Rule2024-12864
Corporate Average Fuel Economy Standards for Passenger Cars and Light Trucks for Model Years 2027 and Beyond and Fuel Efficiency Standards for Heavy-Duty Pickup Trucks and Vans for Model Years 2030 and Beyond
Primary source
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Published
June 24, 2024
Effective
August 23, 2024
Issuing agencies
Transportation DepartmentNational Highway Traffic Safety Administration
Abstract
NHTSA, on behalf of the Department of Transportation (DOT), is finalizing Corporate Average Fuel Economy (CAFE) standards for passenger cars and light trucks that increase at a rate of 2 percent per year for passenger cars in model years (MYs) 2027-31, 0 percent per year for light trucks in model years 2027-28, and 2 percent per year for light trucks in model years 2029-31. NHTSA is also finalizing fuel efficiency standards for heavy-duty pickup trucks and vans (HDPUVs) for model years 2030-32 that increase at a rate of 10 percent per year and model years 2033-35 that increase at a rate of 8 percent per year.
Full Text
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[Federal Register Volume 89, Number 121 (Monday, June 24, 2024)]
[Rules and Regulations]
[Pages 52540-52954]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-12864]
[[Page 52539]]
Vol. 89
Monday,
No. 121
June 24, 2024
Part II
Department of Transportation
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National Highway Traffic Safety Administration
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49 CFR Parts 523, 531 et al.
Corporate Average Fuel Economy Standards for Passenger Cars and Light
Trucks for Model Years 2027 and Beyond and Fuel Efficiency Standards
for Heavy-Duty Pickup Trucks and Vans for Model Years 2030 and Beyond;
Final Rule
Federal Register / Vol. 89, No. 121 / Monday, June 24, 2024 / Rules
and Regulations
[[Page 52540]]
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DEPARTMENT OF TRANSPORTATION
National Highway Traffic Safety Administration
49 CFR Parts 523, 531, 533, 535, 536, and 537
[NHTSA-2023-0022]
RIN 2127-AM55
Corporate Average Fuel Economy Standards for Passenger Cars and
Light Trucks for Model Years 2027 and Beyond and Fuel Efficiency
Standards for Heavy-Duty Pickup Trucks and Vans for Model Years 2030
and Beyond
AGENCY: National Highway Traffic Safety Administration (NHTSA).
ACTION: Final rule.
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SUMMARY: NHTSA, on behalf of the Department of Transportation (DOT), is
finalizing Corporate Average Fuel Economy (CAFE) standards for
passenger cars and light trucks that increase at a rate of 2 percent
per year for passenger cars in model years (MYs) 2027-31, 0 percent per
year for light trucks in model years 2027-28, and 2 percent per year
for light trucks in model years 2029-31. NHTSA is also finalizing fuel
efficiency standards for heavy-duty pickup trucks and vans (HDPUVs) for
model years 2030-32 that increase at a rate of 10 percent per year and
model years 2033-35 that increase at a rate of 8 percent per year.
DATES: This rule is effective August 23, 2024.
ADDRESSES: For access to the dockets or to read background documents or
comments received, please visit <a href="https://www.regulations.gov">https://www.regulations.gov</a>, and/or
Docket Management Facility, M-30, U.S. Department of Transportation,
West Building, Ground Floor, Rm. W12-140, 1200 New Jersey Avenue SE,
Washington, DC 20590. The Docket Management Facility is open between 9
a.m. and 4 p.m. Eastern time, Monday through Friday, except Federal
holidays.
FOR FURTHER INFORMATION CONTACT: For technical and policy issues,
Joseph Bayer, CAFE Program Division Chief, Office of Rulemaking,
National Highway Traffic Safety Administration, 1200 New Jersey Avenue
SE, Washington, DC 20590; email: <a href="/cdn-cgi/l/email-protection#b7ddd8c4d2c7df99d5d6ced2c5f7d3d8c399d0d8c1"><span class="__cf_email__" data-cfemail="177d786472677f3975766e72655773786339707861">[email protected]</span></a>. For legal
issues, Rebecca Schade, NHTSA Office of Chief Counsel, National Highway
Traffic Safety Administration, 1200 New Jersey Avenue SE, Washington,
DC 20590; email: <a href="/cdn-cgi/l/email-protection#67150205020404064914040f0603022703081349000811"><span class="__cf_email__" data-cfemail="1d6f787f787e7e7c336e7e757c79785d797269337a726b">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
Table of Acronyms and Abbreviations
------------------------------------------------------------------------
Abbreviation Term
------------------------------------------------------------------------
AAA............................... American Automobile Association.
AALA.............................. American Automotive Labeling Act.
AAPC.............................. The American Automotive Policy
Council.
ABT............................... Average, Banking, and Trading.
AC................................ Air conditioning.
ACC............................... Advanced Clean Cars.
ACEEE............................. American Council for an Energy
Efficient Economy.
ACF............................... Advanced Clean Fleets.
ACME.............................. Adaptive Cylinder Management Engine.
ACT............................... Advanced Clean Trucks.
ADEAC............................. advanced cylinder deactivation.
ADEACD............................ advanced cylinder deactivation on a
dual overhead camshaft engine.
ADEACS............................ advanced cylinder deactivation on a
single overhead camshaft engine.
ADSL.............................. Advanced diesel engine.
AEO............................... Annual Energy Outlook.
AER............................... All-Electric Range.
AERO.............................. Aerodynamic improvements.
AFV............................... Alternative fuel vehicle.
AHSS.............................. advanced high strength steel.
AIS............................... Abbreviated Injury Scale.
AMPC.............................. Advanced Manufacturing Production
Tax Credit.
AMTL.............................. Advanced Mobility Technology
Laboratory.
ANL............................... Argonne National Laboratory.
ANSI.............................. American National Standards
Institute.
APA............................... Administrative Procedure Act.
AT................................ traditional automatic transmissions.
AVE............................... Alliance for Vehicle Efficiency.
AWD............................... All-Wheel Drive.
BEA............................... Bureau of Economic Analysis.
BEV............................... Battery electric vehicle.
BGEPA............................. Bald and Golden Eagle Protection
Act.
BIL............................... Bipartisan Infrastructure Law.
BISG.............................. Belt Mounted integrated starter/
generator.
BMEP.............................. Brake Mean Effective Pressure.
BNEF.............................. Bloomberg New Energy Finance.
BPT............................... Benefit-Per-Ton.
BSFC.............................. Brake-Specific Fuel Consumption.
BTW............................... Brake and Tire Wear.
CAA............................... Clean Air Act.
CAFE.............................. Corporate Average Fuel Economy.
CARB.............................. California Air Resources Board.
CBD............................... Center for Biological Diversity.
CBI............................... Confidential Business Information.
CEA............................... Center for Environmental
Accountability.
CEGR.............................. Cooled Exhaust Gas Recirculation.
CEQ............................... Council on Environmental Quality.
CFR............................... Code of Federal Regulations.
CH4............................... Methane.
[[Page 52541]]
CI................................ Compression Ignition.
CNG............................... Compressed Natural Gas.
CO................................ Carbon Monoxide.
CO2............................... Carbon Dioxide.
COVID............................. Coronavirus disease of 2019.
CPM............................... Cost Per Mile.
CR................................ Compression Ratio.
CRSS.............................. Crash Report Sampling System.
CUV............................... Crossover Utility Vehicle.
CVC............................... Clean Vehicle Credit.
CVT............................... Continuously Variable Transmissions.
CY................................ Calendar year.
CZMA.............................. Coastal Zone Management Act.
DCT............................... Dual Clutch Transmissions.
DD................................ Direct Drive.
DEAC.............................. Cylinder Deactivation.
DEIS.............................. Draft Environmental Impact
Statement.
DFS............................... Dynamic Fleet Share.
DMC............................... Direct Manufacturing Cost.
DOE............................... Department of Energy.
DOHC.............................. Dual Overhead Camshaft.
DOI............................... Department of the Interior.
DOT............................... Department of Transportation.
DPM............................... Diesel Particulate Matter.
DR................................ Discount Rate.
DSLI.............................. Advanced diesel engine with
improvements.
DSLIAD............................ Advanced diesel engine with
improvements and advanced cylinder
deactivation.
E.O............................... Executive Order.
EFR............................... Engine Friction Reduction.
EIA............................... U.S. Energy Information
Administration.
EIS............................... Environmental Impact Statement.
EISA.............................. Energy Independence and Security
Act.
EJ................................ Environmental Justice.
EPA............................... U.S. Environmental Protection
Agency.
EPCA.............................. Energy Policy and Conservation Act.
EPS............................... Electric Power Steering.
ERF............................... effective radiative forcing.
ESA............................... Endangered Species Act.
ESS............................... Energy Storage System.
ETDS.............................. Electric Traction Drive System.
EV................................ Electric Vehicle.
FCC............................... Fuel Consumption Credits.
FCEV.............................. Fuel Cell Electric Vehicle.
FCIV.............................. Fuel Consumption Improvement Value.
FCV............................... Fuel Cell Vehicle.
FE................................ Fuel Efficiency.
FEOC.............................. Foreign Entity of Concern.
FHWA.............................. Federal Highway Administration.
FIP............................... Federal Implementation Plan.
FMVSS............................. Federal Motor Vehicle Safety
Standards.
FMY............................... Final Model Year.
FRIA.............................. Final Regulatory Impact Analysis.
FTA............................... Free Trade Agreement.
FTP............................... Federal Test Procedure.
FWCA.............................. Fish and Wildlife Conservation Act.
FWD............................... Front-Wheel Drive.
FWS............................... U.S. Fish and Wildlife Service.
GCWR.............................. Gross Combined Weight Rating.
GDP............................... Gross Domestic Product.
GES............................... General Estimates System.
GGE............................... Gasoline Gallon Equivalents.
GHG............................... Greenhouse Gas.
GM................................ General Motors.
gpm............................... gallons per mile.
GREET............................. Greenhouse gases, Regulated
Emissions, and Energy use in
Transportation.
GVWR.............................. Gross Vehicle Weight Rating.
HATCI............................. Hyundai America Technical Center,
Inc.
HCR............................... High-Compression Ratio.
HD................................ Heavy-Duty.
HDPUV............................. Heavy-Duty Pickups and Vans.
HEG............................... High Efficiency Gearbox.
HEV............................... Hybrid Electric Vehicle.
HFET.............................. Highway Fuel Economy Test.
HVAC.............................. Heating, Ventilation, and Air
Conditioning.
[[Page 52542]]
IACC.............................. improved accessories.
IAV............................... IAV Automotive Engineering, Inc.
ICCT.............................. The International Council on Clean
Transportation.
ICE............................... Internal Combustion Engine.
IIHS.............................. Insurance Institute for Highway
Safety.
IPCC.............................. Intergovernmental Panel on Climate
Change.
IQR............................... Interquartile Range.
IRA............................... Inflation Reduction Act.
IWG............................... Interagency Working Group.
LD................................ Light-Duty.
LDB............................... Low Drag Brakes.
LDV............................... Light-Duty Vehicle.
LE................................ Learning Effects.
LEV............................... Low-Emission Vehicle.
LFP............................... Lithium Iron Phosphate.
LIB............................... Lithium-Ion Batteries.
LIVC.............................. Late Intake Valve Closing.
LT................................ Light truck.
MAX............................... maximum values.
MBTA.............................. Migratory Bird Treaty Act.
MD................................ Medium-Duty.
MDHD.............................. Medium-Duty Heavy-Duty.
MDPCS............................. Minimum Domestic Passenger Car
Standard.
MDPV.............................. Medium-Duty Passenger Vehicle.
MEMA.............................. Motor & Equipment Manufacturer's
Association.
MIN............................... minimum values.
MMTCO2............................ Million Metric Tons of Carbon
Dioxide.
MMY............................... Mid-Model Year.
MOU............................... Memorandum of Understanding.
MOVES............................. Motor Vehicle Emission Simulator
(including versions 3 and 4).
MPG............................... Miles Per Gallon.
mph............................... Miles Per Hour.
MR................................ Mass Reduction.
MSRP.............................. Manufacturer Suggested Retail Price.
MY................................ Model Year.
NAAQS............................. National Ambient Air Quality
Standards.
NACFE............................. North American Council for Freight
Efficiency.
NADA.............................. National Automotive Dealers
Association.
NAICS............................. North American Industry
Classification System.
NAS............................... National Academy of Sciences.
NCA............................... Nickel Cobalt Aluminum.
NEMS.............................. National Energy Modeling System.
NEPA.............................. National Environmental Policy Act.
NESCCAF........................... Northeast States Center for a Clean
Air Future.
NEVI.............................. National Electric Vehicle
Infrastructure.
NHPA.............................. National Historic Preservation Act.
NHTSA............................. National Highway Traffic Safety
Administration.
NMC............................... Nickel Manganese Cobalt.
NOX............................... Nitrogen Oxide.
NPRM.............................. Notice of Proposed Rulemaking.
NRC............................... National Research Council.
NRDC.............................. Natural Resource Defense Council.
NREL.............................. National Renewable Energy
Laboratory.
NTTAA............................. National Technology Transfer and
Advancement Act.
NVH............................... Noise-Vibration-Harshness.
NVO............................... Negative Valve Overlap.
NVPP.............................. National Vehicle Population Profile.
OEM............................... Original Equipment Manufacturer.
OHV............................... Overhead Valve.
OMB............................... Office of Management and Budget.
OPEC.............................. Organization of the Petroleum
Exporting Countries.
ORNL.............................. Oak Ridge National Laboratories.
PC................................ Passenger Car.
PEF............................... Petroleum Equivalency Factor.
PHEV.............................. Plug-in Hybrid Electric Vehicle.
PM................................ Particulate Matter.
PM2.5............................. fine particulate matter.
PMY............................... Pre-Model Year.
PPC............................... Passive Prechamber Combustion.
PRA............................... Paperwork Reduction Act of 1995.
PRIA.............................. Preliminary Regulatory Impact
Analysis.
PS................................ Power Split.
REMI.............................. Regional Economic Models, Inc.
RFS............................... Renewable Fuel Standard.
[[Page 52543]]
RIN............................... Regulation identifier number.
ROD............................... Record of Decision.
ROLL.............................. Tire rolling resistance.
RPE............................... Retail Price Equivalent.
RPM............................... Rotations Per Minute.
RRC............................... Rolling Resistance Coefficient.
RWD............................... Rear Wheel Drive.
SAE............................... Society of Automotive Engineers.
SAFE.............................. Safer Affordable Fuel-Efficient.
SBREFA............................ Small Business Regulatory
Enforcement Fairness Act.
SC................................ Social Cost.
SCC............................... Social Cost of Carbon.
SEC............................... Securities and Exchange Commission.
SGDI.............................. Stoichiometric Gasoline Direct
Injection.
SHEV.............................. Strong Hybrid Electric Vehicle.
SI................................ Spark Ignition.
SIP............................... State Implementation Plan.
SKIP.............................. refers to skip input in market data
input file.
SO2............................... Sulfur Dioxide.
SOC............................... State of Charge.
SOHC.............................. Single Overhead Camshaft.
SOX............................... Sulfur Oxide.
SPR............................... Strategic Petroleum Reserve.
SUV............................... Sport Utility Vehicle.
SwRI.............................. Southwest Research Institute.
TAR............................... Technical Assessment Report.
TSD............................... Technical Support Document.
UAW............................... United Automobile, Aerospace &
Agricultural Implement Workers of
America.
UF................................ Utility Factor.
UMRA.............................. Unfunded Mandates Reform Act of
1995.
VCR............................... Variable Compression Ratio.
VMT............................... Vehicle Miles Traveled.
VOC............................... Volatile Organic Compounds.
VSL............................... Value of a Statistical Life.
VTG............................... Variable Turbo Geometry.
VTGE.............................. Variable Turbo Geometry (Electric).
VVL............................... Variable Valve Lift.
VVT............................... Variable Valve Timing.
WF................................ Work Factor.
ZEV............................... Zero Emission Vehicle.
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Does this action apply to me?
This final rule affects companies that manufacture or sell new
passenger automobiles (passenger cars), non-passenger automobiles
(light trucks), and heavy-duty pickup trucks and vans (HDPUVs), as
defined under NHTSA's Corporate Average Fuel Economy (CAFE) and medium
and heavy duty (MD/HD) fuel efficiency (FE) regulations.\1\ Regulated
categories and entities include:
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\1\ ``Passenger car,'' ``light truck,'' and ``heavy-duty pickup
trucks and vans'' are defined in 49 CFR part 523.
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NAICS codes Examples of potentially
Category \a\ regulated entities
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Industry....................... 335111 Motor Vehicle
336112 Manufacturers.
Industry....................... 811111 Commercial Importers of
811112 Vehicles and Vehicle
811198 Components.
423110
Industry....................... 335312 Alternative Fuel
336312 Vehicle Converters.
336399
811198
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\a\ North American Industry Classification System (NAICS).
This list is not intended to be exhaustive, but rather provides a
guide regarding entities likely to be regulated by this action. To
determine whether particular activities may be regulated by this
action, you should carefully examine the regulations. You may direct
questions regarding the applicability of this action to the persons
listed in FOR FURTHER INFORMATION CONTACT.
Table of Contents
I. Executive Summary
II. Overview of the Final Rule
A. Summary of the NPRM
[[Page 52544]]
B. Public Participation Opportunities and Summary of Comments
C. Changes to the CAFE Model in Light of Public Comments and New
Information
D. Final Standards--Stringency
E. Final Standards--Impacts
1. Light Duty Effects
2. Heavy Duty Pickup Trucks and Vans Effects
F. Final Standards Are Maximum Feasible
G. Final Standards Are Feasible in the Context of EPA's Final
Standards and California's Standards
III. Technical Foundation for Final Rule Analysis
A. Why is NHTSA conducting this analysis?
1. What are the key components of NHTSA's analysis?
2. How do requirements under EPCA/EISA shape NHTSA's analysis?
3. What updated assumptions does the current model reflect as
compared to the 2022 final rule and the 2023 NPRM?
B. What is NHTSA analyzing?
C. What inputs does the compliance analysis require?
1. Technology Options and Pathways
2. Defining Manufacturers' Current Technology Positions in the
Analysis Fleet
3. Technology Effectiveness Values
4. Technology Costs
5. Simulating Existing Incentives, Other Government Programs,
and Manufacturer ZEV Deployment Plans
a. Simulating ZEV Deployment Unrelated to NHTSA's Standards
b. IRA Tax Credits
6. Technology Applicability Equations and Rules
D. Technology Pathways, Effectiveness, and Cost
1. Engine Paths
2. Transmission Paths
3. Electrification Paths
4. Road Load Reduction Paths
a. Mass Reduction
b. Aerodynamic Improvements
c. Low Rolling Resistance Tires
5. Simulating Air Conditioning Efficiency and Off-Cycle
Technologies
E. Consumer Responses to Manufacturer Compliance Strategies
1. Macroeconomic and Consumer Behavior Assumptions
2. Fleet Composition
a. Sales
b. Scrappage
3. Changes in Vehicle Miles Traveled (VMT)
4. Changes to Fuel Consumption
F. Simulating Emissions Impacts of Regulatory Alternatives
G. Simulating Economic Impacts of Regulatory Alternatives
1. Private Costs and Benefits
a. Costs to Consumers
(1) Technology Costs
(2) Consumer Sales Surplus
(3) Ancillary Costs of Higher Vehicle Prices
b. Benefits to Consumers
(1) Fuel Savings
(2) Refueling Benefit
(3) Additional Mobility
2. External Costs and Benefits
a. Costs
(1) Congestion and Noise
(2) Fuel Tax Revenue
b. Benefits
(1) Climate Benefits
(a) Social Cost of Greenhouse Gases Estimates
(b) Discount Rates for Climate Related Benefits
(c) Comments and Responses About the Agency's Choice of Social
Cost of Carbon Estimates and Discount Rates
(2) Reduced Health Damages
(3) Reduction in Petroleum Market Externalities
(4) Changes in Labor Use and Employment
3. Costs and Benefits Not Quantified
H. Simulating Safety Effects of Regulatory Alternatives
1. Mass Reduction Impacts
2. Sales/Scrappage Impacts
3. Rebound Effect Impacts
4. Value of Safety Impacts
IV. Regulatory Alternatives Considered in This Final Rule
A. General Basis for Alternatives Considered
B. Regulatory Alternatives Considered
1. Reference Baseline/No-Action Alternative
2. Alternative Baseline/No-Action Alternative
3. Action Alternatives for Model Years 2027-2032 Passenger Cars
and Light Trucks
a. Alternative PC1LT3
b. Alternative PC2LT002--Final Standards
c. Alternative PC2LT4
d. Alternative PC3LT5
e. Alternative PC6LT8
f. Other Alternatives Suggested by Commenters for Passenger Car
and LT CAFE Standards
4. Action Alternatives for Model Years 2030-2035 Heavy-Duty
Pickups and Vans
a. Alternative HDPUV4
b. Alternative HDPUV108--Final Standards
c. Alternative HDPUV10
d. Alternative HDPUV14
V. Effects of the Regulatory Alternatives
A. Effects on Vehicle Manufacturers
1. Passenger Cars and Light Trucks
2. Heavy-Duty Pickups and Vans
B. Effects on Society
1. Passenger Cars and Light Trucks
2. Heavy-Duty Pickups and Vans
C. Physical and Environmental Effects
1. Passenger Cars and Light Trucks
2. Heavy-Duty Pickups and Vans
D. Sensitivity Analysis, Including Alternative Baseline
1. Passenger Cars and Light Trucks
2. Heavy-Duty Pickups and Vans
VI. Basis for NHTSA's Conclusion That the Standards Are Maximum
Feasible
A. EPCA, as Amended by EISA
1. Lead Time
a. Passenger Cars and Light Trucks
b. Heavy-Duty Pickups and Vans
2. Separate Standards for Passenger Cars, Light Trucks, and
Heavy-Duty Pickups and Vans, and Minimum Standards for Domestic
Passenger Cars
3. Attribute-Based and Defined by a Mathematical Function
4. Number of Model Years for Which Standards May Be Set at a
Time
5. Maximum Feasible Standards
a. Passenger Cars and Light Trucks
(1) Technological Feasibility
(2) Economic Practicability
(3) The Effect of Other Motor Vehicle Standards of the
Government on Fuel Economy
(4) The Need of the U.S. To Conserve Energy
(a) Consumer Costs and Fuel Prices
(b) National Balance of Payments
(c) Environmental Implications
(d) Foreign Policy Implications
(5) Factors That NHTSA Is Prohibited From Considering
(6) Other Considerations in Determining Maximum Feasible CAFE
Standards
b. Heavy-Duty Pickups and Vans
(1) Appropriate
(2) Cost-Effective
(3) Technologically Feasible
B. Comments Regarding the Administrative Procedure Act (APA) and
Related Legal Concerns
C. National Environmental Policy Act
1. Environmental Consequences
a. Energy
(1) Direct and Indirect Impacts
(2) Cumulative Impacts
b. Air Quality
(1) Direct and Indirect Impacts
(a) Criteria Pollutants
(b) Toxic Air Pollutants
(c) Health Impacts
(2) Cumulative Impacts
(a) Criteria Pollutants
(b) Toxic Air Pollutants
(c) Health Impacts
c. Greenhouse Gas Emissions and Climate Change
(1) Direct and Indirect Impacts
(a) Greenhouse Gas Emissions
(b) Climate Change Indicators (Carbon Dioxide Concentration,
Global Mean Surface Temperature, Sea Level, Precipitation, and Ocean
pH)
(2) Cumulative Impacts
(a) Greenhouse Gas Emissions
(b) Climate Change Indicators (Carbon Dioxide Concentration,
Global Mean Surface Temperature, Sea Level, Precipitation, and Ocean
pH)
(c) Health, Societal, and Environmental Impacts of Climate
Change
(d) Qualitative Impacts Assessment
2. Conclusion
D. Evaluating the EPCA/EISA Factors and Other Considerations To
Arrive at the Final Standards
1. Passenger Cars and Light Trucks
2. Heavy-Duty Pickups and Vans
3. Severability
VII. Compliance and Enforcement
A. Background
B. Overview of Enforcement
1. Light Duty CAFE Program
a. Determining Compliance
b. Flexibilities
c. Civil Penalties
2. Heavy-Duty Pickup Trucks and Vans
a. Determining Compliance
b. Flexibilities
c. Civil Penalties
C. Changes Made by This Final Rule
[[Page 52545]]
1. Elimination of OC and AC Efficiency FCIVs for BEVs in the
CAFE Program
2. Addition of a Utility Factor for Calculating FCIVs for PHEVs
3. Phasing Out OC FCIVs by MY 2033
4. Elimination of the 5-Cycle and Alternative Approval Pathways
for CAFE
5. Requirement To Respond To Requests for Information Regarding
Off-Cycle Requests Within 60 Days for LDVs for MYs 2025 and 2026
6. Elimination of OC Technology Credits for Heavy-Duty Pickup
Trucks and Vans Starting in Model Year 2030
7. Technical Amendments for Advanced Technology Credits
8. Technical Amendments to Part 523
a. 49 CFR 523.2 Definitions
b. 49 CFR 523.3 Automobile
c. 49 CFR 523.4 Passenger Automobile
d. 49 CFR 523.5 Non-Passenger Automobile
e. 49 CFR 523.6 Heavy-Duty Vehicle
f. 49 CFR 523.8 Heavy-Duty Vocational Vehicle
9. Technical Amendments to Part 531
a. 49 CFR 531.1 Scope
b. 49 CFR 531.4 Definitions
c. 49 CFR 531.5 Fuel Economy Standards
10. Technical Amendments to Part 533
a. 49 CFR 533.1 Scope
b. 49 CFR 533.4 Definitions
11. Technical Amendments to Part 535
a. 49 CFR 535.4 Definitions
b. 49 CFR 535.7 Average, Banking, and Trading (ABT) Credit
Program
12. Technical Amendments to Part 536
13. Technical Amendments to Part 537
a. 49 CFR 537.2 Scope
b. 49 CFR 537.3 Applicability
c. 49 CFR 537.4 Definitions
d. 49 CFR 537.7 Pre-Model Year and Mid-Model Year Reports
D. Non-Fuel Saving Credits or Flexibilities
E. Additional Comments
1. AC FCIVs
2. Credit Transfer Cap AC
3. Credit Trading Between HDPUV and Light Truck Fleets
4. Adjustment for Carry Forward and Carryback Credits
5. Increasing Carryback Period
6. Flex Fuel Vehicle Incentives
7. Reporting
8. Petroleum Equivalency Factor for HDPUVs
9. Incentives for Fuel Cell Electric Vehicles
10. EV Development
11. PHEV in HDPUV
VIII. Regulatory Notices and Analyses
A. Executive Order 12866, Executive Order 13563, and Executive
Order 14094
B. DOT Regulatory Policies and Procedures
C. Executive Order 14037
D. Environmental Considerations
1. National Environmental Policy Act (NEPA)
2. Clean Air Act (CAA) as Applied to NHTSA's Final Rule
3. National Historic Preservation Act (NHPA)
4. Fish and Wildlife Conservation Act (FWCA)
5. Coastal Zone Management Act (CZMA)
6. Endangered Species Act (ESA)
7. Floodplain Management (Executive Order 11988 and DOT Order
5650.2)
8. Preservation of the Nation's Wetlands (Executive Order 11990
and DOT Order 5660.1a)
9. Migratory Bird Treaty Act (MBTA), Bald and Golden Eagle
Protection Act (BGEPA), Executive Order 13186
10. Department of Transportation Act (Section 4(f))
11. Executive Order 12898: ``Federal Actions To Address
Environmental Justice in Minority Populations and Low-Income
Populations''; Executive Order 14096: ``Revitalizing Our Nation's
Commitment to Environmental Justice for All''
12. Executive Order 13045: ``Protection of Children From
Environmental Health Risks and Safety Risks''
E. Regulatory Flexibility Act
F. Executive Order 13132 (Federalism)
G. Executive Order 12988 (Civil Justice Reform)
H. Executive Order 13175 (Consultation and Coordination With
Indian Tribal Governments)
I. Unfunded Mandates Reform Act
J. Regulation Identifier Number
K. National Technology Transfer and Advancement Act
L. Department of Energy Review
M. Paperwork Reduction Act
N. Congressional Review Act
I. Executive Summary
NHTSA, on behalf of the Department of Transportation, is finalizing
new corporate average fuel economy (CAFE) standards for passenger cars
and light trucks for model years 2027-2031,\2\ setting forth augural
standards for MY 2032,\3\ and finalizing new fuel efficiency standards
for heavy-duty pickup trucks and vans \4\ (HDPUVs) for model years
2030-2035. This final rule responds to NHTSA's statutory obligation to
set CAFE and HDPUV standards at the maximum feasible level that the
agency determines vehicle manufacturers can achieve in each MY, in
order to improve energy conservation.\5\ Improving energy conservation
by raising CAFE and HDPUV standard stringency not only helps consumers
save money on fuel, but also improves national energy security and
reduces harmful emissions.
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\2\ Passenger cars are generally sedans, station wagons, and
two-wheel drive crossovers and sport utility vehicles (CUVs and
SUVs), while light trucks are generally four-wheel drive sport
utility vehicles, pickups, minivans, and passenger/cargo vans.
``Passenger car'' and ``light truck'' are defined more precisely at
49 CFR part 523.
\3\ MY 2032, is ``augural,'' as in the 2012 final rule that
established CAFE standards for MYs 2017 and beyond. The 2012 final
rule citation is 77 FR 62624 (Oct. 15, 2012).
\4\ HDPUVs are generally Class 2b/3 work trucks, fleet SUVs,
work vans, and cutaway chassis-cab vehicles. ``Heavy-duty pickup
trucks and vans'' are more precisely defined at 49 CFR part 523.
\5\ See 49 U.S.C. 32902.
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Based on the information currently before us, NHTSA estimates that
relative to the reference baseline \6\ this final rule will reduce
gasoline consumption by 64 billion gallons relative to reference
baseline levels for passenger cars and light trucks and will reduce
fuel consumption by approximately 5.6 billion gallons relative to
reference baseline levels for HDPUVs through calendar year 2050. If
compared to the alternative baseline, which has lower levels of
electric vehicle penetration than the reference baseline, fuel savings
will be greater at approximately 115 billion gallons.\7\ Reducing
gasoline consumption has multiple benefits--it improves our nation's
energy security, it saves consumers money, and reduces harmful
pollutant emissions that lead to adverse human and environmental health
outcomes and climate change. NHTSA estimates that relative to the
reference baseline, this final rule will reduce carbon dioxide
(CO<INF>2</INF>) emissions by 659 million metric tons for passenger
cars and light trucks, and by 55 million metric tons for HDPUVs through
calendar year 2050. Again, these relative reductions are greater if the
rule is compared to the alternative baseline, but demonstrating a
similar level of absolute carbon dioxide emissions.\8\ While consumers
could pay more for new vehicles upfront, we estimate that they would
save money on fuel costs over the lifetimes of those new vehicles--in
the reference baseline analysis lifetime fuel savings exceed modeled
regulatory costs by roughly $247, on average, for passenger car and
light truck buyers of MY 2031 vehicles, and roughly $491, on average,
for HDPUV buyers of MY 2038 vehicles. By comparison, in the No ZEV
alternative baseline analysis, lifetime fuel savings exceed modeled
regulatory costs by roughly $400, on average, for passenger car and
light truck buyers of MY 2031 vehicles. Net benefits for the preferred
[[Page 52546]]
alternative for passenger cars and light trucks are estimated to be
$35.2 billion at a 3 percent discount rate (DR),\9\ and $30.8 billion
at a 7 percent DR, and for HDPUVs, net benefits are estimated to be
$13.6 billion at a 3 percent DR, and $11.8 billion at a 7 percent DR.
Net benefits are higher if the final rules are assessed relative to the
alternative baseline, estimated to be $44.9 billion at a 3 percent DR
and $39.8 billion at 7 percent DR.\10\ (For simplicity, however, all
projections presented in this document use the reference baseline
unless otherwise stated.)
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\6\ NHTSA performed an analysis considering an alternative
baseline, referenced herein as the ``No ZEV alternative baseline.''
The alternative baseline does not assume manufacturers will
consider, or preemptively react to, or voluntarily deploy electric
vehicles consistent with any of the California light-duty vehicle
Zero Emission Vehicle programs (specifically, ACC I and ACC II)
during any of the model years simulated in the analysis, regardless
of the fact that ACC I is a legally binding program, and regardless
of manufacturer commitments to deploy electric vehicles consistent
with ACC II. See TSD Chapter 1.4.2, RIA 3.2, and Section IV.B.2 of
this document for further discussion.
\7\ Under the CAFE standards finalized in this rule, the
absolute amount of fuel use predicted through CY 2050 only differs
by 1.4 percent between the reference and alternative baseline
analysis.
\8\ There is a 1 percent difference between the absolute volume
of carbon dioxide (measured in million metric tons, or mmt) produced
through CY 2050 in the reference baseline analysis and alternative
baseline analysis under the final standards.
\9\ The Social Cost of Greenhouse Gases (SC-GHG) assumed a 2
percent discount rate for the net benefit values discussed here.
\10\ While the absolute fuel consumption and carbon dioxide
emissions are similar when the final standards are applied over both
baselines considered, the higher net benefits for the alternative
baseline are a result of a larger portion of the reduced fuel use
and reduced carbon dioxide being attributed to the CAFE standards
rather than to the baseline.
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The record for this action is comprised of the notice of proposed
rulemaking (NPRM) and this final rule, a Technical Support Document
(TSD), a Final Regulatory Impact Assessment (FRIA), and a Draft and
Final EIS, along with extensive analytical documentation, supporting
references, and many other resources. Most of these resources are
available on NHTSA's website,\11\ and other references not available on
NHTSA's website can be found in the rulemaking docket, the docket
number of which is listed at the beginning of this preamble.
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\11\ See NHTSA. 2023. Corporate Average Fuel Economy. Available
at: <a href="https://www.nhtsa.gov/laws-regulations/corporate-average-fuel-economy">https://www.nhtsa.gov/laws-regulations/corporate-average-fuel-economy</a>. (Accessed: Feb. 23, 2024).
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The final rule considers a range of regulatory alternatives for
each fleet, consistent with NHTSA's obligations under the
Administrative Procedure Act (APA), National Environmental Policy Act
(NEPA), and E.O. 12866. Specifically, NHTSA considered five regulatory
alternatives for passenger cars and light trucks, as well as the No-
Action Alternative. Each alternative is labeled for the type of vehicle
and the rate of increase in fuel economy stringency based on changes
for each model year, for example, PC1LT3 represents a 1 percent
increase in Passenger Car standards and a 3 percent increase in Light
Truck standards. We include four regulatory alternatives for HDPUVs,
each representing different possible rates of year-over-year increase
in the stringency of new fuel economy and fuel efficiency standards, as
well as the No-Action Alternative. For example, HDPUV4 represents a 4
percent increase in fuel efficiency standards applicable to HDPUVs. The
regulatory alternatives are as follows: \12\
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\12\ In a departure from recent CAFE rulemaking trends, we have
applied different rates of stringency increase to the passenger car
and the light truck fleets in different model years, because the
record indicated that different rates of fuel economy were possible.
Rather than have both fleets increase their respective standards at
the same rate, light truck standards increase at a different rate
than passenger car standards in the first two years of the program.
This is consistent with NHTSA's obligation to set maximum feasible
CAFE standards separately for passenger cars and light trucks (see
49 U.S.C. 32902), which gives NHTSA discretion, by law, to set CAFE
standards that increase at different rates for cars and trucks.
Section VI of this preamble also discusses in greater detail how
this approach carries out NHTSA's responsibility under the Energy
Policy and Conservation Act (EPCA) to set maximum feasible standards
for both passenger cars and light trucks.
\13\ Percentages in the table represent the year over year
reduction in gal/mile applied to the mpg values on the target
curves. The reduction in gal/mile results in an increased mpg.
[GRAPHIC] [TIFF OMITTED] TR24JN24.000
[[Page 52547]]
[GRAPHIC] [TIFF OMITTED] TR24JN24.001
After assessing these alternatives against the reference baseline
and the alternative baseline, and evaluating numerous sensitivity
cases, NHTSA is finalizing stringency increases at 2 percent per year
for passenger cars for MYs 2027 through 2031, and at 0 percent per year
for light trucks for MYs 2027 and 2028, and 2 percent per year for MYs
2029-2031. NHTSA is also setting forth an augural MY 2032 standard that
increases at a rate of 2 percent for both passenger cars and light
trucks. NHTSA is finalizing stringency increases at 10 percent per year
for HDPUVs for MYs 2030-2032, and 8 percent per year for MYs 2033-2035.
The regulatory alternatives representing these final stringency
increases are called ``PC2LT002'' for passenger cars and light trucks,
and ``HDPUV108'' for HDPUVs. These standards are also referred to
throughout the rulemaking documents as the ``preferred alternative'' or
``final standards.'' NHTSA concludes that these levels are the maximum
feasible for these model years as discussed in more detail in Section
VI of this preamble, and in particular given the statutory constraints
that prevent NHTSA from considering the fuel economy of battery
electric vehicles (BEVs) in determining maximum feasible CAFE
standards.\15\
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\14\ For HDPUVs, the different regulatory alternatives are also
defined in terms of percent-increases in stringency from year to
year, but in terms of fuel consumption reductions rather than fuel
economy increases, so that increasing stringency appears to result
in standards going down (representing a direct reduction in fuel
consumed) over time rather than up. Also, unlike for the passenger
car and light truck standards, because HDPUV standards are measured
using a fuel consumption metric, year-over-year percent changes do
actually represent gallon/mile differences across the work-factor
range.
\15\ 49 U.S.C. 32902(h) states that when determining what levels
of CAFE standards are maximum feasible, NHTSA ``(1) may not consider
the fuel economy of dedicated automobiles [including battery-
electric vehicles]; (2) shall consider dual fueled automobiles to be
operated only on gasoline or diesel fuel; and (3) may not consider,
when prescribing a fuel economy standard, the trading, transferring,
or availability of credits under section 32903.''
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NHTSA notes that due to the statutory constraints that prevent
NHTSA from considering the fuel economy of dedicated alternative fueled
vehicles, the full (including electric-only operation) fuel economy of
dual-fueled alternative fueled vehicles, and the availability of over-
compliance credits when determining what standards are maximum
feasible, many aspects of our analysis are different from what they
would otherwise be without the statutory restrictions--in particular,
the technologies chosen to model possible compliance options, the
estimated costs, benefits, and achieved levels of fuel economy, as well
as the current and projected adoption of alternative fueled vehicles.
NHTSA evaluates the results of that constrained analysis by weighing
the four enumerated statutory factors to determine which standards are
maximum feasible, as discussed in Section VI.A.5.
For passenger cars and light trucks, NHTSA notes that the final
year of standards, MY 2032, is ``augural,'' as in the 2012 final rule
which established CAFE standards for model years 2017 and beyond.
Augural standards mean that they are NHTSA's best estimate of what the
agency would propose, based on the information currently before it, if
the agency had authority to set CAFE standards for more than five model
years in one action. The augural standards do not, and will not, have
any effect in themselves and are not binding unless adopted in a
subsequent rulemaking. Consistent with past practice, NHTSA is
including augural standards for MY 2032 to give its best estimate of
what those standards would be to provide as much predictability as
possible to manufacturers and to be consistent with the time frame of
the Environmental Protection Agency (EPA) standards for greenhouse gas
(GHG) emissions from motor vehicles. Due to statutory lead time
constraints for HDPUV standards, NHTSA's final rule for HDPUV standards
must begin with MY 2030. There is no restriction on the number of model
years for which NHTSA may set HDPUV standards, so none of the HDPUV
standards are augural.
The CAFE standards remain vehicle-footprint-based, like the current
CAFE standards in effect since MY 2011, and the HDPUV standards remain
work-factor-based, like the HDPUV standards established in the 2011
``Phase 1'' rulemaking used in the 2016 ``Phase 2'' rulemaking. The
footprint of a vehicle is the area calculated by multiplying the
wheelbase times the track width, essentially the rectangular area of a
vehicle measured from tire to tire where the tires hit the ground. The
work factor (WF) of a vehicle is a unit established to measure payload,
towing capability, and whether or not a vehicle has four-wheel drive.
This means that the standards are defined by mathematical equations
that represent linear functions relating vehicle footprint to fuel
economy targets for passenger cars and light trucks,\16\ and relating
WF to fuel consumption targets for HDPUVs.
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\16\ Generally, passenger cars have more stringent targets than
light trucks regardless of footprint, and smaller vehicles will have
more stringent targets than larger vehicles, because smaller
vehicles are generally more fuel efficient. No individual vehicle or
vehicle model need meet its target exactly, but a manufacturer's
compliance is determined by how its average fleet fuel economy
compares to the average fuel economy of the targets of the vehicles
it manufactures.
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The target curves for passenger cars, light trucks, and
compression-ignition and spark-ignition HDPUVs are set forth in
Sections II and IV; curves for model years prior to the years of the
rulemaking time frame are included in the figures for context. NHTSA
[[Page 52548]]
underscores that the equations and coefficients defining the curves are
the CAFE and HDPUV standards, and not the mpg and gallon/100-mile
estimates that the agency currently estimates could result from
manufacturers complying with the curves. We provide mpg and gallon/100-
mile estimates for ease of understanding after we illustrate the
footprint curves, but the equations and coefficients are the actual
standards. NHTSA is also finalizing new minimum domestic passenger car
CAFE standards (MDPCS) for model years 2027-2031 as required by the
Energy Policy and Conservation Act of 1975 (EPCA), as amended by the
EISA, and applied to vehicles defined as manufactured in the United
States. Section 32902(b)(4) of 49 U.S.C. requires NHTSA to project the
minimum domestic standard when it promulgates passenger car standards
for a MY; these standards are shown in Table I-3 below. NHTSA retains
the 1.9 percent offset first used in the 2020 final rule, reflecting
prior differences between passenger car footprints originally forecast
by the agency and passenger car footprints as they occurred in the real
world, such that the minimum domestic passenger car standard is as
shown in the table below.
[GRAPHIC] [TIFF OMITTED] TR24JN24.002
Recognizing that many readers think about CAFE standards in terms
of the mpg values that the standards are projected to eventually
require, NHTSA currently estimates that the standards would require
roughly 50.4 mpg in MY 2031, on an average industry fleet-wide basis,
for passenger cars and light trucks. NHTSA notes both that real-world
fuel economy is generally 20-30 percent lower than the estimated
required CAFE level stated above,\17\ and also that the actual CAFE
standards are the footprint target curves for passenger cars and light
trucks. This last note is important, because it means that the ultimate
fleet-wide levels will vary depending on the mix of vehicles that
industry produces for sale in those model years. NHTSA also calculates
and presents ``estimated achieved'' fuel economy levels, which differ
somewhat from the estimated required levels for each fleet, for each
year.\18\ NHTSA estimates that the industry-wide average fuel economy
achieved in MY 2031 for passenger cars and light trucks combined could
increase from about 52.1 mpg under the No-Action Alternative to 52.5
mpg under the standards.
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\17\ CAFE compliance is evaluated per 49 U.S.C. 32904(c) Testing
and Calculation Procedures, which states that the EPA Administrator
(responsible under EPCA/EISA for measuring vehicle fuel economy)
shall use the same procedures used for model year 1975 (weighted 55
percent urban cycle and 45 percent highway cycle) or comparable
procedures. Colloquially, this is known as the 2-cycle test. The
``real-world'' or 5-cycle evaluation includes the 2-cycle tests, and
three additional tests that are used to adjust the city and highway
estimates to account for higher speeds, air conditioning use, and
colder temperatures. In addition to calculating vehicle fuel
economy, EPA is responsible for providing the fuel economy data that
is used on the fuel economy label on all new cars and light trucks,
which uses the ``real-world'' values. In 2006, EPA revised the test
methods used to determine fuel economy estimates (city and highway)
appearing on the fuel economy label of all new cars and light trucks
sold in the U.S., effective with 2008 model year vehicles.
\18\ NHTSA's analysis reflects that manufacturers nearly
universally make the technological improvements prompted by CAFE
standards at times that coincide with existing product ``refresh''
and ``redesign'' cycles, rather than applying new technology every
year regardless of those cycles. It is significantly more cost-
effective to make fuel economy-improving technology updates when a
vehicle is being updated. See TSD 2.2.1.7 for additional discussion
about manfacturer refresh and redesign cycles.
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[[Page 52549]]
[GRAPHIC] [TIFF OMITTED] TR24JN24.003
To the extent that manufacturers appear to be over-complying in our
analysis with required fuel economy levels in the passenger car fleet,
NHTSA notes that this is due to the inclusion of several all-electric
manufacturers in the reference baseline analysis, which affects the
overall average achieved levels. Manufacturers with more traditional
fleets do not over-comply at such high levels in our analysis, and our
analysis considers the compliance paths for both manufacturer groups.
In contrast, while it looks like some manufacturers are falling short
of required fuel economy levels in the light truck fleet (and choosing
instead to pay civil penalties), NHTSA notes that this appears to be an
economic decision by a relatively small number of companies. In
response to comments from vehicle manufacturers, in particular
manufacturers that commented that they cannot stop manufacturing large
fuel inefficient light trucks while also transitioning to manufacturing
electric vehicles, NHTSA has reconsidered light truck stringency levels
and notes that manufacturers no longer face CAFE civil penalties as
modeled in the NPRM. Please see Section VI.D of this preamble for more
discussion on these topics and how the agency has considered them in
determining maximum feasible standards for this final rule.
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\19\ There is no actual legal requirement for combined passenger
car and light truck fleets, but NHTSA presents information this way
in recognition of the fact that many readers will be accustomed to
seeing such a value.
\20\ The MY 2022 baseline fleet that was used from 2022 NHTSA
Pre-Model Year (PMY) data consists of 38% passenger car and 62%
light truck.
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For HDPUVs, NHTSA currently projects that the standards would
require, on an average industry fleet-wide basis for the HDPUV fleet,
roughly 2.851 gallons per 100 miles in MY 2035.\21\ HDPUV standards are
attribute-based like passenger car and light truck standards, so here,
too, ultimate fleet-wide levels will vary depending on what industry
produces for sale.
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\21\ The HDPUV standards measure compliance in direct fuel
consumption and uses gallons consumed per 100 miles of operation as
a metric. See 49 CFR 535.6.
[GRAPHIC] [TIFF OMITTED] TR24JN24.004
For all fleets, average requirements and average achieved CAFE and
HDPUV fuel efficiency levels would ultimately depend on manufacturers'
and consumers' responses to standards, technology developments,
economic conditions, fuel prices, and other factors.
[[Page 52550]]
Our technical analysis for this final rule keeps the same general
framework as past CAFE and HDPUV rules, but as applied to the most up-
to-date fleet available at the time of the analysis. NHTSA has updated
technologies considered in our analysis (removing technologies which
are already universal or nearly so and technologies which are exiting
the fleet, adding certain advanced engine technologies); \22\ updated
macroeconomic input assumptions, as with each round of rulemaking
analysis; improved user control of various input parameters; updated
our approach to modeling manufacturers' expected compliance with
states' Zero Emission Vehicle (ZEV) programs and deployment of
additional electric vehicles consistent with manufacturer commitments;
accounted for changes to DOE's Petroleum Equivalency Factor (PEF),\23\
for the reference baseline assumptions; expanded accounting for Federal
incentives such as Inflation Reduction Act programs; expanded
procedures for estimating new vehicle sales and fleet shares; updated
inputs for projecting aggregate light-duty Vehicle Miles Traveled
(VMT); and added various output values and options.\24\
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\22\ See TSD Chapter 1.1 for a complete list of technologies
added or removed from the analysis.
\23\ For more information on DOE's final rule, see 89 FR 22041
(Mar. 29, 2024). For more information on how DOE's revised PEF
affects NHTSA's results in this final rule, please see Chapter 9 of
the FRIA.
\24\ See TSD Chapter 1.1 for a detailed discussion of analysis
updates.
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NHTSA concludes, as we explain in more detail below, that
Alternative PC2LT002 is the maximum feasible alternative that
manufacturers can achieve for model years 2027-2031 passenger cars and
light trucks, based on a variety of reasons. Energy conservation is
still paramount, for the consumer benefits, energy security benefits,
and environmental benefits that it provides. Moreover, although the
vehicle fleet is undergoing a significant transformation now and in the
coming years, for reasons other than the CAFE standards, NHTSA believes
that a significant percentage of the on-road (and new) vehicle fleet
may remain propelled by internal combustion engines (ICEs) through
2031. NHTSA believes that the final standards will encourage
manufacturers producing those ICE vehicles during the standard-setting
time frame to achieve significant fuel economy, improve energy
security, and reduce harmful pollution by a large amount. At the same
time, NHTSA is finalizing standards that our estimates project will
continue to save consumers money and fuel over the lifetime of their
vehicles while being economically practicable and technologically
feasible for manufacturers to achieve.
Although all of the other alternatives, except for the no-action
alternative, would conserve more energy and provide greater fuel
savings benefits and certain pollutant emissions reductions, NHTSA's
statutorily-constrained analysis currently estimates that those
alternatives may not be achievable for many manufacturers in the
rulemaking time frame.\25\ Additionally, the analysis indicates
compliance with those more stringent alternatives would impose
significant costs (under the constrained analysis) on individual
consumers without corresponding fuel savings benefits large enough to,
on average, offset those costs. Within that framework, NHTSA's analysis
suggests that the more stringent alternatives could push more
technology application than would be economically practicable, given
anticipated reference baseline activity that will already be consuming
manufacturer resources and capital and the constraints of planned
manufacturer redesign cycles. In contrast to all other action
alternatives, except for the no-action alternative, Alternative
PC2LT002 comes at a cost we believe the market can bear without
creating consumer acceptance or sales issues, appears to be much more
achievable, and will still result in consumer net benefits on average.
The alternative also achieves large fuel savings benefits and
significant reductions in emissions compared to the no-action
alternative. NHTSA concludes Alternative PC2LT002 is the appropriate
choice given this record.
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\25\ See Section VI for a complete discussion.
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For HDPUVs, NHTSA concludes, as explained in more detail below,
that Alternative HDPUV108 is the maximum feasible alternative that
manufacturers can achieve for model years 2030-2035 HDPUVs. It has been
seven years since NHTSA revisited HDPUV standards, and our analysis
suggests that there is much opportunity for cost-effective improvements
in this segment, broadly speaking. At the same time, we recognize that
these vehicles are primarily used to conduct work for a large number of
businesses. Although Alternatives HDPUV10 and HDPUV14 would conserve
more energy and provide greater fuel savings benefits and
CO<INF>2</INF> emissions reductions, they are more costly than
HDPUV108, and NHTSA currently estimates that Alternative HDPUV108 is
the most cost-effective under a variety of metrics and at either a 3
percent or a 7 percent DR, while still being appropriate and
technologically feasible. NHTSA is allowed to consider electrification
in determining maximum feasible standards for HDPUVs. As a result,
NHTSA concludes that HDPUV108 is the appropriate choice given the
record discussed in more detail below, and we believe it balances
EPCA's overarching objective of energy conservation while remaining
cost-effective and technologically feasible.
For passenger cars and light trucks, NHTSA estimates that this
final rule would reduce average fuel outlays over the lifetimes of MY
2031 vehicles by about $639 per vehicle relative to the reference
baseline, while increasing the average cost of those vehicles by about
$392 over the reference baseline, at a 3 percent discount rate; this
represents a difference of $247. With climate benefits discounted at 2
percent and all other benefits and costs discounted at 3 percent, when
considering the entire CAFE fleet for model years 1983-2031, NHTSA
estimates $24.5 billion in monetized costs and $59.7 billion in
monetized benefits attributable to the standards, such that the present
value of aggregate net monetized benefits to society would be $35.2
billion.\26\ Again, the net benefits are larger if the final rule is
assessed relative to the alternative baseline.
---------------------------------------------------------------------------
\26\ These values are from our ``model year'' analysis,
reflecting the entire fleet from MYs 1983-2031, consistent with past
practice. Model year and calendar year perspectives are discussed in
more detail below in this section.
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For HDPUVs, NHTSA estimates that this final rule could reduce
average fuel outlays over the lifetimes of MY 2038 vehicles by about
$717 per vehicle, while increasing the average cost of those vehicles
by about $226 over the reference baseline, at a 3 percent discount
rate; this represents a difference of $491. With climate benefits
discounted at 2 percent and all other benefits and costs discounted at
3 percent, when considering the entire on-road HDPUV fleet for calendar
years 2022-2050, NHTSA estimates $3.4 billion in monetized costs and
$17 billion in monetized benefits attributable to the standards, such
that the present value of aggregate net monetized benefits to society
would be $13.6 billion.\27\
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\27\ These values are from our ``calender year'' analysis,
reflecting the on-the-road fleet from CYs 2022-2050. Model year and
calendar year perspectives are discussed in more detail below in
this section.
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These assessments do not include important unquantified effects,
such as energy security benefits, equity and distributional effects,
and certain air quality benefits from the reduction of
[[Page 52551]]
toxic air pollutants and other emissions, among other things, so the
net benefit estimate is a conservative one.\28\ In addition, the power
sector emissions modeling reflected in this analysis is subject to
uncertainty and may be conservative to the extent that other components
that influence energy markets, such as recently finalized Federal rules
and additional modeled policies like Federal tax credits, are
incorporated in those estimates. That said, NHTSA performed additional
modeling to test the sensitivity of those estimates and found that in
the context of total emissions, any changes from using different power
sector forecasts are extremely small. This is discussed in more detail
in FRIA Chapter 9.
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\28\ These cost and benefit estimates are based on many
different and uncertain inputs, and NHTSA has conducted several
dozen sensitivity analyses varying individual inputs to evaluate the
effect of that uncertainty. For example, while NHTSA's reference
baseline analysis constrains the application of high compression
ratio engines to some vehicles based on performance and other
considerations, we also conducted a sensitivity analysis that
removed all of those constraints. Results of this and other
sensitivity analyses are discussed in Section V of this preamble, in
Chapter 9 of the FRIA, and (if large or otherwise significant) in
Section VI.D of this preamble.
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Table I-6 presents aggregate benefits and costs for new vehicle
buyers and for the average individual new vehicle buyer.
[GRAPHIC] [TIFF OMITTED] TR24JN24.005
NHTSA recognizes that EPA has recently issued a final rule to set
new multi-pollutant emissions standards for model years 2027 and later
light-duty (LD) and medium-duty vehicles (MDV).\29\ EPA describes its
final rule as building upon EPA's final standards for Federal GHG
emissions standards for passenger cars and light trucks for model years
2023 through 2026 and leverages advances in clean car technology to
unlock benefits to Americans ranging from reducing pollution, to
improving public health, to saving drivers money through reduced fuel
and maintenance costs.\30\ EPA's standards phase in over model years
2027 through 2032.\31\
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\29\ Multi-Pollutant Emissions Standards for Model Years 2027
and Later Light-Duty and Medium-Duty Vehicles; Final Rule, 89 FR
27842 (Apr. 18, 2024).
\30\ Id.
\31\ Id.
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NHTSA coordinated with EPA in developing our final rule to avoid
inconsistencies and produce requirements that are consistent with
NHTSA's statutory authority. The final rules nevertheless differ in
important ways. First, NHTSA's final rule, consistent with its
statutory authority and mandate under EPCA/EISA, focuses on improving
vehicle fuel economy and not directly on reducing vehicle emissions--
though reduced emissions are a follow-on effect of improved fuel
economy. Second, the biggest difference between the two final rules is
due to EPCA/EISA's statutory prohibition against NHTSA considering the
fuel economy of dedicated alternative fueled vehicles, including BEVs,
and including the full fuel economy of dual-fueled alternative fueled
vehicles in determining the maximum feasible fuel economy level that
manufacturers can achieve for passenger cars and light trucks, even
though manufacturers may use BEVs and dual-fueled alternative fuel
vehicles (AFV) like PHEVs to comply with CAFE standards. EPA is not
prohibited from considering BEVs or PHEVs as a compliance option. EPA's
final rule is informed by, among other considerations, trends in the
automotive industry (including the proliferation of announced
investments by automakers in electrifying their fleets), tax incentives
under the Inflation Reduction Act (IRA), and other factors in the
rulemaking record that are leading to a rapid transition in the
automotive industry toward less-pollutant-emitting vehicle
technologies. NHTSA, in contrast, may not consider BEVs as a compliance
option for the passenger car and light truck fleets even though
manufacturers may, in fact, use BEVs to comply with CAFE standards.
This constraint means that not only are NHTSA's stringency rates of
increase
[[Page 52552]]
different from EPA's but also the shapes of our standards are different
based upon the different scopes.
Recognizing these statutory restrictions and their effects on
NHTSA's analysis (and that EPA's analysis and decisions are not subject
to such constraints) NHTSA sought to optimize the effectiveness of the
final CAFE standards consistent with our statutory factors. Our
statutorily constrained simulated industry response shows a reasonable
path forward to compliance with CAFE standards, but we want to stress
that our analysis simply shows feasibility and does not dictate a
required path to compliance. Because the standards are performance-
based, manufacturers are always free to apply their expertise to find
the appropriate technology path that best meets all desired outcomes.
Indeed, as explained in greater detail later on in this final rule, it
is entirely possible and reasonable that a vehicle manufacturer will
use technology options to meet NHTSA's standards that are significantly
different from what NHTSA's analysis for this final rule suggests given
the statutory constraints under which it operates. NHTSA has ensured
that these final standards take account of statutory objectives and
constraints while minimizing compliance costs.
As discussed before, NHTSA does not face the same statutory
limitations in setting standards for HDPUVs as it does in setting
standards for passenger cars and light trucks. This allows NHTSA to
consider a broader array of technologies in setting maximum feasible
standards for HDPUVs. However, we are still considerate of factors that
allow these vehicles to maintain utility and do work for the consumer
when we set the standards.
Additionally, NHTSA has considered and accounted for the electric
vehicles that manufacturers' have indicated they intend to deploy in
our analysis, as part of the analytical reference baseline.\32\ Some of
this deployment would be consistent with manufacturer compliance with
California's Advanced Clean Cars (ACC) I and Advanced Clean Trucks
(ACT). We find that manufacturers will comply with ZEV requirements in
California and a number of other states in the absence of CAFE
standards, and accounting for that expected compliance allows us to
present a more realistic picture of the state of fuel economy even in
the absence of changes to the CAFE standards. In the proposal, we also
included the main provisions of California's Advanced Clean Cars II
program (ACC II), which California has adopted but which has not been
granted a Clean Air Act preemption waiver by EPA. Because ACC II has
not been granted a waiver, we have not included it in our analysis as a
legal requirement applying to manufacturers. However, manufacturers
have indicated that they intend to deploy additional electric vehicles
regardless of whether the waiver is granted, and our analysis reflects
these vehicles. Reflecting this expected deployment of electric
vehicles for non-CAFE compliance reasons in the analysis improves the
accuracy of this reference baseline in reflecting the state of the
world without the revised CAFE standards, and thus the information
available to decision-makers in their decision as to what standards are
maximum feasible, and to the public. However, in order to ensure that
the analysis is robust to other possible futures, NHTSA also prepared
an alternative baseline--one that reflected none of these electric
vehicles (No ZEV Alternative Baseline). The net benefits of the
standards are larger under this alternative baseline than they are
under the reference baseline, and the technology deployment scenario is
reasonable under the alternative baseline, further reinforcing NHTSA's
conclusion that the final standards are reasonable, appropriate, and
maximum feasible regardless of the deployment of electric vehicles that
occurs independent of the standards.
---------------------------------------------------------------------------
\32\ Specifically, we include the main provisions of the ACC I
and ACT programs, and additional electric vehicles automakers have
indicated to NHTSA that they intend to deploy, as discussed further
below in Section III.
---------------------------------------------------------------------------
NHTSA notes that while the current estimates of costs and benefits
are important considerations and are directed by E.O. 12866, cost-
benefit analysis provides only one informative data point in addition
to the host of considerations that NHTSA must balance by statute when
determining maximum feasible standards. Specifically, for passenger
cars and light trucks, NHTSA is required to consider four statutory
factors--technological feasibility, economic practicability, the effect
of other motor vehicle standards of the Government on fuel economy, and
the need of the United States to conserve energy. For HDPUVs, NHTSA is
required to consider three statutory factors--whether standards are
appropriate, cost-effective, and technologically reasonable--to
determine whether the standards it adopts are maximum feasible.\33\ As
will be discussed further below, NHTSA concludes that Alternatives
PC2LT002 and HDPUV108 are maximum feasible on the basis of these
respective factors, and the cost-benefit analysis, while informative,
is not one of the statutorily-required factors. NHTSA also considered
several dozen sensitivity cases varying different inputs and concluded
that even when varying inputs resulted in changes to net benefits or
(on rare occasions) changed the relative order of regulatory
alternatives in terms of their net benefits, those changes were not
significant enough to outweigh our conclusion that Alternatives
PC2LT002 and HDPUV108 are maximum feasible.
---------------------------------------------------------------------------
\33\ 49 U.S.C. 32902(k).
---------------------------------------------------------------------------
NHTSA further notes that CAFE and HDPUV standards apply only to new
vehicles, meaning that the costs attributable to new standards are
``front-loaded'' because they result primarily from the application of
fuel-saving technology to new vehicles. By contrast, the impact of new
CAFE and HDPUV standards on fuel consumption and energy savings, air
pollution, and GHGs--and the associated benefits to society--occur over
an extended time, as drivers buy, use, and eventually scrap these new
vehicles. By accounting for many model years and extending well into
the future to 2050, our analysis accounts for these differing patterns
in impacts, benefits, and costs. Given the front-loaded costs versus
longer-term benefits, it is likely that an analysis extending even
further into the future would find additional net present benefits.
The bulk of our analysis for passenger cars and light trucks
presents a ``model year'' (MY) perspective rather than a ``calendar
year'' (CY) perspective. The MY perspective considers the lifetime
impacts attributable to all passenger cars and light trucks produced
prior to MY 2032, accounting for the operation of these vehicles over
their entire lives (with some MY 2031 vehicles estimated to be in
service as late as 2050). This approach emphasizes the role of the
model years for which new standards are being finalized, while
accounting for the potential that the standards could induce some
changes in the operation of vehicles produced prior to MY 2027 (for
passenger cars and light trucks), and that, for example, some
individuals might choose to keep older vehicles in operation, rather
than purchase new ones.
The calendar year perspective we present includes the annual
impacts attributable to all vehicles estimated to be in service in each
calendar year for which our analysis includes a representation of the
entire registered passenger car, light truck, and HDPUV fleet. For this
final rule, this calendar
[[Page 52553]]
year perspective covers each of calendar years 2022-2050, with
differential impacts accruing as early as MY 2022.\34\ Compared to the
MY perspective, the calendar year perspective includes model years of
vehicles produced in the longer term, beyond those model years for
which standards are being finalized.
---------------------------------------------------------------------------
\34\ For a presentation of effects by calendar year, please see
Chapter 8.2.4.6 of the FRIA.
---------------------------------------------------------------------------
The tables below summarize estimates of selected impacts viewed
from each of these two perspectives, for each of the regulatory
alternatives considered in this final rule, relative to the reference
baseline.
---------------------------------------------------------------------------
\35\ FRIA Chapter 1, Figure 1-1 provides a graphical comparison
of energy sources and their relative change over the standard
setting years.
\36\ The additional electricity use during regulatory years is
attributed to an increase in the number of PHEVs; PHEV fuel economy
is only considered in charge-sustaining (i.e., gasoline-only) mode
in the compliance analysis, but electricity consumption is computed
for the effects analysis.
[GRAPHIC] [TIFF OMITTED] TR24JN24.006
[GRAPHIC] [TIFF OMITTED] TR24JN24.007
[[Page 52554]]
[GRAPHIC] [TIFF OMITTED] TR24JN24.008
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\37\ Climate benefits are based on changes (reductions) in
CO<INF>2</INF>, CH<INF>4</INF>, and N<INF>2</INF>O emissions and are
calculated using three different estimates of the SCC, SC-
CH<INF>4</INF>, and SC-N<INF>2</INF>O. Each estimate assumes a
different discount rate (1.5 percent, 2 percent, and 2.5 percent).
For the presentational purposes of this table and other similar
summary tables, we show the benefits associated with the SC-GHG at a
2 percent discount rate. See Section III.G of this preamble for more
information.
\38\ For this and similar tables in this section, net benefits
may differ from benefits minus costs due to rounding.
\39\ Climate benefits are based on changes (reductions) in
CO<INF>2</INF>, CH<INF>4</INF>, and N<INF>2</INF>O emissions and are
calculated using three different estimates of the SCC, SC-
CH<INF>4</INF>, and SC-N<INF>2</INF>O. Each estimate assumes a
different discount rate (1.5 percent, 2 percent, and 2.5 percent).
For the presentational purposes of this table and other similar
summary tables, we show the benefits associated with the SC-GHG at a
2 percent discount rate. See Section III.G of this preamble for more
information.
\40\ See <a href="https://www.whitehouse.gov/omb/information-regulatory-affairs/reports/">https://www.whitehouse.gov/omb/information-regulatory-affairs/reports/</a> for examples of how this reporting is used by the
Federal Government.
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[[Page 52555]]
[GRAPHIC] [TIFF OMITTED] TR24JN24.009
Our net benefit estimates are likely to be conservative both
because (as discussed above) our analysis only extends to MY 2031 and
calendar year 2050 (LD) and calendar year 2050 (HDPUV), and because
there are additional important health, environmental, and energy
security benefits that could not be fully quantified or monetized.
Finally, for purposes of comparing the benefits and costs of CAFE and
HDPUV standards to the benefits and costs of other Federal regulations,
policies, and programs under the Regulatory Right-to-Know Act,\40\ we
have computed ``annualized'' benefits and costs relative to the
reference baseline, as follows:
---------------------------------------------------------------------------
\41\ Climate benefits are based on changes (reductions) in
CO<INF>2</INF>, CH<INF>4</INF>, and N<INF>2</INF>O emissions and are
calculated using three different estimates of the SCC, SC-
CH<INF>4</INF>, and SC-N<INF>2</INF>O. Each estimate assumes a
different discount rate (1.5 percent, 2 percent, and 2.5 percent).
For the presentational purposes of this table and other similar
summary tables, we show the benefits associated with the SC-GHG at a
2 percent discount rate. See Section III.G of this preamble for more
information.
\42\ For this and similar tables in this section, net benefits
may differ from benefits minus costs due to rounding.
---------------------------------------------------------------------------
[[Page 52556]]
[GRAPHIC] [TIFF OMITTED] TR24JN24.010
[GRAPHIC] [TIFF OMITTED] TR24JN24.011
[[Page 52557]]
It is also worth emphasizing that, although NHTSA is prohibited
from considering the availability of certain flexibilities in making
our determination about the levels of CAFE standards that would be
maximum feasible, manufacturers have a variety of flexibilities
available to aid their compliance. Section VII of this preamble
summarizes these flexibilities and what NHTSA has finalized for this
final rule. NHTSA is finalizing changes to these flexibilities as shown
in Table I-13 and Table I-14.
---------------------------------------------------------------------------
\43\ Climate benefits are based on changes (reductions) in
CO<INF>2</INF>, CH<INF>4</INF>, and N<INF>2</INF>O emissions and are
calculated using three different estimates of the SCC, SC-
CH<INF>4</INF>, and SC-N<INF>2</INF>O. Each estimate assumes a
different discount rate (1.5 percent, 2 percent, and 2.5 percent).
For the presentational purposes of this table and other similar
summary tables, we show the benefits associated with the SC-GHG at a
2 percent discount rate. See Section III.G of this preamble for more
information.
---------------------------------------------------------------------------
BILLING CODE 4910-59-P
[[Page 52558]]
[GRAPHIC] [TIFF OMITTED] TR24JN24.012
[[Page 52559]]
[GRAPHIC] [TIFF OMITTED] TR24JN24.013
BILLING CODE 4910-59-C
The following sections of this preamble discuss the technical
foundation for the agency's analysis, the regulatory alternatives
considered in this final rule, the estimated effects of the regulatory
alternatives, the basis for NHTSA's conclusion that the standards are
maximum feasible, and NHTSA's approach to compliance and enforcement.
The extensive record supporting NHTSA's conclusion is documented in
this preamble, in the TSD, the FRIA, the Final EIS, and the additional
materials on NHTSA's website and in the rulemaking docket.
II. Overview of the Final Rule
A. Summary of the NPRM
In the NPRM, NHTSA proposed new fuel economy standards for LDVs for
[[Page 52560]]
model years 2027-2031 and new fuel efficiency standards for HDPUVs for
model years 2030-2035. NHTSA also set forth proposed augural standards
for LDVs for model year 2032. NHTSA explained that it was proposing the
standards in response to the agency's statutory mandate to improve
energy conservation and reduce the nation's energy dependence on
foreign sources. NHTSA also explained that the proposal was also
consistent with Executive Order (E.O.) 14037, ``Strengthening American
Leadership in Clean Cars and Trucks,'' (August 5, 2021),\44\ which
directed the Secretary of Transportation (by delegation, NHTSA) to
consider beginning work on rulemakings under the Energy Independence
and Security Act of 2007 (EISA) to establish new fuel economy standards
for LDVs beginning with model year 2027 and extending through at least
model year 2030, and to establish new fuel efficiency standards for
HDPUVs beginning with model year 2028 and extending through at least
model year 2030,\45\ consistent with applicable law.\46\
---------------------------------------------------------------------------
\44\ E.O. 14037 of Aug 5, 2021 (86 FR 43583).
\45\ Due to statutory lead time constraints for HDPUV standards,
NHTSA's proposal for HDPUV standards must begin with model year
2030.
\46\ See 49 U.S.C. Chapter 329, generally.
---------------------------------------------------------------------------
NHTSA discussed the fact that EPA issued a proposal to set new
multi-pollutant emissions standards for model years 2027 and later for
light-duty and medium-duty vehicles. NHTSA explained that we
coordinated with EPA in developing our proposal to avoid
inconsistencies and produce requirements that are consistent with
NHTSA's statutory authority. The proposals nevertheless differed in
important ways, described in detail in the NPRM. EPA has since issued a
final rule associated with its proposal,\47\ and the interaction
between EPA's final standards and NHTSA's final standards is discussed
in more detail below.
---------------------------------------------------------------------------
\47\ 89 FR 27842 (Apr. 18, 2024).
---------------------------------------------------------------------------
NHTSA also explained that it had considered and accounted for
manufacturers' expected compliance with California's Advanced Clean
Cars (ACC I) program and Advanced Clean Trucks (ACT) regulations in our
analysis, as part of the analytical reference baseline.\48\ We stated
that manufacturers will comply with current ZEV requirements in
California and a number of other states in the absence of CAFE
standards, and accounting for that expected compliance allows us to
present a more realistic picture of the state of fuel economy even in
the absence of changes to the CAFE standards. NHTSA also incorporated
deployment of electric vehicles that would be consistent with
California's ACC II program, which has not received a preemption waiver
from EPA. However, automakers have indicated their intent to deploy
electric vehicles consistent with the levels that would be required
under ACCII if a waiver were to be granted, and as such its inclusion
similarly makes the reference baseline more accurate. Reflecting
expected compliance with the current ZEV programs and manufacturer
deployment of EVs consistent with levels that would be required under
the ACC II program in the analysis helps to improve the accuracy of the
reference baseline in reflecting the state of the world without the
revised CAFE standards, and thus the information available to
policymakers in their decision as to what standards are maximum
feasible and to the public in commenting on those standards. NHTSA also
described several other improvements and updates it made to the
analysis since the 2022 final rule based on NHTSA analysis, new data,
and stakeholder meetings for the NPRM.
---------------------------------------------------------------------------
\48\ Specifically, we include the main provisions of the ACC I,
ACC II, (as currently submitted to EPA), and ACT programs, as
discussed further below in Section III.C.5.a.
---------------------------------------------------------------------------
NHTSA proposed fuel economy standards for model years 2027-2032
(model year 2032 being proposed augural standards) that increased at a
rate of 2 percent per year for both passenger cars and 4 percent per
year for light trucks, and fuel efficiency standards for model years
2030-2035 that increased at a rate of 10 percent per year for HDPUVs.
NHTSA also took comment on a wide range of alternatives, including no-
action alternatives for both light duty vehicles and HDPUVs (retaining
the 2022 passenger car and light truck standards and the 2016 final
rule for HDPUV standards) and updates to the compliance flexibilities.
The proposal was accompanied by a Preliminary Regulatory Impact
Analysis (PRIA), a Draft Environmental Impact Statement (Draft EIS),
Technical Support Document (TSD) and the CAFE Model software source
code and documentation, all of which were also subject to comment in
their entirety and all of which received significant comments.
NHTSA tentatively concluded that Alternative PC2LT4 was maximum
feasible for LDVs for model years 2027-2031 and Alternative HDPUV10 was
maximum feasible for HDPUVs for model years 2030-2035. NHTSA explained
that average requirements and achieved CAFE levels would ultimately
depend on manufacturers' and consumers' responses to standards,
technology developments, economic conditions, fuel prices, and other
factors. NHTSA estimated that the proposal would reduce gasoline
consumption by 88 billion gallons relative to reference baseline levels
for LDVs, and by approximately 2.6 billion gallons relative to
reference baseline levels for HDPUVs through calendar year 2050. NHTSA
also estimated that the proposal would reduce carbon dioxide
(CO<INF>2</INF>) emissions by 885 million metric tons for LDVs, and by
22 million metric tons for HDPUVs through calendar year 2050.
In terms of economic effects, NHTSA estimated that while consumers
would pay more for new vehicles upfront, they would save money on fuel
costs over the lifetimes of those new vehicles--lifetime fuel savings
exceed modeled regulatory costs by roughly $100, on average, for model
year 2032 LDVs, and by roughly $300, on average, for buyers of model
year 2038 HDPUVs. NHTSA estimated that net benefits for the preferred
alternative for LDVs would be $16.8 billion at a 3 percent discount
rate, and $8.4 billion at a 7 percent discount rate, and for the
preferred alternative for HDPUVs would be $2.2 billion at a 3 percent
discount rate, and $1.4 billion at a 7 percent discount rate.
NHTSA also addressed the question of harmonization with other motor
vehicle standards of the Government that affect fuel economy. Even
though NHTSA and EPA issued separate rather than joint notices, NHTSA
explained that it had worked closely with EPA in developing the
respective proposals, and that the agencies had sought to minimize
inconsistency between the programs where doing so was consistent with
the agencies' respective statutory mandates. NHTSA emphasized that
differences between the proposals, especially as regards programmatic
flexibilities, were not new in the proposal, and that differences were
often a result of the different statutory frameworks. NHTSA reminded
readers that since the agencies had begun regulating concurrently in
2010, these differences have meant that manufacturers have had (and
will have) to plan their compliance strategies considering both the
CAFE standards and the GHG standards and assure that they are in
compliance with both. NHTSA was also confident that industry would
still be able to build a single fleet of vehicles to meet both the
NHTSA and EPA standards. NHTSA sought comment broadly on all aspects of
the proposal.
[[Page 52561]]
B. Public Participation Opportunities and Summary of Comments
The NPRM was published on NHTSA's website on July 28, 2023, and
published in the Federal Register on August 17, 2023,\49\ beginning a
60-day comment period. The agency left the docket open for considering
late comments to the extent practicable. A separate Federal Register
notice, published on August 25, 2023,\50\ announced a virtual public
hearing taking place on September 28 and 29, 2023. Approximately 155
individuals and organizations signed up to participate in the hearing.
The hearing started at 9:30 a.m. EDT on September 28th and ended at
approximately 5:00 p.m., completing the entire list of participants
within a single day,\51\ resulting in a 141-page transcript.\52\ The
hearing also collected many pages of comments from participants, in
addition to the hearing transcript, all of which were submitted to the
docket for the rule.
---------------------------------------------------------------------------
\49\ 88 FR 56128 (Aug. 17, 2023).
\50\ 88 FR 58232 (Aug. 25, 2023).
\51\ A recording of the hearing is provided on NHTSA's website.
Avilable at: <a href="https://www.nhtsa.gov/events/cafe-standards-public-hearing-september-2023">https://www.nhtsa.gov/events/cafe-standards-public-hearing-september-2023</a>. (Acccessed: Jan. 29, 2024).
\52\ The transcript, as captured by the stenographer or
captioning folks to their best of abilities, is available in the
docket for this rule.
---------------------------------------------------------------------------
Including the 2,269 comments submitted as part of the public
hearings, NHTSA's docket received a total of 63,098 comments, with tens
of thousands of comments submitted by individuals and over 100 deeply
substantive comments that included many attachments submitted by
stakeholder organizations. NHTSA also received five comments on its
Draft EIS to the separate EIS docket NHTSA-2022-0075, in addition to 17
comments on the EIS scoping notice that informed NHTSA's preparation of
the Draft EIS.
Many commenters supported the proposal. Commenters supporting the
proposal emphasized the importance of increased fuel economy for
consumers, as well as cited concerns about climate change, which are
relevant to the need of the United States to conserve energy.
Commenters also expressed the need for harmonization and close
coordination between NHTSA, EPA, and DOE for their respective programs.
Many citizens, environmental groups, some States and localities, and
some vehicle manufacturers stated strong support for NHTSA finalizing
the most stringent alternative.
Many manufacturers urged NHTSA to consider the impact of EPA's
standards as well as the impact of DOE's Petroleum Equivalency Factor
(PEF) rule on fleet compliance (discussed in more detail below). Many
manufacturers supported alignment with EPA's and DOE's standards.
Manufacturers were also supportive of keeping the footprint-based
standards for LD vehicles and work factor-based standards for HDPUVs.
Manufacturers and others were also supportive of continuing the HD
Phase 2 approach for HDPUVs by having separate standards for
compression ignition (CI) and spark ignition (SI) vehicles, as well as
continuing to use a zero fuel consumption value for alternative fuel
vehicles such as battery electric vehicles.
In other areas, commenters expressed mixed views on the compliance
and flexibilities proposed in the notice. Manufacturers were supportive
of maintaining the Minimum Domestic Passenger Car Standard (MDPCS)
offset relative to the standards. Most manufacturers and suppliers did
not support phasing out off-cycle and AC efficiency fuel consumption
improvement values (FCIVs), whereas NGOs and electric vehicle
manufacturers supported removing all flexibilities. Many fuel and
alternative fuel associations opposed the regulation due to lack of
consideration for other types of fuels in NHTSA's analysis.
NHTSA also received several comments on subjects adjacent to the
rule but beyond the agency's authority to influence. NHTSA has reviewed
all comments and accounted for them where legally possible in the
modeling and qualitatively, as discussed below and throughout the rest
of the preamble and in the TSD.
NHTSA received a range of comments about the interaction between
DOE's Petroleum Equivalency Factor (PEF) proposal and NHTSA's CAFE
proposal, mainly from vehicle manufacturers. Several stakeholders
commented in support of the proposed PEF,\53\ while others commented
that the PEF should remain at the pre-proposal level, or even
increase.\54\ The American Automotive Policy Council (AAPC), the policy
organization that represents the ``Detroit Three'' or D3--Ford, General
Motors, and Stellantis--commented that DOE's proposed PEF reduction
inappropriately devalues electrification, and accordingly ``a devalued
PEF yields a dramatic deficiency in light-duty trucks, that make up 83%
of the D3's product portfolio.'' \55\ The AAPC also commented that
``NHTSA's inclusion of the existing PEF for EVs in 2026 creates an
artificially high CAFE compliance baseline, and the proposed PEF post-
2027 removes the only high-leverage compliance tool available to auto
manufacturers.'' \56\ Relatedly, as part of their comments generally
opposing DOE's proposed PEF level, other automakers provided
alternative values for the PEF,\57\ or supported a phase-in of the PEF
to better allow manufacturers to restructure their product mix.\58\
Other stakeholders urged NHTSA to delay the CAFE rule until DOE adopts
a revised PEF,\59\ or stated that NHTSA should reopen comments on its
proposal following final DOE action on the PEF.\60\ Finally, some
commenters recommended that NHTSA apply a PEF to the HDPUV segment.\61\
---------------------------------------------------------------------------
\53\ Toyota, Docket No. NHTSA-2023-0022-61131, at 9-12; Arconic,
Docket No. NHTSA-2023-0022-48374, at 2.
\54\ HATCI, Docket No. NHTSA-2023-0022-48991-A1, at 2.
\55\ AAPC, Docket No. NHTSA-2023-0022-60610, at 3-5.
\56\ Id.
\57\ HATCI, Docket No. NHTSA-2023-0022-48991-A1, at 2.
\58\ HATCI, Docket No. NHTSA-2023-0022-48991-A1, at 2;
Volkswagen, Docket No. NHTSA-2023-0022-58702, at 7; Porsche, Docket
No. NHTSA-2023-0022-59240, at 7; GM, Docket No. NHTSA-2023-0022-
60686, at 6. (e.g., ``In the event that the proposed lower PEF is
adopted with a 3-year delay (i.e., lower PEF starts in the 2030
model year), GM could support the NHTSA CAFE Preferred Alternative;
however, we note that there are likely to be substantial CAFE/GHG
alignment issues starting in 2030.'').
\59\ NAM, Docket No. NHTSA-2023-0022-59289, at 2.
\60\ The Alliance, Docket No. NHTSA-2023-0022-60652, at 5-6.
\61\ MECA Clean Mobility, Docket No. NHTSA-2023-0022-63053, at
4-5; The Aluminum Association, Docket No. NHTSA-2023-0022-58486, at
3; Arconic Corporation, Docket No. NHTSA-2023-0022-48374, at 2.
---------------------------------------------------------------------------
Regarding comments that were supportive of or opposing the new PEF,
those comments are beyond the scope of this rulemaking. By statute, DOE
is required to determine the PEF value and EPA is required to use DOE's
value for calculation of a vehicle's CAFE value.\62\ NHTSA has no
control over the selection of the PEF value or fuel economy calculation
procedures; accordingly, the PEF value is just one input among many
inputs used in NHTSA's analysis. While NHTSA was in close coordination
with DOE during the pendency of the PEF update process, stakeholder
comments about the PEF value and whether the value should be phased in
were addressed in DOE's final rule.\63\
---------------------------------------------------------------------------
\62\ 49 U.S.C. 32904.
\63\ 89 FR 22041 (March 29, 2024).
---------------------------------------------------------------------------
As NHTSA does not take a position on the PEF value, the agency
believes it was appropriate to use the most up-to-date input assumption
at each stage of
[[Page 52562]]
the analysis to provide stakeholders the best information about the
effects of different levels of CAFE standards. NHTSA also included
sensitivity analyses in the NPRM with DOE's pre-proposal PEF value so
that all stakeholders had notice of and the opportunity to comment on a
scenario where the PEF did not change.\64\ NHTSA accordingly disagrees
that the agency needed to reopen comments on the proposal following
final DOE action on the PEF.
---------------------------------------------------------------------------
\64\ PRIA, Chapter 9.
---------------------------------------------------------------------------
NHTSA agrees with AAPC that when a manufacturer's portfolio
consists predominantly of lower fuel economy light trucks, as in the
particular case of the D3, averaging the fuel economy of those vehicles
with high fuel economy BEVs would help them comply with fuel economy
standards more so than if BEVs had a lower fuel economy due to a lower
PEF. However, this concern is somewhat ameliorated by the changes in
DOE's final PEF rule, including a gradual reduction of the fuel content
factor.\65\ Furthermore NHTSA has determined that the final standards
are the maximum feasible fuel economy level that manufacturers can
achieve even without producing additional electric vehicles. And, NHTSA
disagrees that including in the modeling the old PEF in 2026 and prior
and the new PEF in 2027 and beyond ``removes the only high-leverage
compliance tool available to auto manufacturers'' (emphasis added), as
there are several compliance tools available to manufacturers,
including increasing the fuel economy of their ICE vehicles. As
discussed further in Section VI, NHTSA believes that the standards
finalized in this rule explicitly contemplate the concerns expressed by
and the capability of all manufacturers.
---------------------------------------------------------------------------
\65\ 89 FR 22041, at 22050 (March 29, 2024) (``After careful
consideration of the comments, DOE concludes that removing the fuel
content factor will, over the long term, further the statutory goals
of conserving all forms of energy while considering the relative
scarcity and value to the United States of all fuels used to
generate electricity. This is because, as explained in the 2023 NOPR
and in more detail below, by significantly overvaluing the fuel
savings effects of EVs in a mature EV market with CAFE standards in
place, the fuel content factor will disincentivize both increased
production of EVs and increased deployment of more efficient ICE
vehicles. Hence, the fuel content factor results in higher petroleum
use than would otherwise occur.'').
---------------------------------------------------------------------------
NHTSA will not use a PEF for HDPUV compliance at this time. NHTSA
will continue to use the framework that was put in place by the HD
Phase 2 rule, and in coordination with EPA's final rule, by using zero
upstream energy consumption for compliance calculations (note that
NHTSA does consider upstream effects of electricity use in its effects
modeling). Any potential future action on developing PEF for HDPUV
compliance would most likely occur in a standalone future rulemaking
after NHTSA has a more thorough opportunity to consider the costs and
benefits of such an approach and all stakeholders can present feedback
on the issue.
NHTSA also received a range of comments about BEV infrastructure.
Comments covered both the amount and quality of BEV charging
infrastructure and the state of electric grid infrastructure. Some
stakeholders, including groups representing charging station providers
and electricity providers, commented that although additional
investments will be required to support future demand for public
chargers and the electricity required for BEV charging, their
preparation and planning for the BEV transition is already
underway.\66\ Many stakeholders emphasized the role of a robust public
charging network to facilitate the BEV transition,\67\ and broadly
urged the Administration to work amongst the agencies and with
automakers, utilities, and other interested parties to ensure that BEV
charging infrastructure buildout, including developing minimum
standards for public charging efficiency, and BEV deployment happen
hand in hand.\68\
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\66\ ZETA, Docket No. NHTSA-2023-0022-60508, at 29-70.
\67\ Climate Hawks Civic Action, Docket No. NHTSA-2023-0022-
61094, at 2059; U.S. Chamber of Commerce, Docket No. NHTSA-2023-
0022-61069, at 5-6.
\68\ ZETA, Docket No. NHTSA-2023-0022-60508, at 29-70; MEMA,
Docket No. NHTSA-2023-0022-59204, at 10; NAM, Docket No. NHTSA-2023-
0022-59203-A1, at 1.
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In contrast, some stakeholders emphasized the current lack of
public BEV charging infrastructure as a barrier to EV adoption.\69\
Stakeholders also highlighted mechanical problems with existing
charging stations,\70\ which they stated contributes to dissatisfaction
with public charging stations among electric vehicle owners.\71\ Other
stakeholders commented that the country's electricity transmission
infrastructure is not currently in a position to support the expected
electricity demand from the BEV transition and may not be in the future
for several reasons,\72\ such as the lack of materials needed to expand
and upgrade the grid.\73\ To combat those concerns, other stakeholders
recommended that administration officials and congressional leaders
prioritize policies that would strengthen transmission systems and
infrastructure and speed up their growth.\74\ Stakeholders also
recommended that NHTSA capture some elements of charging and grid
infrastructure issues in its analysis,\75\ and outside of the analysis
and this rulemaking, identify ways to assist in the realization of
adequate BEV infrastructure.\76\
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\69\ U.S. Chamber of Commerce, Docket No. NHTSA-2023-0022-61069,
at 5; NATSO et al., Docket No. NHTSA-2023-0022-61070, at 5-7.
\70\ ACI, Docket No. NHTSA-2023-0022-50765, at 4; CFDC et al,
Docket No. NHTSA-2023-0022-62242, at 16; NADA, NHTSA-2023-0022-
58200, at 10.
\71\ CFDC et al, Docket No. NHTSA-2023-0022-62242, at 16.
\72\ NAM, Docket No. NHTSA-2023-0022-59289, at 3; ACI, Docket
No. NHTSA-2023-0022-50765, at 4; Missouri Corn Growers Association,
Docket No. NHTSA-2023-0022-58413, at 2; NCB, Docket No. NHTSA-2023-
0022-53876, at 1; AFPM, Docket No. NHTSA-2023-0022-61911-A2, at 41;
NATSO et al., Docket No. NHTSA-2023-0022-61070, at 8; West Virginia
Attorney General's Office, Docket No. NHTSA-2023-0022-63056, at 12-
13; MOFB, Docket No. NHTSA-2023-0022-61601, at 2.
\73\ AFPM, Docket No. NHTSA-2023-0022-61911-A2, at 41.
\74\ NAM, Docket No. NHTSA-2023-0022-59203, at 3.
\75\ For example, some stakeholders stated that technologies
like direct current fast chargers (DCFCs) should be prioritized in
publicly funded projects and infrastructure decisions, and should be
considered to varying extents in NHTSA's analysis. See, e.g., MEMA,
Docket No. NHTSA-2023-0022-59204, at 6-7; Alliance for Vehicle
Efficiency (AVE), Docket No. NHTSA-2023-0022-60213, at 7; AFPM,
Docket No. NHTSA-2023-0022-61911, at 47. Stakeholders also
recommended, as an example, NHTSA account for the long lead time for
critical grid infrastructure upgrades. MEMA, Docket No. NHTSA-2023-
0022-59204-A1, at 3.
\76\ MEMA, Docket No. NHTSA-2023-0022-59204-A1, at 3-5.
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NHTSA acknowledges and appreciates all the comments received on
charging infrastructure, which include both broad comments on future
grid infrastructure needs, as well as increased deployment of reliable
and convenient charging stations. NHTSA agrees with commenters in that
infrastructure is an important aspect of a successful transition to
BEVs in the future. We also agree that infrastructure improvements are
necessary and directly related to keeping pace with projected levels of
BEV supply and demand as projected by other agencies and independent
forecasters.
With that said, NHTSA projects that manufacturers will deploy a
wide variety of technologies to meet the final CAFE standards that
specifically are not BEVs, considering NHTSA's statutory limitations.
As discussed further throughout this preamble, NHTSA does not consider
adoption of BEVs in the LD fleet beyond what is already in the
reference baseline. Results in Chapter 8 of the FRIA show increased
technology penetrations of more efficient
[[Page 52563]]
conventional ICEs, increased penetration of advanced transmissions,
increased mass reduction technologies, and other types of
electrification such as mild and strong hybrids.
In addition, as discussed further below, NHTSA has coordinated with
DOE and EPA while developing this final rule, as requested by
commenters. Experts at NHTSA's partner agencies have found that the
grid and associated charging infrastructure could handle the increase
in BEVs related to both EPA's light- and medium-duty vehicle multi-
pollutant rule and the HD Phase 3 GHG rule \77\--significantly more
BEVs than NHTSA projects in the LD and HDPUV reference baselines
examined in this rule. Thus, infrastructure beyond what is planned for
buildout in the rulemaking timeframe, accounting not only for
electricity generation and distribution, but considering load-balancing
management measures, as well, to improve grid operations, would not be
required. It should also be noted that expert projections show an order
of magnitude increase in available (domestic) public charging ports
between the release of the final rule and the rulemaking timeframe,\78\
not accounting for the additional availability of numerous residential
and depot chargers. Battery energy storage integration with DC fast
chargers can further expedite deployment of necessary infrastructure,
reducing lead time for distribution upgrades while increasing the
likelihood of meeting public charging needs in the next decade.\79\ The
National Electric Vehicle Infrastructure (NEVI) program is also
investing $5 billion in federal funding to deploy a national network of
public EV chargers.\80\ Additionally, federally funded charging
stations are required to adhere to a set of nationally recognized
standards, such as a minimum of 97% annual-uptime,\81\ which is
anticipated to greatly improve charging reliability concerns of today.
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\77\ National Renewable Energy Laboratory, Lawrence Berkeley
National Laboratory, Kevala Inc., and U.S. Department of Energy.
2024. Multi-State Transportation Electrification Impact Study:
Preparing the Grid for Light-, Medium-, and Heavy-Duty Electric
Vehicles. DOE/EE-2818, U.S. Department of Energy, (Accessed: May 1,
2024); EPA GHG final rule. RIA Chapter 5.3.
\78\ Rho Motion. EV Charging Quarterly Outlook--Quarter 1 2024.
Proprietary data. Subscription information available at: <a href="https://rhomotion.com/">https://rhomotion.com/</a>.
\79\ Poudel, S., et al. Innovative Charging Solutions for
Deploying the National Charging Network: Technoeconomic Analysis.
United States.
\80\ U.S Department of Transportation, Federal Highway
Administration. March 5, 2024. National Electric Vehicle
Infrastructure (NEVI) Program. Available at: <a href="https://www.fhwa.dot.gov/environment/nevi/">https://www.fhwa.dot.gov/environment/nevi/</a>. (Accessed: May 9, 2024).
\81\ U.S. Department of Transportation, Federal Highway
Administration. Feb. 28, 2023. National Electric Vehicle
Infrastructure Standards and Requirements. Available at: <a href="https://www.federalregister.gov/documents/2023/02/28/2023-03500/national-electric-vehicle-infrastructure-standards-and-requirements">https://www.federalregister.gov/documents/2023/02/28/2023-03500/national-electric-vehicle-infrastructure-standards-and-requirements</a>.
(Accessed: May 1, 2024).
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For the HDPUV analysis, NHTSA does consider adoption of BEVs in the
standard setting years, and we do see an uptake of BEVs; however, the
population of the HDPUV fleet is extremely small, consisting of fewer
than 1 million vehicles, compared to the LD fleet that consists of over
14 million vehicles. This means that any potential impact of HDPUV BEV
adoption on the electric grid would be similarly small. We also want to
note that the adoption of these HDPUV BEVs is driven primarily by
factors other than NHTSA's standards, including the market demand for
increased fuel efficiency and state ZEV programs, as shown in detail in
Section V of this preamble and FRIA Chapter 8.3.2. However, as with LD
standards examined in this rule, most manufacturers could choose to
meet the preferred standards with limited BEVs. There are still
opportunities in the advanced engines, advanced transmissions, and
strong hybrid technologies that could be used to meet the HDPUV
preferred standards starting in model year 2030.
Although NHTSA does not consider BEVs in its analysis of CAFE
stringency, and there is minimal BEV adoption driven by the HDPUV FE
standards, NHTSA coordinated with both DOE and EPA on many of the
challenges raised by commenters to understand how the infrastructure
will be developing and improving in the future. Our review of efforts
taking place under the NEVI Program and consultation with DOE and EPA
leads us to conclude that (1) there will be sufficient EV
infrastructure to support the vehicles included in the light-duty
reference baseline and in the HDPUV analysis; and (2) it is reasonable
to anticipate that the power sector can continue to manage and improve
the electricity distribution system to support the increase in BEVs.
DOE and EPA conducted analyses that evaluate potential grid impacts of
LD and HD fleet that contain significantly more BEVs than NHTSA's
light-duty reference baseline and HDPUV fleets. Their analyses conclude
that the implementation of EPA's LD and HD rules can be achieved. DOE
and EPA found that sufficient electric grid charging and infrastructure
\82\ can be deployed, numerous federal programs are providing funding
to upgraded charging and grid infrastructure, and managed charging and
innovative charging solutions can reduce needed grid updates.\83\ The
analyses conducted for this assessment of the power sector section
covered multiple inputs and assumptions across EPA and DOE tools, such
as PEV adoption and EVSE access and utilization, to make sure that all
aspects of the grid scenarios modeled are analyzed through 2050 between
the no action and action alternative in EPA's rule.
---------------------------------------------------------------------------
\82\ See discussion at EPA, Regulatory Impact Analysis, Multi-
Pollutant Emissions Standards for Model Years 2027 and Later Light-
Duty and Medium-Duty Vehicles, Chapter 5.4.5. Available at <a href="https://www.epa.gov/system/files/documents/2024-03/420r24004.pdf">https://www.epa.gov/system/files/documents/2024-03/420r24004.pdf</a> (last
accessed May 22, 2024).
\83\ See id.
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NHTSA also received several comments regarding critical materials
used to make EV batteries. In support of its comments that the EV
supply chain is committed to supporting full electrification, ZETA
provided a thorough recitation of policy drivers supporting critical
minerals development, projected demand for critical minerals, and
ongoing investments and support from its members for critical mineral
production, refining, and processing.\84\ Similarly, stakeholders
commented about different federal and industry programs, incentives,
and investments to promote the production and adoption of electric
vehicles.\85\ Similar to comments on EV infrastructure, many
stakeholders commented that federal agencies should work together to
ensure a reliable supply chain for critical minerals.\86\
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\84\ ZETA, Docket No. NHTSA-2023-0022-60508, at 29-39.
\85\ States and Cities, Docket No. NHTSA-2023-0022-61904,
Appendix at 36-39; ICCT, Docket No. NHTSA-2023-0022-54064, at 2, 7.
\86\ NAM, Docket No. NHTSA-2023-0022-59203, at 1.
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Other stakeholders commented about several critical minerals issues
they perceived to be barriers to a largescale transition to EVs.\87\
Stakeholders commented generally on a limited or unavailable supply of
certain critical minerals,\88\ and more specifically the
[[Page 52564]]
lack of mineral extraction and production in the United States, stating
that domestic production of critical minerals is insufficient to meet
projected demands.\89\ Stakeholders also commented on the potential
environmental impact of mining critical minerals,\90\ particularly as
vehicle manufacturers produce EVs with increasing battery pack
sizes.\91\ Other stakeholders commented that all of these factors
(including costs and environmental impact) should be considered in
NHTSA's analysis.\92\ Finally, several stakeholders commented on how
critical minerals' energy security issues interact with NHTSA's
balancing factors to set maximum feasible standards and those comments
are addressed in Section VI.5; other stakeholders commented on how
critical minerals sourcing interacts with NHTSA's assumptions about tax
credits and those comments are addressed in Section III.C.
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\87\ ACI, Docket No. NHTSA-2023-0022-50765, at 4-7; RFAet al,
Docket No. NHTSA-2023-0022-57625, at 2; NAM, Docket No. NHTSA-2023-
0022-59203, at 3; AHUA, Docket No. NHTSA-2023-0022-58180, at 6-7;
CFDC et al, Docket No. NHTSA-2023-0022-62242, at 22-23; West
Virginia Attorney General's Office et al., Docket No. NHTSA-2023-
0022-63056, at 13-14.; Valero, Docket No. NHTSA-2023-0022-58547;
Mario Loyola and Steven G. Bradbury, Docket No. NHTSA-2023-0022-
61952, at 10; MCGA, Docket No. NHTSA-2023-0022-60208; The Alliance,
Docket No. NHTSA-2023-0022-60652.
\88\ Nissan, Docket No. NHTSA-2023-0022-60696, at 7; AVE, Docket
No. NHTSA-2023-0022-60213, at 3-4.
\89\ ACI, Docket No. NHTSA-2023-0022-50765, at 5; API, Docket
No. NHTSA-2023-0022-60234, at 4; AFPM, Docket No. NHTSA-2023-0022-
61911, at 2-11.
\90\ ACE, Docket No. NHTSA-2023-0022-60683, at 2-3.
\91\ ACI, Docket No. NHTSA-2023-0022-50765.
\92\ ACE, Docket No. NHTSA-2023-0022-60683, at 3; MECA, Docket
No. NHTSA-2023-0022-63053, at 8.
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We appreciate the commenters' feedback in this area and believe
that the comments are important to note. However, as we have discussed
earlier in this section, the CAFE standards final rulemaking analysis
does not include adoption of BEVs beyond what is represented in the
reference baseline. We do allow adoption of BEVs in the HDPUV fleet, as
EPCA/EISA does not limit consideration of HDPUV technologies in the
same way as LD technologies; however, as discussed above, BEV adoption
is driven primarily by reasons other than NHTSA's fuel efficiency
standards and the number of vehicles that adopt BEV technology in our
analysis is relatively (compared to the LD fleet) small. That said,
NHTSA believes that commenters' concerns are either currently addressed
or are being actively addressed by several public and private
endeavors.
NHTSA, in coordination with DOE and EPA, reviewed current supply
chain and updated analyses on critical materials. In particular, the
DOE, through Argonne National Laboratory, conducted an updated
assessment of developing and securing mineral supply for the U.S.
electric vehicle industry, the Securing Critical Minerals report.\93\
The Argonne study focuses on five materials identified in a previous
assessment,\94\ including lithium, nickel, cobalt, graphite, and
manganese.\95\ The study collects and examines potential domestic
sources of materials, as well as sources outside the U.S. including
Free Trade Agreement (FTA) partners, members of the Mineral Security
Partnership (MSP), economic allies without FTAs (referred to as ``Non-
FTA countries'' in the Argonne study), and Foreign Entity of Concern
(FEOC) sources associated with covered nations, to support domestic
critical material demand from anticipated electric vehicle penetration.
The assessment considers geological resources and current international
development activities that contribute to the understanding of mineral
supply security as jurisdictions around the world seek to reduce
emissions. The study also highlights current activities that are
intended to expand a secure supply chain for critical minerals both
domestically and among U.S. allies and partner nations; and considers
the potential to meet U.S. demand with domestic and other secure
sources. The DOE Securing Critical Minerals report concluded that the
U.S. is ``well-positioned to meet its lithium demand through domestic
production.'' In the near- and medium-term there is sufficient capacity
in FTA and MSP countries to meet demand for nickel and cobalt; however,
the U.S. will likely need to rely at least partly on non-FTA counties
given expected competition for these minerals from other countries'
decarbonization goals. In the near-term, meeting U.S. demand with
natural graphite supply from domestic FTA and MSP sources is unlikely.
In the medium-term, there is potential for new capacity in both FTA and
non-FTA countries, and for synthetic graphite production to scale. The
U.S. can rely on FTA and MSP partners, as well as other economic and
defense partners, to fill supply gaps; countries with which the U.S.
has good trade relations are anticipated to have the ability to assist
the U.S. in securing the minerals needed to meet EV and ESS (energy
storage system) deployment targets set by the Biden Administration.\96\
NHTSA considers Argonne's assessment to be thorough and up to date. In
addition, it should be noted that DOE's assessments consider critical
minerals and battery components to support more than ten million EVs by
2035 <SUP>97 98</SUP>--significantly more than we project in our
reference baseline.
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\93\ Barlock, T. et al. Securing Critical Materials for the U.S.
Electric Vehicle Industry: A Landscape Assessment of Domestic and
International Supply Chains for Five Key Battery Materials. United
States. Available at: <a href="https://doi.org/10.2172/2319240">https://doi.org/10.2172/2319240</a>. (Accessed:
May 1, 2024).
\94\ Department of Energy, July 2023. Critical Materials
Assessment. Available at: <a href="https://www.energy.gov/sites/default/files/2023-07/doe-critical-material-assessment_07312023.pdf">https://www.energy.gov/sites/default/files/2023-07/doe-critical-material-assessment_07312023.pdf</a>.
(Accessed: May 1, 2024).
\95\ The 2023 DOE Critical Minerals Assessment classifies
manganese as ``non critical'', as reflected in the Securing Critical
Minerals report referenced.
\96\ Associated with the implementation of the BIL and IRA.
\97\ See Figure 14 in Barlock, T.A. et al. February 2024.
Securing Critical Materials for the U.S. Electric Vehicle Industry.
ANL-24/06. Final Report. Available at: <a href="https://publications.anl.gov/anlpubs/2024/03/187907.pdf">https://publications.anl.gov/anlpubs/2024/03/187907.pdf</a>. (Accessed: Apr. 5, 2024).
\98\ See in Gohlke, D. et al. March 2024. Quantification of
Commercially Planned Battery Component Supply in North America
through 2035. ANL-24/14. Final Report. Available at: <a href="https://publications.anl.gov/anlpubs/2024/03/187735.pdf">https://publications.anl.gov/anlpubs/2024/03/187735.pdf</a> (Accessed: June 3,
2024).
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NHTSA also received a wide variety of comments on alternative fuels
including ethanol and biofuels. A group of commenters representing
ethanol and biofuel producers objected to NHTSA's handling of BEVs in
the analysis, in part because of their views on NHTSA's ability to
consider those vehicles under 49 U.S.C. 32902(h), raised energy
security concerns with reduced demand for and reliance on U.S.-produced
alternative fuels as a result of these regulations, and commented that
BEVs would increase reliance on foreign supply chains.\99\ Other
commenters shared similar sentiments regarding alternative fuels. These
commenters stated that NHTSA failed to consider other fuels like
ethanol and biofuels as a way to improve fuel economy in the analysis
as part of a holistic approach to reducing the U.S.'s gasoline
consumption, and therefore the proposed rule was arbitrary.\100\
Commenters also stated that NHTSA did not consider the Renewable Fuel
Standard (RFS) regulation in this rulemaking, and argued that NHTSA's
failure to do so was arbitrary.\101\ Finally, commenters recommended
that NHTSA consider high octane renewable fuels as a way to improve
fuel economy for conventional ICEs.\102\
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\99\ BSC, Docket No. NHTSA-2023-0022-50824 at 1; MME, Docket No.
NHTSA-2023-0022-50861 at 2; WPE, Docket No. NHTSA-2023-0022-52616 at
2; POET, Docket No. NHTSA-2023-0022-61561 at 6; SIRE, Docket No.
NHTSA-2023-0022-57940 at 2.
\100\ Growth Energy, Docket No. NHTSA-2023-0022-61555 at 1;
KCGA, Docket No. NHTSA-2023-0022-59007 at 5; POET, Docket No. NHTSA-
2023-0022-61561 at 5; Toyota, Docket No. NHTSA-2023-0022-61131 at 2;
Commenwealth Agri Energy LLC, Docket No. NHTSA-2023-0022-61599 at 3;
MEMA, Docket No. NHTSA-2023-0022-59204 at 3; AFPM, Docket No. NHTSA-
2023-0022-61911 at 25.
\101\ Growth Energy, Docket No. NHTSA-2023-0022-61555 at 2.
\102\ NCB, Docket No. NHTSA-2023-0022-53876 at 2; CFDC et al.,
Docket No. NHTSA-2023-0022-62242 at 17-20; NATSO et al., Docket No.
NHTSA-2023-0022-61070 at 9.
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[[Page 52565]]
NHTSA believes that fuel producers' comments about NHTSA's
purported inability to consider BEVs under 49 U.S.C. 32902(h) are
somewhat misguided, considering that EPCA's definition of ``alternative
fuel'' in 49 U.S.C. 32901 also includes ethanol, other alcohols, and
fuels derived from biological materials, among other fuels.\103\ This
means that if NHTSA were to adopt the fuel producers' interpretation of
49 U.S.C. 32902(h) to restrict BEV adoption in the reference baseline,
NHTSA would have to take an analogous approach to limit the agency's
consideration of vehicles fueled by other alternative fuels, for
example, ethanol, in the reference baseline. This is because 49 U.S.C.
32902(h) does not just place guardrails on NHTSA's consideration of
manufacturers producing BEVs in response to CAFE standards, but all
dedicated alternative fueled automobiles, and fuels produced by the
commenters here are, as listed above, considered alternative fuels.
NHTSA does consider some alternative-fueled vehicle adoption in the
reference baseline where that adoption is driven for reasons other than
NHTSA's standards (see Section IV), and the commenters do mention the
RFS as a driver of the increased use of renewable alternative fuels
like ethanol and biofuels. However, the RFS is a regulation that
increases the use of renewable fuels to replace petroleum derived fuels
in motor gasoline, and to the extent that EPA has approved the use of
E15 in all model year 2001 and newer gasoline vehicles produced for the
U.S. market, we account for that in our analysis. NHTSA also considers
flexible fuel vehicles (FFVs) that exist in the reference baseline
fleet in the analysis, however FFVs are also subject to the
restrictions in 49 U.S.C. 32902(h)(2).\104\ NHTSA applies the same CAFE
Model restrictions in the standard-setting analysis to FFVs that apply
to PHEVs to ensure that the agency is not improperly considering the
alternative-fueled operation of dual-fueled vehicles when setting CAFE
standards.\105\
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\103\ 49 U.S.C. 32901(a)(1).
\104\ 49 U.S.C. 32901(a)(9); 49 U.S.C. 32902(h)(2).
\105\ CAFE Model Documentation, S5.
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There is also a practical consideration that while blending ethanol
or biofuels with gasoline has the potential to reduce U.S. reliance on
petroleum, renewable fuels like ethanol and biofuels decrease fuel
economy.\106\ The fuel economy of FFVs operating on high-ethanol blends
are worse than when operating on conventional gasoline, because
although ethanol has a higher octane rating than petroleum gasoline, it
is less energy dense. For example, a model year 2022 Ford F150 4WD
achieves a real world combined 20 mpg rating on conventional gas versus
15 mpg on alternative E85 fuel.\107\ FFVs do see a compliance boost in
the CAFE program with a 0.15 multiplier,\108\ however, again NHTSA's
consideration of those vehicles' fuel economy values to set higher fuel
economy standards is limited by 49 U.S.C. 32902(h)(2).
---------------------------------------------------------------------------
\106\ <a href="http://Fueleconomy.gov">Fueleconomy.gov</a>. New Flex-fuel Vehicles for model year
2012 to model year 2025. Available at: <a href="https://www.fueleconomy.gov/feg/flextech.shtml">https://www.fueleconomy.gov/feg/flextech.shtml</a>. (Accessed: Apr. 12, 2024).
\107\ DOE Alternative Fuels Data Center. Ethanol E85 Vehicles
for model year 2022-2024. Available at: <a href="https://afdc.energy.gov/vehicles/search/data">https://afdc.energy.gov/vehicles/search/data</a>. (Accessed: Apr. 12, 2024).
\108\ 40 CFR 600.510-12(c)(2)(v).
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Regarding comments about energy security, we discuss this further
in preamble Section VI. As mentioned above, commenters suggested that
consideration of BEVs also impacts NHTSA's statutory considerations of
energy security. However, NHTSA does not consider BEVs in its standard-
setting, and notes that this final rule is not a BEV mandate, as
claimed by some commenters. Results in preamble Section V and FRIA
Chapter 8 show that manufacturers have a wide variety of technology
options to meet both LD and HDPUV standards, and the paths to
compliance modeled in this analysis represent only a possible path, and
not a required path. NHTSA does not mandate any one technology that
manufacturers must use, hence why we have evaluated an array of
technologies for manufacturers to use for meeting the standards. As
with other technologies in the analysis, nothing prevents manufacturers
from using FFVs or other dedicated alternative fueled vehicles to
comply with CAFE standards.
Finally, NHTSA received a wide variety of comments on compliance
aspects of the CAFE program. Although most of them have been summarized
and discussed in Section VII of this preamble, we received comments
regarding the fuel economy utility factor (UF) compliance calculation
for plug-in hybrids. Mitsubishi commented that NHTSA failed to account
for EPA's proposal to update the UF calculation for the combined fuel
economy for PHEVs, stating that ``[t]he result is that NHTSA
overestimated the value of PHEV CAFE compliance and underestimated the
costs of achieving compliance.'' \109\ On the other hand, ICCT and the
Strong PHEV Coalition supported NHTSA using EPA's new proposed UF
approach for the rulemaking analysis.\110\ MECA supported NHTSA's
continued use of SAE J2841 and recommended that, at a minimum, we
should not reduce the UF from the current levels.\111\
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\109\ Mitsubishi, Docket No. NHTSA-2023-0022-61637 at 4.
\110\ ICCT, Docket No. NHTSA-2023-0022-54064 at 25; Strong PHEV
Colaition, Docket No. NHTSA-2023-0022-60193 at 6.
\111\ MECA, Docket No. NHTSA-2023-0022-63053, at 6.
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We appreciate stakeholders providing comments to NHTSA on PHEV fuel
economy calculations. While in the CAFE modeling NHTSA uses SAE J2841
to calculate PHEV fuel economy, for CAFE compliance, NHTSA must use
EPA's test procedures.\112\ This means that EPA will report fuel
economy values to NHTSA beginning in model year 2031 consistent with
the new PHEV UF finalized in EPA's final rule. NHTSA chose to use SAE
J841 as a simplifying assumption in the model for this analysis to
reduce analytical complexity and based on a lack of readily available
data from manufacturers; however, choosing to use SAE J2841 versus
another PHEV UF results in functionally no difference in NHTSA's
standard setting analysis because for the purpose of setting fuel
economy standards, NHTSA cannot consider the electric portion of PHEV
operation, per statute.\113\ For more detailed discussion of modeled
PHEV fuel economy values, see TSD Chapter 3.3.
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\112\ 40 CFR 600.116-12: Special procedures related to electric
vehicles and hybrid electric vehicles.
\113\ U.S.C 32902(h)(2).
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Discussion and responses to other comments can be found throughout
this preamble in areas applicable to the comment received.
Nearly every aspect of the NPRM analysis and discussion received
some level of comment by at least one commenter. Overall, the comments
received included both broad assessments and pointed analyses, and the
agency appreciates the level of engagement of commenters in the public
comment process and the information and opinions provided.
C. Changes to the CAFE Model in Light of Public Comments and New
Information
Comments received to the NPRM were considered carefully within the
statutory authority provided by the law, because they are critical for
[[Page 52566]]
understanding stakeholders' positions, as well as for gathering
additional information that can help to inform the agency about aspects
or effects of the proposal that the agency may not have considered at
the time of the proposal was issued. The views, data, requests, and
suggestions contained in the comments help us to form solutions and
make appropriate adjustments to our proposals so that we may be better
assured that the final standards we set are reasonable for the
rulemaking time frame. For this final rule, the agency made substantive
changes resulting directly from the suggestions and recommendations
from commenters, as well as new information obtained since the time the
proposal was developed, and corrections both highlighted by commenters
and discovered internally. These changes reflect DOT's long-standing
commitment to ongoing refinement and improvement of its approach to
estimating the potential impacts of new CAFE standards. Through further
consideration and deliberation, and also in response to many public
comments received since then, NHTSA has made a number of changes to the
CAFE Model since the 2023 NPRM, including those that are listed below
and detailed in Section II and III, as well as in the TSD and FRIA that
accompany this final rule.
D. Final Standards--Stringency
NHTSA is establishing new CAFE standards for passenger cars (PCs)
and light trucks (LTs) produced for model years 2027-2031, setting
forth augural CAFE standards for PCs and LTs for model year 2032, and
establishing fuel efficiency standards for HDPUVs for model years 2030-
2035. Passenger cars are generally sedans, station wagons, and two-
wheel drive crossovers and sport utility vehicles (CUVs and SUVs),
while light trucks are generally 4WD sport utility vehicles, pickups,
minivans, and passenger/cargo vans.\114\ NHTSA is establishing
standards (represented by alternative PC2LT002, which is the preferred
alternative in our analysis) that increase in stringency at 2 percent
per year for PCs produced for model years 2027-2031 (and setting forth
augural standards that would increase by another 2 percent for PCs
produced in model year 2032), at 0 percent per year for LTs produced in
model years 2027-2028 and 2 percent per year for LTs produced in model
years 2029-2031 (and setting forth augural standards that would
increase by another 2 percent for LTs produced in model year 2032).
Passenger car and light truck standards are all attribute-based. NHTSA
is setting CAFE standards defined by a mathematical function of vehicle
footprint,\115\ which has an observable correlation with fuel economy.
The final standards, and regulatory alternatives, take the form of fuel
economy targets expressed as functions of vehicle footprint, which are
separate for PCs and LTs. Section IV below discusses NHTSA's continued
reliance on footprint as the relevant attribute for PCs and LTs in this
final rule.
---------------------------------------------------------------------------
\114\ ``Passenger car'' and ``light truck'' are defined at 49
CFR part 523.
\115\ Vehicle footprint is roughly measured as the rectangle
that is made by the four points where the vehicle's tires touch the
ground. Generally, passenger cars have more stringent targets than
light trucks regardless of footprint, and smaller vehicles will have
more stringent targets than larger vehicles. No individual vehicle
or vehicle model need meet its target exactly, but a manufacturer's
compliance is determined by how its average fleet fuel economy
compares to the average fuel economy of the targets of the vehicles
it manufactures.
---------------------------------------------------------------------------
The target curves for the final passenger car and light truck
standards are as follows; curves for model years 2024-2026 are included
in the figures for context. NHTSA underscores that the equations and
coefficients defining the curves are, in fact, the CAFE standards, and
not the mpg numbers that the agency estimates could result from
manufacturers complying with the curves. Because the estimated mpg
numbers are an effect of the final standards, they are presented in
Section II.E. To give context to what the passenger car footprint curve
is showing in Figure II-1, for model year 2024, the target for the
smallest footprint passenger cars is 55.4 mpg, and the target for the
largest footprint passenger cars is 41.5 mpg. For model year 2031, the
smallest footprint passenger cars have a target of 74.1 mpg and the
largest passenger cars have a target of 55.4 mpg.
[[Page 52567]]
[GRAPHIC] [TIFF OMITTED] TR24JN24.014
To give context to what the light truck footprint curve is showing
in Figure II-2, the smallest footprint truck fuel economy target is
44.5 mpg, and the largest truck fuel economy target is 26.7 mpg. And in
model year 2031, the smallest truck footprint target is 57.1 mpg, and
the largest truck footprint target is 34.3 mpg.
[[Page 52568]]
[GRAPHIC] [TIFF OMITTED] TR24JN24.015
NHTSA has also amended the minimum domestic passenger car standard
(MDPCS) for model years 2027-2031 and set forth an augural MDPCS for
model year 2032. Section 32902(b)(4) of 49 U.S.C. requires NHTSA to
project the MDPCS when it promulgates passenger car standards for a
model year, as a result the MDPCSs are established as specific mpg
values. NHTSA retains the 1.9-percent offset to the MDPCS, first used
in the 2020 final rule, to account for recent projection errors as part
of estimating the total passenger car fleet fuel economy.\116\ The
final MDPCS for model years 2027-2031 and the augural MDPCS for model
year 2032 for the preferred alternative are presented in Table II-1.
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\116\ Section VI.A.2 (titled ``Separate Standards for Passenger
Cars, Light Trucks, and Heavy-Duty Pickups and Vans, and Minimum
Standards for Domestic Passenger Cars'') discusses the basis for the
offset.
[GRAPHIC] [TIFF OMITTED] TR24JN24.016
Heavy-duty pickup trucks and vans are work vehicles that have GVWR
between 8,501 pounds to 14,000 pounds (known as Class 2b through 3
vehicles) manufactured as complete vehicles by a single or final stage
manufacturer or manufactured as incomplete vehicles as designated by a
manufacturer.\117\ The majority of these HDPUVs are \3/4\-ton and 1-ton
pickup trucks, 12- and 15-passenger vans, and large work vans that are
sold by vehicle manufacturers as complete vehicles, with no secondary
manufacturer making substantial modifications prior to registration and
use. The final standards, represented by alternative HDPUV108 in
NHTSA's analysis, increases at a rate of 10 percent per year for model
years 2030-2032 and 8 percent per year for model years 2033-2035. The
final standards, like the proposed standards, are defined by a linear
work factor target function with two sets of sub-configurations with
one for spark ignition (SI) that represents gasoline, CNG, strong
hybrids, and PHEVs and the other for compression ignition (CI) that
represents diesels, BEVs and FCEVs. The target linear curves for HDPUV
are still in the same units as in Phase 2 final rule in gallons per 100
miles and for context both the
[[Page 52569]]
SI and CI curves are shown for model years 2026-2035.
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\117\ See 49 CFR 523.7, 40 CFR 86.1801-12, 40 CFR 86.1819-17, 40
CFR 1037.150.
\118\ The passenger car, light truck, and HDPUV target curve
function coefficients are defined in Equation IV-1, Equation IV-2,
and Equation IV-3, respectively. See Final TSD Chapter 1.2.1 for a
complete discussion about the footprint and work factor curve
functions and how they are calculated.
\119\ The passenger car, light truck, and HDPUV target curve
function coefficients are defined in Equation IV-1, Equation IV-2,
and Equation IV-3, respectively. See Final TSD Chapter 1.2.1 for a
complete discussion about the footprint and work factor curve
functions and how they are calculated.
[GRAPHIC] [TIFF OMITTED] TR24JN24.017
[GRAPHIC] [TIFF OMITTED] TR24JN24.018
[GRAPHIC] [TIFF OMITTED] TR24JN24.019
[[Page 52570]]
[GRAPHIC] [TIFF OMITTED] TR24JN24.020
E. Final Standards--Impacts
As for past CAFE rulemakings, NHTSA has used the CAFE Model to
estimate the effects of this final rule's light duty CAFE and HDPUV
fuel efficiency standards and of other regulatory alternatives under
consideration. Some inputs to the CAFE Model are derived from other
models, such as Argonne National Laboratory's Autonomie vehicle
simulation tool and Argonne's GREET fuel-cycle emissions analysis
model, the U.S. Energy Information Administration's (EIA's) National
Energy Modeling System (NEMS), and EPA's Motor Vehicle Emissions
Simulator (MOVES) vehicle emissions model. Especially given the scope
of NHTSA's analysis, these inputs involve a number of uncertainties.
NHTSA underscores that all results of today's analysis simply represent
the agency's best estimates based on the information currently before
us and on the agency's reasonable judgment.
1. Light Duty Effects
NHTSA estimates that this final rule would increase the eventual
average of manufacturers' CAFE requirements to about 50.4 mpg by 2031
rather than, under the No-Action Alternative (i.e., the baseline
standards issued in 2023 ending with model year 2026 standards carried
forward indefinitely), about 46.9 mpg. For passenger cars, the
standards in 2031 are estimated to require 65.1 mpg, and for light
trucks, 45.2 mpg. This compares with 58.8 mpg and 42.6 mpg for cars and
trucks, respectively, under the No-Action Alternative.
[GRAPHIC] [TIFF OMITTED] TR24JN24.021
The model year 2032 augural CAFE standard is estimated to require a
fleet average fuel economy of 51.4 mpg rather than, under the No-Action
Alternative, about 46.9 mpg. For passenger cars, the average in 2032 is
estimated to require 66.4 mpg, and for the light trucks, 46.2 mpg.
[[Page 52571]]
[GRAPHIC] [TIFF OMITTED] TR24JN24.022
Because manufacturers do not comply exactly with each standard in
each model year, but rather focus their compliance efforts when and
where it is most cost-effective to do so, ``estimated achieved'' fuel
economy levels differ somewhat from ``estimated required'' levels for
each fleet, for each year. NHTSA estimates that the industry-wide
average fuel economy achieved in model year 2031 could increase from
about 52.1 mpg under the No-Action Alternative to 52.5 mpg under the
final rule's standards.
[GRAPHIC] [TIFF OMITTED] TR24JN24.023
The augural achieved CAFE level in model year 2032 is estimated to
be 53.5 mpg rather than, under the No-Action Alternative, about 53 mpg.
For passenger cars, the fleet average in 2032 is estimated to achieve
72.3 mpg, and for light trucks 47.3 mpg.
[GRAPHIC] [TIFF OMITTED] TR24JN24.024
NHTSA's analysis estimates manufacturers' potential responses to
the combined effect of CAFE standards and separate (reference baseline,
model years 2024-2026) CO<INF>2</INF> standards, ZEV programs, and fuel
prices. Together, the regulatory programs are more binding (i.e.,
require more of manufacturers) than any single program considered in
isolation, and today's analysis, like past analyses, shows some
estimated overcompliance with the final CAFE standards for both the
passenger car and light truck fleets.
NHTSA measures and reports benefits and costs from increasing fuel
economy and efficiency standards from two different perspectives.
First, the agency's ``model year'' perspective focuses on benefits and
costs of establishing alternative CAFE standards for model years 2027
through 2031 (and fuel efficiency standards for HDPUVs for model years
2030 through 2035), and measures these over each separate model year's
entire lifetime. The calendar year perspective we present includes the
annual impacts attributable to all vehicles estimated to be in service
in each calendar year for which our analysis includes a representation
of the entire registered passenger car, light truck, and HDPUV fleet.
For this final rule, this calendar year perspective covers each of
calendar years 2022-2050, with differential impacts accruing as early
as MY 2022.\120\ Compared to the model year perspective, the calendar
year perspective includes model years of vehicles produced in the
longer term, beyond those model years for which standards are being
finalized. The strengths and limitations of each accounting perspective
is discussed in detail in FRIA Chapter 5.
---------------------------------------------------------------------------
\120\ For a presentation of effects by calendar year, please see
Chapter 8.2.4.6 of the FRIA.
---------------------------------------------------------------------------
The table below summarizes estimates of selected impacts viewed
from each of these two perspectives, for each of the regulatory
alternatives considered in this final rule, relative to the reference
baseline.
[[Page 52572]]
[GRAPHIC] [TIFF OMITTED] TR24JN24.025
NHTSA estimates for the final standards are compared to levels of
gasoline and electricity consumption NHTSA projects would occur under
the No-Action Alternative (i.e., the reference baseline) as shown in
Table II-8.\123\
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\121\ FRIA Chapter 1, Figure 1-1 provides a graphical comparison
of energy sources and their relative change over the standard
setting years.
\122\ The additional electricity use during regulatory years is
attributed to an increase in the number of PHEVs; PHEV fuel economy
is only considered in charge-sustaining (i.e., gasoline-only) mode
in the compliance analysis, but electricity consumption is computed
for the effects analysis.
\123\ While NHTSA does not condider electrification in its
analysis during the rulemaking time frame, the analysis still
reflects application of electric vehicles in the baseline fleet and
during the model years, such that electrification (and thus,
electricity consumption) increases in NHTSA's is not considering it
in our decision-making.
---------------------------------------------------------------------------
NHTSA's analysis also estimates total annual consumption of fuel by
the entire on-road light-duty fleet from calendar year 2022 through
calendar year 2050. On this basis, gasoline and electricity consumption
by the U.S. light-duty vehicle fleet evolves as shown in Figure II-5
and Figure II-6, each of which shows projections for the No-Action
Alternative, PC2LT002 (the Preferred Alternative), PC1LT3, PC2LT4,
PC3LT5, and PC6LT8.
[GRAPHIC] [TIFF OMITTED] TR24JN24.026
[[Page 52573]]
[GRAPHIC] [TIFF OMITTED] TR24JN24.027
Accounting for emissions from both vehicles and upstream energy
sector processes (e.g., petroleum refining and electricity generation),
which are relevant to NHTSA's evaluation of the need of the United
States to conserve energy, NHTSA estimates that the final rule would
reduce greenhouse gas emissions by about 659 million metric tons of
carbon dioxide (CO<INF>2</INF>), about 825 thousand metric tons of
methane (CH<INF>4</INF>), and about 24 thousand metric tons of nitrous
oxide (N<INF>2</INF>O).
[GRAPHIC] [TIFF OMITTED] TR24JN24.028
Emissions reductions accrue over time, as the example for
CO<INF>2</INF> emissions shows in Figure II-7.
[[Page 52574]]
[GRAPHIC] [TIFF OMITTED] TR24JN24.029
For the ``standard setting'' analysis, the FRIA accompanying
today's notice provides additional detail regarding projected criteria
pollutant emissions and health effects, as well as the inclusion of
these impacts in today's benefit-cost analysis. For the
``unconstrained'' or ``EIS'' analysis, the Final EIS accompanying
today's notice presents much more information regarding projected
criteria pollutant emissions, as well as model-based estimates of
corresponding impacts on several measures of urban air quality and
public health. As mentioned above, these estimates of criteria
pollutant emissions are based on a complex analysis involving
interacting simulation techniques and a myriad of input estimates and
assumptions. Especially extending well past 2050, the analysis involves
a multitude of uncertainties.
To illustrate the effectiveness of the technology added in response
to today's final rule, Table II-10 presents NHTSA's estimates for
increased vehicle cost and lifetime fuel expenditures. For more
detailed discussion of these and other results related to LD final
standards, see Section V below.
[GRAPHIC] [TIFF OMITTED] TR24JN24.030
With the SC-GHG discounted at 2.0 percent and other benefits and
costs discounted at 3 percent, NHTSA estimates that monetized costs and
benefits could be approximately $24.5 billion and $59.7 billion,
respectively, such that the present value of aggregate monetized net
benefits to society could be approximately $35.2 billion. With the SC-
GHG discounted at 2.0 percent and other benefits and costs discounted
at 7 percent, NHTSA estimates approximately $16.2 billion in monetized
costs and $47.0 billion in monetized benefits could be attributable to
vehicles produced during and prior to model year 2031 over the course
of their lives, such that the present value of aggregate net monetized
benefits to society could be approximately $30.8 billion.
[[Page 52575]]
[GRAPHIC] [TIFF OMITTED] TR24JN24.031
[GRAPHIC] [TIFF OMITTED] TR24JN24.032
[GRAPHIC] [TIFF OMITTED] TR24JN24.033
[[Page 52576]]
2. Heavy Duty Pickup Trucks and Vans Effects
NHTSA estimates that the final rule would increase HDPUV fuel
efficiency standards to about 2.851 gals/100 mile by 2035 rather than,
under the No-Action Alternative (i.e., the baseline standards issued in
2016 final rule for Phase 2 ending with model year 2029 standards
carried forward indefinitely), about 5.023 gals/100mile. Unlike the
light-duty CAFE program, NHTSA may consider AFVs when setting maximum
feasible standards for HDPUVs. Additionally, for purposes of
calculating average fuel efficiency for HDPUVs, NHTSA considers EVs,
fuel cell vehicles, and the proportion of electric operation of EVs and
PHEVs that is derived from electricity that is generated from sources
that are not onboard the vehicle to have a fuel efficiency value of 0
gallons/mile. NHTSA estimates that the final rule would achieve an
average fuel efficiency 2.565 gals/100 mile by 2035 rather than, under
the No-Action Alternative, about 2.716 gals/100 mile.
[GRAPHIC] [TIFF OMITTED] TR24JN24.034
NHTSA estimates that over the lives of vehicles subject to these
final HDPUV standards, the final standards would save about 5.6 billion
gallons of gasoline and increase electricity consumption (as the
percentage of electric vehicles increases over time) by about 56 TWh (a
5.4 percent increase), compared to levels of gasoline and electricity
consumption NHTSA projects would occur under the reference baseline
standards (i.e., the No-Action Alternative) as shown in Table II-15.
[GRAPHIC] [TIFF OMITTED] TR24JN24.035
NHTSA's analysis also estimates total annual consumption of fuel by
the entire on-road HDPUV fleet from calendar year 2022 through calendar
year 2050. On this basis, gasoline and electricity consumption by the
U.S. HDPUV fleet evolves as shown in Figure II-8 and Figure II-9, each
of which shows projections for the No-Action Alternative, HDPUV4,
HDPUV108 (the Preferred Alternative), HDPUV10, and HDPUV14.
[[Page 52577]]
[GRAPHIC] [TIFF OMITTED] TR24JN24.036
[GRAPHIC] [TIFF OMITTED] TR24JN24.037
Accounting for emissions from both vehicles and upstream energy
sector processes (e.g., petroleum refining and electricity generation),
which are relevant to NHTSA's evaluation of the need of the United
States to conserve energy, NHTSA estimates that the final HDPUV
standards would reduce greenhouse gas emissions by about 55 million
metric tons of carbon dioxide (CO<INF>2</INF>), about 65 thousand
metric tons of methane (CH<INF>4</INF>), and about 3 thousand metric
tons of nitrous oxide (N<INF>2</INF>O).
[[Page 52578]]
[GRAPHIC] [TIFF OMITTED] TR24JN24.038
NHTSA's analysis also estimates annual emissions attributable to
the entire on-road HDPUV fleet from calendar year 2022 through calendar
year 2050. Also accounting for both vehicles and upstream processes,
NHTSA estimates that CO<INF>2</INF> emissions from the HDPUV standards
could evolve over time as shown in Figure II-10.
[GRAPHIC] [TIFF OMITTED] TR24JN24.039
To illustrate the effectiveness of the technology added to HDPUVs
in response to today's final rule and the overall societal effects of
the HDPUV standards, Table II-17 presents NHTSA's estimates for
increased vehicle cost and lifetime fuel expenditures and Table II-18
summarizes the benefit-cost analysis. For more detailed discussion of
these and other results related to HDPUV final standards, see Preamble
Section V and Section VI below.
[GRAPHIC] [TIFF OMITTED] TR24JN24.040
[[Page 52579]]
[GRAPHIC] [TIFF OMITTED] TR24JN24.041
F. Final Standards Are Maximum Feasible
NHTSA's conclusion, after consideration of the factors described
below and information in the administrative record for this action, is
that 2 percent increases in stringency for passenger cars for model
years 2027-2031, 0 percent increases in stringency for light trucks in
model years 2027-2028, and 2 percent increases in stringency for model
years 2029-2031 for light trucks (Alternative PC2LT002) are maximum
feasible. The Department of Transportation is deeply committed to
working aggressively to improve energy conservation and reduce
environmental harms and economic and security risks associated with
energy use. NHTSA has concluded that Alternative PC2LT002 is
technologically feasible, is economically practicable (based on
manageable average per-vehicle cost increases, minimal effects on
sales, and estimated increases in employment, among other
considerations), and is complementary to other motor vehicle standards
of the Government on fuel economy that are simultaneously applicable
during model years 2027-2031, as described in more detail below.
After consideration of the technical capabilities, economic
practicability, statutory requirements, and the Phase 2 final
standards, NHTSA has concluded that a 10 percent increase in model
years 2030-2032 and an 8 percent increase in model years 2033-2035 for
the HDPUV fleet (HDPUV108) is maximum feasible. NHTSA's analysis shows
that current Phase 2 standards do not require significant technological
improvements through model year 2029, though we expect to see
additional fuel efficient technology penetration in model years 2030
through 2035, which can be viewed in more detail in FRIA Chapter 8.
Considering our statutory requirements, we have reduced the stringency
to 8 percent increases in model years 2033-2035.
See preamble Section VI for more discussion on how we determined
that the final CAFE and HDPUV standards are maximum feasible.
G. Final Standards Are Feasible in the Context of EPA's Final Standards
and California's Standards
The NHTSA and EPA final rules remain coordinated despite being
issued as separate regulatory actions. NHTSA is finalizing CAFE
standards that represent the maximum feasible under our program's
statutory constraints, which differ to varying degrees by vehicle
classification and model year from the GHG standards set forth by the
EPA. Overall, EPA's GHG standards, developed under their program's
authorities, place a higher degree of stringency on manufacturers in
part because of their ability to consider all vehicle technologies,
including alternative fueled vehicles, in setting standards. As with
past rules, NHTSA's and EPA's programs also differ in other respects,
such as programmatic flexibilities. Accordingly, NHTSA's coordination
with EPA was limited to areas where each agency's statutory framework
allowed some level of harmonization. These differences mean that
manufacturers have had (and will continue to have) to plan their
compliance strategies considering both the CAFE standards and the GHG
standards to ensure that they maintain compliance with both. Because
NHTSA and EPA are regulating the same vehicles and manufacturers will
use many of the same technologies to meet each set of standards, NHTSA
performed appropriate analyses to quantify the differences and their
impacts. Auto manufacturers have shown a consistent historical ability
to manage compliance strategies that account for the concurrent
implementation of multiple regulatory programs. Past experience with
these programs indicates that each manufacturer will optimize its
compliance strategy around whichever standard is most binding for its
fleet of vehicles. If different agencies' standards are more binding
for some companies in certain years, this does not mean that
manufacturers must build multiple fleets of vehicles, but rather that
they will have to be more strategic about how they build their fleet.
More detailed discussion of this issue can be found in Section VI.A of
this preamble. Critically, NHTSA has concluded that it is feasible for
manufacturers to meet the NHTSA standards in a regulatory framework
that includes the EPA standards.
NHTSA has also considered and accounted for manufacturers' expected
compliance with California's ZEV program (ACC I and ACT) and its
adoption by other states in developing the reference baseline for this
final rule. We have also accounted for the Framework Agreements between
manufacturers who have committed to meeting those Agreements. Finally,
we accounted for additional ZEV deployment that manufacturers have
[[Page 52580]]
committed to undertake, which would be consistent with the requirements
of ACC II. NHTSA's assessment regarding the inclusion of ZEVs in the
reference baseline is detailed in Preamble Section III.C.5 and Section
IV.B.1, and well as in Chapter 3.1 of the accompanying FRIA.
NHTSA also conducted an analysis using an alternative baseline,
under which NHTSA removed not only the electric vehicles that would be
deployed to comply with ACC I, but also those that would be deployed
consistent with manufacturer commitments to deploy additional electric
vehicles regardless of legal requirements, consistent with the levels
under ACC II. NHTSA describes this as the ``No ZEV alternative
baseline.'' For further reading on this alternative baseline, see RIA
Chapters 3 and 8 and Preamble Section IV.B for comparison of the
baselines.
III. Technical Foundation for Final Rule Analysis
A. Why is NHTSA conducting this analysis?
NHTSA is finalizing CAFE standards that will increase at 2 percent
per year for passenger cars during MYs 2027 through 2031, and for light
trucks, standards that will not increase beyond the MY 2026 standards
in MYs 2027 through 2028, thereafter increasing at 2 percent per year
for MYs 2029 through 2031. The final HDPUV standards will increase at
10 percent per year during MYs 2030 through 2032, and then increase at
8 percent for MYs 2033 through 2035. NHTSA estimates these stringency
increases in the passenger car and light truck fleets will reduce
gasoline consumption through calendar year 2050 by about 64 billion
gallons and increase electricity consumption by about 333 terawatt-
hours (TWh). The stringency increases in the HDPUV fleet will reduce
gasoline consumption by about 5.6 billion gallons and increase
electricity consumption by about 56 TWh through calendar year 2050.
Accounting for emissions from both vehicles and upstream energy sector
processes (e.g., petroleum refining and electricity generation), NHTSA
estimates that the CAFE standards will reduce greenhouse gas emissions
by about 659 million metric tons of carbon dioxide (CO<INF>2</INF>),
about 825 thousand metric tons of methane (CH<INF>4</INF>), and about
23.5 thousand metric tons of nitrous oxide (N<INF>2</INF>0). The HDPUV
standards are estimated to further reduce greenhouse gas emissions by
55 million metric tons of CO<INF>2</INF>, 65 thousand metric tons of
CH<INF>4</INF> and 3 thousand metric tons of N<INF>2</INF>0.
When NHTSA promulgates new regulations, it generally presents an
analysis that estimates the impacts of those regulations, and the
impacts of other regulatory alternatives. These analyses derive from
statutes such as the Administrative Procedure Act (APA) and NEPA, from
E.O.s (such as E.O. 12866 and 13563), and from other administrative
guidance (e.g., Office of Management and Budget (OMB) Circular A-4).
For CAFE and HDPUV standards, EPCA, as amended by EISA, contains a
variety of provisions that NHTSA seeks to account for analytically.
Capturing all of these requirements analytically means that NHTSA
presents an analysis that spans a meaningful range of regulatory
alternatives, that quantifies a range of technological, economic, and
environmental impacts, and that does so in a manner that accounts for
EPCA/EISA's various express requirements for the CAFE and HDPUV
programs (e.g., passenger cars and light trucks must be regulated
separately; the standard for each fleet must be set at the maximum
feasible level in each MY; etc.).
NHTSA's standards are thus supported by, although not dictated by,
extensive analysis of potential impacts of the regulatory alternatives
under consideration. Together with this preamble, a TSD, a FRIA, and a
Final EIS, provide a detailed enumeration of related methods,
estimates, assumptions, and results. These additional analyses can be
found in the rulemaking docket for this final rule \124\ and on NHTSA's
website.\125\
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\124\ Docket No. NHTSA-2023-0022, which can be accessed at
<a href="https://www.regulations.gov">https://www.regulations.gov</a>.
\125\ See NHTSA. 2023. Corporate Average Fuel Economy. Available
at: <a href="https://www.nhtsa.gov/laws-regulations/corporate-average-fuel-economy">https://www.nhtsa.gov/laws-regulations/corporate-average-fuel-economy</a>. (Accessed: Feb. 23, 2024).
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This section provides further detail on the key features and
components of NHTSA's analysis. It also describes how NHTSA's analysis
has been constructed specifically to reflect governing law applicable
to CAFE and HDPUV standards (which may vary between programs). Finally,
the discussion reviews how NHTSA's analysis has been expanded and
improved in response to comments received on the 2023 proposal,\126\ as
well as additional work conducted over the last year. The analysis for
this final rule aided NHTSA in implementing its statutory obligations,
including the weighing of various considerations, by reasonably
informing decision-makers about the estimated effects of choosing
different regulatory alternatives.
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\126\ 88 FR 56128 (Aug. 17, 2023).
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1. What are the key components of NHTSA's analysis?
NHTSA's analysis makes use of a range of data (i.e., observations
of things that have occurred), estimates (i.e., things that may occur
in the future), and models (i.e., methods for making estimates). Two
examples of data include (1) records of actual odometer readings used
to estimate annual mileage accumulation at different vehicle ages and
(2) CAFE compliance data used as the foundation for the ``analysis
fleets'' containing, among other things, production volumes and fuel
economy/fuel efficiency levels of specific configurations of specific
vehicle models produced for sale in the U.S. Two examples of estimates
include (1) forecasts of future Gross Domestic Product (GDP) growth
used, with other estimates, to forecast future vehicle sales volumes
and (2) technology cost estimates, which include estimates of the
technologies' ``direct cost,'' marked up by a ``retail price
equivalent'' (RPE) factor used to estimate the ultimate cost to
consumers of a given fuel-saving technology, and an estimate of ``cost
learning effects'' (i.e., the tendency that it will cost a manufacturer
less to apply a technology as the manufacturer gains more experience
doing so).
NHTSA uses the CAFE Compliance and Effects Modeling System (usually
shortened to the ``CAFE Model'') to estimate manufacturers' potential
responses to new CAFE, HDPUV, and GHG standards and to estimate various
impacts of those responses. DOT's Volpe National Transportation Systems
Center (often simply referred to as the ``Volpe Center'') develops,
maintains, and applies the model for NHTSA. NHTSA has used the CAFE
Model to perform analyses supporting every CAFE rulemaking since 2001.
The 2016 rulemaking regarding HDPUV fuel efficiency standards, NHTSA's
most recent HDPUV rulemaking, also used the CAFE Model for analysis.
The basic design of the CAFE Model is as follows: The system first
estimates how vehicle manufacturers might respond to a given regulatory
scenario, and from that potential compliance solution, the system
estimates what impact that response will have on fuel consumption,
emissions, safety impacts, and economic externalities. In a highly
summarized form, TSD Figure 1-1 shows the basic categories of CAFE
Model procedures and the sequential logical flow between different
stages of the modeling.\127\ The diagram does not present specific
model inputs or
[[Page 52581]]
outputs, as well as many specific procedures and model interactions.
The model documentation accompanying this final rule presents these
details.\128\
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\127\ TSD Chapter 1, see Figure 1-1: CAFE Model Procedures and
Logical Flow.
\128\ CAFE Model Documentation for 2024 FRM.
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More specifically, the model may be characterized as an integrated
system of models. For example, one model estimates manufacturers'
responses, another estimates resultant changes in total vehicle sales,
and still another estimates resultant changes in fleet turnover (i.e.,
scrappage). Additionally, and importantly, the model does not determine
the form or stringency of the standards. Instead, the model applies
inputs specifying the form and stringency of standards to be analyzed
and produces outputs showing the impacts of manufacturers working to
meet those standards, which become part of the basis for comparing
different potential stringencies. A regulatory scenario, meanwhile,
involves specification of the form, or shape, of the standards (e.g.,
flat standards, or linear or logistic attribute-based standards), scope
of passenger car, light truck, and HDPUV regulatory classes, and
stringency of the CAFE or HDPUV standards for each MY to be analyzed.
For example, a regulatory scenario may define CAFE or HDPUV standards
for a particular class of vehicles that increase in stringency by a
given percent per year for a given number of consecutive years.
Manufacturer compliance simulation and the ensuing effects
estimation, collectively referred to as compliance modeling, encompass
numerous subsidiary elements. Compliance simulation begins with a
detailed user-provided initial forecast of the vehicle models offered
for sale during the simulation period.\129\ The compliance simulation
then attempts to bring each manufacturer into compliance with the
standards defined by the regulatory scenario contained within an input
file developed by the user.\130\
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\129\ Because the CAFE Model is publicly available, anyone can
develop their own initial forecast (or other inputs) for the model
to use. The DOT-developed Market Data Input file that contains the
forecast for this final rule is available on NHTSA's website at
<a href="https://www.nhtsa.gov/corporate-average-fuel-economy/cafe-compliance-and-effects-modeling-system">https://www.nhtsa.gov/corporate-average-fuel-economy/cafe-compliance-and-effects-modeling-system</a>.
\130\ With appropriate inputs, the model can also be used to
estimate impacts of manufacturers' potential responses to new
CO<INF>2</INF> standards and to California's ZEV program.
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Estimating impacts involves calculating resultant changes in new
vehicle costs, estimating a variety of costs (e.g., for fuel) and
effects (e.g., CO<INF>2</INF> emissions from fuel combustion) occurring
as vehicles are driven over their lifetimes before eventually being
scrapped, and estimating the monetary value of these effects.
Estimating impacts also involves consideration of consumer responses--
e.g., the impact of vehicle fuel economy/efficiency, operating costs,
and vehicle price on consumer demand for passenger cars, light trucks,
and HDPUVs. Both basic analytical elements involve the application of
many analytical inputs. Many of these inputs are developed outside of
the model and not by the model. For example, the model applies fuel
prices; it does not estimate fuel prices.
NHTSA also uses EPA's Motor Vehicle Emission Simulator (MOVES)
model to estimate ``vehicle'' or ``downstream'' emission factors for
criteria pollutants,\131\ and uses four Department of Energy (DOE) and
DOE-sponsored models to develop inputs to the CAFE Model, including
three developed and maintained by DOE's Argonne National Laboratory
(Argonne). The agency uses the DOE Energy Information Administration's
(EIA's) National Energy Modeling System (NEMS) to estimate fuel
prices,\132\ and uses Argonne's Greenhouse gases, Regulated Emissions,
and Energy use in Transportation (GREET) model to estimate emissions
rates from fuel production and distribution processes.\133\ DOT also
sponsored DOE/Argonne to use Argonne's Autonomie full-vehicle modeling
and simulation system to estimate the fuel economy/efficiency impacts
for over a million combinations of technologies and vehicle types.\134\
The TSD and FRIA describe details of our use of these models. In
addition, as discussed in the Final EIS accompanying this final rule,
DOT relied on a range of models to estimate impacts on climate, air
quality, and public health. The Final EIS discusses and describes the
use of these models.
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\131\ See <a href="https://www.epa.gov/moves">https://www.epa.gov/moves</a>. This final rule uses
version MOVES4 (the latest version at the time of analysis),
available at <a href="https://www.epa.gov/moves/latest-version-motor-vehicle-emission-simulator-moves">https://www.epa.gov/moves/latest-version-motor-vehicle-emission-simulator-moves</a>.
\132\ See <a href="https://www.eia.gov/outlooks/aeo/">https://www.eia.gov/outlooks/aeo/</a>. This final rule
uses fuel prices estimated using the Annual Energy Outlook (AEO)
2023 version of NEMS (see <a href="https://www.eia.gov/outlooks/aeo/tables_ref.php">https://www.eia.gov/outlooks/aeo/tables_ref.php</a>.).
\133\ Information regarding GREET is available at <a href="https://greet.es.anl.gov/">https://greet.es.anl.gov/</a>. This final rule uses the R&D GREET 2023 version.
\134\ As part of the Argonne simulation effort, individual
technology combinations simulated in Autonomie were paired with
Argonne's BatPaC model to estimate the battery cost associated with
each technology combination based on characteristics of the
simulated vehicle and its level of electrification. Information
regarding Argonne's BatPaC model is available at <a href="https://www.anl.gov/cse/batpac-model-software">https://www.anl.gov/cse/batpac-model-software</a>. In addition, the impact of
engine technologies on fuel consumption, torque, and other metrics
was characterized using GT-POWER simulation modeling in combination
with other engine modeling that was conducted by IAV Automotive
Engineering, Inc. (IAV). The engine characterization ``maps''
resulting from this analysis were used as inputs for the Autonomie
full-vehicle simulation modeling. Information regarding GT-POWER is
available at <a href="https://www.gtisoft.com/gt-power/">https://www.gtisoft.com/gt-power/</a>.
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To prepare for the analysis that supports this final rule, DOT has
refined and expanded the CAFE Model through ongoing development.
Examples of such changes, some informed by past external comment, made
since 2022 include: \135\
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\135\ A more detailed list can be found in Chapter 1.1 of the
TSD.
<bullet> Updated analysis fleet
<bullet> Addition of HDPUVs, and associated required updates across
entire model
<bullet> Updated technologies considered in the analysis
[cir] Addition of HCRE, HCRD and updated diesel technology models \136\
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\136\ See technologies descriptions in TSD Chapter 3.
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[cir] Removal of EFR, DSLIAD, manual transmissions, AT6L2, EPS, IACC,
LDB, SAX, and some P2 combinations \137\
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\137\ See technologies description in 87 FR 25710 (May 2, 2022).
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<bullet> User control of additional input parameters
<bullet> Updated modeling approach to manufacturers' expected
compliance with states' ZEV programs
<bullet> Expanded accounting for Federal incentives, such as the IRA
<bullet> Expanded procedures for estimating new vehicle sales and fleet
shares
<bullet> VMT coefficient updates
In response to feedback, interagency meetings, comments from
stakeholders, as well as continued development, DOT has made additional
changes to the CAFE Model for the final rule. Since the 2023 NPRM, DOT
has made the following changes to the CAFE Model and inputs, including:
\138\
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\138\ A more detailed list of updates can be found in Chapter
1.1 of the TSD.
<bullet> Updated battery costs for electrified technologies
<bullet> Updated different phase-in penetration for different BEV
ranges
<bullet> Updated ZEV State shares, credit values and projected ZEV
requirements to inform the reference baseline
<bullet> Reclassified Rivian and Ford vehicles from HDPUV to LD based
on official certification data submission
<bullet> Allow the user to directly input AC efficiency, AC leakage and
off cycle credit limits for each MY, separately for conventional ICE
vehicles and electric vehicles
<bullet> Addressed issues with when road load technologies are applied
to the fleet
[[Page 52582]]
<bullet> Updated and expanded model reporting capabilities
<bullet> Updated IRA Tax Credit implementation
<bullet> Updated input factors for economic models
<bullet> Updated input factors for the safety models
<bullet> Updated emission modeling
These changes reflect DOT's long-standing commitment to ongoing
refinement of its approach to estimating the potential impacts of new
CAFE and HDPUV standards.\139\ The TSD elaborates on these changes to
the CAFE Model, as well as changes to inputs to the model for this
analysis.
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\139\ A list accounting of major updates since the CAFE Model
was developed in 2001 can be found in Chapter 1.1 of the TSD.
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NHTSA underscores that this analysis uses the CAFE Model in a
manner that explicitly accounts for the fact that in producing a single
fleet of vehicles for sale in the United States, manufacturers make
decisions that consider the combination of CAFE/HDPUV standards, EPA
GHG standards, and various policies set at sub-national levels (e.g.,
ZEV regulatory programs, set by California and adopted by many other
states). These regulations have important structural and other
differences that affect the strategy a manufacturer could pursue in
designing a fleet that complies with each of the above. As explained,
NHTSA's analysis reflects a number of statutory and regulatory
requirements applicable to CAFE/HDPUV and EPA GHG standard-setting. As
stated previously, NHTSA coordinated with EPA and DOE to optimize the
effectiveness of NHTSA's standards while minimizing compliance costs,
informed by public comments from all stakeholders and consistent with
the statutory factors.
2. How do requirements under EPCA/EISA shape NHTSA's analysis?
EPCA contains multiple requirements governing the scope and nature
of CAFE standard setting. Some of these have been in place since EPCA
was first signed into law in 1975, and some were added in 2007, when
Congress passed EISA and amended EPCA. EISA also gave NHTSA authority
to set standards for HDPUVs, and that authority was generally less
constrained than for CAFE standards. NHTSA's modeling and analysis to
inform standard setting is guided and shaped by these statutory
requirements. EPCA/EISA requirements regarding the technical
characteristics of CAFE and HDPUV standards and the analysis thereof
include, but are not limited to, the following:
Corporate Average Standards: Section 32902 of 49 U.S.C. requires
standards for passenger cars, light trucks, and HDPUVs to be corporate
average standards, applying to the average fuel economy/efficiency
levels achieved by each corporation's fleets of vehicles produced for
sale in the U.S.\140\ The CAFE Model calculates the CAFE and
CO<INF>2</INF> levels of each manufacturer's fleets based on estimated
production volumes and characteristics, including fuel economy/
efficiency levels, of distinct vehicle models that could be produced
for sale in the U.S.
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\140\ This differs from certain other types of vehicle
standards, such as safety standards. For example, every vehicle
produced for sale in the U.S. must, on its own, meet all applicable
Federal motor vehicle safety standards (FMVSS), but no vehicle
produced for sale must, on its own, meet Federal fuel economy or
efficiency standards. Rather, each manufacturer is required to
produce a mix of vehicles that, taken together, achieve an average
fuel economy/efficiency level no less than the applicable minimum
level.
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Separate Standards for Passenger Cars, Light Trucks, and HDPUVs:
Section 32902 of 49 U.S.C. requires the Secretary of Transportation to
set CAFE standards separately for passenger cars and light trucks and
allows the Secretary to prescribe separate standards for different
classes of heavy-duty (HD) vehicles like HDPUVs. The CAFE Model
accounts separately for differentiated standards and compliance
pathways for passenger cars, light trucks, and HDPUVs when it analyzes
CAFE/HDPUV or GHG standards.
Attribute-Based Standards: Section 32902 of 49 U.S.C. requires the
Secretary of Transportation to define CAFE standards as mathematical
functions expressed in terms of one or more vehicle attributes related
to fuel economy, and NHTSA has extended this approach to HDPUV
standards as well through regulation. This means that for a given
manufacturer's fleet of vehicles produced for sale in the U.S. in a
given regulatory class and MY, the applicable minimum CAFE requirement
(or maximum HDPUV fuel consumption requirement) is computed based on
the applicable mathematical function, and the mix and attributes of
vehicles in the manufacturer's fleet. The CAFE Model accounts for such
functions and vehicle attributes explicitly.
Separately Defined Standards for Each Model Year: Section 32902 of
49 U.S.C. requires the Secretary of Transportation (by delegation,
NHTSA) to set CAFE standards (separately for passenger cars and light
trucks) \141\ at the maximum feasible levels in each MY. Fuel
efficiency levels for HDPUVs must also be set at the maximum feasible
level, in tranches of (at least) 3 MYs at a time. The CAFE Model
represents each MY explicitly, and accounts for the production
relationships between MYs.\142\
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\141\ Chaper 329 of title 49 of the U.S. Code uses the term
``non-passenger automobiles,'' while NHTSA uses the term ``light
trucks'' in its CAFE regulations. The terms' meanings are identical.
\142\ For example, a new engine first applied to a given mode/
configuration in MY 2027 will most likely persist in MY 2028 of that
same vehicle model/configuration, in order to reflect the fact that
manufacturers do not apply brand-new engines to a given vehicle
model every single year. The CAFE Model is designed to account for
these real-world factors.
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Separate Compliance for Domestic and Imported Passenger Car Fleets:
Section 32904 of 49 U.S.C. requires the EPA Administrator to determine
CAFE compliance separately for each manufacturer's fleets of domestic
passenger cars and imported passenger cars, which manufacturers must
consider as they decide how to improve the fuel economy of their
passenger car fleets.\143\ The CAFE Model accounts explicitly for this
requirement when simulating manufacturers' potential responses to CAFE
standards, and combines any given manufacturer's domestic and imported
cars into a single fleet when simulating that manufacturer's potential
response to GHG standards (because EPA does not have separate standards
for domestic and imported passenger cars).
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\143\ There is no such requirement for light trucks or HDPUVs.
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Minimum CAFE Standards for Domestic Passenger Car Fleets: Section
32902 of 49 U.S.C. requires that domestic passenger car fleets meet a
minimum standard, which is calculated as 92 percent of the industry-
wide average level required under the applicable attribute-based CAFE
standard, as projected by the Secretary at the time the standard is
promulgated. The CAFE Model accounts explicitly for this requirement
when simulating manufacturer compliance with CAFE standards and sets
this requirement aside when simulating manufacturer compliance with GHG
standards.
Civil Penalties for Noncompliance: Section 32912 of 49 U.S.C. (and
implementing regulations) prescribes a rate (in dollars per tenth of a
mpg) at which the Secretary is to levy civil penalties if a
manufacturer fails to comply with a passenger car or light truck CAFE
standard for a given fleet in a given MY, after considering available
credits. Some manufacturers have historically chosen to pay civil
penalties rather than achieve full numerical compliance across all
fleets.\144\ The
[[Page 52583]]
CAFE Model calculates civil penalties (adjusted for inflation) for CAFE
shortfalls and provides means to estimate that a manufacturer might
stop adding fuel-saving technologies once continuing to do so would
effectively be more ``expensive'' (after accounting for fuel prices and
buyers' willingness to pay for fuel economy) than paying civil
penalties. The CAFE Model does not allow civil penalty payment as an
option for EPA's GHG standards or NHTSA's HDPUV standards.\145\
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\144\ NHTSA does not assume willingness to pay civil penalties
for manufacturers who have commented publicly that they will not pay
civil penalties in the rulemaking time frame, MY 2027 to MY 2031.
\145\ While civil penalties are an option in the HDPUV fleet
manufacturers have not exercised this option in the real world.
Additionally, the penalties for noncompliance are significantly
higher, and thus manufacturers will try to avoid paying them.
Setting the model to disallow civil penalties acts to best simulate
this behavior. If the model does find no option other than ``paying
a civil penalty'' in the HDPUV fleet, this cost should be considered
a proxy for credit purchase.
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Dual-Fueled and Dedicated Alternative Fuel Vehicles: For purposes
of calculating passenger car and light truck CAFE levels used to
determine compliance, 49 U.S.C. 32905 and 32906 specify methods for
calculating the fuel economy levels of vehicles operating on
alternative fuels to gasoline or diesel, such as electricity. In some
cases, after MY 2020, methods for calculating AFV fuel economy are
governed by regulation. The CAFE Model can account for these
requirements explicitly for each vehicle model. However, 49 U.S.C.
32902 prohibits consideration of the fuel economy of dedicated
Alternative Fuel Vehicles (AFVs), and requires that the fuel economy of
dual-fueled AFVs' fuel economy, such as plug-in electric vehicles
(EVs), be calculated as though they ran only on gasoline or diesel,
when NHTSA determines the maximum feasible fuel economy level that
manufacturers can achieve, in a given year for which NHTSA is
establishing CAFE standards. The CAFE Model therefore has an option to
be run in a manner that excludes the additional application of
dedicated AFVs and counts only the gasoline fuel economy of dual-fueled
AFVs, in MYs for which maximum feasible standards are under
consideration. As allowed under NEPA for analysis appearing in
Environmental Impact Statements (EIS) that help inform decision makers
about the environmental impacts of CAFE standards, the CAFE Model can
also be run without this analytical constraint. The CAFE Model does
account for dedicated and dual-fueled AFVs when simulating
manufacturers' potential responses to EPA's GHG standards because the
Clean Air Act (CAA), under which the EPA derives its authority to set
GHG standards for motor vehicles, contains no restrictions in using
AFVs for compliance. There are no specific statutory directions in EISA
with regard to dedicated and dual-fueled AFV fuel efficiency for
HDPUVs, so the CAFE Model reflects relevant regulatory provisions by
calculating fuel consumption directly per 49 U.S.C. 32905 and 32906
specified methods.
ZEV Regulatory Programs: The CAFE Model can simulate manufacturers'
compliance with state-level ZEV programs applicable in California and
``Section 177'' \146\ states. This approach involves identifying
specific vehicle model/configurations that could be replaced with BEVs
and converting to BEVs only enough sales count of the vehicle models to
meet the manufacturer's compliance obligations under state-level ZEV
programs, before beginning to consider the potential that other
technologies could be applied toward compliance with CAFE, HDPUV, or
GHG standards.
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\146\ The term ``Section 177'' states refers to states which
have elected to adopt California's standards in lieu of Federal
requirements, as allowed under section 177 of the CAA.
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Creation and Use of Compliance Credits: Section 32903 of 49 U.S.C.
provides that manufacturers may earn CAFE ``credits'' by achieving a
CAFE level beyond that required of a given passenger car or light truck
fleet in a given MY and specifies how these credits may be used to
offset the amount by which a different fleet falls short of its
corresponding requirement. These provisions allow credits to be
``carried forward'' and ``carried back'' between MYs, transferred
between regulated classes (domestic passenger cars, imported passenger
cars, and light trucks), and traded between manufacturers. However,
credit use for passenger car and light truck compliance is also subject
to specific statutory limits. For example, CAFE compliance credits can
be carried forward a maximum of five MYs and carried back a maximum of
three MYs. Also, EPCA/EISA caps the amount of credits that can be
transferred between passenger car and light truck fleets and prohibits
manufacturers from applying traded or transferred credits to offset a
failure to achieve the applicable minimum standard for domestic
passenger cars. The CAFE Model can simulate manufacturers' potential
use of CAFE credits carried forward from prior MYs or transferred from
other fleets.\147\ Section 32902 of 49 U.S.C. prohibits consideration
of manufacturers' potential application of CAFE compliance credits when
determining the maximum feasible fuel economy level that manufacturers
can achieve for their fleets of passenger cars and light trucks. The
CAFE Model can be operated in a manner that excludes the application of
CAFE credits for a given MY under consideration for standard setting,
and NHTSA operated the model with that constraint for the purpose of
determining the appropriate CAFE standard for passenger cars and light
trucks. No such statutory restrictions exist for setting HDPUV
standards. For modeling EPA's GHG standards, the CAFE Model does not
limit transfers because the CAA does not limit them. Insofar as the
CAFE Model can be exercised in a manner that simulates trading of GHG
compliance credits, such simulations treat trading as unlimited.\148\
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\147\ The CAFE Model does not explicitly simulate the potential
that manufacturers would carry CAFE or GHG credits back (i.e.,
borrow) from future model years, or acquire and use CAFE compliance
credits from other manufacturers. At the same time, because EPA has
elected not to limit credit trading, the CAFE Model can be exercised
(for purposes of evaluating GHG standards) in a manner that
simulates unlimited (a.k.a. ``perfect'') GHG compliance credit
trading throughout the industry (or, potentially, within discrete
trading ``blocs''). Given these dynamics, and given also the fact
that the agency has yet to resolve some of the analytical challenges
associated with simulating use of these flexibilities, the agency
has decided to support this final rule with a conservative analysis
that sets aside the potential that manufacturers would depend widely
on borrowing and trading--not to mention that, for purposes of
determining maximum feasible CAFE standards, statute prohibits NHTSA
from considering the trading, transferring, or availability of
credits (see 49 U.S.C. 32902(h)). While compliance costs in real
life may be somewhat different from what is modeled in the
rulemaking record as a result of this decision, that is broadly true
no matter what, and the agency does not believe that the difference
would be so great that it would change the policy outcome.
Furthermore, a manufacturer employing a trading strategy would
presumably do so because it represents a lower-cost compliance
option. Thus, the estimates derived from this modeling approach are
likely to be conservative in this respect, with real-world
compliance costs likely being lower.
\148\ To avoid making judgments about possible future trading
activity, the model simulates trading by combining all manufacturers
into a single entity, so that the most cost-effective choices are
made for the fleet as a whole.
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Statutory Basis for Stringency: Section 32902 of 49 U.S.C. requires
the Secretary of Transportation (by delegation, NHTSA) to set CAFE
standards for passenger cars and light trucks at the maximum feasible
levels that manufacturers can achieve in a given MY, considering
technological feasibility, economic practicability, the need of the
United States to conserve energy, and the impact of other motor vehicle
standards of the Government on fuel economy. For HDPUV standards, which
must also achieve the maximum
[[Page 52584]]
feasible improvement, the similar yet distinct factors of
appropriateness, cost-effectiveness, and technological feasibility must
be considered. EPCA/EISA authorizes the Secretary of Transportation (by
delegation, NHTSA) to interpret these factors, and as the Department's
interpretation has evolved, NHTSA has continued to expand and refine
its qualitative and quantitative analysis to account for these
statutory factors. For example, one of the ways that economic
practicability considerations are incorporated into the analysis is
through the technology effectiveness determinations: the Autonomie
simulations reflect the agency's conservative assumption that it would
not be economically practicable (nor, for HDPUVs, appropriate for
vehicles with different use cases) for a manufacturer to ``split'' an
engine shared among many vehicle model/configurations into myriad
versions each optimized to a single vehicle model/configuration.
National Environmental Policy Act: NEPA requires NHTSA to consider
the environmental impacts of its actions in its decision-making
processes, including for CAFE standards. The Final EIS accompanying
this final rule documents changes in emission inventories as estimated
using the CAFE Model, but also documents corresponding estimates--based
on the application of other models documented in the Final EIS--of
impacts on the global climate, on air quality, and on human health.
Other Aspects of Compliance: Beyond these statutory requirements
applicable to DOT, EPA, or both are a number of specific technical
characteristics of CAFE, HDPUV, and/or GHG regulations that are also
relevant to the construction of this analysis, like the ``off-cycle''
technology fuel economy/emissions improvements that apply for both CAFE
and GHG compliance. Although too little information is available to
account for these provisions explicitly in the same way that NHTSA has
accounted for other technologies, the CAFE Model includes and makes use
of inputs reflecting NHTSA's expectations regarding the extent to which
manufacturers may earn such credits, along with estimates of
corresponding costs. Similarly, the CAFE Model includes and makes use
of inputs regarding credits EPA has elected to allow manufacturers to
earn toward GHG levels (not CAFE or HDPUV) based on the use of air
conditioner refrigerants with lower global warming potential, or on the
application of technologies to reduce refrigerant leakage. In addition,
the CAFE Model accounts for EPA ``multipliers'' for certain AFVs, based
on current regulatory provisions or on alternative approaches. Although
these are examples of regulatory provisions that arise from the
exercise of discretion rather than specific statutory mandate, they can
materially impact outcomes.
3. What updated assumptions does the current model reflect as compared
to the 2022 final rule and the 2023 NPRM?
Besides the updates to the CAFE Model described above, any analysis
of regulatory actions that will be implemented several years in the
future, and whose benefits and costs accrue over decades, requires a
large number of assumptions. Over such time horizons, many, if not
most, of the relevant assumptions in such an analysis are inevitably
uncertain. Each successive CAFE and HDPUV analysis seeks to update
assumptions to better reflect the current state of the world and
[…truncated; see source link]Indexed from Federal Register on June 24, 2024.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.