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Proposed Rule2023-07955

Greenhouse Gas Emissions Standards for Heavy-Duty Vehicles-Phase 3

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Published

April 27, 2023

Issuing agencies

Environmental Protection Agency

Abstract

The Environmental Protection Agency (EPA) is proposing to promulgate new GHG standards for heavy-duty highway vehicles starting in model year (MY) 2028 through MY 2032 and to revise certain GHG standards for MY 2027 that were established previously under EPA's Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium- and Heavy-Duty Engines and Vehicles--Phase 2 rule (``HD GHG Phase 2''). This document proposes updates to discrete elements of the Averaging Banking and Trading program, including a proposal to eliminate the last MY year of the HD GHG Phase 2 advanced technology incentive program for certain types of electric highway heavy-duty vehicles. EPA is proposing to add warranty requirements for batteries and other components of zero-emission vehicles and to require customer-facing battery state-of- health monitors for plug-in hybrid and battery electric vehicles. In this document, we are also proposing additional revisions and clarifying and editorial amendments to certain highway heavy-duty vehicle provisions and certain test procedures for heavy-duty engines. Finally, as part of this action, EPA is proposing to revise its regulations addressing preemption of state regulation of new locomotives and new engines used in locomotives.

Full Text

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<title>Federal Register, Volume 88 Issue 81 (Thursday, April 27, 2023)</title>
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[Federal Register Volume 88, Number 81 (Thursday, April 27, 2023)]
[Proposed Rules]
[Pages 25926-26161]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-07955]

[[Page 25925]]

Vol. 88

Thursday,

No. 81

April 27, 2023

Part III

Environmental Protection Agency

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40 CFR Parts 1036, 1037, et al.

Greenhouse Gas Emissions Standards for Heavy-Duty Vehicles--Phase 3;
Proposed Rule

Federal Register / Vol. 88, No. 81 / Thursday, April 27, 2023 /
Proposed Rules

[[Page 25926]]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 1036, 1037, 1054, 1065, and 1074

[EPA-HQ-OAR-2022-0985; FRL-8952-01-OAR]
RIN 2060-AV50

Greenhouse Gas Emissions Standards for Heavy-Duty Vehicles--Phase
3

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Environmental Protection Agency (EPA) is proposing to
promulgate new GHG standards for heavy-duty highway vehicles starting
in model year (MY) 2028 through MY 2032 and to revise certain GHG
standards for MY 2027 that were established previously under EPA's
Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium- and
Heavy-Duty Engines and Vehicles--Phase 2 rule (``HD GHG Phase 2'').
This document proposes updates to discrete elements of the Averaging
Banking and Trading program, including a proposal to eliminate the last
MY year of the HD GHG Phase 2 advanced technology incentive program for
certain types of electric highway heavy-duty vehicles. EPA is proposing
to add warranty requirements for batteries and other components of
zero-emission vehicles and to require customer-facing battery state-of-
health monitors for plug-in hybrid and battery electric vehicles. In
this document, we are also proposing additional revisions and
clarifying and editorial amendments to certain highway heavy-duty
vehicle provisions and certain test procedures for heavy-duty engines.
Finally, as part of this action, EPA is proposing to revise its
regulations addressing preemption of state regulation of new
locomotives and new engines used in locomotives.

DATES: Comments must be received on or before June 16, 2023. Comments
on the information collection provisions submitted to the Office of
Management and Budget (OMB) under the Paperwork Reduction Act (PRA) are
best assured of consideration by OMB if OMB receives a copy of your
comments on or before May 30, 2023. Public hearing: EPA will announce
information regarding the public hearing for this proposal in a
supplemental Federal Register document. Please refer to the
SUPPLEMENTARY INFORMATION section for additional information on the
public hearing.

ADDRESSES: You may send comments, identified by Docket ID No. EPA-HQ-
OAR-2022-0985, by any of the following methods:
<bullet> Federal eRulemaking Portal: <a href="https://www.regulations.gov/">https://www.regulations.gov/</a>
(our preferred method). Follow the online instructions for submitting
comments.
<bullet> Email: <a href="/cdn-cgi/l/email-protection#d1b0fcb0bfb5fca3fc95beb2bab4a591b4a1b0ffb6bea7">[email&#160;protected]</a>. Include Docket ID No. EPA-
HQ-OAR-2022-0985 in the subject line of the message.
<bullet> Mail: U.S. Environmental Protection Agency, EPA Docket
Center, OAR Docket, Mail Code 28221T, 1200 Pennsylvania Avenue NW,
Washington, DC 20460.
<bullet> Hand Delivery or Courier: EPA Docket Center, WJC West
Building, Room 3334, 1301 Constitution Avenue NW, Washington, DC 20004.
The Docket Center's hours of operations are 8:30 a.m.-4:30 p.m.,
Monday-Friday (except Federal Holidays).
Instructions: All submissions received must include the Docket ID
No. for this rulemaking. Comments received may be posted without change
to <a href="https://www.regulations.gov/">https://www.regulations.gov/</a>, including any personal information
provided. For detailed instructions on sending comments and additional
information on the rulemaking process, see the ``Public Participation''
heading of the SUPPLEMENTARY INFORMATION section of this document.

FOR FURTHER INFORMATION CONTACT: Brian Nelson, Assessment and Standards
Division, Office of Transportation and Air Quality, Environmental
Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI 48105;
telephone number: (734) 214-4278; email address: <a href="/cdn-cgi/l/email-protection#5c3239302f3332723e2e353d321c392c3d723b332a">[email&#160;protected]</a>.

SUPPLEMENTARY INFORMATION:

Public Participation

Written Comments

Submit your comments, identified by Docket ID No. EPA-HQ-OAR-2022-
0985, at <a href="https://www.regulations.gov">https://www.regulations.gov</a> (our preferred method), or the
other methods identified in the ADDRESSES section. Once submitted,
comments cannot be edited or removed from the docket. The EPA may
publish any comment received to its public docket. Do not submit to
EPA's docket at <a href="https://www.regulations.gov">https://www.regulations.gov</a> any information you
consider to be Confidential Business Information (CBI), Proprietary
Business Information (PBI), or other information whose disclosure is
restricted by statute. If you choose to submit CBI or PBI as a comment
to EPA's docket, please send those materials to the person listed in
the FOR FURTHER INFORMATION CONTACT section. Multimedia submissions
(audio, video, etc.) must be accompanied by a written comment. The
written comment is considered the official comment and should include
discussion of all points you wish to make. The EPA will generally not
consider comments or comment contents located outside of the primary
submission (i.e., on the web, cloud, or other file sharing system).
Commenters who would like EPA to further consider in this rulemaking
any relevant comments that they provided on the HD2027 NPRM regarding
proposed HD vehicle GHG standards for the MYs at issue in this proposal
must resubmit those comments to EPA during this proposal's comment
period. Please visit <a href="https://www.epa.gov/dockets/commenting-epa-dockets">https://www.epa.gov/dockets/commenting-epa-dockets</a>
for additional submission methods; the full EPA public comment policy;
information about CBI, PBI, or multimedia submissions; and general
guidance on making effective comments.

Participation in Virtual Public Hearing

EPA will announce information regarding the public hearing for this
proposal in a supplemental Federal Register document. The hearing
notice, registration information, and any updates to the hearing
schedule will also be available at <a href="https://www.epa.gov/regulations-emissions-vehicles-and-engines/proposed-rule-greenhouse-gas-emissions-standards-heavy">https://www.epa.gov/regulations-emissions-vehicles-and-engines/proposed-rule-greenhouse-gas-emissions-standards-heavy</a>. Please refer to this website for any updates regarding
the hearings. EPA does not intend to publish additional documents in
the Federal Register announcing updates to the hearing schedule.
Docket: All documents in the docket are listed on the
<a href="http://www.regulations.gov">www.regulations.gov</a> website. Although listed in the index, some
information is not publicly available, e.g., CBI or other information
whose disclosure is restricted by statute. Certain other material, such
as copyrighted material, is not placed on the internet and will be
publicly available only in hard copy form through the EPA Docket Center
at the location listed in the ADDRESSES section of this document.

General Information

Does this action apply to me?

This action relates to companies that manufacture, sell, or import
into the United States new heavy-duty highway vehicles and engines.
This action also relates to state and local governments. Potentially
affected categories and entities include the following:

[[Page 25927]]

------------------------------------------------------------------------
Category NAICS codes \a\ NAICS title
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Industry......................... 336110 Automobile and
Light Duty Motor
Vehicle
Manufacturing.
Industry......................... 336120 Heavy Duty Truck
Manufacturing.
Industry......................... 336211 Motor Vehicle Body
Manufacturing.
Industry......................... 336213 Motor Home
Manufacturing.
Industry......................... 333618 Other Engine
Equipment
Manufacturing.
Industry......................... 811198 All Other
Automotive Repair
and Maintenance.
Government....................... ................ State and local
governments.\b\
------------------------------------------------------------------------
\a\ NAICS Association. NAICS & SIC Identification Tools. Available
online: <a href="https://www.naics.com/search">https://www.naics.com/search</a>.
\b\ It should be noted that the proposed revisions do not impose any
requirements that state and local governments must meet, but rather
implement the Clean Air Act preemption provisions for locomotives.

This table is not intended to be exhaustive, but rather provides a
guide for readers regarding entities potentially affected by this
action. This table lists the types of entities that EPA is now aware
could potentially be affected by this action. Other types of entities
not listed in the table could also be affected. To determine whether
your entity is regulated by this action, you should carefully examine
the applicability criteria found in 40 CFR parts 1036, 1037, 1054,
1065, and 1074.\1\ If you have questions regarding the applicability of
this action to a particular entity, consult the person listed in the
FOR FURTHER INFORMATION CONTACT section.
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\1\ See 40 CFR 1036.1 through 1036.15 and 40 CFR 1037.1 through
1037.15.
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What action is the Agency taking?

The Environmental Protection Agency (EPA) is proposing to
promulgate new GHG standards for heavy-duty highway vehicles starting
in model year (MY) 2028 through MY 2032 and to revise certain GHG
standards for MY 2027 that were established previously under EPA's
Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium- and
Heavy-Duty Engines and Vehicles--Phase 2 rule (``HD GHG Phase 2'') that
we believe are appropriate and feasible considering lead time, costs,
and other factors. EPA also proposes that it is appropriate to
eliminate the last model year (MY 2027) of advanced technology
incentives for certain electric highway heavy-duty vehicles, initially
established under the HD GHG Phase 2 rule. EPA is proposing to add
warranty requirements for batteries and other components of zero-
emission vehicles and to require customer-facing battery state-of-
health monitors for plug-in hybrid and battery electric vehicles. We
are also proposing revisions and clarifying and editorial amendments to
certain highway heavy-duty vehicle provisions of 40 CFR part 1037 and
certain test procedures for heavy-duty engines in 40 CFR parts 1036 and
1065. In addition, in this action EPA is proposing to revise its
regulations addressing preemption of state regulation of new
locomotives and new engines used in locomotives, to more closely align
with language in the Clean Air Act.

What is the Agency's authority for taking this action?

Clean Air Act section 202(a), 42 U.S.C. 7521(a), requires that EPA
establish emission standards for air pollutants from new motor vehicles
or new motor vehicle engines, which, in the Administrator's judgment,
cause or contribute to air pollution that may reasonably be anticipated
to endanger public health or welfare. The Administrator has found that
GHG emissions from highway heavy-duty vehicles and engines cause or
contribute to air pollution that may endanger public health or welfare.
Therefore, the Administrator is exercising his authority under CAA
section 202(a)(1)-(2) to establish standards for GHG emissions from
highway heavy-duty vehicles. In addition, section 209(e)(2)(B) of the
CAA, 42 U.S.C. 7543(e)(2)(B), requires EPA to promulgate regulations
implementing subsection 209(e) of the Act, which addresses the
prohibition of state standards regarding certain classes of new nonroad
engines or new nonroad vehicles including new locomotives and new
engines used in locomotives, as well as EPA's authorization criteria
for certain California standards for other nonroad engines or nonroad
vehicles. See Section I.D of this preamble for more information on the
agency's authority for this action.

Did EPA conduct a peer review before issuing this action?

This proposed regulatory action is supported by influential
scientific information. EPA, therefore, is conducting peer review in
accordance with OMB's Final Information Quality Bulletin for Peer
Review. Specifically, we conducted the peer review process on two
analyses: (1) Emission Adjustments for Onroad Vehicles in MOVES3.R1,
and (2) Greenhouse Gas and Energy Consumption Rates for Onroad Vehicles
in MOVES3.R1. In addition, we plan to conduct a peer review of inputs
to the Heavy-Duty Technology Resource Use Case Scenario (HD TRUCS) tool
used to analyze HD vehicle energy usage and associated component costs.
All peer review were or will be in the form of letter reviews conducted
by a contractor. The peer review reports for each analysis will be
posted in the docket for this action and will be posted at EPA's
Science Inventory (<a href="https://cfpub.epa.gov/si/">https://cfpub.epa.gov/si/</a>).

Table of Contents

Executive Summary
A. Need for Regulatory Action
B. The Opportunity for Clean Air Provided by Zero-Emission
Vehicle Technologies
C. Summary of the Major Provisions in the Regulatory Action
D. Impacts of the Proposed Standards
I. Introduction
A. Brief Overview of the Heavy-Duty Industry
B. History of Greenhouse Gas Emission Standards for Heavy-Duty
Engines and Vehicles
C. What has changed since we finalized the HD GHG Phase 2 rule?
D. EPA Statutory Authority for the Proposal
E. Coordination With Federal and State Partners
F. Stakeholder Engagement
II. Proposed CO<INF>2</INF> Emission Standards
A. Public Health and Welfare Need for GHG Emission Reductions
B. Summary of Comments Received From HD2027 NPRM
C. Background on the CO<INF>2</INF> Emission Standards in the HD
GHG Phase 2 Program
D. Vehicle Technologies
E. Technology, Charging Infrastructure, and Operating Costs
F. Proposed Standards
G. EPA's Basis That the Proposed Standards Are Feasible and
Appropriate Under the Clean Air Act
H. Potential Alternatives
I. Small Businesses
III. Compliance Provisions, Flexibilities, and Test Procedures
A. Proposed Revisions to the ABT Program
B. Battery Durability Monitoring and Warranty Requirements
C. Additional Proposed Revisions to the Regulations
IV. Proposed Program Costs
A. IRA Tax Credits

[[Page 25928]]

B. Technology Package Costs
C. Manufacturer Costs
D. Purchaser Costs
E. Social Costs
V. Estimated Emission Impacts From the Proposed Program
A. Model Inputs
B. Estimated Emission Impacts From the Proposed Standards
VI. Climate, Health, Air Quality, Environmental Justice, and
Economic Impacts
A. Climate Change Impacts
B. Health and Environmental Effects Associated With Exposure to
Non-GHG Pollutants
C. Air Quality Impacts of Non-GHG Pollutants
D. Environmental Justice
E. Economic Impacts
F. Oil Imports and Electricity and Hydrogen Consumption
VII. Benefits of the Proposed Program
A. Social Cost of GHGs
B. Criteria Pollutant Health Benefits
C. Energy Security
VIII. Comparison of Benefits and Costs
A. Methods
B. Results
IX. Analysis of Alternative CO<INF>2</INF> Emission Standards
A. Comparison of Proposal and Alternative
B. Emission Inventory Comparison of Proposal and Slower Phase-In
Alternative
C. Program Costs Comparison of Proposal and Alternative
D. Benefits
E. How do the proposal and alternative compare in overall
benefits and costs?
X. Preemption of State Standards and Requirements for New
Locomotives or New Engines Used in Locomotives
A. Overview
B. Background
C. Evaluation of Impact of Regulatory Preemption
D. What is EPA proposing?
XI. Statutory and Executive Order Reviews
A. Executive Order 12866: Regulatory Planning and Review and
Executive Order 13563: Improving Regulation and Regulatory Review
B. Paperwork Reduction Act (PRA)
C. Regulatory Flexibility Act (RFA)
D. Unfunded Mandates Reform Act (UMRA)
E. Executive Order 13132: Federalism
F. Executive Order 13175: Consultation and Coordination With
Indian Tribal Governments
G. Executive Order 13045: Protection of Children From
Environmental Health and Safety Risks
H. Executive Order 13211: Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use
I. National Technology Transfer and Advancement Act (NTTAA) and
1 CFR Part 51
J. Executive Order 12898: Federal Actions To Address
Environmental Justice in Minority Populations and Low-Income
Populations.
XII. Statutory Authority and Legal Provisions
List of Subjects

Executive Summary

A. Need for Regulatory Action

The Environmental Protection Agency (EPA) is proposing this action
to further reduce GHG air pollution from highway heavy-duty (hereafter
referred to as ``heavy-duty'' or HD) engines and vehicles across the
United States. Despite the significant emissions reductions achieved by
previous rulemakings, GHG emissions from HD vehicles continue to impact
public health, welfare, and the environment. The transportation sector
is the largest U.S. source of GHG emissions, representing 27 percent of
total GHG emissions.\2\ Within the transportation sector, heavy-duty
vehicles are the second largest contributor to GHG emissions and are
responsible for 25 percent of GHG emissions in the sector.\3\ GHG
emissions have significant impacts on public health and welfare as
evidenced by the well-documented scientific record and as set forth in
EPA's Endangerment and Cause or Contribute Findings under Section
202(a) of the CAA.\4\ Additionally, major scientific assessments
continue to be released that further advance our understanding of the
climate system and the impacts that GHGs have on public health and
welfare both for current and future generations, as discussed in
Section II.A.
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\2\ Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-
2020 (EPA-430-R-22-003, published April 2022).
\3\ Ibid.
\4\ 74 FR 66496, December 15, 2009; see also 81 FR 54422, August
15, 2016 (making a similar endangerment and cause or contribute
findings for GHGs from aircraft under section 231(a)(2)(A)).
Recently, in April 2022, EPA denied administrative petitions
relating to the 2009 finding, determining that ``[t]he science
supporting the Administrator's [2009] finding that elevated
concentrations of greenhouse gases in the atmosphere may reasonably
be anticipated to endanger the public health and welfare of current
and future U.S. generations is robust, voluminous, and compelling,
and has been strongly affirmed by recent scientific assessments. . .
.'' EPA's Denial of Petitions Relating to the Endangerment and Cause
or Contribute Findings for Greenhouse Gases Under Section 202(a) of
the Clean Air Act 1, available at <a href="https://www.epa.gov/system/files/documents/2022-04/decision_document.pdf">https://www.epa.gov/system/files/documents/2022-04/decision_document.pdf</a>.
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The potential for the application of zero-emission vehicle (ZEV)
technologies in the heavy-duty sector presents an opportunity for
significant reductions in heavy-duty GHG emissions over the long
term.\5\ Major trucking fleets, HD vehicle and engine manufacturers,
and U.S. states have announced plans to increase the use of heavy-duty
zero-emissions technologies in the coming years. The 2021
Infrastructure Investment and Jobs Act (commonly referred to as the
``Bipartisan Infrastructure Law'' or BIL) and the Inflation Reduction
Act of 2022 (``Inflation Reduction Act'' or IRA) together include many
incentives for the development, production, and sale of ZEVs, electric
charging infrastructure, and hydrogen, which are expected to spur
significant innovation in the heavy-duty sector.\6\ In addition,
supporting assessments provided by some commenters during the comment
period for the EPA's March 2022 Notice of Proposed Rulemaking ``Control
of Air Pollution from New Motor Vehicles: Heavy-Duty Engine and Vehicle
Standards'' (hereafter referred to as ``HD2027 NPRM''), which proposed
strengthening existing MY 2027 GHG standards for heavy-duty vehicles,
suggested that significant ZEV adoption rates can be achieved over the
next decade.7 8 We discuss these developments in more detail
in Section I. EPA also projects that improvements in internal
combustion engines, powertrains, and vehicle technologies such as those
EPA projected would be used to achieve the HD GHG Phase 2 standards
will also be needed to continue to reduce GHG emissions from the HD
sector, and as described in Section II.D.1, these technology
improvements continue to be feasible. With respect to the need for GHG
reductions and these heavy-duty sector developments, EPA is proposing
in this document more stringent MY 2027 HD vehicle CO<INF>2</INF>
emission standards (i.e., beyond what was finalized in HD GHG Phase 2)
and new HD vehicle CO2 emission standards starting in MYs 2028 through
2032 that we believe are appropriate and feasible considering cost,
lead time, and other factors, as described throughout this preamble and
supporting materials in the docket for this proposed rulemaking.
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\5\ Throughout the preamble, we use the term ZEV technologies to
refer to technologies that result in zero tailpipe emissions.
Example ZEV technologies include battery electric vehicles and fuel
cell vehicles.
\6\ Infrastructure Investment and Jobs Act, Public Law 117-58,
135 Stat. 429 (2021) (``Bipartisan Infrastructure Law'' or ``BIL''),
available at <a href="https://www.congress.gov/117/plaws/publ58/PLAW-117publ58.pdf">https://www.congress.gov/117/plaws/publ58/PLAW-117publ58.pdf</a>; Inflation Reduction Act of 2022, Public Law 117-169,
136 Stat. 1818 (2022) (``Inflation Reduction Act'' or ``IRA''),
available at <a href="https://www.congress.gov/117/bills/hr5376/BILLS-117hr5376enr.pdf">https://www.congress.gov/117/bills/hr5376/BILLS-117hr5376enr.pdf</a>.
\7\ Notice of Proposed Rulemaking for Control of Air Pollution
from New Motor Vehicles: Heavy-Duty Engine and Vehicle Standards. 87
FR 17414 (March 28, 2022).
\8\ U.S. EPA, ``Control of Air Pollution from New Motor
Vehicles: Heavy-Duty Engine and Vehicle Standards--Response to
Comments.'' Section 28. Docket EPA-HQ-OAR-2019-0055.
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EPA sets highway heavy-duty vehicle and engine standards for GHG
emissions

[[Page 25929]]

under its authority in CAA section 202(a). Section 202(a)(1) 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 or new motor
vehicle engines, . . . which in his judgment cause, or contribute to,
air pollution which may reasonably be anticipated to endanger public
health or welfare.'' Section 202(a)(2) provides that standards under
section 202(a) apply to such vehicles and engines ``after such period
as the Administrator finds necessary to permit the development and
application of the requisite technology, giving appropriate
consideration to the cost of compliance within such period.'' Pursuant
to section 202(a)(1), such standards apply to vehicles and engines
``for their useful life.'' EPA also may consider other factors such as
the impacts of potential GHG standards on the industry, fuel savings,
oil conservation, energy security, and other relevant considerations.
Congress authorized the Administrator to determine the levels of
emission reductions achievable for such air pollutants through the
application of technologies taking into account cost, lead time, and
other factors.
Pursuant to our 202(a) authority, EPA first established standards
for the heavy-duty sector in the 1970s. Since then, the Agency has
revised the standards multiple times based upon updated data and
information, the continued need to mitigate air pollution, and
Congressional enactments directing EPA to regulate emissions from the
heavy-duty sector more stringently. Since 1985, HD engine and vehicle
manufacturers could comply with criteria-pollutant standards using
averaging,\9\ EPA also introduced banking and trading compliance
flexibilities in the HD program in 1990,\10\ and EPA's HD GHG standards
and regulations have consistently included an averaging, banking, and
trading (ABT) program from the start.\11\ Since the first standards,
subsequent standards have extended to additional pollutants (including
GHGs), increased in stringency, and spurred the development and
deployment of numerous new vehicle and engine technologies. For
example, the most recent GHG standards for HD vehicles will reduce
CO<INF>2</INF> emissions by approximately 1.1 billion metric tons over
the lifetime of the new vehicles sold under the program (HD GHG Phase
2, 81 FR 73478, October 25, 2016) and the most recent criteria-
pollutant standards are projected to reduce NO<INF>X</INF> emissions
from the in-use HD fleet by almost 50 percent in 2045 (``Control of Air
Pollution from New Motor Vehicles: Heavy-Duty Engine and Vehicle
Standards'' (hereafter referred to as ``HD2027 FRM''), 88 FR 4296,
January 24, 2023). This proposal builds upon this multi-decadal
tradition of regulating heavy-duty vehicles and engines, by applying
the Agency's clear and longstanding statutory authority considering new
real-world data and information, including recent Congressional action
in the Bipartisan Infrastructure Law (BIL) and Inflation Reduction Act
(IRA).
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\9\ 50 FR 10606, Mar. 15, 1985; see also NRDC v. Thomas, 805
F.2d 410, 425 (D.C. Cir. 1986) (upholding emissions averaging in the
1985 HD final rule).
\10\ 55 FR 30584, July 26, 1990.
\11\ 76 FR 57128, September 15, 2011 (explaining ABT is a
flexibility that provides an opportunity for manufacturers to make
necessary technological improvements while reducing the overall cost
of the program); 81 FR 73495, October 25, 2016 (explaining that ABT
plays an important role in providing manufacturers flexibilities,
including helping reduce costs).
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This Notice of Proposed Rulemaking is consistent with Executive
Order 14037 on Strengthening American Leadership in Clean Cars and
Trucks, which directs the Administrator to ``consider updating the
existing greenhouse gas emissions standards for heavy-duty engines and
vehicles beginning with model year 2027 and extending through and
including at least model year 2029'' and directs EPA to ``consider
beginning work on a rulemaking under the Clean Air Act to establish new
greenhouse gas emissions standards for heavy-duty engines and vehicles
to begin as soon as model year 2030.'' \12\ Consistent with this
direction, in the HD2027 NPRM, we proposed building on and improving
the existing emission control program for highway heavy-duty vehicles
by further strengthening certain MY 2027 GHG standards finalized under
the HD GHG Phase 2 rule. However, we did not take final action on the
GHG portion of the HD2027 proposal in the final rule (HD2027 FRM).
Since that time, EPA has continued its analysis of the heavy-duty
vehicle sector including the recent passage of the IRA, which as we
discuss further in this preamble provides significant incentives for
GHG reductions in the heavy-duty vehicle sector. Based on this updated
information and analysis, and consistent with EPA's authority under the
Clean Air Act section 202(a), we are issuing this Notice of Proposed
Rulemaking (``HD GHG Phase 3 NPRM'') to propose certain revised HD
vehicle carbon dioxide (CO<INF>2</INF>) standards for MY 2027 and
certain new HD vehicle CO<INF>2</INF> standards for MYs 2028, 2029,
2030, 2031, and 2032 that would achieve significant GHG reductions for
these and later model years (note the MY 2032 standards would remain in
place for MY 2033 and later). We are requesting comment on an
alternative set of CO<INF>2</INF> standards that would more gradually
increase in stringency than the proposed standards for the same MYs.
EPA also requests comment on setting GHG standards starting in MYs 2027
through 2032 that would reflect: values less stringent than the lower
stringency alternative for certain market segments, values in between
the proposed standards and the alternative standards, values in between
the proposed standards and those that would reflect ZEV adoption levels
(i.e., percent of ZEVs in production volumes) used in California's ACT,
values that would reflect the level of ZEV adoption in the ACT program,
and values beyond those that would reflect ZEV adoption levels in ACT
such as the 50- to 60-percent ZEV adoption range represented by the
publicly stated goals of several major original equipment manufacturers
(OEMs) for 2030.13 14 15 16 17 We also request comment on
promulgating additional new standards with increasing stringency in MYs
2033 through 2035. EPA anticipates that the appropriate choice of final
standards within this range will reflect the Administrator's judgments
about the uncertainties in EPA's analyses as well as consideration of
public comment and updated information where available.
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\12\ 86 FR 43583, August 5, 2021. Executive Order 14037.
Strengthening American Leadership in Clean Cars and Trucks.
\13\ California Air Resources Board, Final Regulation Order--
Advanced Clean Trucks Regulation. Filed March 15, 2021. Available
at: <a href="https://ww2.arb.ca.gov/sites/default/files/barcu/regact/2019/act2019/fro2.pdf">https://ww2.arb.ca.gov/sites/default/files/barcu/regact/2019/act2019/fro2.pdf</a>.
\14\ Scania, `Scania's Electrification Roadmap,' Scania Group,
November 24, 2021, <a href="https://www.scania.com/group/en/home/newsroom/news/2021/Scanias-electrification-roadmap.html">https://www.scania.com/group/en/home/newsroom/news/2021/Scanias-electrification-roadmap.html</a>.
\15\ AB Volvo, `Volvo Trucks Launches Electric Truck with Longer
Range,' Volvo Group, January 14, 2022, <a href="https://www.volvogroup.com/en/news-and-media/news/2022/jan/news-4158927.html">https://www.volvogroup.com/en/news-and-media/news/2022/jan/news-4158927.html</a>.
\16\ Deborah Lockridge, `What Does Daimler Truck Spin-off Mean
for North America?,' Trucking Info (November 11, 2021). <a href="https://www.truckinginfo.com/10155922/what-does-daimler-truck-spin-off-mean-for-north-america">https://www.truckinginfo.com/10155922/what-does-daimler-truck-spin-off-mean-for-north-america</a>.
\17\ Navistar presentation at the Advanced Clean Transportation
(ACT) Expo, Long Beach, CA (May 9-11, 2022).
---------------------------------------------------------------------------

CAA section 202(a) directs EPA to regulate emissions of air
pollutants from new motor vehicles and engines, which in the
Administrator's judgment, cause or contribute to air pollution that may
reasonably be anticipated to endanger

[[Page 25930]]

public health or welfare. While standards promulgated pursuant to CAA
section 202(a) are based on application of technology, the statute does
not specify a particular technology or technologies that must be used
to set such standards; rather, Congress has authorized and directed EPA
to adapt its standards to emerging technologies. In 2009, the
Administrator issued an Endangerment Finding under CAA section 202(a),
concluding that GHG emissions from new motor vehicles and engines,
including heavy-duty vehicles and engines, cause or contribute to air
pollution that may endanger public health or welfare.\18\ Pursuant to
the 2009 Endangerment and Cause or Contribute Finding, EPA promulgated
GHG regulations for heavy-duty vehicles and engines in 2011 and 2016,
referred to as the HD GHG Phase 1 and HD GHG Phase 2 programs,
respectively.\19\ In the HD GHG Phase 1 and Phase 2 programs, EPA set
emission standards that the Agency found appropriate and feasible,
considering cost, lead time, and other factors.
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\18\ 74 FR 66496 (Dec. 15, 2009).
\19\ 76 FR 57106 (Sept. 15, 2011); 81 FR 73478 (Oct. 25, 2016).
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Over time, manufacturers have not only continued to find ways to
further reduce emissions from motor vehicles, including HD vehicles,
they have found ways to eliminate tailpipe emissions entirely through
the use of zero-emission vehicle technologies. Since the 2009
Endangerment and Cause or Contribute Finding and issuance of the HD GHG
Phase 1 and Phase 2 program regulations, there has continued to be
significant technological advancement in the vehicle and engine
manufacturing sectors, including for such zero-emission vehicle
technologies. The HD Phase 3 regulations that we are proposing take
into account the ongoing technological innovation in the HD vehicle
space and reflect CO<INF>2</INF> emission standards that we consider
appropriate and feasible considering cost, lead time, and other
factors.

B. The Opportunity for Clean Air Provided by Zero-Emission Vehicle
Technologies

When the HD GHG Phase 2 rule was promulgated in 2016, we
established CO<INF>2</INF> standards on the premise that ZEV
technologies, such as battery electric vehicles (BEVs) and fuel cell
electric vehicles (FCEVs), would become more widely available in the
heavy-duty market over time, but not in significant volume in the
timeframe of the Phase 2 program. We finalized BEV, plug-in hybrid
electric vehicle (PHEV), and FCEV advanced technology credit
multipliers to encourage the development and sales of these advanced
technologies.
Several significant developments have occurred since 2016 that
point to ZEV technologies becoming more readily available much sooner
than we had previously projected for the HD sector. These developments
support the feasibility of ZEV technologies and render adoption of ZEV
technologies to reduce GHG emissions more cost-competitive than ever
before. First, the HD market has evolved such that early ZEV models are
in use today for some applications and are expected to expand to many
more applications; costs of ZEV technologies have gone down and are
projected to continue to fall; and manufacturers have announced plans
to rapidly increase their investments in ZEV technologies over the next
decade. In 2022, there were a number of manufacturers producing fully
electric HD vehicles for use in a number of applications, and these
small volumes are expected to rise (see Section I.C and Draft
Regulatory Impact Analysis (DRIA) Chapter 1). The cost to manufacture
lithium-ion batteries (the single most expensive component of a BEV)
has dropped significantly in the past eight years, and that cost is
projected to continue to fall during this decade, all while the
performance of the batteries (in terms of energy density)
improves.20 21 Many of the manufacturers that produce HD
vehicles and major firms that purchase HD vehicles have announced
billions of dollars' worth of investments in ZEV technologies and
significant plans to transition to a zero-carbon fleet over the next
ten to fifteen years.\22\
---------------------------------------------------------------------------

\20\ Mulholland, Eamonn. ``Cost of electric commercial vans and
pickup trucks in the United States through 2040.'' Page 7. January
2022. Available at <a href="https://theicct.org/wp-content/uploads/2022/01/cost-ev-vans-pickups-us-2040-jan22.pdf">https://theicct.org/wp-content/uploads/2022/01/cost-ev-vans-pickups-us-2040-jan22.pdf</a>.
\21\ Sharpe, Ben and Hussein Basma. ``A meta-study of purchase
costs for zero-emission trucks''. The International Council on Clean
Transportation, Working Paper 2022-09 (February 2022). Available
online: <a href="https://theicct.org/publication/purchase-cost-ze-trucks-feb22/">https://theicct.org/publication/purchase-cost-ze-trucks-feb22/</a>.
\22\ Environmental Defense Fund (2022) September 2022 Electric
Vehicle Market Update: Manufacturer Commitments and Public Policy
Initiatives Supporting Electric Mobility in the U.S. and Worldwide,
available online at: <a href="https://blogs.edf.org/climate411/files/2022/09/ERM-EDF-Electric-Vehicle-Market-Report_September2022.pdf">https://blogs.edf.org/climate411/files/2022/09/ERM-EDF-Electric-Vehicle-Market-Report_September2022.pdf</a>.
---------------------------------------------------------------------------

Second, the 2021 BIL and the 2022 IRA laws provide significant and
unprecedented monetary incentives for the production and purchase of
qualified ZEVs in the HD market. They also provide incentives for
qualifying electric charging infrastructure and hydrogen, which will
further support a rapid increase in market penetration of HD ZEVs. As a
few examples, over the next five years, BIL provisions include $5
billion to fund the replacement of school buses with zero- or low-
emission buses and $5.6 billion to support the purchase of zero- or
low-emission transit buses and associated infrastructure, with up to
$7.5 billion to help build out a national network of EV charging and
hydrogen refueling infrastructure, some of which may be used for
refueling of heavy duty vehicles. The IRA creates a tax credit of up to
$40,000 per vehicle for vehicles over 14,000 pounds (and up to $7,500
per vehicle for vehicles under 14,000 pounds) for the purchase of
qualified commercial clean vehicles and provides tax credits for the
production and sale of battery cells and modules of up to $45 per
kilowatt-hour (kWh). The wide array of incentives in both laws will
help to reduce the costs to manufacture, purchase, and operate ZEVs,
thereby bolstering their adoption in the market.
Third, there have been multiple actions by states to accelerate the
adoption of HD ZEVs. The State of California and other states have
adopted the ACT program that includes a manufacturer requirement for
zero-emission truck sales.23 24 The ACT program would
require that ``manufacturers who certify Class 2b-8 chassis or complete
vehicles with combustion engines would be required to sell zero-
emission trucks as an
---------------------------------------------------------------------------

\23\ California Air Resources Board, Final Regulation Order--
Advanced Clean Trucks Regulation. Filed March 15, 2021. Available
at: <a href="https://ww2.arb.ca.gov/sites/default/files/barcu/regact/2019/act2019/fro2.pdf">https://ww2.arb.ca.gov/sites/default/files/barcu/regact/2019/act2019/fro2.pdf</a>.
\24\ See, e.g., Final Advanced Clean Truck Amendments, 1461
Mass. Reg. 29 (Jan. 21, 2022) (Massachusetts). Medium- and Heavy-
Duty (MHD) Zero Emission Truck Annual Sales Requirements and Large
Entity Reporting, 44 N.Y. Reg. 8 (Jan. 19, 2022) (New York),
available at <a href="https://dos.ny.gov/system/files/documents/2022/01/011922.pdf">https://dos.ny.gov/system/files/documents/2022/01/011922.pdf</a>. Advanced Clean Trucks Program and Fleet Reporting
Requirements, 53 N.J.R. 2148(a) (Dec. 20, 2021) (New Jersey),
available at <a href="https://www.nj.gov/dep/rules/adoptions/adopt_20211220a.pdf">https://www.nj.gov/dep/rules/adoptions/adopt_20211220a.pdf</a> (pre-publication version). Clean Trucks Rule
2021, DEQ-17-2021 (Nov. 17, 2021), available at <a href="http://records.sos.state.or.us/ORSOSWebDrawer/Recordhtml/8581405">http://records.sos.state.or.us/ORSOSWebDrawer/Recordhtml/8581405</a> (Oregon).
Low emission vehicles, Wash. Admin. Code. Sec. 173-423-070 (2021),
available at <a href="https://app.leg.wa.gov/wac/default.aspx?cite=173-423-070">https://app.leg.wa.gov/wac/default.aspx?cite=173-423-070</a>; 2021 Wash. Reg. 587356 (Dec. 15, 2021); Wash. Reg. 21-24-059
(Nov. 29, 2021) (amending Wash. Admin. Code. Sec. Sec. 173-423 and
173-400), available at <a href="https://lawfilesext.leg.wa.gov/law/wsrpdf/2021/24/21-24-059.pdf">https://lawfilesext.leg.wa.gov/law/wsrpdf/2021/24/21-24-059.pdf</a> (Washington).

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[[Page 25931]]

increasing percentage of their annual [state] sales from 2024 to
2035.'' 25 26 In addition, 17 states and the District of
Columbia have signed a Memorandum of Understanding establishing goals
to support widespread electrification of the HD vehicle market.\27\ We
discuss these factors further in Section I.
---------------------------------------------------------------------------

\25\ California Air Resources Board, Advanced Clean Trucks Fact
Sheet (August 20, 2021), available at <a href="https://ww2.arb.ca.gov/resources/fact-sheets/advanced-clean-trucks-fact-sheet">https://ww2.arb.ca.gov/resources/fact-sheets/advanced-clean-trucks-fact-sheet</a>. See also
California Air Resources Board, Final Regulation Order--Advanced
Clean Trucks Regulation. Filed March 15, 2021. Available at: <a href="https://ww2.arb.ca.gov/sites/default/files/barcu/regact/2019/act2019/fro2.pdf">https://ww2.arb.ca.gov/sites/default/files/barcu/regact/2019/act2019/fro2.pdf</a>.
\26\ EPA granted the ACT rule waiver requested by California
under CAA section 209(b) on March 30, 2023. 88 FR 20688, April 6,
2023 (signed by the Administrator on March 30, 2023).
\27\ Multi-State MOU, available at <a href="https://www.nescaum.org/documents/mhdv-zev-mou-20220329.pdf/">https://www.nescaum.org/documents/mhdv-zev-mou-20220329.pdf/</a>.
---------------------------------------------------------------------------

Recognizing the need for additional GHG reductions from HD vehicles
and the growth of ZEV technologies in the HD market, last year we
proposed strengthening certain existing MY 2027 HD vehicle
CO<INF>2</INF> standards as part of the HD2027 NPRM. We received many
comments on the proposed updates to those HD vehicle CO<INF>2</INF>
emission standards.28 Many commenters suggested that EPA
should further strengthen HD vehicle CO<INF>2</INF> emission standards
in MYs 2027 through 2029 beyond the HD2027 NPRM proposed levels because
of the accelerating adoption of HD ZEV technologies, and some
commenters provided a number of reports that evaluate the potential of
electrification of the HD sector in terms of adoption rates, costs, and
other factors. Some commenters raised concerns with the HD2027 NPRM
proposed changes to certain HD GHG Phase 2 CO<INF>2</INF> emission
standards, asserting the significant investment and lead time required
for development and verification of the durability of ZEV technologies,
especially given the diverse range of applications in the HD market.
---------------------------------------------------------------------------

\28\ U.S. EPA, ``Control of Air Pollution from New Motor
Vehicles: Heavy-Duty Engine and Vehicle Standards--Response to
Comments.'' Section 28. Docket EPA-HQ-OAR-2019-0055.
---------------------------------------------------------------------------

In the HD2027 NPRM, EPA also requested comment on several
approaches to modify the existing Advanced Technology Credit
Multipliers (``credit multipliers'') under the HD GHG Phase 2 program.
Many commenters supported limiting the credits in some fashion, such as
eliminating credit multipliers for ZEVs produced due to state
requirements or phasing out the credit multipliers earlier than MY
2027, which was the last model year that multipliers could be applied
under HD GHG Phase 2. Some of the commenters opposed any changes to the
existing credit multipliers, indicating that the multipliers are
necessary for the development of these new and higher-cost technologies
into existing and new markets. We considered the concerns and
information provided in these comments when developing this proposal,
as discussed in Sections II and III. Commenters who would like EPA to
further consider in this rulemaking any relevant comments that they
provided on the HD2027 NPRM regarding proposed HD vehicle GHG standards
for the MYs at issue in this proposal must resubmit those comments to
EPA during this proposal's comment period.\29\
---------------------------------------------------------------------------

\29\ Note, comments regarding aspects of the HD program besides
those GHG standards and compliance requirements in this proposal are
outside the scope of this rulemaking.
---------------------------------------------------------------------------

EPA believes the increased application of ZEV technologies in the
HD sector presents an opportunity to strengthen GHG standards, which
can result in significant reductions in heavy-duty vehicle emissions.
Based on an in-depth analysis of the potential for the development and
application of ZEV technologies in the HD sector, we are proposing in
this Phase 3 NPRM more stringent GHG standards for MYs 2027 through
2032 and later HD vehicles heavy-duty vehicles that are appropriate and
feasible considering lead time, costs, and other factors. These
proposed Phase 3 standards include (1) revised GHG standards for many
MY 2027 HD vehicles, with a subset of standards that would not change,
and (2) new GHG standards starting in MYs 2028 through 2032, of which
the MY 2032 standards would remain in place for MY 2033 and later. For
the purposes of this preamble, we refer to the Phase 3 NPRM standards
generally as applying to MYs 2027 through 2032 and later HD vehicles.
In this NPRM, we are also requesting comment on setting additional new,
progressively more stringent GHG standards beyond the MYs proposed and
starting in MYs 2033 through 2035. In consideration of concerns from
manufacturers about lead time needed for technology development and
market investments, we request comment in this NPRM on an alternative
set of GHG standards starting in MYs 2027 through 2032 that are lower
than those proposed yet still more stringent than the Phase 2
standards. We also request comment, including supporting data and
analysis, if there are certain market segments, such as heavy-haul
vocational trucks or long-haul tractors which may require significant
energy content for their intended use, for which it may be appropriate
to set standards less stringent than the alternative for the specific
corresponding regulatory subcategories in order to provide additional
lead time to develop and introduce ZEV or other low emissions
technology for those specific vehicle applications. In consideration of
the environmental impacts of HD vehicles and the need for significant
emission reductions, as well as the views expressed by stakeholders
such as environmental justice communities, environmental nonprofit
organizations, and state and local organizations for rapid and
aggressive reductions in GHG emissions, we are also requesting comment
on a more stringent set of GHG standards starting in MYs 2027 through
2032 whose values would go beyond the proposed standards, such as
values that would reflect the level of ZEV adoption (i.e., percent of
ZEVs in production volumes) used in California's ACT program, values in
between these proposed standards and those that would reflect ZEV
adoption levels in ACT, and values beyond those that would reflect ZEV
adoption levels in ACT, such as the 50-60 percent ZEV adoption range
represented by the publicly stated goals of several major OEMs for
2030.30 31 32 33 34
---------------------------------------------------------------------------

\30\ California Air Resources Board, Final Regulation Order--
Advanced Clean Trucks Regulation. Filed March 15, 2021. Available
at: <a href="https://ww2.arb.ca.gov/sites/default/files/barcu/regact/2019/act2019/fro2.pdf">https://ww2.arb.ca.gov/sites/default/files/barcu/regact/2019/act2019/fro2.pdf</a>.
\31\ Scania, `Scania's Electrification Roadmap,' Scania Group,
November 24, 2021, <a href="https://www.scania.com/group/en/home/newsroom/news/2021/Scanias-electrification-roadmap.html">https://www.scania.com/group/en/home/newsroom/news/2021/Scanias-electrification-roadmap.html</a>.
\32\ AB Volvo, `Volvo Trucks Launches Electric Truck with Longer
Range,' Volvo Group, January 14, 2022, <a href="https://www.volvogroup.com/en/news-and-media/news/2022/jan/news-4158927.html">https://www.volvogroup.com/en/news-and-media/news/2022/jan/news-4158927.html</a>.
\33\ Deborah Lockridge, `What Does Daimler Truck Spin-off Mean
for North America?,' Trucking Info (November 11, 2021). <a href="https://www.truckinginfo.com/10155922/what-does-daimler-truck-spin-off-mean-for-north-america">https://www.truckinginfo.com/10155922/what-does-daimler-truck-spin-off-mean-for-north-america</a>.
\34\ Navistar presentation at the Advanced Clean Transportation
(ACT) Expo, Long Beach, CA (May 9-11, 2022).
---------------------------------------------------------------------------

After considering the state of electrification of the HD market,
new incentives, and comments received on the HD2027 NPRM regarding
credit multipliers, EPA believes that the HD GHG Phase 2 levels of
incentives for electrification are no longer appropriate for certain
segments of the HD vehicle market. We are proposing in this document to
end credit multipliers for BEVs and PHEVs one year earlier than
provided in the existing HD GHG Phase 2 program (i.e., no credit
multipliers for BEVs and PHEVs in MYs 2027 and later).

[[Page 25932]]

C. Summary of the Major Provisions in the Regulatory Action

Our proposed program features several key provisions that include,
based on consideration of updated data and information, updating the
existing MY 2027 GHG emission standards and promulgating new GHG
emission standards starting in MYs 2028 through 2032 for HD vehicles.
Specifically, we are proposing to set progressively more stringent GHG
emission standards that would apply to MYs 2027, 2028, 2029, 2030,
2031, and 2032 and later for numerous vocational vehicle and tractor
subcategories. The proposed standards for MY 2032 and later are shown
in Table ES-1 and Table ES-2 and are described in detail in Section II,
while the proposed standards for MYs 2027 through 2031 are shown in
Section II.F.\35\ As described in Section II of this preamble, our
analysis shows that the proposed revisions to HD GHG Phase 2
CO<INF>2</INF> standards for MY 2027 and the proposed new,
progressively lower numeric values of the CO<INF>2</INF> standards
starting in MYs 2028 through 2032 are appropriate considering
feasibility, lead time, costs, and other factors. We seek comment on
these proposed Phase 3 standards starting in MYs 2027 through 2032.
---------------------------------------------------------------------------

\35\ See proposed regulations 40 CFR 1037.105 and 1037.106.

Table ES-1--Proposed MY 2032 and Later Vocational Vehicle CO2 Emission Standards (Grams/Ton-Mile) by Regulatory
Subcategory
----------------------------------------------------------------------------------------------------------------
CI medium SI medium
CI light heavy heavy CI heavy heavy SI light heavy heavy
----------------------------------------------------------------------------------------------------------------
Urban Vehicles.................. 179 176 177 225 215
Multi-Purpose Vehicles.......... 142 153 138 184 186
Regional Vehicles............... 103 136 97 131 165
----------------------------------------------------------------------------------------------------------------
Note: Please see Section II.F.4 for the full set of proposed standards, including for optional custom chassis
vehicles.

Table ES-2--Proposed MY 2032 and Later Tractor CO2 Emission Standards (Grams/Ton-Mile) by Regulatory Subcategory
----------------------------------------------------------------------------------------------------------------
Class 7 all Class 8 day Class 8
cab styles cab sleeper cab
----------------------------------------------------------------------------------------------------------------
Low Roof Tractor................................................ 63.5 48.4 48.1
Mid Roof Tractor................................................ 68.2 51.5 52.2
High Roof Tractor............................................... 66.0 50.0 48.2
----------------------------------------------------------------------------------------------------------------
Note: Please see Section II.F.4 for the full set of proposed standards, including for heavy-haul tractors.

The proposed standards do not mandate the use of a specific
technology, and EPA anticipates that a compliant fleet under the
proposed standards would include a diverse range of technologies (e.g.,
transmission technologies, aerodynamic improvements, engine
technologies, battery electric powertrains, hydrogen fuel cell
powertrains, etc.). The technologies that have played a fundamental
role in meeting the Phase 2 GHG standards will continue to play an
important role going forward as they remain key to reducing the GHG
emissions of HD vehicles powered by internal combustion engines
(referred to in this proposal as ICE vehicles). In developing the
proposed standards, EPA has also considered the key issues associated
with growth in penetration of zero-emission vehicles, including
charging infrastructure and hydrogen production. In our assessment that
supports the appropriateness and feasibility of these proposed
standards, we developed a technology pathway that could be used to meet
each of the standards. The technology package includes a mix of ICE
vehicles with CO<INF>2</INF>-reducing technologies and ZEVs. EPA
developed an analysis tool to evaluate the design features needed to
meet the energy and power demands of various HD vehicle types when
using ZEV technologies. The overarching analysis is premised on
ensuring each of the ZEVs could perform the same work as its ICE
counterpart while oversizing the battery to account for its usable
range and that batteries deteriorate over time. The fraction of ZEVs in
the technology packages are shown in Table ES-3 and described further
in Section II of this preamble.

Table ES-3--Projected ZEV Adoption Rates in Technology Packages for the Proposed Standards
--------------------------------------------------------------------------------------------------------------------------------------------------------
Regulatory subcategory grouping MY 2027 (%) MY 2028 (%) MY 2029 (%) MY 2030 (%) MY 2031 (%) MY 2032 (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Light-Heavy Duty Vocational............................. 22 28 34 39 45 57
Medium Heavy-Duty Vocational............................ 19 21 24 27 30 35
Heavy-Heavy-Duty Vocational............................. 16 18 19 30 33 40
Day Cab Tractors........................................ 10 12 15 20 30 34
Sleeper Cab Tractors.................................... 0 0 0 10 20 25
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Please see Section II.F.1 for the full set of technology packages, including for optional custom chassis vehicles.

We are requesting comment on an alternative set of CO<INF>2</INF>
standards that would more gradually increase in stringency than the
proposed standards starting in MY 2027 through 2032, further described
in Section II.H. We developed a technology pathway that could be used
to meet the alternatives standards, which projects the aggregated

[[Page 25933]]

ZEV adoption rates shown in Table ES-4 and described further in Section
II of this preamble. As described in more detail in Section II, we also
are seeking comment on setting GHG standards starting in MYs 2027
through 2032 that would reflect values less stringent than the lower
stringency alternative for certain market segments as well as comment
on values in between the proposed standards and the alternative
standards. Also described in Section II, we are seeking comment on
setting GHG standards starting in MYs 2027 through 2032 that would
reflect values above the level of the proposed standards. Some of the
HD2027 NPRM commenters provided specific recommendations for ZEV
adoption rates to include in our analysis, and these adoption rates are
on the order of 40 percent or more electrification by MY
2029.36 37 38 39 The California Air Resources Board's
(CARB's) ACT regulation sets ZEV sales requirements for vocational
vehicles at 40 percent and for tractors at 25 percent in MY 2029 (Table
ES-4). Announcements by major manufacturers project their HD ZEV sales
to be in the 50 percent range for 2030 globally, with one manufacturer
projecting sales as high as 60 percent for North America in that
year.40 41 42 43 We request comment and data that would
support more stringent GHG standards than we are proposing for MYs 2027
through 2032, including comment and data on different technologies'
penetration rates than we included in the technology packages described
in Section II of the preamble. Specifically, EPA requests comment on
values that would reflect the level of ZEV adoption used in
California's ACT program, values in between these proposed standards
and those that would reflect ZEV adoption levels in ACT, and values
beyond those that would reflect ZEV adoption levels in ACT such as the
50-60 percent ZEV adoption range represented by the publicly stated
goals of several major OEMs for 2030.44 45 46 47 48 We
further request comment on promulgating progressively more stringent
standards out through MY 2035.
---------------------------------------------------------------------------

\36\ ACEEE Comments to the HD2027 NPRM. See Docket Entry EPA-HQ-
OAR-2019-0055-2852-A1. Referencing Catherine Ledna et al.,
`Decarbonizing Medium-& Heavy-Duty On-Road Vehicles: Zero-Emission
Vehicles Cost Analysis' (NREL, March 2022), <a href="https://www.nrel.gov/docs/fy22osti/82081.pdf">https://www.nrel.gov/docs/fy22osti/82081.pdf</a>.
\37\ EDF Comments to the HD2027 NPRM. See Docket Entry EPA-HQ-
OAR-2019-0055-1265-A1, pp. 16-17.
\38\ ICCT Comments to the HD2027 NPRM. See Docket Entry EPA-HQ-
OAR-2019-0055-1211-A1, p. 6.
\39\ Moving Forward Network Comments to the HD2027 NPRM. See
Docket Entry EPA-HQ-OAR-2019-0055-1277-A1, pp. 19-20.
\40\ Scania, `Scania's Electrification Roadmap,' Scania Group,
November 24, 2021, <a href="https://www.scania.com/group/en/home/newsroom/news/2021/Scanias-electrification-roadmap.html">https://www.scania.com/group/en/home/newsroom/news/2021/Scanias-electrification-roadmap.html</a>; AB Volvo, `Volvo
Trucks Launches Electric Truck with Longer Range,' Volvo Group,
January 14, 2022, <a href="https://www.volvogroup.com/en/news-and-media/news/2022/jan/news-4158927.html">https://www.volvogroup.com/en/news-and-media/news/2022/jan/news-4158927.html</a>.
\41\ David Cullen, `Daimler to Offer Carbon Neutral Trucks by
2039,' (October 25, 2019). <a href="https://www.truckinginfo.com/343243/daimler-aims-to-offer-only-co2-neutral-trucks-by-2039-in-key-markets">https://www.truckinginfo.com/343243/daimler-aims-to-offer-only-co2-neutral-trucks-by-2039-in-key-markets</a>.
\42\ Deborah Lockridge, `What Does Daimler Truck Spin-off Mean
for North America?,' Trucking Info (November 11, 2021). <a href="https://www.truckinginfo.com/10155922/what-does-daimler-truck-spin-off-mean-for-north-america">https://www.truckinginfo.com/10155922/what-does-daimler-truck-spin-off-mean-for-north-america</a>.
\43\ Navistar presentation at the Advanced Clean Transportation
(ACT) Expo, Long Beach, CA (May 9-11, 2022).
\44\ California Air Resources Board, Final Regulation Order--
Advanced Clean Trucks Regulation. Filed March 15, 2021. Available
at: <a href="https://ww2.arb.ca.gov/sites/default/files/barcu/regact/2019/act2019/fro2.pdf">https://ww2.arb.ca.gov/sites/default/files/barcu/regact/2019/act2019/fro2.pdf</a>.
\45\ Scania, `Scania's Electrification Roadmap,' Scania Group,
November 24, 2021, <a href="https://www.scania.com/group/en/home/newsroom/news/2021/Scanias-electrification-roadmap.html">https://www.scania.com/group/en/home/newsroom/news/2021/Scanias-electrification-roadmap.html</a>.
\46\ AB Volvo, `Volvo Trucks Launches Electric Truck with Longer
Range,' Volvo Group, January 14, 2022, <a href="https://www.volvogroup.com/en/news-and-media/news/2022/jan/news-4158927.html">https://www.volvogroup.com/en/news-and-media/news/2022/jan/news-4158927.html</a>.
\47\ Deborah Lockridge, `What Does Daimler Truck Spin-off Mean
for North America?,' Trucking Info (November 11, 2021). <a href="https://www.truckinginfo.com/10155922/what-does-daimler-truck-spin-off-mean-for-north-america">https://www.truckinginfo.com/10155922/what-does-daimler-truck-spin-off-mean-for-north-america</a>.
\48\ Navistar presentation at the Advanced Clean Transportation
(ACT) Expo, Long Beach, CA (May 9-11, 2022).

Table ES-4--Aggregated Projected ZEV Adoption Rates in Technology Packages for the Proposed Standards, Aggregated Projected ZEV Adoption Rates in
Technology Packages for the Alternative Standards, and California ACT ZEV Sales Requirements
--------------------------------------------------------------------------------------------------------------------------------------------------------
MY 2032 and
MY 2027 (%) MY 2028 (%) MY 2029 (%) MY 2030 (%) MY 2031 (%) later (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proposed:
Vocational.......................................... 20 25 30 35 40 50
Short-Haul Tractors................................. 10 12 15 20 30 35
Long-Haul Tractors.................................. 0 0 0 10 20 25
Alternative:
Vocational.......................................... 14 20 25 30 35 40
Short Haul Tractors................................. 5 8 10 15 20 25
Long Haul Tractors.................................. 0 0 0 10 15 20
CARB ACT:
Vocational.......................................... 20 30 40 50 55 60
Tractors............................................ 15 20 25 30 35 40
--------------------------------------------------------------------------------------------------------------------------------------------------------

As discussed in Section II and DRIA Chapters 1 and 2, EPA
recognizes that charging and refueling infrastructure for BEVs and
FCEVs is critically important for the success in the increasing
development and adoption of these vehicle technologies. There are
significant efforts already underway to develop and expand heavy-duty
electric charging and hydrogen refueling infrastructure. The U.S.
government is making large investments through the BIL and the IRA, as
discussed in more detail in DRIA Chapter 1.3.2. (e.g., this includes a
tax credit for charging or hydrogen refueling infrastructure) as well
as billions of additional dollars for programs that could help fund
charging infrastructure if purchased alongside an electric
vehicle).49 50 However, private investments will also play a
critical role in meeting future infrastructure needs. We expect many
BEV or fleet owners to invest in charging infrastructure for depot
charging. (See DRIA Chapter 2.6 for information on our analysis of
depot charging needs and costs associated with this proposal.)
Manufacturers, charging network providers, energy companies and others
are also investing

[[Page 25934]]

in high-power public or other stations that could support en-route
charging. This includes over a billion dollars for recently announced
projects to support electric truck or other commercial vehicle charging
in the United States and Europe.\51\ For example, Daimler Truck North
America is partnering with electric power generation company NextEra
Energy Resources and BlackRock Renewable Power to collectively invest
$650 million to create a nationwide U.S. charging network for
commercial vehicles with a later phase of the project also supporting
hydrogen fueling stations.\52\ Volvo Group and Pilot recently announced
their intent to offer public charging for medium- and heavy-duty BEVs
at over 750 Pilot and Flying J North American truck stops and travel
plazas.\53\ (See DRIA Chapter 1.6.2 for a more detailed discussion of
private investments in heavy-duty infrastructure.)
---------------------------------------------------------------------------

\49\ Inflation Reduction Act, Public Law 117-169 (2022).
\50\ Bipartisan Infrastructure Law, Public Law 117-58, 135 Stat.
429 (2021).
\51\ BloombergNEF. ``Zero-Emission Vehicles Factbook A
BloombergNEF special report prepared for COP27.'' November 2022.
Available online: <a href="https://www.bloomberg.com/professional/download/2022-zero-emissions-vehicle-factbook/">https://www.bloomberg.com/professional/download/2022-zero-emissions-vehicle-factbook/</a>.
\52\ NextEra Energy. News Release: ``Daimler Truck North
America, NextEra Energy Resources and BlackRock Renewable Power
Announce Plans to Accelerate Public Charging Infrastructure for
Commercial Vehicles Across The U.S.'' January 31, 2022. Available
online: <a href="https://newsroom.nexteraenergy.com/news-releases?item=123840">https://newsroom.nexteraenergy.com/news-releases?item=123840</a>.
\53\ Adler, Alan. ``Pilot and Volvo Group add to public electric
charging projects''. FreightWaves. November 16, 2022. Available
online: <a href="https://www.freightwaves.com/news/pilot-and-volvo-group-add-to-public-electric-charging-projects">https://www.freightwaves.com/news/pilot-and-volvo-group-add-to-public-electric-charging-projects</a>.
---------------------------------------------------------------------------

These recent heavy-duty charging announcements come during a period
of rapid growth in the broader market for charging infrastructure
serving cars or other electric vehicles. BloombergNEF estimates that
annual global investment was $62 billion in 2022, nearly twice that of
the prior year.\54\ Private charging companies have already attracted
billions globally in venture capital and mergers and acquisitions.\55\
In the United States, there was $200 million or more in mergers and
acquisition activity in 2022 according to the capital market data
provider Pitchbook,\56\ indicating strong interest in the future of the
charging industry. Domestic manufacturing capacity is also increasing
with over $600 million in announced investments to support the
production of charging equipment and components at existing or new U.S.
facilities.57 58
---------------------------------------------------------------------------

\54\ BloombergNEF. ``Next $100 Billion EV-Charger Spend to Be
Super Fast.'' January 20, 2023. Available online: <a href="https://about.bnef.com/blog/next-100-billion-ev-charger-spend-to-be-super-fast/">https://about.bnef.com/blog/next-100-billion-ev-charger-spend-to-be-super-fast/</a>.
\55\ Hampleton.''Autotech & Mobility M&A market report 1H2023.''
2023. Available online: <a href="https://www.hampletonpartners.com/fileadmin/user_upload/Report_PDFs/Hampleton-Partners-Autotech-Mobility-Report-1H2023-FINAL.pdf">https://www.hampletonpartners.com/fileadmin/user_upload/Report_PDFs/Hampleton-Partners-Autotech-Mobility-Report-1H2023-FINAL.pdf</a>.
\56\ St. John, Alexa, and Nora Naughton.'' Automakers need way
more plug-in stations to make their EV plans work. That has sparked
a buyer frenzy as big charging players gobble up smaller ones.''
Insider, November 24, 2022. Available online: <a href="https://www.businessinsider.com/ev-charging-industry-merger-acquisition-meet-electric-vehicle-demand-2022-11">https://www.businessinsider.com/ev-charging-industry-merger-acquisition-meet-electric-vehicle-demand-2022-11</a>.
\57\ Joint Office of Energy and Transportation. ``Private Sector
Continues to Play Key Part in Accelerating Buildout of EV Charging
Networks.'' February 15, 2023. Available online: <a href="https://driveelectric.gov/news/#private-investment">https://driveelectric.gov/news/#private-investment</a>.
\58\ North Carolina Office of the Governor. ``Manufacturer of
Electric Vehicle Charging Stations Selects Durham County for New
Production Facility''. February 7, 2023. Available online: <a href="https://governor.nc.gov/news/press-releases/2023/02/07/manufacturer-electric-vehicle-charging-stations-selects-durham-county-new-production-facility">https://governor.nc.gov/news/press-releases/2023/02/07/manufacturer-electric-vehicle-charging-stations-selects-durham-county-new-production-facility</a>.
---------------------------------------------------------------------------

These important early actions and market indicators suggest strong
growth in charging and refueling ZEV infrastructure in the coming
years. Furthermore, as described in Section II of this document, our
analysis of charging infrastructure needs and costs supports the
feasibility of the future growth of ZEV technology of the magnitude EPA
is projecting in this proposal's technology package. EPA has heard from
some representatives from the heavy-duty vehicle manufacturing industry
both optimism regarding the heavy-duty industry's ability to produce
ZEV technologies in future years at high volume, but also concern that
a slow growth in ZEV charging and refueling infrastructure can slow the
growth of heavy-duty ZEV adoption, and that this may present challenges
for vehicle manufacturers ability to comply with future EPA GHG
standards. Several heavy-duty vehicle manufacturers have encouraged EPA
to consider ways to address this concern both in the development of the
Phase 3 program, and in the structure of the Phase 3 program itself.
\59\ EPA requests comment on this concern, both in the Phase 3
rulemaking process, and in consideration of whether EPA should consider
undertaking any future actions related to the Phase 3 standards, if
finalized, with respect to the future growth of the charging and
refueling infrastructure for ZEVs. EPA has a vested interest in
monitoring industry's performance in complying with mobile source
emission standards, including the highway heavy-duty industry. EPA
monitors industry's performance through a range of approaches,
including regular meetings with individual companies and regulatory
requirements for data submission as part of the annual certification
process. EPA also provides transparency to the public through actions
such as publishing industry compliance reports (such as has been done
during the heavy-duty GHG Phase 1 program).\60\ EPA requests comment on
what, if any, additional information and data EPA should consider
collecting and monitoring during the implementation of the Phase 3
standards; we also request comment on whether there are additional
stakeholders EPA should work with during implementation of the Phase 3
standards, if finalized, and what measures EPA should consider to help
ensure success of the Phase 3 program, including with respect to the
important issues of refueling and charging infrastructure for ZEVs.
---------------------------------------------------------------------------

\59\ Truck and Engine Manufacturers Association. ``EPA GHG Phase
3 Rulemaking: H-D Vehicle Manufacturers' Perspective'' presentation
to the Society of Automotive Engineers Government and Industry
Meeting. January 18, 2023.
\60\ See EPA Reports EPA-420-R-21-001B covering Model Years
2014-2018, and EPA report EPA-420-R-22-028B covering Model Years
2014--2020, available online at <a href="https://www.epa.gov/compliance-and-fuel-economy-data/epa-heavy-duty-vehicle-and-engine-greenhouse-gas-emissions">https://www.epa.gov/compliance-and-fuel-economy-data/epa-heavy-duty-vehicle-and-engine-greenhouse-gas-emissions</a>.
---------------------------------------------------------------------------

As described in Section III.B of this preamble, we are also
proposing updates to the advanced technology incentives in the ABT
program for HD GHG Phase 2 for electric vehicles. Given the ZEV-related
factors outlined in this section and further described in Sections I
and II that have arisen since the adoption of HD GHG Phase 2, EPA
believes it is appropriate to limit the availability of credit
multipliers, but we also recognize the role these credits play in
developing new markets. We are proposing in this action to eliminate
the advanced technology vehicle credit multipliers for BEVs and PHEVs
for MY 2027, one year before these credit multipliers were set to end
under the existing HD GHG Phase 2 program. We propose retaining the
existing FCEV credit multipliers, because the HD market for this
technology continues to be in the early stage of development. We
request comment on this approach. In addition to this preamble, we have
also prepared a Draft Regulatory Impact Analysis (DRIA) which is
available on our website and in the public docket for this rulemaking.
The DRIA provides additional data, analysis, and discussion. We request
comment on the analysis and data in the DRIA.

D. Impacts of the Proposed Standards

Our estimated emission reductions, average per-vehicle costs,
program costs, and monetized benefits of the proposed program are
summarized in this section and detailed in Sections IV through VIII of
the preamble and Chapters 3 through 8 of the DRIA. EPA notes that,
consistent with CAA section 202, in

[[Page 25935]]

evaluating potential GHG standards, we carefully weigh the statutory
factors, including GHG emissions impacts of the GHG standards, and the
feasibility of the standards (including cost of compliance in light of
available lead time). We monetize benefits of the proposed GHG
standards and evaluate other costs in part to better enable a
comparison of costs and benefits pursuant to E.O. 12866, but we
recognize that there are benefits that we are currently unable to fully
quantify. EPA's consistent practice has been to set standards to
achieve improved air quality consistent with CAA section 202, and not
to rely on cost-benefit calculations, with their uncertainties and
limitations, in identifying the appropriate standards. Nonetheless, our
conclusion that the estimated benefits considerably exceed the
estimated costs of the proposed program reinforces our view that the
proposed GHG standards represent an appropriate weighing of the
statutory factors and other relevant considerations.
Our analysis of emissions impacts accounts for downstream
emissions, i.e., from emission processes such as engine combustion,
engine crankcase exhaust, vehicle evaporative emissions, and vehicle
refueling emissions. Vehicle technologies would also affect emissions
from upstream sources that occur during, for example, electricity
generation and the refining and distribution of fuel. This proposal's
analyses include emissions impacts from electrical generating units
(EGUs).\61\ We also account for refinery emission impacts on non-GHG
pollutants in these analyses.
---------------------------------------------------------------------------

\61\ We are continuing and are not reopening the existing
approach taken in both HD GHG Phase 1 and Phase 2, that compliance
with the vehicle exhaust CO<INF>2</INF> emission standards is based
on CO<INF>2</INF> emissions from the vehicle.
---------------------------------------------------------------------------

The proposed GHG standards would achieve significant reductions in
GHG emissions. As seen in Table ES-5, through 2055 the program would
result in significant downstream GHG emission reductions. In addition,
considering both downstream and EGU cumulative emissions from calendar
years 2027 through 2055, the proposed standards would achieve
approximately 1.8 billion metric tons in CO<INF>2</INF> emission
reductions (see Section V of the preamble and Chapter 4 of the DRIA for
more detail).\62\ As discussed in Section VI of this preamble, these
GHG emission reductions would make an important contribution to efforts
to limit climate change and its anticipated impacts. These GHG
reductions would benefit all U.S. residents, including populations such
as people of color, low-income populations, indigenous peoples, and/or
children that may be especially vulnerable to various forms of damages
associated with climate change. We project a cumulative increase from
calendar years 2027 through 2055 of approximately 0.4 billion metric
tons of CO<INF>2</INF> emissions from EGUs as a result of the increased
demand for electricity associated with the proposal, although those
projected impacts decrease over time because of projected changes in
the future power generation mix, including cleaner combustion
technologies and increases in renewables.\63\
---------------------------------------------------------------------------

\62\ As discussed in Section V, in this proposal we estimated
refinery emissions impacts only for non-GHG emissions. Were we to
estimate impacts on refinery GHG emissions, we expect that the
decrease in liquid fuel consumption associated with this rule would
lead to a reduction in those emissions, and that the total GHG
emissions reductions from this proposal (including downstream, EGU,
and refinery) would exceed 1.8 billion metric tons.
\63\ We expect IRA incentives, particularly sections 45X, 45Y,
and 48E of the Internal Revenue Code (i.e., Title 26) added by
sections 13502 (Advanced Manufacturing Production Credit), 13701
(Clean Electricity Production Credit), and 13702 (Clean Electricity
Investment Credit), respectively, to contribute significantly to
increases in renewables in the future power generation mix.

Table ES-5--Cumulative Downstream GHG Impacts of the Proposal From
Calendar Years 2027 Through 2055 in Billion Metric Tons (BMT) \a\
------------------------------------------------------------------------
Reduction in Percent impact
Pollutant BMT (%)
------------------------------------------------------------------------
Carbon Dioxide (CO2).................... 2.2 -18
Methane (CH4)........................... 0.00035 -17
Nitrous Oxide (N2O)..................... 0.00028 -17
CO2 Equivalent (CO2e)................... 2.3 -18
------------------------------------------------------------------------
\a\ Downstream emissions processes are those that come directly from a
vehicle, such as tailpipe exhaust, crankcase exhaust, evaporative
emissions, and refueling emissions.

We expect the proposed GHG emission standards would lead to an
increase in HD ZEVs relative to our reference case without the proposed
rule, which would also result in reductions of vehicle emissions of
non-GHG pollutants that contribute to ambient concentrations of ozone,
particulate matter (PM<INF>2.5</INF>), NO<INF>2</INF>, CO, and air
toxics. Exposure to these non-GHG pollutants is linked to adverse human
health impacts such as premature death as well as other adverse public
health and environmental effects (see Section VI). As shown in Table
ES-6, by 2055, when considering downstream, EGU, and refinery
emissions, we estimate a net decrease in emissions from all pollutants
modeled (i.e., NO<INF>X</INF>, PM<INF>2.5</INF>, VOC, and
SO<INF>2</INF>). In this year alone, the proposed standards would
reduce downstream PM<INF>2.5</INF> by approximately 970 U.S. tons
(about 39 percent of heavy-duty sector downstream PM<INF>2.5</INF>
emissions) and downstream oxides of nitrogen (NO<INF>X</INF>) by over
70,000 U.S. tons (about 28 percent of heavy-duty sector downstream
NO<INF>X</INF> emissions) (see Section V of the preamble and Chapter 4
of the DRIA for more detail). These reductions in non-GHG emissions
from vehicles would reduce air pollution near roads. As described in
Section VI of this preamble, there is substantial evidence that people
who live or attend school near major roadways are more likely to be of
a non-White race, Hispanic ethnicity, and/or low socioeconomic status.
In addition, emissions from HD vehicles and engines can significantly
affect individuals living near truck freight routes. Based on a study
EPA conducted of people living near truck routes, an estimated 72
million people live within 200 meters of a truck freight route.\64\
Relative to the rest of the population, people of color and those with
lower incomes are more likely to live near truck routes.\65\ In
addition, children who attend school near major roads are
disproportionately

[[Page 25936]]

represented by children of color and children from low-income
households.\66\
---------------------------------------------------------------------------

\64\ U.S. EPA (2021). Estimation of Population Size and
Demographic Characteristics among People Living Near Truck Routes in
the Conterminous United States. Memorandum to the Docket EPA-HQ-OAR-
2019-0055.
\65\ See Section VI.D for additional discussion on our analysis
of environmental justice impacts of this NPRM.
\66\ Kingsley, S., Eliot, M., Carlson, L. et al. Proximity of
U.S. schools to major roadways: a nationwide assessment. J Expo Sci
Environ Epidemiol 24, 253-259 (2014). <a href="https://doi.org/10.1038/jes.2014.5">https://doi.org/10.1038/jes.2014.5</a>.
---------------------------------------------------------------------------

Similar to GHG emissions, we project that non-GHG emissions from
EGUs would increase as a result of the increased demand for electricity
associated with the proposal, and we expect those projected impacts to
decrease over time due to EGU regulations and changes in the future
power generation mix, including impacts of the IRA. We also project
that non-GHG emissions from refineries would decrease as a result of
the lower demand for liquid fuel associated with the proposed GHG
standards (Section V and DRIA Chapter 4).

Table ES-6--Projected Non-GHG Heavy-Duty Emission Impacts \a\ in Calendar Year 2055 Due to the Proposal
----------------------------------------------------------------------------------------------------------------
Downstream Net impact
Pollutant (U.S short EGU (U.S. Refinery (U.S. (U.S. short
tons) short tons) short tons) tons)
----------------------------------------------------------------------------------------------------------------
Nitrogen Oxides (NOX)........................... -71,000 790 -1,800 -72,000
Primary Exhaust PM2.5........................... -970 750 -440 -650
Volatile Organic Compounds (VOC)................ -21,000 750 -1200 -21,000
Sulfur Dioxide (SO2)............................ -520 910 -640 -250
----------------------------------------------------------------------------------------------------------------
\a\ We present emissions reductions as negative numbers and emission increases as positive numbers.

We estimate that the present value, at 3 percent, of costs to
manufacturers would be $9 billion dollars before considering the IRA
battery tax credits. With those battery tax credits, which we estimate
to be $3.3 billion, the cost to manufacturers of compliance with the
program would be $5.7 billion. The manufacturer cost of compliance with
the proposed rule on a per-vehicle basis are shown in Table ES-7. We
estimate that the MY 2032 fleet average per-vehicle cost to
manufacturers by regulatory group would range between a cost savings
for LHD vocational vehicles to $2,300 for HHD vocational vehicles and
between $8,000 and $11,400 per tractor. EPA notes the projected costs
per vehicle for this proposal are similar to the fleet average per-
vehicle costs projected for the HD GHG Phase 2 rule, where the tractor
standards were projected to cost between $10,200 and $13,700 per
vehicle (81 FR 73621 (October 25, 2016)) and the MY 2027 vocational
vehicle standards were projected to cost between $1,486 and $5,670 per
vehicle (81 FR 73718 (October 25, 2016)). For this proposal, EPA finds
that the expected the additional vehicle costs are reasonable in light
of the GHG emissions reductions.\67\
---------------------------------------------------------------------------

\67\ For illustrative purposes, these average costs would
represent an approximate two percent increase for vocational
vehicles and 11 percent increase of tractors if we assume an
approximate minimum vehicle price of $100,000 for vocational
vehicles and $100,000 for tractors (81 FR 73482). We also note that
these average upfront costs are taken across the HD vehicle fleet
and are not meant as an indicator of average price increase.

Table ES-7--Manufacturer Costs To Meet the Proposed MY 2032 Standards Relative to the Reference Case
[2021$]
----------------------------------------------------------------------------------------------------------------
Incremental
ZEV adoption Per-ZEV Fleet-average
Regulatory group rate in manufacturer per-vehicle
technology RPE on manufacturer
package (%) average RPE
----------------------------------------------------------------------------------------------------------------
Light Heavy-Duty Vocational..................................... 45 -$9,515 -$4,326
Medium Heavy-Duty Vocational.................................... 24 1,358 326
Heavy Heavy-Duty Vocational..................................... 28 8,146 2,300
Day Cab Tractors................................................ 30 26,364 8,013
Sleeper Cab Tractors............................................ 21 54,712 11,445
----------------------------------------------------------------------------------------------------------------

The proposed GHG standards would reduce adverse impacts associated
with climate change and exposure to non-GHG pollutants and thus would
yield significant benefits, including those we can monetize and those
we are unable to quantify. Table ES-8 summarizes EPA's estimates of
total monetized discounted costs, operational savings, and benefits.
The results presented here project the monetized environmental and
economic impacts associated with the proposed program during each
calendar year through 2055. EPA estimates that the present value of
monetized net benefits to society would be approximately $320 billion
through the year 2055 (annualized net benefits of $17 billion through
2055), more than 5 times the cost in vehicle technology and associated
electric vehicle supply equipment (EVSE) combined. Regarding social
costs, EPA estimates that the cost of vehicle technology (not including
the vehicle or battery tax credits) and EVSE would be approximately $9
billion and $47 billion respectively, and that the HD industry would
save approximately $250 billion in operating costs (e.g., savings that
come from less liquid fuel used, lower maintenance and repair costs for
ZEV technologies as compared to ICE technologies, etc.). The program
would result in significant social benefits including $87 billion in
climate benefits (with the average SC-GHGs at a 3 percent discount
rate). Between $15 and $29 billion of the estimated total benefits
through 2055 are attributable to reduced emissions of non-GHG
pollutants, primarily those that contribute to ambient concentrations
of

[[Page 25937]]

PM<INF>2.5</INF>. Finally, the benefits due to reductions in energy
security externalities caused by U.S. petroleum consumption and imports
would be approximately $12 billion under the proposed program. A more
detailed description and breakdown of these benefits can be found in
Section VIII of the preamble and Chapter 7 of the DRIA.

Table ES-8--Monetized Discounted Costs, Benefits, and Net Benefits of the Proposed Program for Calendar Years
2027 Through 2055
[Billions of 2021 dollars] \a\ \b\ \c\ \d\ \e\
----------------------------------------------------------------------------------------------------------------
Present value Annualized value
---------------------------------------------------------------
3% Discount 7% Discount 3% Discount 7% Discount
rate rate rate rate
----------------------------------------------------------------------------------------------------------------
Vehicle Technology Costs........................ $9 $10 $0.47 $0.82
EVSE Costs...................................... 47 29 2.5 2.3
Operational Savings............................. 250 120 13 10
Energy Security Benefits........................ 12 6.0 0.62 0.49
GHG Benefits.................................... 87 87 4.6 4.6
Non-GHG Benefits................................ 15 to 29 5.8 to 11 0.78 to 1.5 0.47 to 0.91
Net Benefits.................................... 320 180 17 12
----------------------------------------------------------------------------------------------------------------
Notes:
\a\ Values rounded to two significant figures; totals may not sum due to rounding. Present and annualized values
are based on the stream of annual calendar year costs and benefits included in the analysis (2027-2055) and
discounted back to year 2027.
\b\ Climate benefits are based on reductions in CO2, CH4, and N2O emissions and are calculated using four
different estimates of the social cost of each GHG (SC-GHG model average at 2.5%, 3%, and 5% discount rates;
95th percentile at 3% discount rate), which each increase over time. In this table, we show the benefits
associated with the average SC-GHGs at a 3% discount rate, but the Agency does not have a single central SC-
GHG point estimate. We emphasize the importance and value of considering the benefits calculated using all
four SC-GHG estimates and present them later in this preamble. As discussed in Chapter 7 of the DRIA, a
consideration of climate benefits calculated using discount rates below 3 percent, including 2 percent and
lower, is also warranted when discounting intergenerational impacts. We note that in this proposal we are
using the SC-GHG estimates presented in the February 2021 Technical Support Document (TSD): Social Cost of
Carbon, Methane, and Nitrous Oxide Interim Estimates under E.O. 13990 (IWG 2021). For further discussion of SC-
GHG and how EPA accounted for these estimates, please refer to Section VII of this preamble.
\c\ The same discount rate used to discount the value of damages from future GHG emissions in this table (SC-
GHGs at 3% discount rate) is used to calculate the present and annualized values of climate benefits for
internal consistency, while all other costs and benefits are discounted at either 3% or 7%.
\d\ Non-GHG health benefits are presented based on two different long-term exposure studies of mortality risk: a
Medicare study (Wu et al., 2020) and a National Health Interview Survey study (Pope III et al., 2019). Non-GHG
impacts associated with the standards presented here do not include the full complement of health and
environmental effects that, if quantified and monetized, would increase the total monetized benefits. Instead,
the non-GHG benefits are based on benefit-per-ton values that reflect only human health impacts associated
with reductions in PM2.5 exposure.
\e\ Net benefits reflect the operational savings plus benefits minus costs. For presentational clarity, the
present and equivalent annualized value of net benefits for a 3 percent discount rate reflect benefits based
on the Pope III et al. study while the present and equivalent annualized value of net benefits for a 7 percent
discount rate reflect benefits based on the Wu et al. study.

Regarding the costs to purchasers as shown in Table ES-9, for the
proposed program we estimated the average upfront incremental cost to
purchase a new MY 2032 HD BEV or FCEV relative to an ICE vehicle for a
vocational BEV and EVSE, a short-haul tractor BEV and EVSE, a short-
haul tractor FCEV, and a long-haul tractor FCEV. These incremental
costs account for the IRA tax credits, specifically battery and vehicle
tax credits, as discussed in Section II.E.4 and Section IV.C and IV.D.
We also estimated the operational savings each year (i.e., savings that
come from the lower costs to operate, maintain, and repair BEV
technologies) and payback period (i.e., the year the initial cost
increase would pay back). Table ES-9 shows that for the vocational
vehicle ZEVs, short-haul tractor ZEVs, and long-haul tractor FCEVs the
incremental upfront costs (after the tax credits) are recovered through
operational savings such that pay back occurs after between one and
three years on average for vocational vehicles, after three years for
short-haul tractors and after seven years on average for long-haul
tractors. We discuss this in more detail in Sections II and IV of this
preamble and DRIA Chapters 2 and 3.

Table ES-9--MY 2032 Estimated Average Per-Vehicle Purchaser Upfront Cost and Annual Savings Difference Between
BEV/FCEV and ICE Technologies for the Proposed Program
[2021 dollars] \a\
----------------------------------------------------------------------------------------------------------------
Upfront Annual
vehicle cost Upfront EVSE Total upfront incremental Payback period
Regulatory group difference costs on costs on operating (year) on
(including tax average average costs on average
credits) average
----------------------------------------------------------------------------------------------------------------
LHD Vocational.................. -$9,608 $10,552 $944 -$4,043 1
MHD Vocational.................. -2,907 14,312 11,405 -5,397 3
HHD Vocational.................. -8,528 17,233 8,705 -7,436 2
Short Haul (Day Cab) Tractors... 582 16,753 17,335 -6,791 3
Long Haul (Sleeper Cab) Tractors 14,712 0 14,712 -2,290 7
----------------------------------------------------------------------------------------------------------------
\a\ Undiscounted dollars.

[[Page 25938]]

I. Introduction

A. Brief Overview of the Heavy-Duty Industry

Heavy-duty highway vehicles range from commercial pickup trucks to
vocational vehicles that support local and regional transportation,
construction, refuse collection, and delivery work, to line-haul
tractors (semi trucks) that move freight cross-country. This diverse
array of vehicles is categorized into weight classes based on gross
vehicle weight ratings (GVWR). These weight classes span Class 2b
pickup trucks and vans from 8,500 to 10,000 pounds GVWR through Class 8
line-haul tractors and other commercial vehicles that exceed 33,000
pounds GVWR. While Class 2b and 3 complete pickups and vans are not
included in this proposed rulemaking, Class 2b and 3 vocational
vehicles are included in this rulemaking (as discussed further in
Section III.E.3).\68\
---------------------------------------------------------------------------

\68\ Class 2b and 3 vehicles with GVWR between 8,500 and 14,000
pounds are primarily commercial pickup trucks and vans and are
sometimes referred to as ``medium-duty vehicles''. The vast majority
of Class 2b and 3 vehicles are chassis-certified vehicles, and we
intend to include those vehicles in a combined light-duty and
medium-duty rulemaking action, consistent with E.O. 14037, Section
2a. Heavy-duty engines and vehicles are also used in nonroad
applications, such as construction equipment; nonroad heavy-duty
engines, equipment, and vehicles are not within the scope of this
NPRM.
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Heavy-duty highway vehicles are powered through an array of
different means. Currently, the HD vehicle fleet is primarily powered
by diesel-fueled, compression-ignition (CI) engines. However, gasoline-
fueled, spark-ignition (SI) engines are common in the lighter weight
classes, and smaller numbers of alternative fuel engines (e.g.,
liquified petroleum gas, compressed natural gas) are found in the
heavy-duty fleet. We refer to the vehicles powered by internal
combustion engines (ICE, including SI and CI engines) as ICE vehicles
throughout this preamble. An increasing number of HD vehicles are
powered by zero emission vehicle (ZEV) technologies such as battery
electric vehicle (BEV) technology, e.g., EPA certified 380 HD BEVs in
MY 2020 but that number jumped to 1,163 HD BEVs in MY 2021. We use the
term ZEV technologies throughout the preamble to refer to technologies
that result in zero tailpipe emissions, which in this preamble we refer
to collectively as ZEVs. Example ZEV technologies include BEVs and fuel
cell vehicles (FCEVs). While hybrid vehicles (including plug-in hybrid
electric vehicles) include energy storage features such as batteries,
they also include an ICE, which do not result in zero tailpipe
emissions.
The industry that designs and manufactures HD vehicles is composed
of three primary segments: vehicle manufacturers, engine manufacturers
and other major component manufacturers, and secondary manufacturers
(i.e., body builders). Some vehicle manufacturers are vertically
integrated--designing, developing, and testing their engines in-house
for use in their vehicles; others purchase some or all of their engines
from independent engine suppliers. At the time of this proposal, only
one major independent engine manufacturer supports the HD industry,
though some vehicle manufacturers sell their engines or ``incomplete
vehicles'' (i.e., chassis that include their engines, the frame, and a
transmission) to body builders who design and assemble the final
vehicle. Each of these subindustries is often supported by common
suppliers for subsystems such as transmissions, axles, engine controls,
and emission controls.
In addition to the manufacturers and suppliers responsible for
producing HD vehicles, an extended network of dealerships, repair and
service facilities, and rebuilding facilities contribute to the sale,
maintenance, and extended life of these vehicles and engines. HD
vehicle dealerships offer customers a place to order such vehicles from
a specific manufacturer and often include service facilities for those
vehicles and their engines. Dealership service technicians are
generally trained to perform regular maintenance and make repairs,
which generally include repairs under warranty and in response to
manufacturer recalls. Some trucking fleets, businesses, and large
municipalities hire their own technicians to service their vehicles in
their own facilities. Many refueling centers along major trucking
routes have also expanded their facilities to include roadside
assistance and service stations to diagnose and repair common problems.
The end-users for HD vehicles are as diverse as the applications
for which these vehicles are purchased. Smaller weight class HD
vehicles are commonly purchased by delivery services, contractors, and
municipalities. The middle weight class vehicles tend to be used as
commercial vehicles for business purposes and municipal work that
transport people and goods locally and regionally or provide services
such as utilities. Vehicles in the heaviest weight classes are
generally purchased by businesses with high load demands, such as
construction, towing or refuse collection, or freight delivery fleets
and owner-operators for regional and long-haul goods movement. The
competitive nature of the businesses and owner-operators that purchase
and operate HD vehicles means that any time at which the vehicle is
unable to operate due to maintenance or repair (i.e., downtime) can
lead to a loss in income. The customers' need for reliability drives
much of the vehicle manufacturers innovation and research efforts.

B. History of Greenhouse Gas Emission Standards for Heavy-Duty Engines
and Vehicles

EPA has a longstanding practice of regulating GHG emissions from
the HD sector. In 2009, EPA and the U.S. Department of Transportation's
(DOT's) National Highway Traffic Safety Administration (NHTSA) began
working on a joint regulatory program to reduce GHG emissions and fuel
consumption from HD vehicles and engines.\69\ The first phase of the HD
GHG and fuel efficiency program was finalized in 2011 (76 FR 57106,
September 15, 2011) (``HD GHG Phase 1'').\70\ The HD GHG Phase 1
program largely adopted approaches consistent with recommendations from
the National Academy of Sciences. The HD GHG Phase 1 program, which
began in MY 2014 and phased in through MY 2018, included separate
standards for HD vehicles and HD engines. The program offered
flexibility allowing manufacturers to attain these standards through a
mix of technologies and the option to participate in an emissions
credit ABT program.
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\69\ Greenhouse gas emissions from heavy-duty vehicles are
primarily carbon dioxide (CO<INF>2</INF>), but also include methane
(CH<INF>4</INF>), nitrous oxide (N<INF>2</INF>O), and
hydrofluorocarbons (HFC).
\70\ National Research Council; Transportation Research Board.
The National Academies' Committee to Assess Fuel Economy
Technologies for Medium- and Heavy-Duty Vehicles; ``Technologies and
Approaches to Reducing the Fuel Consumption of Medium- and Heavy-
Duty Vehicles.'' 2010. Available online: <a href="https://www.nap.edu/catalog/12845/technologies-and-approaches-to-reducing-the-fuel-consumption-of-medium-and-heavy-duty-vehicles">https://www.nap.edu/catalog/12845/technologies-and-approaches-to-reducing-the-fuel-consumption-of-medium-and-heavy-duty-vehicles</a>.
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In 2016, EPA and NHTSA finalized the HD GHG Phase 2 program.\71\
The HD GHG Phase 2 program included technology-advancing, performance-
based emission standards for HD vehicles and HD engines that phase in
over the long term, with initial standards for most vehicles and
engines commencing in MY 2021, increasing in stringency in MY 2024, and
culminating in even more stringent MY 2027 standards. HD GHG Phase 2
built upon the Phase 1 program and set standards

[[Page 25939]]

based not only on then-currently available technologies, but also on
technologies that were either still under development or not yet widely
deployed at the time of the HD GHG Phase 2 final rule. To ensure
adequate time for technology development, HD GHG Phase 2 provided up to
10 years lead time to allow for the development and phase-in of these
control technologies. EPA recently finalized technical amendments to
the HD GHG Phase 2 rulemaking (``HD Technical Amendments'') that
included changes to the test procedures for heavy-duty engines and
vehicles to improve accuracy and reduce testing burden.\72\
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\71\ 81 FR 73478, October 25, 2016.
\72\ 86 FR 34308, June 29, 2021.
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As with the previous HD GHG Phase 1 and Phase 2 rules and light-
duty GHG rules, EPA has coordinated with the DOT and NHTSA during the
development of this proposed rule. This included coordination prior to
and during the interagency review conducted under E.O. 12866. EPA has
also consulted with CARB during the development of this proposal, as
EPA also did during the development of the HD GHG Phase 1 and 2 and
light-duty rules. See Section I.E for additional detail on EPA's
coordination with DOT/NHTSA, CARB, and additional Federal Agencies.

C. What has changed since we finalized the HD GHG Phase 2 rule?

In 2016, we established the HD GHG Phase 2 CO<INF>2</INF> standards
on the premise that zero-emission technologies would not be available
and cost-competitive in significant volumes in the timeframe of the HD
GHG Phase 2 program but would become more widely available in the HD
market over time. To encourage that availability at faster pace, we
finalized BEV, PHEV, and FCEV advanced technology credit multipliers
for HD vehicles. As described in the Executive Summary and Section II
of this preamble, we have considered new data and recent policy changes
and we are now projecting that ZEV technologies will be readily
available and technologically feasible much sooner than we had
projected. We list the developments pointing to this increased
application of ZEV technologies again in the following paragraphs (and
we discuss their impacts on the HD market in more detail in the
Sections I.C.1 through I.C.3):
First, the HD market has evolved such that early ZEV models are in
use today for some applications and are expected to expand to many more
applications, ZEV technologies costs have gone down and are projected
to continue to fall, and manufacturers have announced plans to rapidly
increase their investments in ZEV technologies over the next decade.
For example, in 2022, several manufacturers are producing fully
electric HD vehicles in several applications, and these applications
are expected to expand (see Section I.C.1 and DRIA Chapter 1).
Furthermore, several HD manufacturers have announced their ZEV
projections that signify a rapid increase in BEVs over the next decade.
This increase in HD ZEVs is in part due to the significant decrease in
cost to manufacture lithium-ion batteries, the single most expensive
component of a BEV, in the past decade; those costs are projected to
continue to fall during this decade, all while the performance of these
batteries in terms of energy density has improved and is projected to
continue to improve.73 74 Many of the manufacturers who
produce HD vehicles and firms that purchase HD vehicles have announced
billions of dollars' worth of investments in ZEV technologies and
significant plans to transition to a zero-carbon fleet over the next
ten to fifteen years.\75\
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\73\ Mulholland, Eamonn. ``Cost of electric commercial vans and
pickup trucks in the United States through 2040.'' Page 7. January
2022. Available at <a href="https://theicct.org/wp-content/uploads/2022/01/cost-ev-vans-pickups-us-2040-jan22.pdf">https://theicct.org/wp-content/uploads/2022/01/cost-ev-vans-pickups-us-2040-jan22.pdf</a>.
\74\ Environmental Defense Fund. ``Technical Review of Medium-
and Heavy-Duty Electrification Costs for 2027-2030.'' February 2,
2022. Available online at: <a href="https://blogs.edf.org/climate411/files/2022/02/EDF-MDHD-Electrification-v1.6_20220209.pdf">https://blogs.edf.org/climate411/files/2022/02/EDF-MDHD-Electrification-v1.6_20220209.pdf</a>.
\75\ Environmental Defense Fund (2022) Electric Vehicle Market
Update: Manufacturer Commitments and Public Policy Initiatives
Supporting Electric Mobility in the U.S. and Worldwide, September
2022, available online at: <a href="https://blogs.edf.org/climate411/files/2022/09/ERM-EDF-Electric-Vehicle-Market-Report_September2022.pdf">https://blogs.edf.org/climate411/files/2022/09/ERM-EDF-Electric-Vehicle-Market-Report_September2022.pdf</a>.
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Second, the 2021 BIL and the 2022 IRA laws have been enacted, and
together these two laws provide significant and unprecedented monetary
incentives for the production and purchase of ZEVs in the HD market, as
well as incentives for electric vehicle charging and hydrogen, which
will further support a rapid increase in market penetration of ZEVs.
Third, there have been multiple actions by states to accelerate the
adoption of HD ZEVs. The State of California and other states have
adopted the ACT program that includes a manufacturer requirement for
zero-emission truck sales.76 77 The ACT program provides
that ``manufacturers who certify Class 2b-8 chassis or complete
vehicles with combustion engines would be required to sell zero-
emission trucks as an increasing percentage of their annual [state]
sales from 2024 to 2035.'' 78 79 In addition, 17 states and
the District of Columbia have signed a Memorandum of Understanding
establishing goals to support widespread electrification of the HD
vehicle market.\80\
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\76\ California Air Resources Board, Final Regulation Order--
Advanced Clean Trucks Regulation. Filed March 15, 2021. Available
at: <a href="https://ww2.arb.ca.gov/sites/default/files/barcu/regact/2019/act2019/fro2.pdf">https://ww2.arb.ca.gov/sites/default/files/barcu/regact/2019/act2019/fro2.pdf</a>.
\77\ Oregon adopted ACT on 11/17/2021: <a href="https://www.oregon.gov/deq/rulemaking/Pages/ctr2021.aspx">https://www.oregon.gov/deq/rulemaking/Pages/ctr2021.aspx</a>. Washington adopted ACT on 11/29/
2021: <a href="https://ecology.wa.gov/Regulations-Permits/Laws-rules-rulemaking/Rulemaking/WAC-173-423-400">https://ecology.wa.gov/Regulations-Permits/Laws-rules-rulemaking/Rulemaking/WAC-173-423-400</a>. New York adopted ACT on 12/
29/2021: <a href="https://www.dec.ny.gov/regulations/26402.html">https://www.dec.ny.gov/regulations/26402.html</a>. New Jersey
adopted ACT on 12/20/2021: <a href="https://www.nj.gov/dep/rules/adoptions.html">https://www.nj.gov/dep/rules/adoptions.html</a>. Massachusetts adopted ACT on 12/30/2021: <a href="https://www.mass.gov/regulations/310-CMR-700-air-pollution-control#proposed-amendments-public-comment">https://www.mass.gov/regulations/310-CMR-700-air-pollution-control#proposed-amendments-public-comment</a>.
\78\ California Air Resources Board, Advanced Clean Trucks Fact
Sheet (August 20, 2021), available at <a href="https://ww2.arb.ca.gov/resources/fact-sheets/advanced-clean-trucks-fact-sheet">https://ww2.arb.ca.gov/resources/fact-sheets/advanced-clean-trucks-fact-sheet</a>. See also
California Air Resources Board, Final Regulation Order--Advanced
Clean Trucks Regulation. Filed March 15, 2021. Available at: <a href="https://ww2.arb.ca.gov/sites/default/files/barcu/regact/2019/act2019/fro2.pdf">https://ww2.arb.ca.gov/sites/default/files/barcu/regact/2019/act2019/fro2.pdf</a>.
\79\ EPA granted the ACT rule waiver requested by California
under CAA section 209(b) on March 30, 2023.
\80\ Multi-State MOU, available at <a href="https://www.nescaum.org/documents/mhdv-zev-mou-20220329.pdf/">https://www.nescaum.org/documents/mhdv-zev-mou-20220329.pdf/</a>.
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We note that the improvements in internal combustion engine
technologies that began under the HD GHG Phase 1 program and are being
advanced under the HD GHG Phase 2 standards are still necessary for
reducing GHG emissions from the HD sector. As we discuss in Section
II.D.1, these technology improvements exist today and we believe they
will continue to be feasible during the timeframe at issue in this
proposed rulemaking.
1. The HD Zero-Emission Vehicle Market
Since 2012, manufacturers have developed a number of prototype and
demonstration HD BEV projects, particularly in the State of California,
establishing technological feasibility and durability of BEV technology
for specific applications used for specific services, as well as
building out necessary infrastructure.\81\ In 2019, approximately 60
makes and models of HD BEVs were available for purchase, with
additional product lines in prototype or other early development
stages.82 83 84 According to the Global

[[Page 25940]]

Commercial Vehicle Drive to Zero Zero-Emission Technology Inventory
(ZETI), 160 BEV models were commercially available on the market in the
United States and Canada region in 2021, and around 200 BEV models are
projected to be available by 2024.\85\ DRIA Chapter 1 provides a
snapshot of BEV models in the HD vehicle market.
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\81\ NACFE (2019) ``Guidance Report: Viable Class \7/8\
Electric, Hybrid and Alternative Fuel Tractors'', available online
at: <a href="https://nacfe.org/downloads/viable-class-7-8-alternative-vehicles/">https://nacfe.org/downloads/viable-class-7-8-alternative-vehicles/</a>.
\82\ Nadel, S. and Junga, E. (2020). ``Electrifying Trucks: From
Delivery Vans to Buses to 18-Wheelers.'' American Council for an
Energy-Efficient Economy White Paper, available at: <a href="https://aceee.org/white-paper/electrifying-trucks-delivery-vans-buses-18">https://aceee.org/white-paper/electrifying-trucks-delivery-vans-buses-18</a>.
\83\ The composition of all-electric truck models was: 36 buses,
10 vocational trucks, 9 step vans, 3 tractors, 2 street sweepers,
and 1 refuse truck (Nadel and Junga (2020) citing AFDC (Alternative
Fuels Data Center). 2018. ``Average Annual Vehicle Miles Traveled by
Major Vehicle Categories.'' <a href="http://www.afdc.energy.gov/data/widgets/10309">www.afdc.energy.gov/data/widgets/10309</a>.
\84\ Note that there are varying estimates of BEV and FCEV
models in the market; NACFE (2019) ``Guidance Report: Viable Class
\7/8\ Electric, Hybrid and Alternative Fuel Tractors'', available
at: <a href="https://nacfe.org/downloads/viable-class-7-8-alternative-vehicles/">https://nacfe.org/downloads/viable-class-7-8-alternative-vehicles/</a>. (NACFE 2019) provided slightly lower estimates than those
included here from Nadel and Junga 2020. A recent NREL study
suggests that there may be more models available, but it is unclear
how many are no longer on the market since the inventory includes
vehicles introduced and used in commerce starting in 2012 (Smith et
al. 2019).
\85\ Global Commercial Vehicle Drive to Zero. ``ZETI Data
Explorer''. CALSTART. Version 1.1, accessed February 2023. Available
online: <a href="https://globaldrivetozero.org/tools/zeti-data-explorer/">https://globaldrivetozero.org/tools/zeti-data-explorer/</a>.
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Current production volumes of HD BEVs originally started increasing
in the transit bus market, where electric bus sales grew from 300 to
650 in the United States between 2018 to 2019.86 87 In 2020,
the market continued to expand beyond transit, with approximately 900
HD BEVs sold in the United States and Canada combined, consisting of
transit buses (54 percent), school buses (33 percent), and straight
trucks (13 percent).\88\ By 2021, M.J. Bradley's analysis of the HD BEV
market found that 30 manufacturers had at least one BEV model for sale
and an additional nine companies had made announcements to begin BEV
production by 2025.\89\ In April 2022, the Environmental Defense Fund
(EDF) projected deployments and major orders of electric trucks and
buses in the United States to rise to 54,000 by 2025 based on an
analysis of formal statements and announcements by auto manufacturers,
as well as analysis of the automotive press and data from financial and
market analysis firms that regularly cover the auto industry.\90\ Given
the dynamic nature of the BEV market, the number and types of vehicles
available are increasing fairly rapidly.\91\
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\86\ Tigue, K. (2019) ``U.S. Electric Bus Demand Outpaces
Production as Cities Add to Their Fleets'' Inside Climate News,
November 14. <a href="https://insideclimatenews.org/news/14112019/electric-bus-cost-savings-health-fuel-charging">https://insideclimatenews.org/news/14112019/electric-bus-cost-savings-health-fuel-charging</a>.
\87\ Note that ICCT (2020) estimates 440 electric buses were
sold in the U.S. and Canada in 2019, with 10 of those products being
FCEV pilots. The difference in estimates of number of electric buses
available in the U.S. may lie in different sources looking at
production vs. sales of units.
\88\ International Council on Clean Transportation. ``Fact
Sheet: Zero-Emission Bus and Truck Market in the United States and
Canada: A 2020 Update.'' Pages 3-4. May 2021.
\89\ M.J. Bradley and Associates (2021) ``Medium- and Heavy-Duty
Vehicles: Market Structure, Environmental Impact, and EV
Readiness.'' Page 21. July 2021.
\90\ Environmental Defense Fund. ``Electric Vehicle Market
Update: Manufacturer Commitments and Public Policy Initiatives
Supporting Electric Mobility in the U.S. and Worldwide''. April
2022. Available online: <a href="https://blogs.edf.org/climate411/files/2022/04/electric_vehicle_market_report_v6_april2022.pdf">https://blogs.edf.org/climate411/files/2022/04/electric_vehicle_market_report_v6_april2022.pdf</a>.
\91\ Union of Concerned Scientists (2019) ``Ready for Work: Now
Is the Time for Heavy-Duty Electric Vehicles,'' available at
<a href="http://www.ucsusa.org/resources/ready-work">www.ucsusa.org/resources/ready-work</a>.
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The current market for HD FCEVs is not as developed as the market
for HD BEVs, but models are being designed, tested, and readied for
purchase in the coming years. According to ZETI,\92\ at least 16 HD
FCEV models are expected to become commercially available for
production in the United States and Canada region by 2024, as listed in
DRIA Chapter 1. The Hydrogen Fuel Cell Partnership reports that fuel
cell electric buses have been in commercial development for 20 years
and, as of May 2020, over 100 buses are in operation or in planning in
the United States.\93\ Foothill Transit in Los Angeles County ordered
33 transit buses that they expect to be operating in early 2023.\94\
Ten Toyota-Kenworth Class 8 fuel cell tractors were successfully tested
in the Port of Los Angeles and surrounding area through 2022.\95\
Hyundai is scheduled to test 30 Class 8 tractors in the Port of Oakland
in 2023.\96\ Nikola has agreements with fleets to purchase or lease
over 200 Class 8 trucks upon satisfactory completion of demonstrations
97 98 99 and is building a manufacturing facility in
Coolidge, Arizona, with an expected production capacity of up to 20,000
BEV and FCEV trucks by the end of 2023.\100\
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\92\ Global Commercial Vehicle Drive to Zero. ``ZETI (Zero-
Emission Technology Inventory)''. CALSTART. Version 8.0, accessed
November 2022. Available online: <a href="https://globaldrivetozero.org/tools/zeti/">https://globaldrivetozero.org/tools/zeti/</a>.
\93\ Hydrogen Fuel Cell Partnership. ``Buses & Trucks''.
Available online: <a href="https://h2fcp.org/buses_trucks">https://h2fcp.org/buses_trucks</a>.
\94\ Scauzillo, Steve. ``First hydrogen-powered transit bus in
LA County hits streets in December, starting new trend''. San
Gabriel Valley Tribune. November 22, 2022. Available online: <a href="https://ourcommunitynow.com/post/first-hydrogen-powered-transit-bus-in-la-county-hits-streets-in-december-starting-new-trend">https://ourcommunitynow.com/post/first-hydrogen-powered-transit-bus-in-la-county-hits-streets-in-december-starting-new-trend</a>.
\95\ Heavy Duty Trucking. ``FCEV Drayage Trucks Prove Themselves
in LA Port Demonstration Project.'' HDT Truckinginfo. September 22,
2022. Available online: <a href="https://www.truckinginfo.com/10181655/fcev-drayage-trucks-prove-themselves-in-la-port-demonstration-project">https://www.truckinginfo.com/10181655/fcev-drayage-trucks-prove-themselves-in-la-port-demonstration-project</a>.
\96\ Hyundai. ``Hyundai Motors Details Plans to Expand into U.S.
Market with Hydrogen-powered XCIENT Fuel Cells at ACT Expo.'' May
10, 2022. Available online: <a href="https://www.hyundai.com/worldwide/en/company/newsroom/hyundai-motor-details-plans-to-expand-into-u.s.-market-with-hydrogen-powered-xcient-fuel-cells-at-act-expo-0000016825">https://www.hyundai.com/worldwide/en/company/newsroom/hyundai-motor-details-plans-to-expand-into-u.s.-market-with-hydrogen-powered-xcient-fuel-cells-at-act-expo-0000016825</a>.
\97\ Heavy Duty Trucking. ``Pennsylvania Flatbed Carrier to
Lease 100 Nikola Tre FCEVs.'' HDT Truckinginfo. October 14, 2021.
Available online: <a href="https://www.truckinginfo.com/10153974/pennsylvania-flatbed-carrier-to-lease-100-nikola-tre-evs">https://www.truckinginfo.com/10153974/pennsylvania-flatbed-carrier-to-lease-100-nikola-tre-evs</a>.
\98\ Green Car Congress. ``Covenant Logistics Group signs letter
of intent for 10 Nikola Tre BEVs and 40 Tre FCEVs.'' January 12,
2022. Available online: <a href="https://www.greencarcongress.com/2022/01/20220112-covenant.html">https://www.greencarcongress.com/2022/01/20220112-covenant.html</a>.
\99\ Adler, Alan. ``Plug Power will buy up to 75 Nikola fuel
cell trucks.'' Freightwaves. December 15, 2022. Available online;
<a href="https://www.freightwaves.com/news/plug-power-will-buy-up-to-75-nikola-fuel-cell-trucks">https://www.freightwaves.com/news/plug-power-will-buy-up-to-75-nikola-fuel-cell-trucks</a>.
\100\ Nikola. ``Nikola Corportation Celebrates the Customer
Launch of Serial Production in Coolidge, Arizona.'' April 27, 2022.
Available online: https://nikolamotor.com/press_releases/nikola-
corporation-celebrates-the-customer-launch-of-serial-production-in-
coolidge-arizona-
163#:~:text=Phase%201%20of%20the%20Coolidge,per%20year%20on%20two%20s
hifts.
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For this proposed rulemaking, EPA conducted an analysis of
manufacturer-supplied end-of-year production reports provided to us as
a requirement of the process to certify HD vehicles to our GHG emission
standards.\101\ Based on the end-of-year production reports for MY
2019, manufacturers produced approximately 350 certified HD BEVs. This
is out of nearly 615,000 HD diesel ICE vehicles produced in MY 2019 and
represents approximately 0.06 percent of the HD vehicles market. In MY
2020, 380 HD BEVs were certified, an increase of 30 BEVs from 2019. The
BEVs were certified in a variety of the Phase 1 vehicle subcategories,
including light, medium, and heavy heavy-duty vocational vehicles and
vocational tractors. Out of the 380 HD BEVs certified in MY 2020, a
total of 177 unique makes and models were available for purchase by 52
manufacturers in Classes 3-8. In MY 2021, EPA certified 1,163 heavy-
duty BEVs, representing 0.2 percent of the HD vehicles. There were no
HD FCEVs certified through MY 2021. We note that these HD BEV
certifications preceded implementation of incentives in the 2022 IRA,
which we expect to increase adoption (and certification) of BEV and
FCEV technology in the heavy-duty sector.
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\101\ Memo to Docket. Heavy-Duty Greenhouse Gas Emissions
Certification Data. March 2023. Docket EPA-HQ-OAR-2022-0985.
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Based on current trends, manufacturer announcements, the 2021 BIL
and 2022 IRA, and state-level actions, electrification of the HD market
is

[[Page 25941]]

expected to substantially increase over the next decade from current
levels. The projected rate of growth in electrification of the HD
vehicle sector currently varies widely. After passage of the IRA, EDF's
September 2022 report update projected deployments and major orders of
electric trucks and buses to rise to 166,000 by the end of 2022.\102\
ERM updated an analysis for EDF that projected five scenarios that span
a range of between 13 and 48 percent Class 4-8 ZEV sales in 2029, with
an average of 29 percent.\103\ The International Council for Clean
Transportation (ICCT) and Energy Innovation conducted an analysis of
the impact of the IRA on electric vehicle uptake, projecting between 39
and 48 percent Class 4-8 ZEV sales in 2030 across three scenarios and
between 47 and 56 percent in 2035.\104\
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\102\ Environmental Defense Fund. ``Electric Vehicle Market
Update: Manufacturer Commitments and Public Policy Initiatives
Supporting Electric Mobility in the U.S. and Worldwide''. September
2022. Available online: <a href="https://blogs.edf.org/climate411/files/2022/09/ERM-EDF-Electric-Vehicle-Market-Report_September2022.pdf">https://blogs.edf.org/climate411/files/2022/09/ERM-EDF-Electric-Vehicle-Market-Report_September2022.pdf</a>.
\103\ Robo, Ellen and Dave Seamonds. Technical Memo to
Environmental Defense Fund: Investment Reduction Act Supplemental
Assessment: Analysis of Alternative Medium- and Heavy-Duty Zero-
Emission Vehicle Business-As-Usual Scenarios. ERM. August 19, 2022.
Available online: <a href="https://www.erm.com/contentassets/154d08e0d0674752925cd82c66b3e2b1/edf-zev-baseline-technical-memo-addendum.pdf">https://www.erm.com/contentassets/154d08e0d0674752925cd82c66b3e2b1/edf-zev-baseline-technical-memo-addendum.pdf</a>.
\104\ ICCT and Energy Innovation. ``Analyzing the Impact of the
Inflation Reduction Act on Electric Vehicle Uptake in the United
States''. January 2023. Available online: <a href="https://theicct.org/wp-content/uploads/2023/01/ira-impact-evs-us-jan23-2.pdf">https://theicct.org/wp-content/uploads/2023/01/ira-impact-evs-us-jan23-2.pdf</a>.
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One of the most important factors influencing the extent to which
BEVs are available for purchase and able to enter the market is the
cost of lithium-ion batteries, the single most expensive component of a
BEV. According to Bloomberg New Energy Finance, average lithium-ion
battery costs have decreased by more than 85 percent since 2010,
primarily due to global investments in battery production and ongoing
improvements in battery technology.\105\ A number of studies, including
the Sharpe and Basma meta-study of direct manufacturing costs from a
variety of papers, show that battery pack costs are projected to
continue to fall during this decade.106 107 108 Cost
reductions in battery packs for electric trucks are anticipated due to
continued improvement of cell and battery pack performance and
advancements in technology associated with energy density, materials
for cells, and battery packaging and integration.\109\
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\105\ Bloomberg. ``Battery Pack Prices Cited Below $100/kWh for
the First Time in 2020, While Market Average Sits at $137/kWh''.
Available online: <a href="https://about.bnef.com/blog/battery-pack-prices-cited-below-100-kwh-for-the-first-time-in-2020-while-market-average-sits-at-137-kwh/">https://about.bnef.com/blog/battery-pack-prices-cited-below-100-kwh-for-the-first-time-in-2020-while-market-average-sits-at-137-kwh/</a>.
\106\ Mulholland, Eamonn. ``Cost of electric commercial vans and
pickup trucks in the United States through 2040.'' Page 7. January
2022. Available at <a href="https://theicct.org/wp-content/uploads/2022/01/cost-ev-vans-pickups-us-2040-jan22.pdf">https://theicct.org/wp-content/uploads/2022/01/cost-ev-vans-pickups-us-2040-jan22.pdf</a>.
\107\ Environmental Defense Fund. ``Technical Review of Medium-
and Heavy-Duty Electrification Costs for 2027-2030.'' February 2,
2022. Available online: <a href="https://blogs.edf.org/climate411/files/2022/02/EDF-MDHD-Electrification-v1.6_20220209.pdf">https://blogs.edf.org/climate411/files/2022/02/EDF-MDHD-Electrification-v1.6_20220209.pdf</a>.
\108\ Sharpe, Ben and Hussein Basma. ``A meta-study of purchase
costs for zero-emission trucks''. The International Council on Clean
Transportation, Working Paper 2022-09 (February 2022). Available
online: <a href="https://theicct.org/wp-content/uploads/2022/02/purchase-cost-ze-trucks-feb22-1.pdf">https://theicct.org/wp-content/uploads/2022/02/purchase-cost-ze-trucks-feb22-1.pdf</a>.
\109\ Sharpe, Ben and Hussein Basma. ``A meta-study of purchase
costs for zero-emission trucks''. The International Council on Clean
Transportation. <a href="https://theicct.org/wp-content/uploads/2022/02/purchase-cost-ze-trucks-feb22-1.pdf">https://theicct.org/wp-content/uploads/2022/02/purchase-cost-ze-trucks-feb22-1.pdf</a>.
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Currently, the fuel cell stack is the most expensive component of a
HD FCEV, due primarily to the technological requirements of
manufacturing rather than raw material costs.\110\ Projected costs are
expected to decrease as manufacturing matures and materials
improve.\111\ Larger production volumes are anticipated as global
demand increases for fuel cell systems for HD vehicles, which would
improve economies of scale.\112\ Costs of the onboard hydrogen storage
tank, another component unique to a FCEV, are also projected to drop
due to lighter weight and lower cost carbon fiber-reinforced materials,
technology improvements, and economies of scale.\113\
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\110\ Deloitte China. ``Fueling the Future of Mobility: Hydrogen
and fuel cell solutions for transportation, Volume 1''. 2020.
Available online: <a href="https://www2.deloitte.com/content/dam/Deloitte/cn/Documents/finance/deloitte-cn-fueling-the-future-of-mobility-en-200101.pdf">https://www2.deloitte.com/content/dam/Deloitte/cn/Documents/finance/deloitte-cn-fueling-the-future-of-mobility-en-200101.pdf</a>.
\111\ Sharpe, Ben and Hussein Basma. ``A Meta-Study of Purchase
Costs for Zero-Emission Trucks''. The International Council on Clean
Transportation. February 2022. Available online: <a href="https://theicct.org/wp-content/uploads/2022/02/purchase-cost-ze-trucks-feb22-1.pdf">https://theicct.org/wp-content/uploads/2022/02/purchase-cost-ze-trucks-feb22-1.pdf</a>.
\112\ Deloitte China. ``Fueling the Future of Mobility: Hydrogen
and fuel cell solutions for transportation, Volume 1''. 2020.
Available online: <a href="https://www2.deloitte.com/content/dam/Deloitte/cn/Documents/finance/deloitte-cn-fueling-the-future-of-mobility-en-200101.pdf">https://www2.deloitte.com/content/dam/Deloitte/cn/Documents/finance/deloitte-cn-fueling-the-future-of-mobility-en-200101.pdf</a>.
\113\ Ibid.
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As the cost of components has come down, manufacturers have
increasingly announced their projections for zero-emission HD vehicles,
and these projections signify a rapid increase in BEVs and FCEVs over
the next decade. For example, Volvo Trucks and Scania announced a
global electrification target of 50 percent of trucks sold being
electric by 2030.\114\ Daimler Trucks North America has committed to
offering only what they refer to as ``carbon-neutral'' trucks in the
United States. by 2039 and expects that by 2030 as much as 60 percent
of its sales will be ZEVs.115 116 Navistar has a goal of
having 50 percent of its sales volume be ZEVs by 2030, and it has
committed to achieve 100 percent zero emissions by 2040.\117\ Cummins
targets net-zero carbon emissions by 2050.118 119
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\114\ Scania, `Scania's Electrification Roadmap,' Scania Group,
November 24, 2021, <a href="https://www.scania.com/group/en/home/newsroom/news/2021/Scanias-electrification-roadmap.html">https://www.scania.com/group/en/home/newsroom/news/2021/Scanias-electrification-roadmap.html</a>; AB Volvo, `Volvo
Trucks Launches Electric Truck with Longer Range,' Volvo Group,
January 14, 2022, <a href="https://www.volvogroup.com/en/news-and-media/news/2022/jan/news-4158927.html">https://www.volvogroup.com/en/news-and-media/news/2022/jan/news-4158927.html</a>.
\115\ David Cullen, `Daimler to Offer Carbon Neutral Trucks by
2039,' (October 25, 2019). <a href="https://www.truckinginfo.com/343243/daimler-aims-to-offer-only-co2-neutral-trucks-by-2039-in-key-markets">https://www.truckinginfo.com/343243/daimler-aims-to-offer-only-co2-neutral-trucks-by-2039-in-key-markets</a>.
\116\ Deborah Lockridge, `What Does Daimler Truck Spin-off Mean
for North America?,' Trucking Info (November 11, 2021). <a href="https://www.truckinginfo.com/10155922/what-does-daimler-truck-spin-off-mean-for-north-america">https://www.truckinginfo.com/10155922/what-does-daimler-truck-spin-off-mean-for-north-america</a>.
\117\ Navistar presentation at the Advanced Clean Transportation
(ACT) Expo, Long Beach, CA (May 9-11, 2022).
\118\ Cummins, Inc. ``Cummins Unveils New Environmental
Sustainability Strategy to Address Climate Change, Conserve Natural
Resources.'' November 14, 2019. Last accessed on September 10, 2021
at <a href="https://www.cummins.com/news/releases/2019/11/14/cummins-unveils-new-environmental-sustainability-strategy-address-climate">https://www.cummins.com/news/releases/2019/11/14/cummins-unveils-new-environmental-sustainability-strategy-address-climate</a>.
\119\ Environmental Defense Fund (2022) September 2022 Electric
Vehicle Market Update: Manufacturer Commitments and Public Policy
Initiatives Supporting Electric Mobility in the U.S. and Worldwide,
available online at: <a href="https://blogs.edf.org/climate411/files/2022/09/ERM-EDF-Electric-Vehicle-Market-Report_September2022.pdf">https://blogs.edf.org/climate411/files/2022/09/ERM-EDF-Electric-Vehicle-Market-Report_September2022.pdf</a>.
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On a parallel path, large private HD fleet owners are also
increasingly committing to expanding their electric fleets.\120\ A
report by the International Energy Agency (IEA) provides a
comprehensive accounting of recent announcements made by UPS, FedEx,
DHL, Walmart, Anheuser-Busch, Amazon, and PepsiCo for fleet
electrification.\121\ Amazon and UPS, for example, placed orders in
2020 for 10,000 BEV delivery vans from EV start-ups Rivian and Arrival,
respectively, and Amazon has plans to scale up to 100,000 BEV vans by
2030.122 123

[[Page 25942]]

Likewise, in December 2022, PepsiCo added the first of 100 planned
Tesla Semis to its fleet.\124\ These announcements include not only
orders for electric delivery vans and semi-trucks, but more specific
targets and dates to full electrification or net-zero emissions.
Amazon, FedEx, DHL, and Walmart have set a commitment to fleet
electrification and/or achieving net-zero emissions by
2040.125 126 127 128 We recognize that certain delivery vans
will likely fall into the Class 2b and 3 regulatory category, the vast
majority of which are not covered in this rule's proposed updates; we
intend to address this category in a separate light and medium-duty
vehicle rulemaking.\129\
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\120\ Environmental Defense Fund (2021) EDF analysis finds
American fleets are embracing electric trucks. July 28, 2021.
Available online at: <a href="https://blogs.edf.org/energyexchange/2021/07/28/edf-analysis-finds-american-fleets-are-embracing-electric-trucks/">https://blogs.edf.org/energyexchange/2021/07/28/edf-analysis-finds-american-fleets-are-embracing-electric-trucks/</a>
.
\121\ International Energy Association. Global EV Outlook 2021.
April 2021. Available online at: <a href="https://iea.blob.core.windows.net/assets/ed5f4484-f556-4110-8c5c-4ede8bcba637/GlobalEVOutlook2021.pdf">https://iea.blob.core.windows.net/assets/ed5f4484-f556-4110-8c5c-4ede8bcba637/GlobalEVOutlook2021.pdf</a>.
\122\ Amazon, Inc. ``Introducing Amazon's first custom electric
delivery vehicle.'' October 8, 2020. Last accessed on October 18,
2022 at <a href="https://www.aboutamazon.com/news/transportation/introducing-amazons-first-custom-electric-delivery-vehicle">https://www.aboutamazon.com/news/transportation/introducing-amazons-first-custom-electric-delivery-vehicle</a>.
\123\ Arrival Ltd. ``UPS invests in Arrival and orders 10,000
Generation 2 Electric Vehicles.'' April 24, 2020. Last accessed on
October 18, 2022 at <a href="https://arrival.com/us/en/news/ups-invests-in-arrival-and-orders-10000-generation-2-electric-vehicles">https://arrival.com/us/en/news/ups-invests-in-arrival-and-orders-10000-generation-2-electric-vehicles</a>.
\124\ Akash Sriram. ``Musk delivers first Tesla truck, but no
update on output, pricing.'' Reuters. December 2, 2022. Last
accessed on January 4, 2023 at <a href="https://www.reuters.com/business/autos-transportation/musk-delivers-first-tesla-semi-trucks-2022-12-02/">https://www.reuters.com/business/autos-transportation/musk-delivers-first-tesla-semi-trucks-2022-12-02/</a>.
\125\ Robo, Ellen and Dave Seamonds. Technical Memo to
Environmental Defense Fund: Investment Reduction Act Supplemental
Assessment: Analysis of Alternative Medium- and Heavy-Duty Zero-
Emission Vehicle Business-As-Usual Scenarios. ERM. August 19, 2022.
Available online: <a href="https://www.erm.com/contentassets/154d08e0d0674752925cd82c66b3e2b1/edf-zev-baseline-technical-memo-addendum.pdf">https://www.erm.com/contentassets/154d08e0d0674752925cd82c66b3e2b1/edf-zev-baseline-technical-memo-addendum.pdf</a>.
\126\ FedEx Corp. ``FedEx Commits to Carbon-Neutral Operations
by 2040.'' March 3, 2021. Last accessed on October 18, 2022 at
<a href="https://newsroom.fedex.com/newsroom/asia-english/sustainability2021">https://newsroom.fedex.com/newsroom/asia-english/sustainability2021</a>.
\127\ Deutsche Post DHL Group. ``Zero emissions by 2050: DHL
announces ambitious new environmental protection target.'' March
2017. Last accessed on October 18, 2022 at <a href="https://www.dhl.com/global-en/delivered/sustainability/zero-emissions-by-2050.html">https://www.dhl.com/global-en/delivered/sustainability/zero-emissions-by-2050.html</a>.
\128\ Walmart Inc. ``Walmart Sets Goal to Become a Regenerative
Company.'' September 21, 2020. Last accessed on October 18, 2022 at
<a href="https://corporate.walmart.com/newsroom/2020/09/21/walmart-sets-goal-to-become-a-regenerative-company">https://corporate.walmart.com/newsroom/2020/09/21/walmart-sets-goal-to-become-a-regenerative-company</a>.
\129\ Complete heavy-duty vehicles at or below 14,000 pounds.
GVWR are chassis-certified under 40 CFR part 86, while incomplete
vehicles at or below 14,000 pounds. GVWR may be certified to either
40 CFR part 86 (meeting standards under subpart S) or 40 CFR part
1037 (installed engines would then need to be certified under 40 CFR
part 1036). Class 2b and 3 vehicles are primarily chassis-certified
complete commercial pickup trucks and vans. We intend to pursue a
combined light-duty and medium-duty rulemaking to set more stringent
standards for complete and incomplete vehicles at or below 14,000
pounds. GVWR that are certified under 40 CFR part 86, subpart S. The
standards proposed in this rule would apply for all heavy-duty
vehicles above 14,000 pounds. GVWR, except as noted in 40 CFR
1037.150(l). The proposed standards in this rule would also apply
for incomplete heavy-duty vehicles at or below 14,000 pounds. GVWR
if vehicle manufacturers opt to certify those vehicles under 40 CFR
part 1037 instead of certifying under 40 CFR part 86, subpart S.
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Amazon and Walmart are among fleets owners and operators that are
also considering hydrogen. Amazon signed an agreement with Plug
Power,\130\ a company building an end-to-end hydrogen ecosystem, to
supply hydrogen for up to 800 HD long-haul trucks or 30,000 forklifts
(which are commonly powered using hydrogen) starting in 2025 through
2040.\131\ Walmart is purchasing hydrogen from Plug Power \132\ and
plans to expand pilots of fuel cell forklifts, yard trucks, and
possibly HD long-haul trucks by 2040.\133\ Plug Power has agreed to
purchase up to 75 Nikola Class 8 fuel cell trucks over the next three
years in exchange for supplying the company with hydrogen fuel.\134\
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\130\ Plug Power. ``Plug and Amazon Sign Green Hydrogen
Agreement''. Available online: <a href="https://www.ir.plugpower.com/press-releases/news-details/2022/Plug-and-Amazon-Sign-Green-Hydrogen-Agreement/default.aspx">https://www.ir.plugpower.com/press-releases/news-details/2022/Plug-and-Amazon-Sign-Green-Hydrogen-Agreement/default.aspx</a>.
\131\ Amazon. ``Amazon adopts green hydrogen to help decarbonize
its operations''. August 25, 2022. Available online: <a href="https://www.aboutamazon.com/news/sustainability/amazon-adopts-green-hydrogen-to-help-decarbonize-its-operations">https://www.aboutamazon.com/news/sustainability/amazon-adopts-green-hydrogen-to-help-decarbonize-its-operations</a>.
\132\ Plug Power. ``Plug Supplies Walmart with Green Hydrogen to
Fuel Retailer's Fleet of Material Handling Lift Trucks''. April 19,
2022. Available online: <a href="https://www.ir.plugpower.com/press-releases/news-details/2022/Plug-Supplies-Walmart-with-Green-Hydrogen-to-Fuel-Retailers-Fleet-of-Material-Handling-Lift-Trucks/default.aspx">https://www.ir.plugpower.com/press-releases/news-details/2022/Plug-Supplies-Walmart-with-Green-Hydrogen-to-Fuel-Retailers-Fleet-of-Material-Handling-Lift-Trucks/default.aspx</a>.
\133\ Proactive. ``WalMart eyes benefits of hydrogen delivery
vehicles in wider trials''. Proactive 13:17. June 8, 2022. Available
online: <a href="https://www.proactiveinvestors.co.uk/companies/news/984360/walmart-eyes-benefits-of-hydrogen-delivery-vehicles-in-wider-trials-984360.html">https://www.proactiveinvestors.co.uk/companies/news/984360/walmart-eyes-benefits-of-hydrogen-delivery-vehicles-in-wider-trials-984360.html</a>.
\134\ Adler, Alan. ``Plug Power will buy up to 75 Nikola fuel
cell trucks''. Freightwaves. December 15, 2022. Available online:
<a href="https://www.freightwaves.com/news/plug-power-will-buy-up-to-75-nikola-fuel-cell-trucks">https://www.freightwaves.com/news/plug-power-will-buy-up-to-75-nikola-fuel-cell-trucks</a>.
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The lifetime total cost of ownership (TCO), which includes
maintenance and fuel costs, is likely a primary factor for HD vehicle
and fleet owners considering BEV and FCEV purchases. In fact, a 2018
survey of fleet owners showed ``lower cost of ownership'' as the second
most important motivator for electrifying their fleet.\135\ An ICCT
analysis from 2019 suggests that TCO for light and medium heavy-duty
BEVs could reach cost parity with comparable diesel ICE vehicles in the
early 2020s, while heavy HD BEVs and FCEVs are likely to reach cost
parity with comparable diesel ICE vehicles closer to the 2030
timeframe.\136\ Recent findings from Phadke et al. suggest that BEV TCO
could be 13 percent less than that of a comparable diesel ICE vehicle
if electricity pricing is optimized.\137\ These studies do not consider
the IRA. The Rocky Mountain Institute found that because of the IRA,
the TCO of electric trucks will be lower than the TCO of comparable
diesel trucks about five years faster than without the IRA. They expect
cost parity as soon as 2023 for urban and regional duty cycles that
travel up to 250 miles and 2027 for long-hauls that travel over 250
miles.\138\
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\135\ The primary motivator for fleet managers was
``Sustainability and environmental goals''; the survey was conducted
by UPS and GreenBiz.
\136\ ICCT (2019) ``Estimating the infrastructure needs and
costs for the launch of zero-emissions trucks''; available online
at: <a href="https://theicct.org/publications/zero-emission-truck-infrastructure">https://theicct.org/publications/zero-emission-truck-infrastructure</a>.
\137\ Phadke, A., et. al. (2021) ``Why Regional and Long-Haul
Trucks are Primed for Electrification Now''; available online at:
<a href="https://eta-publications.lbl.gov/sites/default/files/updated_5_final_ehdv_report_033121.pdf">https://eta-publications.lbl.gov/sites/default/files/updated_5_final_ehdv_report_033121.pdf</a>.
\138\ Kahn, Ari, et. al. ``The Inflation Reduction Act Will Help
Electrify Heavy-Duty Trucking''. Rocky Mountain Institute. August
25, 2022. Available online: <a href="https://rmi.org/inflation-reduction-act-will-help-electrify-heavy-duty-trucking/">https://rmi.org/inflation-reduction-act-will-help-electrify-heavy-duty-trucking/</a>.
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As the ICCT and Phadke et al. studies suggest, fuel costs are an
important part of TCO. While assumptions about vehicle weight and size
can make direct comparisons between HD ZEVs and ICE vehicles
challenging, data show greater energy efficiency of battery-electric
and fuel cell technology relative to ICE
technologies.139 140 Better energy efficiency leads to lower
electricity or hydrogen fuel costs for ZEVs relative to ICE fuel
costs.141 142 Maintenance and service costs are also an
important component within TCO; although there is limited data
available on actual maintenance costs for HD ZEVs, early experience
with BEV medium HD vehicles and transit buses suggests the potential
for lower maintenance costs after an initial period of learning to
refine both component durability and maintenance procedures.\143\ We
expect similar trends for FCEVs, as discussed in Chapter 2 of the DRIA.
To facilitate HD fleets transitioning to ZEVs, some manufacturers are
currently including maintenance in leasing agreements with fleets; it
is unclear the extent to which a full-service leasing model will
persist or will be transitioned to a more

[[Page 25943]]

traditional purchase model after an initial period of
learning.144 145
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\139\ NACFE (2019) ``Guidance Report: Viable Class 7/8 Electric,
Hybrid and Alternative Fuel Tractors'', available online at: <a href="https://nacfe.org/downloads/viable-class-7-8-alternative-vehicles/">https://nacfe.org/downloads/viable-class-7-8-alternative-vehicles/</a>.
\140\ Nadel, S. and Junga, E. (2020) ``Electrifying Trucks: From
Delivery Vans to Buses to 18-Wheelers''. American Council for an
Energy-Efficient Economy White Paper, available online at: <a href="https://aceee.org/white-paper/electrifying-trucks-delivery-vans-buses-18">https://aceee.org/white-paper/electrifying-trucks-delivery-vans-buses-18</a>.
\141\ NACFE (2019) ``Guidance Report: Viable Class 7/8 Electric,
Hybrid and Alternative Fuel Tractors'', available online at: <a href="https://nacfe.org/downloads/viable-class-7-8-alternative-vehicles/">https://nacfe.org/downloads/viable-class-7-8-alternative-vehicles/</a>.
\142\ Nadel, S. and Junga, E. (2020) ``Electrifying Trucks: From
Delivery Vans to Buses to 18-Wheelers''. American Council for an
Energy-Efficient Economy White Paper, available online at: <a href="https://aceee.org/white-paper/electrifying-trucks-delivery-vans-buses-18">https://aceee.org/white-paper/electrifying-trucks-delivery-vans-buses-18</a>.
\143\ U.S. Department of Energy Alternative Fuels Data Center
(AFDC), ``Developing Infrastructure to Charge Plug-In Electric
Vehicles'', <a href="https://afdc.energy.gov/fuels/electricity_infrastructure.html">https://afdc.energy.gov/fuels/electricity_infrastructure.html</a> (accessed 2-27-20).
\144\ Fisher, J. (2019) ``Volvo's First Electric VNR Ready for
the Road.'' Fleet Owner, September 17. <a href="http://www.fleetowner.com/blue-fleets/volvo-s-first-electric-vnr-ready-road">www.fleetowner.com/blue-fleets/volvo-s-first-electric-vnr-ready-road</a>.
\145\ Gnaticov, C. (2018). ``Nikola One Hydrogen Electric Semi
Hits the Road in Official Film.'' Carscoops, Jan. 26.
<a href="http://www.carscoops.com/2018/01/nikola-one-hydrogen-electric-semi-hits-road-official-film/">www.carscoops.com/2018/01/nikola-one-hydrogen-electric-semi-hits-road-official-film/</a>.
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The growth in incentive programs will continue to play an important
role in the HD ZEV market. For example, as discussed in more detail in
this section, FHWA-approved plans providing $1.5 billion in funding for
expanding charging on over 75,000 miles of highway encourages states to
consider station designs and power levels that could support heavy-duty
vehicles. In a 2017 survey of fleet managers, upfront purchase price
was listed as the primary barrier to HD fleet electrification. This
suggests that federal incentive programs like those in the BIL and IRA
(discussed in Section I.C.2) to offset ZEV purchase costs, as well as
state and local incentives and investments, can be influential in the
near term, with improvements in BEV and FCEV component costs playing an
increasing role in reducing costs in the longer term.146 147
For example, BEV incentive programs for transit and school buses have
experienced growth and are projected to continue to influence BEV
markets. The Los Angeles Department of Transportation (LADOT) is one of
the first transit organizations in the country to develop a program
committed to transitioning its transit fleets to ZEVs by 2030--a target
that is 10 years sooner than CARB's Innovative Clean Transportation
(ICT) regulation requiring all public transit to be electric by
2040.\148\ Since these announcements, LADOT has purchased 27 BEV
transit and school buses from BYD and Proterra; by 2030, the number of
BEV buses in the LADOT fleet is expected to grow to 492 buses. Outside
of California, major metropolitan areas including Chicago, Seattle, New
York City, and Washington, DC, have zero-emissions transit programs
with 100 percent ZEV target dates ranging from 2040 to
2045.149 150 151 152 EV school bus programs, frequently in
partnership with local utilities, are also being piloted across the
country and are expanding under EPA's Clean School Bus Program
(CSB).\153\ These programs initially included school districts in, but
not limited to, California, Virginia, Massachusetts, Michigan,
Maryland, Illinois, New York, and
Pennsylvania.154 155 156 157 158 Going forward, they will
continue to expand with BIL funding of over $5 billion over the next
five years (FY 2022-2026) to replace existing school buses with zero-
emission and low-emission models, as discussed more in Section I.C.2.
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\146\ Other barriers that fleet managers prioritized for fleet
electrification included: Inadequate charging infrastructure--our
facilities, inadequate product availability, inadequate charging
infrastructure--public; for the full list of top barriers see Nadel
and Junga (2020), citing UPS and GreenBiz 2018.
\147\ Nadel, S. and Junga, E. (2020) ``Electrifying Trucks: From
Delivery Vans to Buses to 18-Wheelers''. American Council for an
Energy-Efficient Economy White Paper, available online at: <a href="https://aceee.org/white-paper/electrifying-trucks-delivery-vans-buses-18">https://aceee.org/white-paper/electrifying-trucks-delivery-vans-buses-18</a>.
\148\ LADOT, (2020). ``LADOT Transit Zero-Emission Bus Rollout
Plan'' <a href="https://ww2.arb.ca.gov/sites/default/files/2020-12/LADOT_ROP_Reso_ADA12172020.pdf">https://ww2.arb.ca.gov/sites/default/files/2020-12/LADOT_ROP_Reso_ADA12172020.pdf</a>.
\149\ Sustainable Bus. ``CTA Chicago tests electric buses and
pursues 100% e-fleet by 2040''. April 29, 2021. Available online:
<a href="https://www.sustainable-bus.com/electric-bus/cta-chicago-electric-buses/">https://www.sustainable-bus.com/electric-bus/cta-chicago-electric-buses/</a>.
\150\ Pascale, Jordan. ``Metro Approves Plans For Fully Electric
Bus Fleet By 2045''. DCist. June 10, 2021. Available online: <a href="https://dcist.com/story/21/06/10/metro-goal-entirely-electric-bus-fleet-2045/">https://dcist.com/story/21/06/10/metro-goal-entirely-electric-bus-fleet-2045/</a>.
\151\ King County Metro. ``Transitioning to a zero-emissions
fleet''. Available online: <a href="https://kingcounty.gov/depts/transportation/metro/programs-projects/innovation-technology/zero-emission-fleet.aspx">https://kingcounty.gov/depts/transportation/metro/programs-projects/innovation-technology/zero-emission-fleet.aspx</a>.
\152\ Hallum, Mark. ``MTA's recent purchase of zero emissions
buses will be 33% bigger than expected''. AMNY. May 25, 2021.
Available online: <a href="https://www.amny.com/transit/mta-says-45-to-60-more-buses-in-recent-procurement-will-be-zero-emissions/">https://www.amny.com/transit/mta-says-45-to-60-more-buses-in-recent-procurement-will-be-zero-emissions/</a>.
\153\ U.S. Environmental Protection Agency. ``Clean School Bus
Program''. Available online: <a href="https://www.epa.gov/cleanschoolbus">https://www.epa.gov/cleanschoolbus</a>.
\154\ Commonwealth of Massachusetts. ``EV Programs &
Incentives''. Available online: <a href="https://www.mass.gov/info-details/ev-programs-incentives">https://www.mass.gov/info-details/ev-programs-incentives</a>.
\155\ Morris, Charles. ``NYC's new school bus contract includes
electric bus pilot''. Charged--Electric Vehicles Magazine. July 7,
2021. Available online: <a href="https://chargedevs.com/newswire/nycs-new-school-bus-contract-includes-electric-bus-pilot/">https://chargedevs.com/newswire/nycs-new-school-bus-contract-includes-electric-bus-pilot/</a>.
\156\ Soneji, Hitesh, et. al. ``Pittsburg USD Electric School
Bus Final Project Report''. Olivine, Inc. September 23, 2020.
Available online: <a href="https://olivineinc.com/wp-content/uploads/2020/10/Pittsburg-USD-Electric-School-Bus-Final-Project-Report-Final.pdf">https://olivineinc.com/wp-content/uploads/2020/10/Pittsburg-USD-Electric-School-Bus-Final-Project-Report-Final.pdf</a>.
\157\ Shahan, Cynthia. ``Largest Electric School Bus Program in
United States Launching in Virginia''. CleanTechnica. January 12,
2020. Available online: <a href="https://cleantechnica.com/2020/01/12/largest-electric-school-bus-program-in-united-states-launching-in-virginia/">https://cleantechnica.com/2020/01/12/largest-electric-school-bus-program-in-united-states-launching-in-virginia/</a>.
\158\ St. John, Jeff. ``Highland Electric Raises $235M, Lands
Biggest Electric School Bus Contract in the US''. gtm. February 25,
2021. Available online: <a href="https://www.greentechmedia.com/articles/read/on-heels-of-253m-raise-highland-electric-lands-biggest-electric-school-bus-contract-in-the-u.s">https://www.greentechmedia.com/articles/read/on-heels-of-253m-raise-highland-electric-lands-biggest-electric-school-bus-contract-in-the-u.s</a>.
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In summary, the HD ZEV market is growing rapidly, and ZEV
technologies are expected to expand to many applications across the HD
sector. As the industry is dynamic and changing rapidly, the examples
presented here represent only a sampling of the ZEV HD investment
policies and markets. DRIA Chapter 1 provides a more detailed
characterization of the HD ZEV technologies in the current and
projected ZEV market. We request comment on our assessment of the HD
ZEV market and any additional data sources we should consider.
2. Bipartisan Infrastructure Law and Inflation Reduction Act
i. BIL
The BIL \159\ was enacted on November 15, 2021, and contains
provisions to support the deployment of low- and zero-emission transit
buses, school buses, and trucks that service ports, as well as electric
vehicle charging infrastructure and hydrogen. These provisions include
Section 71101 funding for EPA's Clean School Bus Program,\160\ with $5
billion to fund the replacement of ICE school buses with clean and
zero-emission buses over the next five years. In its first phase of
funding for the Clean School Bus Program, EPA is issuing nearly $1
billion in rebates (up to a maximum of $375,000 per bus, depending on
the bus fuel type, bus size, and school district prioritization status)
\161\ for replacement clean and zero-emission buses and associated
infrastructure costs.162 163 The BIL also includes funding
for DOT's Federal Transit Administration (FTA) Low- or No-Emission
Grant Program,\164\ with over $5.6 billion over the next five years to
support the purchase of zero- or low-emission transit buses and
associated infrastructure.\165\
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\159\ United States, Congress. Public Law 117-58. Infrastructure
Investment and Jobs Act of 2021. <a href="http://Congress.gov">Congress.gov</a>, <a href="http://www.congress.gov/bill/117th-congress/house-bill/3684/text">www.congress.gov/bill/117th-congress/house-bill/3684/text</a>. 117th Congress, House
Resolution 3684, passed 15 Nov. 2021.
\160\ U.S. Environmental Protection Agency. ``Clean School Bus
Program''. Available online: <a href="https://www.epa.gov/cleanschoolbus">https://www.epa.gov/cleanschoolbus</a>.
\161\ U.S. Environmental Protection Agency. ``2022 Clean School
Bus (CSB) Rebates Program Guide''. May 2022. Available online:
<a href="https://nepis.epa.gov/Exe/ZyPDF.cgi/P1014WNH.PDF?Dockey=P1014WNH.PDF">https://nepis.epa.gov/Exe/ZyPDF.cgi/P1014WNH.PDF?Dockey=P1014WNH.PDF</a>.
\162\ Some recipients are able to claim up to $20,000 per bus
for charging infrastructure.
\163\ U.S. Environmental Protection Agency, ``EPA Clean School
Bus Program Second Report to Congress Fiscal Year 2022,'' EPA-420-R-
23-002, February 2023. Available online: <a href="https://www.epa.gov/system/files/documents/2023-02/420r23002.pdf">https://www.epa.gov/system/files/documents/2023-02/420r23002.pdf</a> (last accessed February 9,
2023).
\164\ U.S. Department of Transportation, Federal Transit
Administration. ``Low or No Emission Vehicle Program--5339(c)''.
Available online: <a href="https://www.transit.dot.gov/lowno">https://www.transit.dot.gov/lowno</a> (last accessed
February 10, 2023).
\165\ U.S. Department of Transportation, Federal Transit
Administration. ``Bipartisan Infrastructure Law Fact Sheet: Grants
for Buses and Bus Facilities''. Available online: <a href="https://www.transit.dot.gov/funding/grants/fact-sheet-buses-and-bus-facilities-program">https://www.transit.dot.gov/funding/grants/fact-sheet-buses-and-bus-facilities-program</a> (last accessed February 10, 2023).
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The BIL includes up to $7.5 billion to help build out a national
network of EV

[[Page 25944]]

charging and hydrogen fueling through DOT's Federal Highway
Administration (FHWA). This includes $2.5 billion in discretionary
grant programs for charging and fueling infrastructure \166\ along
designated alternative fuel corridors and in communities (Section
11401) \167\ and $5 billion for the National Electric Vehicle
Infrastructure (NEVI) Formula Program (under Division J, Title
VIII).\168\ In September 2022, the FHWA approved the first set of plans
for the NEVI program covering all 50 states, Washington, DC, and Puerto
Rico. The approved plans provide $1.5 billion in funding for fiscal
years (FY) 2022 and 2023 to expand charging on over 75,000 miles of
highway.\169\ While jurisdictions are not required to build stations
specifically for heavy-duty vehicles, FHWA's guidance encourages states
to consider station designs and power levels that could support heavy-
duty vehicles.\170\
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\166\ Fueling infrastructure includes hydrogen, propane, and
natural gas.
\167\ U.S. Department of Transportation, Federal Highway
Administration, ``The National Electric Vehicle Infrastructure
(NEVI) Formula Program Guidance,'' February 10, 2022. Available
online: <a href="https://www.fhwa.dot.gov/environment/alternative_fuel_corridors/nominations/90d_nevi_formula_program_guidance.pdf">https://www.fhwa.dot.gov/environment/alternative_fuel_corridors/nominations/90d_nevi_formula_program_guidance.pdf</a> (last accessed February 10,
2023).
\168\ U.S. Department of Transportation, Federal Highway
Administration. ``Bipartisan Infrastructure Law, Fact Sheets:
National Electric Vehicle Infrastructure Formula Program''. February
10, 2022. Available online: <a href="https://www.fhwa.dot.gov/bipartisan-infrastructure-law/nevi_formula_program.cfm">https://www.fhwa.dot.gov/bipartisan-infrastructure-law/nevi_formula_program.cfm</a>.
\169\ U.S. Department of Transportation. ``Historic Step: All
Fifty States Plus DC and Puerto Rico Grenlit to Move EV Charging
Networks Forward, Covering 75,000 miles of Highway''. Available
online: <a href="https://www.transportation.gov/briefing-room/historic-step-all-fifty-states-plus-dc-and-puerto-rico-greenlit-move-ev-charging">https://www.transportation.gov/briefing-room/historic-step-all-fifty-states-plus-dc-and-puerto-rico-greenlit-move-ev-charging</a>.
\170\ U.S. Department of Transportation, Federal Highway
Administration. ``National Electric Vehicle Infrastructure Formula
Program: Bipartisan Infrastructure Law--Program Guidance''. February
10, 2022. Available online: <a href="https://www.fhwa.dot.gov/environment/alternative_fuel_corridors/nominations/90d_nevi_formula_program_guidance.pdf">https://www.fhwa.dot.gov/environment/alternative_fuel_corridors/nominations/90d_nevi_formula_program_guidance.pdf</a>.
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The BIL funds other programs that could support HD vehicle
electrification. For example, there is continued funding of the
Congestion Mitigation and Air Quality (CMAQ) Improvement Program, with
more than $2.5 billion authorized for FY 2022 through FY 2026. The BIL
(Section 11115) amended the CMAQ Improvement Program to add, among
other things, ``the purchase of medium- or heavy-duty zero emission
vehicles and related charging equipment'' to the list of activities
eligible for funding. The BIL establishes a program under Section 11402
``Reduction of Truck Emissions at Port Facilities'' that includes
grants to be administered through FHWA aimed at reducing port
emissions, including through electrification. In addition, the BIL
includes funding for DOT's Maritime Administration (MARAD) Port
Infrastructure Development Program; \171\ and DOT's Federal Highway
Administration (FHWA) Carbon Reduction Program.\172\
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\171\ U.S. Department of Transportation, Maritime
Administration. ``Bipartisan Infrastructure Law: Maritime
Administration''. Available online: <a href="https://www.maritime.dot.gov/about-us/bipartisan-infrastructure-law-maritime-administration">https://www.maritime.dot.gov/about-us/bipartisan-infrastructure-law-maritime-administration</a>.
\172\ U.S. Department of Transportation, Federal Highway
Administration. ``Bipartisan Infrastructure Law, Fact Sheets: Carbon
Reduction Program (CRP)''. April 20, 2022. Available online: <a href="https://www.fhwa.dot.gov/bipartisan-infrastructure-law/crp_fact_sheet.cfm">https://www.fhwa.dot.gov/bipartisan-infrastructure-law/crp_fact_sheet.cfm</a>.
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The BIL also targets batteries used for electric vehicles. It funds
DOE's Battery Materials Processing and Battery Manufacturing
program,\173\ which grants funds to promote U.S. processing and
manufacturing of batteries for automotive and electric grid use through
demonstration projects, the construction of new facilities, and the
retooling, retrofitting, and expansion of existing facilities. This
includes a total of $3 billion for battery material processing and $3
billion for battery manufacturing and recycling, with additional
funding for a lithium-ion battery recycling prize competition, research
and development activities in battery recycling, state and local
programs, and the development of a collection system for used
batteries. In addition, the BIL includes $200 million for the Electric
Drive Vehicle Battery Recycling and Second-Life Application Program for
research, development, and demonstration of battery recycling and
second-life applications.
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\173\ U.S. Department of Energy. ``Biden Administration
Announces $3.16 Billion From Bipartisan Infrastructure Law to Boost
Domestic Battery Manufacturing and Supply Chains. May 2, 2022.
Available online: <a href="https://www.energy.gov/articles/biden-administration-announces-316-billion-bipartisan-infrastructure-law-boost-domestic">https://www.energy.gov/articles/biden-administration-announces-316-billion-bipartisan-infrastructure-law-boost-domestic</a>.
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Hydrogen provisions of the BIL include funding for several programs
to accelerate progress towards the Hydrogen Shot goal, launched on June
7, 2021, to reduce the cost of clean hydrogen \174\ production by 80
percent to $1 for 1 kg in 1 decade \175\ and jumpstart the hydrogen
market in the United States. This includes $8 billion for the
Department of Energy's Regional Clean Hydrogen Hubs Program to
establish networks of clean hydrogen producers, potential consumers,
and connective infrastructure in close proximity; $1 billion for a
Clean Hydrogen Electrolysis Program; and $500 million for Clean
Hydrogen Manufacturing and Recycling Initiatives.\176\ The BIL also
called for development of a Clean Hydrogen Production Standard to guide
DOE hub and Research, Development, Deployment, and Diffusion (RDD&D)
actions; and a National Clean Hydrogen Strategy and Roadmap to
facilitate widescale production, processing, delivery, storage, and use
of clean hydrogen. These BIL programs are currently under development,
and further details are expected over the course of calendar year (CY)
2023.
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\174\ The BIL defines ``clean hydrogen'' as hydrogen produced in
compliance with the GHG emissions standard established under 42 U.S.
Code section 16166(a), including production from any fuel source,
where the standard developed shall define the term to mean hydrogen
produced with a carbon intensity equal to or less than 2 kilograms
of carbon dioxide-equivalent produced at the site of production per
kilogram of hydrogen produced.
\175\ Satyapal, Sunita. ``2022 AMR Plenary Session''. U.S.
Department of Energy, Hydrogen and Fuel Cell Technologies Office.
June 6, 2022. Available online: <a href="https://www.energy.gov/sites/default/files/2022-06/hfto-amr-plenary-satyapal-2022-1.pdf">https://www.energy.gov/sites/default/files/2022-06/hfto-amr-plenary-satyapal-2022-1.pdf</a>.
\176\ U.S. Department of Energy. ``DOE Establishes Bipartisan
Infrastructure Law's $9.5 Billion Clean Hydrogen Initiatives''.
February 15, 2022. Available online: <a href="https://www.energy.gov/articles/doe-establishes-bipartisan-infrastructure-laws-95-billion-clean-hydrogen-initiatives">https://www.energy.gov/articles/doe-establishes-bipartisan-infrastructure-laws-95-billion-clean-hydrogen-initiatives</a>.
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ii. IRA Sections 13502 and 13403
The IRA,\177\ which was enacted on August 16, 2022, contains
several provisions relevant to vehicle electrification and the
associated infrastructure via tax credits, grants, rebates, and loans
through CY 2032, including two key provisions that provide a tax credit
to reduce the cost of producing qualified batteries (battery tax
credit) and to reduce the cost of purchasing qualified ZEVs (vehicle
tax credit). The battery tax credit in ``Advanced Manufacturing
Production Credit'' in IRA section 13502 and the ``Qualified Commercial
Clean Vehicles'' vehicle tax credit in IRA section 13403 are included
quantitatively in our analysis.
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\177\ Inflation Reduction Act of 2022, Public Law 117-169, 136
Stat. 1818 (2022) (``Inflation Reduction Act'' or ``IRA''),
available at <a href="https://www.congress.gov/117/bills/hr5376/BILLS-117hr5376enr.pdf">https://www.congress.gov/117/bills/hr5376/BILLS-117hr5376enr.pdf</a>.
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IRA section 13502, ``Advanced Manufacturing Production Credit,''
provides tax credits for the production and sale of battery cells and
modules of up to $45 per kilowatt-hour (kWh), and for 10 percent of the
cost of producing applicable critical minerals (including those found
in batteries and fuel cells, provided that the minerals meet certain
specifications), when such components or minerals are produced in the
United States. These credits begin in CY 2023 and phase down starting
in CY 2030, ending after CY 2032. With projected direct manufacturing
costs for heavy-

[[Page 25945]]

duty vehicle batteries on the order of $65 to $275/kWh in the 2025-2030
timeframe,\178\ this tax credit has the potential to noticeably reduce
the cost of qualifying batteries and, by extension, the cost of BEVs
and FCEVs with qualifying batteries. We did not include a detailed cost
breakdown of fuel cells quantitatively in our analysis, but the
potential impact on fuel cells may also be significant because platinum
(an applicable critical mineral commonly used in fuel cells) is a major
contributor to the cost of fuel cells.\179\
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\178\ Sharpe, B., Basma, H. ``A meta-study of purchase costs for
zero-emission trucks''. International Council on Clean
Transportation. February 17, 2022. Available online: <a href="https://theicct.org/wp-content/uploads/2022/02/purchase-cost-ze-trucks-feb22-1.pdf">https://theicct.org/wp-content/uploads/2022/02/purchase-cost-ze-trucks-feb22-1.pdf</a>.
\179\ Leader, Alexandra & Gaustad, Gabrielle & Babbitt, Callie.
(2019). The effect of critical material prices on the
competitiveness of clean energy technologies. Materials for
Renewable and Sustainable Energy. 8. 10.1007/s40243-019-0146-z.
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We limited our assessment of this tax credit in our DRIA Chapter 2
analysis to the tax credits for battery cells and modules. Pursuant to
the IRA, qualifying battery cells must have an energy density of not
less than 100 watt-hours per liter, and we expect that batteries for
heavy-duty BEVs and FCEVs will exceed this requirement as described in
DRIA Chapter 2.4.2.2. Qualifying battery cells must be capable of
storing at least 12 watt-hours of energy and qualifying battery modules
must have an aggregate capacity of not less than 7 kWh (or, for FCEVs,
not less than 1 kWh); typical battery cells and modules for motor
vehicles also exceed these requirements.\180\ Additionally, the ratio
of the capacity of qualifying cells and modules to their maximum
discharge amount shall not exceed 100:1. We expect that battery cells
and modules in heavy-duty BEVs and FCEVs will also meet this
requirement because the high costs and weight of the batteries and the
competitiveness of the heavy-duty industry will pressure manufacturers
to allow as much of their batteries to be useable as possible. We did
not consider the tax credits for critical minerals quantitatively in
our analysis. However, we note that any applicability of the critical
mineral tax credit may further reduce the costs of batteries.
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\180\ Islam, Ehsan Sabri, Ram Vijayagopal, Aymeric Rousseau. ``A
Comprehensive Simulation Study to Evaluate Future Vehicle Energy and
Cost Reduction Potential'', Report to the U.S. Department of Energy,
Contract ANL/ESD-22/6, October 2022. See Medium- and heavy-duty
vehicles (techno-economic analysis with BEAN). Available online:
<a href="https://vms.taps.anl.gov/research-highlights/u-s-doe-vto-hfto-r-d-benefits/">https://vms.taps.anl.gov/research-highlights/u-s-doe-vto-hfto-r-d-benefits/</a>.
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We included this battery tax credit by reducing the direct
manufacturing costs of batteries in BEVs and FCEVs, but not the
associated indirect costs. At present, there are few manufacturing
plants for HD vehicle batteries in the United States, which means that
few batteries would qualify for the tax credit now. We expect that the
industry will respond to this tax credit incentive by building more
domestic battery manufacturing capacity in the coming years, but this
will take several years to come to fruition. Thus, we have chosen to
model this tax credit by assuming that HD BEV and FCEV manufacturers
fully utilize the module tax credit (which provides $10 per kWh) and
gradually increase their utilization of the cell tax credit (which
provides $35 per kWh) for MY 2027-2029 until MY 2030 and beyond, when
they earn 100 percent of the available cell and module tax credits.
Further discussion of this battery tax credit and our battery costs can
be found in DRIA Chapter 2.4.3.1.
IRA section 13403, ``Qualified Commercial Clean Vehicles,'' creates
a tax credit of up to $40,000 per Class 4 through 8 HD vehicle (up to
$7,500 per Class 2b or 3 vehicle) for the purchase or lease of a
qualified commercial clean vehicle. This tax credit is available from
CY 2023 through CY 2032 and is based on the lesser of the incremental
cost of the clean vehicle over a comparable ICE vehicle or the
specified percentage of the basis of the clean vehicle, up to the
maximum applicable limitation. By effectively reducing the price a
vehicle owner must pay for a HD ZEV and the incremental difference in
cost between it and a comparable ICE vehicle--by $40,000 in many
cases--more vehicle purchasers will be poised to take advantage of the
cost savings anticipated from total cost of ownership, including
operational cost savings from fuel and maintenance and repair compared
with ICE vehicles. Among other specifications, these vehicles must be
on-road vehicles (or mobile machinery) that are propelled to a
significant extent by a battery-powered electric motor or are qualified
fuel cell motor vehicles (also known as fuel cell electric vehicles,
FCEVs). For the former, the battery must have a capacity of at least 15
kWh (or 7 kWh if it has a gross vehicle weight rating of less than
14,000 pounds (Class 3 or below)) and must be rechargeable from an
external source of electricity. This limits the qualified vehicles to
BEVs and plug-in hybrid electric vehicles (PHEVs), in addition to
FCEVs. Since this tax credit overlaps with the model years for which we
are proposing standards (MYs 2027 through 2032), we included it in our
calculations for each of those years in our feasibility analysis for
our proposed standards (see DRIA Chapter 2).
For BEVs and FCEVs, the per-vehicle tax credit is equal to the
lesser of the following, up to the cap limitation: (A) 30 percent of
the BEV or FCEV cost, or (B) the incremental cost of the BEV or FCEV
when compared to a comparable (in size and use) ICE vehicle. The
limitation on this tax credit is $40,000 for vehicles with a gross
vehicle weight rating of equal to or greater than 14,000 pounds (Class
4-8 commercial vehicles) and $7,500 for vehicles with a gross vehicle
weight rating of less than 14,000 pounds (commercial vehicles Class 3
and below). For example, if a BEV with a gross vehicle weight rating of
equal to or greater than 14,000 pounds costs $350,000 and a comparable
ICE vehicle costs $150,000,\181\ the tax credit would be the lesser of
the following, subject to the limitation: (A) 30 percent x $350,000 =
$105,000 or (B) $350,000-$150,000 = $200,000. (A) is less than (B), but
(A) exceeds the limit of $40,000, so the tax credit would be $40,000.
For PHEVs, the per-vehicle tax credit follows the same calculation and
cap limitation as for BEVs and FCEVs except that (A) is 15 percent of
the PHEV cost.
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\181\ Sharpe, B., Basma, H. ``A meta-study of purchase costs for
zero-emission trucks''. International Council on Clean
Transportation. February 17, 2022. Available online: <a href="https://theicct.org/wp-content/uploads/2022/02/purchase-cost-ze-trucks-feb22-1.pdf">https://theicct.org/wp-content/uploads/2022/02/purchase-cost-ze-trucks-feb22-1.pdf</a>.
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In order to estimate the impact of this tax credit in our
feasibility analysis for BEVs and FCEVs, we first applied a retail
price equivalent to our direct manufacturing costs for BEVs, FCEVs, and
ICE vehicles. Note that the direct manufacturing costs of BEVs and
FCEVs were reduced by the amount of the battery tax credit in IRA
section 13502, as described in DRIA Chapter 2.4.3.1. We calculated the
purchaser's incremental cost of BEVs and FCEVs compared to ICE vehicles
and not the full cost of vehicles in our analysis. We based our
calculation of the tax credit on this incremental cost. When the
incremental cost exceeded the tax credit limitation (determined by
gross vehicle weight rating as described in the previous paragraph), we
decreased the incremental cost by the tax credit limitation. When the
incremental cost was between $0 and the tax credit limitation, we
reduced the incremental cost to $0 (i.e., the tax credit received by
the purchaser was equal to the incremental cost). When the incremental
cost was negative (i.e., the BEV or FCEV was cheaper to purchase than
the ICE vehicle), no tax credit was given. In order for this
calculation to be appropriate, we determined that all

[[Page 25946]]

Class 4-8 BEVs and FCEVs must cost more than $133,333 such that 30
percent of the cost is at least $40,000 (or $25,000 and $7,500,
respectively, for BEVs and FCEVs Class 3 and below), which is
reasonable based on our review of the literature on the costs of BEVs
and FCEVs.\182\ The tax credit amounts for each vehicle type included
in our analysis in MYs 2027 and 2032 are shown in DRIA Chapter 2.8.2.
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\182\ Burnham, A., Gohlke, D., Rush, L., Stephens, T., Zhou, Y.,
Delucchi, M. A., Birky, A., Hunter, C., Lin, Z., Ou, S., Xie, F.,
Proctor, C., Wiryadinata, S., Liu, N., Boloor, M. ``Comprehensive
Total Cost of Ownership Quantification for Vehicles with Different
Size Classes and Powertrains''. Argonne National Laboratory. April
1, 2021. Available at <a href="https://publications.anl.gov/anlpubs/2021/05/167399.pdf">https://publications.anl.gov/anlpubs/2021/05/167399.pdf</a>.
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We project that the impact of the IRA vehicle tax credit will be
significant, as shown in DRIA Chapter 2.8.2. In many cases, the
incremental cost (with the tax credit) of a BEV compared to an ICE
vehicle is eliminated, leaving only the cost of the electric vehicle
supply equipment (EVSE) as an added upfront cost to the BEV owner.
Similarly, in some cases, the tax credit eliminates the upfront cost of
a FCEV compared to an ICE vehicle.
iii. Other IRA Provisions
There are many other provisions of the IRA that we expect will
support electrification of the heavy-duty fleet. Importantly, these
other provisions do not serve to reduce ZEV adoption rates from our
current projections. Due to the complexity of analyzing the combined
potential impact of these provisions, we did not quantify their
potential impact in our assessment of costs and feasibility, but we
note that they may help to reduce many obstacles to electrification of
HDVs and may further support or even increase ZEV adoption rates beyond
the levels we currently project. Our assessment of the impacts of these
provisions of the IRA on ZEV adoption rates are, therefore, somewhat
conservative.
Section 13404, ``Alternative Fuel Refueling Property Credit,''
modifies an existing tax credit that applies to alternative fuel
refueling property (e.g., electric vehicle chargers and hydrogen
fueling stations) and extends the tax credit through CY 2032. The
credit also applies to refueling property that stores or dispenses
specified clean-burning fuels, including at least 85 percent hydrogen,
into the fuel tank of a motor vehicle. Starting in CY 2023, this
provision provides a tax credit of up to 30 percent of the cost of the
qualified alternative fuel refueling property (e.g., HD BEV charger),
and up to $100,000 when located in low-income or non-urban area census
tracts and certain other requirements are met. We expect that many HD
BEV owners will need chargers installed in their depots for overnight
charging, and this tax credit will effectively reduce the costs of
installing charging infrastructure and, in turn, further effectively
reduce the total costs associated with owning a BEV for many HD vehicle
owners. Additionally, this tax credit may offset some of the costs of
installing very high-powered public and private chargers that are
necessary to recharge HD BEVs with minimal downtime during the day.
Similarly, we expect that this tax credit will reduce the costs
associated with refueling heavy-duty FCEVs, whose owners may rely on
public hydrogen refueling stations or those installed in their depots.
We expect that this tax credit will help incentivize the build out of
the charging and hydrogen refueling infrastructure necessary for high
BEV and FCEV adoption, which may further support increased BEV and FCEV
uptake.
Section 60101, ``Clean Heavy-duty Vehicles,'' amends the CAA to add
new section 132 (42 U.S.C. 7432) and appropriates $1 billion to the
Administrator, including $600 million generally for carrying out CAA
section 132 (3 percent of which must be reserved for administrative
costs necessary to carry out the section's provisions) and $400 million
to make awards under CAA section 132 to eligible recipients/contractors
that propose to replace eligible vehicles to serve one or more
communities located in an air quality area designated pursuant to CAA
section 107 as nonattainment for any air pollutant, in FY 2022 and
available through FY 2031. CAA section 132 requires the Administrator
to implement a program to make awards of grants and rebates to eligible
recipients (defined as States, municipalities, Indian tribes, and
nonprofit school transportation associations), and to make awards of
contracts to eligible contractors for providing rebates, for up to 100
percent of costs for: (1) the incremental costs of replacing a Class 6
or Class 7 heavy-duty vehicle that is not a zero-emission vehicle with
a zero-emission vehicle (as determined by the Administrator based on
the market value of the vehicles); (2) purchasing, installing,
operating, and maintaining infrastructure needed to charge, fuel, or
maintain zero-emission vehicles; (3) workforce development and training
to support the maintenance, charging, fueling, and operation of zero-
emission vehicles; and (4) planning and technical activities to support
the adoption and deployment of zero-emission vehicles.
Section 60102, ``Grants to Reduce Air Pollution at Ports,'' amends
the CAA to add a new section 133 (42 U.S.C. 7433) and appropriates $3
billion (2 percent of which must be reserved for administrative costs
necessary to carry out the section's provisions), $750 million of which
is for projects located in areas of nonattainment for any air
pollutant, in FY 2022 and available through FY 2027, to reduce air
pollution at ports. Competitive rebates or grants are to be awarded for
the purchase or installation of zero-emission port equipment or
technology for use at, or to directly serve, one or more ports; to
conduct any relevant planning or permitting in connection with the
purchase or permitting of zero-emission port equipment or technology;
and to develop qualified climate action plans. The zero-emission
equipment or technology either (1) produces zero emissions of GHGs,
listed criteria pollutants, and hazardous air pollutants or (2) it
captures 100 percent of the emissions produced by an ocean-going vessel
at berth.
Section 60103, ``Greenhouse Gas Reduction Fund,'' amends the CAA to
add a new section 134 (42 U.S.C. 7434) and appropriates $27 billion,
$15 billion of which is for low-income and disadvantaged communities,
in FY 2022 and available through FY 2024, for a GHG reduction grant
program. The program supports direct investments in qualified projects
at the national, regional, State, and local levels, and indirect
investments to establish new or support existing public, quasi-public,
not-for-profit, or nonprofit entities that provide financial assistance
to qualified projects. The program focuses on the rapid deployment of
low- and zero-emission products, technologies, and services to reduce
or avoid GHG emissions and other forms of air pollution.
Section 60104, ``Diesel Emissions Reductions,'' appropriates $60
million (2 percent of which must be reserved for administrative costs
necessary to carry out the section's provisions), in FY 2022 and
available through FY 2031, for grants, rebates, and loans under section
792 of the Energy Policy Act of 2005 (42 U.S.C. 16132) to identify and
reduce diesel emissions resulting from goods movement facilities and
vehicles servicing goods movement facilities in low-income and
disadvantaged communities to address the health impacts of such
emissions on such communities.

[[Page 25947]]

Section 70002 appropriates $3 billion in FY 2022 and available
through FY 2031 for the U.S. Postal Service to purchase ZEVs ($1.29
billion) and to purchase, design, and install infrastructure to support
zero-emission delivery vehicles at facilities that the U.S. Postal
Service owns or leases from non-Federal entities ($1.71 billion).
Section 13501, ``Extension of the Advanced Energy Project Credit,''
allocates $10 billion in tax credits for facilities to domestically
manufacture advanced energy technologies, subject to certain
application and other requirements and limitations. Qualifying
properties now include light-, medium-, or heavy-duty electric or fuel
cell vehicles along with the technologies, components, or materials for
such vehicles and the associated charging or refueling infrastructure.
They also include hybrid vehicles with a gross vehicle weight rating of
not less than 14,000 pounds along with the technologies, components, or
materials for them.
Sections 50142, 50143, 50144, 50145, 50151, 50152, and 50153
collectively appropriate nearly $13 billion to support low- and zero-
emission vehicle manufacturing and energy infrastructure. These
provisions are intended to help accelerate the ability for industry to
meet the demands spurred by the previously mentioned IRA sections, both
for manufacturing vehicles, including BEVs and FCEVs, and for energy
infrastructure.
Section 13204, ``Clean Hydrogen,'' amends section 45V of the
Internal Revenue Code (i.e., Title 26) to offer a tax credit to produce
hydrogen for qualified clean production facilities that use a process
that results in a lifecycle GHG emissions rate of not greater than 4 kg
of CO<INF>2</INF>e per kg of hydrogen. This credit is eligible for
qualified clean hydrogen production facilities whose construction
begins before January 1, 2033, and is available during the 10-year
period beginning on the date such facility was originally placed in
service. The credit increases to a maximum of $3 per kilogram produced
as the lifecycle GHG emissions rate is reduced to less than 0.45 kg of
CO<INF>2</INF>e per kg of hydrogen. Facilities that received credit for
the construction of carbon capture and direct air capture equipment or
facilities (i.e., under 45Q) do not qualify, and prevailing wage and
apprenticeship requirements apply. Section 60113, ``Methane Emissions
Reduction Program,'' amends the CAA by adding Section 136 and
appropriates $850 million to EPA to support methane mitigation and
monitoring, plus authorizes a new fee of $900 per ton on ``waste''
methane emissions that escalates after two years to $1,500 per ton.
These combined incentives promote the production of hydrogen in a
manner that minimizes its potential greenhouse gas impact.
While there are challenges facing greater adoption of heavy-duty
ZEV technologies, the IRA provides many financial incentives to
overcome these challenges and thus would also support our proposed
rulemaking. We expect IRA sections 13502 and 13403 to support the
adoption of HD ZEV technologies in the market, as detailed in our
assessment of the appropriate GHG standards we are proposing.
Additionally, we expect IRA sections 13404, 60101-60104, 70002, 13501,
50142-50145, 50151-50153, and 13204 to further accelerate ZEV adoption,
but we are not including them quantitatively in our analyses.
As described in Section II of the proposed rule, EPA has considered
the potential impacts of the BIL and the IRA in our assessment of the
appropriate proposed GHG standards both quantitatively and
qualitatively, and we request comment on our approach.

3. States' Efforts To Increase Adoption of HD ZEVs

HD vehicle sales and on-road vehicle populations are significant in
the state of California. Approximately ten percent of U.S. HD ICE
vehicles in 2016 were registered in California.\183\ California adopted
the ACT program in 2020, which will also influence the market
trajectory for BEV and FCEV technologies.184 185 186 The ACT
program requires manufacturers who certify HD vehicles for sale in
California to sell a certain percentage of zero-emission HD vehicles
(BEVs or FCEVs) in California for each model year, beginning with MY
2024.\187\ As shown in Table I-1, the sales requirements vary by
vehicle class, starting at 5 to 9 percent of total MY 2024 HD vehicle
sales in California and increasing to 40 to 75 percent of a total MY's
HD vehicle sales in California in MYs 2035 and later.\188\
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\183\ FHWA. U.S. Highway Statistics. Available online at:
<a href="https://www.fhwa.dot.gov/policyinformation/statistics.cfm">https://www.fhwa.dot.gov/policyinformation/statistics.cfm</a>.
\184\ CAA section 209(a) generally preempts states from adopting
emission control standards for new motor vehicles. But Congress
created an important exception from preemption. Under CAA section
209(b), the State of California may seek a waiver of preemption, and
EPA must grant it unless the Agency makes one of three statutory
findings. California's waiver of preemption for its motor vehicle
emissions standards allows other States to adopt and enforce
identical standards pursuant to CAA section 177. Since the CAA was
enacted, EPA has granted California dozens of waivers of preemption,
permitting California to enforce its own motor vehicle emission
standards.
\185\ California Air Resources Board, Final Regulation Order--
Advanced Clean Trucks Regulation. Filed March 15, 2021. Available
at: <a href="https://ww2.arb.ca.gov/sites/default/files/barcu/regact/2019/act2019/fro2.pdf">https://ww2.arb.ca.gov/sites/default/files/barcu/regact/2019/act2019/fro2.pdf</a>.
\186\ EPA granted the ACT rule waiver requested by California
under C

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