Proposed Rulemaking To Establish Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards

Note: EPA no longer updates this information, but it may be useful as a reference or resource.
PDF Version (50 pp, 1232K, About PDF)

[Federal Register: September 28, 2009 (Volume 74, Number 186)]
[Proposed Rules]
[Page 49553-49602]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28se09-26]

Proposed Rulemaking To Establish Light-Duty Vehicle Greenhouse
Gas Emission Standards and Corporate Average Fuel Economy Standards

[[Continued from page 49552]]

[[Page 49553]]
[GRAPHIC]
[TIFF OMITTED] TP28SE09.015

BILLING CODE 4910-59-C
    First, note that the scale in Figure III.D.6-2 is much smaller by a
factor of 3 than that in Figure III.D.6-1. In other words, accounting
for differences in vehicle weight (at constant footprint) and
performance dramatically reduces the differences in various
manufacturers' CO₂ emissions. Most of the manufacturers with
high offsets in Figure III.D.6-1 now show low or negative offsets. For
example, BMW's and VW's trucks show very low CO₂ emissions.
Tata's emissions are very close to the industry average. Daimler's
vehicles are no more than 10 g/mi above the average for the industry.
This analysis indicates that the primary reasons for the differences in
technology penetrations shown for the various manufacturers in Table
III.D.6-3 are weight and performance. EPA has not determined why some
manufacturers' vehicle weight is relatively high for its footprint
value, or whether this weight provides additional utility for the
consumer. Performance is more

[[Page 49554]]

straightforward. Some consumers desire high performance and some
manufacturers orient their sales towards these consumers. However, the
cost in terms of CO₂ emissions is clear. Producing
relatively heavy or high performance vehicles increases CO₂
emissions and will require greater levels of technology in order to
meet the proposed CO₂ standards.
    As can be seen from Table III.D.6-3 above, widespread use of
several technologies is projected due to the proposed standards. The
vast majority of engines are projected to be converted to direct
injection, with some of these engines including cylinder deactivation
or turbocharging and downsizing. More than 60 percent of all
transmissions are projected to be either high speed automatic
transmissions or dual-clutch automated manual transmissions. More than
one third of the fleet is projected to be equipped with 42 volt start-
stop capability. This technology was not utilized in 2008 vehicles, but
as discussed above, promises significant fuel efficiency improvement at
a moderate cost.
    EPA foresees no significant technical or engineering issues with
the projected deployment of these technologies across the fleet, with
their incorporation being folded into the vehicle redesign process. All
of these technologies are commercially available now. The automotive
industry has already begun to convert its port fuel-injected gasoline
engines to direct injection. Cylinder deactivation and turbocharging
technologies are already commercially available. As indicated in Table
III.D.6-1, high speed transmissions are already widely used. However,
while more common in Europe, automated manual transmissions are not
currently used extensively in the U.S. Widespread use of this
technology would require significant capital investment but does not
present any significant technical or engineering issues. Start-stop
systems also represent a significant challenge because of the
complications involved in a changeover to a higher voltage electrical
architecture. However, with appropriate capital investments (which are
captured in the costs), these technology penetration rates are
achievable within the timeframe of this rule. While most manufacturers
have some plans for these systems, our projections indicate that their
use may exceed 35 percent of sales, with some manufacturers requiring
higher levels.
    Most manufacturers would not have to hybridize any vehicles due to
the proposed standards. The hybrids shown for Toyota are projected to
be sold even in the absence of the proposed standards. However the
relatively high hybrid penetrations (15%) projected for BMW, Daimler,
Porsche, Tata and Volkswagen deserve further discussion. These
manufacturers are all projected by the OMEGA model to utilize the
maximum application of full hybrids allowed by our model in this time
frame, which is 15 percent.
    As discussed in the EPA DRIA, a 2016 technology penetration rate of
85% is projected for the vast majority of available technologies,
however, for full hybrid systems the projection shows that given the
available lead-time full hybrids can only be applied to approximately
15% of a manufacturer's fleet. This number of course can vary by manufacturer.
    While the hybridization levels of BMW, Daimler, Porsche, Tata and
Volkswagen are relatively high, the sales levels of these five
manufacturers are relatively low. Thus, industry-wide, hybridization
reaches only 8 percent, compared with 3 percent in the reference case.
This 8 percent level is believed to be well within the capability of
the hybrid component industry by 2016. Thus, the primary challenge for
these five companies would be at the manufacturer level, redesigning a
relatively large percentage of sales to include hybrid technology. The
proposed TLAAS provisions will provide significant aid to these
manufacturers in pre-2016 compliance, since all qualified companies are
expected to be able to take advantage of these provisions. By 2016, it
is likely that these manufacturers would also be able to change vehicle
characteristics which currently cause their vehicles to emit much more
CO₂ than similar sized vehicles produced by other
manufacturers. These factors may include changes in model mix, further
lightweighting, downpowering, electric and/or plug-in hybrid vehicles,
or downsizing (our current baseline fleet assumes very little change in
footprint from 2012-2016), as well as technologies that may not be
included in our packages. Also, companies may have technology
penetration rates of less costly technologies (listed in the above
tables) greater than 85%, and they may also be able to apply hybrid
technology to more than 15 percent of their fleet (as the 15% for
hybrid technology is an industry average). For example, a switch to a
low GWP alternative refrigerant in a large fraction of a fleet can
replace many other much more costly technologies, but this option is
not captured in the modeling. In addition, these manufacturers can also
take advantage of flexibilities, such as early credits for air
conditioning and trading with other manufacturers. The EPA expects that
there will be certain high volume manufacturers that will earn a
significant amount of early GHG credits starting in 2009 and 2010 that
will expire 5 years later, by 2014 and 2015, unused. The EPA believes
that these manufacturers will be willing to sell these expiring credits
to manufacturers with whom there is no direct competition. Furthermore,
some of these manufacturers have also stated either publicly or in
confidential discussions with EPA that they will be able to comply with
2016 standards. Because of the confidential nature of this information
sharing, EPA is unable to capture these packages specifically in our
modeling. The following companies have all submitted letters in support
of the national program, including the 2016 MY levels discussed above:
BMW, Chrysler, Daimler, Ford, GM, Honda, Mazda, Toyota, and Volkswagen.
This supports the view that the emissions reductions needed to achieve
the standards are technically and economically feasible for all these
companies, and that EPA's projection of non-compliance for four of the
companies is based on an inability of our model to fully account for
the full flexibilities of the EPA program as well as the potentially
unique technology approaches or new product offerings which these
manufactures are likely to employ.
    In addition, manufacturers do not need to apply technology exactly
according to our projections. Our projections simply indicate one path
which would achieve compliance. Those manufacturers whose vehicles are
heavier and higher performing than average in particular have
additional options to facilitate compliance and reduce their
technological burden closer to the industry average. These options
include decreasing the mass of the vehicles and/or decreasing the power
output of the engines. Finally, EPA allows compliance to be shown
through the use of emission credits obtained from other manufacturers.
Especially for the lower volume sales of some manufacturers that could
be one component of an effective compliance strategy, reducing the
technology that needs to be employed on their vehicles.
    For the vast majority of light-duty cars and trucks, manufacturers
have available to them a range of technologies that are currently
commercially available and can feasibly be employed in their vehicles
by MY 2016. Our modeling projects widespread use of these technologies
as a technologically feasible approach to complying with the proposed
standards.

[[Page 49555]]

    In sum, EPA believes that the emissions reductions called for by
the proposed standards are technologically feasible, based on
projections of widespread use of commercially available technology, as
well as use by some manufacturers of other technology approaches and
compliance flexibilities not fully reflected in our modeling.
    EPA also projected the cost associated with these projections of
technology penetration. Table III.D.6-4 shows the cost of technology in
order for manufacturers to comply with the 2011 MY CAFE standards, as
well as those associated with the proposed 2016 CO₂ emission
standards. The latter costs are incremental to those associated with
the 2011 MY standards and also include $60 per vehicle, on average, for
the cost of projected use of improved air-conditioning systems.\163\
---------------------------------------------------------------------------

    \163\ Note that the actual cost of the A/C technology is
estimated at $78 per vehicle as shown in Table III.D.2-3. However,
we expect only 85 percent of the fleet to add that technology.
Therefore, the cost of the technology when spread across the entire
fleet is $66 per vehicle ($78x85%=$66).

                         Table III.D.6-4--Cost of Technology per Vehicle in 2016 ($2007)
----------------------------------------------------------------------------------------------------------------
                                            2011 MY CAFE standards              Proposed 2016 CO2 standards
                                   -----------------------------------------------------------------------------
                                        Cars        Trucks        All          Cars        Trucks        All
----------------------------------------------------------------------------------------------------------------
BMW...............................         $319         $479         $361       $1,701       $1,665       $1,691
Chrysler..........................            7          125           59        1,331        1,505        1,408
Daimler...........................          431          632          495        1,631        1,357        1,543
Ford..............................           28          211          109        1,435        1,485        1,457
General Motors....................           28          136           73          969        1,782        1,311
Honda.............................            0            0            0          606          695          633
Hyundai...........................            0           76           14          739        1,680          907
Kia...............................            0           48            8          741        1,177          812
Mazda.............................            0            0            0          946        1,030          958
Mitsubishi........................           96          322          123        1,067        1,263        1,090
Nissan............................            0           19            6        1,013        1,194        1,064
Porsche...........................          535        1,074          706        1,549          666        1,268
Subaru............................           64          100           77          903        1,329        1,057
Suzuki............................           99          231          133        1,093        1,263        1,137
Tata..............................          691        1,574        1,161        1,270          674          952
Toyota............................            0            0            0          600          436          546
Volkswagen........................          269          758          354        1,626          949        1,509
Overall...........................           47          141           78          968        1,214        1,051
----------------------------------------------------------------------------------------------------------------

    As can be seen, the industry average cost of complying with the
2011 MY CAFE standards is quite low, $78 per vehicle. The range of
costs across manufacturers is quite large, however. Honda, Mazda and
Toyota are projected to face no cost, while Daimler, Porsche and Tata
face costs of at least $495 per vehicle. As described above, these last
three manufacturers face such high costs to meet even the 2011 MY CAFE
standards due to both their vehicles' weight per unit footprint and
performance. Also, these cost estimates apply to sales in the 2016 MY.
These three manufacturers, as well as others like Volkswagen, may
choose to pay CAFE fines prior to this or even in 2016.
    As shown in the last row of Table III.D.6-4, the average cost of
technology to meet the proposed 2016 standards for cars and trucks
combined relative to the 2011 MY CAFE standards is $1051 per vehicle.
The projection shows that the average cost for cars would be slightly
lower than that for trucks. Toyota and Honda show projected costs
significantly below the average, while BMW, Porsche, Tata and
Volkswagen show significantly higher costs. On average, the $1051 per
vehicle cost is significant, representing roughly 5% of the total cost
of a new vehicle. However, as discussed below, the fuel savings
associated with the proposed standards exceeds this cost significantly.
    While the CO₂ emission compliance modeling using the
OMEGA model focused on the proposed 2016 MY standards, EPA believes
that the proposed standards for 2012-2015 would also be feasible. As
discussed above, EPA believes that manufacturers develop their vehicle
designs with several model years in view. Generally, the technology
estimated above for 2016 MY vehicles represents the technology which
would be added to those vehicles which are being redesigned in 2012-
2015. The proposed CO₂ standards for 2012-2016 reduce
CO₂ emissions at a fairly steady rate. Thus, manufacturers
which redesign their vehicles at a fairly steady rate will automatically
comply with the interim standard as they plan for compliance in 2016.
    Manufacturers which redesign much fewer than 20% of their sales in
the early years of the proposed program would face a more difficult
challenge, as simply implementing the ``2016 MY'' technology as
vehicles are redesigned may not enable compliance in the early years.
However, even in this case, manufacturers would have several options to
enable compliance. One, they could utilize the proposed debit carry-
forward provisions described above. This may be sufficient alone to
enable compliance through the 2012-2016 MY time period, if their
redesign schedule exceeds 20% per year prior to 2016. If not, at some
point, the manufacturer might need to increase their use of technology
beyond that projected above in order to generate the credits necessary
to balance the accrued debits. For most manufacturers representing the
vast majority of U.S. sales, this would simply mean extending the same
technology to a greater percentage of sales. The added cost of this in
the later years of the program would be balanced by lower costs in the
earlier years. Two, the manufacturer could buy credits from another
manufacturer. As indicated above, several manufacturers are projected
to require less stringent technology than the average. These
manufacturers would be in a position to provide credits at a reasonable
technology cost. Thus, EPA believes the proposed standards for 2012-
2016 would be feasible.
7. What Other Fleet-Wide CO₂ Levels Were Considered?
    Two alternative sets of CO₂ standards were considered.
One set would reduce

[[Page 49556]]

CO₂ emissions at a rate of 4 percent per year. The second
set would reduce CO₂ emissions at a rate of 6 percent per
year. The analysis of these standards followed the exact same process
as described above for the proposed standards. The only difference was
the level of CO₂ emission standards. The footprint-based
standard coefficients of the car and truck curves for these two
alternative control scenarios were discussed above. The resultant
CO₂ standards in 2016 for each manufacturer under these two
alternative scenarios and under the proposal are shown in Table III.D.7-1.

 Table III.D.7-1--Overall Average CO2 Emission Standards by Manufacturer
                                 in 2016
------------------------------------------------------------------------
                                           4% per                6% per
                                            year     Proposed     year
------------------------------------------------------------------------
BMW....................................        245        241        222
Chrysler...............................        266        262        241
Daimler................................        257        253        233
Ford...................................        270        266        245
General Motors.........................        272        268        247
Honda..................................        243        239        219
Hyundai................................        235        231        212
Kia....................................        237        234        215
Mazda..................................        231        227        208
Mitsubishi.............................        226        223        204
Nissan.................................        251        247        227
Porsche................................        234        230        210
Subaru.................................        237        233        213
Suzuki.................................        227        223        203
Tata...................................        267        263        241
Toyota.................................        247        243        223
Volkswagen.............................        233        230        211
Overall................................        254        250        230
------------------------------------------------------------------------

    Tables III.D.7-2 and III.D.7-3 show the technology penetration
levels for the 4 percent per year and 6 percent per year standards in 2016.

                          Table III.D.7-2--Technology Penetration--4% per Year CO2 Standards in 2016: Cars and Trucks Combined
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                 Mass
                                                      GDI       GDI+ deac    GDI+ turbo    6 Speed    Dual clutch   Start-stop     Hybrid     reduction
                                                                                          auto trans     trans                                   (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
BMW.............................................           4%          35%          47%          15%          71%          71%          14%            5
Chrysler........................................           47           25            3           33           48           48            0            5
Daimler.........................................            3           44           39           11           73           72           13            5
Ford............................................           33           32           13           23           61           61            0            5
General Motors..................................           33           25            7           19           48           48            0            5
Honda...........................................           20            1            0            6           19           19            2            2
Hyundai.........................................           27            2           12            2           39           39            0            3
Kia.............................................           31            0            4            1           34           34            0            2
Mazda...........................................           34            2           16           10           43           43            0            3
Mitsubishi......................................           65            2            7           28           60           60            0            6
Nissan..........................................           34           22            2           40           51           51            1            5
Porsche.........................................            7           36           49           10           70           70           15            4
Subaru..........................................           46            4           14           10           54           46            0            3
Suzuki..........................................           72            5            2           15           63           63            0            4
Tata............................................            4           81            0           14           70           70           15            6
Toyota..........................................           25            2            0           30           33            5           13            1
Volkswagen......................................            9           26           58           12           72           70           15            4
Overall.........................................           28           17            9           20           45           40            4            4
Increase over 2011 CAFE.........................           21           15            9           -5           42           38            1            4
--------------------------------------------------------------------------------------------------------------------------------------------------------


                      Table III.D.7-3--Technology Penetration--6% per Year Alternative Standards in 2016: Cars and Trucks Combined
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                Weight
                                                      GDI       GDI+ deac    GDI+ turbo    6 Speed    Dual clutch   Start-stop     Hybrid     reduction
                                                                                          auto trans     trans                                   (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
BMW.............................................           4%          35%          47%          15%          71%          71%          14%            5
Chrysler........................................           29           50            6            4           85           85            0            8
Daimler.........................................            3           44           39           11           73           72           13            5
Ford............................................            8           37           40            4           74           74           11            7
General Motors..................................           24           54            8            6           81           81            0            8
Honda...........................................           38            1           15            8           50           50            2            4
Hyundai.........................................           36            9           28            7           66           66            0            5
Kia.............................................           48            0           25           18           55           55            0            4
Mazda...........................................           65            2           16            4           81           76            0            6

[[Page 49557]]


Mitsubishi......................................           59            7           19            7           80           80            5            8
Nissan..........................................           34           17           35            9           76           76           10            7
Porsche.........................................            7           36           49           10           70           70           15            4
Subaru..........................................           66            4           14            0           85           80            0            6
Suzuki..........................................            2           12           71            0           80           80            5            7
Tata............................................            4           81            0           14           70           70           15            6
Toyota..........................................           40            7           11           25           50           50           13            3
Volkswagen......................................            9           26           58           12           72           70           15            4
Overall.........................................           28           24           23           11           67           67            7            6
Increase over 2011 CAFE.........................           22           23           22          -15           65           65            4            6
--------------------------------------------------------------------------------------------------------------------------------------------------------

    With respect to the 4 percent per year standards, the levels of
requisite control technology decreased relative to those under the
proposed standards, as would be expected. Industry-wide, the largest
decrease was a 2 percent decrease in the application of start-stop
technology. On a manufacturer specific basis, the most significant
decreases were a 6 percent decrease in hybrid penetration for BMW and a
2 percent drop for Daimler. These are relatively small changes and are
due to the fact that the 4 percent per year standards only require 4 g/
mi CO₂ less control than the proposed standards in 2016.
Porsche, Tata and Volkswagen continue to be unable to comply with the
CO₂ standards in 2016.
    With respect to the 6 percent per year standards, the levels of
requisite control technology increased relative to those under the
proposed standards, as again would be expected. Industry-wide, the
largest increase was an 8 percent increase in the application of start-
stop technology. On a manufacturer specific basis, the most significant
increases were a 42 percent increase in hybrid penetration for BMW and
a 38 percent increase for Daimler. These are more significant changes
and are due to the fact that the 6 percent per year standards require
20 g/mi CO₂ more control than the proposed standards in
2016. Porsche, Tata and Volkswagen continue to be unable to comply with
the CO₂ standards in 2016. However, BMW joins this list, as
well, though just by 1 g/mi. Most manufacturers experience the increase
in start-stop technology application, with the increase ranging from 5
to 17 percent.
    Table III.D.7-4 shows the projected cost of the two alternative
sets of standards.

               Table III.D.7-4--Technology Cost per Vehicle in 2016--Alternative Standards ($2007)
----------------------------------------------------------------------------------------------------------------
                                         4 Percent per year standards           6 Percent per year standards
                                   -----------------------------------------------------------------------------
                                        Cars        Trucks        All          Cars        Trucks        All
----------------------------------------------------------------------------------------------------------------
BMW...............................       $1,701       $1,665       $1,691       $1,701       $1,665       $1,691
Chrysler..........................        1,340        1,211        1,283        1,642        2,211        1,893
Daimler...........................        1,631        1,357        1,543        1,631        1,357        1,543
Ford..............................        1,429        1,305        1,374        2,175        2,396        2,273
General Motors....................          969        1,567        1,221        1,722        2,154        1,904
Honda.............................          633          402          564          777        1,580        1,016
Hyundai...........................          685        1,505          832        1,275        1,680        1,347
Kia...............................          741          738          741        1,104        1,772        1,213
Mazda.............................          851          914          860        1,369        1,030        1,320
Mitsubishi........................        1,132          247        1,028        1,495        2,065        1,563
Nissan............................          910        1,194          991        1,654        2,274        1,830
Porsche...........................        1,549          666        1,268        1,549          666        1,268
Subaru............................          903        1,131          985        1,440        1,615        1,503
Suzuki............................        1,093        1,026        1,076        1,718        2,219        1,846
Tata..............................        1,270          674          952        1,270          674          952
Toyota............................          518          366          468          762        1,165          895
Volkswagen........................        1,626          949        1,509        1,626          949        1,509
Overall...........................          940        1,054          978        1,385        1,859        1,544
----------------------------------------------------------------------------------------------------------------

    As can be seen, the average cost of the 4 percent per year
standards is only $73 per vehicle less than that for the proposed
standards. In contrast, the average cost of the 6 percent per year
standards is nearly $500 per vehicle more than that for the proposed
standards. Compliance costs are entering the region of non-linearity.
The $73 cost savings of the 4 percent per year standards relative to
the proposal represents $18 per g/mi CO₂ increase. The $493
cost increase of the 6 percent per year standards relative to the
proposal represents $25 per g/mi CO₂ increase.
    EPA does not believe the 4% per year alternative is an appropriate
standard for the MY2012-2016 time frame. As discussed above, the 250 g/
mi proposal is technologically feasible in this time frame at
reasonable costs, and provides higher GHG emission reductions at a
modest cost increase over the 4% per year alternative (less than $100
per vehicle). In addition, the 4% per year alternative does not result
in a harmonized National Program for the country. Based on California's
letter of May 18, 2009, the emission standards under this alternative
would not result in the State of California revising its regulations
such that compliance with

[[Page 49558]]

EPA's GHG standards would be deemed to be in compliance with
California's GHG standards for these model years. Thus, the consequence
of promulgating a 4% per year standard would be to require
manufacturers to produce two vehicle fleets: a fleet meeting the 4% per
year Federal standard, and a separate fleet meeting the more stringent
California standard for sale in California and the section 177 States.
This further increases the costs of the 4% per year standard and could
lead to additional difficulties for the already stressed automotive industry.
    EPA also does not believe the 6% per year alternative is an
appropriate standard for the MY 2012-2016 time frame. As shown in
Tables III.D.7-3 and III.D.7-4, the 6% per year alternative represents
a significant increase in both the technology required and the overall
costs compared to the proposed standards. In absolute percent increases
in the technology penetration, compared to the proposed standards the
6% per year alternative requires for the industry as a whole: an 18%
increase in GDI fuel systems, an 11% increase in turbo-downsize
systems, a 6% increase in dual-clutch automated manual transmissions
(DCT), and a 9% increase in start-stop systems. For a number of
manufacturers the expected increase in technology is greater: for GM, a
15% increase in both DCTs and start-stop systems, for Nissan a 9%
increase in full hybrid systems, for Ford an 11% increase in full
hybrid systems, for Chrysler a 34% increase in both DCT and start-stop
systems and for Hyundai a 23% increase in the overall penetration of
DCT and start-stop systems. For the industry as a whole, the per-
vehicle cost increase for the 6% per year alternative is nearly $500.
On average this is a 50% increase in costs compared to the proposed
standards. At the same time, CO₂ emissions would be reduced
by about 8%, compared to the 250 g/mi target level.
    These technology and cost increases are significant, given the
amount of lead-time between now and model years 2012-2016. In order to
achieve the levels of technology penetration for the proposed
standards, the industry needs to invest significant capital and product
development resources right away, in particular for the 2012 and 2013
model year, which is only 2-3 years from now. For the 2014-2016 time
frame, significant product development and capital investments will
need to occur over the next 2-3 year in order to be ready for launching
these new products for those model years. Thus a major part of the
required capital and resource investment will need to occur in the next
few years, under the proposed standards. EPA believes that the proposal
(a target of 250 gram/mile in 2016) already requires significant
investment and product development costs for the industry, focused on
the next few years.
    It is important to note, and as discussed later in this preamble,
as well as in the draft Joint Technical Support Document and the draft
EPA Regulatory Impact Analysis document, the average model year 2016
per-vehicle cost increase of nearly $500 includes an estimate of both
the increase in capital investments by the auto companies and the
suppliers as well as the increase in product development costs. These
costs can be significant, especially as they must occur over the next
2-3 years. Both the domestic and transplant auto firms, as well as the
domestic and world-wide automotive supplier base, is experiencing one
of the most difficult markets in the U.S. and internationally that has
been seen in the past 30 years. One major impact of the global downturn
in the automotive industry and certainly in the U.S. is the significant
reductions in product development engineers and staffs, as well as a
tightening of the credit markets which allow auto firms and suppliers
to make the near-term capital investments necessary to bring new
technology into production. EPA is concerned that the significantly
increased pressure on capital and other resources from the 6% per year
alternative may be too stringent for this time frame, given both the
relatively limited amount of lead-time between now and model years
2012-2016, the need for much of these resources over the next few
years, as well the current financial and related circumstances of the
automotive industry. EPA is not concluding that the 6% per year
alternative standards are technologically infeasible, but EPA believes
such standards for this time frame would be overly stringent given the
significant strain it would place on the resources of the industry
under current conditions. EPA believes this degree of stringency is not
warranted at this time. Therefore EPA does not believe the 6% per year
alternative would be an appropriate balance of various relevant factors
for model years 2012-1016.
    These alternative standards represent two possibilities out of
many. The EPA believes that the current proposed standards represent an
appropriate balance of the factors relevant under section 202(a). For
further discussion of this issue, see Chapter 4 of the DRIA.

E. Certification, Compliance, and Enforcement

1. Compliance Program Overview
    This section of the preamble describes EPA's proposal for a
comprehensive program to ensure compliance with EPA's proposed emission
standards for carbon dioxide (CO₂), nitrous oxide
(N₂O), and methane (CH₄), as described in Section
III.B. An effective compliance program is essential to achieving the
environmental and public health benefits promised by these mobile
source GHG standards. EPA's proposal for a GHG compliance program is
designed around two overarching priorities: (1) To address Clean Air
Act (CAA) requirements and policy objectives; and (2) to streamline the
compliance process for both manufacturers and EPA by building on
existing practice wherever possible, and by structuring the program
such that manufacturers can use a single data set to satisfy both the
new GHG and Corporate Average Fuel Economy (CAFE) testing and reporting
requirements. The program proposed by EPA and NHTSA recognizes, and
replicates as closely as possible, the compliance protocols associated
with the existing CAA Tier 2 vehicle emission standards, and with CAFE
standards. The certification, testing, reporting, and associated
compliance activities closely track current practices and are thus
familiar to manufacturers. EPA already oversees testing, collects and
processes test data, and performs calculations to determine compliance
with both CAFE and CAA standards. Under this proposed coordinated
approach, the compliance mechanisms for both programs are consistent
and non-duplicative.
    Vehicle emission standards established under the CAA apply
throughout a vehicle's full useful life. In this case EPA is proposing
fleet average standards where compliance with the fleet average is
determined based on the testing performed at time of production, as
with the current CAFE fleet average. EPA is also proposing in-use
standards that apply throughout a vehicle's useful life, with the
standard determined by adding a 10% adjustment factor to the model-
level emission results used to calculate the fleet average. Therefore,
EPA's proposed program must not only assess compliance with the fleet
average standards described in Section III.B, but must also assess
compliance with the in-use standards. As it does now, EPA would use a
variety of compliance mechanisms to conduct these assessments,
including pre-production certification and post-production, in-use

[[Page 49559]]

monitoring once vehicles enter customer service. Specifically, EPA is
proposing a compliance program for the fleet average that utilizes CAFE
program protocols with respect to testing, a certification procedure
that operates in conjunction with the existing CAA Tier 2 certification
procedures, and assessment of compliance with the in-use standards
concurrent with existing EPA and manufacturer Tier 2 emission
compliance testing programs. Under the proposed compliance program
manufacturers would also be afforded numerous flexibilities to help
achieve compliance, both stemming from the program design itself in the
form of a manufacturer-specific CO₂ fleet average standard,
as well as in various credit banking and trading opportunities, as
described in Section III.C. EPA's proposed compliance program is
outlined in further detail below. EPA requests comment on all aspects
of the compliance program design including comments about whether
differences between the proposed compliance scheme for GHG and the
existing compliance scheme for other regulated pollutants are
appropriate.
2. Compliance With Fleet-Average CO₂ Standards
    Fleet average emission levels can only be determined when a
complete fleet profile becomes available at the close of the model
year. Therefore, EPA is proposing to determine compliance with the
fleet average CO₂ standards when the model year closes out,
as is currently the protocol under EPA's Tier 2 program as well as
under the current CAFE program. The compliance determination would be
based on actual production figures for each model and on model-level
emissions data collected through testing over the course of the model
year. Manufacturers would submit this information to EPA in an end-of-
year report which is discussed in detail in Section III.E.5.h below.
    Manufacturers currently conduct their CAFE testing over an entire
model year to maximize efficient use of testing and engineering
resources. Manufacturers submit their CAFE test results to EPA and EPA
conducts confirmatory fuel economy testing at its laboratory on a
subset of these vehicles under EPA's Part 600 regulations. EPA is
proposing that manufacturers continue to perform the model level
testing currently required for CAFE fuel economy performance and
measure and report the CO₂ values for all tests conducted.
Thus, manufacturers will submit one data set in satisfaction of both
CAFE and GHG requirements such that EPA's proposed program would not
impose additional timing or testing requirements on manufacturers
beyond that required by the CAFE program. For example, manufacturers
currently submit fuel economy test results at the subconfiguration and
configuration levels to satisfy CAFE requirements. Under this proposal
manufacturers would also submit CO₂ values for the same
vehicles. Section III.E.3 discusses how this will be implemented in the
certification process.
a. Compliance Determinations
    As described in Section III.B above, the fleet average standards
would be determined on a manufacturer by manufacturer basis, separately
for cars and trucks, using the proposed footprint attribute curves.
Under this proposal, EPA would calculate the fleet average emission
level using actual production figures and, for each model type,
CO₂ emission test values generated at the time of a
manufacturer's CAFE testing. EPA would then compare the actual fleet
average to the manufacturer's footprint standard to determine
compliance, taking into consideration use of averaging and/or other
types of credits.
    Final determination of compliance with fleet average CO₂
standards may not occur until several years after the close of the
model year due to the flexibilities of carry-forward and carry-back
credits and the remediation of deficits (see Section III.C). A failure
to meet the fleet average standard after credit opportunities have been
exhausted could ultimately result in penalties and injunctive orders
under the CAA as described in Section III.E.6 below.
    EPA periodically provides mobile source emissions and fuel economy
information to the public, for example through the annual Compliance
Report \164\ and Fuel Economy Trends Report.\165\ EPA plans to expand
these reports to include GHG performance and compliance trends
information, such as annual status of credit balances or debits, use of
various credit programs, attained versus projected fleet average
emission levels, and final compliance status for a model year after
credit reconciliation occurs. We seek comment on all aspects of public
dissemination of GHG compliance information
---------------------------------------------------------------------------

    \164\ 2007 Progress Report Vehicle and Engine Compliance
Activities; EPA-420-R-08-011; October 2008. This document is
available electronically at http://www.epa.gov/otaq/about/
420r08011.pdf.
    \165\ Light-Duty Automotive Technology and Fuel-Economy Trends:
1975 Through 2008; EPA-420-S-08-003; September 2008. This document
is available electronically at http://www.epa.gov/otaq/fetrends.htm.
---------------------------------------------------------------------------

b. Required Minimum Testing for Fleet Average CO₂
    As noted, EPA is proposing that the same test data required for
determining a manufacturer's compliance with the CAFE standard also be
used to determine the manufacturer's compliance with the fleet average
CO₂ emissions standard. CAFE requires manufacturers to
submit test data representing at least 90% of the manufacturer's model
year production, by configuration.\166\ The CAFE testing covers the
vast majority of models in a manufacturer's fleet. Manufacturers
industry-wide currently test more than 1,000 vehicles each year to meet
this requirement. EPA believes this minimum testing requirement is
necessary and applicable for calculating accurate CO₂ fleet
average emissions. Manufacturers may test additional vehicles, at their
option. As described above, EPA would use the emissions results from
the model-level testing to calculate a manufacturer's fleet average CO₂
emissions and to determine compliance with the CO₂ standard.
---------------------------------------------------------------------------

    \166\ See 40 CFR 600.010-08(d).
---------------------------------------------------------------------------

    EPA is proposing to continue to allow certain testing flexibilities
that exist under the CAFE program. EPA has always permitted
manufacturers some ability to reduce their test burden in tradeoff for
lower fuel economy numbers. Specifically the practice of ``data
substitution'' enables manufacturers to apply fuel economy test values
from a ``worst case'' configuration to other configurations in lieu of
testing them. The substituted values may only be applied to
configurations that would be expected to have better fuel economy and
for which no actual test data exist. Substituted data would only be
accepted for the GHG program if it is also used for CAFE purposes.
    EPA's regulations for CAFE fuel economy testing permit the use of
analytically derived fuel economy data in lieu of an actual fuel
economy test in certain situations.\167\ Analytically derived data is
generated mathematically using expressions determined by EPA and is
allowed on a limited basis when a manufacturer has not tested a
specific vehicle configuration. This has been done as a means to reduce
some of the testing burden on manufacturers without sacrificing
accuracy in fuel economy measurement. EPA has issued guidance that
provides details on analytically

[[Page 49560]]

derived data and that specifies the conditions when analytically
derived fuel economy may be used. EPA would also apply the same
guidance to the GHG program and would allow any analytically derived
data used for CAFE to also satisfy the GHG data reporting requirements.
EPA would, however, need to revise the terms in the current equations
for analytically derived fuel economy to specify them in terms of
CO₂. Analytically derived CO₂ data would not be
permitted for the Emission Data Vehicle representing a test group for
pre-production certification, only for the determination of the model
level test results used to determine actual fleet-average CO₂ levels.
---------------------------------------------------------------------------

    \167\ 40 CFR 600.006-08(e).
---------------------------------------------------------------------------

    EPA is retaining the definitions needed to determine CO₂
levels of each model type (such as ``subconfiguration,''
``configuration,'' ``base level,'' etc.) as they are currently defined
in EPA's fuel economy regulations.
3. Vehicle Certification
    CAA section 203(a)(1) prohibits manufacturers from introducing a
new motor vehicle into commerce unless the vehicle is covered by an
EPA-issued certificate of conformity. Section 206(a)(1) of the CAA
describes the requirements for EPA issuance of a certificate of
conformity, based on a demonstration of compliance with the emission
standards established by EPA under section 202 of the Act. The
certification demonstration requires emission testing, and must be done
for each model year.\168\
---------------------------------------------------------------------------

    \168\ CAA section 206(a)(1).
---------------------------------------------------------------------------

    Under Tier 2 and other EPA emission standard programs, vehicle
manufacturers certify a group of vehicles called a test group. A test
group typically includes multiple vehicle car lines and model types
that share critical emissions-related features.\169\ The manufacturer
generally selects and tests one vehicle to represent the entire test
group for certification purposes. The test vehicle is the one expected
to be the worst case for the emission standard at issue. Emission
results from the test vehicle are used to assign the test group to one
of several specified bins of emissions levels, identified in the Tier 2
rule, and this bin level becomes the in-use emissions standard for that
test group.\170\
---------------------------------------------------------------------------

    \169\ The specific test group criteria are described in 40 CFR
86.1827-01, car lines and model types have the meaning given in 40
CFR 86.1803-01.
    \170\ Initially in-use standards were different from the bin
level determined at certification as the useful life level. The
current in-use standards, however, are the same as the bin levels.
In all cases, the bin level, reflecting useful life levels, has been
used for determining compliance with the fleet average.
---------------------------------------------------------------------------

    Since compliance with the Tier 2 fleet average depends on actual
test group sales volumes and bin levels, it is not possible to
determine compliance at the time the manufacturer applies for and
receives a certificate of conformity for a test group. Instead, EPA
requires the manufacturer to make a good faith demonstration in the
certification application that vehicles in the test group will both (1)
comply throughout their useful life with the emissions bin assigned,
and (2) contribute to fleetwide compliance with the Tier 2 average when
the year is over. EPA issues a certificate for the vehicles included in
the test group based on this demonstration, and includes a condition in
the certificate that if the manufacturer does not comply with the fleet
average, then production vehicles from that test group will be treated
as not covered by the certificate to the extent needed to bring the
manufacturer's fleet average into compliance with Tier 2.
    The certification process often occurs several months prior to
production and manufacturer testing may occur months before the
certificate is issued. The certification process for the Tier 2 program
is an efficient way for manufacturers to conduct the needed testing
well in advance of certification, and to receive the needed
certificates in a time frame which allows for the orderly production of
vehicles. The use of a condition on the certificate has been an
effective way to ensure compliance with the Tier 2 fleet average.
    EPA is proposing to similarly condition each certificate of
conformity for the GHG program upon a manufacturer's good faith
demonstration of compliance with the manufacturer's fleetwide average
CO₂ standard. The following discussion explains how EPA
proposes to integrate the proposed vehicle certification program into
the existing certification program.
a. Compliance Plans
    EPA is proposing that manufacturers submit a compliance plan to EPA
prior to the beginning of the model year and prior to the certification
of any test group. This plan would include the manufacturer's estimate
of its footprint-based standard (Section III.B), along with a
demonstration of compliance with the standard based on projected model-
level CO₂ emissions, and production estimates. Manufacturers
would submit the same information to NHTSA in the pre-model year report
required for CAFE compliance. However, the GHG compliance plan could
also include additional information relevant only to the EPA program.
For example, manufacturers seeking to take advantage of air
conditioning or other credit flexibilities (Section III.C) would
include these in their compliance demonstration. Similarly, the
compliance demonstration would need to include a credible plan for
addressing deficits accrued in prior model years. EPA would review the
compliance plan for technical viability and conduct a certification
preview discussion with the manufacturer. EPA would view the compliance
plan as part of the manufacturer's good faith demonstration, but
understands that initial projections can vary considerably from the
reality of final production and emission results. EPA requests comment
on the proposal to evaluate manufacturer compliance plans prior to the
beginning of model year certification. EPA also requests comment on
what criteria the agency should use to evaluate the sufficiency of the
plan and on what steps EPA should take if it determines that a plan is
unlikely to offset a deficit.
b. Certification Test Groups and Test Vehicle Selection
    Manufacturers currently divide their fleet into ``test groups'' for
certification purposes. The test group is EPA's unit of certification;
one certificate is issued per test group. These groupings cover
vehicles with similar emission control system designs expected to have
similar emissions performance.\171\ The factors considered for
determining test groups include combustion cycle, engine type, engine
displacement, number of cylinders and cylinder arrangement, fuel type,
fuel metering system, catalyst construction and precious metal
composition, among others. Vehicles having these features in common are
generally placed in the same test group.\172\ Cars and trucks may be
included in the same test group as long as they have similar emissions
performance (manufacturers frequently produce cars and trucks that have
identical engine designs and emission controls).
---------------------------------------------------------------------------

    \171\ 40 CFR 86.1827-01.
    \172\ EPA provides for other groupings in certain circumstances,
and can establish its own test groups in cases where the criteria do
not apply. 40 CFR 86.1827-01(b), (c) and (d).
---------------------------------------------------------------------------

    EPA is proposing to retain the current Tier 2 test group structure
for cars and light trucks in the certification requirements for
CO₂. At the time of certification, manufacturers would use
the CO₂ emission level from the Tier 2 Emission Data Vehicle
as a surrogate to represent all of the models in the test group.
However, following certification

[[Page 49561]]

further testing would generally be required for compliance with the
fleet average CO₂ standard as described below. EPA's
issuance of a certificate would be conditioned upon the manufacturer's
subsequent model level testing and attainment of the actual fleet
average. Further discussion of these requirements is presented in
Section III.E.6.
    EPA recognizes that the Tier 2 test group criteria do not
necessarily relate to CO₂ emission levels. For instance,
while some of the criteria, such as combustion cycle, engine type and
displacement, and fuel metering, may have a relationship to
CO₂ emissions, others, such as those pertaining to the
catalyst, may not. In fact, there are many vehicle design factors that
impact CO₂ generation and emission but are not included in
EPA's test group criteria.\173\ Most important among these may be vehicle
weight, horsepower, aerodynamics, vehicle size, and performance features.
---------------------------------------------------------------------------

    \173\ EPA noted this potential lack of connection between fuel
economy testing and testing for emissions standard purposes when it first
adopted fuel economy test procedures. See 41 FR at 38677 (Sept. 10, 1976).
---------------------------------------------------------------------------

    EPA considered, but is not proposing, a requirement for separate
CO₂ test groups established around criteria more directly
related to CO₂ emissions. Although CO₂-specific
test groups might more consistently predict CO₂ emissions of
all vehicles in the test group, the addition of a CO₂ test
group requirement would greatly increase the pre-production
certification burden for both manufacturers and EPA. For example, a
current Tier 2 test group would need to be split into two groups if
automatic and manual transmissions models had been included in the same
group. Two- and four-wheel drive vehicles in a current test group would
similarly require separation, as would weight differences among
vehicles. This would at least triple the number of test groups. EPA
believes that the added burden of creating separate CO₂ test
groups is not warranted or necessary to maintain an appropriately
rigorous certification program because the test group data are later
replaced by model specific data which are used as the basis for
determining compliance with a manufacturer's fleet average standard.
    EPA believes that the current test group concept is appropriate for
N₂O and CH₄ because the technologies that would
be employed to control N₂O and CH₄ emissions
would generally be the same as those used to control the criteria pollutants.
    As just discussed, the ``worst case'' vehicle a manufacturer
selects as the Emissions Data Vehicle to represent a test group under
Tier 2 (40 CFR 86.1828-01) may not have the highest levels of
CO₂ in that group. For instance, there may be a heavier,
more powerful configuration that would have higher CO₂, but
may, due to the way the catalytic converter has been matched to the
engine, actually have lower NO_X, CO, PM or HC.
    Therefore, in lieu of a separate CO₂-specific test
group, EPA considered requiring manufacturers to select a
CO₂ test vehicle from within the Tier 2 test group that
would be expected, based on good engineering judgment, to have the
highest CO₂ emissions within that test group. The
CO₂ emissions results from this vehicle would be used to
establish an in-use CO₂ emission standard for the test
group. The requirement for a separate, worst case CO₂
vehicle would provide EPA with some assurance that all vehicles within
the test group would have CO₂ emission levels at or below
those of the selected vehicle, even if there is some variation in the
CO₂ control strategies within the test group (such as
different transmission types). Under this approach, the test vehicle
might or might not be the same one that would be selected as worst case
for criteria pollutants. Thus, manufacturers might be required to test
two vehicles in each test group, rather than a single vehicle. This
would represent an added timing burden to manufacturers because they
might need to build additional test vehicles at the time of
certification that previously weren't required to be tested.
    Instead, EPA is proposing to require a single Emission Data Vehicle
that would represent the test group for both Tier 2 and CO₂
certification. The manufacturer would be allowed to initially apply the
Emission Data Vehicle's CO₂ emissions value to all models in
the test group, even if other models in the test group are expected to
have higher CO₂ emissions. However, as a condition of the
certificate, this surrogate CO₂ emissions value would
generally be replaced with actual, model-level CO₂ values
based on results from CAFE testing that occurs later in the model year.
This model level data would become the official certification test
results (as per the conditioned certificate) and would be used to
determine compliance with the fleet average. Only if the test vehicle
is in fact the worst case CO₂ vehicle for the test group
could the manufacturer elect to apply the Emission Data Vehicle
emission levels to all models in the test group for purposes of
calculating fleet average emissions. Manufacturers would be unlikely to
make this choice, because doing so would ignore the emissions
performance of vehicle models in their fleet with lower CO₂
emissions and would unnecessarily inflate their CO₂ fleet
average. Testing at the model level already occurs and data are already
being submitted to EPA for CAFE and labeling purposes, so it would be
an unusual situation that would cause a manufacturer to ignore these
data and choose to accept a higher CO₂ fleet average.
    EPA requests comment regarding whether the Tier 2 test group can
adequately represent CO₂ emissions for certification
purposes, and whether the Emission Data Vehicle's CO₂
emission level is an appropriate surrogate for all vehicles in a test
group at the time of certification, given that the certificate would be
conditioned upon additional model level testing occurring during the
year (see Section III.E.6) and that the surrogate CO₂
emission values would be replaced with model-level emissions data from
those tests. Comments should also address EPA's desire to minimize the
up-front pre-production testing burden and whether the proposed
efficiencies would be balanced by the requirement to test all model
types in the fleet by the conclusion of the model year in order to
establish the fleet average CO₂ levels.
    There are two standards that the manufacturer would be subject to,
the fleet average standard and the in-use standard for the useful life
of the vehicle. Compliance with the fleet average standard is based on
production-weighted averaging of the test data that applies for each
model. For each model, the in-use standard is set at 10% higher than
the level used for that model in calculating the fleet average. The
certificate would cover both of these standards, and the manufacturer
would have to demonstrate compliance with both of these standards for
purposes of receiving a certificate of conformity. The certification
process for the in-use standard is discussed below in Section III.E.4.
c. Certification Testing Protocols and Procedures
    To be consistent with CAFE, EPA proposes to combine the
CO₂ emissions results from the FTP and HFET tests using the
same calculation method used to determine fuel economy for CAFE
purposes. This approach is appropriate for CO₂ because
CO₂ and fuel economy are so closely related. Other than the
fact that fuel economy is calculated using a harmonic average and
CO₂ emissions can be calculated using a conventional
average, the calculation methods are very similar. The FTP CO₂

[[Page 49562]]

data will be weighted at 55%, and the highway CO₂ data at
45%, and then averaged to determine the combined number. See Section
III.B.1 for more detailed information on CO₂ test
procedures, Section III.C.1 on Air Conditioning Emissions, and Section
III.B.6 for N₂O and CH₄ test procedures.
    For the purposes of compliance with the fleet average and in-use
standards, the emissions measured from each test vehicle will include
hydrocarbons (HC) and carbon monoxide (CO), in addition to
CO₂. All three of these exhaust constituents are currently
measured and used to determine the amount of fuel burned over a given
test cycle using a ``carbon balance equation'' defined in the
regulations, and thus measurement of these is an integral part of
current fuel economy testing. As explained in Section III.C, it is
important to account for the total carbon content of the fuel.
Therefore the carbon-related combustion products HC and CO must be
included in the calculations along with CO₂. CO emissions
are adjusted by a coefficient that reflects the carbon weight fraction
(CWF) of the CO molecule, and HC emissions are adjusted by a
coefficient that reflects the CWF of the fuel being burned (the
molecular weight approach doesn't work since there are many different
hydrocarbons being accounted for). Thus, EPA is proposing that the
carbon-related exhaust emissions of each test vehicle be calculated
according to the following formula, where HC, CO, and CO₂
are in units of grams per mile:

Carbon-related exhaust emissions (grams/mile) = CWF*HC + 1.571*CO + CO₂

    As part of the current CAFE and Tier 2 compliance programs, EPA
selects a subset of vehicles for confirmatory testing at its National
Vehicle and Fuel Emissions Laboratory. The purpose of confirmatory
testing is to validate the manufacturer's emissions and/or fuel economy
data. Under this proposal, EPA would add CO₂,
N₂O, and CH₄ to the emissions measured in the
course of Tier 2 and CAFE confirmatory testing. The emission values
measured at the EPA laboratory would continue to stand as official, as
under existing regulatory programs.
    As is the current practice with fuel economy testing, if during
EPA's confirmatory testing the EPA CO₂ value differs from
the manufacturer's value by more than 3%, manufacturers could request a
re-test. Also as with current practice, the results of the re-test
would stand as official, even if they differ from the manufacturer
value by more than 3%. EPA is proposing to allow a re-test request
based on a 3% or greater disparity since a manufacturer's fleet average
emissions level would be established on the basis of model level
testing only (unlike Tier 2 for which a fixed bin standard structure
provides the opportunity for a compliance buffer). EPA requests comment
on whether the 3% value currently used during CAFE confirmatory testing
is appropriate and should be retained under the proposed GHG program.
4. Useful Life Compliance
    Section 202(a)(1) of the CAA requires emission standards to apply
to vehicles throughout their statutory useful life, as further
described in Section III.A. For emission programs that have fleet
average standards, such as Tier 2 and the proposed CO₂
standards, the useful life requirement applies to individual vehicles
rather than to the fleet average standard. For example, in Tier 2 the
useful life requirements apply to the individual emission standard
levels or ``bins'' that the vehicles are certified to, not the fleet
average standard. For Tier 2, the useful life requirement is 10 years
or 120,000 miles with an optional 15 year or 150,000 mile provision.
For each model, the proposed CO₂ standards in-use are the
model specific levels used in calculating the fleet average, adjusted
to be 10% higher. EPA is proposing the 10% adjustment factor to provide
some margin for production and test-to-test variability that could
result in differences between initial model-level emission results used
in calculating the fleet average and any subsequent in-use testing. EPA
requests comment on whether a separate in-use standard is an
appropriate means of addressing issues of variability and whether 10%
is an appropriate adjustment.
    This in-use standard would apply for the same useful life period as
in Tier 2. Section 202(i)(3)(D) of the CAA allows EPA to adopt useful
life periods for light-duty vehicles and light-duty trucks which differ
from those in section 202(d). Similar to Tier 2, the useful life
requirements would be applicable to the model-level CO₂
certification values (similar to the Tier 2 bins), not to the fleet
average standard.
    EPA believes that the useful life period established for criteria
pollutants under Tier 2 is also appropriate for CO₂. Data
from EPA's current in-use compliance test program indicate that
CO₂ emissions from current technology vehicles increase very
little with age and in some cases may actually improve slightly. The
stable CO₂ levels are expected because unlike criteria
pollutants, CO₂ emissions in current technology vehicles are
not controlled by after treatment systems that may fail with age.
Rather, vehicle CO₂ emission levels depend primarily on
fundamental vehicle design characteristics that do not change over
time. Therefore, vehicles designed for a given CO₂ emissions
level would be expected to sustain the same emissions profile over
their full useful life.
    The CAA requires emission standards to be applicable for the
vehicle's full useful life. Under Tier 2 and other vehicle emission
standard programs, EPA requires manufacturers to demonstrate at the
time of certification that the new vehicles being certified will
continue to meet emission standards throughout their useful life. EPA
allows manufacturers several options for predicting in-use
deterioration, including full vehicle testing, bench-aging specific
components, and application of a deterioration factor based on data
and/or engineering judgment.
    In the specific case of CO₂, EPA does not currently
anticipate notable deterioration and is therefore proposing that an
assigned deterioration factor be applied at the time of certification.
EPA is further proposing an additive assigned deterioration factor of
zero, or a multiplicative factor of one. EPA anticipates that the
deterioration factor would be updated from time to time, as new data
regarding emissions deterioration for CO₂ are obtained and
analyzed. Additionally, EPA may consider technology-specific
deterioration factors, should data indicate that certain CO₂
control technologies deteriorate differently than others.
    During compliance plan discussions prior to the beginning of the
certification process, EPA would explore with each manufacturer any new
technologies that could warrant use of a different deterioration
factor. Manufacturers would not be allowed to use the assigned
deterioration factor but rather would be required to establish an
appropriate factor for any vehicle model determined likely to
experience increases in CO₂ emissions over the vehicle's
useful life. If such an instance were to occur, EPA is also proposing
to allow manufacturers to use the whole-vehicle mileage accumulation
method currently offered in EPA's regulations.
    EPA requests comments on the proposal to allow manufacturers to use
an EPA-assigned deterioration factor for CO₂ useful life
compliance, and to set that factor at zero (additive) or one
(multiplicative). Particularly helpful would be data from in-use
vehicles that demonstrate the rate of change in CO₂
emissions over a vehicle's useful life,

[[Page 49563]]

separated according to vehicle technology.
    N₂O and CH₄ emissions are directly affected
by vehicle emission control systems. Any of the durability options
offered under EPA's current compliance program can be used to determine
how emissions of N₂O and CH₄ change over time.
a. Ensuring Useful Life Compliance
    The CAA requires a vehicle to comply with emission standards over
its regulatory useful life and affords EPA broad authority for the
implementation of this requirement. As such, EPA has authority to
require a manufacturer to remedy any noncompliance issues. The remedy
can range from the voluntary or mandatory recall of any noncompliant
vehicles to the recalculation of a manufacturers fleet average
emissions level. This provides manufacturers with a strong incentive to
design and build complying vehicles.
    Currently, EPA regulations require manufacturers to conduct in-use
testing as a condition of certification. Specifically, manufacturers
must commit to later procure and test privately-owned vehicles that
have been normally used and maintained. The vehicles are tested to
determine the in-use levels of criteria pollutants when they are in
their first and third years of service. This testing is referred to as
the In-Use Verification Program (IUVP) testing, which was first
implemented as part of EPA's CAP 2000 certification program.\174\ The
emissions data collected from IUVP serves several purposes. It provides
EPA with annual real-world in-use data representing the majority of
certified vehicles. EPA uses IUVP data to identify in-use problems,
validate the accuracy of the certification program, verify the
manufacturer's durability processes, and support emission modeling
efforts. Manufacturers are required to test low mileage and high
mileage vehicles over the FTP and US06 test cycles. They are also required
to provide evaporative emissions and on-board diagnostics (OBD) data.
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    \174\ 64 FR 23906, May 4, 1999.
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    Manufacturers are required to provide data for all regulated
criteria pollutants. Some manufacturers voluntarily submit
CO₂ data as part of IUVP. EPA is proposing that for IUVP
testing, all manufacturers will provide emission data for
CO₂ and also for N₂O and CH₄. EPA is
also proposing that manufacturers perform the highway test cycle as
part of IUVP. Since the proposed CO₂ standard reflects a
combined value of FTP and highway results, it is necessary to include
the highway emission test in IUVP to enable EPA to compare an in-use
CO₂ level with a vehicle's in-use standard. EPA requests
comments on adding the highway test cycle as part of the IUVP requirements.
    Another component of the CAP 2000 certification program is the In-
Use Confirmatory Program (IUCP). This is a manufacturer-conducted
recall quality in-use test program that can be used as the basis for
EPA to order an emission recall. In order to qualify for IUCP, there is
a threshold of 1.30 times the certification emission standard and an
additional requirement that at least 50% of the test vehicles for the
test group fail for the same pollutant. EPA is proposing to exclude
IUVP data for CO₂, N₂O, and CH₄
emissions from the IUCP thresholds. At this time, EPA does not have
sufficient data to determine if the existing thresholds are appropriate
or even applicable to those emissions. Once EPA can gather more data
from the IUVP program and from EPA's internal surveillance program
described below, EPA will reassess the need to exclude IUCP thresholds,
and if warranted, propose a separate rulemaking establishing IUCP
threshold criteria which may include CO₂, N₂O,
and CH₄ emissions. EPA requests comment on the proposal to
exclude CO₂, N₂O, and CH₄ from the
IUCP threshold.
    EPA has also administered its own in-use testing program for light-
duty vehicles under authority of section 207(c) of the CAA for more
than 30 years. In this program, EPA procures and tests representative
privately owned vehicles to determine whether they are complying with
emission standards. When testing indicates noncompliance, EPA works
with the manufacturer to determine the cause of the problem and to
conduct appropriate additional testing to determine its extent or the
effectiveness of identified remedies. This program operates in
conjunction with the IUVP program and other sources of information to
provide a comprehensive picture of the compliance profile for the
entire fleet and address compliance problems that are identified. EPA
proposes to add CO₂, N₂O, and CH₄ to
the emissions measurements it collects during surveillance testing.
b. In-Use Compliance Standard
    For Tier 2, the in-use standard and the certification standard are
the same. In-use compliance for an individual vehicle is determined by
comparing the vehicle's in-use emission results with the emission
standard levels or ``bin'' to which the vehicle is certified rather
than to the Tier 2 fleet average standard for the manufacturer. This is
because as part of a fleet average standard, individual vehicles can be
certified to various emission standard levels, which could be higher or
lower than the fleet average standard. Thus, comparing an individual
vehicle to the fleet average, where that vehicle was certified to an
emission level that could be different than the fleet average level,
would be inappropriate.
    This would also be true for the proposed CO₂ fleet
average standard. Therefore, to ensure that an individual vehicle
complies with the proposed CO₂ standards in-use, it is
necessary to compare the vehicle's in-use CO₂ emission
result with the appropriate model-level certification CO₂
level used in determining the manufacturer's fleet average result.
    There is a fundamental difference between the proposed
CO₂ standards and Tier 2 standards. For Tier 2, the
certification standard is one of eight different emission levels, or
``bins,'' whereas for the proposed CO₂ fleet average
standard, the certification standard is the model-level certification
CO₂ result. The Tier 2 fleet average standard is calculated
using the ``bin'' emission level or standard, not the actual
certification emission level of the certification test vehicle. So no
matter how low a manufacturer's actual certification emission results
are, the fleet average is still calculated based on the ``bin'' level
rather than the lower certification result. In contrast, EPA is
proposing that the CO₂ fleet average standard would be
calculated using the actual vehicle model-level CO₂ values
from the certification test vehicles. With a known certification
emission standard, such as the Tier 2 ``bins,'' manufacturers typically
attempt to over-comply with the standard to give themselves some
cushion for potentially higher in-use testing results due to emissions
performance deterioration and/or variability that could result in
higher emission levels during subsequent in-use testing. For our
proposed CO₂ standards, the certification standard is the
actual certification vehicle test result, thus manufacturers cannot
over comply since the certification test vehicle result will always be
the value used in determining the CO₂ fleet average. If the
manufacturer attempted to design the vehicle to achieve a lower
CO₂ value, similar to Tier 2 for in-use purposes, the new
lower CO₂ value would simply become the new certification standard.
    The CO₂ fleet average standard is based on the
performance of pre-production technology that is

[[Page 49564]]

representative of the point of production, and while there is expected
to be limited if any deterioration in effectiveness for any vehicle
during the useful life, the fleet average standard does not take into
account the test to test variability or production variability that can
affect in-use levels. Therefore, EPA believes that unlike Tier 2, it is
necessary to have a different in-use standard for CO₂ to
account for these variabilities. EPA is proposing to set the in-use
standard at 10% higher than the appropriate model-level certification
CO₂ level used in determining the manufacturer's fleet average result.
    As described above, manufacturers typically design their vehicles
to emit at emission levels considerably below the standards. This
intentional difference between the actual emission level and the
emission standard is referred to as ``certification margin,'' since it
is typically the difference between the certification emission level
and the emission standard. The certification margin can provide
manufacturers with some protection from exceeding emission standards
in-use, since the in-use standards are typically the same as the
certification standards. For Tier 2, the certification margin is the
delta between the specific emission standard level, or ``bin,'' to
which the vehicle is certified, and the vehicle's certification emission level.
    Since the level of the fleet average standard does not reflect this
kind of variability, EPA believes it is appropriate to set an in-use
standard that provides manufacturers with an in-use compliance factor
of 10% that will act as a surrogate for a certification margin. The
factor would only be applicable to CO₂ emissions, and would
be applied to the model-level test results that are used to establish
the model-level in-use standard.
    If the in-use emission result for the vehicle exceeds the model-
level CO₂ certification result multiplied by the in-use
compliance factor of 10%, then the vehicle would have exceeded the in-
use emission standard. The in-use compliance factor would apply to all
in-use compliance testing including IUVP, selective enforcement audits,
and EPA's internal test program.
    The intent of the separate in-use standard, based on a 10%
compliance factor adjustment, is to provide a reasonable margin such
that vehicles are not automatically deemed as exceeding standards
simply because of normal variability in test results. EPA has some
concerns however that this in-use compliance factor could be perceived
as providing manufacturers with the ability to design their fleets to
generate CO₂ emissions up to 10% higher than the actual
values they use to certify and to calculate the year end fleet average
value that determines compliance with the fleet average standard. This
concern provides additional rationale for requiring FTP and HFET IUVP
data for CO₂ emissions to ensure that in-use values are not
regularly 10% higher than the values used in the fleet average
calculation. If in the course of reviewing a manufacturer's IUVP data
it becomes apparent that a manufacturer's CO₂ results are
consistently higher than the values used for certification, EPA would
discuss the matter with the manufacturer and consider possible
resolutions such as changes to ensure that the emissions test data more
accurately reflects the emissions level of vehicles at the time of
production, increased EPA confirmatory testing, and other similar measures.
    EPA selected a value of 10% for the in-use standard based on a
review of EPA's fuel economy labeling and CAFE confirmatory test
results for the past several vehicle model years. The EPA data indicate
that it is common for test variability to range between three to six
percent and only on rare occasions to exceed 10%. EPA believes that a
value of 10% should be sufficient to account for testing variability
and any production variability that a manufacturer may encounter. EPA
considered both higher and lower values. The Tier 2 fleet as a whole,
for example, has a certification margin approaching 50%.\175\ However,
there are some fundamental differences between CO₂ emissions
and other criteria pollutants in the magnitude of the pollutants. Tier
2 NMOG and NO_X emission standards are hundredths of a gram
per mile (e.g., 0.07 g/mi NO_X & 0.09 g/mi NMOG), whereas the
CO₂ standards are four orders of magnitude greater (e.g.,
250 g/mi). Thus EPA does not believe it is appropriate to consider a
value on the order of 50 percent. In addition, little deterioration in
emissions control is expected in-use. The adjustment factor addresses
only one element of what is usually built into a compliance margin.
---------------------------------------------------------------------------

    \175\ See pages 39-41 of EPA's Vehicle and Engine Compliance
Activities 2007 Progress Report (EPA-420-R-08-011) published in
October 2008. This document is available electronically at 
http://epa.gov/otaq/about/420r08011.pdf.
---------------------------------------------------------------------------

    EPA requests comments regarding a proposed in-use standard that
uses an in-use compliance factor. Specifically, is a factor the best
way to address the technical and other feasibility of the in-use
standard; is 10% the appropriate factor; can EPA expect variability to
decrease as manufacturing experience increases, in which case would it
be appropriate for the in-use compliance factor of 10% to decrease over
time? EPA especially requests any data to support such comments.
5. Credit Program Implementation
    As described in Section III.E.2 above, for each manufacturer's
model year production, EPA is proposing that the manufacturer would
average the CO₂ emissions within each of the two averaging
sets (passenger cars and trucks) and compare that with its respective
fleet average CO₂ standards (which in turn would have been
determined from the appropriate footprint curve applicable to that
model year). In addition to this within-company averaging, EPA is
proposing that when a manufacturer's fleet average CO₂
emissions of vehicles produced in an averaging set over-complies
compared to the applicable fleet average standard, the manufacturer
could generate credits that it could save for later use (banking) or
could transfer to another manufacturer (trading). Section III.C
discusses opportunities that EPA is proposing for manufacturers to earn
additional credits, beyond those simply calculated by ``over-
achieving'' their applicable standard. Implementation of the credit
program generally involves two steps: calculation of the credit amount
and reporting the amount and the associated data and calculations to EPA.
    Of the various credit programs being proposed by EPA, there are two
broad types. One type of credit directly lowers a manufacturer's actual
fleet average by virtue of being applied to the methodology for
calculating the fleet average emissions. Examples of this type of
credit include the credits available for alternative fuel vehicles and
for advanced technology vehicles. The second type of credit is
independent of the calculation of a manufacturer's fleet average.
Rather than giving credit by lowering a manufacturer's fleet average
via a credit mechanism, these credits (in megagrams) are calculated
separately and are simply added to the manufacturer's overall ``bank''
of credits (or debits). Using a fictional example, the remainder of
this section will step through the different types of credits and show
where and how they are calculated and how they impact a manufacturer's
available credits.
a. Basic Credits for a Fleet With Average CO₂ Emissions
Below the Standard
    Basic credits are earned by doing better than the applicable
standard. Manufacturers calculate their standards

[[Page 49565]]

(separate standards are calculated for cars and trucks) using the
footprint-based equations described in Section III.B. A manufacturer's
actual end-of-year fleet average CO₂ is calculated similarly
to the way in which CAFE values are currently calculated; in fact, the
regulations are essentially identical. The current CAFE calculation
methods are in 40 CFR Part 600. EPA is proposing to amend key subparts
and sections of Part 600 to require that fleet average CO₂
be calculated in a manner parallel to the way CAFE values are
calculated. First manufacturers would determine a CO₂-
equivalent value for each model type. The CO₂-equivalent
value is a summation of the carbon-containing constituents of the
exhaust emissions, with each weighted by a coefficient that reflects
the carbon weight fraction of that constituent. For gasoline and diesel
vehicles this simply involves measurement of total hydrocarbons and
carbon monoxide in addition to CO₂, but becomes somewhat
more complex for alternative fuel vehicles due to the different nature
of their exhaust emissions. For example, for ethanol-fueled vehicles,
the emission tests must measure ethanol, methanol, formaldehyde, and
acetaldehyde in addition to CO₂. However, all these
measurements are necessary to determine fuel economy and thus no new
testing or data collection would be required. Second, manufacturers
would calculate a fleet average by weighting the CO₂-
equivalent value for each model type by the production of that model
type, as they currently do for the CAFE program. Again, this would be
done separately for cars and trucks. Finally, the manufacturer would
compare the calculated standard with the average that is actually
achieved to determine the credits (or debits). Both the determination
of the applicable standard and the actual fleet average would be done
after the model year is complete and using final model year production data.
    Consider a basic example where Manufacturer ``A'' has calculated a
car standard of 300 grams/mile and a fleet average of 290 grams/mile
(Figure III.E.5-1). Further assume that the manufacturer produced
500,000 cars. The credit is calculated by taking the difference between
the standard and the fleet average (300-290=10) and multiplying it by
the production of 500,000. This result is then multiplied by the
lifetime vehicle miles travelled (for cars this is 190,971 miles), then
finally divided by 1,000,000 to convert from grams to total megagrams.
The result is the number of CO₂ megagrams of credit (or
deficit, if the manufacturer was not able to comply with the fleet
average standard) generated by the manufacturer's car fleet. In this
example, the result is 954,855 megagrams.
BILLING CODE 4910-59-P

[[Page 49566]]
[GRAPHIC] [TIFF OMITTED] TP28SE09.016

b. Advanced Technology Credits
    Advanced technology credits directly impact a manufacturer's fleet
average, thus increasing the amount of credits they earn (or reducing
the amount of debits that would otherwise accrue). To earn these
credits, manufacturers that produce electric vehicles, plug-in hybrid
electric vehicles, or fuel cell electric vehicles would include these
vehicles in the fleet average calculation with their model type
emission values (0 g/m for electric vehicles and fuel cell electric
vehicles, and a measured CO₂ value for plug-in hybrid
electric vehicles), but would apply the proposed multiplier of 2.0 to
the production volume of each of these vehicles. This approach would
thus enhance the impact that each of these low-CO₂ advanced
technology vehicles has on the manufacturer's fleet average.
    EPA is proposing to limit availability of advanced technology
credits to the technologies noted above, with the additional limitation
that the vehicles must be certified to Tier 2 Bin 5 emission standards
or cleaner (this obviously applies primarily to plug-in hybrid electric
vehicles). EPA is proposing to use the following definitions to
determine which vehicles

[[Page 49567]]

are eligible for the advanced technology credits:
    • Electric vehicle means a motor vehicle that is powered
solely by an electric motor drawing current from a rechargeable energy
storage system, such as from storage batteries or other portable
electrical energy storage devices, including hydrogen fuel cells,
provided that:
     • (1) Recharge energy must be drawn from a source off the
vehicle, such as residential electric service; and
     • (2) The vehicle must be certified to the emission standards
of Bin #1 of Table S04-1 in paragraph (c)(6) of Sec.  86.1811.
    • Fuel cell electric vehicle means a motor vehicle propelled
solely by an electric motor where energy for the motor is supplied by a
fuel cell.
    • Fuel cell means an electrochemical cell that produces
electricity via the reaction of a consumable fuel on the anode with an
oxidant on the cathode in the presence of an electrolyte.
    • Plug-in hybrid electric vehicle (PHEV) means a hybrid
electric vehicle that: (1) Has the capability to charge the battery
from an off-vehicle electric source, such that the off-vehicle source
cannot be connected to the vehicle while the vehicle is in motion, and
(2) has an equivalent all-electric range of no less than 10 miles.
    With some simplifying assumptions, assume that 25,000 of
Manufacturer A's fleet are now plug-in hybrid electric vehicles with
CO₂ emissions of 100 g/mi, and the remaining 475,000 are
conventional technology vehicles with average CO₂ emissions
of 290 grams/mile. By applying the factor of 2.0 to the electric
vehicle production numbers in the appropriate places in the fleet
average calculation formula Manufacturer A now has more than 2.6
million credits (Figure III.E.5-2). Without the use of the multiplier
Manufacturer A's fleet average would be 281 instead of 272, which would
generate about 1.8 million credits.

[[Page 49568]]
[GRAPHIC] [TIFF OMITTED] TP28SE09.017

c. Flexible-Fuel Vehicle Credits
    As noted in Section III.C, treatment of flexible-fuel vehicle (FFV)
credits differs between 2012 to 2015 and 2016 and later. For the 2012
through 2015 model years the FFV credits will be calculated as they are
in the CAFE program for the same model years, except that formulae in
the regulations would be modified as needed to do the calculations in
terms of grams per mile of CO₂ rather than miles per gallon.
Like the advanced technology vehicle credits, these credits are
integral to the fleet average calculation, but rather than crediting
the vehicles with an artificially inflated quantity as in the advanced
technology credit program described above, the FFV credit program
allows the vehicles to be represented by artificially reduced
emissions. To use this credit program, the CO₂ emissions of
FFVs will be represented by the average of two things: the
CO₂ emissions while operating on gasoline, and the
CO₂ emissions operating on the alternative fuel multiplied by 0.15.
    For example, Manufacturer A now makes 30,000 FFVs with
CO₂ emissions of 280 g/mi using gasoline and 260 g/mi using
ethanol. The CO₂ emissions that would represent the FFVs in
the fleet average calculation would be calculated as follows:

FFV emissions = (280 + 260x0.15) / 2 = 160 g/mi

[[Page 49569]]

    Including these FFVs with the applicable credit in Manufacturer A's
fleet average, as shown below in Figure III.E.5-3, further reduces the
fleet average to 256 grams/mile and increases the manufacturer's
credits to about 4.2 million megagrams.
[GRAPHIC] [TIFF OMITTED] TP28SE09.018

    In the 2016 and later model years the calculation of FFV emissions
would be much the same except that the determination of the
CO₂ value to represent an FFV model type would be based upon
the actual use of the alternative fuel and on actual CO₂
emissions while operating on that fuel. EPA's default assumption in the
regulations is that the alternative fuel is used negligibly, and the
CO₂ value that would apply to an FFV by default would be the
value determined for operation on conventional fuel. However, if the
manufacturer believes

[[Page 49570]]

that the alternative fuel is used in real-world driving and that
accounting for this use could improve the fleet average, the
manufacturer would have two options. First, the regulations would allow
a manufacturer to request that EPA determine an appropriate weighting
value for an alternative fuel to reflect the degree of use of that fuel
in FFVs relative to real-world use of the conventional fuel. Section
III.C describes how EPA might make this determination. Any value
determined by EPA would be published via guidance letter to
manufacturers, and that weighting value would be available for all
manufacturers to use for that fuel. A second option proposed in the
regulations would allow a manufacturer to determine the degree of
alternative fuel use for their own vehicle(s), using a variety of
potential methods. Both the method and the use of the final results
would have to be approved by EPA before their use would be allowed. In
either case, whether EPA supplies the weighting factors or the
manufacturer determines them, the CO₂ emissions of an FFV in
2016 and later would be as follows (assuming non-zero use of the
alternative fuel):

(W1xCO₂conv)+(W2xCO₂alt),

Where,

W1 and W2 are the proportion of miles driven using conventional fuel
and alternative fuel, respectively, CO₂conv is the
CO₂ value while using conventional fuel, and
CO₂alt is the CO₂ value while using the alternative fuel.
d. Dedicated Alternative Fuel Vehicle Credits
    Like the FFV credit program described above, these credits would be
treated differently in the first years of the program than in the 2016
and later model years. In fact, these credits are essentially identical
to the FFV credits except for two things: (1) There is no need to
average CO₂ values for gasoline and alternative fuel, and
(2) in 2016 and later there is no demonstration needed to get a benefit
from the alternative fuel. The CO₂ values are essentially
determined the same way they are for FFVs operating on the alternative
fuel. For the 2012 through 2015 model years the CO₂ test
results are multiplied by the credit adjustment factor of 0.15, and the
result is production-weighted in the fleet average calculation. For
example, assume that Manufacturer A now produces 20,000 dedicated CNG
vehicles with CO₂ emissions of 220 grams/mile, in addition
to the FFVs and PHEVs already included in their fleet (Figure III.E.5-
4). Prior to the 2016 model year the CO₂ emissions
representing these CNG vehicles would be 33 grams/mile (220 x 0.15).

[[Page 49571]]
[GRAPHIC] [TIFF OMITTED] TP28SE09.019

BILLING CODE 4910-59-C
    The calculation for 2016 and later would be exactly the same except
the 0.15 credit adjustment factor would be removed from the equation,
and the CNG vehicles would simply be production-weighted in the
equation using their actual emissions value of 220 grams/mile instead
of the ``credited'' value of 33 grams/mile.
e. Air Conditioning Leakage Credits
    Unlike the credit programs described above, air conditioning-
related credits do not affect the overall calculation of the fleet
average. Whether a manufacturer generates zero air conditioning credits
or many, the calculated fleet average remains the same. Air
conditioning credits are calculated and added to any credits (or
deficit) that results from the fleet average calculation. Thus, these
credits can increase a manufacturer's credit balance or offset a
deficit, but their calculation is external to the fleet average
calculation. As noted in Section III.C, manufacturers could generate
credits for reducing the leakage of refrigerant from their air
conditioning systems. To do this the manufacturer would identify an air
conditioning system improvement, indicate that they

[[Page 49572]]

intend to use the improvement to generate credits, and then calculate
an annual leakage rate (grams/year) for that system based on the method
defined by the proposed regulations. Air conditioning credits would be
determined separately for cars and trucks using the car and truck-
specific equations described in Section III.C.
    In order to put these credits on the same basis as the basic and
other credits describe above, the air conditioning leakage credits
would need to be calculated separately for cars and trucks. Thus, the
resulting grams per mile credit determined from the appropriate car or
truck equation would be multiplied by the lifetime VMT (190,971 for
cars; 221,199 for trucks), and then divided by 1,000,000 to get the
total megagrams of CO₂ credits generated by the improved air
conditioning system. Although the calculations are done separately for
cars and trucks, the total megagrams would be summed and then added to
the overall credit balance maintained by the manufacturer.
    For example, assume that Manufacturer A has improved an air
conditioning system that is installed in 250,000 cars and that the
calculated leakage rate is 12 grams/year. Assume that the manufacturer
has also implemented a new refrigerant with a Global Warming Potential
of 850. In this case the credit per air conditioning unit, rounded to
the nearest gram per mile would be:

[13.8 x [1--(12/16.6 x 850/1430)] = 7.9 g/mi.

    Total megagrams of credits would then be:

[ 7.9 x 250,000 x 190971 ] / 1,000,000 = 377,168 Mg.

    These credits would be added directly to a manufacturer's total
balance; thus in this example Manufacturer A would now have, after
consideration of all the above credits, a total of 5,437,900 Megagrams
of credits.
f. Air Conditioning Efficiency Credits
    As noted in Section III.C.1.b, manufacturers could earn credits for
improvements in air conditioning efficiency that reduce the impact of
the air conditioning system on fuel consumption. These credits are
similar to the air conditioning leakage credits described above, in
that these credits are determined independently from the manufacturer's
fleet average calculation, and the resulting credits are added to the
manufacturer's overall balance for the respective model year. Like the
air conditioning leakage credits, these credits can increase a
manufacturer's credit balance or offset a deficit, but their
calculation is external to the fleet average calculation.
    In order to put these credits on the same basis as the basic and
other credits describe above, the air conditioning leakage credits
would need to be calculated separately for cars and trucks. Thus, the
resulting grams per mile credit determined in the above equation would
be multiplied by the lifetime VMT (190,971 for cars; 221,199 for
trucks), and then divided by 1,000,000 to get the total megagrams of
CO₂ credits generated by the improved air conditioning
system. Although the calculations are done separately for cars and
trucks, the total megagrams can be summed and then added to the overall
credit balance maintained by the manufacturer.
    As described in Section III.C, manufacturers would determine their
credit based on selections from a menu of technologies, each of which
provides a gram per mile credit amount. The credits would be summed for
all the technologies implemented by the manufacturer, but could not
exceed 5.7 grams per mile. Once this is done, the calculation is a
straightforward translation of a gram per mile credit to total car or
truck megagrams, using the same methodology described above. For
example, if Manufacturer A implements enough technologies to get the
maximum 5.7 grams per mile for an air conditioning system that sells
250,000 units in cars, the calculation of total credits would be as follows:

[5.7 x 250,000 x 190971] / 1,000,000 = 272,134 Mg.

    These credits would be added directly to a manufacturer's total
balance; thus in this example Manufacturer A would now have, after
consideration of all the above credits, a total of 5,710,034 Megagrams
of credits.
g. Off-Cycle Technology Credits
    As described in Section III.C, these credits would be available for
certain technologies that achieve real-world CO₂ reductions
that aren't adequately captured on the city or highway test cycles used
to determine compliance with the fleet average standards. Like the air
conditioning credits, these credits are independent of the fleet
average calculation. Section III.C.4 describes two options for
generating these credits: either using EPA's 5-cycle fuel economy
labeling methodology, or if that method fails to capture the
CO₂-reducing impact of the technology, the manufacturer
could propose and use, with EPA approval, a different analytical
approach to determining the credit amount. Like the air conditioning
credits above, these credits would have to be determined separately for
cars and trucks because of the differing lifetime mileage assumptions
between cars and trucks.
    Using the 5-cycle approach would be relatively straightforward, and
because the 5-cycle formulae account for nationwide variations in
driving conditions, no additional adjustments to the test results would
be necessary. The manufacturer would simply calculate a 5-cycle
CO₂ value with the technology installed and operating and
compare it with a 5-cycle CO₂ value determined without the
technology installed and/or operating. Existing regulations describe
how to calculate 5-cycle fuel economy values, and the proposed
regulations contain provisions that describe how to calculate 5-cycle
CO₂ values. The manufacturer would have to design a test
program that accounts for vehicle differences if the technology is
installed in different vehicle types, and enough data would have to be
collected to address data uncertainty issues. A description of such a
test program and the results would be submitted to EPA for approval.
    As noted in Section III.C.4, a manufacturer-developed testing, data
collection and analysis program would require some additional EPA
approval and oversight. Once the demonstration of the CO₂
reduction of an off-cycle technology is complete, however, and the
resulting value accounts for variations in driving, climate and other
conditions across the country, the two approaches are treated
fundamentally the same way and in a way that parallels the approach for
determining the air conditioning credits described above. Once a gram
per mile value is approved by the EPA, the manufacturer would determine
the total credit value by multiplying the gram per mile per vehicle
credit by the volume of vehicles with that technology and approved for
use of the credit. This would then be multiplied by the lifetime
vehicle miles for cars or trucks, whichever applies, and divided by
1,000,000 to obtain total Megagrams of CO₂ credits. These
credits would then be added to the manufacturer's total balance for the
given model year. Just like the above air conditioning case, an off-
cycle technology that is demonstrated to achieve an average
CO₂ reduction of 4 grams/mile and that is installed in
175,000 cars would generate credits as follows:

[4 x 175,000 x 190971] / 1,000,000 = 133,680 Mg.

[[Page 49573]]

h. End-of-Year Reporting
    In general, implementation of the averaging, banking, and trading
(ABT) program, including the calculation of credits and deficits, would
be accomplished via existing reporting mechanisms. EPA's existing
regulations define how manufacturers calculate fleet average miles per
gallon for CAFE compliance purposes, and EPA is proposing to modify
these regulations to also require the parallel calculation of fleet
average CO₂ levels for car and light truck compliance
categories. These regulations already require an end-of-year report for
each model year, submitted to EPA, which details the test results and
calculations that determine each manufacturer's CAFE levels. EPA is
proposing to require that this report also include fleet average
CO₂ levels. In addition to requiring reporting of the actual
fleet average achieved, this end-of-year report would also contain the
calculations and data determining the manufacturer's applicable fleet
average standard for that model year. As under the existing Tier 2
program, the report would be required to contain the fleet average
standard, all values required to calculate the fleet average standard,
the actual fleet average CO₂ that was achieved, all values
required to calculate the actual fleet average, the number of credits
generated or debits incurred, all the values required to calculate the
credits or debits, and the resulting balance of credits or debits.
    Because of the multitude of credit programs that are available, the
end-of-year report will be required to have more data and a more
defined and specific structure than the CAFE end-of-year report does
today. Although requiring ``all the data required'' to calculate a
given value should be inclusive, the proposed report would contain some
requirements specific to certain types of credits.
    For advanced technology credits that apply to vehicles like
electric vehicles and plug-in hybrid electric vehicles, manufacturers
would be required to identify the number and type of these vehicles and
the effect of these credits on their fleet average. The same would be
true for credits due to flexible-fuel and alternative-fuel vehicles,
although for 2016 and later flexible-fuel credits manufacturers would
also have to provide a demonstration of the actual use of the
alternative fuel in-use and the resulting calculations of
CO₂ values for such vehicles. For air conditioning leakage
credits manufacturers would have to include a summary of their use of
such credits that would include which air conditioning systems were
subject to such credits, information regarding the vehicle models which
were equipped with credit-earning air conditioning systems, the
production volume of these air conditioning systems, the leakage score
of each air conditioning system generating credits, and the resulting
calculation of leakage credits. Air conditioning efficiency reporting
will be somewhat more complicated given the phase-in of the efficiency
test, and reporting would have to detail compliance with the phase-in
as well as the test results and the resulting efficiency credits
generated. Similar reporting requirements would also apply to the
variety of possible off-cycle credit options, where manufacturers would
have to report the applicable technology, the amount of credit per
unit, the production volume of the technology, and the total credits
from that technology.
    Although it is the final end-of-year report, when final production
numbers are known, that will determine the degree of compliance and the
actual values of any credits being generated by manufacturers, EPA is
also proposing that manufacturers be prepared to discuss their
compliance approach and their potential use of the variety of credit
options in pre-certification meetings that EPA routinely has with
manufacturers. In addition, and in conjunction with a pre-model year
report required under the CAFE program, the manufacturer would be
required to submit projections of all of the elements described above.
    Finally, to the extent that there are any credit transactions, the
manufacturer would have to detail in the end-of-year report
documentation on all credit transactions that the manufacturer has
engaged in. Information for each transaction would include: The name of
the credit provider, the name of the credit recipient, the date the
transfer occurred, the quantity of credits transferred, and the model
year in which the credits were earned. Failure by the manufacturer to
submit the annual report in the specified time period would be
considered to be a violation of section 203(a)(1) of the Clean Air Act.
6. Enforcement
    As discussed above in Section III.E.5 under the proposed program,
manufacturers would report to EPA their fleet average standard for a
given model year (reporting separately for each of the car and truck
averaging sets), the credits or deficits generated in the current year,
the balance of credit balances or deficits (taking into account banked
credits, deficit carry-forward, etc. see Section III.E.5), and whether
they were in compliance with the fleet average standard under the terms
of the regulations. EPA would review the annual reports, figures, and
calculations submitted by the manufacturer to determine any
nonconformance. EPA requests comments on the above approach for
monitoring and enforcement of the fleet average standard.
    Each certificate, required prior to introduction into commerce,
would be conditioned upon the manufacturer attaining the CO₂
fleet average standard. If a manufacturer failed to meet this condition
and had not generated or purchased enough credits to cover the fleet
average exceedance following the three year deficit carry-forward
(Section III.B.4, then EPA would review the manufacturer's sales for
the most recent model year and designate which vehicles caused the
fleet average standard to be exceeded. EPA would designate as
nonconforming those vehicles with the highest emission values first,
continuing until a number of vehicles equal to the calculated number of
non-complying vehicles as determined above is reached and those
vehicles would be considered to be not covered by the certificates of
conformity covering those model types. In a test group where only a
portion of vehicles would be deemed nonconforming, EPA would determine
the actual nonconforming vehicles by counting backwards from the last
vehicle sold in that model type. A manufacturer would be subject to
penalties and injunctive orders on an individual vehicle basis for sale
of vehicles not covered by a certificate. This is the same general
mechanism used for the National LEV and Tier 2 corporate average
standards, except that these programs operate slightly differently in
that the non-compliant vehicles would be designated not in the most
recent model year, but in the model year in which the deficit
originated. EPA requests comment on which approach is most appropriate;
the Tier 2 approach of penalizing vehicles from the year in which the
deficit was generated, or the proposed approach that would penalize
vehicles from the year in which the manufacturer failed to make up the
deficit as required.
    Section 205 of the CAA authorizes EPA to assess penalties of up to
$37,500 per vehicle for violations of the requirements or prohibitions
of this proposed rule.\176\ This section of the

[[Page 49574]]

CAA provides that the agency shall take the following penalty factors
into consideration in determining the appropriate penalty for any
specific case: The gravity of the violation, the economic benefit or
savings (if any) resulting from the violation, the size of the
violator's business, the violator's history of compliance with this
title, action taken to remedy the violation, the effect of the penalty
on the violator's ability to continue in business, and such other
matters as justice may require.
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    \176\ 42 U.S.C. 7524(a), Civil Monetary Penalty Inflation
Adjustment, 69 FR 7121 (Feb. 13, 2004) and Civil Monetary Penalty
Inflation Adjustment Rule, 73 FR 75340 (Dec. 11, 2008).
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    EPA recognizes that it may be appropriate, should a manufacturer
fail to comply with the NHTSA fuel economy standards as well as the
CO₂ standard proposed today in a case arising out of the
same facts and circumstances, to take into account the civil penalties
that NHTSA has assessed for violations of the CAFE standards when
determining the appropriate penalty amount for violations of the
CO₂ emissions standards. This approach is consistent with
EPA's broad discretion to consider ``such other matters as justice may
require,'' and will allow EPA to exercise its discretion to prevent
injustice and ensure that penalties for violations of the
CO₂ rule are assessed in a fair and reasonable manner.
    The statutory penalty factor that allows EPA to consider ``such
other matters as justice may require'' vests EPA with broad discretion
to reduce the penalty when other adjustment factors prove insufficient
or inappropriate to achieve justice.\177\ The underlying principle of
this penalty factor is to operate as a safety mechanism when necessary
to prevent injustice.\178\
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    \177\ In re Spang & Co., 6 E.A.D. 226, 249 (EAB 1995).
    \178\ B.J. Carney Industries, 7 E.A.D. 171, 232, n. 82 (EAB 1997).
---------------------------------------------------------------------------

    In other environmental statutes, Congress has specifically required
EPA to consider penalties assessed by other government agencies where
violations arise from the same set of facts. For instance, section
311(b)(8) of the Clean Water Act, 33 U.S.C. 1321(b)(8) authorizes EPA
to consider any other penalty for the same incident when determining
the appropriate Clean Water Act penalty. Likewise, section 113(e) of
the CAA authorizes EPA to consider ``payment by the violator of
penalties previously assessed for the same violation'' when assessing
penalties for certain violations of Title I of the Act.
7. Prohibited Acts in the CAA
    Section 203 of the Clean Air Act describes acts that are prohibited
by law. This section and associated regulations apply equally to the
greenhouse standards proposed today as to any other regulated pollutant.
8. Other Certification Issues
a. Carryover/Carry Across Certification Test Data
    EPA's certification program for vehicles allows manufacturers to
carry certification test data over and across certification testing
from one model year to the next, when no significant changes to models
are made. EPA expects that this policy could also apply to
CO₂, N₂O and CH₄ certification test
data. A manufacturer may also be eligible to use carryover and carry
across data to demonstrate CO₂ fleet average compliance if
they had done so for CAFE purposes.
b. Compliance Fees
    The CAA allows EPA to collect fees to cover the costs of issuing
certificates of conformity for the classes of vehicles and engines
covered by this proposal. On May 11, 2004, EPA updated its fees
regulation based on a study of the costs associated with its motor
vehicle and engine compliance program (69 FR 51402). At the time that
cost study was conducted the current rulemaking was not considered.
    At this time the extent of any added costs to EPA as a result of
this proposal is not known. EPA will assess its compliance testing and
other activities associated with the proposed rule and may amend its
fees regulations in the future to include any warranted new costs.
c. Small Entity Deferment
    EPA is proposing to defer CO₂ standards for certain
small entities, and these entities (necessarily) would not be subject
to the certification requirements of this proposal.
    As discussed in Section III.B.7, businesses meeting the Small
Business Administration (SBA) criterion of a small business as
described in 13 CFR 121.201 would not be subject to the proposed GHG
requirements, pending future regulatory action. EPA is proposing that
such entities submit a declaration to EPA containing a detailed written
description of how that manufacturer qualifies as a small entity under
the provisions of 13 CFR 121.201 in order to ensure EPA is aware of the
deferred companies. This declaration would have to be signed by a chief
officer of the company, and would have to be made at least 30 days
prior to the introduction into commerce of any vehicles for each model
year for which the small entity status is requested, but not later than
December of the calendar year prior to the model year for which
deferral is requested. For example, if a manufacturer will be
introducing model year 2012 vehicles in October of 2011, then the small
entity declaration would be due in September of 2011. If 2012 model
year vehicles are not planned for introduction until March of 2012,
then the declaration would have to be submitted in December of 2011.
Such entities are not automatically exempted from other EPA regulations
for light-duty vehicles and light-duty trucks; therefore, absent this
annual declaration EPA would assume that each entity was not deferred
from compliance with the proposed greenhouse gas standards.
d. Onboard Diagnostics (OBD) and CO₂ Regulations
    The light-duty on-board diagnostics (OBD) regulations require
manufacturers to detect and identify malfunctions in all monitored
emission-related powertrain systems or components.\179\ Specifically,
the OBD system is required to monitor catalysts, oxygen sensors, engine
misfire, evaporative system leaks, and any other emission control
systems directly intended to control emissions, such as exhaust gas
recirculation (EGR), secondary air, and fuel control systems. The
monitoring threshold for all of these systems or components is 1.5
times the applicable standards, which typically include NMHC, CO,
NO_X, and PM. EPA is confident that many of the emission-
related systems and components currently monitored would effectively
catch any malfunctions related to CO₂ emissions. For
example, malfunctions resulting from engine misfire, oxygen sensors,
the EGR system, the secondary air system, and the fuel control system
would all have an impact on CO₂ emissions. Thus, repairs
made to any of these systems or components should also result in an
improvement in CO₂ emissions. In addition, EPA does not have
data on the feasibility or effectiveness of monitoring various emission
systems and components for CO₂ emissions and does not
believe it would be prudent to include CO₂ emissions without
such information. Therefore, at this time, EPA does not plan to require
CO₂ emissions as one of the applicable standards required
for the OBD monitoring threshold. EPA plans to evaluate OBD monitoring
technology, with regard to monitoring CO₂ emissions-related
systems and components, and may choose to propose to include
CO₂ emissions as part of the OBD requirements in a future regulatory

[[Page 49575]]

action. EPA requests comment as to whether this is appropriate at this
time, and specifically requests any data that would support the need
for CO₂-related components that could or should be monitored
via an OBD system.
---------------------------------------------------------------------------

    \179\ 40 CFR 86.1806-04.
---------------------------------------------------------------------------

e. Applicability of Current High Altitude Provisions to Greenhouse Gases
    EPA is proposing that vehicles covered by this proposal meet the
CO₂, N₂O and CH₄ standard at altitude.
The CAA requires emission standards under section 202 to apply at all
altitudes.\180\ EPA does not expect vehicle CO₂,
CH₄, or N₂O emissions to be significantly
different at high altitudes based on vehicle calibrations commonly used
at all altitudes. Therefore, EPA is proposing to retain its current
high altitude regulations so manufacturers would not normally be
required to submit vehicle CO₂ test data for high altitude.
Instead, they would submit an engineering evaluation indicating that
common calibration approaches will be utilized at high altitude. Any
deviation in emission control practices employed only at altitude would
need to be included in the auxiliary emission control device (AECD)
descriptions submitted by manufacturers at certification. In addition,
any AECD specific to high altitude would be required to include
emissions data to allow EPA evaluate and quantify any emission impact
and validity of the AECD. EPA requests comment on this approach, and
specifically requests data on impact of altitude on FTP and HFET
CO₂ emissions.
---------------------------------------------------------------------------

    \180\ See CAA 206(f).
---------------------------------------------------------------------------

f. Applicability of Standards to Aftermarket Conversions
    With the exception of the small entity deferment option EPA is
proposing, EPA's emission standards, including the proposed greenhouse
gas standards, would continue to apply as stated in the applicability
sections of the relevant regulations. The proposed greenhouse gas
standards are being incorporated into 40 CFR part 86, subpart S, the
provisions of which include exhaust and evaporative emission standards
for criteria pollutants. Subpart S includes requirements for new light-
duty vehicles, light-duty trucks, medium-duty passenger vehicles, Otto-
cycle complete heavy-duty vehicles, and some incomplete light-duty
trucks. Subpart S is currently specifically applicable to aftermarket
conversion systems, aftermarket conversion installers, and aftermarket
conversion certifiers, as those terms are defined in 40 CFR 85.502. EPA
expects that some aftermarket conversion companies would qualify for
and seek the small entity deferment, but those that do not qualify
would be required to meet the applicable emission standards, including
the proposed greenhouse gas standards.
9. Miscellaneous Revisions to Existing Regulations
a. Revisions and Additions to Definitions
    EPA is proposing to amend its definitions of ``engine code,''
``transmission class,'' and ``transmission configuration'' in its
vehicle certification regulations (Part 86) to conform with the
definitions for those terms in its fuel economy regulations (Part 600).
The exact terms in Part 86 are used for reporting purposes and are not
used for any compliance purpose (e.g., an engine code would not
determine which vehicle was selected for emission testing). However,
the terms are used for this purpose in Part 600 (e.g., engine codes,
transmission class, and transmission configurations are all criteria
used to determine which vehicles are to be tested for the purposes of
establishing corporate average fuel economy). Here, EPA is proposing
that the same vehicles tested to determine corporate average fuel
economy also be tested to determine fleet average CO₂, so
the same definitions should apply. Thus EPA is proposing to amend its
Part 86 definitions of the above terms to conform to the definitions in
Part 600.
    To bring EPA's fuel economy regulations in Part 600 into conformity
with this proposal for fleet average CO₂ and NHTSA's reform
truck regulations two amendments are proposed. First, the definition of
``footprint'' that is proposed in this rule is also being proposed for
addition to EPA's Part 86 and 600 regulations. This definition is based
on the definition promulgated by NHTSA at 49 CFR 523.2. Second, EPA is
proposing to amend its model year CAFE reporting regulations to include
the footprint information necessary for EPA to determine the reformed
truck standards and the corporate average fuel economy. This same
information is proposed to be included in this proposal for fleet
average CO₂ and fuel economy compliance.
b. Addition of Ethanol Fuel Economy Calculation Procedures
    EPA is proposing to add calculation procedures to part 600 for
determining the carbon-related exhaust emissions and calculating the
fuel economy of vehicles operating on ethanol fuel. Manufacturers have
been using these procedures as needed, but the regulatory language--
which specifies how to determine the fuel economy of gasoline, diesel,
compressed natural gas, and methanol fueled vehicles--has not
previously been brought up-to-date to provide procedures for vehicles
operating on ethanol. Thus EPA is proposing a carbon balance approach
similar to other fuels for the determination of carbon-related exhaust
emissions for the purpose of determining fuel economy and for
compliance with the proposed fleet average CO₂ standards.
The carbon balance formula is similar to that for methanol, except that
ethanol-fueled vehicles must also measure the emissions of ethanol and
acetaldehyde. The proposed carbon balance equation for determining fuel
economy is as follows, where CWF is the carbon weight fraction of the
fuel and CWF_exHC is the carbon weight fraction of the
exhaust hydrocarbons:

mpg = (CWF x SG x 3781.8)/((CWF_exHCx HC) + (0.429 x CO) +
(0.273 x CO₂) + (0.375 x CH₃OH) + (0.400 x
HCHO) + (0.521 x C₂H₅OH) + (0.545 x
C₂H₄O))

    The proposed equation for determining the total carbon-related
exhaust emissions for compliance with the CO₂ fleet average
standards is the following, where CWF_exHC is the carbon
weight fraction of the exhaust hydrocarbons:

CO₂-eq = (CWF_exHCx HC) + (0.429 x CO) + (0.375
x CH₃OH) + (0.400 x HCHO) + (0.521 x
C₂H₅OH) + (0.545 x
C₂H₄O) + CO₂.

    EPA requests comment on the use of these formulae to determine fuel
economy and carbon emissions.
c. Revision of Electric Vehicle Applicability Provisions
    In 1980 EPA issued a rule that provided for the inclusion of
electric vehicles in the CAFE program.\181\ EPA now believes that
certain provisions of the regulations should be updated to reflect the
current state of motor vehicle emission and fuel economy regulations.
In particular, EPA believes that the exemption of electric vehicles in
certain cases from fuel economy labeling and CAFE requirements should
be reevaluated and revised.
---------------------------------------------------------------------------

    \181\ 45 FR 49256, July 24, 1980.
---------------------------------------------------------------------------

    The rule created an exemption for electric vehicles from fuel
economy labeling in the following cases: (1) If the electric vehicles
are produced by a company that produces only electric vehicles; and (2)
if the electric vehicles are produced by a company that

[[Page 49576]]

produces fewer than 10,000 vehicles of all kinds worldwide. EPA
believes that this exemption language is no longer appropriate and
proposes to delete it from the affected regulations. First, since 1980
many regulatory provisions have been put in place to address the
concerns of small manufacturers and enable them to comply with fuel
economy and emission programs with reduced burden. EPA believes that
all small volume manufacturers should compete on a fair and level
regulatory playing field and that there is no longer a need to treat
small volume electric vehicles any differently than small volume
manufacturers of other types of vehicles. Current regulations contain
streamlined certification procedures for small companies, and because
electric vehicles emit no direct pollution there is effectively no
certification emission testing burden. For example, the proposed
greenhouse gas regulations contain a provision allowing the exemption
of certain small entities. Meeting the requirements for fuel economy
labeling and CAFE will entail a testing, reporting, and labeling
burden, but these burdens are not extraordinary and should be applied
equally to all small volume manufacturers, regardless of the fuel that
moves their vehicles. EPA has been working with existing electric
vehicle manufacturers on fuel economy labeling, and EPA believes it is
important for the consumer to have impartial, accurate, and useful
label information regarding the energy consumption of these vehicles.
Second, EPCA does not provide for an exemption of electric vehicles
from NHTSA's CAFE program, and NHTSA regulations regarding the
applicability of the CAFE program do not provide an exemption for
electric vehicles. Third, the blanket exemption for any manufacturer of
only electric vehicles assumed at the time that these companies would
all be small, but the exemption language inappropriately did not
account for size and would allow large manufacturers to be exempt as
well. Finally, because of growth expected in the electric vehicle
market in the future, EPA believes that the labeling and CAFE
regulations need to be designed to more specifically accommodate
electric vehicles and to require that consumers be provided with
appropriate information regarding these vehicles. For these reasons EPA
is proposing revisions to 40 CFR Part 600 applicability regulations
such that these electric vehicle exemptions are deleted starting with
the 2012 model year.
d. Miscellaneous Conforming Regulatory Amendments
    Throughout the regulations EPA has made a number of minor
amendments to update the regulations as needed or to conform with
amendments discussed in this preamble. For example, for consistency
with the ethanol fuel economy calculation procedures discussed above,
EPA has amended regulations where necessary to require the collection
of emissions of ethanol and acetaldehyde. Other changes are made to
applicability sections to remove obsolete regulatory requirements such
as phase-ins related to EPA's Tier 2 emission standards program, and
still other changes are made to better accommodate electric vehicles in
EPA emission control regulations. Not all of these minor amendments are
noted in this preamble, thus the reader should carefully evaluate the
proposed regulatory text to ensure a complete understanding of the
regulatory changes being proposed by EPA.
10. Warranty, Defect Reporting, and Other Emission-Related Components
Provisions
    Under section 207(a) of the CAA, manufacturers must warrant that a
vehicle is designed to comply with the standards and will be free from
defects that may cause it to not comply over the specified period which
is 2 years/24,000 miles (whichever is first) or, for major emission
control components, 8 years/80,000 miles. Under certain conditions,
manufacturers may be liable to replace failed emission components at no
expense to the owner. EPA regulations define ``emission related parts''
for the purpose of warranty. This definition includes parts which must
function properly to assure continued compliance with the emission
standards.\182\
---------------------------------------------------------------------------

    \182\ 40 CFR 85.2102(14).
---------------------------------------------------------------------------

    The air conditioning system and its components have not previously
been covered under the CAA warranty provisions. However, the proposed
A/C leakage and A/C-related CO₂ emission standards are
dependent upon the proper functioning of a number of components on the
A/C system, such as rings, fittings, compressors, and hoses. Therefore,
EPA is proposing that these components be included under the CAA
section 207(a) emission warranty provisions, with a warranty of 2
years/24,000 miles.
    EPA requests comment as to whether any other parts or components
should be designated as ``emission related parts'' subject to warranty
and defect reporting provisions under this proposal.
11. Light Duty Vehicles and Fuel Economy Labeling
    American consumers need accurate and meaningful information about
the environmental and fuel economy performance of new light vehicles.
EPA believes it is important that the fuel-economy label affixed to the
new vehicles provide consumers with the critical information they need
to make smart purchase decisions. This is a special challenge in light
of the expected increase in market share of electric and other advanced
technology vehicles. Consumers may need new and different information
than today's vehicle labels provide in order to help them understand
the energy use and associated cost of owning these electric and
advanced technology vehicles. As discussed below, these two issues are
key to determining whether the current MPG-based fuel-economy label is
adequate.
    Therefore, as part of this action, EPA seeks comments on issues
surrounding consumer vehicle labeling in general, and labeling of
advanced technology vehicles in particular. EPA also plans to initiate
a separate rulemaking to explore in detail the information displayed on
the fuel economy label and the methodology for deriving that
information. The purposes of this new rulemaking would be to ensure
that American consumers continue to have the most accurate, meaningful,
and useful information available to them when purchasing new vehicles,
and that the information is presented to them in clear and
understandable terms.
a. Background
    EPA has considerable experience in providing vehicle information to
consumers through its fuel-economy labeling activities and related web-
based programs. Under 49 U.S.C. 32908(b) EPA is responsible for
developing the fuel economy labels that are posted on window stickers
of all new light duty cars and trucks sold in the U.S. and, beginning
with the 2011 model year, on all new medium-duty passenger vehicles (a
category that includes large sport-utility vehicles and passenger
vans). The statutory requirements established by EPCA require that the
label contain the following:
    • The fuel economy of the vehicle; \183\
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    \183\ ``Fuel economy'' per the statute is miles per gallon of
gasoline (or equivalent amount of other fuel).
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    • The estimated annual fuel cost of operating the vehicle;

[[Page 49577]]

    • The range of fuel economy of comparable vehicles among all manufacturers;
    • A statement that a fuel economy booklet is available from
the dealer; \184\ and
---------------------------------------------------------------------------

    \184\ EPA and DOE jointly publish the annual Fuel Economy Guide
and distribute it to dealers.
---------------------------------------------------------------------------

    • The amount of the ``gas guzzler'' tax imposed on the
vehicle by the Internal Revenue Service.
    • Other information required or authorized by EPA that is
related to the information required above.
    Fuel economy is defined as the number of miles traveled by an
automobile for each gallon of gasoline (or equivalent amount of other
fuel). It is relatively easy to determine the miles per gallon (MPG)
for vehicles that use liquid fuels (e.g., gasoline or diesel), but an
expression that uses gallons--whether miles per gallon or gallons per
mile--may not be a useful metric for vehicles that have limited to no
operation on liquid fuel such as electric or compressed natural gas
vehicles. The mpg metric is the one generally used today to provide
comparative fuel economy information to consumers.
    As part of its vehicle certification, CAFE, and fuel economy
labeling authorities, EPA works with stakeholders on the testing and
other regulatory requirements necessary to bring advanced technology
vehicles to market. With increasing numbers of advanced technology
vehicles beginning to be sold, EPA believes it is now appropriate to
address potential regulatory and certification issues associated with
these technologies including how best to provide relevant consumer
information about their environmental impact, energy consumption, and cost.
b. Test Procedures
    As discussed in this notice, there are explicit and very long-
standing test procedures and calculation methodologies associated with
CAFE that EPA uses to test conventionally-fueled vehicles and to
calculate their fuel economy. These test procedures and calculations
also generally apply to advanced technology vehicles (e.g., an electric
(EV) or plug-in hybrid vehicle (PHEV)).
    The basic test procedure for an electric vehicle follows a
standardized practice--an EV is fully charged and then driven over the
city cycle (Urban Dynamometer Drive Schedule) until the vehicle can no
longer maintain the required drive cycle vehicle speed. For some
vehicles, this could require operation over multiple drive cycles. The
EV is then fully recharged and the AC energy to the charger is recorded.
    To derive the CAFE value for electric vehicles, the amount of AC
energy needed to recharge the battery is divided by the range the
vehicle reached in the repeated city drive cycle. This calculation
provides a raw CAFE energy consumption value expressed in kilowatt
hours per 100 miles. The raw CAFE number is then converted to miles per
gallon of equivalent gasoline using a Department of Energy (DOE)
conversion factor of 82,700 Kwhr/gallon of gasoline.\185\ The DOE
conversion factor combines several adjustments including: an adjustment
similar to the statutory 6.67 multiplier credit \186\ used in deriving
the final CAFE value for alternative fueled vehicles; a factor
representing the gasoline-equivalent energy content of electricity; and
various adjustments to account for the relative efficiency of producing
and transporting the electricity. The resulting value after the DOE
conversion factor is applied becomes the final CAFE city value.
---------------------------------------------------------------------------

    \185\ 49 U.S.C. 32904 and 10 CFR 474.3.
    \186\ 49 U.S.C. 32905.
---------------------------------------------------------------------------

    The label value calculation for an EV uses a different conversion
factor than the CAFE value calculation. To come up with the final city
fuel economy label value for an EV, a conversion factor of 33,705 Kwhr/
gallon of gasoline equivalent is applied to the raw consumption number
instead of the 82,700 Kwhr/gallon used for CAFE. The conversion factor
used for labeling purposes represents only the gasoline-equivalent
energy content of electricity, without the multiplier credit and other
adjustments used in the CAFE calculation. The consumption, now
expressed as a fuel economy in miles per gallon equivalent, is then
applied to the derived 5-cycle equation required under EPA's fuel
economy labeling regulations. The above process is then repeated for
the EV highway fuel economy label number. Finally, the combined city/
highway numbers for the EV use the same 55/45 weighting as conventional
vehicles to determine the final fuel economy label values. CAFE numbers
end up being significantly higher for EVs than the associated fuel
economy label values, both because a higher adjustment factor applies
under CAFE regulations and also because other real-world adjustments
such as the 5-cycle test are not applied to the CAFE values.
    For PHEVs, a similar process would be followed, except that PHEVs
require testing in both charge sustain (CS) and charge depleting (CD)
modes to capture how these vehicles operate. For charge sustain modes,
PHEVs essentially operate as conventional Hybrid Electric Vehicles
(HEVs). PHEVs therefore test in all 5-cycles (for further information
on these test cycles, see Section III.C.4) just as HEVs do for CS fuel
economy. For CD fuel economy, PHEVs are only required to test on the
Urban Dynamometer Drive Schedule and Highway Fuel Economy cycles just
like other alternative fueled vehicles--the 5-cycle fuel economy
testing is optional in the CD mode. There are additional processes that
address different PHEV modes, such as for PHEVs that operate solely on
electricity throughout the CD mode.
    As this discussion shows, the CAFE and fuel economy labeling test
procedures and calculations for advanced technology vehicles such as
EVs and PHEVs can be very complicated. EPA is interested in comments on
these processes, including views on the appropriate use of adjustment
factors. Currently in guidance, EPA references SAE J1634 for EV range
and consumption test procedures. EPA currently includes the
``California Exhaust Emission Standards and Test Procedures for 2003
and Subsequent Model Zero-Emission Vehicles, in the Passenger Car,
Light Truck, and Medium-duty Vehicle Classes'' by reference in 40 CFR
86.1. As California requirements and SAE test procedures are updated
these may be included by reference in the future.
c. Current Fuel Economy Label
    In 2006 EPA redesigned the window stickers to make them more
informative for consumers. More particular, the redesigned stickers
more prominently feature annual fuel cost information, to provide
contemporary and easy-to-use graphics for comparing the fuel economy of
different vehicles, to use clearer text, and to include a Web site
reference to www.fueleconomy.gov which provides additional information.
In addition, EPA updated how the city and highway fuel economy values
were calculated, to reflect typical real-world driving patterns.\187\
This rulemaking involved significant stakeholder outreach in
determining how best to calculate and display this new information. The
feedback EPA has received to date on the new label design and values
has been generally very positive.
---------------------------------------------------------------------------

    \187\ 71 FR 77872 (December 27, 2006). Fuel Economy Labeling of
Motor Vehicles: Revisions to Improve Calculations of Fuel Economy
Estimates. U.S. EPA.
---------------------------------------------------------------------------

    During the 2006 label rulemaking process EPA requested comments on

[[Page 49578]]

how a fuel consumption metric (such as gallons per 100 miles) could be
used and represented to the public, including presentation in the
annual Fuel Economy Guide. EPA received a number of comments from both
vehicle manufacturers and consumer organizations, suggesting that the
MPG measures can be misleading and that a fuel consumption metric might
be more meaningful to consumers than the established MPG metric found
on fuel economy labels. The reason is that fuel consumption metric,
directly measures the amount of fuel used and is thus directly related
to cost that consumers incur when filling up.
    The problem with the MPG metric is that it is inversely related to
fuel consumption and cost. As higher MPG values are reached, the
relative impact of these higher values on fuel consumption and fuel
costs decreases. For example, a 25 percent increase in gallons per 100
miles will always lead to a 25 percent increase in the fuel cost, but a
similar 25 percent increase in MPG will have varying impacts on actual
fuel cost depending on whether the percent increase occurs to a low or
high MPG value. Many consumers do not understand this nonlinear
relationship between MPG and fuel costs. Evidence suggest that people
tend to see the MPG as being linear with fuel cost, which will lead to
erroneous decisions regarding vehicle purchases. Figure III.E.11-1
below illustrates the issue; one can see that changes in MPG at low MPG
levels can result in large changes in the fuel cost, while changes in
MPG values at high MPG levels result in small changes in the fuel cost.
For example, a change from 10 to 15 MPG will reduce the 10-mile fuel
cost from $2.50 to $1.60, but a similar increase in MPG from 20 to 25
MPG will only reduce the 10-mile fuel cost by less than $0.30.

[[Page 49579]]
[GRAPHIC] [TIFF OMITTED] TP28SE09.020

    Because of the potential for consumers to misunderstand this MPG/
cost relationship, commenters on the 2006 labeling rule universally
agreed that any change to the label metric should involve a significant
public education campaign directed toward both dealers and consumers.
    In 2006, EPA did not include a consumption-based metric on the
redesigned fuel economy label in 2006. It was concerned about potential
confusion associated with introducing a second metric on the label (MPG
is a required element, as noted above). EPA has developed an
interactive feature on www.fueleconomy.gov which allows consumers,
while viewing data on a specific vehicle, to switch units between the
MPG and gallons per 100 miles metrics. The tool also displays the cost
and the amount of fuel needed to drive 25 miles. As indicated above,
however, EPA is alert to the problems with the MPG measure and the
importance of providing consumers with a clear sense

[[Page 49580]]

of the consequences of their purchasing decisions; a gallon-per mile
measure would have significant advantages. EPA plans to seek comment
and engage in extensive public debate about fuel consumption and other
appropriate consumer information metrics as part of a new labeling rule
initiative. EPA also welcomes comments on this topic in response to
this GHG proposal.
d. Labeling for Advanced Technology Vehicles
    Even though a fuel consumption metric may more directly represent
likely fuel costs than a fuel economy metric, any expression that uses
gallons--whether miles per gallon or gallons per mile--is not a useful
metric for vehicles that have limited to no operation on liquid fuel
(e.g., electricity or compressed natural gas). For example, PHEVs and
extended range electric vehicles (EREVs) can use two types of energy
sources: (1) An onboard battery, charged by plugging the vehicle into
the electrical grid via a conventional wall outlet, to power an
electric motor, as well as (2) a gas or diesel-powered engine to propel
the vehicle or power a generator used to provide electricity to the
electric motor. Depending on how these vehicles are operated, they can
use electricity exclusively, never use electricity and operate like a
conventional hybrid, or operate in some combination of these two modes.
The use of a MPG figure alone would not account for the electricity
used to propel the vehicle.
    EPA has worked closely with numerous stakeholders including vehicle
manufacturers, the Society of Automotive Engineers (SAE), the State of
California, the Department of Energy (DOE) and others to develop
possible approaches for both estimating fuel economy and labeling
vehicles that can operate using more than one energy source. At the
present time, EPA believes the appropriate method for estimating fuel
economy of PHEVs and EREVs would be a weighted average of fuel economy
for the two modes of operation. A methodology developed by SAE and DOE
to predict the fractions of total distance driven in each mode of
operation (electricity and gas) uses a term known as a utility factor
(UF). By using a utility factor, it is possible to determine a weighted
average for fuel economy of the electric and gasoline modes. For
example, a UF of 0.8 would indicate that a PHEV or EREV operates in an
all electric mode 80% of the time and uses the gasoline engine the
other 20% of the time. In this example, the weighted average fuel
economy value would be influenced more by the electrical operation than
the gasoline operation.
    Under this approach, a UF could be assigned to each successive fuel
economy test until the battery charge was depleted and the PHEV or EREV
needed power from the gasoline engine to propel the vehicle or to
recharge the battery. One minus the sum of all the utility factors
would then represent the fraction of driving performed in this
``gasoline mode.'' Fuel economy could then be expressed as:
[GRAPHIC] [TIFF OMITTED] TP28SE09.021

    Likewise, the electrical consumption would be expressed by adding
the fuel consumption from each mode. Since there is no electrical
consumption in hybrid mode, the equation for electricity consumption
would be as follows:
[GRAPHIC] [TIFF OMITTED] TP28SE09.074

    Utility factors could be cycle specific not only due to different
battery ranges on different test cycles but also due to the fact that
``highway'' type driving may imply longer trips than urban driving.
That is to say that the average city trip could be shorter than the
average highway trip.
e. Request for Comments
    EPA is interested in comments on both topics raised in this
section. For the methodology, we are interested in comments addressing
how the utility factor is calculated and which data should be used in
establishing the UF. Additionally, commenters should address: The
appropriateness of this approach for estimating fuel economy for PHEVs
and EREVs, including the concept of using a UF to determine the fuel
economy for vehicles operated in multiple modes; the appropriate form
and value of the factor, including the type of data that would be
necessary to confidently develop it accurately; and availability of
other potential methodologies for determining fuel economy for vehicles
that can operate in multiple modes, such as ``all electric'' and
``hybrid,'' including the use of fuel consumption, cost, GHG emissions,
or other metrics in addition to miles per gallon.
    EPA is also requesting comment on how the agency can satisfy
statutory labeling requirements while providing relevant information to
consumers. For example, the statute indicates that EPA may provide
other related items on the label beyond those that are required.\188\
EPA is interested in receiving comments on the potential approaches and
supporting data we might consider for adding additional information
regarding fuel economics while maintaining our statutory obligation to
report MPG on the label.
---------------------------------------------------------------------------

    \188\ 49 U.S.C. 3290(b)(F).
---------------------------------------------------------------------------

    There are a number of different metrics that are available that
could be useful in this regard. Two possible options would be to show
consumption in fuel use per distance (e.g., gallons/100 miles) or in
cost per distance (e.g., $/100 miles). As discussed above, these two
metrics have benefits over a straight mpg value in showing a more
direct relationship between fuel consumption and cost. The cost/
distance metric has an added potential benefit of providing a common
basis for comparing differently fueled or powered vehicles, for example
being able to show the cost of gasoline used over a specified distance
or time for a conventional gasoline-powered vehicle in comparison to
the gasoline and electricity used over the same period for a plug-in
hybrid vehicle. Another approach would be to use a metric that provides
information about a vehicle's greenhouse gas emissions per unit of
travel, such as carbon dioxide equivalent grams per mile (g
CO₂e/mi). This type of metric would allow consumers to
directly compare among vehicles on the basis of their overall
greenhouse gas impact. A total annual energy cost would be another way
to look at this information, and is currently used on the fuel economy
label. As is currently done, EPA would need to determine and show a
common set of fuel costs used to calculate such values, recognizing
that energy costs vary across the country.
    The Agency is also interested in comments on the usefulness of
adding other types of information, such as an estimated driving range
for electric vehicles. The label design is also an important issue to
consider and any changes to the existing label would need to show
information in a technologically accurate, meaningful and
understandable manner, while ensuring that the label does not become
overcrowded and difficult for consumers to comprehend. EPA is also
interested in what and how other information paths, such as web-based
programs, could be used to enhance the consumer education process.

[[Page 49581]]

F. How Would This Proposal Reduce GHG Emissions and Their Associated Effects?

    This action is an important step towards curbing steady growth of
GHG emissions from cars and light trucks. In the absence of control,
GHG emissions worldwide and in the U.S. are projected to continue
steady growth; Table III.F-1 shows emissions of CO₂,
methane, nitrous oxide and air conditioning refrigerants on a
CO₂-equivalent basis for calendar years 2010, 2020, 2030,
2040 and 2050. U.S. GHGs are estimated to make up roughly 15 percent of
total worldwide emissions, and the contribution of direct emissions
from cars and light trucks to this U.S. share is growing over time,
reaching an estimated 20 percent of U.S. emissions by 2030 in the
absence of control. As discussed later in this section, this steady
rise in GHG emissions is associated with numerous adverse impacts on
human health, food and agriculture, air quality, and water and forestry resources.

                          Table III.F-1--Reference Case GHG Emissions by Calendar Year
                                                   [MMTCO2 Eq]
----------------------------------------------------------------------------------------------------------------
                                                              2010       2020       2030       2040       2050
----------------------------------------------------------------------------------------------------------------
All Sectors (Worldwide) a................................     41,016     48,059     52,870     56,940     60,209
All Sectors (U.S. Only) a................................      7,118      7,390      7,765      8,101      8,379
U.S. Cars/Light Truck Only b.............................      1,359      1,332      1,516      1,828      2,261
----------------------------------------------------------------------------------------------------------------
a ADAGE model projections, U.S. EPA.\189\
b MOVES (2010), OMEGA Model (2020-50) U.S. EPA. See DRIA Chapter 5.3 for modeling details.

    EPA's proposed GHG rule, if finalized, will result in significant
reductions as newer, cleaner vehicles come into the fleet, and the rule
is estimated to have a measurable impact on world global temperatures.
As discussed in Section I, this GHG proposal is part of a joint
National Program such that a large majority of the projected benefits
would be achieved jointly with NHTSA's proposed CAFE standards which
are described in detail in Section IV of this preamble. EPA estimates
the reductions attributable to the GHG program over time assuming the
proposed 2016 standards continue indefinitely post-2016,\190\ compared
to a baseline scenario in which the 2011 model year fuel economy
standards continue beyond 2011.
---------------------------------------------------------------------------

    \189\ U.S. EPA (2009). ``EPA Analysis of the American Clean
Energy and Security Act of 2009: H.R. 2454 in the 111th Congress.''
U.S. Environmental Protection Agency, Washington, DC, USA.
(www.epa.gov/climatechange/economics/economicanalyses.html)
    \190\ This analysis does not include the EISA requirement for 35
MPG through 2020 or California's Pavley 1 GHG standards. The
proposed standards are intended to supersede these requirements, and
the baseline case for comparison is the emissions that would result
without further action above the currently promulgated fuel economy standards.
---------------------------------------------------------------------------

    Using this approach, EPA estimates these standards would cut annual
fleetwide car and light truck tailpipe CO₂ emissions 21
percent by 2030, when 90 percent of car and light truck miles will be
travelled by vehicles meeting the new standards. Roughly 20 percent of
these reductions are due to emission reductions from gasoline
extraction, production and distribution processes as a result of
reduced gasoline demand associated with this proposal. Some of the
overall emission reductions also come from projected improvements in
the efficiency of vehicle air conditioning systems, which will
substantially reduce direct emissions of HFCs, one of the most potent
greenhouse gases, as well as indirect emissions of tailpipe
CO₂ emissions attributable to reduced engine load from air
conditioning. In total, EPA estimates that compared to a baseline of
indefinite 2011 model year standards, net GHG emission reductions from
the proposed program would be 325 million metric tons CO₂-
equivalent (MMTCO₂eq) annually by 2030, which represents a
reduction of 4 percent of total U.S. GHG emissions and 0.6 percent of
total worldwide GHG emissions projected in that year. This estimate
accounts for all upstream fuel production and distribution emission
reductions, vehicle tailpipe emission reductions including air
conditioning benefits, as well as increased vehicle miles travelled
(VMT) due to the ``rebound'' effect discussed in Section III.H. EPA
estimates this would be the equivalent of removing nearly 60 million
cars and light trucks from the road in this timeframe.
    EPA projects the total reduction of the program over the full life
of model year 2012-2016 vehicles is about 950 MMTCO₂eq, with
fuel savings of 76 billion gallons (1.8 billion barrels) of gasoline
over the life of these vehicles, assuming that some manufacturers take
advantage of low-cost HFC reduction strategies to help meet these
proposed standards.
    These reductions are projected to reduce global mean temperature by
approximately 0.007-0.016[deg]C by 2100, and global mean sea level rise
is projected to be reduced by approximately 0.06-0.15 cm by 2100.
1. Impact on GHG Emissions
a. Calendar Year Reductions Due to GHG Standards
    This action, if finalized, will reduce GHG emissions emitted
directly from vehicles due to reduced fuel use and more efficient air
conditioning systems. In addition to these ``downstream'' emissions,
reducing CO₂ emissions translates directly to reductions in
the emissions associated with the processes involved in getting
petroleum to the pump, including the extraction and transportation of
crude oil, and the production and distribution of finished gasoline
(termed ``upstream'' emissions). Reductions from tailpipe GHG standards
grow over time as the fleet turns over to vehicles affected by the
standards, meaning the benefit of the program will continue as long as
the oldest vehicles in the fleet are replaced by newer, lower
CO₂ emitting vehicles.
    EPA is not projecting any reductions in tailpipe CH₄ or
N₂O emissions as a result of these proposed emission caps,
which are meant to prevent emission backsliding and to bring diesel
vehicles equipped with advanced technology aftertreatment into
alignment with current gasoline vehicle emissions.
    As detailed in the DRIA, EPA estimated calendar year tailpipe
CO₂ reductions based on pre- and post-control CO₂
gram per mile levels from EPA's OMEGA model and assumed to continue
indefinitely into the future, coupled with VMT projections from
AEO2009. These estimates reflect the real-world CO₂
emissions reductions projected for the entire U.S. vehicle fleet in a
specified calendar year, including the projected effect of air
conditioning credits, TLAASP credits and FFV credits. EPA also
estimated full lifetime reductions for model years 2012-2016

[[Page 49582]]

using pre- and post-control CO₂ levels projected by the
OMEGA model, coupled with projected vehicle sales and lifetime mileage
estimates. These estimates reflect the real-world CO₂
emissions reductions projected for model years 2012 through 2016
vehicles over their entire life.
    This proposal would allow manufacturers to earn credits for
improved vehicle air conditioning efficiency. Since these improvements
are relatively low cost, EPA projects that manufacturers will take
advantage of this flexibility, leading to reductions from emissions
associated with vehicle air conditioning systems. As explained above,
these reductions will come from both direct emissions of air
conditioning refrigerant over the life of the vehicle and tailpipe
CO₂ emissions produced by the increased load of the A/C
system on the engine. In particular, EPA estimates that direct
emissions of HFCs, one of the most potent greenhouse gases, would be
reduced 40 percent from light-duty vehicles when the fleet has turned
over to more efficient vehicles. The fuel savings derived from lower
tailpipe CO₂ would also lead to reductions in upstream
emissions. Our estimated reductions from the A/C credits program are
based on our analysis of how manufacturers are expected to take
advantage of this credit opportunity in complying with the
CO₂ fleetwide average tailpipe standards.
    Upstream emission reductions associated with the production and
distribution of fuel were estimated using emission factors from DOE's
GREET1.8 model, with some modifications as detailed in the DRIA. These
estimates include both international and domestic emission reductions,
since reductions in foreign exports of finished gasoline and/or crude
would make up a significant share of the fuel savings resulting from
the proposed GHG standards. Thus, significant portions of the upstream
GHG emission reductions will occur outside of the U.S.; a breakdown of
projected international versus domestic reductions is included in the DRIA.
    Table III.F.1-1 shows reductions estimated from these proposed GHG
standards assuming a pre-control case of 2011 MY standards continuing
indefinitely beyond 2011, and a post-control case in which 2016 MY
standards continue indefinitely beyond 2016. These reductions are
broken down by upstream and downstream components, including air
conditioning improvements, and also account for the offset from a 10
percent VMT ``rebound'' effect as discussed in Section III.H. Including
the reductions from upstream emissions, total reductions are estimated
to reach 325 MMTCO₂eq annually by 2030 (a 21 percent
reduction in U.S. car and light truck emissions), and grow to over 500
MMTCO₂eq in 2050 as cleaner vehicles continue to come into
the fleet (a 23 percent reduction in U.S. car and light truck emissions).

                                  Table III.F.1-1--Projected Net GHG Reductions
                                              [MMTCO2 Eq per year]
----------------------------------------------------------------------------------------------------------------
                                                                           Calendar year
                                                 ---------------------------------------------------------------
                                                       2020            2030            2040            2050
----------------------------------------------------------------------------------------------------------------
Net Reduction Due to Tailpipe Standards *.......           165.2           324.6           417.5           518.5
Tailpipe Standards..............................           107.7           211.4           274.1           344.0
A/C--indirect CO2...............................            11.0            21.1            27.3            34.2
A/C--direct HFCs................................            13.5            27.2            32.1            34.9
Upstream........................................            33.1            64.9            84.1           105.5
Percent reduction relative to U.S. reference               12.4%           21.4%           22.8%           22.9%
 (cars + light trucks)..........................
Percent reduction relative to U.S. reference                2.2%            4.2%            5.2%            6.2%
 (all sectors)..................................
Percent reduction relative to worldwide                     0.3%            0.6%            0.7%            0.9%
 reference......................................
----------------------------------------------------------------------------------------------------------------
* Includes impacts of 10% VMT rebound rate presented in Table III.F.1-3.

b. Lifetime Reductions for 2012-2016 Model Years
    EPA also analyzed the emission reductions over the full life of the
2012-2016 model year cars and trucks affected by this proposal.\191\
These results, including both upstream and downstream GHG
contributions, are presented in Table III.F.1-2, showing lifetime
reductions of nearly 950 MMTCO₂eq, with fuel savings of 76
billion gallons (1.8 billion barrels) of gasoline.
---------------------------------------------------------------------------

    \191\ As detailed in the DRIA, for this analysis the full life
of the vehicle is represented by average lifetime mileages for cars
(190,000 miles) and trucks (221,000 miles) averaged over calendar
years 2012 through 2030, a function of how far vehicles drive per
year and scrappage rates.

              Table III.F.1-2--Projected Net GHG Reductions
                          [MMTCO2 Eq per year]
------------------------------------------------------------------------
                                        Lifetime GHG      Lifetime fuel
             Model year                reduction (MMT   savings (billion
                                           CO2 EQ)          gallons)
------------------------------------------------------------------------
2012................................              81.4               6.6
2013................................             125.0              10.0
2014................................             174.1              13.9
2015................................             243.2              19.5
2016................................             323.6              26.3
                                     -----------------------------------
    Total Program Benefit...........             947.4              76.2
------------------------------------------------------------------------

[[Page 49583]]

c. Impacts of VMT Rebound Effect
    As noted above and discussed more fully in Section III.H., the
effect of fuel cost on VMT (``rebound'') was accounted for in our
assessment of economic and environmental impacts of this proposed rule.
A 10 percent rebound case was used for this analysis, meaning that VMT
for affected model years is modeled as increasing by 10 percent as much
as the increase in fuel economy; i.e., a 10 percent increase in fuel
economy would yield a 1.0 percent increase in VMT. Results are shown in
Table III.F.1-3; using the 10 percent rebound rate results in an
overall emission increase of 26.4 MMTCO₂eq annually in 2030
(this increase is accounted for in the reductions presented in Tables
III.F.1-1 and III.F.1-2). Our estimated changes in CH₄ or
N₂O emissions as a result of these proposed vehicle GHG
standards are attributed solely to this rebound effect.
    As discussed in Section III.H, EPA will be reassessing the
appropriate rate of VMT rebound for the final rule. Although EPA has
not directly quantified the GHG emissions effect of using a lower
rebound rate for this analysis, lowering the rebound rate would reduce
the emission increases in Tables III.F.1-1 and III.F.1-2 in proportion
(i.e., zero rebound equals zero emissions effect), and, thus, would
increase our estimates of emission reductions due to these proposed standards.

                                Table III.F.1-3--GHG Impact of 10% VMT Rebound a
                                              [MMTCO2 Eq per year]
----------------------------------------------------------------------------------------------------------------
                                                       2020            2030            2040            2050
----------------------------------------------------------------------------------------------------------------
Total GHG Increase..............................          13.6            26.4            34.2            42.9
Tailpipe & Indirect A/C CO2.....................          10.6            20.6            26.6            33.4
Upstream GHGs b.................................           2.95            5.74            7.43            9.32
Tailpipe N2O....................................           0.040           0.085           0.113           0.142
Tailpipe CH4....................................           0.008           0.016           0.021           0.027
----------------------------------------------------------------------------------------------------------------
a These impacts are included in the reductions shown in Table III.F.1-1 and III.F.1-2.
b Upstream rebound impact calculated as upstream total CO2 effect times ratio of downstream tailpipe rebound CO2
  effect to downstream tailpipe total CO2 effect.

d. Analysis of Alternatives
    EPA analyzed two alternative scenarios, including 4% and 6% annual
increases in 2 cycle (CAFE) fuel economy. In addition to this annual
increase, EPA assumed that manufacturers would use air conditioning
improvements in identical penetrations as in the primary scenario.
Under these assumptions, EPA expects achieved fleetwide average
emission levels of 254 g/mile CO₂ EQ (4%), and 230 g/mile
CO₂ EQ (6%) in 2016.
    As in the primary scenario, EPA assumed that the fleet complied
with the standards. For full details on modeling assumptions, please
refer to DRIA Chapter 5.

                         Table III.F.1-4--Calendar Year Impacts of Alternative Scenarios
----------------------------------------------------------------------------------------------------------------
                                                  Calendar year
-----------------------------------------------------------------------------------------------------------------
                                             Scenario           CY 2020      CY 2030      CY 2040      CY 2050
----------------------------------------------------------------------------------------------------------------
Total GHG Reductions (MMT CO2EQ)....  Primary...............        165.2        324.6        417.5        518.5
                                      4%....................        152.8        305.9        394.1        489.3
                                      6%....................        215.2        426.2        549.3        683.9
Fuel Savings (Billion Gallons         Primary...............         13.4         26.2         33.9         42.6
 Gasoline Equivalent).
                                      4%....................         12.2         24.5         31.8         39.9
                                      6%....................         17.8         35.1         45.5         57.1
----------------------------------------------------------------------------------------------------------------


                                              Table III.F.1-5--Model Year Impacts of Alternative Scenarios
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Model year lifetime
---------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        Scenario              MY 2012      MY 2013      MY 2014      MY 2015      MY 2016       Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total GHG Reductions (MMT CO2EQ)...........  Primary......................         81.4        125.0        174.1        243.2        323.6        947.4
                                             4%...........................         41.8         93.5        160.8        231.0        305.2        832.3
                                             6%...........................         60.2        146.4        239.9        333.3        424.9      1,204.7
Fuel Savings (Billion Gallons Gasoline       Primary......................          6.6         10.0         13.9         19.5         26.3         76.2
 Equivalent).
                                             4%...........................          3.1          7.2         12.7         18.4         24.7         66.1
                                             6%...........................          4.7         11.9         19.7         27.4         35.2         99.0
--------------------------------------------------------------------------------------------------------------------------------------------------------

2. Overview of Climate Change Impacts From GHG Emissions
    Once emitted, greenhouse gases (GHG) that are the subject of this
regulation can remain in the atmosphere for decades to centuries,
meaning that (1) their concentrations become well-mixed throughout the
global atmosphere regardless of emission origin, and (2) their effects
on climate are long lasting. Greenhouse gas emissions come mainly from
the combustion of fossil fuels (coal, oil, and gas), with additional
contributions from the clearing of

[[Page 49584]]

forests and agricultural activities. The transportation sector accounts
for a portion, 28%, of US GHG emissions.\192\
---------------------------------------------------------------------------

    \192\ U.S. EPA (2008) Inventory of U.S. Greenhouse Gas Emissions
and Sinks: 1990-2006. EPA-430-R-08-005, Washington, DC. http://
www.epa.gov/climatechange/emissions/usgginv_archive.html.
---------------------------------------------------------------------------

    This section provides a broad overview of some of the impacts of
GHG emissions. The best sources of information include the major
assessment reports of both the Intergovernmental Panel on Climate
Change (IPCC) and the U.S. Global Change Research Program (USGCRP,
formerly referred to as the U.S. Climate Change Science Program). The
IPCC and USGCRP assessments base their findings on the large body of
individual, peer- reviewed studies in the literature, and then the IPCC
and USGCRP assessments themselves go through a transparent peer-
reviewed process. The USGCRP reports, where possible, are specific to
impacts in the U.S. and therefore represent the best available
syntheses of relevant impacts.
    Most recently, the USGCRP released a report entitled ``Global
Climate Change Impacts in the United States''.\193\ The report
summarizes the science and the impacts of climate change on the United
States, now and in the future. It focuses on climate change impacts in
different regions of the U.S. and on various aspects of society and the
economy such as energy, water, agriculture, and human health. It's also
a report written in plain language, with the goal of better informing
public and private decision making at all levels. The foundation of
this report is a set of 21 Synthesis and Assessment Products (SAPs),
which were designed to address key policy-relevant issues in climate
science. The report was extensively reviewed and revised based on
comments from experts and the public. The report was approved by its
lead USGCRP Agency, the National Oceanic and Atmospheric
Administration, the other USGCRP agencies, and the Committee on the
Environment and Natural Resources on behalf of the National Science and
Technology Council. This report meets all Federal requirements
associated with the Information Quality Act, including those pertaining
to public comment and transparency. Readers are encouraged to review
this report.
---------------------------------------------------------------------------

    \193\ Global Climate Change Impacts in the United States, Thomas
R. Karl, Jerry M. Melillo, and Thomas C. Peterson, (eds.). Cambridge
University Press, 2009. http://www.globalchange.gov/publications/
reports/scientific-assessments/us-impacts.
---------------------------------------------------------------------------

    The source document for the section below is the draft endangerment
Technical Support Document (TSD). In EPA's Proposed Endangerment and
Cause or Contribute Findings Under the Clean Air Act,\194\ EPA provides
a summary of the USGCRP and IPCC reports in a draft TSD. The draft TSD
reviews observed and projected changes in climate based on current and
projected atmospheric GHG concentrations and emissions, as well as the
related impacts and risks from climate change that are projected in the
absence of GHG mitigation actions, including this proposal and other
U.S. and global actions. The TSD serves as an important support
document to EPA's proposed Endangerment Finding; however, the document
is a draft and is still undergoing comment and review as part of EPA's
rulemaking process, and is subject to change based upon comments to the
final endangerment finding.
---------------------------------------------------------------------------

    \194\ See Federal Register/Vol. 74, No. 78/Friday, April 24,
2009/Proposed Rules; also Docket Number EPA-HQ-OAR-2009-0171; FRL-8895-5.
---------------------------------------------------------------------------

a. Changes in Atmospheric Concentrations of GHGs From Global and U.S.
Emissions
    Concentrations of six key GHGs (carbon dioxide, methane, nitrous
oxide, hydrofluorocarbons, perfluorocarbons and sulfur hexafluoride)
are at unprecedented levels compared to the recent and distant past.
The global atmospheric CO₂ concentration has increased about
38% from pre-industrial levels to 2009, and almost all of the increase
is due to anthropogenic emissions.
    Based on data from the most recent Inventory of U.S. Greenhouse Gas
Emissions and Sinks (2008),\195\ total U.S. GHG emissions increased by
905.9 teragrams of CO₂-equivalent (Tg CO₂ Eq), or
14.7%, between 1990 and 2006. U.S. transportation sources subject to
control under section 202(a) of the Clean Air Act (passenger cars,
light duty trucks, other trucks and buses, motorcycles, and cooling
\196\) emitted 1665 Tg CO₂ Eq in 2006, representing almost
24% of the total U.S. GHG emissions. Total global emissions, calculated
by summing emissions of the six greenhouse gases by country, for 2005
was 38,725.9 Tg CO₂ Eq. This represents an increase of 26%
from the 1990 level. See the EPA report ``Inventory of U.S. Greenhouse
Gas Emissions and Sinks: 1990-2006'',\197\ Section 2 of the proposed
Endangerment TSD, and IPCC's Working Group I (WGI) Fourth Assessment
Report (AR4) \198\ for a more complete discussion of GHG emissions and
concentrations.
---------------------------------------------------------------------------

    \195\ U.S. EPA (2008) Inventory of U.S. Greenhouse Gas Emissions
and Sinks: 1990-2006. EPA-430-R-08-005, Washington, DC.
    \196\ Cooling refers to refrigerants/air conditioning from all
transportation sources and is related to HFCs.
    \197\ U.S. EPA (2008) Inventory of U.S. Greenhouse Gas Emissions
and Sinks: 1990-2006. EPA-430-R-08-005, Washington, DC. http://
www.epa.gov/climatechange/emissions/usgginv_archive.html.
    \198\ Climate Change 2007: The Physical Science Basis.
Contribution of Working Group I to the Fourth Assessment Report of
the Intergovernmental Panel on Climate Change [Solomon, S., D. Qin,
M. Manning, Z. Chen, M. Marquis, K.B. Averyt, M.Tignor and H.L.
Miller (eds.)]. Cambridge University Press, Cambridge, United
Kingdom and New York, NY, USA.
---------------------------------------------------------------------------

b. Observed Changes in Climate
i. Temperature
    The warming of the climate system is unequivocal, as is now evident
from observations of increases in global air and ocean temperatures,
widespread melting of snow and ice, and rising global average sea
level. The global average net effect of the increase in atmospheric GHG
concentrations, plus other human activities (e.g., land use change and
aerosol emissions), on the global energy balance since 1750 has been
one of warming. The global mean surface temperature \199\ over the last
100 years (1906-2005) has risen by about 0.74 [deg]C (1.5 [deg]F) +/-
0.18 [deg]C, and climate model simulations suggest that natural
variation alone (e.g., changes in solar irradiance) cannot explain the
observed warming. The rate of warming over the last 50 years is almost
double that over the last 100 years. Most of the observed increase in
global mean surface temperature since the mid-20th century is very
likely due to the observed increase in anthropogenic GHG concentrations.
---------------------------------------------------------------------------

    \199\ Surface temperature is calculated by processing data from
thousands of world-wide observation sites on land and sea.
---------------------------------------------------------------------------

    It can be stated with confidence that global mean surface
temperature was higher during the last few decades of the 20th century
than during any comparable period during the preceding four centuries.
Like global mean surface temperatures, U.S. surface temperatures also
warmed during the 20th and into the 21st century. U.S. average annual
temperatures are now approximately 0.69[deg]C (1.25[deg]F) warmer than
at the start of the 20th century, with an increased rate of warming
over the past 30 years. Temperatures in winter have risen more than any
other season, with winters in the Midwest and northern Great Plains
increasing more than 7 [deg]F.\200\ Some of these changes have been
faster than previous assessments had suggested.
---------------------------------------------------------------------------

    \200\ Global Climate Change Impacts in the United States, Thomas
R. Karl, Jerry M. Melillo, and Thomas C. Peterson, (eds.) Cambridge
University Press, 2009.
---------------------------------------------------------------------------

    For additional information, please see Section 4 of the proposed Endangerment

[[Page 49585]]

TSD, IPCC WGI AR4,\201\ and the report ``Global Climate Change Impacts
in the United States''.\202\
---------------------------------------------------------------------------

    \201\ Climate Change 2007: The Physical Science Basis.
Contribution of Working Group I to the Fourth Assessment Report of
the Intergovernmental Panel on Climate Change [Solomon, S., D. Qin,
M. Manning, Z. Chen, M. Marquis, K.B. Averyt, M.Tignor and H.L.
Miller (eds.)]. Cambridge University Press, Cambridge, United
Kingdom and New York, NY, USA.
    \202\ Global Climate Change Impacts in the United States, Thomas
R. Karl, Jerry M. Melillo, and Thomas C. Peterson, (eds.). Cambridge
University Press, 2009. http://www.globalchange.gov/publications/
reports/scientific-assessments/us-impacts.
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ii. Precipitation
    Observations show that changes are occurring in the amount,
intensity, frequency and type of precipitation. Global, long-term
trends from 1900 to 2005 have been observed in the amount of
precipitation over many large regions. Patterns in precipitation change
are more spatially and seasonally variable than temperature change, but
where significant precipitation changes do occur they are consistent
with measured changes in stream flow. Significantly increased
precipitation has been observed in eastern parts of North and South
America, northern Europe and northern and central Asia.\200\ More
intense and longer droughts have been observed over wider areas since
the 1970s, particularly in the tropics and subtropics. It is likely
there has been an increase in heavy precipitation events (e.g., 95th
percentile) within many land regions, even in those where there has
been a reduction in total precipitation amount, consistent with a
warming climate and observed significant increasing amounts of water
vapor in the atmosphere. Rising temperatures have generally resulted in
rain rather than snow in locations and seasons such as in northern and
mountainous regions where the average (1961-1990) temperatures were
close to 0 [deg]C. Over the contiguous U.S., total annual precipitation
increased at an average rate of 6.5% from 1901-2006, with the greatest
increases in precipitation in the East and North Central climate
regions (11.2% per century).
    For additional information, please see Section 4 of the proposed
Endangerment TSD, IPCC WGI AR4,\203\ and the USGCRP report ``Global
Climate Change Impacts in the United States''.\204\
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    \203\ Climate Change 2007: The Physical Science Basis.
Contribution of Working Group I to the Fourth Assessment Report of
the Intergovernmental Panel on Climate Change [Solomon, S., D. Qin,
M. Manning, Z. Chen, M. Marquis, K.B. Averyt, M.Tignor and H.L.
Miller (eds.)]. Cambridge University Press, Cambridge, United
Kingdom and New York, NY, USA.
    \204\ Global Climate Change Impacts in the United States, Thomas
R. Karl, Jerry M. Melillo, and Thomas C. Peterson, (eds.). Cambridge
University Press, 2009. http://www.globalchange.gov/publications/
reports/scientific-assessments/us-impacts.
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iii. Extreme Events
    Changes in climate extremes have been observed related to
temperature, precipitation, tropical cyclones, and sea level. In the
last 50 years, there have been widespread changes in extreme
temperatures observed across the globe. For example, cold days, cold
nights, and frost have become less frequent, while hot days, hot
nights, and heat waves have become more frequent. Globally, a reduction
in the number of daily cold extremes has been observed in 70 to 75% of
the land regions where data is available. Cold nights (lowest or
coldest 10% of nights, based on the period 1961-1990) have become rarer
over the last 50 years.
    Observational evidence indicates an increase in intense tropical
cyclone (i.e., tropical storms and/or hurricanes) activity in the North
Atlantic. Since about 1970, increases in cyclone developments that
affect the U.S. East and Gulf Coasts have been correlated with
increases of tropical sea surface temperatures In the contiguous U.S.,
studies find statistically significant increases in heavy precipitation
(the heaviest 5%) and very heavy precipitation (the heaviest 1%) of 14
and 20%, respectively. Much of this increase occurred during the last
three decades of the 20th century and is most apparent over the eastern
parts of the country. Trends in drought also have strong regional
variations. In much of the Southeast and large parts of the western
U.S., the frequency of drought has increased coincident with rising
temperatures over the past 50 years. Although there has been an overall
increase in precipitation and no clear trend in drought for the nation
as a whole, increasing temperatures have made droughts more severe and
widespread than they would have otherwise been.
    For additional information, please see Section 4 of the proposed
Endangerment TSD, the CCSP report ``Weather and Climate Extremes in a
Changing Climate. Regions of Focus: North America, Hawaii, Caribbean,
and U.S. Pacific Islands'',\205\ IPCC WGI AR4,\206\ and the report
``Global Climate Change Impacts in the United States''.\207\
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    \205\ Weather and Climate Extremes in a Changing Climate.
Regions of Focus: North America, Hawaii, Caribbean, and U.S. Pacific
Islands. A Report by the U.S. Climate Change Science Program and the
Subcommittee on Global Change Research. [Thomas R. Karl, Gerald A.
Meehl, Christopher D. Miller, Susan J. Hassol, Anne M. Waple, and
William L. Murray (eds.)]. Department of Commerce, NOAA's National
Climatic Data Center, Washington, D.C., USA, 164 pp.
    \206\ Climate Change 2007: The Physical Science Basis.
Contribution of Working Group I to the Fourth Assessment Report of
the Intergovernmental Panel on Climate Change [Solomon, S., D. Qin,
M. Manning, Z. Chen, M. Marquis, K.B. Averyt, M.Tignor and H.L.
Miller (eds.)]. Cambridge University Press, Cambridge, United
Kingdom and New York, NY, USA.
    \207\ Global Climate Change Impacts in the United States, Thomas
R. Karl, Jerry M. Melillo, and Thomas C. Peterson, (eds.). Cambridge
University Press, 2009. http://www.globalchange.gov/publications/
reports/scientific-assessments/us-impacts.
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iv. Physical and Biological Changes
    Observations show that climate change is currently affecting U.S.
physical and biological systems in significant ways. Observations of
the cryosphere (the ``frozen'' component of the climate system) have
revealed changes in sea ice, glaciers and snow cover, freezing and
thawing, and permafrost. Satellite data since 1978 show that annual
average Arctic sea ice extent has shrunk by 2.7% (+/- 0.6%) per decade,
with larger decreases in summer. Subtropical and tropical corals in
shallow waters have already suffered major bleaching events that are
primarily driven by increases in sea surface temperatures. Heat stress
from warmer ocean water can cause corals to expel the microscopic algae
that live inside them which are essential to their survival. Another
stressor on coral populations is ocean acidification which occurs as
CO₂ is absorbed from the atmosphere by the oceans. About
one-third of the carbon dioxide emitted by human activities has been
absorbed by the ocean, resulting in a decrease in the ocean's pH. A
lower pH affects the ability of living things to create and maintain
shells or skeletons of calcium carbonate. Other documented bio-physical
impacts include a significant lengthening of the growing season and
increase in net primary productivity \208\ in higher latitudes of North
America. Over the last 19 years, global satellite data indicate an
earlier onset of spring across the temperate latitudes by 10 to 14 days.
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    \208\ Net primary productivity is the rate at which an ecosystem
accumulates energy or biomass, excluding the energy it uses for the
process of respiration.

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[[Page 49586]]

    For additional information, please see Section 4 of the proposed
Endangerment TSD and IPCC WGI AR4.\209\
---------------------------------------------------------------------------

    \209\ IPCC (2007a) Climate Change 2007: The Physical Science
Basis. Contribution of Working Group I to the Fourth Assessment
Report of the Intergovernmental Panel on Climate Change [Solomon,
S., D. Qin, M. Manning, Z. Chen, M. Marquis, K.B. Averyt, M. Tignor
and H.L. Miller (eds.)]. Cambridge University Press, Cambridge,
United Kingdom and New York, NY, USA.
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c. Projected Changes in Climate
    Most future scenarios that assume no explicit GHG mitigation
actions (beyond those already enacted) project increasing global GHG
emissions over the century, with corresponding climbing GHG
concentrations. Carbon dioxide is expected to remain the dominant
anthropogenic GHG over the course of the 21st century. The radiative
forcing \210\ associated with the non-CO₂ GHGs is still
significant and increasing over time. As a result, warming over this
century is projected to be considerably greater than over the last
century and climate related changes are expected to continue while new
ones develop. Described below are projected changes in climate for the U.S.
---------------------------------------------------------------------------

    \210\ Radiative forcing is a measure of the change that a factor
causes in altering the balance of incoming (solar) and outgoing
(infrared and reflected shortwave) energy in the Earth-atmosphere
system and thus shows the relative importance of different factors
in terms of their contribution to climate change.
---------------------------------------------------------------------------

    See Section 6 of the proposed Endangerment TSD, IPCC WGI AR4,\211\
the USGCRP report ``Global Climate Change Impacts in the United
States'',\212\ and the CCSP report ``Weather and Climate Extremes in a
Changing Climate, Regions of Focus: North America, Hawaii, Caribbean,
and U.S. Pacific Islands'' \213\ for a more complete discussion of
projected changes in climate.
---------------------------------------------------------------------------

    \211\ Climate Change 2007: The Physical Science Basis.
Contribution of Working Group I to the Fourth Assessment Report of
the Intergovernmental Panel on Climate Change [Solomon, S., D. Qin,
M. Manning, Z. Chen, M. Marquis, K.B. Averyt, M.Tignor and H.L.
Miller (eds.)]. Cambridge University Press, Cambridge, United
Kingdom and New York, NY, USA.
    \212\ Global Climate Change Impacts in the United States, Thomas
R. Karl, Jerry M. Melillo, and Thomas C. Peterson, (eds.). Cambridge
University Press, 2009. http://www.globalchange.gov/publications/
reports/scientific-assessments/us-impacts.
    \213\ Weather and Climate Extremes in a Changing Climate.
Regions of Focus: North America, Hawaii, Caribbean, and U.S. Pacific
Islands. A Report by the U.S. Climate Change Science Program and the
Subcommittee on Global Change Research. [Thomas R. Karl, Gerald A.
Meehl, Christopher D. Miller, Susan J. Hassol, Anne M. Waple, and
William L. Murray (eds.)]. Department of Commerce, NOAA's National
Climatic Data Center, Washington, DC, USA, 164 pp.
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i. Temperature
    Future warming over the course of the 21st century, even under
scenarios of low emissions growth, is very likely to be greater than
observed warming over the past century. The range of IPCC SRES
scenarios provides a global warming range of 1.8 [deg]C to 4.0 [deg]C
(3.2 [deg]F to 7.2 [deg]F) with an uncertainty range of 1.1 [deg]C to
6.4 [deg]C (2.0 [deg]F to 11.5 [deg]F). All of the U.S. is very likely
to warm during this century, and most areas of the U.S. are expected to
warm by more than the global average. The average warming in the U.S.
through 2100 is projected by nearly all the models used in the IPCC
assessment to exceed 2 [deg]C (3.6 [deg]F) for all scenarios, with 5
out of 21 models projecting average warming in excess of 4 [deg]C (7.2
[deg]F) for the mid-range emissions scenario. The number of days with
high temperatures above 90 [deg]F is projected to increase throughout
the U.S. Temperature increases in the next couple of decades will be
primarily determined by past emissions of heat-trapping gases. As a
result, there is less difference in projected temperature scenarios in
the near-term (around 2020) than in the middle (2050) and end of the
century, which will be determined more by future emissions.
ii. Precipitation
    Increases in the amount of precipitation are very likely in higher
latitudes, while decreases are likely in most subtropical latitudes and
the southwestern U.S., continuing observed patterns. The mid-
continental area is expected to experience drying during the summer,
indicating a greater risk of drought. Climate models project continued
increases in the heaviest downpours during this century, while the
lightest precipitation is projected to decrease. With more intense
precipitation expected to increase, the risk of flooding and greater
runoff and erosion will also increase. In contrast, droughts are likely
to become more frequent and severe in some regions. The Southwest, in
particular, is expected to experience increasing drought as changes in
atmospheric circulation patterns cause the dry zone just outside the
tropics to expand farther northward into the United States.
iii. Extreme Events
    It is likely that hurricanes will become more intense, especially
along the Gulf and Atlantic coasts, with stronger peak winds and more
heavy precipitation associated with ongoing increases of tropical sea
surface temperatures. Heavy rainfall events are expected to increase,
increasing the risk of flooding, greater runoff and erosion, and thus
the potential for adverse water quality effects. These projected trends
can increase the number of people at risk from suffering disease and
injury due to floods, storms, droughts, and fires. Severe heat waves
are projected to intensify, which can increase heat-related mortality
and sickness.
iv. Physical and Biological Changes
    IPCC projects a six-inch to two-foot rise in sea level during the
21st century from processes such as thermal expansion of sea water and
the melting of land-based polar ice sheets. Ocean acidification is
projected to continue, resulting in the reduced biological production
of marine calcifiers, including corals. In addition to ocean
acidification, coastal waters are very likely to continue to warm by as
much as 4 to 8 [deg]F in this century, both in summer and winter. This
will result in a northward shift in the geographic distribution of
marine life along the coasts. Warmer ocean temperatures will also
contribute to increased coral bleaching.
d. Key Climate Change Impacts and Risks
    The effects of climate changes observed to date and/or projected to
occur in the future include: More frequent and intense heat waves, more
wildfires, degraded air quality, more heavy downpours and flooding,
increased drought, greater sea level rise, more intense storms, water
quantity and quality problems, and negative impacts to human health,
water supply, agriculture, forestry, coastal areas, wildlife and
ecosystems, and many other aspects of society and the natural environment.
i. Human Health
    Warm temperatures and extreme weather already cause and contribute
to adverse human health outcomes through heat-related mortality and
morbidity, storm-related fatalities and injuries, and disease. In the
absence of effective adaptation, these effects are likely to increase
with climate change. Health effects related to climate change include
increased deaths, injuries, infectious diseases, and stress-related
disorders and other adverse effects associated with social disruption
and migration from more frequent extreme weather. Severe heat waves are
projected to intensify in magnitude and duration over the portions of
the U.S. where these events already occur, with potential increases in
mortality and morbidity, especially among the elderly, young and other
sensitive populations.

[[Page 49587]]

However, reduced human mortality from cold exposure is projected
through 2100. It is not clear whether reduced mortality from cold will
be greater or less than increased heat-related mortality, especially
among the elderly, young and frail. Public health effects from climate
change will likely disproportionately impact the health of certain
segments of the population, such as the poor, the very young, the
elderly, those already in poor health, the disabled, those living alone
and/or indigenous populations dependent on one or a few resources.
Increases are expected in potential ranges and exposure of certain
diseases affected by temperature and precipitation changes, including
vector and waterborne diseases (i.e., malaria, dengue fever, West Nile
virus). See the CCSP Report ``Analyses of the effects of global change
on human health and welfare and human systems'',\214\ IPCC's Working
Group II (WG2) AR4,\215\ and Section 7 of the proposed Endangerment TSD
for a more complete discussion regarding climate change and impacts on
human health.
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    \214\ Analyses of the effects of global change on human health
and welfare and human systems. A Report by the U.S. Climate Change
Science Program and the Subcommittee on Global Change Research.
[Gamble, J.L. (ed.), K.L. Ebi, F.G. Sussman, T.J. Wilbanks,
(Authors)]. U.S. Environmental Protection Agency, Washington, DC, USA.
    \215\ Climate Change 2007: Impacts, Adaptation and
Vulnerability. Contribution of Working Group II to the Fourth
Assessment Report of the Intergovernmental Panel on Climate Change
[M.L. Parry, O.F. Canziani, J.P. Palutikof, P.J. van der Linden and
C.E. Hanson (eds.)]. Cambridge University Press, Cambridge, United
Kingdom and New York, NY, USA.
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ii. Air Quality
    Climate change can be expected to influence the concentration and
distribution of air pollutants through a variety of direct and indirect
processes, including the modification of biogenic emissions, the change
of chemical reaction rates, wash-out of pollutants by precipitation,
and modification of weather patterns that influence pollutant build-up.
Higher temperatures and weaker circulation patterns associated with
climate change are expected to worsen regional ozone pollution in the
U.S., with associated risks in respiratory infection, aggravation of
asthma, and premature death. In addition to human health effects,
elevated levels of tropospheric ozone have significant adverse effects
on crop yields, pasture and forest growth, and species composition. See
Section 8 of the proposed Endangerment TSD, EPA's report ``Assessment
of the Impacts of Global Change on Regional U.S. Air Quality: A
Synthesis of Climate Change Impacts on Ground-Level Ozone'', \216\ the
CCSP report ``Analyses of the effects of global change on human health
and welfare and human systems'' \217\ and IPCC WGII AR4 \218\ for a
more complete discussion regarding human health impacts resulting from
climate change effects on air quality.
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    \216\ EPA (2009) Assessment of the Impacts of Global Change on
Regional U.S. Air Quality: A Synthesis of Climate Change Impacts on
Ground-Level Ozone. An Interim Report of the U.S. EPA Global Change
Research Program. U.S. Environmental Protection Agency, Washington,
DC, EPA/600/R-07/094.
    \217\ Analyses of the effects of global change on human health
and welfare and human systems. A Report by the U.S. Climate Change
Science Program and the Subcommittee on Global Change Research.
[Gamble, J.L. (ed.), K.L. Ebi, F.G. Sussman, T.J. Wilbanks,
(Authors)]. U.S. Environmental Protection Agency, Washington, DC, USA.
    \218\ Climate Change 2007: Impacts, Adaptation and
Vulnerability. Contribution of Working Group II to the Fourth
Assessment Report of the Intergovernmental Panel on Climate Change
[M.L. Parry, O.F. Canziani, J.P. Palutikof, P.J. van der Linden and
C.E. Hanson (eds.)]. Cambridge University Press, Cambridge, United
Kingdom and New York, NY, USA.
---------------------------------------------------------------------------

iii. Food and Agriculture
    The CCSP concluded that, with increased CO₂ and
temperature, the life cycle of grain and oilseed crops will likely
progress more rapidly. But, as temperature rises, these crops will
increasingly begin to experience failure, especially if climate
variability increases and precipitation lessens or becomes more
variable. Furthermore, the marketable yield of many horticultural crops
(e.g., tomatoes, onions, fruits) is very likely to be more sensitive to
climate change than grain and oilseed crops. Higher temperatures will
very likely reduce livestock production during the summer season, but
these losses will very likely be partially offset by warmer
temperatures during the winter season. Cold water fisheries will likely
be negatively affected; warm-water fisheries will generally benefit;
and the results for cool-water fisheries will be mixed, with gains in
the northern and losses in the southern portions of ranges. See Section
9 of the proposed Endangerment TSD, the CCSP report ``The Effects of
Climate Change on Agriculture, Land Resources, Water Resources, and
Biodiversity in the United States'', and the USGCRP report ``Global
Climate Change Impacts in the United States'' for a more complete discussion
regarding climate science and impacts to food production and agriculture.
iv. Forestry
    Climate change has very likely increased the size and number of
forest fires, insect outbreaks, and tree mortality in the interior
west, the Southwest, and Alaska, and will continue to do so.
Disturbances like wildfire and insect outbreaks are increasing and are
likely to intensify in a warmer future with drier soils and longer
growing seasons. Although recent climate trends have increased
vegetation growth, continuing increases in disturbances are likely to
limit carbon storage, facilitate invasive species, and disrupt
ecosystem services. Overall forest growth for North America as a whole
will likely increase modestly (10-20%) as a result of extended growing
seasons and elevated CO₂ over the next century, but with
important spatial and temporal variation. Forest growth is slowing in
areas subject to drought and has been subject to significant loss due
insect infestations such as the spruce bark beetle in Alaska. See
Section 10 of the proposed Endangerment TSD, the CCSP report ``The
Effects of Climate Change on Agriculture, Land Resources, Water
Resources, and Biodiversity in the United States'', IPCC WGII, and the
USGCRP report ``Global Climate Change Impacts in the United States''
for a more complete discussion regarding climate science and impacts to
forestry.
v. Water Resources
    The vulnerability of freshwater resources in the United States to
climate change varies from region to region. Climate change will likely
further constrain already over-allocated water resources in some
sections of the U.S., increasing competition among agricultural,
municipal, industrial, and ecological uses. Although water management
practices in the U.S. are generally advanced, particularly in the
western U.S climate change may increasingly create conditions well
outside of historic observations impacting managed water systems.
Rising temperatures will diminish snowpack and increase evaporation,
affecting seasonal availability of water. Groundwater systems generally
respond more slowly to climate change than surface water systems. In
semi-arid and arid areas, groundwater resources are particularly
vulnerable because of precipitation and stream flow are concentrated
over a few months, year-to-year variability is high, and deep
groundwater wells or reservoirs generally do not exist. Availability of
groundwater is likely to be influenced by changes in withdrawals
(reflecting development, demand, and availability of other sources).
    In the Great Lakes and major river systems, lower levels are likely
to exacerbate challenges relating to water quality, navigation, recreation,

[[Page 49588]]

hydropower generation, water transfers, and bi-national relationships.
Decreased water supply and lower water levels are likely to exacerbate
challenges relating to aquatic navigation. Higher water temperatures,
increased precipitation intensity, and longer periods of low flows will
exacerbate many forms of water pollution, potentially making attainment
of water quality goals more difficult. As waters become warmer, the
aquatic life they now support will be replaced by other species better
adapted to warmer water. In the long-term, warmer water and changing
flow may result in deterioration of aquatic ecosystems. See Section 11
of the proposed Endangerment TSD, the CCSP report ``The Effects of
Climate Change on Agriculture, Land Resources, Water Resources, and
Biodiversity in the United States'', IPCC WGII, and the USGCRP report
``Global Change Impacts in the United States'' for a more complete
discussion regarding climate science and impacts to water resources.
vi. Sea Level Rise and Coastal Areas
    Warmer temperatures raise sea level by expanding ocean water,
melting glaciers, and possibly increasing the rate at which ice sheets
discharge ice and water into the oceans. Rising sea level and the
potential for stronger storms pose an increasing threat to coastal
cities, residential communities, infrastructure, beaches, wetlands, and
ecosystems. Coastal communities and habitats will be increasingly
stressed by climate change effects interacting with development and
pollution. Sea level is rising along much of the U.S. coast, and the
rate of change will increase in the future, exacerbating the impacts of
progressive inundation, storm-surge flooding, and shoreline erosion.
Studies find 75% of the shoreline removed from the influence of spits,
tidal inlets and engineering structures is eroding along the U.S. East
Coast probably due to sea level rise. Storm impacts are likely to be
more severe, especially along the Gulf and Atlantic coasts. Salt
marshes, estuaries, other coastal habitats, and dependent species will
be further threatened by sea level rise. The interaction with coastal
zone development and climate change effects such as sea level rise will
further stress coastal communities and habitats. Population growth and
rising value of infrastructure in coastal areas increases vulnerability
and risk of climate variability and future climate change. Sea level
rise and high rates of water withdrawal promote the intrusion of saline
water in to groundwater supplies, which adversely affects water
quality. See Section 12 of the proposed Endangerment TSD, the CCSP
report ``Coastal Sensitivity to Sea Level Rise: A Focus on the Mid-
Atlantic Region'',\219\ the USGCRP report ``Global Change Impacts in
the United States'', and IPCC WGII for a more complete discussion
regarding climate science and impacts to sea level rise and coastal areas.
---------------------------------------------------------------------------

    \219\ CCSP (2009) Coastal Sensitivity to Sea-Level Rise: A Focus
on the Mid-Atlantic Region. A report by the U.S. Climate Change
Science Program and the Subcommittee on Global Change Research.
[James G. Titus (Coordinating Lead Author), K. Eric Anderson, Donald
R. Cahoon, Dean B. Gesch, Stephen K. Gill, Benjamin T. Gutierrez, E.
Robert Thieler, and S. Jeffress Williams (Lead Authors)], U.S.
Environmental Protection Agency, Washington DC, USA, 320 pp.
---------------------------------------------------------------------------

vii. Energy, Infrastructure and Settlements
    Most of the effects of climate change on the U.S. energy sector
will be related to energy use and production. The research evidence is
relatively clear that climate warming will mean reductions in total
U.S. heating requirements and increases in total cooling requirements
for building. These changes will vary by region and by season and will
affect household and business energy costs. Studies project that
temperature increases due to global warming are very likely to increase
peak demand for electricity in most regions of the country as rising
temperatures are expected to increase energy requirements for cooling
residential and commercial buildings. An increase in peak demand for
electricity can lead to a disproportionate increase in energy
infrastructure investment. Extreme weather events can threaten coastal
energy infrastructures and electricity transmission and distribution in
the U.S. Increases in hurricane intensity are likely to cause further
disruptions to oil and gas operations in the Gulf, like those
experienced in 2005 with Hurricane Katrina. Climate change is likely to
affect some renewable energy sources across the nation, such as
hydropower production in regions subject to changing patterns of
precipitation or snowmelt. The U.S. energy sector, which relies heavily
on water for both hydropower and cooling capacity, may be adversely
impacted by changes to water supply and quality in reservoirs and other
water bodies.
    Water infrastructure, including drinking water and wastewater
treatment plants, and sewer and storm water management systems, will be
at greater risk of flooding, sea level rise and storm surge, low flows,
and other factors that could impair performance. In addition, as water
supply is constrained and demand increases it will become more likely
that water will have to be transported and moved which will require
additional energy capacity. See Section 13 of the proposed Endangerment
TSD, the CCSP reports ``the Effects of Climate Change on Energy
Production in the United States'' \220\ and ``Impacts of Climate Change
and Variability on Transportation Systems and Infrastructure'',\221\
and the USGCRP report ``Global Change Impacts in the United States''
for a more complete discussion regarding climate science and impacts to
energy, infrastructure and settlements.
---------------------------------------------------------------------------

    \220\ CCSP (2007): Effects of Climate Change on Energy
Production and Use in the United States. A Report by the U.S.
Climate Change Science Program and the subcommittee on Global Change
Research. Thomas J. Wilbanks, Vatsal Bhatt, Daniel E. Bilello,
Stanley R. Bull, James Ekmann, William C. Horak, Y. Joe Huang, Mark
D. Levine, Michael J. Sale, David K. Schmalzer, and Michael J.
Scott). Department of Energy, Office of Biological & Environmental
Research, Washington, DC, USA, 160 pp.
    \221\ CCSP (2008) Impacts of Climate Change and Variability on
Transportation Systems and Infrastructure: Gulf Coast Study, Phase
I. A Report by the U.S. Climate Change Science Program and the
Subcommittee on Global Change Research [Savonis, M.J., V.R. Burkett,
and J.R. Potter (eds.)]. Department of Transportation, Washington,
DC, USA, 445 pp.
---------------------------------------------------------------------------

viii. Ecosystems and Wildlife
    Disturbances such as wildfires and insect outbreaks are increasing
in the U.S. and are likely to intensify in a warmer future with drier
soils and longer growing seasons. Although recent climate trends have
increased vegetation growth, continuing increases in disturbances are
likely to limit carbon storage, facilitate invasive species, and
disrupt ecosystem services. Over the 21st century, changes in climate
will cause species to shift north and to higher elevations and
fundamentally rearrange U.S. ecosystems. Differential capacities for
range shifts are constrained by development, habitat fragmentation,
invasive species, and broken ecological connections. IPCC consequently
predicts significant disruption of ecosystem structure, function, and
services. See Section 14 of the proposed Endangerment TSD, IPCC WGII,
the CCSP report ``The Effects of Climate Change on Agriculture, Land
Resources, Water Resources, and Biodiversity in the United States'',
and the USGCRP report ``Global Change Impacts in the United States''
for a more complete discussion regarding climate science and impacts to
ecosystems and wildlife.

[[Page 49589]]

3. Changes in Global Mean Temperature and Sea Level Rise Associated
With the Proposal's GHG Emissions Reductions
    EPA examined \222\ the reductions in CO₂ and other GHGs
associated with the proposal and analyzed the projected effects on
global mean surface temperature and sea level, two common indicators of
climate change. The analysis projects that the proposal will reduce
climate warming and sea level rise. Although the projected reductions
are small in overall magnitude by themselves, they are quantifiable and
would contribute to reducing climate change risks.
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    \222\ Using the Model for the Assessment of Greenhouse Gas
Induced Climate Change (MAGICC, http://www.cgd.ucar.edu/cas/wigley/
magicc/ ), EPA estimated the effects of this action's greenhouse gas
emissions reductions on global mean temperature and sea level.
Please refer to Chapter 7.4 of the DRIA for additional information.
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a. Estimated Projected Reductions in Global Mean Surface Temperatures
and Sea Level Rise
    EPA estimated changes in the atmospheric CO₂
concentration, global mean surface temperature and sea level to 2100
resulting from the emissions reductions in this proposal using the
Model for the Assessment of Greenhouse Gas Induced Climate Change
(MAGICC, version 5.3). This widely used, peer reviewed modeling tool
was also used to project temperature and sea level rise under different
emissions scenarios in the Third and Fourth Assessments of the
Intergovernmental Panel on Climate Change (IPCC).
    GHG emissions reductions from Section III.F.1a were applied as net
reductions to a peer reviewed global reference case (or baseline)
emissions scenario to generate an emissions scenario specific to this
proposal. For the proposal scenario, all emissions reductions were
assumed to begin in 2012, with zero emissions change in 2011 (from the
reference case) followed by emissions linearly increasing to equal the
value supplied in Section III.F.1.a for 2020 and then continuing to
2100. Details about the reference case scenario and how the emissions
reductions were applied to generate the proposal scenario can be found
in the DRIA Chapter 7.
    The atmospheric CO₂ concentration, temperature, and sea-
level increases for both the reference case and the proposal emissions
scenarios were computed using MAGICC. To compute the reductions in the
atmospheric CO₂ concentrations as well as in temperature and
sea level resulting from the proposal, the output from the proposal
scenario was subtracted from an existing MiniCAM emission scenario. To
capture some key uncertainties in the climate system with the MAGICC
model, changes in temperature and sea-level rise were projected across
the most current IPCC range for climate sensitivities which ranges from
1.5 [deg]C to 6.0 [deg]C (representing the 90% confidence
interval).\223\ This wide range reflects the uncertainty in this
measure of how much the global mean temperature would rise if the
concentration of carbon dioxide in the atmosphere were to double.
Details about this modeling analysis can be found in the DRIA Chapter 7.4.
---------------------------------------------------------------------------

    \223\ In IPCC reports, equilibrium climate sensitivity refers to
the equilibrium change in the annual mean global surface temperature
following a doubling of the atmospheric equivalent carbon dioxide
concentration. The IPCC states that climate sensitivity is
``likely'' to be in the range of 2 [deg]C to 4.5 [deg]C, ``very
unlikely'' to be less than 1.5 [deg]C, and ``values substantially
higher than 4.5 [deg]C cannot be excluded.'' IPCC WGI, 2007, Climate
Change 2007--The Physical Science Basis, Contribution of Working
Group I to the Fourth Assessment Report of the IPCC, 
http://www.ipcc.ch/. 
---------------------------------------------------------------------------

    The results of this modeling show small, but quantifiable,
reductions in the atmospheric CO₂ concentration, the
projected global mean surface temperature and sea level resulting from
this proposal (assuming it is finalized), across all climate
sensitivities. As a result of this proposal's emission reductions, the
atmospheric CO₂ concentration is projected to be reduced by
approximately 2.9 to 3.2 parts per million (ppm), the global mean
temperature is projected to be reduced by approximately 0.007-0.016
[deg]C by 2100, and global mean sea level rise is projected to be
reduced by approximately 0.06-0.15cm by 2100. The reductions are small
relative to the IPCC's 2100 ``best estimates'' for global mean
temperature increases (1.8-4.0 [deg]C) and sea level rise (0.20-0.59m)
for all global GHG emissions sources for a range of emissions
scenarios. EPA used a peer reviewed model, the MAGICC model, to do this
analysis. This analysis is specific to the proposed rule and therefore
cannot come from some previously published work. The Agency welcomes
comment on the use of the MAGICC model for these purposes. Further
discussion of EPA's modeling analysis is found in Chapter 7 of the Draft RIA.
    As a substantial portion of CO₂ emitted into the
atmosphere is not removed by natural processes for millennia, each unit
of CO₂ not emitted into the atmosphere avoids essentially
permanent climate change on centennial time scales. Though the
magnitude of the avoided climate change projected here is small, these
reductions would represent a reduction in the adverse risks associated
with climate change (though these risks were not formally estimated for
this proposal) across all climate sensitivities.
4. Weight Reduction and Potential Safety Impacts
    In this section, EPA will discuss potential safety impacts of the
proposed standards. In the joint technology analysis, EPA and NHTSA
agree that automakers could reduce weight as one part of the industry's
strategy for meeting the proposed standards. As shown in table III.D.6-
3, of this Preamble, EPA's modeling projects that vehicle manufacturers
will reduce the weight of their vehicles by 4% on average between 2011
and 2016 although individual vehicles may have greater or smaller
weight reduction (NHTSA's results are similar using the Volpe model).
The penetration and magnitude of these modeled changes are consistent
with the public announcements made by many manufacturers since early
2008 and are consistent with meetings that EPA has had with senior
engineers and technical leadership at many of the automotive companies
during 2008 and 2009.
    EPA also projects that automakers will not reduce footprint in
order to meet the proposed CO₂ standards in our modeling
analysis. NHTSA and EPA have taken two measures to help ensure that the
proposed rules provide no incentive for mass reduction to be
accompanied by a corresponding decrease in the footprint of the vehicle
(with its concomitant decrease in crush and crumple zones). The first
design feature of the proposed rule is that the CO₂ or fuel
economy targets are based on the attribute of footprint (which is a
surrogate for vehicle size).\224\ The second design feature is that the
shape of the footprint curve (or function) has been carefully chosen
such that it neither encourages manufacturers to increase, nor decrease
the footprint of their fleet. Thus, the standard curves are designed to
be approximately ``footprint neutral'' within the sloped portion of the
function.\225\ For further discussion on this, refer to Section II.C of
the preamble, or Chapter 2 of the joint TSD. Thus the agencies are
assuming in their

[[Page 49590]]

modeling analysis that the manufacturers could reduce vehicle mass
without reducing vehicle footprint as one way to respond to the
proposed rule.\226\
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    \224\ As the footprint attribute is defined as wheelbase times
track width, the footprint target curves do not discourage
manufacturers from reducing vehicle size by reducing front, rear, or
side overhang, which can impact safety by resulting in less crush space.
    \225\ This neutrality with respect to footprint does not extend
to the smallest and largest vehicles, because the function is
limited, or flattened, in these footprint ranges.
    \226\ See Chapter 1 of the joint TSD for a description of
potential footprint changes in the 2016 reference fleet.
---------------------------------------------------------------------------

    In Section IV of this preamble, NHTSA presents a safety analysis of
the proposed CAFE standards based on the 2003 Kahane analysis. As
discussed in Section IV, NHTSA has developed a worse case estimate of
the impact of weight reductions on fatalities. The underlying data used
for that analysis does not allow NHTSA to analyze the specific impact
of weight reduction at constant footprint because historically there
have not been a large number of vehicles produced that relied
substantially on material substitution. Rather, the data set includes
vehicles that were either smaller and lighter or larger and heavier.
The numbers in the NHTSA analysis predict the safety-related fatality
consequences that would occur in the unlikely event that weight
reduction for model years 2012-2016 is accomplished by reducing mass
and reducing footprint. EPA concurs with NHTSA that the safety analysis
conducted by NHTSA and presented in Section IV is a worst case analysis
for fatalities, and that the actual impacts on vehicle safety could be
much less. However, EPA and NHTSA are not able to quantify the lower-
bound potential impacts at this time.
    The agencies believe that reducing vehicle mass without reducing
the size of the vehicle or the structural integrity is technically
feasible in the rulemaking time frame. Many of the technical options
for doing so are outlined in Chapter 3 of the joint TSD and in EPA's
DRIA. Weight reduction can be accomplished by the proven methods
described below. Every manufacturer will employ these methodologies to
some degree, the magnitude to which each will be used will depend on
opportunities within individual vehicle design.
    • Material Substitution: Substitution of lower density and/
or higher strength materials in a manner that preserves or improves the
function of the component. This includes substitution of high-strength
steels, aluminum, magnesium or composite materials for components
currently fabricated from mild steel (e.g., the magnesium-alloy front
structure used on the 2009 Ford F150 pickups).\227\ Light-weight
materials with acceptable energy absorption properties can maintain
structural integrity and absorption of crash energy relative to
previous designs while providing a net decrease in component weight.
---------------------------------------------------------------------------

    \227\ We note that since these MY 2009 F150s have only begun to
enter the fleet, there is little real-world crash data available to
evaluate the safety impacts of this new design.
---------------------------------------------------------------------------

    • Smart Design: Computer aided engineering (CAE) tools can
be used to better optimize load paths within structures by reducing
stresses and bending moments without adversely affecting structural
integrity. This allows better optimization of the sectional thicknesses
of structural components to reduce mass while maintaining or improving
the function of the component. Smart designs also integrate separate
parts in a manner that reduces mass by combining functions or the
reduced use of separate fasteners. In addition, some ``body on frame''
vehicles are redesigned with a lighter ``unibody'' construction with
little compromise in vehicle functionality.
    • Reduced Powertrain Requirements: Reducing vehicle weight
sufficiently can allow for the use of a smaller, lighter and more
efficient engine while maintaining or even increasing performance.
Approximately half of the reduction is due to these reduced powertrain
output requirements from reduced engine power output and/or
displacement, lighter weight transmission and final drive gear ratios.
The subsequent reduced rotating mass (e.g. transmission, driveshafts/
halfshafts, wheels and tires) via weight and/or size reduction of
components are made possible by reduced torque output requirements.
    • Mass Compounding: Following from the point above, the
compounded weight reductions of the body, engine and drivetrain can
reduce stresses on the suspension components, steering components,
brakes, and thus allow further reductions in the weight of these
subsystems. The reductions in weight for unsprung masses such as
brakes, control arms, wheels and tires can further reduce stresses in
the suspension mounting points which can allow still further reductions
in weight. For example, lightweighting can allow for the reduction in
the size of the vehicle brake system, while maintaining the same
stopping distance.
    Therefore, EPA believes it is both technically feasible to reduce
weight without reducing vehicle size, footprint or structural strength
and manufacturers have indicated to the agencies that they will use
these approaches to accomplish these tasks. We request written comment
on this assessment and this projection, including up-to-date plans
regarding the extent of use by each manufacturer of each of the
methodologies described above.
    For this proposed rule, as noted earlier, EPA's modeling analysis
projects that weight reduction by model year 2016 on the order of 4% on
average for the fleet will occur (see Section III.D.6 for details on
our estimated mass reduction). EPA believes that such modeled changes
in the fleet could result in much smaller fatality impacts than those
in the worst case scenario presented in Section IV by NHTSA, since
manufacturers have many safer options for reducing vehicle weight than
doing so by simultaneously reducing footprint. The NHTSA analysis,
based solely on 4-door vehicles, does not independently differentiate
between weight reduction which comes from vehicle downsizing (a
physically smaller vehicle) and vehicle weight reduction solely through
design and material changes (i.e., making a vehicle weigh less without
changing the size of the vehicle or reducing structural integrity).
    Dynamic Research Incorporated (DRI) has assessed the independent
effects of vehicle weight and size on safety in order to determine if
there are tradeoffs between improving vehicle safety and fuel
consumption. In their 2005 studies 228 229 one of which was
published as a Society of Automotive Engineers Technical Paper and
received peer review through that body, DRI presented results that
indicate that vehicle weight reduction tends to decrease fatalities,
but vehicle wheelbase and track reduction tends to increase fatalities.
The DRI work focused on four major points, with #1 and
#4 being discussed with additional detail below:
---------------------------------------------------------------------------

    \228\ ``Supplemental Results on the Independent Effects of Curb
Weight, Wheelbase and Track on Fatality Risk'', Dynamic Research,
Inc., DRI-TR-05-01, May 2005.
    \229\ ``An Assessment of the Effects of Vehicle Weight and Size
on Fatality Risk in 1985 to 1998 Model Year Passenger Cars and 1985
to 1997 Model Year'', M. Van Auken and J. Zellner, Dynamic Research
Inc., Society of Automotive Engineers Technical Paper 2005-01-1354.
---------------------------------------------------------------------------

    1. 2-Door vehicles represented a significant portion of the light
duty fleet and should not be ignored.
    2. Directional control and therefore crash avoidance improves with
a reduction in curb weight.
    3. The occupants of the impacted vehicle, or ``collision partner''
benefit from being impacted by a lighter vehicle.
    4. Rollover fatalities are reduced by a reduction in curb weight
due to lower centers of gravity and lower loads on the roof structures.

[[Page 49591]]

    The data used for the DRI analysis was similar to NHTSA's 2003
Kahane study, using Fatality Analysis Reporting System (FARS) data for
vehicle model years 1985 through 1998 for cars, and 1985 through 1997
trucks. This data overlaps Kahane's FARS data on model year 1991 to
1999 vehicles. However, DRI included 2-door passenger cars, whereas the
Kahane study excluded all 2-door vehicles. The 2003 Kahane study
excluded 2-door passenger cars because it found that for MY 1991-1999
vehicles, sports and muscle cars constituted a significant proportion
of those vehicles. These vehicles have relatively high weight relative
to their wheelbase, and are also disproportionately involved in
crashes. Thus, Kahane concluded that including these vehicles in the
analysis excessively skewed the regression results. However, as of July
1, 1999, 2-door passenger cars represented 29% of the registered cars
in the United States. DRI's position was that this is a significant
portion of the light duty fleet, too large to be ignored, and
conclusions regarding the effects of weight and safety should be based
on data for all cars, not just 4-doors. DRI did state in their
conclusions that the results are sensitive to removing data for 2-doors
and wagons, and that the results for 4-door cars with respect to the
effects of wheelbase and track width were no longer statistically
significant when 2-door cars were removed. EPA and NHTSA recognize that
it is important to properly account for 2-door cars in a regression
analysis evaluating the impacts of vehicle weight on safety. Thus, the
agencies seek comment on how to ensure that any analysis supporting the
final rule accounts as fully as possible for the range of safety
impacts due to weight reduction on the variety of vehicles regulated
under these proposed standards.
    The DRI and Kahane studies also differ with respect to the impact
of vehicle weight on rollover fatalities. The Kahane study treated curb
weight as a surrogate for size and weight and analyzed them as a single
variable. Using this method, the 2003 Kahane analysis indicates that
curb weight reductions would increase fatalities due to rollovers. The
DRI study differed by analyzing curb weight, wheelbase, and track as
multiple variables and concluded that curb weight reduction would
decrease rollover fatalities, and wheelbase and track reduction would
increase rollover fatalities. DRI offers two potential root causes for
higher curb weight resulting in higher rollover fatalities. The first
is that a taller vehicle tends to be heavier than a shorter vehicle;
therefore heavier vehicles may be more likely to rollover because the
vehicle height and weight are correlated with vehicle center of gravity
height. The second is that FMVSS 216 for roof crush strength
requirements for passenger cars of model years 1995 through 1999 were
proportional to the unloaded vehicle weight if the weight is less than
3,333 lbs, however they were a constant if the weight is greater than
3,333 lbs. Therefore heavier vehicles may have had relatively less
rollover crashworthiness.
    NHTSA has rejected the DRI analysis, and has not relied on it for
its evaluation of safety impact changes in CAFE standards. See Section
IV.G.6 of this Notice, as well as NHTSA's March 2009 Final Rulemaking
for MY2011 CAFE standards (see 74 FR at 14402-05).
    The DRI and Kahane analyses of the FARS data appear similar in one
respect because the results are reproducible between the two studies
when using aggregated vehicle attributes for 4-door
cars.230 231 232 However, when DRI and NHTSA separately
analyzed individual vehicle attributes of mass, wheelbase and track
width, DRI and NHTSA obtained different results for passenger cars.
NHTSA has raised this as a concern with the DRI study. When 2-door
vehicles are removed from the data set EPA is concerned that the
results may no longer be statistically significant with respect to
independent vehicle attributes due to the small remaining data set, as
DRI stated in the 2005 study.
---------------------------------------------------------------------------

    \230\ ``Supplemental Results on the Independent Effects of Curb
Weight, Wheelbase and Track on Fatality Risk'', Dynamic Research,
Inc., DRI-TR-05-01, May 2005.
    \231\ ``An Assessment of the Effects of Vehicle Weight and Size
on Fatality Risk in 1985 to 1998 Model Year Passenger Cars and 1985
to 1997 Model Year'', M. Van Auken and J. Zellner, Dynamic Research
Inc., Society of Automotive Engineers Technical Paper 2005-01-1354.
    \232\ FR Vol. 74, No. 59, beginning on pg. 14402.
---------------------------------------------------------------------------

    The DRI analysis concluded that there would be a small reduction in
fatalities for cars and for trucks for a 100 pound reduction in curb
weight without accompanied vehicle footprint or size changes. EPA notes
that if DRI's results were to be applied using the curb weight
reductions predicted by the OMEGA model, an overall reduction in
fatalities would be predicted. EPA invites comment on all aspects of
the issue of the impact of this kind of weight reduction on safety,
including the usefulness of the DRI study in evaluating this issue.
    The agencies are committed to continuing to analyze vehicle safety
issues so a more informed evaluation can be made. We request comment on
this issue. These comments should include not only further discussion
and analysis of the relevant studies but data and analysis which can
allow the agencies to more accurately quantify any potential safety
issues with the proposed standards.

G. How Would the Proposal Impact Non-GHG Emissions and Their Associated Effects?

    In addition to reducing the emissions of greenhouse gases, this
proposal would influence the emissions of ``criteria'' air pollutants
and air toxics (i.e., hazardous air pollutants). The criteria air
pollutants include carbon monoxide (CO), fine particulate matter
(PM_2.5), sulfur dioxide (SO_X) and the ozone
precursors hydrocarbons (VOC) and oxides of nitrogen (NO_X);
the air toxics include benzene, 1,3-butadiene, formaldehyde,
acetaldehyde, and acrolein. Our estimates of these non-GHG emission
impacts from the proposed program are shown by pollutant in Table
III.G-1 and Table III.G-2 in total, and broken down by the two drivers
of these changes: (a) ``Upstream'' emission reductions due to decreased
extraction, production and distribution of motor gasoline; and (b)
``downstream'' emission increases, reflecting the effects of VMT
rebound (discussed in Sections III.F and III.H). Total program impacts
on criteria and toxics emissions are discussed below, followed by
individual discussions of the upstream and downstream impacts. Those
are followed by discussions of the effects on air quality, health, and
other environmental concerns.
    As discussed in Chapter 5 of the DRIA, the impacts presented here
are only from petroleum (i.e., EPA assumes that total volumes of
ethanol and other renewable fuels will remain unchanged due to this
program). Ethanol use was modeled at the volumes projected in AEO2007
for the reference and control case; thus no changes are projected in
upstream emissions related to ethanol production and distribution.
However, due to the decreased gasoline volume associated with this
proposal, a greater market share of E10 is expected relative to E0,
which would be expected to have some effect on fleetwide average non-
GHG emission rates. This effect, which is likely small relative to the
other effects considered here, has not been accounted for in the
downstream emission modeling conducted for this proposal, but EPA does
plan to address it in the final rule air quality analysis, for which
localized impacts could be more significant. A more comprehensive
analysis of the impacts of different

[[Page 49592]]

ethanol and gasoline volume scenarios is being prepared as part of
EPA's RFS2 rulemaking package.\233\
---------------------------------------------------------------------------

    \233\ 74 FR 24904. See also Docket EPA-HQ-OAR-2005-0161.
---------------------------------------------------------------------------

    As shown in Table III.G-1, EPA estimates that this program would
result in reductions of NO_X, VOC, PM and SO_X, but
would increase CO emissions. For NO_X, VOC, PM and
SO_X, we estimate net reductions in criteria pollutant
emissions because the emissions reductions from upstream sources are
larger than the emission increases due to additional driving (i.e., the
``rebound effect''). In the case of CO, we estimate slight emission
increases, because there are relatively small reductions in upstream
emissions, and thus the projected emission increases due to additional
driving are greater than the projected emission decreases due to
reduced fuel production. EPA estimates that the proposed program would
result in small changes for toxic emissions compared to total U.S.
inventories across all sectors. For all pollutants the overall impact
of the program would be relatively small compared to total U.S.
inventories across all sectors. In 2030 EPA estimates the proposed
program would reduce these total NO_X, PM and SO_X
inventories by 0.2 to 0.3 percent and reduce the VOC inventory by 1.2
percent, while increasing the total national CO inventory by 0.4 percent.
    As shown in Table III.G-2, EPA estimates that the proposed program
would result in small changes for toxic emissions compared to total
U.S. inventories across all sectors. In 2030 EPA estimates the program
would reduce total benzene and formaldehyde by 0.04 percent. Total
acrolein, acetaldehyde, and 1,3-butadiene would increase by 0.03 to 0.2
percent.
    Other factors which may impact non-GHG emissions, but are not
estimated in this analysis, include:
    • Vehicle technologies used to reduce tailpipe
CO₂ emissions; because the regulatory standards for non-GHG
emissions are the primary driver for these emissions, EPA expects the
impact of this program to be negligible on non-GHG emission rates per mile.
    • The potential for increased market penetration of diesel
vehicles; because these vehicles would be held to the same
certification and in-use standards for criteria pollutants as their
gasoline counterparts, EPA expects their impact to be negligible on
criteria pollutants and other non-GHG emissions.
    • Early introduction of electric vehicles and plug-in hybrid
electric vehicles, which would reduce criteria emissions in cases where
they are able to certify to lower certification standards. It would
also likely reduce gaseous air toxics.
    • Reduced refueling emissions due to less frequent refueling
events and reduced annual refueling volumes resulting from the GHG standards.
    • Increased hot soak evaporative emissions due to the likely increase
in number of trips associated with VMT rebound modeled in this proposal.
    • Increased market share of E10 relative to E0 due to the
decreased overall gasoline consumption of this proposal combined with
an unchanged fuel ethanol volume.
    EPA invites comments on the possible contribution of these factors
to non-GHG emissions.
BILLING CODE 4910-59-P

[[Page 49593]]
[GRAPHIC] [TIFF OMITTED] TP28SE09.022

BILLING CODE 4910-59-C
1. Upstream Impacts of Program
    Reducing tailpipe CO₂ emissions from light-duty cars and
trucks through tailpipe standards and improved A/C efficiency will
result in reduced fuel demand and reductions in the emissions
associated with all of the processes involved in getting petroleum to
the pump. These upstream emission impacts on criteria pollutants are
summarized in Table III.G-1. The upstream reductions grow over time as
the fleet turns over to cleaner CO₂ vehicles, so that by
2030 VOC would decrease by 148,000 tons, NO_X by 43,000 tons,
and PM2.5 by 6,000 tons. Table III.G-2 shows the corresponding impacts
on upstream air toxic emissions in 2030. Formaldehyde decreases by 112
tons, benzene by 320 tons, acetaldehyde by 15 tons, acrolein by 2 tons,
and 1,3-butadiene by 3 tons.
    To determine these impacts, EPA estimated the impact of reduced
petroleum volumes on the extraction and transportation of crude oil as
well as the production and distribution of finished gasoline. For the
purpose of assessing domestic-only emission reductions it was necessary
to estimate the fraction of fuel savings attributable to domestic
finished gasoline, and of this gasoline what fraction is produced from
domestic crude. For this analysis EPA estimated that 50 percent of fuel
savings is attributable to domestic finished gasoline and that 90
percent of this gasoline originated from imported crude. Emission
factors for most upstream emission sources are based on the GREET1.8
model, developed by DOE's Argonne National Laboratory,\234\ but in some
cases the GREET values were modified or updated by EPA to be consistent
with the National Emission Inventory (NEI).\235\ The primary updates
for this analysis were to incorporate newer information on gasoline
distribution emissions for VOC from the NEI, which were significantly
higher than GREET estimates; and the incorporation of upstream emission
factors for the air toxics estimated in this analysis: benzene, 1,3-
butadiene, acetaldehyde, acrolein, and

[[Page 49594]]

formaldehyde. The development of these emission factors is detailed in
DRIA Chapter 5.
---------------------------------------------------------------------------

    \234\ Greenhouse Gas, Regulated Emissions, and Energy Use in
Transportation model (GREET), U.S. Department of Energy, Argonne
National Laboratory, http://www.transportation.anl.gov/modeling_
simulation/GREET/.
    \235\ EPA. 2002 National Emissions Inventory (NEI) Data and
Documentation, http://www.epa.gov/ttn/chief/net/2002inventory.html.
---------------------------------------------------------------------------

2. Downstream Impacts of Program
    As discussed in more detail in Section III.H, the effect of fuel
cost on VMT (``rebound'') was accounted for in our assessment of
economic and environmental impacts of this proposed rule. A 10 percent
rebound case was used for this analysis, meaning that VMT for affected
model years is modeled as increasing by 10 percent as much as the
increase in fuel economy; i.e., a 10 percent increase in fuel economy
would yield a 1.0 percent increase in VMT.
    Downstream emission impacts of the rebound effect are summarized in
Table III.G-1 for criteria pollutants and precursors and Table III.G-2
for air toxics. The emission increases from the rebound effect grow
over time as the fleet turns over to cleaner CO₂ vehicles,
so that by 2030 VOC would increase by 5,500 tons, NO_X by
16,000 tons, and PM2.5 by 570 tons. Table III.G-2 shows the
corresponding impacts on air toxic emissions. The most noteworthy of
these impacts in 2030 are 40 additional tons of 1,3-butadiene, 75 tons
of acetaldehyde, 240 tons of benzene, 96 tons of formaldehyde, and 4
tons of acrolein.
    For this analysis the reference case non-GHG emissions for light
duty vehicles and trucks were derived using EPA's MOtor Vehicle
Emission Simulator (MOVES) model for VOC, CO, NO_X, PM and
air toxics. PM2.5 emission estimates include additional adjustments for
low temperatures, discussed in detail in the DRIA. Because this
modeling was based on calendar year estimates, estimating the rebound
effect required a fleet-weighted rebound factor to be calculated for
calendar years 2020 and 2030; these factors are presented in DRIA Chapter 5.
    As discussed in Section III.H, EPA will be taking comment on the
appropriate level of rebound rate for this analysis. The sensitivity of
the downstream emission increases shown in Tables III.G-1 and III.G-2
to the level of rebound would be in direct proportion to the rebound
rate itself; since zero rebound would result in zero emission increase,
the downstream results presented in Table III.G-1 and Table III.G-2 can
be directly scaled to estimate the effect of lower rebound rates.
3. Health Effects of Non-GHG Pollutants
a. Particulate Matter
i. Background
    Particulate matter is a generic term for a broad class of
chemically and physically diverse substances. It can be principally
characterized as discrete particles that exist in the condensed (liquid
or solid) phase spanning several orders of magnitude in size. Since
1987, EPA has delineated that subset of inhalable particles small
enough to penetrate to the thoracic region (including the
tracheobronchial and alveolar regions) of the respiratory tract
(referred to as thoracic particles). Current NAAQS use PM_2.5
as the indicator for fine particles (with PM_2.5 referring to
particles with a nominal mean aerodynamic diameter less than or equal
to 2.5 [micro]m), and use PM₁₀ as the indicator for purposes
of regulating the coarse fraction of PM₁₀ (referred to as
thoracic coarse particles or coarse-fraction particles; generally
including particles with a nominal mean aerodynamic diameter greater
than 2.5 [micro]m and less than or equal to 10 [micro]m, or
PM_10-2.5). Ultrafine particles are a subset of fine particles,
generally less than 100 nanometers (0.1 &mu;m) in aerodynamic diameter.
    Fine particles are produced primarily by combustion processes and
by transformations of gaseous emissions (e.g., SO_X,
NO_X and VOC) in the atmosphere. The chemical and physical
properties of PM_2.5 may vary greatly with time, region,
meteorology, and source category. Thus, PM_2.5 may include a
complex mixture of different pollutants including sulfates, nitrates,
organic compounds, elemental carbon and metal compounds. These
particles can remain in the atmosphere for days to weeks and travel
hundreds to thousands of kilometers.
ii. Health Effects of PM
    Scientific studies show ambient PM is associated with a series of
adverse health effects. These health effects are discussed in detail in
EPA's 2004 Particulate Matter Air Quality Criteria Document (PM AQCD)
and the 2005 PM Staff Paper. 236 237 238 Further discussion
of health effects associated with PM can also be found in the DRIA for
this rule.
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    \236\ U.S. EPA (2004). Air Quality Criteria for Particulate
Matter. Volume I EPA600/P-99/002aF and Volume II EPA600/P-99/002bF.
Retrieved on March 19, 2009 from Docket EPA-HQ-OAR-2003-0190 at
http://www.regulations.gov/.
    \237\ U.S. EPA. (2005). Review of the National Ambient Air
Quality Standard for Particulate Matter: Policy Assessment of
Scientific and Technical Information, OAQPS Staff Paper. EPA-452/R-
05-005a. Retrieved March 19, 2009 from http://www.epa.gov/ttn/naaqs/
standards/pm/data/pmstaffpaper_20051221.pdf.
    \238\ The PM NAAQS is currently under review and the EPA is
considering all available science on PM health effects, including
information which has been published since 2004, in the development
of the upcoming PM Integrated Science Assessment Document (ISA). A
second draft of the PM ISA was completed in July 2009 and was
submitted for review by the Clean Air Scientific Advisory Committee
(CASAC) of EPA's Science Advisory Board. Comments from the general
public have also been requested. For more information, see 
http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=210586.
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    Health effects associated with short-term exposures (hours to days)
to ambient PM include premature mortality, aggravation of
cardiovascular and lung disease (as indicated by increased hospital
admissions and emergency department visits), increased respiratory
symptoms including cough and difficulty breathing, decrements in lung
function, altered heart rate rhythm, and other more subtle changes in
blood markers related to cardiovascular health.\239\ Long-term exposure
to PM_2.5 and sulfates has also been associated with
mortality from cardiopulmonary disease and lung cancer, and effects on
the respiratory system such as reduced lung function growth or
development of respiratory disease. A new analysis shows an association
between long-term PM_2.5 exposure and a measure of
atherosclerosis development.240 241
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    \239\ U.S. EPA. (2006). National Ambient Air Quality Standards
for Particulate Matter; Proposed Rule. 71 FR 2620, January 17, 2006.
    \240\ K[uuml]nzli, N., Jerrett, M., Mack, W.J., et al. (2004).
Ambient air pollution and atherosclerosis in Los Angeles. Environ
Health Perspect., 113, 201-206.
    \241\ This study is included in the 2006 Provisional Assessment
of Recent Studies on Health Effects of Particulate Matter Exposure.
The provisional assessment did not and could not (given a very short
timeframe) undergo the extensive critical review by CASAC and the
public, as did the PM AQCD. The provisional assessment found that
the ``new'' studies expand the scientific information and provide
important insights on the relationship between PM exposure and
health effects of PM. The provisional assessment also found that
``new'' studies generally strengthen the evidence that acute and
chronic exposure to fine particles and acute exposure to thoracic
coarse particles are associated with health effects. Further, the
provisional science assessment found that the results reported in
the studies did not dramatically diverge from previous findings, and
taken in context with the findings of the AQCD, the new information
and findings did not materially change any of the broad scientific
conclusions regarding the health effects of PM exposure made in the
AQCD. However, it is important to note that this assessment was
limited to screening, surveying, and preparing a provisional
assessment of these studies. For reasons outlined in Section I.C of
the preamble for the final PM NAAQS rulemaking in 2006 (see 71 FR
61148-49, October 17, 2006), EPA based its NAAQS decision on the
science presented in the 2004 AQCD.
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    Studies examining populations exposed over the long term (one or
more years) to different levels of air pollution, including the Harvard
Six Cities Study

[[Page 49595]]

and the American Cancer Society Study, show associations between long-
term exposure to ambient PM_2.5 and both total and
cardiopulmonary premature mortality.242 243 244 In addition,
an extension of the American Cancer Society Study shows an association
between PM_2.5 and sulfate concentrations and lung cancer mortality.\245\
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    \242\ Dockery, D.W., Pope, C.A. III, Xu, X, et al. (1993). An
association between air pollution and mortality in six U.S. cities.
N Engl J Med, 329, 1753-1759. Retrieved on March 19, 2009 from
http://content.nejm.org/cgi/content/full/329/24/1753. 
    \243\ Pope, C.A., III, Thun, M.J., Namboodiri, M.M., Dockery,
D.W., Evans, J.S., Speizer, F.E., and Heath, C.W., Jr. (1995).
Particulate air pollution as a predictor of mortality in a
prospective study of U.S. adults. Am. J. Respir. Crit. Care Med, 151, 669-674.
    \244\ Krewski, D., Burnett, R.T., Goldberg, M.S., et al. (2000).
Reanalysis of the Harvard Six Cities study and the American Cancer
Society study of particulate air pollution and mortality. A special
report of the Institute's Particle Epidemiology Reanalysis Project.
Cambridge, MA: Health Effects Institute. Retrieved on March 19, 2009
from http://epa.gov/ncer/science/pm/hei/Rean-ExecSumm.pdf.
    \245\ Pope, C.A., III, Burnett, R.T., Thun, M. J., Calle, E.E.,
Krewski, D., Ito, K., Thurston, G.D., (2002). Lung cancer,
cardiopulmonary mortality, and long-term exposure to fine
particulate air pollution. J. Am. Med. Assoc., 287, 1132-1141.
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b. Ozone
i. Background
    Ground-level ozone pollution is typically formed by the reaction of
VOC and NO_X in the lower atmosphere in the presence of heat
and sunlight. These pollutants, often referred to as ozone precursors,
are emitted by many types of pollution sources, such as highway and
nonroad motor vehicles and engines, power plants, chemical plants,
refineries, makers of consumer and commercial products, industrial
facilities, and smaller area sources.
    The science of ozone formation, transport, and accumulation is
complex.\246\ Ground-level ozone is produced and destroyed in a
cyclical set of chemical reactions, many of which are sensitive to
temperature and sunlight. When ambient temperatures and sunlight levels
remain high for several days and the air is relatively stagnant, ozone
and its precursors can build up and result in more ozone than typically
occurs on a single high-temperature day. Ozone can be transported
hundreds of miles downwind of precursor emissions, resulting in
elevated ozone levels even in areas with low local VOC or NO_X emissions.
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    \246\ U.S. EPA. (2006). Air Quality Criteria for Ozone and
Related Photochemical Oxidants (Final). EPA/600/R-05/004aF-cF.
Washington, DC: U.S. EPA. Retrieved on March 19, 2009 from Docket
EPA-HQ-OAR-2003-0190 at http://www.regulations.gov/.
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ii. Health Effects of Ozone
    The health and welfare effects of ozone are well documented and are
assessed in EPA's 2006 Air Quality Criteria Document (ozone AQCD) and
2007 Staff Paper.247 248 Ozone can irritate the respiratory
system, causing coughing, throat irritation, and/or uncomfortable
sensation in the chest. Ozone can reduce lung function and make it more
difficult to breathe deeply; breathing may also become more rapid and
shallow than normal, thereby limiting a person's activity. Ozone can
also aggravate asthma, leading to more asthma attacks that require
medical attention and/or the use of additional medication. In addition,
there is suggestive evidence of a contribution of ozone to
cardiovascular-related morbidity and highly suggestive evidence that
short-term ozone exposure directly or indirectly contributes to non-
accidental and cardiopulmonary-related mortality, but additional
research is needed to clarify the underlying mechanisms causing these
effects. In a recent report on the estimation of ozone-related
premature mortality published by the National Research Council (NRC), a
panel of experts and reviewers concluded that short-term exposure to
ambient ozone is likely to contribute to premature deaths and that
ozone-related mortality should be included in estimates of the health
benefits of reducing ozone exposure.\249\ Animal toxicological evidence
indicates that with repeated exposure, ozone can inflame and damage the
lining of the lungs, which may lead to permanent changes in lung tissue
and irreversible reductions in lung function. People who are more
susceptible to effects associated with exposure to ozone can include
children, the elderly, and individuals with respiratory disease such as
asthma. Those with greater exposures to ozone, for instance due to time
spent outdoors (e.g., children and outdoor workers), are of particular concern.
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    \247\ U.S. EPA. (2006). Air Quality Criteria for Ozone and
Related Photochemical Oxidants (Final). EPA/600/R-05/004aF-cF.
Washington, DC: U.S. EPA. Retrieved on March 19, 2009 from Docket
EPA-HQ-OAR-2003-0190 at http://www.regulations.gov/.
    \248\ U.S. EPA. (2007). Review of the National Ambient Air
Quality Standards for Ozone: Policy Assessment of Scientific and
Technical Information, OAQPS Staff Paper. EPA-452/R-07-003.
Washington, DC. U.S. EPA. Retrieved on March 19, 2009 from Docket
EPA-HQ-OAR-2003-0190 at http://www.regulations.gov/.
    \249\ National Research Council (NRC), 2008. Estimating
Mortality Risk Reduction and Economic Benefits from Controlling
Ozone Air Pollution. The National Academies Press: Washington, DC.
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    The 2006 ozone AQCD also examined relevant new scientific
information that has emerged in the past decade, including the impact
of ozone exposure on such health effects as changes in lung structure
and biochemistry, inflammation of the lungs, exacerbation and causation
of asthma, respiratory illness-related school absence, hospital
admissions and premature mortality. Animal toxicological studies have
suggested potential interactions between ozone and PM with increased
responses observed to mixtures of the two pollutants compared to either
ozone or PM alone. The respiratory morbidity observed in animal studies
along with the evidence from epidemiologic studies supports a causal
relationship between acute ambient ozone exposures and increased
respiratory-related emergency room visits and hospitalizations in the
warm season. In addition, there is suggestive evidence of a
contribution of ozone to cardiovascular-related morbidity and non-
accidental and cardiopulmonary mortality.
c. NO_X and SO_X
i. Background
    Nitrogen dioxide (NO₂) is a member of the NO_X
family of gases. Most NO₂ is formed in the air through the
oxidation of nitric oxide (NO) emitted when fuel is burned at a high
temperature. SO₂, a member of the sulfur oxide
(SO_X) family of gases, is formed from burning fuels
containing sulfur (e.g., coal or oil derived), extracting gasoline from
oil, or extracting metals from ore.
    SO₂ and NO₂ can dissolve in water vapor and
further oxidize to form sulfuric and nitric acid which react with
ammonia to form sulfates and nitrates, both of which are important
components of ambient PM. The health effects of ambient PM are
discussed in Section III.G.3.a of this preamble. NO_X along
with non-methane hydrocarbon (NMHC) are the two major precursors of
ozone. The health effects of ozone are covered in Section III.G.3.b.
ii. Health Effects of NO₂
    Information on the health effects of NO₂ can be found in
the U.S. Environmental Protection Agency Integrated Science Assessment
(ISA) for Nitrogen Oxides.\250\ The U.S. EPA has concluded that the
findings of epidemiologic, controlled human

[[Page 49596]]

exposure, and animal toxicological studies provide evidence that is
sufficient to infer a likely causal relationship between respiratory
effects and short-term NO₂ exposure. The ISA concludes that
the strongest evidence for such a relationship comes from epidemiologic
studies of respiratory effects including symptoms, emergency department
visits, and hospital admissions. The ISA also draws two broad
conclusions regarding airway responsiveness following NO₂
exposure. First, the ISA concludes that NO₂ exposure may
enhance the sensitivity to allergen-induced decrements in lung function
and increase the allergen-induced airway inflammatory response at
exposures as low as 0.26 ppm NO₂ for 30 minutes. Second,
exposure to NO₂ has been found to enhance the inherent
responsiveness of the airway to subsequent nonspecific challenges in
controlled human exposure studies of asthmatic subjects. Enhanced
airway responsiveness could have important clinical implications for
asthmatics since transient increases in airway responsiveness following
NO₂ exposure have the potential to increase symptoms and
worsen asthma control. Together, the epidemiologic and experimental
data sets form a plausible, consistent, and coherent description of a
relationship between NO₂ exposures and an array of adverse
health effects that range from the onset of respiratory symptoms to
hospital admission.
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    \250\ U.S. EPA (2008). Integrated Science Assessment for Oxides
of Nitrogen--Health Criteria (Final Report). EPA/600/R-08/071.
Washington, DC: U.S. EPA. Retrieved on March 19, 2009 from http://
cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=194645.
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    Although the weight of evidence supporting a causal relationship is
somewhat less certain than that associated with respiratory morbidity,
NO₂ has also been linked to other health endpoints. These
include all-cause (nonaccidental) mortality, hospital admissions or
emergency department visits for cardiovascular disease, and decrements
in lung function growth associated with chronic exposure.
iii. Health Effects of SO₂
    Information on the health effects of SO₂ can be found in
the U.S. Environmental Protection Agency Integrated Science Assessment
for Sulfur Oxides.\251\ SO₂ has long been known to cause
adverse respiratory health effects, particularly among individuals with
asthma. Other potentially sensitive groups include children and the
elderly. During periods of elevated ventilation, asthmatics may
experience symptomatic bronchoconstriction within minutes of exposure.
Following an extensive evaluation of health evidence from epidemiologic
and laboratory studies, the EPA has concluded that there is a causal
relationship between respiratory health effects and short-term exposure
to SO₂. Separately, based on an evaluation of the
epidemiologic evidence of associations between short-term exposure to
SO₂ and mortality, the EPA has concluded that the overall
evidence is suggestive of a causal relationship between short-term
exposure to SO₂ and mortality.
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    \251\ U.S. EPA. (2008). Integrated Science Assessment (ISA) for
Sulfur Oxides--Health Criteria (Final Report). EPA/600/R-08/047F.
Washington, DC: U.S. Environmental Protection Agency. Retrieved on
March 18, 2009 from http://cfpub.epa.gov/ncea/cfm/
recordisplay.cfm?deid=198843.
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d. Carbon Monoxide
    Carbon monoxide (CO) forms as a result of incomplete fuel
combustion. CO enters the bloodstream through the lungs, forming
carboxyhemoglobin and reducing the delivery of oxygen to the body's
organs and tissues. The health threat from CO is most serious for those
who suffer from cardiovascular disease, particularly those with angina
or peripheral vascular disease. Healthy individuals also are affected,
but only at higher CO levels. Exposure to elevated CO levels is
associated with impairment of visual perception, work capacity, manual
dexterity, learning ability and performance of complex tasks. Carbon
monoxide also contributes to ozone nonattainment since carbon monoxide
reacts photochemically in the atmosphere to form ozone.\252\ Additional
information on CO related health effects can be found in the Carbon
Monoxide Air Quality Criteria Document (CO AQCD).253 254
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    \252\ U.S. EPA (2000). Air Quality Criteria for Carbon Monoxide,
EPA/600/P-99/001F. This document is available in Docket EPA-HQ-OAR-2004-0008.
    \253\ U.S. EPA (2000). Air Quality Criteria for Carbon Monoxide,
EPA/600/P-99/001F. This document is available in Docket EPA-HQ-OAR-2004-0008.
    \254\ The CO NAAQS is currently under review and the EPA is
considering all available science on CO health effects, including
information which has been published since 2000, in the development
of the upcoming CO Integrated Science Assessment Document (ISA). A
first draft of the CO ISA was completed in March 2009 and was
submitted for review by the Clean Air Scientific Advisory Committee
(CASAC) of EPA's Science Advisory Board. For more information, see
http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=203935.
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e. Air Toxics
    Motor vehicle emissions contribute to ambient levels of air toxics
known or suspected as human or animal carcinogens, or that have
noncancer health effects. The population experiences an elevated risk
of cancer and other noncancer health effects from exposure to air
toxics. \255\ These compounds include, but are not limited to, benzene,
1,3-butadiene, formaldehyde, acetaldehyde, acrolein, polycyclic organic
matter (POM), and naphthalene. These compounds, except acetaldehyde,
were identified as national or regional risk drivers in the 2002
National-scale Air Toxics Assessment (NATA) and have significant
inventory contributions from mobile sources.\256\ Emissions and ambient
concentrations of compounds are discussed in the DRIA chapter on
emission inventories and air quality (Chapters 5 and 7, respectively).
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    \255\ U. S. EPA. 2002 National-Scale Air Toxics Assessment.
www.epa.gov/ttn/atw/nata12002/risksum.html.
    \256\ U.S. EPA. 2009. National-Scale Air Toxics Assessment for
2002. http://www.epa.gov/ttn/atw/nata2002/.
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    i. Benzene
    The EPA's IRIS database lists benzene as a known human carcinogen
(causing leukemia) by all routes of exposure, and concludes that
exposure is associated with additional health effects, including
genetic changes in both humans and animals and increased proliferation
of bone marrow cells in mice.257 258 259 EPA states in its
IRIS database that data indicate a causal relationship between benzene
exposure and acute lymphocytic leukemia and suggest a relationship
between benzene exposure and chronic non-lymphocytic leukemia and
chronic lymphocytic leukemia. The International Agency for Research on
Carcinogens (IARC) has determined that benzene is a human carcinogen
and the U.S. Department of Health and Human Services (DHHS) has
characterized benzene as a known human carcinogen.260 261
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    \257\ U.S. EPA. 2000. Integrated Risk Information System File
for Benzene. This material is available electronically at http://
www.epa.gov/iris/subst/0276.htm.
    \258\ International Agency for Research on Cancer (IARC). 1982.
Monographs on the evaluation of carcinogenic risk of chemicals to
humans, Volume 29. Some industrial chemicals and dyestuffs, World
Health Organization, Lyon, France, p. 345-389.
    \259\ Irons, R.D.; Stillman, W.S.; Colagiovanni, D.B.; Henry,
V.A. 1992. Synergistic action of the benzene metabolite hydroquinone
on myelopoietic stimulating activity of granulocyte/macrophage
colony-stimulating factor in vitro, Proc. Natl. Acad. Sci. 89:3691-3695.
    \260\ International Agency for Research on Cancer (IARC). 1987.
Monographs on the evaluation of carcinogenic risk of chemicals to
humans, Volume 29. Supplement 7, Some industrial chemicals and
dyestuffs, World Health Organization, Lyon, France.
    \261\ U.S. Department of Health and Human Services National
Toxicology Program 11th Report on Carcinogens available at http://
www.ntp.niehs.nih.gov/go/16183.
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    A number of adverse noncancer health effects including blood disorders,
such as preleukemia and aplastic anemia, have also been associated with

[[Page 49597]]

long-term exposure to benzene.262 263 The most sensitive
noncancer effect observed in humans, based on current data, is the
depression of the absolute lymphocyte count in blood.264 265
In addition, recent work, including studies sponsored by the Health
Effects Institute (HEI), provides evidence that biochemical responses
are occurring at lower levels of benzene exposure than previously know
266 267 268 269 EPA's IRIS program has not yet evaluated
these new data.
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    \262\ Aksoy, M. (1989). Hematotoxicity and carcinogenicity of
benzene. Environ. Health Perspect. 82: 193-197.
    \263\ Goldstein, B.D. (1988). Benzene toxicity. Occupational
medicine. State of the Art Reviews. 3: 541-554.
    \264\ Rothman, N., G.L. Li, M. Dosemeci, W.E. Bechtold, G.E.
Marti, Y.Z. Wang, M. Linet, L.Q. Xi, W. Lu, M.T. Smith, N. Titenko-
Holland, L.P. Zhang, W. Blot, S.N. Yin, and R.B. Hayes (1996)
Hematotoxicity among Chinese workers heavily exposed to benzene. Am.
J. Ind. Med. 29: 236-246.
    \265\ U.S. EPA (2002) Toxicological Review of Benzene (Noncancer
Effects). Environmental Protection Agency, Integrated Risk
Information System (IRIS), Research and Development, National Center
for Environmental Assessment, Washington DC. This material is
available electronically at http://www.epa.gov/iris/subst/0276.htm.
    \266\ Qu, O.; Shore, R.; Li, G.; Jin, X.; Chen, C.L.; Cohen, B.;
Melikian, A.; Eastmond, D.; Rappaport, S.; Li, H.; Rupa, D.;
Suramaya, R.; Songnian, W.; Huifant, Y.; Meng, M.; Winnik, M.; Kwok,
E.; Li, Y.; Mu, R.; Xu, B.; Zhang, X.; Li, K. (2003) HEI Report 115,
Validation & Evaluation of Biomarkers in Workers Exposed to Benzene in China.
    \267\ Qu, Q., R. Shore, G. Li, X. Jin, L.C. Chen, B. Cohen, et
al. (2002) Hematological changes among Chinese workers with a broad
range of benzene exposures. Am. J. Industr. Med. 42: 275-285.
    \268\ Lan, Qing, Zhang, L., Li, G., Vermeulen, R., et al. (2004)
Hematotoxically in Workers Exposed to Low Levels of Benzene. Science
306: 1774-1776.
    \269\ Turtletaub, K.W. and Mani, C. (2003) Benzene metabolism in
rodents at doses relevant to human exposure from Urban Air. Research
Reports Health Effect Inst. Report No.113.
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ii. 1,3-Butadiene
    EPA has characterized 1,3-butadiene as carcinogenic to humans by
inhalation.270 271 The IARC has determined that 1,3-
butadiene is a human carcinogen and the U.S. DHHS has characterized
1,3-butadiene as a known human carcinogen.272 273 There are
numerous studies consistently demonstrating that 1,3-butadiene is
metabolized into genotoxic metabolites by experimental animals and
humans. The specific mechanisms of 1,3-butadiene-induced carcinogenesis
are unknown; however, the scientific evidence strongly suggests that
the carcinogenic effects are mediated by genotoxic metabolites. Animal
data suggest that females may be more sensitive than males for cancer
effects associated with 1,3-butadiene exposure; there are insufficient
data in humans from which to draw conclusions about sensitive
subpopulations. 1,3-butadiene also causes a variety of reproductive and
developmental effects in mice; no human data on these effects are
available. The most sensitive effect was ovarian atrophy observed in a
lifetime bioassay of female mice.\274\
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    \270\ U.S. EPA (2002) Health Assessment of 1,3-Butadiene. Office
of Research and Development, National Center for Environmental
Assessment, Washington Office, Washington, DC. Report No. EPA600-P-
98-001F. This document is available electronically at http://
www.epa.gov/iris/supdocs/buta-sup.pdf.
    \271\ U.S. EPA (2002) Full IRIS Summary for 1,3-butadiene (CASRN
106-99-0). Environmental Protection Agency, Integrated Risk
Information System (IRIS), Research and Development, National Center
for Environmental Assessment, Washington, DC http://www.epa.gov/
iris/subst/0139.htm.
    \272\ International Agency for Research on Cancer (IARC) (1999)
Monographs on the evaluation of carcinogenic risk of chemicals to
humans, Volume 71, Re-evaluation of some organic chemicals,
hydrazine and hydrogen peroxide and Volume 97 (in preparation),
World Health Organization, Lyon, France.
    \273\ U.S. Department of Health and Human Services (2005)
National Toxicology Program 11th Report on Carcinogens available at:
ntp.niehs.nih.gov/index.cfm?objectid=32BA9724-F1F6-975E-7FCE50709CB4C932.
    \274\ Bevan, C.; Stadler, J.C.; Elliot, G.S.; et al. (1996)
Subchronic toxicity of 4-vinylcyclohexene in rats and mice by
inhalation. Fundam. Appl. Toxicol. 32:1-10.
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iii. Formaldehyde
    Since 1987, EPA has classified formaldehyde as a probable human
carcinogen based on evidence in humans and in rats, mice, hamsters, and
monkeys.\275\ EPA is currently reviewing recently published
epidemiological data. For instance, research conducted by the National
Cancer Institute (NCI) found an increased risk of nasopharyngeal cancer
and lymphohematopoietic malignancies such as leukemia among workers
exposed to formaldehyde.276 277 In an analysis of the
lymphohematopoietic cancer mortality from an extended follow-up of
these workers, NCI confirmed an association between lymphohematopoietic
cancer risk and peak exposures.\278\ A recent National Institute of
Occupational Safety and Health (NIOSH) study of garment workers also
found increased risk of death due to leukemia among workers exposed to
formaldehyde.\279\ Extended follow-up of a cohort of British chemical
workers did not find evidence of an increase in nasopharyngeal or
lymphohematopoietic cancers, but a continuing statistically significant
excess in lung cancers was reported.\280\ Recently, the IARC re-
classified formaldehyde as a human carcinogen (Group 1).\281\
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    \275\ U.S. EPA (1987) Assessment of Health Risks to Garment
Workers and Certain Home Residents from Exposure to Formaldehyde,
Office of Pesticides and Toxic Substances, April 1987.
    \276\ Hauptmann, M.; Lubin, J. H.; Stewart, P. A.; Hayes, R. B.;
Blair, A. 2003. Mortality from lymphohematopeotic malignancies among
workers in formaldehyde industries. Journal of the National Cancer
Institute 95: 1615-1623.
    \277\ Hauptmann, M.; Lubin, J. H.; Stewart, P. A.; Hayes, R. B.;
Blair, A. 2004. Mortality from solid cancers among workers in
formaldehyde industries. American Journal of Epidemiology 159: 1117-1130.
    \278\ Beane Freeman, L. E.; Blair, A.; Lubin, J. H.; Stewart, P.
A.; Hayes, R. B.; Hoover, R. N.; Hauptmann, M. 2009. Mortality from
lymphohematopoietic malignancies among workers in formaldehyde
industries: The National Cancer Institute cohort. J. National Cancer
Inst. 101: 751-761.
    \279\ Pinkerton, L. E. 2004. Mortality among a cohort of garment
workers exposed to formaldehyde: an update. Occup. Environ. Med. 61: 193-200.
    \280\ Coggon, D, EC Harris, J Poole, KT Palmer. 2003. Extended
follow-up of a cohort of British chemical workers exposed to
formaldehyde. J National Cancer Inst. 95:1608-1615.
    \281\ International Agency for Research on Cancer (IARC). 2006.
Formaldehyde, 2-Butoxyethanol and 1-tert-Butoxypropan-2-ol. Volume
88. (in preparation), World Health Organization, Lyon, France.
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    Formaldehyde exposure also causes a range of noncancer health
effects, including irritation of the eyes (burning and watering of the
eyes), nose and throat. Effects from repeated exposure in humans
include respiratory tract irritation, chronic bronchitis and nasal
epithelial lesions such as metaplasia and loss of cilia. Animal studies
suggest that formaldehyde may also cause airway inflammation--including
eosinophil infiltration into the airways. There are several studies
that suggest that formaldehyde may increase the risk of asthma--
particularly in the young.282 283
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    \282\ Agency for Toxic Substances and Disease Registry (ATSDR).
1999. Toxicological profile for Formaldehyde. Atlanta, GA: U.S.
Department of Health and Human Services, Public Health Service.
http://www.atsdr.cdc.gov/toxprofiles/tp111.html.
    \283\ WHO (2002) Concise International Chemical Assessment
Document 40: Formaldehyde. Published under the joint sponsorship of
the United Nations Environment Programme, the International Labour
Organization, and the World Health Organization, and produced within
the framework of the Inter-Organization Programme for the Sound
Management of Chemicals. Geneva.
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iv. Acetaldehyde
    Acetaldehyde is classified in EPA's IRIS database as a probable
human carcinogen, based on nasal tumors in rats, and is considered
toxic by the inhalation, oral, and intravenous routes.\284\
Acetaldehyde is reasonably anticipated to be a human carcinogen by the
U.S. DHHS in the 11th Report on Carcinogens and is classified as
possibly carcinogenic to humans (Group 2B) by

[[Page 49598]]

the IARC.285 286 EPA is currently conducting a reassessment
of cancer risk from inhalation exposure to acetaldehyde. The primary
noncancer effects of exposure to acetaldehyde vapors include irritation
of the eyes, skin, and respiratory tract.\287\ In short-term (4 week)
rat studies, degeneration of olfactory epithelium was observed at
various concentration levels of acetaldehyde
exposure.288 289 Data from these studies were used by EPA to
develop an inhalation reference concentration. Some asthmatics have
been shown to be a sensitive subpopulation to decrements in functional
expiratory volume (FEV1 test) and bronchoconstriction upon acetaldehyde
inhalation.\290\ The agency is currently conducting a reassessment of
the health hazards from inhalation exposure to acetaldehyde.
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    \284\ U.S. EPA. 1991. Integrated Risk Information System File of
Acetaldehyde. Research and Development, National Center for
Environmental Assessment, Washington, DC. This material is available
electronically at http://www.epa.gov/iris/subst/0290.htm.
    \285\ U.S. Department of Health and Human Services National
Toxicology Program 11th Report on Carcinogens available at:
ntp.niehs.nih.gov/index.cfm?objectid=32BA9724-F1F6-975E-7FCE50709CB4C932.
    \286\ International Agency for Research on Cancer (IARC). 1999.
Re-evaluation of some organic chemicals, hydrazine, and hydrogen
peroxide. IARC Monographs on the Evaluation of Carcinogenic Risk of
Chemical to Humans, Vol. 71. Lyon, France.
    \287\ U.S. EPA. 1991. Integrated Risk Information System File of
Acetaldehyde. This material is available electronically at http://
www.epa.gov/iris/subst/0290.htm.
    \288\ Appleman, L. M., R. A. Woutersen, V. J. Feron, R. N.
Hooftman, and W. R. F. Notten. 1986. Effects of the variable versus
fixed exposure levels on the toxicity of acetaldehyde in rats. J.
Appl. Toxicol. 6: 331-336.
    \289\ Appleman, L.M., R.A. Woutersen, and V.J. Feron. 1982.
Inhalation toxicity of acetaldehyde in rats. I. Acute and subacute
studies. Toxicology. 23: 293-297.
    \290\ Myou, S.; Fujimura, M.; Nishi K.; Ohka, T.; and Matsuda,
T. 1993. Aerosolized acetaldehyde induces histamine-mediated
bronchoconstriction in asthmatics. Am. Rev. Respir. Dis.148(4 Pt 1): 940-3.
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v. Acrolein
    Acrolein is extremely acrid and irritating to humans when inhaled,
with acute exposure resulting in upper respiratory tract irritation,
mucus hypersecretion and congestion. Levels considerably lower than 1
ppm (2.3 mg/m3) elicit subjective complaints of eye and
nasal irritation and a decrease in the respiratory
rate.291 292 Lesions to the lungs and upper respiratory
tract of rats, rabbits, and hamsters have been observed after
subchronic exposure to acrolein. Based on animal data, individuals with
compromised respiratory function (e.g., emphysema, asthma) are expected
to be at increased risk of developing adverse responses to strong
respiratory irritants such as acrolein. This was demonstrated in mice
with allergic airway-disease by comparison to non-diseased mice in a
study of the acute respiratory irritant effects of acrolein.\293\ The
intense irritancy of this carbonyl has been demonstrated during
controlled tests in human subjects, who suffer intolerable eye and
nasal mucosal sensory reactions within minutes of exposure.\294\
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    \291\ Weber-Tschopp, A; Fischer, T; Gierer, R; et al. (1977)
Experimentelle reizwirkungen von Acrolein auf den Menschen. Int Arch
Occup Environ Hlth 40(2):117-130. In German
    \292\ Sim, VM; Pattle, RE. (1957) Effect of possible smog
irritants on human subjects. J Am Med Assoc 165(15):1908-1913.
    \293\ Morris JB, Symanowicz PT, Olsen JE, et al. 2003. Immediate
sensory nerve-mediated respiratory responses to irritants in healthy
and allergic airway-diseased mice. J Appl Physiol 94(4):1563-1571.
    \294\ Sim VM, Pattle RE. Effect of possible smog irritants on
human subjects JAMA165: 1980-2010, 1957.
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    EPA determined in 2003 that the human carcinogenic potential of
acrolein could not be determined because the available data were
inadequate. No information was available on the carcinogenic effects of
acrolein in humans and the animal data provided inadequate evidence of
carcinogenicity.\295\ The IARC determined in 1995 that acrolein was not
classifiable as to its carcinogenicity in humans.\296\
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    \295\ U.S. EPA. 2003. Integrated Risk Information System File of
Acrolein. Research and Development, National Center for
Environmental Assessment, Washington, DC. This material is available
at http://www.epa.gov/iris/subst/0364.htm.
    \296\ International Agency for Research on Cancer (IARC). 1995.
Monographs on the evaluation of carcinogenic risk of chemicals to
humans, Volume 63, Dry cleaning, some chlorinated solvents and other
industrial chemicals, World Health Organization, Lyon, France.
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vi. Polycyclic Organic Matter (POM)
    POM is generally defined as a large class of organic compounds
which have multiple benzene rings and a boiling point greater than 100
degrees Celsius. Many of the compounds included in the class of
compounds known as POM are classified by EPA as probable human
carcinogens based on animal data. One of these compounds, naphthalene,
is discussed separately below. Polycyclic aromatic hydrocarbons (PAHs)
are a subset of POM that contain only hydrogen and carbon atoms. A
number of PAHs are known or suspected carcinogens. Recent studies have
found that maternal exposures to PAHs (a subclass of POM) in a
population of pregnant women were associated with several adverse birth
outcomes, including low birth weight and reduced length at birth, as
well as impaired cognitive development at age three.297 298
EPA has not yet evaluated these recent studies.
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    \297\ Perera, F.P.; Rauh, V.; Tsai, W-Y.; et al. (2002) Effect
of transplacental exposure to environmental pollutants on birth
outcomes in a multiethnic population. Environ Health Perspect. 111: 201-205.
    \298\ Perera, F.P.; Rauh, V.; Whyatt, R.M.; Tsai, W.Y.; Tang,
D.; Diaz, D.; Hoepner, L.; Barr, D.; Tu, Y.H.; Camann, D.; Kinney,
P. (2006) Effect of prenatal exposure to airborne polycyclic
aromatic hydrocarbons on neurodevelopment in the first 3 years of
life among inner-city children. Environ Health Perspect 114: 1287-1292.
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vii. Naphthalene
    Naphthalene is found in small quantities in gasoline and diesel
fuels. Naphthalene emissions have been measured in larger quantities in
both gasoline and diesel exhaust compared with evaporative emissions
from mobile sources, indicating it is primarily a product of
combustion. EPA released an external review draft of a reassessment of
the inhalation carcinogenicity of naphthalene based on a number of
recent animal carcinogenicity studies.\299\ The draft reassessment
completed external peer review.\300\ Based on external peer review
comments received, additional analyses are being undertaken. This
external review draft does not represent official agency opinion and
was released solely for the purposes of external peer review and public
comment. Once EPA evaluates public and peer reviewer comments, the
document will be revised. The National Toxicology Program listed
naphthalene as ``reasonably anticipated to be a human carcinogen'' in
2004 on the basis of bioassays reporting clear evidence of
carcinogenicity in rats and some evidence of carcinogenicity in
mice.\301\ California EPA has released a new risk assessment for
naphthalene, and the IARC has reevaluated naphthalene and re-classified
it as Group 2B: possibly carcinogenic to humans.\302\ Naphthalene also
causes a number of chronic non-cancer effects in animals, including

[[Page 49599]]

abnormal cell changes and growth in respiratory and nasal tissues.\303\
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    \299\ U. S. EPA. 2004. Toxicological Review of Naphthalene
(Reassessment of the Inhalation Cancer Risk), Environmental
Protection Agency, Integrated Risk Information System, Research and
Development, National Center for Environmental Assessment,
Washington, DC. This material is available electronically at 
http://www.epa.gov/iris/subst/0436.htm.
    \300\ Oak Ridge Institute for Science and Education. (2004).
External Peer Review for the IRIS Reassessment of the Inhalation
Carcinogenicity of Naphthalene. August 2004. http://cfpub.epa.gov/
ncea/cfm/recordisplay.cfm?deid=84403.
    \301\ National Toxicology Program (NTP). (2004). 11th Report on
Carcinogens. Public Health Service, U.S. Department of Health and
Human Services, Research Triangle Park, NC. Available from: 
http://ntp-server.niehs.nih.gov.
    \302\ International Agency for Research on Cancer (IARC).
(2002). Monographs on the Evaluation of the Carcinogenic Risk of
Chemicals for Humans. Vol. 82. Lyon, France.
    \303\ U. S. EPA. 1998. Toxicological Review of Naphthalene,
Environmental Protection Agency, Integrated Risk Information System,
Research and Development, National Center for Environmental
Assessment, Washington, DC. This material is available
electronically at http://www.epa.gov/iris/subst/0436.htm.
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viii. Other Air Toxics
    In addition to the compounds described above, other compounds in
gaseous hydrocarbon and PM emissions from vehicles will be affected by
this proposed action. Mobile source air toxic compounds that would
potentially be impacted include ethylbenzene, polycyclic organic
matter, propionaldehyde, toluene, and xylene. Information regarding the
health effects of these compounds can be found in EPA's IRIS
database.\304\
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    \304\ U.S. EPA Integrated Risk Information System (IRIS)
database is available at: www.epa.gov/iris.
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4. Environmental Effects of Non-GHG Pollutants
a. Visibility
    Visibility can be defined as the degree to which the atmosphere is
transparent to visible light. Airborne particles degrade visibility by
scattering and absorbing light. Visibility is important because it has
direct significance to people's enjoyment of daily activities in all
parts of the country. Individuals value good visibility for the well-
being it provides them directly, where they live and work and in places
where they enjoy recreational opportunities. Visibility is also highly
valued in significant natural areas such as national parks and
wilderness areas and special emphasis is given to protecting visibility
in these areas. For more information on visibility, see the final 2004
PM AQCD as well as the 2005 PM Staff Paper.305 306
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    \305\ U.S. EPA. (2004). Air Quality Criteria for Particulate
Matter (AQCD). Volume I Document No. EPA600/P-99/002aF and Volume II
Document No. EPA600/P-99/002bF. Washington, DC: U.S. Environmental
Protection Agency. Retrieved on March 18, 2009 from http://
cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=87903.
    \306\ U.S. EPA. (2005). Review of the National Ambient Air
Quality Standard for Particulate Matter: Policy Assessment of
Scientific and Technical Information, OAQPS Staff Paper. EPA-452/R-
05-005. Washington, DC: U.S. Environmental Protection Agency.
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    EPA is pursuing a two-part strategy to address visibility. First,
to address the welfare effects of PM on visibility, EPA has set
secondary PM_2.5 standards which act in conjunction with the
establishment of a regional haze program. In setting this secondary
standard, EPA has concluded that PM_2.5 causes adverse
effects on visibility in various locations, depending on PM
concentrations and factors such as chemical composition and average
relative humidity. Second, section 169 of the Clean Air Act provides
additional authority to address existing visibility impairment and
prevent future visibility impairment in the 156 national parks, forests
and wilderness areas categorized as mandatory class I Federal areas (62
FR 38680-81, July 18, 1997).\307\ In July 1999, the regional haze rule
(64 FR 35714) was put in place to protect the visibility in mandatory
class I Federal areas. Visibility can be said to be impaired in both
PM_2.5 nonattainment areas and mandatory class I Federal areas.
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    \307\ These areas are defined in section 162 of the Act as those
national parks exceeding 6,000 acres, wilderness areas and memorial
parks exceeding 5,000 acres, and all international parks which were
in existence on August 7, 1977.
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b. Plant and Ecosystem Effects of Ozone
    Elevated ozone levels contribute to environmental effects, with
impacts to plants and ecosystems being of most concern. Ozone can
produce both acute and chronic injury in sensitive species depending on
the concentration level and the duration of the exposure. Ozone effects
also tend to accumulate over the growing season of the plant, so that
even low concentrations experienced for a longer duration have the
potential to create chronic stress on vegetation. Ozone damage to
plants includes visible injury to leaves and impaired photosynthesis,
both of which can lead to reduced plant growth and reproduction,
resulting in reduced crop yields, forestry production, and use of
sensitive ornamentals in landscaping. In addition, the impairment of
photosynthesis, the process by which the plant makes carbohydrates (its
source of energy and food), can lead to a subsequent reduction in root
growth and carbohydrate storage below ground, resulting in other, more
subtle plant and ecosystems impacts.
    These latter impacts include increased susceptibility of plants to
insect attack, disease, harsh weather, interspecies competition and
overall decreased plant vigor. The adverse effects of ozone on forest
and other natural vegetation can potentially lead to species shifts and
loss from the affected ecosystems, resulting in a loss or reduction in
associated ecosystem goods and services. Lastly, visible ozone injury
to leaves can result in a loss of aesthetic value in areas of special
scenic significance like national parks and wilderness areas. The final
2006 ozone AQCD presents more detailed information on ozone effects on
vegetation and ecosystems.
c. Atmospheric Deposition
    Wet and dry deposition of ambient particulate matter delivers a
complex mixture of metals (e.g., mercury, zinc, lead, nickel, aluminum,
cadmium), organic compounds (e.g., POM, dioxins, furans) and inorganic
compounds (e.g., nitrate, sulfate) to terrestrial and aquatic
ecosystems. The chemical form of the compounds deposited depends on a
variety of factors including ambient conditions (e.g., temperature,
humidity, oxidant levels) and the sources of the material. Chemical and
physical transformations of the compounds occur in the atmosphere as
well as the media onto which they deposit. These transformations in
turn influence the fate, bioavailability and potential toxicity of
these compounds. Atmospheric deposition has been identified as a key
component of the environmental and human health hazard posed by several
pollutants including mercury, dioxin and PCBs.\308\
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    \308\ U.S. EPA (2000) Deposition of Air Pollutants to the Great
Waters: Third Report to Congress. Office of Air Quality Planning and
Standards. EPA-453/R-00-0005. This document is available in Docket
EPA-HQ-OAR-2003-0190.
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    Adverse impacts on water quality can occur when atmospheric
contaminants deposit to the water surface or when material deposited on
the land enters a water body through runoff. Potential impacts of
atmospheric deposition to water bodies include those related to both
nutrient and toxic inputs. Adverse effects to human health and welfare
can occur from the addition of excess nitrogen via atmospheric
deposition. The nitrogen-nutrient enrichment contributes to toxic algae
blooms and zones of depleted oxygen, which can lead to fish kills,
frequently in coastal waters. Deposition of heavy metals or other
toxins may lead to the human ingestion of contaminated fish, human
ingestion of contaminated water, damage to the marine ecology, and
limits to recreational uses. Several studies have been conducted in
U.S. coastal waters and in the Great Lakes Region in which the role of
ambient PM deposition and runoff is
investigated.309 310 311 312 313
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    \309\ U.S. EPA (2004) National Coastal Condition Report II.
Office of Research and Development/Office of Water. EPA-620/R-03/
002. This document is available in Docket EPA-HQ-OAR-2003-0190.
    \310\ Gao, Y., E.D. Nelson, M.P. Field, et al. 2002.
Characterization of atmospheric trace elements on PM_2.5
particulate matter over the New York-New Jersey harbor estuary.
Atmos. Environ. 36: 1077-1086.
    \311\ Kim, G., N. Hussain, J.R. Scudlark, and T.M. Church. 2000.
Factors influencing the atmospheric depositional fluxes of stable
Pb, 210Pb, and 7Be into Chesapeake Bay. J. Atmos. Chem. 36: 65-79.
    \312\ Lu, R., R.P. Turco, K. Stolzenbach, et al. 2003. Dry
deposition of airborne trace metals on the Los Angeles Basin and
adjacent coastal waters. J. Geophys. Res. 108(D2, 4074): AAC 11-1 to 11-24.
    \313\ Marvin, C.H., M.N. Charlton, E.J. Reiner, et al. 2002.
Surficial sediment contamination in Lakes Erie and Ontario: A
comparative analysis. J. Great Lakes Res. 28(3): 437-450.

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[[Page 49600]]

    Atmospheric deposition of nitrogen and sulfur contributes to
acidification, altering biogeochemistry and affecting animal and plant
life in terrestrial and aquatic ecosystems across the U.S. The
sensitivity of terrestrial and aquatic ecosystems to acidification from
nitrogen and sulfur deposition is predominantly governed by geology.
Prolonged exposure to excess nitrogen and sulfur deposition in
sensitive areas acidifies lakes, rivers and soils. Increased acidity in
surface waters creates inhospitable conditions for biota and affects
the abundance and nutritional value of preferred prey species,
threatening biodiversity and ecosystem function. Over time, acidifying
deposition also removes essential nutrients from forest soils,
depleting the capacity of soils to neutralize future acid loadings and
negatively affecting forest sustainability. Major effects include a
decline in sensitive forest tree species, such as red spruce (Picea
rubens) and sugar maple (Acer saccharum), and a loss of biodiversity of
fishes, zooplankton, and macro invertebrates.
    In addition to the role nitrogen deposition plays in acidification,
nitrogen deposition also causes ecosystem nutrient enrichment leading
to eutrophication that alters biogeochemical cycles. Excess nitrogen
also leads to the loss of nitrogen sensitive lichen species as they are
outcompeted by invasive grasses as well as altering the biodiversity of
terrestrial ecosystems, such as grasslands and meadows. For a broader
explanation of the topics treated here, refer to the description in
Chapter 7 of the DRIA.
    Adverse impacts on soil chemistry and plant life have been observed
for areas heavily influenced by atmospheric deposition of nutrients,
metals and acid species, resulting in species shifts, loss of
biodiversity, forest decline and damage to forest productivity.
Potential impacts also include adverse effects to human health through
ingestion of contaminated vegetation or livestock (as in the case for
dioxin deposition), reduction in crop yield, and limited use of land
due to contamination.
    Atmospheric deposition of pollutants can reduce the aesthetic
appeal of buildings and culturally important articles through soiling,
and can contribute directly (or in conjunction with other pollutants)
to structural damage by means of corrosion or erosion. Atmospheric
deposition may affect materials principally by promoting and
accelerating the corrosion of metals, by degrading paints, and by
deteriorating building materials such as concrete and limestone.
Particles contribute to these effects because of their electrolytic,
hygroscopic, and acidic properties, and their ability to adsorb
corrosive gases (principally sulfur dioxide). The rate of metal
corrosion depends on a number of factors, including the deposition rate
and nature of the pollutant; the influence of the metal protective
corrosion film; the amount of moisture present; variability in the
electrochemical reactions; the presence and concentration of other
surface electrolytes; and the orientation of the metal surface.
d. Environmental Effects of Air Toxics
    Fuel combustion emissions contribute to ambient levels of
pollutants that contribute to adverse effects on vegetation. Volatile
organic compounds (VOCs), some of which are considered air toxics, have
long been suspected to play a role in vegetation damage.\314\ In
laboratory experiments, a wide range of tolerance to VOCs has been
observed.\315\ Decreases in harvested seed pod weight have been
reported for the more sensitive plants, and some studies have reported
effects on seed germination, flowering and fruit ripening. Effects of
individual VOCs or their role in conjunction with other stressors
(e.g., acidification, drought, temperature extremes) have not been well
studied. In a recent study of a mixture of VOCs including ethanol and
toluene on herbaceous plants, significant effects on seed production,
leaf water content and photosynthetic efficiency were reported for some
plant species.\316\
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    \314\ U.S. EPA. 1991. Effects of organic chemicals in the
atmosphere on terrestrial plants. EPA/600/3-91/001.
    \315\ Cape JN, ID Leith, J Binnie, J Content, M Donkin, M
Skewes, DN Price AR Brown, AD Sharpe. 2003. Effects of VOCs on
herbaceous plants in an open-top chamber experiment. Environ.
Pollut. 124:341-343.
    \316\ Cape JN, ID Leith, J Binnie, J Content, M Donkin, M
Skewes, DN Price AR Brown, AD Sharpe. 2003. Effects of VOCs on
herbaceous plants in an open-top chamber experiment. Environ.
Pollut. 124:341-343.
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    Research suggests an adverse impact of vehicle exhaust on plants,
which has in some cases been attributed to aromatic compounds and in
other cases to nitrogen oxides.317 318 319 The impacts of
VOCs on plant reproduction may have long-term implications for
biodiversity and survival of native species near major roadways. Most
of the studies of the impacts of VOCs on vegetation have focused on
short-term exposure and few studies have focused on long-term effects
of VOCs on vegetation and the potential for metabolites of these
compounds to affect herbivores or insects.
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    \317\ Viskari E-L. 2000. Epicuticular wax of Norway spruce
needles as indicator of traffic pollutant deposition. Water, Air,
and Soil Pollut. 121:327-337.
    \318\ Ugrekhelidze D, F Korte, G Kvesitadze. 1997. Uptake and
transformation of benzene and toluene by plant leaves. Ecotox.
Environ. Safety 37:24-29.
    \319\ Kammerbauer H, H Selinger, R Rommelt, A Ziegler-Jons, D
Knoppik, B Hock. 1987. Toxic components of motor vehicle emissions
for the spruce Pciea abies. Environ. Pollut. 48:235-243.
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5. Air Quality Impacts of Non-GHG Pollutants
a. Current Levels of PM_2.5, Ozone, CO and Air Toxics
    This proposal may have impacts on levels of PM_2.5,
ozone, CO and air toxics. Nationally, levels of PM_2.5,
ozone, CO and air toxics are declining.320 321 However, in
2005 EPA designated 39 nonattainment areas for the 1997
PM_2.5 National Ambient Air Quality Standard (NAAQS) (70 FR
943, January 5, 2005). These areas are composed of 208 full or partial
counties with a total population exceeding 88 million. The 1997
PM_2.5 NAAQS was recently revised and the 2006 24-hour
PM_2.5 NAAQS became effective on December 18, 2006. The
numbers above likely underestimate the number of counties that are not
meeting the PM_2.5 NAAQS because the nonattainment areas
associated with the more stringent 2006 24-hour PM_2.5 NAAQS
have not yet been designated. Area designations for the 2006 24-hour
PM_2.5 NAAQS are expected to be promulgated in 2009 and
become effective 90 days after publication in the Federal Register.
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    \320\ U.S. EPA (2008) National Air Quality Status and Trends
through 2007. Office of Air Quality Planning and Standards, Research
Triangle Park, NC. Publication No. EPA 454/R-08-006. http://epa.gov/
airtrends/2008/index.html.
    \321\ U.S. EPA (2007) Final Regulatory Impact Analysis: Control
of Hazardous Air Pollutants from Mobile Sources, Office of
Transportation and Air Quality, Ann Arbor, MI, Publication No.
EPA420-R-07-002. http://www.epa.gov/otaq/toxics.htm.
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    In addition, the U.S. EPA has recently amended the ozone NAAQS (73
FR 16436, March 27, 2008). That final 2008 ozone NAAQS rule set forth
revisions to the previous 1997 NAAQS for ozone to provide increased
protection of public health and welfare. As of June 5, 2009, there are
55 areas designated as

[[Page 49601]]

nonattainment for the 1997 8-hour ozone NAAQS, comprising 290 full or
partial counties with a total population of approximately 132 million
people. These numbers do not include the people living in areas where
there is a future risk of failing to maintain or attain the 1997 8-hour
ozone NAAQS. The numbers above likely underestimate the number of
counties that are not meeting the ozone NAAQS because the nonattainment
areas associated with the more stringent 2008 8-hour ozone NAAQS have
not yet been designated.
    The proposed vehicle standards may also impact levels of ambient
CO, a criteria pollutant (see Table III.G-1 above for co-pollutant
emission impacts). As of June 5, 2009 there are approximately 479,000
people living in a portion of Clark Co., NV which is currently the only
area in the country that is designated as nonattainment for CO.\322\
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    \322\ Carbon Monoxide Nonattainment Area Summary: 
http://www.epa.gov/air/oaqps/greenbk/cnsum.html.
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    Further, the majority of Americans continue to be exposed to
ambient concentrations of air toxics at levels which have the potential
to cause adverse health effects.\323\ The levels of air toxics to which
people are exposed vary depending on where people live and work and the
kinds of activities in which they engage, as discussed in detail in
U.S. EPA's recent mobile source air toxics rule.\324\
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    \323\ U.S. Environmental Protection Agency (2007). Control of
Hazardous Air Pollutants from Mobile Sources; Final Rule. 72 FR
8434, February 26, 2007.
    \324\ U.S. Environmental Protection Agency (2007). Control of
Hazardous Air Pollutants from Mobile Sources; Final Rule. 72 FR
8434, February 26, 2007.
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b. Impacts of Proposed Standards on Future Ambient PM_2.5,
Ozone, CO and Air Toxics
    Full-scale photochemical air quality modeling is necessary to
accurately project levels of PM_2.5, ozone, CO and air
toxics. For the final rule, a national-scale air quality modeling
analysis will be performed to analyze the impacts of the vehicle
standards on PM_2.5, ozone, and selected air toxics (i.e.,
benzene, formaldehyde, acetaldehyde, acrolein and 1,3-butadiene). The
length of time needed to prepare the necessary emissions inventories,
in addition to the processing time associated with the modeling itself,
has precluded us from performing air quality modeling for this proposal.
    Section III.G.1 of the preamble presents projections of the changes
in criteria pollutant and air toxics emissions due to the proposed
vehicle standards; the basis for those estimates is set out in Chapter
5 of the DRIA. The atmospheric chemistry related to ambient
concentrations of PM_2.5, ozone and air toxics is very
complex, and making predictions based solely on emissions changes is
extremely difficult. However, based on the magnitude of the emissions
changes predicted to result from the proposed vehicle standards, EPA
expects that there will be an improvement in ambient air quality,
pending a more comprehensive analysis for the final rule.
    For the final rule, EPA intends to use a 2005-based Community
Multi-scale Air Quality (CMAQ) modeling platform as the tool for the
air quality modeling. The CMAQ modeling system is a comprehensive
three-dimensional grid-based Eulerian air quality model designed to
estimate the formation and fate of oxidant precursors, primary and
secondary PM concentrations and deposition, and air toxics, over
regional and urban spatial scales (e.g. over the contiguous
U.S.).325 326 327 The CMAQ model is a well-known and well-
established tool and is commonly used by EPA for regulatory analyses,
for instance the recent ozone NAAQS proposal, and by States in
developing attainment demonstrations for their State Implementation
Plans.\328\ The CMAQ model (version 4.6) was peer-reviewed in February
of 2007 for EPA as reported in ``Third Peer Review of CMAQ Model,'' and
the EPA Office of Research and Development (ORD) peer review report
which includes version 4.7 is currently being finalized.\329\
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    \325\ U.S. Environmental Protection Agency, Byun, D.W., and
Ching, J.K.S., Eds, 1999. Science algorithms of EPA Models-3
Community Multiscale Air Quality (CMAQ modeling system, EPA/600/R-
99/030, Office of Research and Development).
    \326\ Byun, D.W., and Schere, K.L., 2006. Review of the
Governing Equations, Computational Algorithms, and Other Components
of the Models-3 Community Multiscale Air Quality (CMAQ) Modeling
System, J. Applied Mechanics Reviews, 59 (2), 51-77.
    \327\ Dennis, R.L., Byun, D.W., Novak, J.H., Galluppi, K.J.,
Coats, C.J., and Vouk, M.A., 1996. The next generation of integrated
air quality modeling: EPA's Models-3, Atmospheric Environment, 30, 1925-1938.
    \328\ U.S. EPA (2007). Regulatory Impact Analysis of the
Proposed Revisions to the National Ambient Air Quality Standards for
Ground-Level Ozone. EPA document number 442/R-07-008, July 2007.
    \329\ Aiyyer, A., Cohan, D., Russell, A., Stockwell, W.,
Tanrikulu, S., Vizuete, W., Wilczak, J., 2007. Final Report: Third
Peer Review of the CMAQ Model. p. 23.
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    CMAQ includes many science modules that simulate the emission,
production, decay, deposition and transport of organic and inorganic
gas-phase and particle-phase pollutants in the atmosphere. EPA intends
to use the most recent CMAQ version (version 4.7), which was officially
released by EPA's Office of Research and Development (ORD) in December
2008 and reflects updates to earlier versions in a number of areas to
improve the underlying science. These include (1) enhanced secondary
organic aerosol (SOA) mechanism to include chemistry of isoprene,
sesquiterpene, and aged in-cloud biogenic SOA in addition to terpene;
(2) improved vertical convective mixing; (3) improved heterogeneous
reaction involving nitrate formation; and (4) an updated gas-phase
chemistry mechanism, Carbon Bond 05 (CB05), with extensions to model
explicit concentrations of air toxic species as well as chlorine and
mercury. This mechanism, CB05-toxics, also computes concentrations of
species that are involved in aqueous chemistry and that are precursors
to aerosols.

H. What Are the Estimated Cost, Economic, and Other Impacts of the Proposal?

    In this section, EPA presents the costs and impacts of EPA's
proposed GHG program. It is important to note that NHTSA's CAFE
standards and EPA's GHG standards will both be in effect, and each will
lead to increases in average fuel economy and CO₂ emissions
reductions. The two agencies' standards comprise the National Program,
and this discussion of costs and benefits of EPA's GHG standard does
not change the fact that both the CAFE and GHG standards, jointly, are
the source of the benefits and costs of the National Program.
    This section outlines the basis for assessing the benefits and
costs of these standards and provides estimates of these costs and
benefits. Some of these effects are private, meaning that they affect
consumers and producers directly in their sales, purchases, and use of
vehicles. These private effects include the costs of the technology,
fuel savings, and the benefits of additional driving and reduced
refueling. Other costs and benefits affect people outside the markets
for vehicles and their use; these effects are termed external costs,
because they affect people external to the market. The external effects
include the climate impacts, the effects on non-GHG pollutants, and the
effects on traffic, accidents, and noise due to additional driving. The
sum of the private and external benefits and costs is the net social
benefits of the program. There is some debate about the role of private
benefits in assessing the benefits and costs of the program: If
consumers have full information and perfect foresight in their vehicle
purchase decisions, it is possible that they have

[[Page 49602]]

already considered these benefits in their vehicle purchase decisions.
If so, then the inclusion of private benefits in the net benefits
calculation may be inappropriate. If these conditions do not hold, then
the private benefits may be a part of the net benefits. Section III.H.1
discusses this issue more fully.
    EPA's proposed program costs consist of the vehicle program costs
(costs of complying with the vehicle CO₂ standards, taking
into account FFV credits through 2015, the temporary lead-time
alternative allowance standard program (TLAASP), full car/truck
trading, and the A/C credit program), along with the fuel savings
associated with reduced fuel usage resulting from the proposed program.
These proposed program costs also include external costs associated
with noise, congestion, accidents, time spent refueling vehicles, and
energy security impacts. EPA also presents the cost-effectiveness of
the proposed standards and our analysis of the expected economy-wide
impacts. The projected monetized benefits of reducing GHG emissions and
co-pollutant health and environmental impacts are also presented. EPA
also presents our estimates of the impact on vehicle miles traveled and
the impacts associated with those miles as well as other societal
impacts of the proposed program, including energy security impacts.
    The total monetized benefits (excluding fuel savings) under the
proposed program are projected to be $21 to $54 billion in 2030,
assuming a 3 percent discount rate and depending on the value used for
the social cost of carbon. The costs of the proposed program in 2030
are estimated to be approximately $18 billion for new vehicle
technology less $90 billion in savings realized by consumers through
fewer fuel expenditures (calculated using pre-tax fuel prices).
    EPA has undertaken an analysis of the economy-wide impacts of the
proposed GHG tailpipe standards as an exploratory exercise that EPA
believes could provide additional insights into the potential impacts
of the proposal.\330\ These results were not a factor regarding the
appropriateness of the proposed GHG tailpipe standards. It is important
to note that the results of this modeling exercise are dependent on the
assumptions associated with how consumers will respond to increases in
higher vehicle costs and improved vehicle fuel economy as a result of
the proposal. Section III.H.1 discusses the underlying distinctions and
implications of the role of consumer response in economic impacts.
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    \330\ See Memorandum to Docket, ``Economy-Wide Impacts of
Proposed Greenhouse Gas Tailpipe Standards,'' September 14, 2009
(Docket EPA-HQ-OAR-2009-0472).
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    Further information on these and other aspects of the economic
impacts of our proposed rule are summarized in the following sections
and are presented in more detail in the DRIA for this rulemaking. EPA
requests comment on all aspects of the cost, savings, and benefits
analysis presented here and in the DRIA. EPA also requests comment on
the inputs used in these analyses as described in the Draft Joint TSD.
1. Conceptual Framework for Evaluating Consumer Impacts
    For this proposed rule, EPA projects significant private gains to
consumers in three major areas: (1) Reductions in spending on fuel, (2)
time saved due to less refueling, and (3) welfare gains from additional
driving that results from the rebound effect. In combination, these
private savings, mostly from fuel savings, appear to outweigh by a
large margin the costs of the program, even without accounting for externalities.
    Admittedly, these findings pose a conundrum. On the one hand,
consumers are expected to gain significantly from the proposed rules,
as the increased cost of fuel efficient cars appears to be far smaller
than the fuel savings (assuming modest discount rates). Yet fuel
efficient cars are currently offered for sale, and consumers'
purchasing decisions may suggest a preference for lower fuel economy
than the proposed rule mandates. Assuming full information and perfect
foresight, standard economic theory suggests that the private gains to
consumers, large as they are, must therefore be accompanied by a
consumer welfare loss. This calculation assumes that consumers
accurately predict all the benefits they will get from a new vehicle,
even if they underestimated fuel savings at the time of purchase. Even
if there is some such loss, EPA believes that under realistic
assumptions, the private gains from the proposed rule, together with
the social gains (in the form of reduction of externalities),
significantly outweigh the costs. But EPA seeks comments on the
underlying issue.
    The central conundrum has been referred to as the Energy Paradox in
this setting (and in several others).\331\ In short, the problem is
that consumers appear not to purchase products that are in their
economic self-interest. There are strong theoretical reasons why this
might be so.\332\ Consumers might be myopic and hence undervalue the
long-term; they might lack information or a full appreciation of
information even when it is presented; they might be especially averse
to the short-term losses associated with energy efficient products (the
behavioral phenomenon of ``loss aversion''); even if consumers have
relevant knowledge, the benefits of energy efficient vehicles might not
be sufficiently salient to them at the time of purchase. A great deal
of work in behavioral economics identifies factors of this sort, which
help account for the Energy Paradox.\333\ This point holds in the
context of fuel savings (the main focus here), but it applies equally
to the other private benefits, including reductions in refueling time
and additional driving.\334\
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    \331\ Jaffe, A.B., & Stavins, R.N. (1994). The Energy Paradox
and the Diffusion of Conservation Technology. Resource and Energy
Economics, 16(2), 91-122.
    \332\ For an overview, see id.
    \333\ Id.; Thaler, Richard. Quasi-Rational Economics. New York:
Russell Sage, 1993.
    \334\ For example, it might be maintained that at the time of
purchase, consumers take full account of the time potentially saved
by fuel-efficient cars, but it might also be questioned whether they
have adequate information to do so, or whether that factor is
sufficiently salient to play the proper role in purchasing decisions.
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    Considerable research suggests that the Energy Paradox is real and
significant due to consumers' inability to value future fuel savings
appropriately. For example, Sanstad and Howarth (1994) argue that
consumers optimize behavior without full information by resorting to
imprecise but convenient rules of thumb. Larrick and Soll (2008) find
evidence that consumers do not understand how to translate changes in
miles-per-gallon into fuel savings (a concern that EPA is continuing to
attempt to address).\335\ If these arguments are valid, then there will
be significant gains to consumers of the government mandating
additional fuel economy.
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    \335\ Sanstad, A., and R. Howarth (1994). `` `Normal' Markets,
Market Imperfections, and Energy Efficiency.'' Energy Policy 22(10):
811-818; Larrick, R.P., and J.B. Soll (2008). ``The MPG illusion.''
Science 320: 1593-1594.
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    The evidence from consumer vehicle choice models indicates a huge
range of estimates for consumers' willingness to pay for additional
fuel economy. Because consumer surplus estimates from consumer vehicle
choice models depend critically on this value, EPA would consider any
consumer surplus estimates of the effect of our rule from such models
to be unreliable. In addition, the predictive ability of consumer
vehicle choice models may be limited. While vehicle choice models

[[Continued on page 49603]]
Notices For
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
Proposed Rulemaking To Establish Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards

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