresses mitigation.
In the Draft Environmental Impact Statement (Draft EIS) and the Final Environmental Impact Statement (Final EIS), the agency identified a Preferred Alternative, labeled as Alternative 3. As NHTSA noted in the Final EIS, under the Preferred Alternative, on an mpg basis, the estimated annual increases in the average required fuel economy levels between MYs 2017 and 2021 average 3.8 to 3.9 percent for passenger cars and 2.5 to 2.7 percent for light trucks. The estimated annual increases in the average required fuel economy levels set forth for MYs 2022–2025—also on an mpg basis—are assumed to average 4.7 percent for passenger cars and 4.8 to 4.9 percent for light trucks.
When preparing an EIS, NEPA requires an agency to compare the potential environmental impacts of its proposed action and a reasonable range of alternatives. In the Draft and Final EIS, NHTSA analyzed a No Action Alternative and three action alternatives. The action alternatives represent a range of potential actions the agency could take. The environmental impacts of these alternatives, in turn, represent a range of potential environmental impacts that could result from NHTSA's chosen action in setting maximum feasible fuel economy standards for light duty vehicles.
The No Action Alternative in the Draft and Final EIS assumes that NHTSA would not issue a rule regarding CAFE standards for MY 2017–2025 passenger cars and light trucks; rather, the No Action Alternative assumes that NHTSA's latest CAFE standards (the MY 2016 fuel economy standards, issued in conjunction with EPA's MY 2016 GHG standards) would continue indefinitely. This alternative provides an analytical baseline against which to compare the environmental impacts of the other alternatives presented in the EIS.
For the EIS, in addition to the No Action Alternative, NHTSA analyzed a range of action alternatives with fuel economy stringencies that increased on average 2 percent to 7 percent annually from the MY 2016 standards for passenger cars and for light trucks. As NHTSA noted in the Final EIS, the agency believes that, based on the different ways the agency could weigh EPCA's four statutory factors, the “maximum feasible” level of CAFE stringency falls within this range.
Throughout the Final EIS, estimated impacts were shown for three action alternatives that illustrate this range of average annual percentage increases in fuel economy: a 2 percent per year average increase in stringency for both passenger cars and light trucks (Alternative 2); the Preferred Alternative with annual percentage increases in stringency for passenger cars and for light trucks that, on average, fall between the 2 percent and 7 percent per year increases (Alternative 3); and a 7 percent per year average increase in stringency for both passenger cars and light trucks (Alternative 4).
Alternatives 2 and 4 were intended to provide the lower and upper bounds of a reasonable range of alternatives. In the EIS, the agency provided environmental analyses of these points to enable the decisionmaker and the public to determine the environmental impacts of points that fall between Alternatives 2 and 4. The action alternatives evaluated in the EIS therefore provided decisionmakers with the ability to select from a wide variety of other potential alternatives with stringencies that increase annually at average percentage rates between 2 and 7 percent. This includes, for example, alternatives with stringencies that increase at different rates for passenger cars and for light trucks and stringencies that increase by different rates in different years. For a discussion of the environmental impacts associated with the alternatives,
The Final EIS recognizes the unique uncertainties inherent in projecting the makeup of the U.S. vehicle fleet far into the future. In order to take account of uncertainties regarding the future vehicle fleet, and how manufacturers would respond to increased fuel economy standards in the future, the Final EIS presents the potential environmental impacts for each of the alternatives using two different assumptions regarding market-driven fuel economy improvements and two different sets of fleet-characteristic assumptions.
NHTSA's environmental analysis indicates that Alternative 4 is the overall Environmentally Preferable Alternative because it would result in the largest reductions in fuel use and GHG emissions among the alternatives considered. Under each action alternative the agency considered, the reduction in fuel consumption resulting from higher fuel economy causes emissions that occur during fuel refining and distribution to decline. For most of these pollutants, this decline is more than sufficient to offset the increase in tailpipe emissions that results from increased driving due to the fuel efficiency rebound effect, leading to a net reduction in total emissions from fuel production, distribution, and use. Because it leads to the largest reductions in fuel refining, distribution, and consumption among the alternatives considered, Alternative 4 would also lead to the lowest total emissions of CO
Alternative 4 would lead to the greatest reduction of CO
For toxic air pollutants, results are mixed. Alternatives 3 and 4 are the Environmentally Preferable Alternatives depending on the pollutant and assumptions used. The greatest reductions in emissions of benzene and 1,3-butadiene occur under Alternative 4 in later analysis years. The greatest reductions in diesel particulate matter (DPM) occur under Alternative 3 (the Preferred Alternative) in later analysis years. Under all action alternatives, emissions of acetaldehyde, acrolein, and formaldehyde would generally increase in later years, depending on the assumptions used. These emissions increases are mainly due to the fuel efficiency rebound effect, which more than offsets emission reductions from decreased fuel usage. Under different assumptions, the fuel efficiency rebound effect would not fully offset emissions reductions from decreased fuel usage, and emissions of these pollutants would instead decrease.
For criteria pollutants, the greatest relative reductions in emissions compared to the No Action Alternative occur under Alternative 4 for CO, PM
At the time the analysis for the Final EIS was performed, EIA's final version of AEO 2012 was not yet released. The AEO 2012 Early Release Reference Case, used for the criteria air pollutant results described above, did not account for new standards for power plants, which are expected to result in substantial reductions of emissions of some air pollutants discussed in the air quality chapter.
As we stated in the Final EIS, NHTSA believes it is reasonable to consider an additional analysis assuming steady improvements to the electrical grid during the course of the next several decades—the period during which any EV deployment associated with this program would occur. In the Final EIS, NHTSA performed an additional air quality analysis in order to take into account changes to the efficiency of power plants and the mix of fuel sources used. Emissions and other environmental impacts from electricity production depend on the efficiency of the power plant and the mix of fuel sources used, sometimes referred to as the “grid mix.” In the United States, the current grid mix is composed of coal, nuclear, natural gas, hydroelectric, oil, and renewable energy resources, with the largest single source of electricity being from coal. As a result of EPA's Acid Rain Program, the Clean Air Interstate Rule, the recent Mercury and Air Toxics Standards, and general advances in technology, emissions from the power-generation sector are expected to decline over time. Low natural gas prices and higher coal prices, as well as slower growth in electrical demand, are currently resulting in a shift away from coal-based electricity generation. Together, these trends suggest a future grid mix that is likely to produce lower upstream emissions per unit of electricity used to charge EVs than the NEMS AEO 2012 Early Release-based 2020 projection, especially in terms of reductions in criteria pollutant emissions.
Under the cleaner grid mix analyzed in the EIS,
EIA's final version of AEO 2012, which accounts for new EPA standards for power plants such as the Mercury and Air Toxics Standards, projects
For more detailed discussion of the environmental impacts associated with the alternatives,
For discussion of the factors balanced by NHTSA in making Its decision,
For discussion of how the factors and considerations balanced by the agency entered into NHTSA's Decision,
For discussion of the agency's preferences among alternatives based on relevant factors, including economic and technical considerations,
The CEQ regulations specify that a ROD must “state whether all practicable means to avoid or minimize environmental harm from the alternative selected have been adopted, and if not, why they were not.” 40 CFR 1505.2(c). The majority of the environmental effects of NHTSA's action are positive,
NHTSA's authority to promulgate new fuel economy standards is limited and does not allow regulation of criteria pollutant from vehicles or of factors affecting those emissions, including driving habits. Consequently, NHTSA must set CAFE standards but is unable to take steps to mitigate the impacts of these standards. Chapter 8 of the Final EIS outlines a number of other initiatives across the government that could ameliorate the environmental impacts of motor vehicle use, including the use of light duty vehicles.
Executive Order 12866, “Regulatory Planning and Review” (58 FR 51735, Oct. 4, 1993), as amended by Executive Order 13563, “Improving Regulation and Regulatory Review” (76 FR 3821, Jan. 21, 2011), provides for making determinations whether a regulatory action is “significant” and therefore subject to OMB review and to the requirements of the Executive Order. The Order defines a “significant regulatory action” as one that is likely to result in a rule that may:
(1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or Tribal governments or communities;
(2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency;
(3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or
(4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order.
The CAFE standards promulgated in this final rule will be economically significant if adopted. Accordingly, OMB reviewed the rule under Executive Order 12866. The rule is also significant within the meaning of the Department of Transportation's Regulatory Policies and Procedures.
The benefits and costs of this proposal are described above. Because the rule is economically significant under both the Department of Transportation's procedures and OMB guidelines, the agency has prepared a Final Regulatory Impact Analysis (FRIA) and placed it in the docket and on the agency's Web site. Further, pursuant to Circular A–4, we have prepared a formal probabilistic uncertainty analysis for this final rule. The circular requires such an analysis for complex rules where there are large, multiple uncertainties whose analysis raises technical challenges or where effects cascade and where the impacts of the rule exceed $1 billion. This final rule meets these criteria on all counts.
Under NEPA, a Federal agency must prepare an EIS on proposals for major Federal actions that significantly affect the quality of the human environment.
The Final EIS quantitatively and qualitatively analyzes the potential environmental impacts of a range of alternative CAFE standards on fuel and energy use, air quality, and global climate change. The Final EIS also qualitatively describes potential environmental impacts to a variety of other resources including land use and development, hazardous materials and regulated wastes, historic and cultural resources, noise, and environmental justice.
CEQ regulations emphasize agency cooperation early in the NEPA process and allow a lead agency (in this case, NHTSA) to request the assistance of other agencies that either have jurisdiction by law or have special expertise regarding issues considered in an EIS.
In preparing the Final EIS, NHTSA took a number of steps to ensure public involvement. On May 10, 2011, NHTSA published a notice of intent to prepare an environmental impact statement for new CAFE standards, requesting comment on the scope of the agency's analysis.
NHTSA received thousands of written and oral comments to the NPRM and the Draft EIS. The transcripts from the public hearings and written comments submitted to NHTSA are part of the administrative record and are available on the Federal Docket, available online at
On July 9, 2012, NHTSA submitted the Final EIS to EPA, in accordance with CEQ NEPA implementing regulations.
In developing the CAFE standards adopted in this final rule, NHTSA has been informed by the analyses contained in the
Based on the foregoing, NHTSA concludes that the environmental analysis and public involvement process complies with NEPA implementing regulations issued by CEQ, DOT Order 5610.1C, and NHTSA regulations.
The CAA (42 U.S.C. § 7401) is the primary Federal legislation that addresses air quality. Under the authority of the CAA and subsequent amendments, EPA has established National Ambient Air Quality Standards (NAAQS) for six criteria pollutants, which are relatively commonplace pollutants that can accumulate in the atmosphere as a result of normal levels of human activity. EPA is required to review each NAAQS every five years and to revise those standards as may be appropriate considering new scientific information.
The air quality of a geographic region is usually assessed by comparing the levels of criteria air pollutants found in the ambient air to the levels established by the NAAQS (taking into account, as well, the other elements of a NAAQS: averaging time, form, and indicator). Concentrations of criteria pollutants within the air mass of a region are measured in parts of a pollutant per million parts of air (ppm) or in micrograms of a pollutant per cubic meter (μg/m
When the measured concentrations of a criteria pollutant within a geographic region are below those permitted by the NAAQS, the region is designated by the EPA as an attainment area for that pollutant, while regions where concentrations of criteria pollutants exceed Federal standards are called nonattainment areas (NAAs). Former NAAs that have attained the NAAQS are designated as maintenance areas. Each NAA is required to develop and implement a State Implementation Plan (SIP), which documents how the region will reach attainment levels within time periods specified in the CAA. In maintenance areas, the SIP documents how the State intends to maintain attainment with the NAAQS. When EPA revises a NAAQS, States must revise their SIPs to address how they will attain the new standard.
Section 176(c) of the CAA prohibits Federal agencies from taking actions in nonattainment or maintenance areas
(1) The Transportation Conformity Rules (40 CFR Part 93, Subpart A), which apply to transportation plans, programs, and projects funded or approved under U.S.C. Title 23 or the Federal Transit Laws (49 U.S.C. Chapter 53). Projects funded by the Federal Highway Administration (FHWA) or the Federal Transit Administration (FTA) usually are subject to transportation conformity. See 40 CFR 93.102.
(2) The General Conformity Rules (40 CFR Part 93, Subpart B) apply to all other federal actions not covered under transportation conformity. The General Conformity Rule established emissions thresholds, or de minimis levels, for use in evaluating the conformity of a project. If the net emissions increases attributable to the project are less than these thresholds, then the project is presumed to conform and no further conformity evaluation is required. If the emissions increases exceed any of these thresholds, then a conformity determination is required. The conformity determination can entail air quality modeling studies, consultation with EPA and state air quality agencies, and commitments to revise the SIP or to implement measures to mitigate air quality impacts.
The final fuel economy standards are not funded or approved under Title 23 or the Federal Transit Act. Further, NHTSA's CAFE program is not a highway or transit project funded or approved by FHWA or FTA. Accordingly, this final rule is not subject to transportation conformity.
Under the General Conformity Rule, a conformity determination is required where a Federal action would result in total direct and indirect emissions of a criteria pollutant or precursor equaling or exceeding the rates specified in 40 CFR 93.153(b)(1) and (2) for nonattainment and maintenance areas. As explained below, NHTSA's action results in neither direct nor indirect emissions as defined in 40 CFR 93.152.
The General Conformity Rule defines direct emissions as those of “a criteria pollutant or its precursors that are caused or initiated by the Federal action and originate in a nonattainment or maintenance area and occur at the same time and place as the action and are reasonably foreseeable.” 40 CFR 93.152. Because NHTSA's action only sets fuel economy standards for light duty vehicles, it causes no direct emissions within the meaning of the General Conformity Rule.
Indirect emissions under the General Conformity Rule include emissions or precursors: (1) That are caused or initiated by the Federal action and originate in the same nonattainment or maintenance area but occur at a different time or place than the action; (2) that are reasonably foreseeable; (3) that the agency can practically control; and (4) for which the agency has continuing program responsibility. 40 CFR 93.152. Each element of the definition must be met to qualify as an indirect emission. NHTSA has determined that, for the purposes of general conformity, emissions that occur as a result of the fuel economy standards are not caused by NHTSA's action, but rather occur due to subsequent activities that the agency cannot practically control. “[E]ven if a Federal licensing, rulemaking, or other approving action is a required initial step for a subsequent activity that causes emissions, such initial steps do not mean that a Federal agency can practically control any resulting emissions” (75
The NHPA (16 U.S.C. 470) sets forth government policy and procedures regarding “historic properties”—that is, districts, sites, buildings, structures, and objects included in or eligible for the National Register of Historic Places (NRHP).
Under Executive Order 12898, Federal agencies are required to identify and address any disproportionately high and adverse human health or environmental effects of its programs, policies, and activities on minority and low-income populations. Pursuant to this order, the Final EIS includes a qualitative analysis of the potential effects of the standards on minority and low-income populations.
The FWCA (16 U.S.C. 2900) provides financial and technical assistance to States for the development, revision, and implementation of conservation plans and programs for nongame fish and wildlife. In addition, the Act encourages all Federal agencies and departments to utilize their authorities to conserve and to promote conservation of nongame fish and wildlife and their habitats. The agency concludes that the FWCA is not applicable to NHTSA's Decision because it does not directly involve fish and wildlife.
The Coastal Zone Management Act (16 U.S.C. 1450) provides for the preservation, protection, development, and (where possible) restoration and enhancement of the nation's coastal zone resources. Under the statute, States are provided with funds and technical assistance in developing coastal zone management programs. Each
The agency concludes that the CZMA is not applicable to NHTSA's Decision because it does not involve an activity within, or outside of, the nation's coastal zones. The agency has, however, conducted a qualitative review of the related direct, indirect, and cumulative impacts, positive or negative, of the alternatives on potentially affected resources, including coastal zones.
Under Section 7(a)(2) of the ESA federal agencies must ensure that actions they authorize, fund, or carry out are “not likely to jeopardize” federally listed threatened or endangered species or result in the destruction or adverse modification of the designated critical habitat of these species. 16 U.S.C. 1536(a)(2). If a federal agency determines that an agency action may affect a listed species or designated critical habitat, it must initiate consultation with the appropriate Service—the U.S. Fish and Wildlife Service of the Department of the Interior and/or the National Oceanic and Atmospheric Administration's National Marine Fisheries Service of the Department of Commerce, depending on the species involved—in order to ensure that the action is not likely to jeopardize the species or destroy or adversely modify designated critical habitat.
NHTSA received one comment to the Draft EIS indicating that the agency should engage in consultation under Section 7 of the ESA when analyzing the overall impact of GHG emissions and other air pollutants. Pursuant to Section 7(a)(2) of the ESA, NHTSA has considered the effects of the proposed CAFE standards and has reviewed applicable ESA regulations, case law, and guidance to determine what, if any, impact there might be to listed species or designated critical habitat. NHTSA has considered issues related to emissions of CO
These Orders require Federal agencies to avoid the long- and short-term adverse impacts associated with the occupancy and modification of floodplains, and to restore and preserve the natural and beneficial values served by floodplains. Executive Order 11988 also directs agencies to minimize the impact of floods on human safety, health and welfare, and to restore and preserve the natural and beneficial values served by floodplains through evaluating the potential effects of any actions the agency may take in a floodplain and ensuring that its program planning and budget requests reflect consideration of flood hazards and floodplain management. DOT Order 5650.2 sets forth DOT policies and procedures for implementing Executive Order 11988. The DOT Order requires that the agency determine if a proposed action is within the limits of a base floodplain, meaning it is encroaching on the floodplain, and whether this encroachment is significant. If significant, the agency is required to conduct further analysis of the proposed action and any practicable alternatives. If a practicable alternative avoids floodplain encroachment, then the agency is required to implement it.
In this rulemaking, the agency is not occupying, modifying and/or encroaching on floodplains. The agency, therefore, concludes that the Orders are not applicable to NHTSA's Decision. The agency has, however, conducted a review of the alternatives on potentially affected resources, including floodplains.
These Orders require Federal agencies to avoid, to the extent possible, undertaking or providing assistance for new construction located in wetlands unless the agency head finds that there is no practicable alternative to such construction and that the proposed action includes all practicable measures to minimize harms to wetlands that may result from such use. Executive Order 11990 also directs agencies to take action to minimize the destruction, loss or degradation of wetlands in “conducting Federal activities and programs affecting land use, including but not limited to water and related land resources planning, regulating, and licensing activities.” DOT Order 5660.1a sets forth DOT policy for interpreting Executive Order 11990 and requires that transportation projects “located in or having an impact on wetlands” should be conducted to assure protection of the Nation's wetlands. If a project does have a significant impact on wetlands, an EIS must be prepared.
The agency is not undertaking or providing assistance for new construction located in wetlands. The agency, therefore, concludes that these Orders do not apply to NHTSA's Decision. The agency has, however, conducted a review of the alternatives on potentially affected resources, including wetlands.
The MBTA provides for the protection of migratory birds that are native to the United States by making it illegal for anyone to pursue, hunt, take, attempt to take, kill, capture, collect, possess, buy, sell, trade, ship, import, or export any migratory bird covered under the statute. The statute prohibits both intentional and unintentional acts. Therefore, the statute is violated if an agency acts in a manner that harms a migratory bird, whether it was intended or not.
The BGEPA (16 U.S.C. 668) prohibits any form of possession or taking of both bald and golden eagles. Under the BGEPA, violators are subject to criminal and civil sanctions as well as an enhanced penalty provision for subsequent offenses.
Executive Order 13186, “Responsibilities of Federal Agencies to Protect Migratory Birds,” helps to further the purposes of the MBTA by requiring a Federal agency to develop a Memorandum of Understanding (MOU) with the Fish and Wildlife Service when it is taking an action that has (or is likely to have) a measurable negative impact on migratory bird populations.
The agency concludes that the MBTA, BGEPA, and Executive Order 13186 do not apply to NHTSA's Decision because
Section 4(f) of the Department of Transportation Act of 1966 (49 U.S.C. 303), as amended by Pub. Law 109–59, is designed to preserve publicly owned parklands, waterfowl and wildlife refuges, and significant historic sites. Specifically, Section 4(f) of the Department of Transportation Act provides that DOT agencies cannot approve a transportation program or project that requires the use of any publicly owned land from a significant public park, recreation area, or wildlife and waterfowl refuge, or any land from a significant historic site, unless a determination is made that:
(1) There is no feasible and prudent alternative to the use of land, and
(2) The program or project includes all possible planning to minimize harm to the property resulting from use, or
(3) A transportation use of Section 4(f) property results in a
The agency concludes that Section 4(f) is not applicable to NHTSA's Decision because this rulemaking does not require the use of any publicly owned land.
Pursuant to the Regulatory Flexibility Act (5 U.S.C. 601
I certify that this final rule will not have a significant economic impact on a substantial number of small entities. The following is NHTSA's statement providing the factual basis for the certification (5 U.S.C. 605(b)).
The final rule directly affects 19 large single stage motor vehicle manufacturers.
Executive Order 13132 requires NHTSA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.”
Additionally, in his January 26 memorandum, the President requested NHTSA to “consider whether any provisions regarding preemption are consistent with the EISA, the Supreme Court's decision in
Pursuant to Executive Order 12988, “Civil Justice Reform,”
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) requires Federal agencies to prepare a written assessment of the costs, benefits, and other effects of a proposed or final rule that includes a Federal mandate likely to result in the expenditure by State, local, or tribal governments, in the aggregate, or by the private sector, of more than $100 million in any one year (adjusted for inflation with base year of 1995). Adjusting this amount by the implicit gross domestic product price deflator for 2010 results in $136 million (111.000/81.606 = 1.36). Before promulgating a rule for which a written statement is needed, section 205 of UMRA generally requires NHTSA to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, most cost-
This final rule will not result in the expenditure by State, local, or tribal governments, in the aggregate, of more than $136 million annually, but it will result in the expenditure of that magnitude by vehicle manufacturers and/or their suppliers. In promulgating this final rule, NHTSA considered a variety of alternative average fuel economy standards lower and higher than those proposed. NHTSA is statutorily required to set standards at the maximum feasible level achievable by manufacturers based on its consideration and balancing of relevant factors and has concluded that the final fuel economy standards are the maximum feasible standards for the passenger car and light truck fleets for MYs 2012–2016 in light of the statutory considerations.
The Department of Transportation assigns a regulation identifier number (RIN) to each regulatory action listed in the Unified Agenda of Federal Regulations. The Regulatory Information Service Center publishes the Unified Agenda in April and October of each year. You may use the RIN contained in the heading at the beginning of this document to find this action in the Unified Agenda.
Executive Order 13045
As noted in Chapter 4 of NHTSA's Final EIS, the criteria pollutants assessed in the agencies have been shown to cause a range of adverse health effects at various concentrations and exposures, including: Damage to lung tissue, reduced lung function, exacerbation of existing respiratory and cardiovascular diseases, difficulty breathing, irritation of the upper respiratory tract, bronchitis and pneumonia, educed resistance to respiratory infections, alterations to the body's defense systems against foreign materials, reduced delivery of oxygen to the body's organs and tissues, impairment of the brain's ability to function properly, cancer and premature death. When these gases and particles accumulate in the air in high enough concentrations, they can harm humans, especially children, the elderly, the ill, and other sensitive individuals.
Diesel Particulate Matter (DPM) is a component of diesel exhaust. DPM particles are very fine, with most particles smaller than 1 micron, and their small size allows inhaled DPM to reach the lungs. Particles typically have a carbon core coated with condensed organic compounds such as POM, which include mutagens and carcinogens. EPA classifies many of the compounds included in the POM class as probable human carcinogens based on animal data. Polycyclic aromatic hydrocarbons (PAHs) are a subset of POM that contains only hydrogen and carbon atoms. Studies have found that maternal exposures to Polycyclic aromatic hydrocarbons (PAHs) in a population of pregnant women were associated with several adverse birth outcomes, including low birth weight and reduced length at birth, and impaired cognitive development in preschool children (3 years of age) (Perera et al. 2003, 2006).
As noted in Chapter 5 of the Final EIS, potential increases in allergens under a changing climate could increase respiratory health risks, particularly for children. Recent research has projected increases in weed pollen and grass pollen under various climate change simulations; these allergens are known to exacerbate children's asthma and cause hospitalizations (Sheffield and Landrigan 2011 citing Héguy et al. 2008, Schmier and Ebi 2009, and Ziska et al. 2008). Consistent with earlier studies, increased temperatures from climate change are projected to increase ground‐level ozone concentrations, triggering asthma attacks among children (Bernstein and Myers 2011). Exposure to smoke from forest fires, which are likely to occur more frequently in the future, cause asthma and respiratory illnesses in children (Bernstein and Myers 2011 citing Liu et al. 2010, Bernstein and Mysers 2011 citing Kunzli et al. 2006).
Additionally, the Final EIS notes that substantial morbidity and childhood mortality has been linked to water- and food-borne diseases. A recent study investigates how six regions in the tropics and subtropics—including South America, North Africa, the Middle East, equatorial Africa, southern Africa, and Southeast Asia, all of which have high incidence of dehydration and diarrhea—could experience increases in diarrhea incidence as average temperatures rise. This study estimates an average temperature increase of 4 °C (7.2 °F) over land in the study area by the end of the century, compared to a 1961 to 1990 baseline, based on an ensemble average of 19 climate models using a moderate (A1B) emission scenario. A relatively simple linear regression relationship was developed between diarrhea incidence and temperature increase based on the results of five independent studies. Applying this relationship, the projected mean increase in the relative risk of contracting diarrhea across the six study regions is eight to 11 percent in the period 2010 to 2039, 15 to 20 percent in the period 2040 to 2069, and 22 to 29 percent in the period 2070 to 2099 (Kolstad and Johansson 2011). Climate change is also projected to affect the rates of water‐ and food‐borne diseases. Currently, foodborne diseases cause an estimated 5,000 deaths, 325,000 hospitalizations, and 76 million illnesses annually in the United States (Ge et al. 2011 citing Mead et al. 1999). A new study tested how climate change can affect the spread of Salmonella. Both extended dryness and heavy rain were tested, and the authors found that these conditions facilitated the transfer of Salmonella typhimurium into the edible portions of lettuce and green onion when Salmonella was present in the soil. If climate change were to cause excessive drought or heavy rain, it could increase the risk of disease outbreaks (Ge et al. 2011).
In the United States, Lyme disease is a common vector‐borne disease, with children between the ages of 5 and 9 having the highest incidence of infection (Bernstein and Myers 2011 citing Bacon et al. 2008). In response to warming temperatures, populations of the black legged tick (Ixodes scapularis, often known as the deer tick) have been expanding and increasing in number across North America northward toward Canada and lower Michigan in the United States (Bernstein and Myers 2011 citing Ogden et al. 2010).
Globally, there has been an increase in cases of skin cancer over the past several decades, due in part to increased exposure to UV‐B radiation caused by
The impacts of climate change on food and water security will be particularly burdensome on children, who are more susceptible to malnutrition and disease (Sheffield and Landrigan 2011). In the Sahel region of Africa, expanding arid climates could hinder agricultural production, resulting in an increase in malnutrition, stunting, and anemia throughout the population. By 2025, an additional six million people in Mali, Africa—of which one million are children—are at heightened risk of malnutrition due to climate and livelihood changes from increasing temperatures and decreased rainfall across the region. As the arid region expands, it is projected that approximately 250,000 children will suffer stunting, 200,000 children will be malnourished, and more than 100,000 will be anemic (Jankowska et al. 2012).
Thus, as detailed in the Final EIS, NHTSA has evaluated the environmental, health, and safety effects of the rule on children and fetuses. The Final EIS also explains why the standards are preferable to other potentially effective and reasonably foreseeable alternatives considered by the agency.
Section 12(d) of the National Technology Transfer and Advancement Act (NTTAA) requires NHTSA to evaluate and use existing voluntary consensus standards in its regulatory activities unless doing so would be inconsistent with applicable law (
Voluntary consensus standards are technical standards developed or adopted by voluntary consensus standards bodies. Technical standards are defined by the NTTAA as “performance-base or design-specific technical specification and related management systems practices.” They pertain to “products and processes, such as size, strength, or technical performance of a product, process or material.”
Examples of organizations generally regarded as voluntary consensus standards bodies include the American Society for Testing and Materials (ASTM), the Society of Automotive Engineers (SAE), and the American National Standards Institute (ANSI). If NHTSA does not use available and potentially applicable voluntary consensus standards, we are required by the Act to provide Congress, through OMB, an explanation of the reasons for not using such standards.
There are currently no voluntary consensus standards relevant to today's final CAFE standards.
Executive Order 13211
The final rule seeks to establish passenger car and light truck fuel economy standards that will reduce the consumption of petroleum and will not have any adverse energy effects. Accordingly, this final rulemaking action is not designated as a significant energy action.
In accordance with 49 U.S.C. 32902(j)(1), we submitted this final rule to the Department of Energy for review. That Department did not make any comments that we have not addressed.
Anyone is able to search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an organization, business, labor union, etc.). You may review DOT's complete Privacy Act statement in the
Confidential business information, Imports, Labeling, Motor vehicle pollution, Reporting and recordkeeping requirements, Research, Warranties.
Administrative practice and procedure, Confidential business information, Incorporation by reference, Labeling, Motor vehicle pollution, Reporting and recordkeeping requirements.
Administrative practice and procedure, Electric power, Fuel economy, Labeling, Reporting and recordkeeping requirements.
Fuel Economy.
Fuel economy, Reporting and Recordkeeping Requirements.
40 CFR Chapter I
For the reasons set forth in the preamble, the Environmental Protection Agency amends parts 85, 86, and 600 of title 40, Chapter I of the Code of Federal Regulations as follows:
42 U.S.C. 7401–7671q.
(a) * * *
(2) * * *
(i) * * *
(D) Optionally, compliance with greenhouse gas emission requirements may be demonstrated by comparing emissions from the vehicle prior to the fuel conversion to the emissions after the fuel conversion. This comparison must be based on FTP test results from the emission data vehicle (EDV) representing the pre-conversion test group. The sum of CO
42 U.S.C. 7401–7671q.
(a) Documents listed in this section have been incorporated by reference into this part. The Director of the Federal Register approved the incorporation by reference as prescribed in 5 U.S.C. 552(a) and 1 CFR part 51. Anyone may inspect copies at the U.S. EPA, Air and Radiation Docket and Information Center, 1301 Constitution Ave. NW., Room B102, EPA West Building, Washington, DC 20460, (202) 566–1744, or at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202–741–6030, or go to:
(b) American Society for Testing and Materials (ASTM). Anyone may purchase copies of these materials from American Society for Testing and Materials at 100 Barr Harbor Drive, P.O. Box C700, West Conshohocken, PA, 19428–2959, (610) 832–9585, or
(1) ASTM C1549–09, Standard Test Method for Determination of Solar Reflectance Near Ambient Temperature Using a Portable Solar Reflectometer, approved August 1, 2009, IBR approved for § 86.1869–12(b).
(2) ASTM D975–04c, Standard Specification for Diesel Fuel Oils, published 2004, IBR approved for §§ 86.213–11, 86.1910.
(3) ASTM D1945–91, Standard Test Method for Analysis of Natural Gas by Gas Chromatography, published 1991, IBR approved for §§ 86.113–94, 86.513–94, 86.1213–94, 86.1313–94.
(4) ASTM D2163–91, Standard Test Method for Analysis of Liquefied Petroleum (LP) Gases and Propane Concentrates by Gas Chromatography, published 1991, IBR approved for §§ 86.113–94, 86.1213–94, 86.1313–94.
(5) ASTM D2986–95a (Reapproved 1999), Standard Practice for Evaluation of Air Assay Media by the Monodisperse DOP (Dioctyl Phthalate) Smoke Test, published 1999, IBR approved for § 86.1310–2007.
(6) ASTM D5186–91, Standard Test Method for Determination of Aromatic Content of Diesel Fuels by Supercritical Fluid Chromatography, published 1991, IBR approved for §§ 86.113–07, 86.1313–91, 86.1313–94, 86.1313–98, 86.1313–2007.
(7) ASTM E29–67 (Reapproved 1980), Standard Recommended Practice for Indicating Which Places of Figures Are To Be Considered Significant in Specified Limiting Values, published 1980, IBR approved for § 86.1105–87.
(8) ASTM E29–90, Standard Practice for Using Significant Digits in Test Data to Determine Conformance with Specifications, published 1990, IBR approved for §§ 86.609–84, 86.609–96, 86.609–97, 86.609–98, 86.1009–84, 86.1009–96, 86.1442, 86.1708–99, 86.1709–99, 86.1710–99, 86.1728–99.
(9) ASTM E29–93a, Standard Practice for Using Significant Digits in Test Data to Determine Conformance with Specifications, published 1993, IBR approved for §§ 86.004–15, 86.007–11, 86.007–15, 86.098–15, 86.1803–01, 86.1823–01, 86.1824–01, 86.1825–01, 86.1837–01.
(10) ASTM E903–96, Standard Test Method for Solar Absorptance, Reflectance, and Transmittance of Materials Using Integrating Spheres, approved April 10, 1996, IBR approved for § 86.1869–12(b).
(11) ASTM E1918–06, Standard Test Method for Measuring Solar Reflectance of Horizontal and Low-Sloped Surfaces in the Field, approved August 15, 2006, IBR approved for § 86.1869–12(b).
(12) ASTM F1471–93, Standard Test Method for Air Cleaning Performance of a High-Efficiency Particulate Air-Filter System, published 1993, IBR approved § 86.1310–2007.
(c) American National Standards Institute (ANSI). Anyone may purchase copies of these materials from American National Standards Institute, 25 W 43rd Street, 4th Floor, New York, NY 10036, (212) 642–4900,
(1) ANSI/AGA NGV1–1994, Standard for Compressed Natural Gas Vehicle (NGV) Fueling Connection Devices, 1994, IBR approved for §§ 86.001–9, 86.004–9, 86.098–8, 86.099–8, 86.099–9, 86.1810–01.
(2) [Reserved]
(d) California Air Resources Board, 1001 I Street, Sacramento, CA, 95812, (916) 322–2884,
(1) California Regulatory Requirements Applicable to the “LEV II” Program, including:
(i) California Non-Methane Organic Gas Test Procedures, August 5, 1999, IBR approved for §§ 86.1803–01, 86.1810–01, 86.1811–04.
(ii) [Reserved]
(2) California Regulatory Requirements Applicable to the National Low Emission Vehicle Program, October 1996, IBR approved for §§ 86.113–04, 86.612–97, 86.1012–97, 86.1702–99, 86.1708–99, 86.1709–99, 86.1717–99, 86.1735–99, 86.1771–99, 86.1775–99, 86.1776–99, 86.1777–99, Appendix XVI, Appendix XVII.
(3) California Regulatory Requirements known as On-board Diagnostics II (OBD–II), Approved on April 21, 2003, Title 13, California Code Regulations, Section 1968.2, Malfunction and Diagnostic System Requirements for 2004 and Subsequent Model-Year Passenger Cars, Light-Duty Trucks, and Medium-Duty Vehicles and Engines (OBD–II), IBR approved for § 86.1806–05.
(4) California Regulatory Requirements known as On-board Diagnostics II (OBD–II), Approved on November 9, 2007, Title 13, California Code Regulations, Section 1968.2, Malfunction and Diagnostic System Requirements for 2004 and Subsequent Model-Year Passenger Cars, Light-Duty Trucks, and Medium-Duty Vehicles and Engines (OBD–II), IBR approved for §§ 86.007–17, 86.1806–05.
(e) International Organization for Standardization (ISO). Anyone may purchase copies of these materials from International Organization for Standardization, Case Postale 56, CH–1211 Geneva 20, Switzerland, 41–22–749–01–11,
(1) ISO 9141–2, Road vehicles—Diagnostic systems—Part 2: CARB requirements for interchange of digital information, February 1, 1994, IBR approved for §§ 86.005–17, 86.007–17, 86.099–17, 86.1806–01, 86.1806–04, 86.1806–05.
(2) ISO 14230–4:2000(E), Road vehicles—Diagnostic systems—KWP 2000 requirements for emission-related systems, June 1, 2000, IBR approved for §§ 86.005–17, 86.007–17, 86.099–17, 86.1806–01, 86.1806–04, 86.1806–05.
(3) ISO 15765–4.3:2001, Road Vehicles—Diagnostics on Controller Area Networks (CAN)—Part 4: Requirements for emissions-related systems, December 14, 2001, IBR approved for §§ 86.005–17, 86.007–17, 86.1806–04, 86.1806–05.
(4) 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
(5) ISO 13837:2008(E), Road Vehicles—Safety glazing materials—Method for the determination of solar transmittance, First edition, April 15, 2008, IBR approved for § 86.1869–12(b).
(f) National Institute of Standards and Technology (NIST). Anyone may purchase copies of these materials from National Institute of Standards and Technology, 100 Bureau Drive, Gaithersburg, MD, 20899,
(1) NIST Special Publication 811, Guide for the Use of the International System of Units (SI), 1995 Edition, IBR approved for § 86.1901.
(2) [Reserved]
(g) Society of Automotive Engineers (SAE). Anyone may purchase copies of these materials from Society of Automotive Engineers, 400 Commonwealth Dr., Warrendale, PA 15096–0001, (877) 606–7323 (U.S. and Canada) or (724) 776–4970 (outside the U.S. and Canada),
(1) SAE J1151, Methane Measurement Using Gas Chromatography, December 1991, (as found in 1994 SAE Handbook—SAE International Cooperative Engineering Program, Volume 1: Materials, Fuels, Emissions, and Noise; Section 13 and page 170 (13.170)), IBR approved for §§ 86.111–94; 86.1311–94.
(2) SAE J1634, Electric Vehicle Energy Consumption and Range Test Procedure, Cancelled October 2002, IBR approved for § 86.1811–04(n).
(3) SAE J1349, Engine Power Test Code—Spark Ignition and Compression Ignition, June 1990, IBR approved for §§ 86.094–8, 86.096–8.
(4) SAE J1711, Recommended Practice for Measuring the Exhaust Emissions and Fuel Economy of Hybrid-Electric Vehicles, Including Plug-In Hybrid Vehicles, June 2010, IBR approved for § 86.1811–04(n).
(5) SAE J1850, Class B Data Communication Network Interface, July 1995, IBR approved for §§ 86.099–17, 86.1806–01.
(6) SAE J1850, Class B Data Communication Network Interface, Revised May 2001, IBR approved for §§ 86.005–17, 86.007–17, 86.1806–04, 86.1806–05.
(7) SAE J1877, Recommended Practice for Bar-Coded Vehicle Identification Number Label, July 1994, IBR approved for §§ 86.095–35, 86.1806–01.
(8) SAE J1892, Recommended Practice for Bar-Coded Vehicle Emission Configuration Label, October 1993, IBR approved for §§ 86.095–35, 86.1806–01.
(9) SAE J1930, Electrical/Electronic Systems Diagnostic Terms, Definitions, Abbreviations, and Acronyms, Revised May 1998, IBR approved for §§ 86.004–38, 86.007–38, 86.010–38, 86.096–38, 86.1808–01, 86.1808–07.
(10) 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 §§ 86.005–17, 86.007–17, 86.010–18, 86.1806–04, 86.1806–05.
(11) SAE J1937, Engine Testing with Low Temperature Charge Air Cooler Systems in a Dynamometer Test Cell, November 1989, IBR approved for §§ 86.1330–84, 86.1330–90.
(12) SAE J1939, Recommended Practice for a Serial Control and Communications Vehicle Network, Revised October 2007, IBR approved for §§ 86.010–18.
(13) SAE J1939–11, Physical Layer—250K bits/s, Shielded Twisted Pair, December 1994, IBR approved for §§ 86.005–17, 86.1806–05.
(14) SAE J1939–11, Physical Layer—250K bits/s, Shielded Twisted Pair, Revised October 1999, IBR approved for §§ 86.005–17, 86.007–17, 86.1806–04, 86.1806–05.
(15) SAE J1939–13, Off-Board Diagnostic Connector, July 1999, IBR approved for §§ 86.005–17, 86.007–17, 86.1806–04, 86.1806–05.
(15) SAE J1939–13, Off-Board Diagnostic Connector, Revised March 2004, IBR approved for § 86.010–18.
(16) SAE J1939–21, Data Link Layer, July 1994, IBR approved for §§ 86.005–17, 86.1806–05.
(18) SAE J1939–21, Data Link Layer, Revised April 2001, IBR approved for §§ 86.005–17, 86.007–17, 86.1806–04, 86.1806–05.
(19) SAE J1939–31, Network Layer, Revised December 1997, IBR approved for §§ 86.005–17, 86.007–17, 86.1806–04, 86.1806–05.
(20) SAE J1939–71, Vehicle Application Layer, May 1996, IBR approved for §§ 86.005–17, 86.1806–05.
(21) SAE J1939–71, Vehicle Application Layer—J1939–71 (through 1999), Revised August 2002, IBR approved for §§ 86.005–17, 86.007–17, 86.1806–04, 86.1806–05.
(22) SAE J1939–71, Vehicle Application Layer (Through February 2007), Revised January 2008, IBR approved for § 86.010–38.
(23) SAE J1939–73, Application Layer—Diagnostics, February 1996, IBR approved for §§ 86.005–17, 86.1806–05.
(24) SAE J1939–73, Application Layer—Diagnostics, Revised June 2001, IBR approved for §§ 86.005–17, 86.007–17, 86.1806–04, 86.1806–05.
(25) SAE J1939–73, Application Layer—Diagnostics, Revised September 2006, IBR approved for §§ 86.010–18, 86.010–38.
(26) SAE J1939–81, Recommended Practice for Serial Control and Communications Vehicle Network Part 81—Network Management, July 1997, IBR approved for §§ 86.005–17, 86.007–17, 86.1806–04, 86.1806–05.
(27) SAE J1939–81, Network Management, Revised May 2003, IBR approved for § 86.010–38.
(28) SAE J1962, Diagnostic Connector, January 1995, IBR approved for §§ 86.099–17, 86.1806–01.
(29) SAE J1962, Diagnostic Connector Equivalent to ISO/DIS 15031–3; December 14, 2001, Revised April 2002, IBR approved for §§ 86.005–17, 86.007–17, 86.010–18, 86.1806–04, 86.1806–05.
(30) SAE J1978, OBD II Scan Tool—Equivalent to ISO/DIS 15031–4; December 14, 2001, Revised April 2002, IBR approved for §§ 86.005–17, 86.007–17, 86.010–18, 86.1806–04, 86.1806–05.
(31) SAE J1979, E/E Diagnostic Test Modes, July 1996, IBR approved for §§ 86.099–17, 86.1806–01.
(32) SAE J1979, E/E Diagnostic Test Modes, Revised September 1997, IBR approved for §§ 86.004–38, 86.007–38, 86.010–38, 86.096–38, 86.1808–01, 86.1808–07.
(33) SAE J1979, E/E Diagnostic Test Modes—Equivalent to ISO/DIS 15031–5; April 30, 2002, Revised April 2002, IBR approved for §§ 86.005–17, 86.007–17, 86.099–17, 86.1806–01, 86.1806–04, 86.1806–05.
(34) SAE J1979, (R) E/E Diagnostic Test Modes, Revised May 2007, IBR approved for § 86.010–18, 86.010–38.
(35) SAE J2012, Recommended Practice for Diagnostic Trouble Code Definitions, July 1996, IBR approved for §§ 86.099–17, 86.1806–01.
(36) SAE J2012, (R) Diagnostic Trouble Code Definitions Equivalent to ISO/DIS 15031–6: April 30, 2002, Revised April 2002, IBR approved for §§ 86.005–17, 86.007–17, 86.010–18, 86.1806–04, 86.1806–05.
(37) SAE J2064 FEB2011, R134a Refrigerant Automotive Air-Conditioned Hose, Revised February 2011, IBR approved for § 86.1867–12(a) and (b).
(38) SAE J2284–3, High Speed CAN (HSC) for Vehicle Applications at 500 KBPS, May 2001, IBR approved for §§ 86.096–38, 86.004–38, 86.007–38, 86.010–38, 86.1808–01, 86.1808–07.
(39) SAE J2403, Medium/Heavy-Duty E/E Systems Diagnosis Nomenclature—Truck and Bus, Revised August 2007, IBR approved for §§ 86.007–17, 86.010–18, 86.010–38, 86.1806–05.
(40) SAE J2534, Recommended Practice for Pass-Thru Vehicle Programming, February 2002, IBR approved for §§ 86.004–38, 86.007–38,
(41) SAE J2534–1, (R) Recommended Practice for Pass-Thru Vehicle Programming, Revised December 2004, IBR approved for § 86.010–38.
(42) SAE J2727 FEB2012, Mobile Air Conditioning System Refrigerant Emission Charts for R–134a and R–1234yf, Revised February 2012, IBR approved for § 86.1867–12(a) and (b).
(43) 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 § 86.1868–12(h).
(h) Truck and Maintenance Council, 950 North Glebe Road, Suite 210, Arlington, VA 22203–4181, (703) 838–1754.
(1) TMC RP 1210B, Revised June 2007, WINDOWSTMCOMMUNICATION API, IBR approved for § 86.010–38.
(2) [Reserved]
(b)
(a)
(d) Practice runs over the prescribed driving schedule may be performed at test point, provided an emission sample is not taken, for the purpose of finding the appropriate throttle action to maintain the proper speed-time relationship, or to permit sampling system adjustment. Both smoothing of speed variations and excessive accelerator pedal perturbations are to be avoided. When using two-roll dynamometers a truer speed-time trace may be obtained by minimizing the rocking of the vehicle in the rolls; the rocking of the vehicle changes the tire rolling radius on each roll. This rocking may be minimized by restraining the vehicle horizontally (or nearly so) by using a cable and winch.
(c) * * *
(1) Ambient humidity within the test cell during all phases of the test sequence shall be controlled to an average of 40–60 grains of water/pound of dry air.
(2) Ambient air temperature within the test cell during all phases of the test sequence shall be controlled to 73–80 °F on average and 75 ± 5 °F as an instantaneous measurement. Air temperature shall be recorded continuously at intervals of not more than 30 seconds.
(a)
(b)
(c)
(d)
(e)
(2) The speed tolerance at any given time on the driving schedules is defined by upper and lower limits. The upper limit is 2 mph higher than the highest point on trace within 1 second of the given time. The lower limit is 2 mph lower than the lowest point on the trace within 1 second of the given time. Speed variations greater than the tolerances (such as may occur during gear changes) are acceptable provided they occur for less than 2 seconds on any occasion. Speeds lower than those prescribed are acceptable provided the vehicle is operated at maximum available power during such occurrences.
(f)
(g)
(h)
(2) Except in cases of component malfunction or failure, all emission control systems installed on or incorporated in a new motor vehicle must be functioning during all procedures in this subpart. The Administrator may authorize maintenance to correct component malfunction or failure.
(3) Use § 86.129 to determine road load power and test weight. The dynamometer's horsepower adjustment settings shall be set such that the force imposed during dynamometer operation matches actual road load force at all speeds.
(4) Tests shall be run on a large single roll electric dynamometer or an equivalent dynamometer configuration that satisfies the requirements of § 86.108–00.
(5) The vehicle speed as measured from the dynamometer rolls shall be used. A speed vs. time recording, as evidence of dynamometer test validity, shall be supplied at request of the Administrator.
(6) The drive wheel tires may be inflated up to a gauge pressure of 45 psi (310 kPa), or the manufacturer's recommended pressure if higher than 45 psi, in order to prevent tire damage. The drive wheel tire pressure shall be reported with the test results.
(7) The driving distance, as measured by counting the number of dynamometer roll or shaft revolutions, shall be determined separately for each driving schedule over which emissions are measured (SC03, and HFET).
(8) Four-wheel drive and all-wheel drive vehicles may be tested either in a four-wheel drive or a two-wheel drive mode of operation. In order to test in the two-wheel drive mode, four-wheel drive and all-wheel drive vehicles may have one set of drive wheels disengaged; four-wheel and all-wheel drive vehicles which can be shifted to a two-wheel mode by the driver may be tested in a two-wheel drive mode of operation.
(i)
(ii) Record air temperature continuously at intervals of not more than 30 seconds. Alternatively, you may use a moving average over intervals of not more than 30 seconds to record and report air temperature. You must maintain records of test cell air temperatures and values of average test temperatures.
(2)
(ii) Humidity shall be recorded continuously at intervals of not more than 30 seconds. Records of cell humidity and values of average test humidity shall be maintained by the manufacturer.
(3)
(4)
(5)
(j)
(1) Interior temperatures shall be measured by placement of thermocouples at the following locations:
(i) The outlet of the center duct on the dash.
(ii) Behind the driver and passenger seat headrests. The location of the temperature measuring devices shall be 30 mm behind each headrest.
(2) The temperature at each location shall be recorded a minimum of every 5 seconds.
(k)
(1) Automatic systems shall be set to automatic and the temperature control set to 72 deg F, with blower or fan speed and vent location controlled by the automatic mode.
(2) Manual systems shall be set at the start of the SC03 drive cycle to full cool with the fan on the highest setting and the airflow setting to “recirculation.” Within the first idle period of the SC03 drive cycle (186 to 204 seconds) the fan speed shall be reduced to the setting closest to 6 volts at the motor, the temperature setting shall be adjusted to provide 55 deg F at the center dash air outlet, and the airflow setting changed to “outside air.”
(l)
(1) Position the test vehicle on the dynamometer (vehicle may be driven) and restrain.
(2)(i) Position the variable speed cooling fan in front of the test vehicle with the vehicle's hood down. This air flow should provide representative cooling at the front of the test vehicle (air conditioning condenser and engine) during the driving cycles. See § 86.161–00(e) for a discussion of cooling fan specifications.
(ii) In the case of vehicles with rear engine compartments (or if this front location provides inadequate engine cooling), an additional cooling fan shall be placed in a position to provide sufficient air to maintain vehicle cooling. The fan capacity shall normally not exceed 5300 cfm (2.50 m
(3) Open all vehicle windows.
(4) Connect the emission test sampling system to the vehicle's exhaust tail pipe(s).
(5) Set the environmental test cell ambient test conditions to the conditions defined in paragraph (c) of this section, except that the solar heat shall be off.
(6) Set the air conditioning system controls to off.
(7) Start the vehicle (with air conditioning system off) and conduct a preconditioning EPA urban dynamometer driving cycle (§ 86.115).
(i) If engine stalling should occur during any air conditioning test cycle operation, follow the provisions of § 86.136–90 (Engine starting and restarting).
(ii) For manual transmission vehicles, the vehicle shall be shifted according the provisions of § 86.128–00.
(8) Following the preconditioning cycle, the test vehicle and cooling fan(s) are turned off, all windows are rolled up, and the vehicle is allowed to soak in the ambient conditions of paragraph (i) of this section for 30 ±1 minutes. If emissions are being measured with the air conditioner operating, the solar heat system must be turned on and generating 850 W/m
(9) Initiate data logging, sampling of exhaust gases, and integrating measured values. Start the engine. If emissions are being measured with the air conditioner operating, you must start the engine with the air conditioning system running as specified in paragraph (k) of this section. Otherwise the air conditioning system should be completely off. Initiate the driver's trace when the engine starts. Fifteen seconds after the engine starts, place vehicle in gear.
(10) Eighteen seconds after the engine starts, begin the initial vehicle acceleration of the SC03 driving schedule.
(11) Operate the vehicle according to the SC03 driving schedule, as described in appendix I, paragraph (h), of this part.
(12) At the end of the deceleration which is scheduled to occur at 594 seconds, simultaneously stop all SC03 and start all HFET sampling, recording, and integrating; including background sampling. Record the measured roll or shaft revolutions.
(13) Allow the vehicle to idle for 14–16 seconds.
(14) Operate the vehicle according to the HFET driving schedule, as described in appendix I to 40 CFR part 600.
(15) Turn the engine off 2 seconds after the end of the last deceleration, i.e., engine off at 765 seconds.
(16) Five seconds after the engine stops running, stop all HFET sampling, recording, and integrating (including background sampling), indicating the end of the test cycle. Record the measured roll or shaft revolutions.
(17) Turn off the solar heat system, if applicable.
(m)
(n)
(1) Conduct the test procedure described in this section with the air conditioning system operating, being sure to follow the appropriate instructions regarding air conditioner operation and use of the solar heat system. Analyze the data and calculate the weighted CO
(2) Allow the vehicle to remain on the dynamometer, with the engine shut off, for 10 to 15 minutes after emissions sampling has concluded. The solar heat system should be turned off.
(3) Conduct the test procedure described in paragraph (l) of this section with the air conditioning system turned off, being sure to follow the appropriate instructions regarding air conditioner operation (off) and use of the solar heat system (off). Analyze the data and calculate the weighted CO
(4) Calculate the incremental CO
(o)
(b)
(j)
(i) Vehicle manufacturers (NAICS code 336111).
(ii) Independent commercial importers (NAICS codes 811111, 811112, 811198, 423110, 424990, and 441120).
(iii) Alternate fuel vehicle converters (NAICS codes 335312, 336312, 336322, 336399, 454312, 485310, and 811198).
(2)(i) Effective for the 2013 and later model years, a manufacturer that would otherwise be exempt under the provisions of paragraph (j)(1) of this section may optionally comply with the greenhouse gas emission standards specified in § 86.1818. A manufacturer making this choice is required to comply with all the applicable standards and provisions in § 86.1818 and with all associated and applicable provisions in this part and in part 600 of this chapter.
(ii) Such a manufacturer may optionally earn credits in the 2012 model year by demonstrating fleet average CO
(k)
The revisions and additions read as follows:
(1) For the greenhouse gas emission standards in § 86.1818, emergency vehicle means a motor vehicle manufactured primarily for use as an ambulance or combination ambulance-hearse or for use by the United States Government or a State or local government for law enforcement.
(2) For provisions related to defeat devices and other AECDs under this subpart, emergency vehicle means a motor vehicle that is an ambulance or a fire truck.
(1) A minimum cargo bed width between the wheelhouses of 48 inches, measured as the minimum lateral distance between the limiting interferences (pass-through) of the wheelhouses. The measurement shall exclude the transitional arc, local protrusions, and depressions or pockets, if present. An open cargo box means a vehicle where the cargo box does not have a permanent roof or cover. Vehicles produced with detachable covers are considered “open” for the purposes of these criteria.
(2) A minimum open cargo box length of 60 inches, where the length is defined by the lesser of the pickup bed length at the top of the body or the pickup bed length at the floor, where the length at
(3)(i) A minimum towing capability of 5,000 pounds, where minimum towing capability is determined by subtracting the gross vehicle weight rating from the gross combined weight rating; or
(ii) A minimum payload capability of 1,700 pounds, where minimum payload capability is determined by subtracting the curb weight from the gross vehicle weight rating.
(f) * * *
(2) For vehicles that comply with the cold temperature NMHC standards described in § 86.1811–10(g) and the CO
The additions and revisions read as follows:
(c) * * *
(2) * * *
(i) * * *
(A) For passenger automobiles with a footprint of less than or equal to 41 square feet, the gram/mile CO
(B) For passenger automobiles with a footprint of greater than 56 square feet, the gram/mile CO
(C) For passenger automobiles with a footprint that is greater than 41 square feet and less than or equal to 56 square feet, the gram/mile CO
(3) * * *
(i) * * *
(A) For light trucks with a footprint of less than or equal to 41 square feet, the gram/mile CO
(B) For light trucks with a footprint that is greater than 41 square feet and less than or equal to the maximum footprint value specified in the table below for each model year, the gram/mile CO
(C) For light trucks with a footprint that is greater than the minimum footprint value specified in the table below and less than or equal to the maximum footprint value specified in the table below for each model year, the gram/mile CO
(D) For light trucks with a footprint greater than the minimum value specified in the table below for each model year, the gram/mile CO
(4)
(d)
(e) * * *
(1) The interim fleet average CO
(i) A qualifying manufacturer is a manufacturer with sales of 2009 model year combined passenger automobiles and light trucks of greater than zero and less than 400,000 vehicles that elects to participate in the Temporary Leadtime Allowance Alternative Standards described in this paragraph (e).
(B) In the case where two or more qualifying manufacturers combine as the result of merger or the purchase of 50 percent or more of one or more companies by another company, and if the combined 2009 model year sales of the merged or combined companies is less than 400,000 but more than zero (combined passenger automobiles and light trucks), the corporate entity formed by the combination of two or more qualifying manufacturers shall continue to be a qualifying manufacturer, except the provisions of paragraph (e)(1)(i)(D) shall apply in the case where one of the merging companies elects to voluntarily opt out of the Temporary Leadtime Allowance Alternative Standards as allowed under paragraph (e)(1)(iv) of this section. The total number of vehicles that the corporate entity is allowed to include under the Temporary Leadtime Allowance Alternative Standards shall be determined by paragraph (e)(2) or (e)(3) of this section, where sales is the total combined 2009 model year sales of all of the merged or combined companies. Vehicles sold by the companies that combined by merger/acquisition to form the corporate entity that were subject to the Temporary Leadtime Allowance Alternative Standards in paragraph (e)(4) of this section prior to the merger/acquisition shall be combined to determine the remaining number of vehicles that the corporate entity may include under the Temporary Leadtime Allowance Alternative Standards in this paragraph (e).
(D) In the case where two or more manufacturers combine as the result of merger or the purchase of 50 percent or more of one or more companies by another company, where one of the manufacturers chooses to voluntarily opt out of the Temporary Leadtime Allowance Alternative Standards under the provisions of paragraph (e)(1)(iv) of this section, the new corporate entity formed by the combination of two or more manufacturers is not a qualifying manufacturer. Such a manufacturer shall meet the emission standards in paragraph (c) of this section beginning with the model year that is numerically two years greater than the calendar year in which the merger/acquisition(s) took place. If one or more of the merged or combined manufacturers was complying with the Temporary Leadtime Allowance Alternative Standards prior to the merger/combination, that manufacturer is no longer eligible for the Temporary Leadtime Allowance Alternative Standards beginning with the model year that is numerically two years greater than the calendar year in which the merger/acquisition(s) took place. The cumulative number of vehicles that such a manufacturer may include in the Temporary Leadtime Allowance Alternative Standards, including those that were included by all merged manufacturers prior to the merger/acquisition, is limited to 100,000.
(iv) In the event of a merger, acquisition, or combination with another manufacturer, a qualifying manufacturer that has not certified any vehicles to the Temporary Leadtime Allowance Alternative Standards in any model year may voluntarily opt out of the Temporary Leadtime Allowance Alternative Standards. A manufacturer making this election must notify EPA in writing of their intent prior to the end of the model year in which a merger or combination with another manufacturer becomes effective. The notification must indicate that the manufacturer is electing to not use the Temporary Leadtime Allowance Alternative
(3)(i) Qualifying manufacturers with sales of 2009 model year combined passenger automobiles and light trucks in the United States of greater than zero and less than 50,000 vehicles may select any combination of 2012 through 2015 model year passenger automobiles and/or light trucks to include under the Temporary Leadtime Allowance Alternative Standards determined in this paragraph (e) up to a cumulative total of 200,000 vehicles, and additionally may select up to 50,000 2016 model year vehicles to include under the Temporary Leadtime Allowance Alternative Standards determined in this paragraph (e). To be eligible for the provisions of this paragraph (e)(3) qualifying manufacturers must provide annual documentation of good-faith efforts made by the manufacturer to purchase credits from other manufacturers. Without such documentation, the manufacturer may use the Temporary Leadtime Allowance Alternative Standards according to the provisions of paragraph (e)(2) of this section, and the provisions of this paragraph (e)(3) shall not apply. Vehicles selected to comply with these standards shall not be included in the calculations of the manufacturer's fleet average standards under paragraph (c) of this section.
(ii) Manufacturers that qualify in the 2016 model year for the expanded Temporary Leadtime Allowance Alternative Standards described in paragraph (e)(3)(i) of this section, may, subject to certain restrictions, use an alternative compliance schedule that provides additional lead time to meet the standards in paragraph (c) of this section for the 2017 through 2020 model years.
(A) The alternative compliance schedule is as follows. In lieu of the standards in paragraph (c) of this section that would otherwise be applicable to the model year shown in the first column of the table below, a qualifying manufacturer may comply with the standards in paragraph (c) of this section determined for the model year shown in the second column of the table. In the 2021 and later model years the manufacturer must meet the standards designated for each model year in paragraph (c) of this section.
(B) A manufacturer using the alternative compliance schedule in paragraph (e)(3)(ii) of this section may not sell or otherwise transfer credits generated in years when the alternative phase-in is used to other manufacturers. Other provisions in § 86.1865 regarding credit banking, deficit carry-forward, and within-manufacturer transfers across fleets apply.
(f)
(3)
(4)
(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)
(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)
(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)
(i)
(B) Vehicle models and projections of production 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)
(B) An evaluation of comparable models from other manufacturers, including CO
(C) A discussion of the CO
(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)
(B) For each model year, a projection of the lowest feasible sales-weighted fleet average CO
(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)
(B) Information regarding ownership relationships with other manufacturers, including details regarding the application of the provisions of § 86.1838–01(b)(3) regarding the aggregation of sales of related companies,
(5)
(6)
(h)
(1) In making the determination required by this paragraph (h), the Administrator shall consider the information available on the factors relevant to setting greenhouse gas emission standards under section 202(a) of the Clean Air Act for model years 2022 through 2025, including but not limited to:
(i) The availability and effectiveness of technology, and the appropriate lead time for introduction of technology;
(ii) The cost on the producers or purchasers of new motor vehicles or new motor vehicle engines;
(iii) The feasibility and practicability of the standards;
(iv) The impact of the standards on reduction of emissions, oil conservation, energy security, and fuel savings by consumers;
(v) The impact of the standards on the automobile industry;
(vi) The impacts of the standards on automobile safety;
(vii) The impact of the greenhouse gas emission standards on the Corporate Average Fuel Economy standards and a national harmonized program; and
(viii) The impact of the standards on other relevant factors.
(2) The Administrator shall make the determination required by this paragraph (h) based upon a record that includes the following:
(i) A draft Technical Assessment Report addressing issues relevant to the standard for the 2022 through 2025 model years;
(ii) Public comment on the draft Technical Assessment Report;
(iii) Public comment on whether the standards established for the 2022 through 2025 model years are appropriate under section 202(a) of the Clean Air Act; and
(iv) Such other materials the Administrator deems appropriate.
(3) No later than November 15, 2017, the Administrator shall issue a draft Technical Assessment Report addressing issues relevant to the standards for the 2022 through 2025 model years.
(4) The Administrator will set forth in detail the bases for the determination required by this paragraph (h), including the Administrator's assessment of each of the factors listed in paragraph (h)(1) of this section.
(m) * * *
(2) * * *
(iii) For the 2012 through 2016 model years only, manufacturers may use alternative deterioration factors. For N
(b) * * *
(1) * * *
(iii)
(B) In lieu of testing an Otto-cycle light-duty vehicle, light-duty truck, or heavy-duty vehicle for particulate emissions for certification, a manufacturer may provide a statement in its application for certification that such vehicles comply with the applicable standards. Such a statement must be based on previous emission tests, development tests, or other appropriate information and good engineering judgment.
(C) A manufacturer may petition the Administrator for a waiver of the requirement to submit total hydrocarbon emission data. If the waiver is granted, then in lieu of testing a certification light-duty vehicle or light-duty truck for total hydrocarbon emissions the manufacturer may provide a statement in its application for certification that such vehicles comply with the applicable standards. Such a statement shall be based on previous emission tests, development tests, or other appropriate information and good engineering judgment.
(D) A manufacturer may petition the Administrator to waive the requirement to measure particulate emissions when conducting Selective Enforcement Audit testing of Otto-cycle vehicles.
(E) In lieu of testing a gasoline, diesel, natural gas, liquefied petroleum gas, or hydrogen fueled Tier 2 or interim non-Tier 2 vehicle for formaldehyde emissions when such vehicles are certified based upon NMHC emissions, a manufacturer may provide a statement in its application for certification that such vehicles comply with the applicable standards. Such a statement must be based on previous emission tests, development tests, or other appropriate information and good engineering judgment.
(F) In lieu of testing a petroleum-, natural gas-, liquefied petroleum gas-, or hydrogen-fueled heavy-duty vehicle for formaldehyde emissions for certification, a manufacturer may provide a statement in its application for certification that such vehicles comply with the applicable standards. Such a statement must be based on previous emission tests, development tests, or other appropriate information and good engineering judgment.
(G) For the 2012 through 2016 model years, in lieu of testing a vehicle for N
(d)
(1) To request consideration for operationally independent status, the manufacturer must submit an application demonstrating that the following criteria are met, and have been continuously met for at least two years prior to submitting the application to EPA. The application must be signed by the president or the chief executive officer of the manufacturer.
(i) The applicant does not receive any financial or other means of support of economic value from any related manufacturers for purposes of vehicle design, vehicle parts procurement, research and development, and production facilities and operation. Any transactions with related manufacturers must be conducted under normal commercial arrangements like those conducted with other external parties. Any such transactions with related manufacturers shall be demonstrated to have been at competitive pricing rates to the applicant.
(ii) The applicant maintains wholly separate and independent research and development, testing, and vehicle manufacturing and production facilities.
(iii) The applicant does not use any vehicle engines, powertrains, or platforms developed or produced by related manufacturers.
(iv) The applicant does not hold any patents jointly with related manufacturers.
(v) The applicant maintains separate business administration, legal, purchasing, sales, and marketing departments as well as wholly autonomous decision making on all commercial matters.
(vi) The Board of Directors of the applicant may not share more than 25 percent of its membership with any related manufacturer. No top operational management of the applicant may be shared with any related manufacturer, including the president, the chief executive officer (CEO), the chief financial officer (CFO), and the chief operating officer (COO). No individual director or combination of directors that is shared with a related manufacturer may exercise exclusive management control over either or both companies.
(vii) Parts or components supply agreements between the applicant and related companies must be established through open market processes. An applicant that sells or otherwise provides parts and/or vehicle components to a manufacturer that is not a related manufacturer must do so through the open market at competitive pricing rates.
(2) Manufacturers that have been granted operationally independent status must report any material changes to the information provided in the application within 60 days of the occurrence of the change. If such a change occurs that results in the manufacturer no longer meeting the requirements of the application, the manufacturer will lose the eligibility to be considered operationally independent. The EPA will confirm that the manufacturer no longer meets one or more of the criteria and thus is no longer considered operationally independent, and will notify the manufacturer of the change in status. A manufacturer who loses the eligibility for operationally independent status must transition to the appropriate emission standards no later than the third model year after the model year in which the loss of eligibility occurred. For example, a manufacturer that loses eligibility in their 2018 model year would be required to meet appropriate standards in the 2021 model year. A manufacturer that loses eligibility must meet the applicable criteria for three
(3) The manufacturer applying for operational independence shall engage an independent certified public accountant, or firm of such accountants (hereinafter referred to as “CPA”), to perform an agreed-upon procedures attestation engagement of the underlying documentation that forms the basis of the application as required in this paragraph (d).
(i) The CPA shall perform the attestation engagements in accordance with the Statements on Standards for Attestation Engagements established by the American Institute of Certified Public Accountants.
(ii) The CPA may complete the requirements of this paragraph with the assistance of internal auditors who are employees or agents of the applicant, so long as such assistance is in accordance with the Statements on Standards for Attestation Engagements established by the American Institute of Certified Public Accountants.
(iii) Notwithstanding the requirements of paragraph (d)(2)(ii) of this section, an applicant may satisfy the requirements of this paragraph (d)(2) if the requirements of this paragraph (d)(2) are completed by an auditor who is an employee of the applicant, provided that such employee:
(A) Is an internal auditor certified by the Institute of Internal Auditors, Inc. (hereinafter referred to as “CIA”); and
(B) Completes the internal audits in accordance with the standards for internal auditing established by the Institute of Internal Auditors.
(iv) Use of a CPA or CIA who is debarred, suspended, or proposed for debarment pursuant to the Governmentwide Debarment and Suspension Regulations, 2 CFR part 1532, or the Debarment, Suspension, and Ineligibility Provisions of the Federal Acquisition Regulations, 48 CFR part 9, subpart 9.4, shall be deemed in noncompliance with the requirements of this section.
(c) * * *
(9) * * *
(iii) For manufacturers using the conditional exemption under § 86.1801(k), failure to fully comply with the fleet production thresholds that determine eligibility for the exemption will be considered a failure to satisfy the terms and conditions upon which the certificate(s) was (were) issued and the vehicles sold in violation of the stated sales and/or production thresholds will not be covered by the certificate(s).
(iv) For manufacturers that are determined to be operationally independent under § 86.1838(d), failure to report a material change in their status within 60 days as required by § 86.1838(d)(2) will be considered a failure to satisfy the terms and conditions upon which the certificate(s) was (were) issued and the vehicles sold in violation of the operationally independent criteria will not be covered by the certificate(s).
(v) For manufacturers subject to an alternative fleet average greenhouse gas exhaust emission standard approved under § 86.1818(g), failure to 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, will be considered a failure to satisfy the terms and conditions upon which the certificate(s) was (were) issued and the vehicles sold in violation of stated sales and/or production thresholds will not be covered by the certificate(s).
The revisions and additions read as follows:
(k)
(5) Total credits or debits generated in a model year, maintained and reported separately for passenger automobiles and light trucks, shall be the sum of the credits or debits calculated in paragraph (k)(4) of this section and any of the following credits, if applicable, minus any N
(i) Air conditioning leakage credits earned according to the provisions of § 86.1867–12(b);
(ii) Air conditioning efficiency credits earned according to the provisions of § 86.1868–12(c);
(iii) Off-cycle technology credits earned according to the provisions of § 86.1869–12(d).
(iv) Full size pickup truck credits earned according to the provisions of § 86.1870–12(c).
(6) The expiration date of unused CO
(i) Unused CO
(ii) Unused CO
(iii) Unused CO
(7) * * *
(i) Credits generated and calculated according to the method in paragraphs (k)(4) and (5) of this section may not be used to offset deficits other than those deficits accrued with respect to the standard in § 86.1818. Credits may be banked and used in a future model year in which a manufacturer's average CO
(iv) Credits generated in the 2017 through 2020 model years under the provisions of § 86.1818(e)(3)(ii) may not be traded or otherwise provided to another manufacturer.
(v) Credits generated under any alternative fleet average standards
(8) * * *
(iv) * * *
(A) If a manufacturer ceases production of passenger automobiles and light trucks, 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 (k)(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 (k)(8)(ii) and (iii) of this section.
(l) * * *
(1) * * *
(ii) Manufacturers producing any passenger automobiles or light trucks subject to the provisions in this subpart must establish, maintain, and retain all the following information in adequately organized records for each passenger automobile or light truck subject to this subpart:
(F) Carbon-related exhaust emission standard, N
(2) * * *
(iii) Manufacturers calculating air conditioning leakage and/or efficiency credits under paragraph § 86.1871–12(b) shall include the following information for each model year and separately for passenger automobiles and light trucks and for each air conditioning system used to generate credits:
(iv) Manufacturers calculating advanced technology vehicle credits under paragraph § 86.1871–12(c) shall include the following information for each model year and separately for passenger automobiles and light trucks:
(v) Manufacturers calculating off-cycle technology credits under paragraph § 86.1871–12(d) shall include, for each model year and separately for passenger automobiles and light trucks, all test results and data required for calculating such credits.
(a) Electric vehicles, plug-in hybrid electric vehicles, and fuel cell vehicles, as those terms are defined in § 86.1803–01, that are certified and produced for U.S. sale, where “U.S.” means the states and territories of the United States, in the 2012 through 2025 model years may use a value of zero (0) grams/mile of CO
(1) Model years 2012 through 2016: The use of zero (0) grams/mile CO
(2) Model years 2017 through 2021: For electric vehicles, plug-in hybrid electric vehicles, and fuel cell vehicles produced for U.S. sale, where “U.S.” means the states and territories of the United States, in the 2017 through 2021 model years, such use of zero (0) grams/mile CO
(3) Model years 2022 through 2025: The use of zero (0) grams/mile CO
(b) For electric vehicles, plug-in hybrid electric vehicles, fuel cell vehicles, dedicated natural gas vehicles, and dual-fuel natural gas vehicles as those terms are defined in § 86.1803–01, that are certified and produced for U.S. sale in the 2017 through 2021 model years and that meet the additional specifications in this section, the manufacturer may use the production multipliers in this paragraph (b) when determining the manufacturer's fleet average carbon-related exhaust emissions under § 600.512 of this chapter. Full size pickup trucks eligible for and using a production multiplier are not eligible for the performance-based credits described in § 86.1870–12(b).
(1) The production multipliers, by model year, for electric vehicles and fuel cell vehicles are as follows:
(2)(i) The production multipliers, by model year, for plug-in hybrid electric vehicles, dedicated natural gas vehicles, and dual-fuel natural gas vehicles are as follows:
(ii) The minimum all-electric driving range that a plug-in hybrid electric vehicle must have in order to qualify for use of a production multiplier is 10.2 miles on its nominal storage capacity of electricity when operated on the highway fuel economy test cycle. Alternatively, a plug-in hybrid electric vehicle may qualify for use of a production multiplier by having an equivalent all-electric driving range greater than or equal to 10.2 miles during its actual charge-depleting range as measured on the highway fuel economy test cycle and tested according to the requirements of SAE J1711, Recommended Practice for Measuring the Exhaust Emissions and Fuel Economy of Hybrid-Electric Vehicles, Including Plug-In Hybrid Vehicles (incorporated by reference in § 86.1). The equivalent all-electric range of a PHEV is determined from the following formula:
(3) The actual production of qualifying vehicles may be multiplied by the applicable value according to the model year, and the result, rounded to the nearest whole number, may be used to represent the production of qualifying vehicles when calculating average carbon-related exhaust emissions under § 600.512 of this chapter.
Manufacturers may generate credits applicable to the CO
(a) The manufacturer shall calculate an annual rate of refrigerant leakage from an air conditioning system in grams per year according to the procedures specified in SAE J2727 (incorporated by reference in § 86.1). In doing so, the refrigerant permeation rates for hoses shall be determined using the procedures specified in SAE J2064 (incorporated by reference in § 86.1) The annual rate of refrigerant leakage from an air conditioning system shall be rounded to the nearest tenth of a gram per year. 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. The annual rate of refrigerant leakage from an air conditioning system shall be rounded to the nearest tenth of a gram per year.
(b) The CO
(1) Passenger automobile leakage credit for an air conditioning system:
Where:
MaxCredit is 12.6 (grams CO
LeakScore means the annual refrigerant leakage rate determined according to the procedures in SAE J2727 (incorporated by reference in § 86.1), where the refrigerant permeation rates for hoses shall be determined using the procedures specified in SAE J2064 (incorporated by reference in § 86.1). 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).
GWP
HiLeakDis means the high leak disincentive, which is zero for model years 2012 through 2016, and for 2017 and later model years is determined using the following equation, except that if GWP
(2) Light truck leakage credit for an air conditioning system:
(c) The total leakage reduction credits generated by the air conditioning system shall be calculated separately for passenger automobiles and light trucks according to the following formula:
(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 § 86.1865–12(k)(5).
(e) The following values for refrigerant global warming potential (GWP
(1) For HFC–134a, GWP
(2) For HFC–152a, GWP
(3) For HFO–1234yf, GWP
(4) For CO
Manufacturers may generate credits applicable to the CO
(a)(1) 2012 through 2016 model year air conditioning efficiency credits are available for the following technologies in the gram per mile amounts indicated in the following table:
(2) 2017 and later model year 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:
(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) of this section for each item that applies to the air conditioning system.
(1) In the 2012 through 2016 model years the total credit value for an air conditioning system for passenger automobiles or light trucks may not be greater than 5.7 grams per mile.
(2) In the 2017 and later model years 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 separately for passenger automobiles and light trucks according to the following formula:
(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 § 86.1865–12(k)(5).
(e) For the 2014 through 2016 model years, manufacturers must validate air conditioning credits by using the Air Conditioning Idle Test Procedure according to the provisions of this paragraph (e) or, alternatively, by using the AC17 reporting requirements specified in paragraph (f) of this section. The Air Conditioning Idle Test Procedure is not applicable after the 2016 model year.
(1) For each air conditioning system selected by the manufacturer to generate air conditioning efficiency credits, the manufacturer shall perform the Air Conditioning Idle Test Procedure specified in § 86.165–12 of this part.
(2) Using good engineering judgment, the manufacturer must select the vehicle configuration to be tested that is expected to result in the greatest increased CO
(3) The manufacturer shall determine an idle test threshold (ITT) for the tested vehicle configuration. A comparison of this threshold value with the CO
(i) 14.9 grams per minute; or
(ii) The value determined from the following equation, rounded to the nearest tenth of a gram per minute:
(4)(i) If the CO
(ii) If the CO
(iii) Air conditioning systems that record an increased CO
(5) Air conditioning systems with compressors that are solely powered by electricity shall submit Air Conditioning Idle Test Procedure data to be eligible to generate credits in the 2014 and later model years, but such systems are not required to meet a specific threshold to be eligible to generate such credits, as long as the engine remains off for a period of at least 2 minutes during the air conditioning on portion of the Idle Test Procedure in § 86.165–12(d).
(f)
(1) The manufacturer shall perform the AC17 test specified in § 86.167–17 of this part on each unique air conditioning system design and vehicle platform combination for which the manufacturer intends to accrue air conditioning efficiency credits. 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. Air conditioning system designs which have similar cooling capacity, component types, and control strategies, yet differ in terms of compressor pulley ratios or condenser or evaporator surface areas will not be considered to be unique system designs. The test results from one unique system design may represent all variants of that design. Manufacturers must use good engineering judgment to identify the unique air conditioning system designs which will require AC17 testing in subsequent model years. Results must be reported separately for all four phases (two phases with air conditioning off and two phases with air conditioning on) of the test to the Environmental Protection Agency, and the results of the calculations required in § 86.167 paragraphs (m) and (n) must also be reported. In each subsequent model year additional air conditioning system designs, if such systems exist, within a vehicle platform that is generating air conditioning credits must be tested using the AC17 procedure. When all unique air conditioning system designs within a platform have been tested, no additional testing is required within that platform, and credits may be carried over to subsequent model years until there is a significant change in the platform design, at which point a new sequence of testing must be initiated. No more than one vehicle from each credit-generating platform is required to be tested in each model year.
(2) The manufacturer shall also report the following information for each vehicle tested: the vehicle class, model type, curb weight, engine displacement, transmission class and configuration, interior volume, climate control system type and characteristics, refrigerant used, compressor type, and evaporator/condenser characteristics.
(g)
(1) For each air conditioning system selected by the manufacturer to generate air conditioning efficiency credits, the manufacturer shall perform the AC17 Air Conditioning Efficiency Test Procedure specified in § 86.167–17 of this part, 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
(iii) Subtract the CO
(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 unique air conditioning system. 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.
(h) The following definitions apply to this section:
(1)
(2)
(3)
(4)
(5)
(6)
(a) Manufacturers may generate credits for CO
(b)
(1) The manufacturer may generate a CO
(i)
(ii)
(iii)
(B) Credits for solar panels used solely for active vehicle ventilation systems are those specified in paragraph (b)(1)(viii)(E).
(C) Credits for solar panels used both for active cabin ventilation and for charging the battery of an electric vehicle, plug-in hybrid electric vehicle, or hybrid electric vehicle shall be calculated using the following equation, and rounded to the nearest 0.1 grams/mile:
P
(iv)
(B) The credit for active aerodynamic improvements for light trucks shall be calculated using the following equation, and rounded to the nearest 0.1 grams/mile:
(v)
(A) The passenger automobile credit for engine idle start-stop systems is 2.5 grams/mile, provided that the vehicle is equipped with an electric heater circulation system (or a technology that provides a similar function). For vehicles not equipped with such systems the credit is 1.5 grams/mile.
(B) The light truck credit for engine idle start-stop systems is 4.4 grams/mile, provided that the vehicle is equipped with an electric heater circulation system (or a technology that provides a similar function). For vehicles not equipped with such systems the credit is 2.9 grams/mile.
(vi)
(A) The passenger automobile credit is 1.5 grams/mile.
(B) The light truck credit is 3.2 grams/mile.
(vii)
(A) The passenger automobile credit is 1.5 grams/mile.
(B) The light truck credit is 3.2 grams/mile.
(viii
(A)
(B)
(C)
(D)
(E)
(2) The maximum allowable decrease in the manufacturer's combined passenger automobile and light truck fleet average CO
(i) Determine the gram per mile decrease for the combined passenger automobile and light truck fleet using the following formula:
(ii) If the value determined in paragraph (b)(2)(i) of this section is greater than 10 grams per mile, 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:
(iii) If the value determined in paragraph (b)(2)(i) of this section is not greater than 10 grams per mile, then the credits that may be accrued by a manufacturer using the 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 10 grams per mile, 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.
(3) In lieu of using the default gram per mile values specified in paragraph (b)(1) of this section for specific technologies, a manufacturer may determine an alternative value for any of the specified technologies. An alternative value must be determined using one of the methods specified in paragraph (c) or (d) of this section.
(4) Definitions for the purposes of this paragraph (b) are as follows:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(x)
(xi)
(xii)
(c)
(1) Testing without the off-cycle technology installed and/or operating. Determine carbon-related exhaust emissions over the FTP, the HFET, the US06, the SC03, and the cold temperature FTP test procedures according to the test procedure provisions specified in 40 CFR part 600 subpart B and using the calculation procedures specified in § 600.113–12 of this chapter. Run each of these tests a minimum of three times without the off-cycle technology installed and operating and average the per phase (bag) results for each test procedure. Calculate the 5-cycle weighted city/highway combined carbon-related exhaust emissions from the averaged per phase results, where the 5-cycle city value is weighted 55% and the 5-cycle highway value is weighted 45%. The resulting combined city/highway value is the baseline 5-cycle carbon-related exhaust emission value for the vehicle.
(2) Testing with the off-cycle technology installed and/or operating. Determine carbon-related exhaust emissions over the US06, the SC03, and the cold temperature FTP test procedures according to the test procedure provisions specified in 40 CFR part 600 subpart B and using the calculation procedures specified in § 600.113–12 of this chapter. Run each of these tests a minimum of three times with the off-cycle technology installed and operating and average the per phase (bag) results for each test procedure. Calculate the 5-cycle weighted city/highway combined carbon-related exhaust emissions from the averaged per phase results, where the 5-cycle city value is weighted 55% and the 5-cycle highway value is weighted 45%. Use the averaged per phase results for the FTP and HFET determined in paragraph (c)(1) of this section for operation without the off-cycle technology in this calculation. The resulting combined city/highway value is the 5-cycle carbon-related exhaust emission value including the off-cycle benefit of the technology but excluding any benefit of the technology on the FTP and HFET.
(3) Subtract the combined city/highway value determined in paragraph (c)(1) of this section from the value determined in paragraph (c)(2) of this section and round to the nearest 0.1 grams/mile. The result is the off-cycle benefit of the technology or technologies being evaluated, subject to EPA approval.
(4) Submit all test values to EPA, and include an engineering analysis describing the technology and how it provides off-cycle emission benefits. EPA may request additional testing if we determine that additional testing would be likely to provide significantly greater confidence in the estimates of off-cycle technology benefits.
(d)
(i) Use modeling, on-road testing, on-road data collection, or other approved analytical or engineering methods;
(ii) Be robust, verifiable, and capable of demonstrating the real-world emissions benefit with strong statistical significance;
(iii) Result in a demonstration of baseline and controlled emissions over a wide range of driving conditions and number of vehicles such that issues of data uncertainty are minimized;
(iv) Result in data on a model type basis unless the manufacturer demonstrates that another basis is appropriate and adequate.
(2)
(3) With respect to fuel consumption improvement values applicable to the determination of average fuel economy under 600.510–12(c)(3) for the 2017 and later model years, EPA will consult with the U.S. Department of Transportation, National Highway Traffic Safety Administration, prior to making a decision on a manufacturer's application submitted under the requirements of this paragraph (d).
(e)
(ii) A manufacturer requesting off-cycle credits under the provisions of paragraph (d) of this section must develop a methodology for demonstrating and determining the benefit of the off-cycle technology, and carry out any necessary testing and analysis required to support that methodology.
(iii) A manufacturer requesting off-cycle credits under paragraphs (b), (c), or (d) of this section must conduct testing and/or prepare engineering analyses that demonstrate the in-use durability of the technology for the full useful life of the vehicle.
(2)
(i) A detailed description of the off-cycle technology and how it functions to reduce CO
(ii) A list of the vehicle model(s) which will be equipped with the technology.
(iii) A detailed description of the test vehicles selected and an engineering analysis that supports the selection of those vehicles for testing.
(iv) All testing and/or simulation data required under paragraph (c) or (d) of this section, as applicable, plus any other data the manufacturer has considered in the analysis.
(v) For credits under paragraph (d) of this section, a complete description of the methodology used to estimate the off-cycle benefit of the technology and all supporting data, including vehicle testing and in-use activity data.
(vi) An estimate of the off-cycle benefit by vehicle model and the fleetwide benefit based on projected sales of vehicle models equipped with the technology.
(vii) An engineering analysis and/or component durability testing data or whole vehicle testing data demonstrating the in-use durability of the off-cycle technology components.
(3)
(i) Review the application for completeness and notify the manufacturer within 30 days if additional information is required.
(ii) Review the data and information provided in the application to determine if the application supports the level of credits estimated by the manufacturer.
(iii) For credits under paragraph (d) of this section, EPA will make the application available to the public for comment, as described in paragraph (d)(2) of this section, within 60 days of receiving a complete application. The public review period will be specified as 30 days, during which time the public may submit comments. Manufacturers may submit a written rebuttal of comments for EPA consideration or may revise their application in response to comments. A revised application should be submitted after the end of the public review period, and EPA will review the application as if it was a new application submitted under this paragraph (e)(3).
(4)
(ii) For credits under paragraph (d) of this section, EPA will notify the manufacturer of its decision after reviewing and evaluating the public comments. EPA will make the decision and rationale available to the public.
(iii) EPA will notify the manufacturer in writing of its decision to approve or deny the application, and will provide the reasons for the decision. EPA will make the decision and rationale available to the public.
(f)
Full-size pickup trucks may be eligible for additional credits based on the implementation of hybrid technologies or on exhaust emission performance, as described in this section. Credits may be generated under either paragraph (a) or (b) of this section for a qualifying pickup truck, but not both.
(a)
(1) Full size pickup trucks that are mild hybrid electric vehicles and that are produced in the 2017 through 2021 model years are eligible for a credit of 10 grams/mile. To receive this credit in a model year, the manufacturer must produce a quantity of mild hybrid electric full size pickup trucks such that the proportion of production of such vehicles, when compared to the manufacturer's total production of full size pickup trucks, is not less than the amount specified in the table below for that model year.
(2) Full size pickup trucks that are strong hybrid electric vehicles and that are produced in the 2017 through 2025 model years are eligible for a credit of 20 grams/mile. To receive this credit in a model year, the manufacturer must produce a quantity of strong hybrid electric full size pickup trucks such that the proportion of production of such vehicles, when compared to the manufacturer's total production of full size pickup trucks, is not less than 10 percent in that model year.
(b)
(1) Full size pickup trucks that are produced in the 2017 through 2021 model years and that achieve carbon-related exhaust emissions less than or equal to the applicable target value determined in § 86.1818–12(c)(3) multiplied by 0.85 (rounded to the nearest gram/mile) and greater than the applicable target value determined in § 86.1818–12(c)(3) multiplied by 0.80 (rounded to the nearest gram/mile) in a model year are eligible for a credit of 10 grams/mile. A pickup truck that qualifies for this credit in a model year may claim this credit for subsequent model years through the 2021 model year if the carbon-related exhaust emissions of that pickup truck do not increase relative to the emissions in the model year in which the pickup truck qualified for the credit. To qualify for this credit in a model year, the manufacturer must produce a quantity of full size pickup trucks that meet the initial emission eligibility requirements
(2) Full size pickup trucks that are produced in the 2017 through 2025 model years and that achieve carbon-related exhaust emissions less than or equal to the applicable target value determined in § 86.1818–12(c)(3) multiplied by 0.80 (rounded to the nearest gram/mile) in a model year are eligible for a credit of 20 grams/mile. A pickup truck that qualifies for this credit in a model year may claim this credit for a maximum of four subsequent model years (a total of five consecutive model years) if the carbon-related exhaust emissions of that pickup truck do not increase relative to the emissions in the model year in which the pickup truck first qualified for the credit. This credit may not be claimed in any model year after 2025. To qualify for this credit in a model year, the manufacturer must produce a quantity of full size pickup trucks that meet the emission requirements of this paragraph (b)(2) such that the proportion of production of such vehicles, when compared to the manufacturer's total production of full size pickup trucks, is not less than 10 percent in that model year. A pickup truck that qualifies for this credit in a model year and is subject to a major redesign in a subsequent model year such that it qualifies for the credit in the model year of the redesign may be allowed to qualify for an additional five years (not to go beyond the 2025 model year) with the approval of the Administrator. Use good engineering judgment to determine whether a pickup truck has been subject to a major redesign.
(c)
Manufacturers may optionally generate CO
(a)
(1)
(i) An average carbon-related exhaust emission value calculation will be made for the combined LDV/LDT1 averaging set, where the terms LDV and LDT1 are as defined in § 86.1803.
(ii) An average carbon-related exhaust emission value calculation will be made for the combined LDT2/HLDT/MDPV averaging set, where the terms LDT2, HLDT, and MDPV are as defined in § 86.1803.
(iii) Average carbon-related exhaust emission values shall be determined according to the provisions of § 600.510–12 of this chapter, except that:
(A) [Reserved]
(B) The average carbon-related exhaust emissions for alcohol fueled model types shall be calculated according to the provisions of § 600.510–12(j)(2)(ii)(B) of this chapter, without the use of the 0.15 multiplicative factor.
(C) The average carbon-related exhaust emissions for natural gas fueled model types shall be calculated according to the provisions of § 600.510–12(j)(2)(iii)(B) of this chapter, without the use of the 0.15 multiplicative factor.
(D) The average carbon-related exhaust emissions for alcohol dual fueled model types shall be the value measured using gasoline or diesel fuel, as applicable, and shall be calculated according to the provisions of § 600.510–12(j)(2)(vi) of this chapter, without the use of the 0.15 multiplicative factor and with F = 0. For the 2010 and 2011 model years only, if the California Air Resources Board has approved a manufacturer's request to use a non-zero value of F, the manufacturer may use such an approved value.
(E) The average carbon-related exhaust emissions for natural gas dual fueled model types shall be the value measured using gasoline or diesel fuel, as applicable, and shall be calculated according to the provisions of § 600.510–12(j)(2)(vii) of this chapter, without the use of the 0.15 multiplicative factor and with F = 0. For the 2010 and 2011 model years only, if
(F) Carbon-related exhaust emission values for electric, fuel cell, and plug-in hybrid electric model types shall be included in the fleet average determined under paragraph (a)(1) of this section only to the extent that such vehicles are not being used to generate early advanced technology vehicle credits under paragraph (c) of this section.
(iv) Fleet average CO
(v) 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 megagram:
(vi) Deficits generated against the applicable CO
(2)
(i) Credits under this pathway shall be calculated according to the provisions of paragraph (a)(1) of this section, except credits may only be generated by vehicles sold in a model year in California and in states with a section 177 program in effect in that model year. For the purposes of this section, “section 177 program” means State regulations or other laws that apply to vehicle emissions from any of the following categories of motor vehicles: Passenger automobiles, light-duty trucks up through 6,000 pounds GVWR, and medium-duty vehicles from 6,001 to 14,000 pounds GVWR, as these categories of motor vehicles are defined in the California Code of Regulations, Title 13, Division 3, Chapter 1, Article 1, Section 1900.
(ii) A deficit in any averaging set for any of the 2009–2011 model years must be offset using credits accumulated by any averaging set in any of the 2009–2011 model years before determining the number of credits that may be carried forward to the 2012 model year. Deficit carry forward and credit banking provisions of § 86.1865–12 apply to early credits earned under this paragraph (a)(1), except that deficits may not be carried forward from any of the 2009–2011 model years into the 2012 model year, and credits earned in the 2009 model year may not be traded to other manufacturers.
(3)
(i) Manufacturers shall earn additional credits under Pathway 3 by calculating an average carbon-related exhaust emission value to the nearest one gram per mile for the classes of motor vehicles identified in this paragraph (a)(3). The results of such calculations will be reported to the Administrator for use in determining compliance with the applicable CO
(ii) An average carbon-related exhaust emission value calculation will be made for the passenger automobile averaging set. The term “passenger automobile” shall have the meaning given by the Department of Transportation at 49 CFR 523.4 for the specific model year for which the calculation is being made.
(iii) An average carbon-related exhaust emission value calculation will be made for the light truck averaging set. The term “light truck” shall have the meaning given by the Department of Transportation at 49 CFR 523.5 for the specific model year for which the calculation is being made.
(iv) Average carbon-related exhaust emission values shall be determined according to the provisions of § 600.510–12 of this chapter, except that:
(A) Vehicles sold in California and the section 177 states determined in paragraph (a)(2)(i) of this section shall not be included.
(B) The average carbon-related exhaust emissions for alcohol fueled model types shall be calculated according to the provisions of § 600.510–12(j)(2)(ii)(B) of this chapter, without the use of the 0.15 multiplicative factor.
(C) The average carbon-related exhaust emissions for natural gas fueled model types shall be calculated according to the provisions of § 600.510–12(j)(2)(iii)(B) of this chapter, without the use of the 0.15 multiplicative factor.
(D) The average carbon-related exhaust emissions for alcohol dual fueled model types shall be calculated according to the provisions of § 600.510–12(j)(2)(vi) of this chapter, without the use of the 0.15 multiplicative factor and with F = 0.
(E) The average carbon-related exhaust emissions for natural gas dual fueled model types shall be calculated according to the provisions of § 600.510–12(j)(2)(vii) of this chapter, without the use of the 0.15 multiplicative factor and with F = 0.
(F) Electric, fuel cell, and plug-in hybrid electric model type carbon-related exhaust emission values shall be included in the fleet average determined under paragraph (a)(1) of this section only to the extent that such vehicles are not being used to generate early advanced technology vehicle credits under paragraph (c) of this section.
(v) Pathway 3 fleet average CO
(A) For 2009 and 2010 model year passenger automobiles, the fleet average
(B) For 2009 model year light trucks the fleet average CO
(C) For 2010 model year light trucks the fleet average CO
(D) For 2011 model year passenger automobiles the fleet average CO
(E) For 2011 model year light trucks the fleet average CO
(vi) 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 megagram:
(vii) Deficits in any averaging set for any of the 2009–2011 model years must be offset using credits accumulated by any averaging set in any of the 2009–2011 model years before determining the number of credits that may be carried forward to the 2012. Deficit carry forward and credit banking provisions of § 86.1865–12 apply to early credits earned under this paragraph (a)(3), except that deficits may not be carried forward from any of the 2009–2011 model years into the 2012 model year, and credits earned in the 2009 model year may not be traded to other manufacturers.
(4)
(b)
(2) Manufacturers must be participating in one of the early fleet average credit pathways described in paragraphs (a)(1), (2), or (3) of this section in order to generate early air conditioning credits for vehicles sold in California and the section 177 states as determined in paragraph (a)(2)(i) of this section. Manufacturers that select Pathway 4 as described in paragraph (a)(4) of this section may not generate early air conditioning credits for vehicles sold in California and the section 177 states as determined in paragraph (a)(2)(i) of this section. Manufacturers not participating in one of the early fleet average credit pathways described in this section may generate early air conditioning credits only for vehicles sold in states other than in California and the section 177 states as determined in paragraph (a)(2)(i) of this section.
(c)
(1) The manufacturer shall record the sales and carbon-related exhaust emission values of eligible vehicles by model type and model year for model years 2009 through 2011 and report these values to the Administrator under paragraph (e) of this section.
(2) Manufacturers may use the 2009 through 2011 eligible vehicles in their fleet average calculations starting with the 2012 model year, subject to a five-year carry-forward limitation.
(i) Eligible 2009 model year vehicles may be used in the calculation of a manufacturer's fleet average carbon-related exhaust emissions in the 2012 through 2014 model years.
(ii) Eligible 2010 model year vehicles may be used in the calculation of a manufacturer's fleet average carbon-related exhaust emissions in the 2012 through 2015 model years.
(iii) Eligible 2011 model year vehicles may be used in the calculation of a manufacturer's fleet average carbon-related exhaust emissions in the 2012 through 2016 model years.
(3)(i) To use the advanced technology vehicle incentive, the manufacturer will apply the 2009, 2010, and/or 2011 model type sales volumes and their model type emission levels to the manufacturer's fleet average calculation.
(ii) The early advanced technology vehicle incentive must be used to offset a deficit in one of the 2012 through 2016 model years, as appropriate under paragraph (c)(2) of this section.
(iii) The advanced technology vehicle sales and emission values may be included in a fleet average calculation for passenger automobiles or light trucks, but may not be used to generate credits in the model year in which they are included or in the averaging set in which they are used. Use of early
(4) Manufacturers may use zero grams/mile to represent the carbon-related exhaust emission values for the electric operation of 2009 through 2011 model year electric vehicles, fuel cell vehicles, and plug-in hybrid electric vehicles subject to the limitations in § 86.1866. The 2009 through 2011 model year vehicles using zero grams per mile shall count against the 200,000 or 300,000 caps on use of this credit value, whichever is applicable under § 86.1866.
(d)
(e)
(1) The report shall contain all information necessary for the calculation of the manufacturer's early credits in each of the 2009 through 2011 model years.
(2) The early credits report shall be in writing, signed by the authorized representative of the manufacturer and shall be submitted no later than 90 days after the end of the 2011 model year.
(3) Manufacturers using one of the optional early fleet average CO
(i) The pathway that they have selected (1, 2, 3, or 4).
(ii) A carbon-related exhaust emission value for each model type of the manufacturer's product line calculated according to paragraph (a) of this section.
(iii) The manufacturer's average carbon-related exhaust emission value calculated according to paragraph (a) of this section for the applicable averaging set and region and all data required to complete this calculation.
(iv) The credits earned for each averaging set, model year, and region, as applicable.
(4) Manufacturers calculating early air conditioning leakage and/or efficiency credits under paragraph (b) of this section shall report the following information for each model year separately for passenger automobiles and light trucks and for each air conditioning system used to generate credits:
(i) A description of the air conditioning system.
(ii) The leakage and efficiency credit values and all the information required to determine these values.
(iii) The total credits earned for each averaging set, model year, and region, as applicable.
(5) Manufacturers calculating early advanced technology vehicle credits under paragraph (c) of this section shall report, for each model year and separately for passenger automobiles and light trucks, the following information:
(i) The number of each model type of eligible vehicle produced.
(ii) The carbon-related exhaust emission value by model type and model year.
(6) Manufacturers calculating early off-cycle technology credits under paragraph (d) of this section shall report, for each model year and separately for passenger automobiles and light trucks, all test results and data required for calculating such credits.
49 U.S.C. 32901–23919q, Pub. L. 109–58.
The revisions and addition read as follows:
(1) The fuel economy value determined for a vehicle (or vehicles) by harmonically averaging the city and highway fuel economy values, weighted 0.55 and 0.45, respectively.
(2) For electric vehicles, for the purpose of calculating average fuel economy pursuant to the provisions of part 600, subpart F, the term means the equivalent petroleum-based fuel economy value as determined by the calculation procedure promulgated by the Secretary of Energy. For the purpose of labeling pursuant to the provisions of part 600, subpart D, the term means the fuel economy value as determined by the procedures specified in § 600.116–12.
(1) The average number of miles traveled by an automobile or group of automobiles per volume of fuel consumed as calculated in this part; or
(2) For the purpose of calculating average fuel economy pursuant to the provisions of part 600, subpart F, fuel economy for electrically powered automobiles means the equivalent petroleum-based fuel economy as determined by the Secretary of Energy in accordance with the provisions of 10 CFR 474. For the purpose of labeling pursuant to the provisions of part 600, subpart D, the term means the fuel economy value as determined by the procedures specified in § 600.116–12.
This section provides test procedures for the FTP, highway, US06, SC03, and the cold temperature FTP tests. Testing
(g) * * *
(2) * * *
(iv) * * *
(C) For the 2012 through 2016 model years only, manufacturers may use an assigned value of 0.010 g/mi for N
(j)(1) For methanol-fueled automobiles and automobiles designed to operate on mixtures of gasoline and methanol, the fuel economy in miles per gallon of methanol is to be calculated using the following equation:
(2)(i) For 2012 and later model year methanol-fueled automobiles and automobiles designed to operate on mixtures of gasoline and methanol, the carbon-related exhaust emissions in grams per mile while operating on methanol is to be calculated using the following equation and rounded to the nearest 1 gram per mile:
HC = Grams/mile HC as obtained in paragraph (g)(2) of this section.
CO = Grams/mile CO as obtained in paragraph (g)(2) of this section.
CO
CH
HCHO = Grams/mile HCHO (formaldehyde) as obtained in paragraph (g)(2) of this section.
(ii) For manufacturers complying with the fleet averaging option for N
(k)(1) For automobiles fueled with natural gas and automobiles designed to operate on gasoline and natural gas, the fuel economy in miles per gallon of natural gas is to be calculated using the following equation:
(2)(i) For automobiles fueled with natural gas and automobiles designed to operate on gasoline and natural gas, the carbon-related exhaust emissions in grams per mile while operating on natural gas is to be calculated for 2012 and later model year vehicles using the following equation and rounded to the nearest 1 gram per mile:
(ii) For manufacturers complying with the fleet averaging option for N
(l)(1) For ethanol-fueled automobiles and automobiles designed to operate on mixtures of gasoline and ethanol, the fuel economy in miles per gallon of ethanol is to be calculated using the following equation:
(2)(i) For 2012 and later model year ethanol-fueled automobiles and automobiles designed to operate on mixtures of gasoline and ethanol, the carbon-related exhaust emissions in grams per mile while operating on ethanol is to be calculated using the following equation and rounded to the nearest 1 gram per mile:
(ii) For manufacturers complying with the fleet averaging option for N
(m)(1) For automobiles fueled with liquefied petroleum gas and automobiles designed to operate on gasoline and liquefied petroleum gas, the fuel economy in miles per gallon of liquefied petroleum gas is to be calculated using the following equation:
(2)(i) For automobiles fueled with liquefied petroleum gas and automobiles designed to operate on gasoline and liquefied petroleum gas, the carbon-related exhaust emissions in grams per mile while operating on liquefied petroleum gas is to be calculated for 2012 and later model year vehicles using the following equation and rounded to the nearest 1 gram per mile:
(ii) For manufacturers complying with the fleet averaging option for N
(n) Manufacturers shall determine CO
(1) For electric vehicles, but not including fuel cell vehicles, the carbon-related exhaust emissions in grams per mile is to be calculated using the following equation and rounded to the nearest one gram per mile:
(2) For plug-in hybrid electric vehicles the carbon-related exhaust emissions in grams per mile is to be calculated according to the provisions of § 600.116, except that the CREE for charge-depleting operation shall be the sum of the CREE associated with gasoline consumption and the net upstream CREE determined according to paragraph (n)(1)(i) of this section, rounded to the nearest one gram per mile.
(3) For 2012 and later model year fuel cell vehicles, the carbon-related exhaust emissions in grams per mile shall be calculated using the method specified in paragraph (n)(1) of this section, except that CREE
The revisions and addition read as follows:
(a) Determine fuel economy values for electric vehicles as specified in §§ 600.210 and 600.311 using the procedures of SAE J1634 (incorporated by reference in § 600.011), with the following clarifications and modifications:
(c)
(1) Calculate the theoretical maximum amount of energy that could be recovered by a hybrid electric vehicle over the FTP test cycle, where the test cycle time and velocity points are expressed at 10 Hz, and the velocity (miles/hour) is expressed to the nearest 0.01 miles/hour, as follows:
(i) For each time point in the 10 Hz test cycle (i.e., at each 0.1 seconds):
(A) Determine the road load power in kilowatts using the following equation:
(B) Determine the applied deceleration power at each sampling point in time, t, in kilowatts, using the following equation. Positive values indicate acceleration and negative values indicate deceleration.
(C) Determine braking power in kilowatts using the following equation. Note that during braking events, P
(ii) The total maximum braking energy (E
(2) Calculate the actual amount of energy recovered (E
(i) Measure the electrical current in Amps to and from the hybrid electric vehicle battery during the FTP. Measurements should be made directly upstream of the battery at a 10 Hz sampling rate.
(ii) At each sampling point where current is flowing into the battery, calculate the current flowing into the battery, in Watt-hours, as follows:
(iii) The total energy recovered (E
(3) The percent of braking energy recovered by a hybrid system relative to the total available energy is determined by the following equation, rounded to the nearest one percent:
(4)(i) Determination nominal voltage (V
(ii) If the absolute value of the measured current to and from the battery during the measurement of either V
(a)
(5)
The revisions read as follows:
Fuel economy labels for flexible-fuel vehicles must meet the specifications described in § 600.302, with the modifications described in this section. This section describes how to label flexible-fuel vehicles equipped with gasoline engines. If the vehicle has a diesel engine, all the references to “gas” or “gasoline” in this section are understood to refer to “diesel” or “diesel fuel”, respectively. All values described in this section are based on gasoline operation, unless otherwise specifically noted.
(b) Include the following elements instead of the information identified in
(6) Add the following statement after the statements described in § 600.302–12(c)(2): “Values are based on gasoline and do not reflect performance and ratings based on E85.” Adjust this statement as appropriate for vehicles designed to operate on different fuels.
(c) You may include the
(1) Insert a horizontal range bar nominally 80 mm long to show how far the vehicle can drive from a full tank of gasoline. Include a vehicle logo at the right end of the range bar. Include the following left-justified expression inside
(2) Insert a second horizontal range bar as described in paragraph (
(a) Include the following statement instead of the statement specified in § 600.302–12(b)(4): “Actual results will vary for many reasons, including driving conditions and how you drive and maintain your vehicle. The average new vehicle gets a MPG and costs $ b to fuel over 5 years. Cost estimates are based on c miles per year at $ d per kW-hr. MPGe is miles per gasoline gallon equivalent. Vehicle emissions are a significant cause of climate change and smog.” For a, b, c, and d, insert the appropriate values established by EPA.
The revisions and addition read as follows:
(c) * * *
(1) For vehicles with engines that are not plug-in hybrid electric vehicles, calculate the fuel consumption rate in gallons per 100 miles (or gasoline gallon equivalent per 100 miles for fuels other than gasoline or diesel fuel) with the following formula, rounded to the first decimal place:
(e) * * *
(3) * * *
(vii) Calculate the annual fuel cost based on the combined values for city and highway driving using the following equation:
(4) Round the annual fuel cost to the nearest $50 by dividing the unrounded annual fuel cost by 50, then rounding the result to the nearest whole number, then multiplying this rounded result by 50 to determine the annual fuel cost to be used for purposes of labeling.
The addition and revisions read as follows:
(b) * * *
(4) Emergency vehicles may be excluded from the fleet average carbon-related exhaust emission calculations described in paragraph (j) of this section. The manufacturer should notify the Administrator that they are making such an election in the model year reports required under § 600.512 of this chapter. Such vehicles should be excluded from both the calculation of the fleet average standard for a manufacturer under 40 CFR 86.1818–12(c)(4) and from the calculation of the fleet average carbon-related exhaust emissions in paragraph (j) of this section.
(c)(1) Average fuel economy shall be calculated as follows:
(i) Except as allowed in paragraph (d) of this section, the average fuel economy for the model years before 2017 will be calculated individually for each category identified in paragraph (a)(1) of this according to the provisions of paragraph (c)(2) of this section.
(ii) Except as permitted in paragraph (d) of this section, the average fuel economy for the 2017 and later model years will be calculated individually for each category identified in paragraph (a)(1) of this section using the following equation:
(2) Divide the total production volume of that category of automobiles by a sum of terms, each of which corresponds to a model type within that category of automobiles and is a fraction determined by dividing the number of automobiles of that model type produced by the manufacturer in the model year by:
(i) For gasoline-fueled and diesel-fueled model types, the fuel economy calculated for that model type in accordance with paragraph (b)(2) of this section; or
(ii) For alcohol-fueled model types, the fuel economy value calculated for that model type in accordance with paragraph (b)(2) of this section divided by 0.15 and rounded to the nearest 0.1 mpg; or
(iii) For natural gas-fueled model types, the fuel economy value calculated for that model type in accordance with paragraph (b)(2) of this section divided by 0.15 and rounded to the nearest 0.1 mpg; or
(iv) For alcohol dual fuel model types, for model years 1993 through 2019, the harmonic average of the following two terms; the result rounded to the nearest 0.1 mpg:
(A) The combined model type fuel economy value for operation on gasoline or diesel fuel as determined in § 600.208–12(b)(5)(i); and
(B) The combined model type fuel economy value for operation on alcohol fuel as determined in § 600.208–12(b)(5)(ii) divided by 0.15 provided the requirements of paragraph (g) of this section are met; or
(v) For alcohol dual fuel model types, for model years after 2019, the combined model type fuel economy determined according to the following equation and rounded to the nearest 0.1 mpg:
(vi) For natural gas dual fuel model types, for model years 1993 through 2019, the harmonic average of the following two terms; the result rounded to the nearest 0.1 mpg:
(A) The combined model type fuel economy value for operation on gasoline or diesel as determined in § 600.208–12(b)(5)(i); and
(B) The combined model type fuel economy value for operation on natural gas as determined in § 600.208–12(b)(5)(ii) divided by 0.15 provided the requirements of paragraph (g) of this section are met; or
(vii)(A) For natural gas dual fuel model types, for model years after 2019, the combined model type fuel economy determined according to the following formula and rounded to the nearest 0.1 mpg:
(B) Natural gas dual fuel model types must meet the following criteria to qualify for use of a Utility Factor greater than 0.5:
(
(
(3)
(i) Air conditioning fuel consumption improvement values are calculated separately for each category identified in paragraph (a)(1) of this section using the following equation:
(ii) Off-cycle technology fuel consumption improvement values are calculated separately for each category identified in paragraph (a)(1) of this section using the following equation:
(iii) Full size pickup truck fuel consumption improvement values are calculated for the light truck category identified in paragraph (a)(1) of this section using the following equation:
(g)(1) Dual fuel automobiles must provide equal or greater energy efficiency while operating on the alternative fuel as while operating on gasoline or diesel fuel to obtain the CAFE credit determined in paragraphs (c)(2)(iv) and (v) of this section or to obtain the carbon-related exhaust emissions credit determined in paragraphs (j)(2)(ii) and (iii) of this section. The following equation must hold true:
(3) Dual fuel passenger automobiles manufactured during model years 1993 through 2019 must meet the minimum driving range requirements established by the Secretary of Transportation (49 CFR part 538) to obtain the CAFE credit determined in paragraphs (c)(2)(iv) and (v) of this section.
(h) For model years 1993 and later, and for each category of automobile identified in paragraph (a)(1) of this section, the maximum increase in average fuel economy determined in paragraph (c) of this section attributable to dual fuel automobiles, except where the alternative fuel is electricity, shall be as follows:
(i) For model years 2012 through 2015, and for each category of automobile identified in paragraph (a)(1) of this section, the maximum decrease in average carbon-related exhaust emissions determined in paragraph (j) of this section attributable to alcohol dual fuel automobiles and natural gas dual fuel automobiles shall be calculated using the following formula, and rounded to the nearest tenth of a gram per mile:
(1) The Administrator shall calculate the decrease in average carbon-related exhaust emissions to determine if the maximum decrease provided in this paragraph (i) has been reached. The Administrator shall calculate the average carbon-related exhaust emissions for each category of automobiles specified in paragraph (a) of this section by subtracting the average carbon-related exhaust emission values determined in paragraph (j) of this section from the average carbon-related exhaust emission values calculated in accordance with this section by assuming all alcohol dual fuel and natural gas dual fuel automobiles are operated exclusively on gasoline (or diesel) fuel. For the purposes of these calculations, the values for natural gas dual fuel automobiles using the optional Utility Factor approach in paragraph (j)(2)(vii) of this section shall not be the gasoline CREE values, but the CREE values determined in paragraph (j)(2)(vii) of this section. The difference is limited to the maximum decrease specified in paragraph (i) of this section.
(2) [Reserved]
(j) * * *
(2) * * *
(vii)(A) For natural gas dual fuel model types, for model years 2016 and later, or optionally for model years 2012 through 2015, the combined model type carbon-related exhaust emissions value determined according to the following formula and rounded to the nearest gram per mile:
(B) Natural gas dual fuel model types must meet the following criteria to qualify for use of a Utility Factor greater than 0.5:
(
(
The revisions and addition read as follows:
(b) * * *
(1) * * *
(v) A description of the various credit, transfer and trading options that will be used to comply with each applicable standard category, including the amount of credit the manufacturer intends to generate for air conditioning leakage, air conditioning efficiency, off-cycle technology, advanced technology vehicles, hybrid or low-emission full size pickup trucks, and various early credit programs;
(vii) A summary by model year (beginning with the 2009 model year) of the number of electric vehicles, fuel cell vehicles, plug-in hybrid electric vehicles, dedicated compressed natural gas vehicles, and dual fuel natural gas vehicles using (or projected to use) the advanced technology vehicle credit and incentives program, including the projected use of production multipliers;
(viii) The methodology which will be used to comply with N
(ix) Notification of the manufacturer's intent to exclude emergency vehicles from the calculation of fleet average standards and the end-of-year fleet average, including a description of the excluded emergency vehicles and the quantity of such vehicles excluded.
In consideration of the foregoing, under the authority of 49 U.S.C. 32901, 32902, and 32903, and delegation of authority at 49 CFR 1.50, NHTSA amends 49 CFR Chapter V as follows:
49 U.S.C 32901, delegation of authority at 49 CFR 1.50.
(1) Vehicles with tires installed having a maximum speed rating at or below 55 mph.
(2) Vehicles primarily designed to perform work off-road (such as in oil fields, forests, or construction sites), and meeting at least one of the criteria of paragraph (2)(i) of this definition and at least one of the criteria of paragraph (2)(ii) of this definition.
(i) Vehicles must have affixed components designed to work in an off-road environment (for example, hazardous material equipment or drilling equipment) or be designed to operate at low speeds making them unsuitable for normal highway operation.
(ii) Vehicles must:
(A) Have an axle that has a gross axle weight rating (GAWR), as defined in 49 CFR § 571.3, of 29,000 pounds or more;
(B) Have a speed attainable in 2 miles of not more than 33 mph; or
(C) Have a speed attainable in 2 miles of not more than 45 mph, an unloaded vehicle weight that is not less than 95 percent of its GVWR, and no capacity to carry occupants other than the driver and operating crew.
(1) Is an “incomplete vehicle” as defined in this subpart; 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
(1) For front seat volume, divide 1,728 into the product of the following SAE dimensions, measured in inches to the nearest 0.1 inches, and round the quotient to the nearest 0.001 cubic feet.
(i) H61–Effective head room—front.
(ii) W3–Shoulder room—front.
(iii) L34–Maximum effective leg room—accelerator.
(2) For the volume of seats to the rear of the front seat, divide 1,728 into the product of the following SAE dimensions, measured in inches to the nearest 0.1 inches, and rounded the quotient to the nearest 0.001 cubic feet.
(i) H63–Effective head room—second.
(ii) W4–Shoulder room—second.
(iii) L51–Minimum effective leg room—second.
49 U.S.C. 32902; delegation of authority at 49 CFR 1.50
The revisions and addition read as follows:
(a) Except as provided in paragraph (f) of this section, each manufacturer of passenger automobiles shall comply with the fleet average fuel economy standards in Table I, expressed in miles per gallon, in the model year specified as applicable:
(b) For model year 2011, a manufacturer's passenger automobile fleet shall comply with the fleet average fuel economy level calculated for that model year according to Figure 1 and the appropriate values in Table II.
(c) For model years 2012–2025, a manufacturer's passenger automobile fleet shall comply with the fleet average fuel economy level calculated for that model year according to Figure 2 and the appropriate values in Table III.
(d) In addition to the requirements of paragraphs (b) and (c) of this section, each manufacturer shall also meet the minimum fleet standard for domestically manufactured passenger automobiles expressed in Table IV:
(e) For model years 2022–2025, each manufacturer shall comply with the standards set forth in paragraphs (c) and (d) in this section, if NHTSA determines in a rulemaking, initiated after January 1, 2017, and conducted in accordance with 49 U.S.C. 32902, that the standards in paragraphs (c) and (d) are the maximum feasible standards for model years 2022–2025. If, for any of those model years, NHTSA determines that the maximum feasible standard for passenger cars and the corresponding minimum standard for domestically manufactured passenger cars should be set at a different level, manufacturers shall comply with those different standards in lieu of the standards set forth for those model years in paragraphs (c) and (d), and NHTSA will revise this section to reflect the different standards.
(a) The fleet average fuel economy performance of all passenger automobiles that are manufactured by a manufacturer in a model year shall be determined in accordance with procedures established by the Administrator of the Environmental Protection Agency under 49 U.S.C. 32904 and set forth in 40 CFR part 600. For model years 2017 to 2025, a manufacturer is eligible to increase the fuel economy performance of passenger cars in accordance with procedures established by EPA set forth in 40 CFR part 600, including any adjustments to fuel economy EPA allows, such as for fuel consumption improvements related to air conditioning efficiency and off-cycle technologies.
(b) The eligibility of a manufacturer to increase its fuel economy performance through use of an off-cycle technology requires an application request made to EPA in accordance with 40 CFR Part 86.1869–12 and an approval granted by EPA made in consultation with NHTSA. In order to expedite NHTSA's consultation with EPA, a manufacturer's application as part of the off-cycle credit approval process under 40 CFR 86.1869–12(b) or 40 CFR 86.1869–12(c) shall also be submitted to NHTSA at the same time if the manufacturer is seeking off-cycle fuel economy improvement values under the CAFE program for those technologies. For off-cycle technologies which are covered under 40 CFR 86.1869–12(b) or 40 CFR 86.1869–12(c), NHTSA will consult with EPA regarding NHTSA's evaluation of the specific off-cycle technology to ensure its impact on fuel economy and the suitability of using the off-cycle technology to adjust the fuel economy performance. NHTSA will provide its views on the suitability of the technology for that purpose to EPA. NHTSA's evaluation and review will consider:
(1) Whether the technology has a direct impact upon improving fuel economy performance;
(2) Whether the technology is related to crash-avoidance technologies, safety critical systems or systems affecting safety-critical functions, or technologies designed for the purpose of reducing the frequency of vehicle crashes;
(3) Information from any assessments conducted by EPA related to the application, the technology and/or related technologies; and
(4) Any other relevant factors.
Assume a hypothetical manufacturer (Manufacturer X) produces a fleet of domestic passenger automobiles in MY 2012 as follows:
Manufacturer X calculates a fuel economy target standard for each unique model type and footprint combination.
Appendix Figure 1—Calculation of Manufacturer X's fleet average fuel economy standard using Table II:
Appendix Figure 2—Calculation of Manufacturer X's actual fleet average fuel economy performance level using Table I:
Note to Appendix Figure 2: Since the actual fleet average fuel economy performance of Manufacturer X's fleet is 32.0 mpg, as compared to its required fleet fuel economy standard of 31.6 mpg, Manufacturer X complied with the CAFE standard for MY 2012 as set forth in § 531.5(c).
49 U.S.C. 32902; delegation of authority at 49 CFR 1.50.
(a) Each manufacturer of light trucks shall comply with the following fleet average fuel economy standards, expressed in miles per gallon, in the model year specified as applicable:
Figure 1:
Figure 2:
Subscript
Figure 3:
Parameters
The
Figure 4:
Parameters
The
(f) For each model year 1996 and thereafter, each manufacturer shall combine its captive imports with its other light trucks and comply with the fleet average fuel economy standard in paragraph (a) of this section.
(g) For model years 2008–2010, at a manufacturer's option, a manufacturer's light truck fleet may comply with the fuel economy standard calculated for each model year according to Figure 1 and the appropriate values in Table V, with said option being irrevocably chosen for that model year and reported as specified in § 537.8.
(h) For model year 2011, a manufacturer's light truck fleet shall comply with the fleet average fuel economy standard calculated for that model year according to Figure 1 and the appropriate values in Table V.
(i) For model years 2012–2016, a manufacturer's light truck fleet shall comply with the fleet average fuel economy standard calculated for that model year according to Figures 2 and 3 and the appropriate values in Table VI.
(j) For model years 2017–2025, a manufacturer's light truck fleet shall comply with the fleet average fuel economy standard calculated for that model year according to Figures 2 and 4 and the appropriate values in Table VII.
(k) For model years 2022–2025, each manufacturer shall comply with the standards set forth in paragraph (j) in this section, if NHTSA determines in a rulemaking, initiated after January 1, 2017, and conducted in accordance with 49 U.S.C. 32902, that the standards in paragraph (j) are the maximum feasible standards for model years 2022–2025. If, for any of those model years, NHTSA determines that the maximum feasible standard for light trucks should be set at a different level, manufacturers shall comply with those different standards in lieu of the standards set forth for those model years in paragraph (j), and NHTSA will revise this section to reflect the different standards.
(b) The fleet average fuel economy performance of all vehicles subject to Part 533 that are manufactured by a manufacturer in a model year shall be determined in accordance with procedures established by the Administrator of the Environmental Protection Agency under 49 U.S.C. 32904 and set forth in 40 CFR part 600. For model years 2017 to 2025, a manufacturer is eligible to increase the fuel economy performance of light trucks in accordance with procedures established by EPA set forth in 40 CFR part 600, including any adjustments to fuel economy EPA allows, such as for fuel consumption improvements related
(c) The eligibility of a manufacturer to increase its fuel economy performance through use of an off-cycle technology requires an application request made to EPA in accordance with 40 CFR Part 86.1869–12 and an approval granted by EPA made in consultation with NHTSA. In order to expedite NHTSA's consultation with EPA, a manufacturer's application as part of the off-cycle credit approval process under 40 CFR 86.1869–12(b) or 40 CFR 86.1869–12(c) shall also be submitted to NHTSA at the same time if the manufacturer is seeking off-cycle fuel economy improvement values under the CAFE program for those technologies. For off-cycle technologies which are covered under 40 CFR 86.1869–12(b) or 40 CFR 86.1869–12(c), NHTSA will consult with EPA regarding NHTSA's evaluation of the specific off-cycle technology to ensure its impact on fuel economy and the suitability of using the off-cycle technology to adjust the fuel economy performance. NHTSA will provide its views on the suitability of the technology for that purpose to EPA. NHTSA's evaluation and review will consider:
(1) Whether the technology has a direct impact upon improving fuel economy performance;
(2) Whether the technology is related to crash-avoidance technologies, safety critical systems or systems affecting safety-critical functions, or technologies designed for the purpose of reducing the frequency of vehicle crashes.
(3) Information from any assessments conducted by EPA related to the application, the technology and/or related technologies; and
(4) Any other relevant factors.
Assume a hypothetical manufacturer (Manufacturer X) produces a fleet of light trucks in MY 2012 as follows:
Manufacturer X calculates a fuel economy target standard for each unique model type and footprint combination.
Since the actual fleet average fuel economy performance of Manufacturer X's fleet is 23.3 mpg, as compared to its required fleet fuel economy standard of 23.7 mpg, Manufacturer X did not comply with the CAFE standard for MY 2012 as set forth in § 533.5(i).
49 U.S.C. 32903; delegation of authority at 49 CFR 1.50.
(c)
(c) Transferred or traded credits may not be used, pursuant to 49 U.S.C. 32903(g)(4) and (f)(2), to meet the domestically manufactured passenger automobile minimum standard specified in 49 U.S.C. 32902(b)(4) and in 49 CFR 531.5(d).
(b) If a manufacturer's calculated fuel economy for a particular compliance category, including any statutorily-required calculations for alternative fuel and dual fuel vehicles, is higher or lower than the applicable fuel economy standard, manufacturers will earn credits or must apply credits or pay civil penalties equal to the difference between the calculated fuel economy level in that compliance category and the applicable standard. Credits earned are the same as any other credits, and may be held, transferred, or traded by the manufacturer subject to the limitations of the statute and this regulation.
(c) For model years up to and including MY 2019, if a manufacturer builds enough dual fuel vehicles (except plug-in hybrid electric vehicles) to improve the calculated fuel economy in a particular compliance category by more than the limits set forth in 49 U.S.C. 32906(a), the improvement in fuel economy for compliance purposes is restricted to the statutory limit. Manufacturers may not earn credits nor reduce the application of credits or fines for calculated improvements in fuel economy based on dual fuel vehicles beyond the statutory limit.
(d) For model years 2020 and beyond, a manufacturer must calculate the fuel economy of dual fueled vehicles in accordance with 40 CFR 600.510–12(c).
49 U.S.C. 32907, delegation of authority at 49 CFR 1.50.
(c) * * *
(4) Be submitted on CD–ROM for confidential reports provided in accordance with Part 537.12 and by email for non-confidential (i.e., redacted) versions of reports. The content of reports must be provided in a pdf or MS Word format except for the information required in 537.7 which must be provided in a MS Excel format. Submit 2 copies of the CD–ROM to: Administrator, National Highway Traffic Administration, 1200 New Jersey Avenue SW., Washington, DC 20590, and submit reports electronically to the following secure email address:
(b) * * *
(3) State the projected required fuel economy for the manufacturer's passenger automobiles and light trucks determined in accordance with 49 CFR 531.5(c) and 49 CFR 533.5 and based upon the projected sales figures provided under paragraph (c)(2) of this section. For each unique model type and footprint combination of the manufacturer's automobiles, provide the information specified in paragraph (b)(3)(i) and (ii) of this section in tabular form. List the model types in order of increasing average inertia weight from top to bottom down the left side of the table and list the information categories in the order specified in paragraphs (b)(3)(i) and (ii) of this section from left to right across the top of the table. Other formats, such as those accepted by EPA, which contain all of the information in a readily identifiable format are also acceptable.
(i) In the case of passenger automobiles:
(A) Beginning model year 2013, base tire as defined in 49 CFR 523.2,
(B) Beginning model year 2013, front axle, rear axle and average track width as defined in 49 CFR 523.2,
(C) Beginning model year 2013, wheelbase as defined in 49 CFR 523.2, and
(D) Beginning model year 2013, footprint as defined in 49 CFR 523.2.
(E) Optionally, beginning model year 2013, the target standard for each unique model type and footprint entry listed in accordance with the equation provided in 49 CFR 531 Figure 3.
(ii) In the case of light trucks:
(A) Beginning model year 2013, base tire as defined in 49 CFR 523.2,
(B) Beginning model year 2013, front axle, rear axle and average track width as defined in 49 CFR 523.2,
(C) Beginning model year 2013, wheelbase as defined in 49 CFR 523.2, and
(D) Beginning model year 2013, footprint as defined in 49 CFR 523.2.
(E) Optionally, beginning model year 2013, the target standard for each unique model type and footprint entry listed in accordance with the equation provided in 49 CFR 533 Figure 4.
(c) * * *
(4) (i) Loaded vehicle weight;
(ii) Equivalent test weight;
(iii) Engine displacement, liters;
(iv) SAE net rated power, kilowatts;
(v) SAE net horsepower;
(vi) Engine code;
(vii) Fuel system (number of carburetor barrels or, if fuel injection is used, so indicate);
(viii) Emission control system;
(ix) Transmission class;
(x) Number of forward speeds;
(xi) Existence of overdrive (indicate yes or no);
(xii) Total drive ratio (N/V);
(xiii) Axle ratio;
(xiv) Combined fuel economy;
(xv) Projected sales for the current model year;
(xvi) (A) In the case of passenger automobiles:
(
(
(B) In the case of light trucks:
(
(
(xvii) Frontal area;
(xviii) Road load power at 50 miles per hour, if determined by the manufacturer for purposes other than compliance with this part to differ from the road load setting prescribed in 40 CFR 86.177–11(d);
(xix) Optional equipment that the manufacturer is required under 40 CFR parts 86 and 600 to have actually installed on the vehicle configuration, or the weight of which must be included in the curb weight computation for the vehicle configuration, for fuel economy testing purposes.
(5) For each model type of automobile which is classified as a non-passenger vehicle (light truck) under part 523 of this chapter, provide the following data:
(i) For an automobile designed to perform at least one of the following functions in accordance with 523.5 (a) indicate (by “yes” or “no” for each function) whether the vehicle can:
(A) Transport more than 10 persons (if yes, provide actual designated seating positions);
(B) Provide temporary living quarters (if yes, provide applicable conveniences as defined in 523.2);
(C) Transport property on an open bed (if yes, provide bed size width and length);
(D) Provide, as sold to the first retail purchaser, greater cargo-carrying than passenger-carrying volume, such as in a cargo van and quantify the value which should be the difference between the values provided in (4)(xvi)(B)(1) and (2) above; if a vehicle is sold with a second-row seat, its cargo-carrying volume is determined with that seat installed, regardless of whether the manufacturer has described that seat as optional; or
(E) Permit expanded use of the automobile for cargo-carrying purposes or other non-passenger-carrying purposes through:
(
(
(ii) For an automobile capable of off-highway operation, identify which of the features below qualify the vehicle as off-road in accordance with 523.5 (b) and quantify the values of each feature:
(A) 4-wheel drive; or
(B) A rating of more than 6,000 pounds gross vehicle weight; and
(C) Has at least four of the following characteristics calculated when the automobile is at curb weight, on a level surface, with the front wheels parallel to the automobile's longitudinal centerline, and the tires inflated to the manufacturer's recommended pressure. The exact value of each feature should be quantified:
(
(
(
(
(7) Identify any air-conditioning (AC), off-cycle and full-size pick-up truck technologies used each model year to calculate the average fuel economy specified in 40 CFR 600.510–12.
(i) Provide a list of each air conditioning efficiency improvement technology utilized in your fleet(s) of vehicles for each model year. For each technology identify vehicles by make and model types that have the technology, which compliance category those vehicles belong to and the number of vehicles for each model equipped with the technology. For each compliance category (domestic passenger car, import passenger car and light truck) report the “Air conditioning fuel consumption improvements” value in gallons/mile in accordance with the equation specified in 40 CFR 600.510–12(c)(3)(i).
(ii) Provide a list of off-cycle efficiency improvement technologies utilized in your fleet(s) of vehicles for each model year that is pending or approved by EPA. For each technology identify vehicles by make and model that have the technology, which compliance category those vehicles belong to, the number of vehicles for each model equipped with the technology, and the associated fuel efficiency credits (grams/mile) available for each technology. For each compliance category (domestic passenger car, import passenger car and light truck) calculate the fleet “Off-Cycle Credit” value in gallons/mile in accordance with the equation specified in 40 CFR 600.510–12(c)(3)(ii).
(iii) Provide a list of full-size pick-up trucks in your fleet that meet the mild and strong hybrid vehicle definitions. For each mild and strong hybrid type, identify vehicles by make and model that have the technology, the number of vehicles produced for each model equipped with the technology, the total number of full size pick-up trucks produced with and without the technology, the calculated percentage of hybrid vehicles relative to the total number of vehicles produced and the associated fuel efficiency credits (grams/mile) available for each technology. For the light truck compliance category calculate the fleet “Pick-up Truck Credit” value in gallons/mile in accordance with the equation specified in 40 CFR 600.510–12(c)(3)(iii).
(iv) For each model year and compliance category, provide the “MPG” and “Average MPG” which are the fleet CAFE value before and the revised fleet CAFE value after taking into consideration adjustments for AC, Off-Cycle and full-size pick-up truck technologies calculated in accordance with 40 CFR 600.510–12 (c)(1)(ii).
(a) * * *
(3) Each manufacturer whose pre-model year report omits any of the information specified in § 537.7(b), (c)(1) and (2), or (c)(4) shall file a supplementary report containing the information specified in paragraph (b)(3) of this section.