Light-Duty Vehicle Greenhouse Gas
Emission Standards and Corporate
Average Fuel Economy Standards
EPA Response to Comments Document
for Joint Rulemaking
United States
Environmental Protection
Agency
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Light-Duty Vehicle Greenhouse Gas
Emission Standards and Corporate
Average Fuel Economy Standards
EPA Response to Comments Document
for Joint Rulemaking
Assessment and Standards Division
Office of Transportation and Air Quality
U.S. Environmental Protection Agency
SER&
United States
Environmental Protection
Agency
EPA-420-R-10-012
April 2010
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Introduction
The following is the Environmental Protection Agency's (EPA) Response to Comments
document for the EPA and National Highway Traffic Safety Administration (NHTSA) Joint
Rulemaking: Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average
Fuel Economy Standards. The following document contains verbatim excerpts of the
commenter's text followed by EPA's responses. Citizen comments that raised unique
substantive issues are included. In addition, several thousand citizens commented through mass
e-mail campaigns; these comments are not included individually, but rather examples are
provided. The comments and responses are organized by topic (see Table of Contents prior to
each section) to help the reader find comments and responses of interest. An index of
commenters and the associated docket numbers is also provided.
This is an EPA document and does not contain NHTSA's responses to comments. NHTSA's
responses to comments are contained in the joint preamble and the NHTSA Final Regulatory
Impact Analysis (RIA) for the rule.
11
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TABLE OF CONTENTS
Index of Proposal Commenters
1. General Comments 1-1
2. Reserved 2-1
3. EPA CO2 Standards 3-1
4. EPA Response to Comments on Joint Issues and Technical Work 4-1
5. EPA Vehicle Program and Estimated Impacts 5-1
6. Reserved 6-1
7. Other Comments 7-1
in
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Index of Proposal Commenters
Proposed Rulemaking To Establish Light-Duty Vehicle Greenhouse
Gas Emission Standards and Corporate Average Fuel Economy
Standards
Commenter
Adcock, James
Air Permitting Forum
Alliance of Automobile Manufacturers
Aluminum Association
American Chemical Society
American Chemistry Council
American Chemistry Council, American
Iron and Steel Institute, American Meat
Institute, Corn Refiners Association,
National Oilseed Processors Association
American Council for an Energy Efficient
Economy
American Farm Bureau Federation
American Forest and Paper Association
American Iron and Steel Institute
American Lung Association of California
American Petroleum Institute
Arizona Public Service
Artega Automobil GmbH & Co. KG
Arthur G. Randol
Association of International Automobile
Manufacturers
Aston Martin Lagonda
Automotive Aftermarket Industry
Association
BCCA Appeal Group
Bieling, Andrea
BiotectConnect, Inc.
BMW of North America, LLC
BorgWarner
Abbreviation
Alliance
ACC
AFBF
AF&PA
APS
AIAM
AAIA; et.al
the Group
BMW
Docket ID Number(s)
OAR-2009-0472-5385
OAR-2009-0472-0128, 7253
NHTSA-2009-0059-0128
OAR-2009-0472-6952
NHTSA-2009-0059-0067.1, 0067.2, 0067.3, 0067
OAR-2009-0472-3985
OAR-2009-0472-8259
NHTSA-2009-0059-0094.1, 0094
OAR-2009-0472-7260
OAR-2009-0472-7172, 7171
OAR-2009-0472-7126
OAR-2009-0472-7088
OAR-2009-0472-7216
OAR-2009-0472-0089.1, 0089, 7143
NHTSA-2009-0059-0089.1, 0089
OAR-2009-0472-7107
OAR-2009-0472-7481
OAR-2009-0472-7254
OAR-2009-0472-0084.1, 0084, 7123
NHTSA-2009-0059-0084.1, 0084
OAR-2009-0472-7217
OAR-2009-0472-7057
OAR-2009-0472-7505
OAR-2009-0472-8704
OAR-2009-0472-7203
OAR-2009-0472-0092.1, 0092, 7145
NHTSA-2009-0059-0092.1, 0092
OAR-2009-0472-0076, 7289
IV
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Brick Industry Association
Brooks, Dawn
California Air Resources Board
California Cotton Ginners Association
California State Senate
Center for Auto Safety
Center for Biological Diversity
Chamber of Commerce of the United
States of America
Charleston Metro Chamber of Commerce
Chew, Yuli
Chrysler Group LLC
Clark, Roy
Clean Energy Fuels
Coalition for Responsible Regulation
Competitive Enterprise Institute
Congress of Racial Equality
Consumer Federation of America
Consumers Energy
Council of Industrial Boiler Owners
County of Greenville
County of Greenville, SC
Cummins Inc.
Custom Lights and Iron
CCGA
Chrysler
croo
NHTSA-2009-0059-0076
OAR-2009-0472-11279
OAR-2009-0472-3851
OAR-2009-0472-7189
OAR-2009-0472-7139
OAR-2009-0472-7532
OAR-2009-0472-0117.1, 0117, 7259
NHTSA-2009-0059-0117.1, 0117
OAR-2009-0472-0053.1, 0053, 0090.1, 0090, 0104.1,
0104.2, 0104.3, 0104.4, 0104.5, 0104.6, 0104.7,
0104.8, 0104, 0105.1, 0105.2, 0105, 0110.1, 0110.2,
0110.3, 0110.4, 0110.5, 0110.6, 0110.7, 0110, 0115.1,
0115.2, 0115.3, 0115.4, 0115.5, 0115.6, 0115.7,
0115.8, 0115, 0118.1, 0118.2, 0118.3, 0118.4, 0118.5,
0118,7269
NHTSA-2009-0059-0053.1, 0053, 0090.1, 0090,
0104.1, 0104.2, 0104.3, 0104.4, 0104.5, 0104.6,
0104.7, 0104.8, 0104, 0105.1, 0105.2, 0105, 0110.1,
0110.2, 0110.3, 0110.4, 0110.5, 0110.6, 0110.7, 0110,
0115.1, 0115.2, 0115.3, 0115.4, 0115.5, 0115.6,
0115.7, 0115.8, 0115, 0118.1, 0118.2, 0118.3, 0118.4,
0118.5,0118
OAR-2009-0472-7233
OAR-2009-0472-7061
OAR-2009-0472-7042
NHTSA-2009-0059-0124
OAR-2009-0472-7257
OAR-2009-0472-7220
OAR-2009-0472-7164
OAR-2009-0472-7281
OAR-2009-0472-7506
OAR-2009-0472-7272
OAR-2009-0472-7264
OAR-2009-0472-7271
NHTSA-2009-0059-0 1 0 1
OAR-2009-0472-8346
OAR-2009-0472-0077.1, 0077, 0080, 7205
NHTSA-2009-0059-0077.1, 0077, 0080
OAR-2009-0472-7110
-------
Denso International America, Inc.
Devon Energy Corporation
Dillard, Joyce
Dinter, Bridget
Dow Chemical Company
Duke Energy
Dynamic Research, Inc
Ecology Center
Edison Electric Institute
Energy, Environmental & Public Utility
Practice Group
Energy-Intensive Manufacturers Working
Group
Environmental Defense Fund
eTec
European Automobile Manufacturer's
Association
European Small Volume Car
Manufacturers' Alliance
Ferrari S.p.a
Fertilizer Institute
Fisker Automotive, Inc.
Ford Motor Company
Ford, Jonathan L.
Fraas, Arthur, G.
Fran Jackson
Fuji Heavy Industries USA, Inc.
General Motors
Georgia Department of Natural Resources
Georgia-Pacific
Gluckstern, Henry
Guardian Industries Corp.
Hagen, David L.
Hartung, Lynn
Heritage Foundation
Herzlich Consulting, Inc.
Dow
ESCA
Subaru
GP
OAR-2009-0472-8765
OAR-2009-0472- 10450
OAR-2009-0472-7226
OAR-2009-0472-7250
OAR-2009-0472-7221
OAR-2009-0472-7136
OAR-2009-0472-0112.1, 0112, 7238
NHTSA-2009-0059-0112.1, 0112
OAR-2009-0472-4068
OAR-2009-0472-7212
OAR-2009-0472-8884
OAR-2009-0472- 11 276
OAR-2009-0472-7285
OAR-2009-0472-7670
OAR-2009-0472-7444
OAR-2009-0472-7287
OAR-2009-0472-7230, 7214
OAR-2009-0472-7279
OAR-2009-0472-8732
OAR-2009-0472-0063.1, 0063, 0068.1, 0068, 7082
NHTSA-2009-0059-0063.1, 0063, 0068.1, 0068
OAR-2009-0472-7674
OAR-2009-0472-7523
OAR-2009-0472-4064
NHTSA-2009-0059-0070.1, 0070
OAR-2009-0472-6953
OAR-2009-0472-7150
OAR-2009-0472-7122
OAR-2009-0472-5258
OAR-2009-0472-7124
OAR-2009-0472-7218
OAR-2009-0472-4070
OAR-2009-0472-7052
OAR-2009-0472-4567
VI
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Honda Motor Company
Honeywell International, Inc.
Honeywell Transportation Systems
Hyde, James
Hyundai Motor Company
IMPCO Technologies, Inc.
Industry Coalition
INRIX
Institute for Energy Research
Institute for Liberty
Institute for Policy Integrity at New York
University School of Law and
Environmental Defense Fund
Insurance Institute for Highway Safety
International Council on Clean
Transportation
Investor Network on Climate Risk
Jaguar Land Rover
Johnson, Kenneth C.
Karplus, Valerie J.
Kleinbaum, Rob
Koenigsegg Automotive AB
KTM-Sportsmotorcycle AG
Lance Tunick
Lawrence Berkeley National Laboratory
League of Women Voters of South
Carolina
Lotus Cars Ltd.
Manufacturers of Emission Controls
Association
Mass Comment Campaign
(13,829, Union of Concerned Scientists)
Mass Comment Campaign
(18,583, unknown organization)
IIHS
LWVSC
NHTSA-2009-0059-0095.1, 0095
OAR-2009-0472-7206
OAR-2009-0472-7248
OAR-2009-0472-7258
OAR-2009-0472-0 103.1, 0103, 7231
NHTSA-2009-0059-0 103.1, 0103
OAR-2009-0472-7282
OAR-2009-0472-7673
NHTSA-2009-0059-0079.1, 0079
OAR-2009-0472-7225
OAR-2009-0472-7284
OAR-2009-0472-0114.1, 0114.2, 0114, 7246
NHTSA-2009-0059-0114.1, 0114.2, 0114
NHTSA-2009-0059-0125.1, 0125
OAR-2009-0472-0093.1, 0093, 7156
NHTSA-2009-0059-0093.1, 0093
OAR-2009-0472-7243
OAR-2009-0472-0081, 7504
NHTS A-2009-0059-008 1
OAR-2009-0472-0 134.1, 0134, 7135
NHTSA-2009-0059-0 134.1, 0134
OAR-2009-0472-7280
OAR-2009-0472-4074
OAR-2009-0472-7194
OAR-2009-0472-7183
OAR-2009-0472-7293, 7208
OAR-2009-0472-0060.1, 0060, 6696
NHTSA-2009-0059-0060.1, 0060
OAR-2009-0472-0 13 7, 11309
NHTSA-2009-0059-0137
OAR-2009-0472-0066, 7249
NHTSA-2009-0059-0066
OAR-2009-0472-7108
OAR-2009-0472-3906
OAR-2009-0472-3907
Vll
-------
Mass Comment Campaign
(19, unknown organization)
Mass Comment Campaign
(2,332, unknown organization)
Mass Comment Campaign
(27,307, Alliance for Climate Protection)
Mass Comment Campaign
(32,918, Sierra Club)
Mass Comment Campaign
(326, Student PIRGs)
Mass Comment Campaign
(48 unknown organization)
Mass Comment Campaign
(7,239, unknown organization)
Massachusetts Department of
Environmental Protection
MD McLaren Automotive Ltd.
Mercedes-Benz
Mindful Consumption, Inc.
Mississippi Department of Environmental
Quality
Missouri Department of Natural Resources,
Air Pollution Control Program
Mitsubishi Motors R & D of America
Morgan Motor Company Ltd.
Morton, Jim
Motor and Equipment Manufacturers
Association
National Asphalt Pavement Association
National Association of Clean Air
Agencies
National Association of Home Builders
National Association of Manufacturers
National Automobile Dealers Association
National Climate Coalition
Daimler AG
MRDA
NACAA
NAHB
NADA
OAR-2009-0472-5748
OAR-2009-0472-5747
OAR-2009-0472-7295
OAR-2009-0472-5749
OAR-2009-0472-11293
OAR-2009-0472-10556
OAR-2009-0472-3905
OAR-2009-0472-7195
OAR-2009-0472-0078, 7288
NHTSA-2009-0059-0078
OAR-2009-0472-7204
OAR-2009-0472-5327
OAR-2009-0472-7102
OAR-2009-0472-0051.1, 0051, 7480
NHTSA-2009-0059-0051.1, 0051
OAR-2009-0472-0085.1, 0085, 0127.1, 0127.2, 0127,
7125
NHTSA-2009-0059-0085.1, 0085, 0127.1, 0127.2,
0127
OAR-2009-0472-7190
OAR-2009-0472-3639
OAR-2009-0472-0083.1, 0083, 7121
NHTSA-2009-0059-0083.1, 0083
OAR-2009-0472-7224
OAR-2009-0472-7071
OAR-2009-0472-11278
OAR-2009-0472-0082, 7215
NHTSA-2009-0059-0082
OAR-2009-0472-7182
NHTSA-2009-0059-0086.1, 0086
Vlll
-------
National Cotton Ginners Association
National Mining Association
National Petrochemical & Refiners
Association
National Renewable Energy Laboratory
National Rural Electric Cooperative
Association
Natural Resources Defense Council
New York City Law Department
New York State Department of
Environmental Conservation
New York State Department of
Transportation
New York University School of Law,
Institute for Policy Integrity
NGV America
NISEI Farmers League
Nissan North America
Northeast States for Coordinated Air Use
Management
Pacific Unitarian Church, Green Sanctuary
Project
Peabody Energy Company
Pendleton, Tom
People's Republic of China
Pew Center
Pittsburgh Glass Works
Porsche Cars North America, Inc.
Portland Cement Association
Process Engineers
Public Citizen and Safe Climate Campaign
Public Hearing Transcript, Detroit
Public Hearing Transcript, Los Angeles
Public Hearing Transcript, New York
NMA
NYSDOT
IPI
OAR-2009-0472-7209
OAR-2009-0472-7237
OAR-2009-0472-7234
OAR-2009-0472-4798
OAR-2009-0472-7252
OAR-2009-0472-0129, 7530, 7274
NHTSA-2009-0059-0129
OAR-2009-0472-0091.1, 0091, 7240
NHTSA-2009-0059-0091.1, 0091
OAR-2009-0472-7454
OAR-2009-0472-0098, 7531
NHTSA-2009-0059-0098
OAR-2009-0472-0111.1, 0111.2, 0111, 7232
NHTSA-2009-0059-0111.1, 0111.2, 0111
OAR-2009-0472-7236
OAR-2009-0472-7142
OAR-2009-0472-6798
OAR-2009-0472-7235
OAR-2009-0472-7241
OAR-2009-0472-7223
OAR-2009-0472-2094
OAR-2009-0472-0135.1, 0135, 11269
NHTSA-2009-0059-0135.1, 0135
OAR-2009-0472-7239
OAR-2009-0472-0 109.1, 0109, 7244
NHTSA-2009-0059-0 109.1, 0109
OAR-2009-0472-7431
OAR-2009-0472-7207
OAR-2009-0472-7166
OAR-2009-0472-0071.1, 0071, 7050
NHTSA-2009-0059-0071.1, 0071
OAR-2009-0472-6185
OAR-2009-0472-7283
OAR-2009-0472-4621
IX
-------
PurigeN98
Recreational Vehicle Industry Association
Rose, Stephen
Saab Automobile AB
SAB 1C Innovative Plastic
SCANA Corporation
Schade, Michael T.
Seeds of Hope
Shaw, Donald F.
Sierra Club
Sierra Research Inc.
Society of Motor Manufacturers and
Traders Limited
South Carolina Chamber of Commerce
South Carolina Department of Health and
Environmental Control
South Carolina Manufacturers Alliance
South Carolina Pulp & Paper Association
South Carolina Wildlife Federation
Southeastern States Air Resource
Managers, Inc.
Spurgeon, C. M.
Spyker Cars
Stanton, Neil
State of California
State of Connecticut
State of Connecticut Department of
Environmental Protection
State of New Jersey
State of Washington Department of
Ecology
Steiner, John
Stockholm Environment Institute-US
Center
RVIA
Saab
SCMA
SCPPA
SESARM
OAR-2009-0472-7201
NHTSA-2009-0059-0107
OAR-2009-0472-0 106.1, 0106, 7276
NHTSA-2009-0059-0 106.1, 0106
OAR-2009-0472-7103
OAR-2009-0472-7090
OAR-2009-0472-7316
OAR-2009-0472-7261.1
OAR-2009-0472-7111
OAR-2009-0472-7270
OAR-2009-0472-7635
OAR-2009-0472-7977
OAR-2009-0472-7229
OAR-2009-0472-7298
OAR-2009-0472-0075, 7202
NHTSA-2009-0059-0075
OAR-2009-0472-7296
OAR-2009-0472-7479
OAR-2009-0472-0 13 6, 11303
NHTSA-2009-0059-0 136
OAR-2009-0472-7137
OAR-2009-0472-7092
OAR-2009-0472-7277
OAR-2009-0472-10169
NHTSA-2009-0059-0087.1, 0087
OAR-2009-0472-0 120, 7499
NHTSA-2009-0059-0120
OAR-2009-0472-0097, 7301
NHTSA-2009-0059-0097
OAR-2009-0472-0073, 0074, 7109
NHTSA-2009-0059-0073, 0074
OAR-2009-0472-7299
OAR-2009-0472-8705
OAR-2009-0472-7432
-------
Texas Chemical Council
Texas Commission on Environmental
Quality
Texas Cotton Ginners Association
Texas Department of Agriculture
Texas Industry Project
Texas Oil and Gas Association
Toyota Motor North America
U.S. Coalition for Advanced Diesel Cars
U.S. EPA, Office of Enforcement and
Compliance Assurance, Office of Federal
Activities
Union of Concerned Scientists
United Auto Workers
University of California, Los Angeles
School of Law
University of California, Santa Barbara,
Bren Working Group on Vehicle Fuel
Economy
University of Miami, School of Law
University of Michigan Transportation
Research Institute
University of Pennsylvania, Environmental
Law Project
US Steel Corporation
Utility Air Regulatory Group
Vehicles Services Consulting, Inc
Volkswagen Group of America
Volvo Car Corporation
Weber, Dave
Western Agricultural Processors
Association
Wiesmann GmbH
Wood, John S.
TCC
TIP
UMTRI
Volkswagen
OAR-2009-0472-7294, 7290
OAR-2009-0472-7180
OAR-2009-0472-7081
OAR-2009-0472-0102, 7300
NHTSA-2009-0059-0102
OAR-2009-0472-7430
OAR-2009-0472-11275
OAR-2009-0472-7291
OAR-2009-0472-0113.1, 0113, 7496
NHTSA-2009-0059-0113.1, 0113
NHTSA-2009-0059-0052.1, 0052
OAR-2009-0472-0096, 7181
NHTSA-2009-0059-0096
OAR-2009-0472-7056
OAR-2009-0472-7263
OAR-2009-0472-7188
OAR-2009-0472-6770
OAR-2009-0472-6802
OAR-2009-0472-7286
OAR-2009-0472-7197
OAR-2009-0472-0116.1, 0116, 7262
NHTSA-2009-0059-0116.1, 0116
OAR-2009-0472-0064, 7292, 7083
NHTSA-2009-0059-0064
OAR-2009-0472-7210
OAR-2009-0472-0119, 7168
NHTSA-2009-0059-01 19
OAR-2009-0472-1410
OAR-2009-0472-7140
OAR-2009-0472-7198
OAR-2009-0472-7157.1x
XI
-------
Zaski, Frank OAR-2009-0472-3769
xn
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General Comments
General Comments 2
1.1 General Support 2
1.2. General Opposition 57
1-1
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EPA Response to Comments
1. General Comments
1.1 General Support
Organization: Alliance of Automobile Manufacturers (Alliance)
Aluminum Association
American Chemical Society
American Council for an Energy Efficient Economy
American Lung Association of California
Association of International Automobile Manufacturers (AIAM)
Bieling, Andrea
Biotect Connect, Inc.
BMW of North America, LLC (BMW)
BorgWarner
Bright Automotive
California Air Resources Board
California State Senate
Cambell, Bruce
Chamber of Commerce of the United States of America
Chew, Yuli
Chrysler Group LLC (Chrysler)
Clarke, Darrell
Clean Energy Fuels
Coalition for Clean Air
Consumer Federation of America
County of Greenville, SC
Cummins Inc.
Dewey, Scott
Eadie, R. Frank
Ecology Center
Environment Michigan
Environment New Jersey
Environmental Defense Fund
Epps, Jennifer
Ford Motor Company
General Motors
Georgia Department of Natural Resources
Glasser, Mark
Honda Motor Company
Honeywell International, Inc.
Honeywell Transportation Systems
Hyundai Motor Company
Insurance Institute for Highway Safely (IIHS)
International Council on Clean Transportation
Kia Motors
Lance Tunic
1-2
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General Comments
League of Women Voters of South Carolina (LWVSC)
Lee Auto Components
Magavern, Bill
Manufacturers of Emission Controls Association
Mass Comment Campaign (13,829) (Union of Concerned Scientists)
Mass Comment Campaign (18,583) (unknown organization)
Mass Comment Campaign (19) (unknown organization)
Mass Comment Campaign (2,332) (unknown organization)
Mass Comment Campaign (27,307) (Alliance for Climate Protection)
Mass Comment Campaign (32,918) (Sierra Club)
Mass Comment Campaign (326) (Student PIRGs)
Mass Comment Campaign (7,239) (unknown organization)
Mercedes-Benz (Daimler AG)
Mitsubishi Motors R & D of America (MRDA)
Motor and Equipment Manufacturers Association
Mr. Richter - Environmental Capital Partners
National Asphalt Pavement Association
National Association of Clean Air Agencies (NACAA)
National Association of Manufacturers
National Automobile Dealers Association (NADA)
Natural Resources Defense Council
New York City Law Department
Northeast States for Coordinated Air Use Management
New York State Department of Environmental Conservation
New York State Department of Transportation (NYSDOT)
New York University School of Law, Institute for Policy Integrity (IPI)
NGV America
Nissan North America
Pacific Unitarian Church, Green Sanctuary Project
Peters, Doug
Pavely, Fran, California State Senate
Physicians for Social Responsibility, Los Angeles
Public Citizen and Safe Climate Campaign
Sack, Emily
Seal, Kathy
Sierra Club
South Carolina Department of Health and Environmental Control
South Carolina Pulp & Paper Association (SCPPA)
South Carolina Wildlife Federation
South Coast Air Quality Management District
Southeastern States Air Resource Managers, Inc. (SESARM)
State of California
State of Connecticut
State of Connecticut Department of Environmental Protection
State of New Jersey
State of Washington Department of Ecology
1-3
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EPA Response to Comments
Steiner, John
Toyota Motor North America
Transportation and Buildings Policy for the State of Massachusetts Executive
Office of Energy and Environmental Affairs
U.S. Coalition for Advanced Diesel Cars
Union of Concerned Scientists
United Auto Workers
University of Miami, School of Law
University of Michigan Transportation Research Institute (UMTRI)
University of Pennsylvania, Environmental Law Project
US Steel Corporation
Volkswagen Group of America (Volkswagen)
Washington State Department of Commerce
Webb, Alysha
Weiner, Jill
Winograd, Marcy
Comment:
Alliance of Automobile Manufacturers (Alliance)
First, we want to commend EPA and NHTSA for the effort invested in putting this complex joint
rulemaking together and for taking the lead in harmonizing the CAFE and Greenhouse Gas
programs into a workable set of requirements. The Alliance supports the overall rule and in
particular supports the agencies' coordinated attribute-based approach. [OAR-2009-0472-6952.1,
p.l]
[[These comments were submitted as testimony at the Detroit public hearing. See docket number
OAR-2009-0472-6185, pp. 83-86.]]
While this proposal covers model years 2012-2016, we agree with EPA and NHTSA that it is
important to create a strong coordinated National Program that continues to provide a national
standard for light-duty vehicles in model years beyond 2016. This is a key to reducing the
impact of vehicle greenhouse gases on our global climate.
The proposal provides manufacturers with a roadmap for meeting significant increases for model
years 2012-2016. It calls for an increase in the average fuel economy in new vehicles by 40
percent to a combined 35.5 miles per gallon. As EPA and NHTSA have stated, final rulemaking
prior to April 2010 is essential to providing manufacturers with the certainty and lead time
necessary to plan for the future and to cost effectively add new technology.
The Alliance members are committed to continuously improving fuel economy and thereby
reducing our greenhouse gas emissions. In fact, the motor vehicle industry has committed to
reduce greenhouse emissions more than any other sector of the U.S. economy. By the Agencies'
own estimates, these new standards would lead to reductions of 62 billion gallons of fuel, or CO2
emissions totaling 656 million metric tons, during the useful lives of vehicles 2012 - 2016
1-4
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General Comments
vehicles. The elements of the proposal before us - a harmonized and coordinated National
Program, attribute-based approach, the available compliance mechanisms and general
implementation elements provide this industry with certainty and flexibility necessary for
achieving ambitious reductions in greenhouse gases and significant savings in oil consumption
proposed by the rule.
In going forward to 2017 and beyond, this joint coordinated effort by EPA and NHTSA on a
national plan is a process we endorse for the future well-being of the industry. It is important to
include all key stakeholders including California and states adopting the California standards into
this process. A goal for going beyond 2017 would be to achieve even greater harmonization
between the EPA and NHTSA program. Already the auto industry is transforming itself and
reinventing the automobile. Automakers have made major investments into developing new fuel
efficient technologies, and the results are continuing to show in the marketplace. More than 50
technologies offered in vehicles for sale today reduce emissions, increase mileage, and allow
these vehicles to run on cleaner fuels. Today consumers can buy more than 130 models that
achieve 30 mpg or more on the highway, and they can choose from more than 27 models of
hybrids and 8 models of clean diesels.
As we stated in our May 18th letter of commitment, the Alliance fully supports the adoption of a
National Program to address both greenhouse gases and fuel economy, and further we commend
the Federal Government for taking a leadership role. By eliminating unnecessary complexity
and providing flexibility for the development of individual manufacturers compliance plans, the
proposed rule will allow manufacturers to develop products that consumers will want to buy and
only enhance vehicle performance with respect to greenhouse gas reductions and oil savings.
In closing, the time has come to move all stakeholders forward. The Alliance believes that any
effective, efficient program to address climate change must be built on a single strong national
framework administered by the Federal Government. This framework should acknowledge the
specific product and sales structure of individual manufacturers' fleets, and be designed in a way
that challenges all manufacturers fairly by including appropriate implementation and compliance
flexibilities without negatively affecting overall greenhouse gas reductions.
To this end, we encourage EPA and NHTSA to work closely with all stakeholders, to refine the
technical framework of the program.
Aluminum Association
The aluminum industry congratulates NHTSA on its continued reliance on a size-based approach
to setting CAFE standards since there is ample evidence to confirm that that size is the vehicle
attribute that can best assure design and structure consistency across model years and preserve
safety. Increased use of high strength, low weight materials like aluminum will increase vehicle
fuel economy, reduce tailpipe emissions and improve safety as manufacturers strive to meet ever
more challenging fuel economy requirements. [NHTSA-2009-0059-0067, p.l]
American Chemical Society
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EPA Response to Comments
The American Chemical Society is pleased by the Obama Administration's recently announced
plan to increase and standardize automobile fuel standards. ACS is a long-time proponent of
increased automotive efficiency standards and previously supported legislation to increase
Corporate Average Fuel Economy. As such, we are gratified to see this move by the
Administration. [OAR-2009-0472-3985.1, p. 1]
Increasing automobile efficiency is an important, and long-overdue, step towards improving the
sustainability and security of our energy enterprise. Improving the efficiency of the national fuel
economy standard is a short-term, relatively inexpensive, and effective way of reducing
greenhouse gas emissions. Cars emit approximately a quarter of overall emissions, and
automotive efficiency has actually fallen over the last two decades. Your initiative is an
important step not only in making our nation more sustainable, but it will help reduce our
dependence on foreign oil, which represents the vast bulk of our imported energy. We also
applaud the decision to standardize the policy nationwide and send the appropriate market
signals necessary for industry capital investments. [OAR-2009-0472-3985.1, p. 1]
Again, thank you for your forward-thinking policy. As America's oldest and largest scientific
society, we look forward to working with you to ensure America's sustainability. [OAR-2009-
0472-3985.1, p. 1]
American Council for an Energy Efficient Economy
ACEEE applauds USEPA and NHTSA for taking the enormous step towards energy security and
environmental protection that this joint rulemaking represents. The proposed rule offers very
substantial increases in fuel economy and reductions in vehicles' greenhouse gas emissions.
The rule also reflects important analytical improvements over the approach taken in previous
rulemakings, especially the more thorough and transparent analysis of the technical potential to
reduce emissions and fuel consumption, and the associated costs. In addition, the agencies' use
of a publicly available data set fully describing the reference fleet, rather than confidential
manufacturer product plans, to develop the rule allows the public to understand in detail the basis
for the standards. [OAR-2009-0472-7260.1, p.l]
[ACEEE also submitted these comments as testimony at the New York public hearing, See
docket number OAR-2009-0472-4621, pp. 138.]
American Lung Association of California
The American Lung Association in California applauds the Obama administration for this
truly historic agreement to adopt rules that mirror California's clean air standards and move the
nation forward toward a cleaner transportation future.
The joint proposal by EPA and NHTSA to establish greenhouse gas vehicle standards and
improve fuel economy in motor vehicles across the nation is an important step in the fight
against global warming, air pollution, and the serious public health impacts of petroleum
consumption.
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General Comments
The American Lung Association of California urges the federal EPA to move forward to adopt
the proposed clean air standard and to adopt the strengthening changes recommended by the
California Air Resources Board today.
These recommendations include, one, adding an automaker-specific backstop to ensure that
the expected level of greenhouse gas emission reductions are achieved; and, two, to ensure that
credit calculations for electric- or hydrogen-powered vehicles include upstream emissions.
In the future, the American Lung Association would also urge EPA to adopt additional measures
to tighten vehicle tailpipe standards for smog-forming pollutants.
[ALAC submitted these comments as testimony at the Los Angeles public hearing. See docket
number OAR-2009-7283, pp. 39-44]
Association of International Automobile Manufacturers (AIAM)
AIAM and our member companies fully support a single national program to address these two
overlapping programs, and we commend the agencies for their efforts to develop a harmonized
program as much as possible. We look forward to working with the agencies as you finalize this
rulemaking early in 2010. [OAR-2009-0472-7123.1, p.l]
The core element of these proposals is for EPA and NHTSA to each separately adopt standards
under each agency's enabling statute that will be of roughly equivalent stringency. The goal is, to
the extent possible, to craft standards that would "allow auto manufacturers to build a single
national light-duty fleet that would comply with both the GHG and the CAFE standards." Notice
of Upcoming Joint Rulemaking to Establish Vehicle GHG Emissions and CAFE Standards, 74
FR 24007, 24009 (May 22, 2009). AIAM supports this proposal and agrees that doing so is
consistent with both the Clean Air Act and EPCA. [OAR-2009-0472-7123.1, p.4]
These NHTSA/EPA proposed regulations are an important step in implementing the new,
harmonized national program for regulating motor vehicle fuel economy and greenhouse gas
emissions that was announced by the Obama Administration on May 19, 2009. [OAR-2009-
0472-7123.1,p.l9]
[AIAM also submitted these comments as testimony at the Los Angeles public hearing. See
docket number OAR-2009-7283, pp. 28-32]
Bieling, Andrea
I applaud the Environmental Protection Agency and the National Highway Traffic Safety
Administration for proposing standards that will make our cars and trucks cleaner and more
efficient. The proposed rules will help realize President Obama's historic commitment, saving
1.8 billion barrels of oil and $193 billion in consumer gasoline costs, and significantly reducing
our global warming emissions.
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EPA Response to Comments
I applaud the Environmental Protection Agency and the National Highway Traffic Safety
Administration for proposing standards that will make our cars and trucks cleaner and more
efficient. The proposed rules will help realize President Obama's historic commitment, saving
1.8 billion barrels of oil and $193 billion in consumer gasoline costs, and significantly reducing
our global warming emissions.
I strongly support cleaner cars and thank the Administration for proposing standards that are a
win for consumers, automakers, and the environment alike. Strong final rules will launch vehicle
standards into the 21st century, help make Detroit a leader in green vehicles, laying a strong
foundation for the cleaner vehicles we need to significantly reduce our reliance on oil and curb
global warming. [OAR-2009-0472-8704 p.l]
BiotectConnect, Inc.
I fully support efforts to improve fuel efficiency. [OAR-2009-0472-7203, p.l]
BMW of North America, LLC (BMW)
The proposal will permit auto manufacturers to build a single light-duty national fleet, satisfying
the requirements of each agency program. In keeping with our corporate commitment to
reducing greenhouse gases, BMW commends both EPA and NHTSA for listening to and
collaborating with auto makers in their efforts toward developing this complex proposal covering
model years 2012 through 2016. Additionally, we commend the State of California Air
Resources Board for their collaboration with EPA and NHTSA toward a single national standard
that includes their aggressive targets. [OAR-2009-0472-7145.1, p.l]
In order to provide product planning certainty for the auto industry, while continuing to reduce
greenhouse gas emissions and improve fleet fuel economy, BMW strongly recommends a
comparable collaboration toward a national program in the model years beyond 2016. This
would also help ensure wise financial and resource investments, as well as increased energy
security for the nation. [OAR-2009-0472-7145.1, p.l]
Now, in keeping with our corporate commitment to reducing greenhouse gases, we commend
both the U.S. Environmental Protection Agency and the National Highway Traffic Safety
Administration for their enormous efforts in developing this complex proposal that will permit
auto manufacturers to build a single light-duty national fleet which will satisfy the requirements
of each agency's program. [These comments were submitted as testimony at the New York
public hearing. See docket number EPA-HQ-OAR-2009-0472-4621, pp. 131.]
BorgWarner
BorgWarner would first like to commend the EPA, NHTSA and the State of California for their
combined efforts to harmonize the standards in this very thorough joint proposal. [NHTSA-
2009-0059-0076, p.l]
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General Comments
BorgWarner is very supportive of EPA, NHTSA and the State of California's efforts and sees the
joint proposal as a major step forward in our desire for energy independence and reduced CO2
emissions. [OAR-2009-0472-7289, p.3]
Bright Automotive
[These comments were submitted as testimony at the Los Angeles public hearing. See docket
number OAR-2009-0472-7283 p. 175]
So we're here to support this and say that there are innovators in this country ready to meet this
challenge, and so we fully support the joint and harmonized regulations. I'm not here to
comment on whether it's sufficient, but it's definitely necessary.
Another thing we'd like to say is we also believe in the business model that is proposed in the
regulation, that this will actually save significantly more money than it will cost.
California Air Resources Board
CARB strongly supports the joint proposed action, most importantly the stringency of the
greenhouse gas emission standards as proposed for each year in the 2012 through 2016 model
years. Those standards align very well with California's adopted and now enforceable Pavley
greenhouse gas emissions standards for those model years, ultimately arriving at the same
stringency as California's standards in 2016. The proposed standards are the result of the
agencies' thorough review and study of technical, engineering, and cost studies and a reasonable
weighing of their respective statutory directives. The proposal also contains several provisions
that will help to ensure no credit windfall occurs that could undermine the standards and reduce
their cumulative greenhouse gas reductions. However, CARB has two critical concerns,
stringency and the upstream emission factor for zero-emission vehicles (ZEVs), which must be
addressed in the Final Rule to ensure California's continued support for the National Program.
Other CARB concerns and responses to questions posed by EPA and NHTSA then
follow. [OAR-2009-0472-7189.1, p.l]
[CARB also submitted these comments as testimony at the Los Angeles public hearing. See
docket number OAR-2009-7283, pp. 21-27]
California State Senate
I applaud the Obama Administration for forging a truly historic agreement to increase fuel
economy and set the nation's first greenhouse gas standard for new passenger cars and light
trucks. The National Clean Vehicles Program, using separate, but complementary fuel economy
and tailpipe greenhouse gas emission standards, is set to achieve a fleetwide average of an
equivalent 35.5 miles per gallon by model year 2016. [OAR-2009-0472-7275.1, p.4]
[Fran Pavley also submitted these comments as testimony at the Los Angeles public hearing. See
docket number EPA-HQ-OAR-2009-0472-7283, pp. 13-20]
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EPA Response to Comments
Cambell, Bruce
[These comments were submitted as testimony at the Los Angeles public hearing. See docket
number EPA-HQ-OAR-2009-0472-7283, p. 199]
And I support the Obama, EPA, NHTSA call for considerably better gas mileage. And I urge
that you get as clean a rule as possible without complicated carbon credit loopholes and
moving-the-problem-around type thing.
So please proceed with as clean as possible around 35 miles per gallon and then improve from
there.
Chamber of Commerce of the United States of America
The U.S. Chamber of Commerce strongly supports reducing emissions from automobile
tailpipes. The Chamber supports improving vehicle fuel economy to 35.5 miles per gallon, a
standard that will also reduce vehicle greenhouse gas emissions to 250 grams of CO2 per mile.
The Chamber has serious concerns, however, with the regulatory framework through which EPA
intends to achieve these goals. [OAR-2009-0472-7233.1, p.l]
Chew, Yuli
Though the results from the use of the MAGICC model only shows small, but quantifiable,
reductions in the atmospheric CO2 concentration,, I support EPA's efforts of regulating the
greenhouse gas from vehicles no matter how insignificant the benefits will be. In the Supreme
Court's decision ion MASSACHUSETTS ET AL. v. ENVIRONMENTAL PROTECTION
AGENCY ET AL. on April 2, 2007, it noted: "Agencies, like legislatures, do not generally
resolve massive problems in one fell swoop, ...., but instead whittle away over time, refining
their approach as circumstances change and they develop a more nuanced understanding of how
best to proceed, That a first step might be tentative does not by itself negate federal-court
jurisdiction. And reducing domestic automobile emissions is hardly tentative. Leaving aside the
other greenhouse gases, the record indicates that the U. S. transportation sector emits an
enormous quantity of carbon dioxide into the atmosphere. " [OAR-2009-0472-7042.1, p. 5]
I believe that the 2003 Kahane Study (in which NHTSA adopted) for 1995 - 1998 Model Year
cars and 1995 - 1997 trucks, in which all 2-door cars, or 20% of registered vehicles were
excluded was statically biased. The information was based on outdated technologies, bad
rollover rates for trucks at that time. It should be reviewed along with 2005 DRI Study (DRI-TR-
05-01). In "Increasing the Fuel Economy and safety of New Light-Duty Vehicles" by Lawrence
Berkeley National Laboratory on September 18, 2006, the final conclusion was "However,
recent research indicates that mass is merely a proxy for other characteristics that are more
important for crashes between cars and trucks, such as frontal heights and stiffness." [OAR-
2009-0472-7042.1, p.5]
Chrysler Group LLC (Chrysler)
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General Comments
Chrysler supports the efforts of the United States Environmental Protection Agency ('EPA') and
the National Highway Traffic Safety Administration ('NHTSA') to establish a National Program
for the regulation of vehicle greenhouse gas emissions and fuel economy. As EPA and NHTSA
have noted, the National Program 'hold[s] out the promise of delivering environmental and
energy benefits, cost savings, and administrative efficiencies that might not be available under a
less coordinated approach. The efforts to craft standards have largely succeeded in 1)
harmonizing Corporate Average Fuel Economy ('CAFE') and vehicle greenhouse gas emissions
('GHG') attribute-based standards; 2) replacing state standards with a single federal standard; and
3) focusing on performance requirements rather than technology mandates. The rules proposed
by this NPRM for the 2012-2016 model years ('MY') will reduce greenhouse gas emissions,
enhance energy security, and offer greater regulatory certainty for vehicle manufacturers.
[NHTSA-2009-0059-0124, p.l]
Chrysler strongly believes that a single national fuel economy and greenhouse gas program will
place more clean and efficient vehicles on the road quickly and at lower costs. Our resources are
best utilized when applied to one, single, national standard versus differing state-level fuel
economy and greenhouse gas requirements. [NHTSA-2009-0059-0124, p.l]
The proposed rules are an important step towards the achievement of the goals of the National
Program. They reflect the substantial efforts that EPA and NHTSA have made to provide
'consistent, harmonized, and streamlined requirements. EPA and NHTSA have recognized that
those efforts are complicated by the fact that EPA and NHTSA have different authorizing statues
with requirements that are not identical. The primary effect of those differences is that EPA can
grant some compliance flexibilities - for example, in trading credits - that NHTSA cannot. As a
result, the joint standards themselves cannot be identical, but 'the goal is providing regulatory
compatibility that allows auto manufacturers to build a single light-duty fleet that would comply
with both the GHG and the CAFE standards.' [NHTSA-2009-0059-0124, pp. 1-2]
Chrysler agrees that regulatory compatibility is an important and achievable goal. If the
regulations are wholly compatible, a fleet that complies with the GHG rules will also comply
with the CAFE standards. In these comments. Chrysler suggests some changes to ensure that the
final rule will meet the goal of regulatory compatibility. We believe that these changes can be
accommodated in the final rule without compromising the environmental goals of the National
Program. We will continue working with EPA and NHTSA to ensure these and our other
concerns are resolved. [NHTSA-2009-0059-0124, p.2]
[[These comments were submitted as testimony at the Detroit public hearing. See docket number
OAR-2009-0472-6185, pp. 46-48]]
We believe it's important to observe that the 2016 model year standard of 250 g/mi carbon
dioxide or 35.5 mpg represent an historic and unprecedented challenge for our industry.
Translating this into more easily understood terms, this is a 10 mpg or 40 percent increase in the
entire fleet's fuel economy from today's level within six years.
Chrysler confirmed support for this historic program in the May 19th, 2009 White House
ceremony with President Obama. Our current CEO, Sergio Marchionne is also the CEO of Fiat,
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EPA Response to Comments
the fuel economy leader in Europe. He understands and endorses these commitments and is
determined to implement the product actions necessary for Chrysler to meet those 2016
standards. In fact, Chrysler and Fiat continue to progress towards those product actions, and
work is already underway on developing new environmentally friendly, fuel-efficient, high
quality vehicles that we intend to become the hallmark of Chrysler's product line.
We have significantly revised our five-year plan to meet these new standards. Chrysler's
compliance requires successful application of abroad range of technologies from advanced
technology ICE all the way through electrification in an unprecedented time. This means that
Chrysler's vehicles will adopt Fiat's world-class technology, platforms and powertrains for small
and medium sized vehicles, allowing us to offer an expanded product lineup including
environmentally friendly vehicles with these rules and, also, by increasing demand to consumers.
One type of technology is multi-air technology, an electrohydraulic variable valve lift system for
internal combustion engines. It controls air flow and combustion cylinder by cylinder, stroke by
stroke, improving both fuel efficiency and performance in our engines.
Chrysler is also working with the Department of Energy to improve the commercial viability of
our plug-in hybrid programs through the electrification grant that we received earlier this year.
In addition to these steps that are primarily powertrain efficiency actions, Chrysler will also
continue to lessen the vehicle energy demands through actions such as improved aerodynamics,
reduced loading resistance, and also material substitution, lightweighting while maintaining
overall strength and safety of our products.
Chrysler believes that reducing vehicle mass without reducing the size of the vehicle or the
structural integrity is technically feasible in the rulemaking time frame on these products.
Clarke, Darrell
[These comments were submitted as testimony at the Los Angeles public hearing. See docket
number OAR-2009-0472-7283 p. 187]
I'm just going to say for starters this is only the most important step for us to take as a nation
about global warming and oil dependence. To put it rather succinctly, I'll point to some charts.
[The commenter provides extensive testimony unrelated to the ruling]
Clean Energy Fuels
Clean Energy supports GHG regulation of motor vehicles and would like to thank both EPA and
NHTSA staff for their hard work and foresight used in the development of this important
rulemaking. [OAR-2009-0472-7220.1, p.5]
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General Comments
[[These comments were submitted as testimony at the Detroit public hearing. See docket number
OAR-2009-0472-6185, p. 141.]]
And I'd like to say there's a lot of hard work put into this rulemaking, and we appreciate it.
We're very supportive of, you probably are new to our company, Clean Energy, we are mostly a
California — although we are nationally based, but we are extremely supportive of EPA's efforts
to curb greenhouse gas emissions in the transportation sector, and we are just looking for ways
that we can get to the same conclusion with more flexibility, using low carbon fuels and, also,
seeing if there are ways to combine efficiency strategies with our technology as well. We
believe that ultimately by employing progressive strategies like bio-methane, hybrid drivetrains,
plug- in hybrid drivetrains, we can achieve 2015 emission targets for greenhouse gases.
[[Clean Energy also submitted these comments as testimony at the Detroit public hearing, See
docket number OAR-2009-0472-6185, p. 131.]]
Coalition for Clean Air
[Following comments are from LA Testimony, OAR-2009-0472-7283, pp. 134-137]
That is why today we applaud the Obama administration for forging a historic agreement with
industry to adopt rules that mirror California's groundbreaking Clean Cars Law.
When we adopted our standards in 2004, we knew that automakers could make clean cars that
consumers want and need. We are confident that they will devise ways to make even cleaner
cars in the future.
So given California's dire need to continue improving our air quality, we cannot take our chances
and assume that after President Obama's administration or administrations, we will have other
administrations who agree with us in the need to reduce global warming gases specifically here
in California.
And having said that, we cannot rely on others out of the state to protect our residence, our
children, our families, and our workers.
Consumer Federation of America
THE IMPORTANCE OF THIS GROUNDBREAKING RULEMAKING In many ways, this is
the most important change in the Corporate Average Fuel Economy (CAFE) program since its
inception three and a half decades ago.
• This rulemaking unifies the regulation of the energy and environmental standards for motor
vehicles in the U.S.
• It embodies one of the largest increases in fuel economy over a four-year period in the history
of the program.
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EPA Response to Comments
• It resolves a major dispute over federal and state shared authority by ordering improvements in
the environmental impact of automobiles, and thereby preserving the most important dynamic
characteristics of federalism.
• It is based on a consensus agreement that includes the automakers.
• It incorporates new methodology for analyzing potential CAFE and greenhouse gas emissions
standards that is more transparent, replicable, and accurate than the prior methodology.
At the same time, this rulemaking reflects the fact that it is a transition regulation that demands a
more effective process for setting fuel economy standards in the future.
• The transition requires the Environmental Protection Agency (EPA) and the National Highway
Traffic Safety Administration (NHTSA) to harmonize and reconcile their statutes.
• The rulemaking recognizes the dire circumstances of the auto industry and allows it some
breathing space to redefine itself and retool before a more rigorous and demanding regime of
fuel economy improvement is required. Thus, the ultimate success of this landmark rulemaking
will be in the framework of standard setting that it creates for the future. There are many critical
issues that will have to be resolved in order to ensure that the standard setting process provides
the maximum benefits for consumers, the nation and the environment.
[[Consumer Federation of America also submitted these comments as testimony at the Detroit
public hearing, See docket number EPA-HQ-OAR-2009-0472-6185, pp. 104-105.]]
County of Greenville, SC
We commend the EPA and the NHTSA for working together to develop a rule that will result in
significant improvements in fuel economy. Our nation needs reduced emissions and energy
security and we support these goals. In addition to reducing greenhouse gas emissions,
improving fuel economy will have the very important benefit of reducing emissions of air
pollution . These reductions will help areas meet the 2008 or a new national ambient air quality
standards resulting from the revisions currently underway at EPA for pollutants including ozone
and particulate matter 2.5 and will also reduce urban air toxics . This will have a very positive
impact on public health and the environment. [OAR-2009-0472-8346 p.l]
As such, we support NHTSA moving forward at this time with the CAFE standards as proposed.
It is important to note that virtually all of the greenhouse gas emission reductions and air quality
benefits will occur from the new CAFE standards proposed by NHTSA. [OAR-2009-0472-8346,
p.l]
Cummins Inc.
Cummins Inc. ("Cummins") supports the proposed joint rulemaking by the National Highway
Transportation Safety Administration (NHTSA) and the Environmental Protection Agency
(EPA) to reduce greenhouse gas (GHG) emissions and improve fuel economy of new cars and
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General Comments
light-duty trucks sold in the United States. Cummins is committed to help meet these goals in
vehicles powered by our engines. Cummins is also working closely with the National Academy
of Sciences (NAS) on developing a framework for a fuel efficiency improvement and GHG
program for heavy-duty commercial vehicles in the United States. We view the development of
technology and responsible regulations as one of our core corporate responsibilities. [O AR-2009-
0472-7205.1, p.2]
Cummins supports the overall framework of the proposed regulation by EPA and NHTSA to
harmonize the agencies' programs. However, Cummins urges EPA to take a more holistic
approach that reflects upstream CO2 impacts in the development of GHG emission standards.
[OAR-2009-0472-7205.1, p.2]
Dewey, Scott
[These comments were submitted as testimony at the Los Angeles public hearing. See docket
number EPA-HQ-OAR-2009-0472-7283 p. 149-159]
It would be hard to overemphasize the importance of this issue for our nation and the world.
Our survival as a species may actually depend on it, getting global warming under control.
Unfortunately, for various political reasons, we are about 20 years late in developing policies
to confront global warming. The problem has grown larger in the meantime, meaning it's
particularly critical that we now act swiftly and effectively to confront this problem. It really is
urgent.
By reducing oil consumption and importation, by reducing greenhouse gas emissions, and by
reducing motorists' fuel costs, the President's national program will enhance national security,
energy independence, and economic stability, making us less vulnerable to energy price shocks
and supply disruption while also helping to control the number one global environmental threat.
It's the proverbial win-win. It's not the total answer to the whole complicated problem, but it's a
good start.
Eadie, R. Frank
The — so we're more than grateful to see the EPA at very long last and, you know, it's — I can't
count the number of years that I've been involved in promoting better CAFE standards for the
country, and it's — you know, I'm really, really grateful that finally the President has decided that
we're going to have that happen, at least — and we want to make sure that it does happen, so let
me applaud that standard over miles per gallon and that's a giant, a real important change, it
probably is not nearly [OAR-2009-0472-4621, p. 169] enough, but it's a major improvement, and
it's something that we're all very grateful for the President's action and your following up on it.
[OAR-2009-0472-4621, p. 170]
Ecology Center
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EPA Response to Comments
The Ecology Center is pleased to be here today and to provide support for the proposed rule
making to establish Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate
Average Fuel Economy Standards. [OAR-2009-0472-4068,p.l]
The Ecology Center has for many years been an advocate for strong fuel economy standards for
cars and light trucks. But we have also advocated that such standards be developed in a way that
helps advance new investments in U.S.-manufacturing, protects jobs, and fairly distributes the
costs across the industry. We believe this approach is the best way to achieve a sustainable
policy that builds public support while also protecting the environment and improving energy
security. [OAR-2009-0472-4068,p.l]
The Ecology Center committed itself to these ideals when it created a special project called the
Green Machines Tour, which was aimed at building public awareness about the many positive
benefits of new investments in advanced fuel economy technologies. We focused on the auto
producing region here in the Midwest, and spent many hours on the road speaking with
community members, union leaders, and elected officials about the fuel-efficient technologies
that were either already being used in today's vehicles, or that were on the drawing boards, and
how they were helping their communities. We identified billions of dollars in new or planned
investments, and the creation or retention of thousands of auto sector jobs. We also discussed
how new policies to require improved vehicle fuel economy could help ensure even greater
opportunities for new jobs and economic development in this vital industry. [OAR-2009-0472-
4068, p.l]
Almost without exception, the people we talked with were in support of advancing new fuel
economy policies. However, they did want assurances that the rules would be developed in a
way that was fair for their community and their industry, and that protection of existing jobs
would be strongly considered. [OAR-2009-0472-4068, p.l]
In summary, the Ecology Center supports the proposed rules and believes that they achieve the
desired balancing of interests for fairness and cost-effectiveness, while also requiring significant
and meaningful reductions of CO2 emissions and petroleum use. It is our hope that these new
rules can help to set the U.S. automobile industry on a new course for success-at least in terms of
improved fuel economy. [OAR-2009-0472-4068, p.2]
Environment Michigan
[[These comments were submitted as testimony at the Detroit public hearing. See docket
number OAR-2009-0472-6185, pp. 64-67.]]
The administration deserves great credit for taking this historic step to cut global warming
pollution, make America more energy independent, and help make Detroit a leader in clean
vehicle technology. We applaud the administration's overall effort and your individual
contributions.
I'll make three main points in my testimony. First, oil dependence and global warming are
urgent and interrelated problems that demand bold policy solutions. Second, this proposal is a
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General Comments
good first step but must be strengthened to meet President Obama's goals for reducing pollution
and saving oil. And, third, the proposal is evidence that the Clean Air Act works in addressing
global warming pollution.
America is at an energy crossroad. As a nation, we are heavily reliant on oil and other fossil fuels
at a time of growing demand and dwindling supply. Our dependence on fossil fuels continues to
impose massive environmental, economic, and security costs. Now our country must choose
between paying to continue the status quo and investing in a clean energy future.
America spends nearly $1 billion each day importing oil. Those funds are a direct transfer of
wealth from America's pocketbooks to oil companies and foreign governments. These figures do
not include the untold damages to our environment, health, and security resulting from the
production and use of oil. A report released this week by the National Academies of Sciences
quantifies just a portion of these damages; it estimated that energy use in motor vehicles
produced $56 billion in health and other nonclimate-related damages in 2005 alone.
Light-duty vehicles alone account for about 40 percent of all U.S. oil consumption.
At the same time, pollution from the production and use of oil is a leading source of air pollution,
water pollution from spills, and global warming pollution.
With respect to global warming, the impacts on human and natural systems are now being
observed nearly everywhere. In 2007, the Nobel Prize- winning U.N. Intergovernmental Panel
on Climate Change predicted serious risks and damages to livelihoods, human infrastructure,
societies, species, and ecosystems unless future warming is substantially reduced. So far this
decade emissions, warming, and impacts, such as ice melt and sea level rise, have all been at the
upper end of IPCC projections.
To meet the challenge of global warming, we must transform the ways America and the rest of
the world produce and use energy, achieving dramatic improvements in the efficiency with
which we use energy in our vehicles, homes, and businesses and moving to clean, renewable
energy, such as wind solar power.
This challenge also brings enormous opportunity. Vastly improving the efficiency of our
economy and moving to renewable energy will reduce our dependence on oil, help revive our
economy, and create millions of green-collar jobs in many fields, including in the auto industry.
Mobile sources emitted more than 30 percent of all U.S. global warming emissions in 2006 and
have been the fastest-growing source of U.S. global warming emissions since 1990. Light-duty
vehicles are responsible for nearly 60 percent of all global warming emissions from mobile
sources.
As a first step to address America's oil dependence and global warming, these proposed vehicles
standards are a good beginning. The proposal will raise the fuel economy of the passenger
vehicle fleet to an average of 34.1 by 2016, accelerating the goals in the 2007 energy bill by four
years. In addition, the proposal sets the first-ever Federal standards to reduce global warming
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EPA Response to Comments
emissions from new passenger vehicles — requiring a fleet average of 250 grams carbon dioxide
equivalent per mile in 2016. Importantly, these standards establish a foundation for more
stringent standards in the future that will do even more to curb global warming and to wean the
country from its dependence on oil.
The proposal makes clear that auto manufacturers can meet these proposed standards by utilizing
technologies that are already available today. Requiring the more widespread adoption of clean
technologies will help spark the technology innovation necessary for automakers to successfully
compete in the global economy and thereby contribute to a strong local and domestic economy.
[[These comments were submitted as testimony at the Detroit public hearing. See docket number
OAR-2009-0472-6185, pp. 69-70.]]
Finally, I want to point out that this proposal is strong evidence that the Clean Air Act is
effective in addressing global warming pollution from vehicles.
The Clean Air Act allows California to set auto emission standards that are stronger than Federal
standards and other states to adopt California's auto emission standards. Over the last 40 years,
California has consistently demonstrated leadership in developing and implementing standards to
curb pollution from motor vehicles, as is the case with the state's first-of-their-kind standards to
reduce global warming emissions from new vehicles.
Thirteen other states and the District of Columbia adopted these California standards
representing about 40 percent of the light-duty market. And the states' program gave rise to the
proposal that is before us today.
We applaud the states that spearheaded the drive for cleaner cars. We wouldn't be here today if
it weren't for their trailblazing efforts to reduce our oil dependence and curb global warming.
This process worked for conventional pollutants, and it works for the pollutants that are fueling
global warming.
In closing, we commend the administration for proposing these historic standards to reduce
global warming pollution, make America more energy independent, and help our country regain
its edge as a technology leader. We urge you to strengthen and finalize the rule.
Environment New Jersey
I definitely appreciate the opportunity to testify today. The Obama Administration deserves great
[OAR-2009-0472-4621, p.66] credit for taking this historic step to cut global warming pollution,
to make this country more energy independent and finally to make America a leader in clean
vehicle technology. We applaud the Administration's overall effort and your individual
contributions. [OAR-2009-0472-4621, p.67]
Environmental Defense Fund
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General Comments
I. THE PROPOSED STANDARDS ARE A VITAL STEP IN FORGING COMMON GROUND
AMONG DIVERSE INTERESTS AND MOVING THE NATION FORWARD TO ADDRESS
GREENHOUSE GASES AND IMPROVE FUEL ECONOMY.
There are dual national security benefits from EPA's proposed action: reducing America's
reliance on foreign oil and beginning to address climate-disrupting emissions that will exacerbate
geopolitical instability. Military experts have pointedly recognized these dual policy imperatives.
A report commissioned by the Pentagon states that "It is quite plausible that within a decade the
evidence of an imminent abrupt climate shift may become clear and reliable. . . . Disruption and
conflict will be endemic features of life." Commander Jeffrey W. Eggers, former director for
combating terrorism at the National Security Council, stated that "the seemingly intractable
problem of U.S. dependence on foreign oil is a pre-eminent national security threat. ..." A CNA
Military Advisory Board report came to a similar conclusion, finding that "[o]ur dependence on
foreign oil reduces our international leverage, places our troops in dangerous global regions,
funds nations and individuals who wish us harm, and weakens our economy; our dependency
and inefficient use of oil also puts our troops at risk." The Government Accountability Office has
also sounded the alarm, warning that "without dramatic change, the nation will become ever
more reliant on imported oil and natural gas with attendant threats to national security." [OAR-
2009-0472-7285.1, pp. 3-4]
The national security risks created by heavy dependence on foreign oil require broadscale
changes throughout the economy. Speaking before the Senate Foreign Relations Committee,
Retired Vice Admiral Dennis McGinn declared: Energy security and a sound response to climate
change cannot be achieved by pursuing more fossil fuels. Our nation requires diversification of
energy sources and a serious commitment to renewable energy. Not simply for environmental
reasons—for national security reasons. [OAR-2009-0472-7285.1, p. 4]
As our military leaders have noted, "[o]ur only choice is whether we're going to make the
decisions [on reducing our dependence on oil] forcefully and in a timely manner. We could lag
and then we'll find ourselves in a much more serious situation, when all of these other costs
come on us." [OAR-2009-0472-7285.1, p. 4]
The cost of delaying action is high: "We will pay to reduce greenhouse gas emissions today . . .
[o]r we will pay the price later in military terms. And that will involve human lives." The
proposed regulations are an important part of necessary, immediate action to reduce emissions.
"Each of us can help end America's addiction to oil. Using less fuel in our cars and trucks
reduces overall demand .... These steps, taken individually, may seem small. Collectively, they
can make us more secure." [OAR-2009-0472-7285.1, p. 4]
[Following comments are from LA Testimony, OAR-2009-0472-7283 p.72-79]
There is good reason for hope. The proposal for cleaner cars at issue today represents an
important step forward in addressing the grim impacts of a changing climate, but to secure
these critical benefits, the final standards must be rigorous and well designed. We examine
some elements of the proposal that warrant close attention.
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EPA Response to Comments
[[These comments were submitted as testimony at the Detroit public hearing. See docket number
EPA-HQ-OAR-2009-0472-6185, pp. 114-117]]
America is a vast and diverse nation. But despite our differences, we are united by unyielding
and common bonds. We are united in a commitment to our nation's security. We stand together
in our quest to realize a shared prosperity for all Americans. And we are steadfast — as a nation
of mothers, fathers, grandparents, uncles and aunts — in our vigilance for a safe and healthy
future for America's children.
On May 19th the President of the United States charted a path forward for our nation that ended
years of discord and division. The President forged an accord on cleaner cars to begin breaking
our addiction to foreign oil, to pioneer the clean energy technologies that will lead the way in the
21st Century global marketplace, and to start reducing the global warming pollution that imperils
our planet.
We sincerely thank the President and the leaders in labor, business, and state government who
worked together to break this logjam - the United Auto Workers, the Alliance of Automobile
Manufacturers, and the numerous states involved from California to Maine.
By virtually any metric, the benefits of the EPA and Department of Transportation proposal to
implement the Presidential accord measure up.
The proposed standards strengthen our national security. The vehicles subject to these proposed
standards are responsible for about 40 percent of all U.S. oil consumption. The standards would
reduce our consumption of oil by 1.8 billion barrels while achieving a 5 percent annual
improvement in fuel efficiency for the nation's passenger vehicle fleet.
The proposed standards reduce global warming pollution from a significant and rapidly rising
sector. The vehicles covered by the proposed standards account for 60 percent of heat-trapping
emissions from the transportation sector and about 20 percent of all U.S. heat-trapping gases.
These emissions have steadily increased by more than 1 percent annually. The EPA estimates the
proposed standards would cut carbon dioxide pollution from passenger vehicles approximately
21 percent by 2030, reducing emissions by 950 million tons.
The proposed standards will provide dividends in fuel savings at the pump for America's
families. The estimated overall cost savings over the life of the vehicle are more than $3,000.
And families who finance a new vehicle purchase are expected to save estimated $12to$14a
month over the duration of the loan.
While these numbers mark progress for our nation, the benefits of the proposed standards are far-
reaching in their measure.
The proposal embodies the first national standards to limit global warming pollution. We
applaud the President and the leadership at the Environmental Protection Agency for taking
landmark steps to reduce heat-trapping gases and for following the law enunciated by the United
States Supreme Court.
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General Comments
The proposal weaves the innovative state clean car programs, the nation's clean air laws, and the
nation's fuel economy laws into a single national policy that reduces global warming pollution
and improves fuel efficiency through the clarity and certainly of an integrated program.
The proposal provides compliance flexibility that will ensure consumers will have a full range of
vehicle choices.
And while the proposed standards can be achieved with today's available technologies, the
proposal also lays the foundation for new innovative technologies that will pave the way for
additional progress in the next phase of clean car standards. And it is these advanced clean car
technologies that will position our nation as a leader in the global economy.
We recognize the challenges ahead in completing this proposal to ensure a rigorous and balanced
outcome. Environment Defense Fund, respectfully, will submit written comments offering our
recommendations to ensure the final standards are protective and well-designed. The
fundamental promise of the Presidential accord and the charge for the Environmental Protection
Agency and Department of Transportation in finalizing the proposed standards - is to strengthen
our nation's common bond by uniting America to achieve profound and lasting progress in
national security, climate stability and economic opportunity. We hope this policy initiative is
the first of many steps in realizing that promise.
[Environmental Defense Fund also submitted these comments as testimony at the New York
public hearing, See docket number EPA-HQ-OAR-2009-0472-4621, pp. 118-119.]
Epps, Jennifer
[These comments were submitted as testimony at the Los Angeles public hearing. See docket
number OAR-2009-0472-7283, pp.205-206]
I think we desperately need clean, fuel-efficient vehicles, and I think we deserve them.
Taxpayers fund the construction of roads and highways. We fund the maintenance of those roads
and highways. We fund the administration of them through the DMV. We fund the policing of
them.
So I think it's high time; we've waited long enough. Automakers have been dragging their feet
for about 25 years, and these new proposals would be the first serious improvements to fuel
economy in two decades.
Ford Motor Company
Ford supports the overall manner in which the agencies have proposed to harmonize the
greenhouse gas emissions and CAFE regulatory framework. The proposal brings together a
range of compliance mechanisms such as improvements to vehicle fuel economy, improvements
in air-conditioning systems designed to minimize refrigerant leakage (another potential source of
greenhouse gases) and advanced technology vehicles that can run on biofuels and electricity.
Taken together, the broader elements of this harmonized national program provide a more
1-21
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EPA Response to Comments
efficient compliance framework compared to individual state programs or potentially
overlapping federal and state programs. [OAR-2009-0472-7082.1, Cover letter, p. 1]
[Following comments are from LA Testimony, OAR-2009-0472-7283, pp.90-96] [Following
comments are also from Detroit Testimony, OAR-2009-0472-6185 p. 13-17] [Ford also
submitted these comments as testimony at the New York public hearing, See docket number
OAR-2009-0472-4621, pp. 26-31.]
We commend the efforts of both agencies in this difficult task to develop harmonized
greenhouse gas emissions and CAFE standards for passenger cars and light-duty trucks, and we
are committed to working with you to finalize these regulations.
Turning now to the proposed rulemaking, Ford supports the manner in which the agencies
have proposed to harmonize the greenhouse gas emissions and CAFE regulatory framework
which is a broader program compared to what was outlined in the 2007 Energy Independence
and Security Act.
It brings together a range of compliance mechanisms such as improvements to vehicle fuel
economy, improvements in air-conditioning systems designed to minimize refrigerant leakage,
another potential source of greenhouse gas emissions, and advanced technology vehicles that can
run on biofuels and electricity.
It also maintains separate car and truck footprint-based targets which Ford and the industry have
supported given that cars and trucks have different functional characteristics whether they have
the same footprint or not.
Taken together, the broader elements of this one national program provide a more
efficient compliance framework compared to individual state programs or potentially
overlapping federal and state programs.
General Motors
GM supports the joint proposal from EPA and NHTSA to address 2012 to 2016 model year
vehicles. We commend the technical staffs of both agencies with working together on this
highly complex issue to produce what appears to us to be a very harmonized approach with the
two Federal programs that will regulate fuel economy and greenhouse gas emissions. We also
want to thank the agencies for leadership that the Federal Government is showing in trying to
minimize the disruptive impacts of having multiple programs at State and Federal levels. (OAR-
2009-0472-6185, p. 10)
It is our view that this rule represents a dramatic opportunity to advance our mutual goals of CO2
reduction and increased energy diversity while respecting customer choice. But even after this
rule is finalized, more work will remain on the policy front. This rule only gets us to 2016.
(OAR-2009-0472-6185, p. 12)
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General Comments
We do urge both EPA and NHTSA to keep all stakeholders at the table and immediately begin
work on the next phase of what we would call an ongoing national strong program. And I will
tell you right now from a GM perspective, we are prepared to engage in that process today.
(OAR-2009-0472-6185, p. 12)
General Motors (GM) supports the joint proposal from EPA and NHTSA to address the fuel
economy and greenhouse gas emissions of 2012-2016 model year vehicles. The proposal is
consistent with the intent of the May agreements with the administration. We commend the
technical staffs of both agencies for working together on this highly complex issue, and
appreciate their efforts to produce a harmonized approach for federal regulation of vehicle fuel
economy and greenhouse gas emissions. We further commend the agencies for the leadership
that the federal government has shown in trying to minimize the disruptive impacts of having
multiple programs at the federal and state levels. While this rule represents a dramatic
opportunity to advance our mutual goals of CC>2 reduction, increased energy diversity and
respecting customer choice, even after this rule is completed, more work will remain on the
policy front. We urge both EPA and NHTSA to move quickly to keep all stakeholders at the
table and work on the next phase of an ongoing, strong National program. All voices — the states,
the automakers, the environmental organizations, and the energy providers - are essential for
this to happen. Ultimately, we will need strong leadership at the federal level with an integrated
and coordinated approach that addresses infrastructure, vehicles, fuels and consumer behavior, as
well as all other sectors of the economy. This proposal is a positive first step and a good
foundation on which we can all build, but we cannot rest on our laurels. [OAR-2009-0472-
6953.1,pp.2-3]
[The following is from LA Testimony, OAR-2009-0472-7283, pp.55-59]
First, let me underscore that GM supports the joint proposal from EPA and NHTSA to address
the 2012 to 2016 model year vehicles. We commend the technical staffs of both the agencies for
working together on this highly complex issue to produce what appears to be a very harmonized
approach for the two federal programs that will regulate vehicle fuel economy and greenhouse
gas emissions.
We also want to thank the agencies for the leadership that the federal government is showing
in trying to minimize the disruptive impacts of having multiple programs at both the federal and
state levels. We are especially pleased that we are able to testify today in support of the approach
that is being proposed rather than saying no to a patchwork of state programs.
Among the highlights of the proposal are, one, the coordinated attribute-based approach of
the two programs; and, two, the recognition of the need for mechanisms that provide for
compliance flexibility in the face of uncertainty over future technology developments and costs,
customer acceptance of these technologies, and the price of fuels that consumers may see in the
marketplace.
This proposal is a positive first step and a good foundation on which we can all build, and
GM intends to provide some detailed technical written comments to enhance the clarity and
harmonization of this joint effort and program. And as we have from the start, we just would like
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EPA Response to Comments
to reiterate our commitment to working with the agencies, the states, and other interested parties
to make this a success.
Georgia Department of Natural Resources
We commend the U.S. Environmental Protection Agency (EPA) for working closely with the
National Highway Traffic Safety Administration (NHTSA) to develop a rule that will result in
significant improvements in fuel economy. Our nation needs energy security and reduced
emissions and we support these goals. [OAR-2009-0472-7150.1, p.l]
Glasser, Mark
[These comments were submitted as testimony at the Los Angeles public hearing. See docket
number OAR-2009-0472-7283, pp.201-205]
And so I bring these personal things up just to note the importance of what you're doing and the
wonderful job that has been started here, and I do thank you guys for coming here and for
listening to all of us.
Honda Motor Company
American Honda Motor Co., Inc. ("Honda") appreciates the efforts made by EPA and NHTSA to
develop a single national program to address motor vehicle greenhouse gas emissions and fuel
economy and welcomes the opportunity to provide its comments on the Notice of Proposed Joint
Rulemaking (the "NPRM"), dated September 28, 2009. [NHTSA-2009-0059-0095.1, p.2]
Honda supports the overarching goal of the NPRM, which is to establish a "coordinated and
harmonized approach" to implementing the Clean Air Act's mandate that EPA regulate motor
vehicle emissions, and the mandate in the Energy Policy and Conservation Act (EPCA) that
NHTSA regulate motor vehicle fuel economy. [NHTSA-2009-0059-0095.1, p.2]
[Following comments are from LA Testimony, OAR-2009-0472-7283, pp.96-103]
This NPRM represents a significant, positive step forward, and we appreciate the efforts of
everyone involved to create more harmonized national standards. Honda has long advocated
for higher fuel economy standards and, by inference, lower greenhouse gas emissions as well as
a single national standard.
Until the White House agreement, the automobile industry was facing fragmented, conflicting,
and burdensome regulation of fuel economy and greenhouse gases. The regulations in California
and adopted by 12 states and the District of Columbia compared to NHTSA's CAFE
regulations differed in terms of testing requirements, vehicle category definitions, and
stringency.
The White House agreement, in Honda's view, represents a great step forward in the much
needed regulation of greenhouse gases. The agreements signal wide consensus that the interests
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General Comments
of the country are best served by starting a greenhouse gas regulation and by a national
implementation of that regulation.
Honeywell International, Inc.
Honeywell supports EPA and NHTSA in its historic effort and has offered the agencies solutions
to better reflect the direct and indirect emissions associated with mobile A/C Systems. [OAR-
2009-0472-7206.1, p. 10]
Honeywell Transportation Systems
HTS commends the Environmental Protection Agency ('EPA') and the National Highway Traffic
and Safety Administration ('NHTSA') in their historic effort to reduce greenhouse gas ('GHG')
emissions from mobile sources and reduce oil consumption through improvements in fuel
economy. We recognize the vast challenge before the two organizations and applaud the
development of a workable solution that protects the environment while providing flexibilities
important to maintaining a viable automotive industry. The Proposed Rulemaking presents a
framework that should be economically practicable and successful in achieving these challenging
goals. Please continue this important work and ensure a harmonized national standard is
maintained to secure the future health of an industry that is so integral to domestic and global
economies. [OAR-2009-0472-7165.1, p.2]
We respectfully submit comments with the view that the Proposed Rules should encourage
compliance with rules and policy objectives while remaining technologically neutral. We believe
that the enacted rules should ensure fair treatment of innovators, foster the development of new
and more effective technologies, and not simply favor currently popular technologies. Setting
clear standards and selection criteria without prescribing specific solutions will inspire
innovation that will stand the test of time. [OAR-2009-0472-7165.1, p.2]
We urge EPA and NHTSA to ensure that decisions taken pursuant to the final Rule incorporate
the best available data on technology performance, vehicle usage, and geographic considerations.
Through these comments and suggestions, we strongly encourage measurable, efficient solutions
that improve fuel economy and reduce GHG emissions. [OAR-2009-0472-7165.1, p.2]
Hyundai Motor Company
The improvement of fuel economy and control of GHG are very important issues to Hyundai. In
our 2008 comments on the proposed NHTSA MY 2011 through 2015 CAFE standards Hyundai
recognized California for beginning a critical national debate on fuel economy and GHG policy.
Moreover, we supported early implementation and a faster ramp up to NHTSA's then 2020 fleet
fuel economy target of 35.0 miles per gallon (mpg) under the 2007 Energy Independence and
Security Act. That same year, Hyundai became the first automaker to pledge to achieve 35 mpg
by 2015 . On November 20, 2009, EPA's 2009 Fuel Economy Trends Report 2 shows that
Hyundai is now the industry leader in brand fuel economy performance for MY 2008 and 2009.
[Following comments are from LA Testimony, OAR-2009-0472-7283, pp.67-72]
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EPA Response to Comments
[[These comments were submitted as testimony at the Detroit public hearing. See docket number
OAR-2009-0472-6185, pp. 79-80.]
First I want to clearly state that the improvement of fuel economy and the control of greenhouse
gases are very important issues for Hyundai, and we appreciate the opportunity to testify here
today.
That same year, we became the first automaker in America to pledge that we would meet the
then 35-mile-per-gallon rule by 2015, not 2020. The fuel economy regulations have now
changed, but our goal remains the same. We've become the industry's fuel economy leader
propelled by our Hyundai Blue Drive initiative.
Hyundai applauds this joint NHTSA-EPA rulemaking exercise here. It represents unprecedented
regulatory cooperation. It seeks a national solution for reducing greenhouse gas emissions and
improving fuel economy of motor vehicles, and it works toward a global solution for addressing
climate change.
A unified program allows manufacturers to develop a concerted and cost-effective way to
work in the development of advanced technologies. We believe that a single national program is
the most efficient and practical approach now and in the future. This is a global and a national
problem and should be addressed on a national basis.
Insurance Institute for Highway Safety (IIHS)
IIHS supports NHTSA's efforts to increase fuel economy while maintaining vehicle safety
through the use of an attribute-based system. [NHTSA-2009-0059-0125.1, p.l]
International Council on Clean Transportation
This proposed rule takes a giant step towards catching up with vehicle efficiency in Europe,
Japan, and other nations (see graphic below) and will enhance U.S. credibility worldwide. We
applaud EPA and NHTSA, along with California, the Administration, and the vehicle
manufacturers, for taking the first steps along the road to a sustainable transportation
system. There are tremendous opportunities to dramatically reduce climate change emissions
from passenger vehicles in the coming years and it is essential to continue this progress in the
future. Long-term goals need to be set, so that manufacturers have consistent, long-term signals
to help them develop future technologies and product plans. This is especially important in the
context of the recession, with companies reorganizing and investment dollars in short supply.
ICCT supports a strong Federal rule and recognizes and applauds the constructive role that
California has played in building the technical and public support for this critical rulemaking.
We urge all parties to continue the process and set aggressive standards for 2017 and beyond.
ICCT strongly supports the proposed program stringency.
[OAR-2009-0472-7156.1, pp. 1-2]
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General Comments
Kia Motors
[These comments were submitted as testimony at the Los Angeles public hearing. See docket
number OAR-2009-0472-7283, pp. 169-170]
The joint EPA/NHTSA proposal is also important to Kia because it works towards the
only meaningful resolution of these issues, which is a global solution of addressing climate
change and energy security.
Kia strongly believes that a single national program to regulate greenhouse gas emissions and
improve the fuel economy of motor vehicles is the most efficient way and practical approach
now and in the future.
We strongly encourage dialogue between California, EPA, and NHTSA on the creation of post-
2016 model year national standards and look forward to participating in such discussions.
In addition to supporting an overall goal of a national program, we also support the
various compliance flexibilities outlined in the joint proposal, including credit transfers and
trading, credit for advanced technologies, and early credits.
These mechanisms are important to provide a cost-effective means of achieving the
standards. This is of particular importance to Kia due to our specific customer need for
affordable quality vehicles with long-term warranties.
Lance Tunick
[[These comments were submitted as testimony at the Los Angeles public hearing. See docket
number OAR-2009-0472-7283, pp. 140]]
I would also like to start off by saying that I fully support a GHG standard that makes SVMs do
their fair share and that does not give them a free ride.
Such an approach is already taken by both NHTSA in its CAFE program as well as by the
European Union where, in both cases, an SVM can obtain an alternative standard determined on
a case-by-case basis and based on feasibility.
League of Women Voters of South Carolina (LWVSC)
Thank you for the opportunity to share our viewpoints on this very important matter. We fully
support and appreciate your efforts by requesting that the new rules and standards be
implemented as soon as possible. [NHTSA-2009-0059-0137, p. 2]
Please allow this letter to serve as a comment on the above matter from the League of Women
Voters of South Carolina (LWVSC). Though we understand fully that the comment period on the
above issues ended in late November we are nonetheless compelled to share our voice on this
issue. [NHTSA-2009-0059-0137, p. 1]
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EPA Response to Comments
LWVSC is very disappointed that South Carolina Department of Health and Environmental
Control (SCDHEC), our state's own environmental protection agency, failed to take sufficient
care in expressing their concerns and disagreement with the federal rules to control greenhouse
gas pollution that contribute to climate change. [NHTSA-2009-0059-0137, p. 1]
Some of SCDHEC's concerns related to program implementation costs may be legitimate.
However, LWVSC believes that program costs should be weighed against what South Carolina
could face in terms of environmental and public health consequences should the new rule not
become law. As a coastal state we are continuously challenged by extreme weather conditions
such as hurricanes, tornadoes, drought, and rising sea levels. LWVSC would also argue that
SCDHEC's comments regarding the program's potential impact on the South Carolina economy
is neither evidence-based nor within SCDHEC's scope of responsibility for comment. [NHTSA-
2009-0059-0137, p. 1]
LWVSC is unsure whether SCDHEC's comments do or do not support consideration of the
regulatory action, or even whether they support any action to control greenhouse gas emissions.
If the intent of SCDHEC's comments is to be non-supportive of the final rule for the
Endangerment and Cause or Contribute Findings for the Greenhouse Gases Under Section 202
(a) of the clean Air Act (Federal Register, December 15,2009), then LWVSC believes that
SCDHEC has made a serious mistake and its comments are unacceptable for protecting the
public health and environment of South Carolina. [NHTSA-2009-0059-0137, p. 1]
While LVWSC supports new federal legislation on greenhouse gases, there is no assurance at
this writing that such legislation will pass in the near future. In short, the only protection we can
expect for the residents of South Carolina will be the minimum federal environmental and health
standards passed down to the respective states because of our own state agency as shown in their
comments to you, will not adopt any stronger regulations even when negative outcomes are so
evident. [NHTSA-2009-0059-0137, p. 2]
Lee Auto Components
[[These comments were submitted as testimony at the Detroit public hearing. See docket
number EPA-HQ-OAR-2009-0472-6185, pp. 123-124.]]
After all these years, I couldn't be more believed and proud that Detroit finally stands with the
Obama administration in an effort to raise fuel economy standards and restrict greenhouse gas
emissions.
Magavern, Bill
[These comments were submitted as testimony at the Los Angeles public hearing. See docket
number OAR-2009-0472-7283, p. 180]
So I see this as being a huge step forward for our country as we grapple with global warming and
decreasing our energy dependence. And I say this as someone who has been involved in this
issue for over 20 years now.
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General Comments
So we really thank President Obama for taking the bold action he did earlier this year in basically
aligning national standards with California standards, recognizing California's leadership,
bringing the automakers into the tent, and moving forward on this very important regulation.
I'm very impressed in your analysis that you're showing a benefit-to-cost ratio of over four to one
from this rule, which is very impressive, and we actually think it could be higher because we
think that your analysis understates the social cost of carbon. We do urge you to do another
assessment because we think you're underestimating the social cost of carbon.
Manufacturers of Emission Controls Association
In conclusion, MECA commends EPA for taking important steps to reduce greenhouse gas
emissions and improve fuel economy from light-duty vehicles. MECA believes that a variety of
advanced powertrain options are available for reducing carbon dioxide emissions from passenger
vehicles and light-duty trucks. [OAR-2009-0472-7108.2, p.11]
MECA believes that EPA should include black carbon emissions as part of its overall greenhouse
gas emission control strategy. [OAR-2009-0472-7108.2, p.7]
Mass Comment Campaign (13,829) (Union of Concerned Scientists)
I applaud your combined efforts to implement the national clean car standards announced by
President Obama. These standards are a win for U.S. drivers, whose gasoline savings will
outweigh any increased costs for vehicle technology developments. Indeed, your own analysis
shows that automakers could reach significantly higher efficiency standards than those proposed
and still save consumers money. [OAR-2009-0472-3906, p.l]
But 30 years without any significant change in fuel economy standards has shown that only a
strong rule will ensure that clean car choices become a reality. Past loopholes to fuel economy
rules, such as allowing automakers to reclassify cars as 'light trucks' to decrease fuel economy
requirements and incorporating weight thresholds that allowed gas guzzlers like the Hummer to
evade all fuel economy regulations, helped to create the current environmental and economic
predicament the automobile industry finds itself in. [OAR-2009-0472-3906, p.l]
The final clean car rule must guard against any potential loopholes or other efforts to weaken the
effectiveness of the standards. Creating a strong national program will fulfill the president's
commitment, provide U.S. consumers with clean vehicle choices, and allow the struggling auto
industry to emerge as the model for a clean energy economy. [OAR-2009-0472-3906, p.l]
Mass Comment Campaign (18,583) (unknown organization)
I support the proposed EPA - NHTSA rule to set strong global warming pollution standards for
personal vehicles. This landmark rule would:
— Limit greenhouse gas pollution from automobiles;
— Improve fuel efficiency by about 5% annually;
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EPA Response to Comments
— Reduce fleet-wide greenhouse gases 19% by 2030; and
— Cut carbon dioxide emissions by an estimated 950 million metric tons and 1.8 billion barrels
of oil over the lifetime of the vehicles sold under the program (model years 2012-2016). [OAR-
2009-0472-3907, p. 1]
Global warming is the most serious environmental threat facing the planet today. Americans face
a wide variety of public health threats, from the spread of infectious diseases to worsening air
quality to more intense weather events heat waves, floods, droughts. [OAR-2009-0472-3907,
p.l]
I applaud EPA and NHTSA for setting the first greenhouse gas emissions limits in American
history and encourage the Obama administration to continue to find ways to curb the pollution
that causes global warming. [OAR-2009-0472-3907, p.l]
Mass Comment Campaign (19) (unknown organization)
Thank you for your efforts to implement the national unified fuel economy standards announced
by President Obama. I applaud your efforts to issue strong standards while also protecting jobs in
the domestic auto industry. We must design these regulations in a way that fairly distributes the
burdens across the industry so we can create new jobs while we move forward with reducing
carbon pollution and enhancing energy security. [OAR-2009-0472-5748, p.l]
Also, the final rule must guard against any potential loopholes or other efforts to weaken the
effectiveness of the standards. Creating a strong national program will provide U.S. consumers
with clean vehicle choices and allow the struggling auto industry to emerge as the model for a
clean energy economy. [OAR-2009-0472-5748, p.l]
Mass Comment Campaign (2,332) (unknown organization)
I urge that you protect the greenhouse gas and fuel economy standards for passenger cars and
light trucks from being undermined by the various credits being offered. [OAR-2009-0472-5747,
p.l]
Automakers have been dragging their feet in making improvements in fuel economy for 25
years. There is ample technology ?on the shelf? to meet the proposed standards without unduly
burdening the industry. If automakers had acted to build more efficient cars and trucks,
consumers would not have been hit as hard by $4-a-gallon gas a little over a year ago. It is time
to put fuel efficient vehicles people want to buy on the market. [OAR-2009-0472-5747, p.l]
President Obama set a goal in May to put us on a path towards reduced greenhouse gas
emissions and oil consumption. I urge that every effort be made to ensure the president's goal
comes to fruition. [OAR-2009-0472-5747, p.l]
Mass Comment Campaign (27,307) (Alliance for Climate Protection)
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General Comments
The Alliance for Climate Protection commends the Environmental Protection Agency (EPA) and
National Highway Traffic Safety Administration (NHTSA) in their efforts to propose regulations
to limit greenhouse gas emissions and improve fuel economy from automobiles and light trucks .
These measures are important to limit global warming pollution, reduce America's dependence
on foreign oil, revitalize the US auto industry, and save consumers money at the gas pump.
[OAR-2009-0472-7295, p.l]
The Alliance informed its members about this proposed rule, and provided them with an
opportunity to support the draft regulation. Interested members expressed support for the
proposal by submitting signing on to a shared statement to serve as public comments to EPA and
NHTSA. [OAR-2009-0472-7295, p.l]
The statement is: T support efforts to strengthen fuel efficiency standards that will reduce
pollution and revitalize our auto industry.' [OAR-2009-0472-7295, p.l]
In total, 27,307 Alliance members endorsed the petition. [OAR-2009-0472-7295, p.l]
The Alliance for Climate Protection supports the intent of the proposed rule and encourages EPA
and NHTSA to finalize a rule that includes the most stringently constructed fuel economy
standards and mandatory greenhouse gas tailpipe limits that will maximize fuel savings and
minimize greenhouse gas pollution. [OAR-2009-0472-7295, p.l]
Mass Comment Campaign (32,918) (Sierra Club)
I applaud Environmental Protection Agency and National Highway Traffic Safety
Administration for proposing standards that will make our cars and trucks cleaner and more
efficient. The vehicles sold under these standards will carry out President Obama's historic
announcement and save 1.8 billion barrels of oil, $193 billion in consumer gasoline costs, and
significantly reduce our greenhouse gas emissions. [OAR-2009-0472-5749, p.l]
I urge the EPA and the Department of Transportation not to let excessive credits and unneeded
flexibility keep us from reaching oil savings and emission reduction goals. Both agencies should
include a backstop that will ensure the auto industry meets the 2016 targets. As it stands now, if
automakers simply produce more gas guzzling trucks than the proposal predicts, we could end up
with more pollution and less oil savings. [OAR-2009-0472-5749, p.l]
These standards will help Detroit become a leader in green vehicles by putting the best of today's
technology to work and investing in future technologies, such as electric vehicles. But we need
to ensure that electric vehicle credits don't allow automakers to fail to clean up other vehicles in
their fleet. While electric vehicles don't have a tailpipe, producing the electricity used to power
an electric vehicle does emit greenhouse gases. The standards should treat electric vehicles
accurately. [OAR-2009-0472-5749, p.l]
I am excited about cleaner cars and applaud the Administration for proposing standards that are a
win for consumers, automakers, and the environment. Strong final rules will take vehicle
standards out of the 1970s and into the 21st century, laying a strong foundation for the cleaner
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EPA Response to Comments
vehicles we need to end our reliance on oil and curb global warming. [OAR-2009-0472-5749,
p.l]
Mass Comment Campaign (326) (Student PIRGs)
Thank you for the leading the way on global warming by proposing the first-ever federal
standards to reduce global warming pollution from cars and light trucks. This historic action will
reduce our nation's oil dependence, save consumers money at the pump, and cut global warming
pollution. [EPA-HQ-OAR-2009-0472-11293, p. 1]
Mass Comment Campaign (7,239) (unknown organization)
The president's 35 mpg by 2016 target will help me and all Americans play a stronger role in
curbing oil dependence and global warming pollution, and help in the transformation and
revitalization of our struggling auto industry. [OAR-2009-0472-3905, p.l]
As we know from 30 years of stagnation on national fuel economy, your plan will be the key to
ensuring that the president's stated goal — 35 mpg by 2016 — becomes reality. [OAR-2009-
0472-3905, p.l]
Significant past loopholes, such as allowing automakers to reclassify cars as 'light trucks' to
decrease fuel economy requirements and incorporating weight thresholds that allowed gas
guzzlers like the Hummer to evade all fuel economy regulations, helped to create the current
environmental and economic predicament the industry finds itself in. [OAR-2009-0472-3905,
p.l]
Only a strong final plan that ensures the president's targets are met will deliver the clean car
choices, oil savings, and jobs that a transformed auto industry can bring. [OAR-2009-0472-3905,
p.l]
I look forward to seeing the Environmental Protection Agency and the Department of
Transportation working together to deliver and implement strong national clean car standards.
[OAR-2009-0472-3905, p.l]
Mercedes-Benz (Daimler AG)
We agree with the conclusion that the nation can't wait for the automobile industry to recover
before pushing forward on greenhouse gas reductions. In fact, our chairman often describes the
current crisis as an opportunity for strong companies like ours to refocus their investment and be
even stronger in a post crisis world, and so for that reason our [These comments were submitted
as testimony at the New York public hearing. See docket number OAR-2009-0472-4621, p. 48.]
company, Daimler, is moving full steam ahead, we have not reduced our investments in any way
and we expect to have significant improvements in our entire fleet across all of our vehicles in
the coming years. In this spirit, we are pleased to participate in this forum and lend our support to
this proposed rule. [These comments were submitted as testimony at the New York public
hearing. See docket number OAR-2009-0472-4621, p. 49.]
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General Comments
Mitsubishi Motors R & D of America (MKDA)
Mitsubishi Motors strongly supports the development of a National Program to regulate light-
duty vehicle greenhouse gas emissions which reduces the regulatory burden upon Automakers
while significantly decreasing light-duty vehicle greenhouse gas emissions. In order to continue
Automakers' efforts to comply with the National Program, Mitsubishi Motors urges EPA and
NHTSA to continue to work together to extend the National Program beyond MY 2016. [OAR-
2009-0472-7125.1, p.l]
Mitsubishi Motors applauds the joint rulemaking efforts of EPA and NHTSA, and specifically
supports the respective organization's harmonization efforts under the National Program. [OAR-
2009-0472-7125.1, p.5]
[Following comments are from LA Testimony, OAR-2009-0472-7283, pp.85-87]
Mitsubishi Motors supports the efficient and practical approach to achieving true greenhouse gas
reductions and fuel economy improvements, a single national standard.
This joint rulemaking by EPA and NHTSA is an important step of establishing a
cohesive national program to reduce greenhouse gases and improve fuel economy. This unified
program should allow manufacturers to develop cost-effective processes in meeting these
standards and deploying advanced technology vehicles.
Motor and Equipment Manufacturers Association
MEMA is encouraged by the collaborative effort between the National Highway Traffic Safety
Administration (NHTSA) and the Environmental Protection Agency (EPA) to improve fuel
economy and reduce emissions under one National Program. Compatible and consistent
standards allow vehicle manufacturers to focus their resources on investing in the best
technologies, which in turn, feeds the ability of the supplier base to advance development and
transfer research technologies into commercially viable products. MEMA and the supplier
industry are committed to policies that enable the introduction of new technologies needed to
support sustainable mobility. [OAR-2009-0472-7121.1, cover page]
The state of the nation's economy has severely challenged the motor vehicle industry and many
suppliers are facing huge financial shortfalls. MEMA is encouraged by the collaborative efforts
between the National Highway Traffic Safety Administration (NHTSA),
Environmental Protection Agency (EPA), and the State of California to approach GHG
emissions and fuel economy standards under one National Program with compatible, consistent
standards. MEMA strongly supports a uniform National Program based on GHG reduction and
increased fuel economy because it allows vehicle manufacturers to focus their resources on
investing in the best technologies available. This, in turn, feeds the ability of the supplier base to
advance development and turn research technologies into commercially viable products. [OAR-
2009-0472-7121.1, p.2]
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EPA Response to Comments
MEMA supports the approach taken by the Administration to bring together the light-duty
vehicle fuel economy standards and emissions standards into a joint National Program. A
uniform program not only allows vehicle manufacturers to invest in the appropriate technologies
their vehicles need to reach and exceed fuel economy and emissions targets, but also helps the
supplier base convert research technologies into commercially viable products. [OAR-2009-
0472-7121.1,p.l3]
[See docket OAR-2009-0472-7121.1, p. cover page-2 for detailed introduction and p. 12 for
detailed conclusion]
Mr. Richter - Environmental Capital Partners
The most obvious is environmental, which encompasses human health and quality of life. It's
fairly obvious if we drive the same number of miles and produce less tailpipe emissions, of
course, we're going to help out the ecological systems and our societies in general. I think you've
all seen the National Academy of Sciences recently released report describing it's estimated that
$120 billion worth of health cost of burning fossil fuels. These are real dollars, they're
real health concerns, and we can do an awful lot if we just eliminate a percentage of the
transportation pollution. [Comment submitted as testimony at the New York public hearing
EPA-HQ-OAR-2009-0472-4621, pp. 159-160]]
So I will close in saying that raising CAFE standards is not the only answer to the many deep
and varied challenges that this nation and the world face, of course, but it is a simple proven,
relatively low cost method of combatting global warming, improving our competitiveness in the
auto industry, strengthen our energy security, stimulating our economy, and reclaiming our
moral standing in the international community. My suggestion and hope is that the EPA takes the
most aggressive approach possible and demands the highest standards in the world for the
American car industry as quickly as possible. Decades of ignoring this responsibility has left us
with no other choice but to learn from the past and much, much upside if we do. [OAR-2009-
0472-4621, p. 164-165]
National Asphalt Pavement Association
As the national association representing the majority of asphalt pavement producers and
contractors, we commend the EPA and the NHTSA for working together to develop a rule that
will result in significant improvements in fuel economy. [OAR-2009-0472-7224.1, p.l]
National Association of Clean Air Agencies (NACAA)
Our association strongly supports timely and effective action to curb GHG emissions from light-
duty vehicles and, therefore, supports this proposal. [OAR-2009-0472-7071.1, p.l]
Global warming is the most pressing global environmental issue facing our generation. The
Intergovernmental Panel on Climate Change (IPCC) stated in 2007 that the evidence that global
warming is already affecting our planet is "unequivocal, as is now evident from observations of
increases in global average air and ocean temperatures, widespread melting of snow and ice, and
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General Comments
rising global average sea level." And since the IPCC report was released, even more compelling
research and evidence have accumulated demonstrating that we need to act now to reduce GHG
emissions. [OAR-2009-0472-7071.1, p.l]
As EPA data confirm, the mobile source sector is responsible for approximately 36 percent of
total U.S. GHG emissions, taking into consideration upstream transportation fuel emissions (such
as those associated with extraction, shipping, refining and distribution), as well as nonroad
mobile sources (including construction, farm and lawn and garden equipment). This level
exceeds electricity generation, which accounts for approximately 34 percent of total U.S. GHG
emissions. Given this significant contribution, a comprehensive regulatory strategy to reduce
GHG emissions from the mobile sector must be developed and implemented without delay.
[OAR-2009-0472-7071.1, p.l]
For this reason, NACAA applauds EPA and NHTSA for this landmark federal proposal which,
in addition to improving the fuel economy of cars and light-duty trucks, puts in place the first
ever national program for reducing motor vehicle GHG emissions. The proposed standards to
reduce GHG emissions from light-duty vehicles in model years 2012 through 2016 are a very
commendable first step forward in what must be an ongoing effort to make light-duty vehicles
and our nation's entire mobile source fleet and fuels as clean and "green" as possible. [OAR-
2009-0472-7071.1, p.l]
We are confident that these standards can be implemented with success, given EPA's proven 30-
year-plus track record of establishing and implementing motor vehicle emissions standards under
Title II of the Clean Air Act. The technical research and analysis that EPA has conducted
illustrate the agency's thoughtful deliberation of various approaches for this program, leading to
a proposed set of national light-duty vehicle GHG emissions standards that can be achieved with
known and available technologies. [OAR-2009-0472-7071.1, p.2]
Moreover, the automobile manufacturers have endorsed the establishment of a national program
for vehicle GHG emissions standards and Corporate Average Fuel Economy standards. In
commitment letters signed on May 18, 2009, automakers and the trade associations that represent
them stated that they "recognize the benefit for the country of a National Program to address
GHGs and fuel economy and the historic announcement of EPA and NHTSA's intent to jointly
propose a rule to set standards for both. They further stated that they "fully support proposal and
adoption of such a National Program," that they "welcome this opportunity to be a partner in
helping to advance a harmonized National Program" and that they "commit to working with EPA
and NHTSA, the states, and other stakeholders to help our country address global climate change
and the need to reduce oil consumption by developing this kind of strong, coordinated, national
program for the model years after 2016." [OAR-2009-0472-7071.1, p.2]
[NACAA also submitted these comments as testimony at the New York public hearing. See
docket number OAR-2009-0472-4621, pp. 54-60.]
National Association of Manufacturers
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EPA Response to Comments
The NAM supports the Administration's broader policy objectives of harmonizing vehicle
emission standards under a National Program and promotion of energy efficiency through
enhanced CAFE standards through the Department of Transportation (DOT). Not only does
establishment of national, uniform standards have the potential - if implemented correctly- to
create a climate of investment certainty necessary to make long-term business decisions, but
stronger energy efficiency objectives will also enhance domestic energy security, which is a key
policy priority for manufacturers. The NAM applauds the Administration's objective to "mitigate
the additional costs that manufacturers would otherwise face in having to comply with multiple
sets of federal and state standards." [OAR-2009-0472-7215.1, p. 2]
National Association of Manufacturers
NAM supports the Administration's broader policy objectives of harmonizing vehicle emission
standards under a National Program and promotion of energy efficiency through enhanced CAFE
standards through the Department of Transportation (DOT). Not only does establishment of
national, uniform standards have the potential - if implemented correctly- to create a climate of
investment certainty necessary to make long-term business decisions, but stronger energy
efficiency objectives will also enhance domestic energy security, which is a key policy priority
for manufacturers. The NAM applauds the Administration's objective to mitigate the additional
costs that manufacturers would otherwise face in having to comply with multiple sets of federal
and state standards. [OAR-2009-0472-7215.1, p.l]
National Automobile Dealers Association (NADA)
Ever since enactment of EPCA in 1975, NADA has supported the goal of continuous fuel
economy improvements, while recognizing the constraints inherent in any "push" approach to
improving motor vehicle fuel economy performance. Simply put, the ultimate success of any
policy directed at improving new vehicle fuel economy and GHG performance rests with
consumer new vehicle preferences. Unless and until consumers actually buy and use new
vehicles, the fuel economy and GHG emissions benefits associated with those vehicles cannot
and will not be realized. Prospective purchasers in search of personal transportation have
alternative choices to buying or leasing new vehicles. Specifically, they always may elect to hold
onto their existing vehicles longer or to turn to the used vehicle marketplace. Production
mandates resulting in vehicles with performance constraints or high prices will lead to lower new
vehicle sales. Thus, any National Program must incorporate feasibility and affordability as
essential elements designed to achieve the energy and environmental benefits associated with
fleet turnover. Of greatest importance for dealers, for energy security, and for the environment is
not what can be built, but what the motoring public is willing and able to buy. [OAR-2009-0472-
7182.1, p.2]
[National Automobile Dealers Association also submitted these comments as testimony at the
New York public hearing, See docket number OAR-2009-0472-4621, pp. 84-85.]
I'd like to commend you for working hard to try to design a single national fuel economy
standard that aims to avoid an unworkable patchwork of state-based laws. Coordinating the
regulatory efforts of two important federal agencies is a challenging task, especially given the
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General Comments
important differences in each agency's statutory structures, mandates, goals and objectives. It is
in this light that today I will present three major points. [These comments were submitted as
testimony at the New York public hearing. See docket number OAR-2009-0472-4621, p. 80.]
Natural Resources Defense Council
[[These comments were submitted as testimony at the Detroit public hearing. See docket
number EPA-HQ-OAR-2009-0472-6185, pp. 18-19.]
NRDC applauds the creation of the National Program. The program is a historic step forward for
protecting the environment and helping consumers save money at the pump. It secures the
benefit of the California Vehicle Emissions Program while also giving consumers more clean
vehicle choices. The program represents a path forward on new vehicle standards that is clearly a
win for automakers, their workers, and the States. It's good for automakers because it gives them
certainty and lays the foundation for them to be more sustainable businesses in a future world of
volatile fuel prices and intensifying global warming. It is good for auto workers because a
stronger industry means more better paying jobs. The program is also good for the states
because it preserves their right to act to protect their local interests and citizens and it upholds
their tremendous value as laboratories for clean vehicle policy.
The joint proposal establishes an important policy partnership by aligning the fuel conservation
directive of the Energy Policy and Conservation Act with the pollution and health protections of
the Clean Air Act. The Supreme Court ruled in Massachusetts v EPA that the Clean Air Act is
the appropriate law for controlling carbon pollution and the Clean Air Act authority brings new
important perspectives to standards that reduce vehicle carbon emissions.
In addition to having health and welfare as primary drivers of the standards, the Clean Air Act
provides technology enforcing standards, and it includes the flexibility to set standards over
longer time frames. Unlike EPCA, which limits NHTSA to setting standards just five years into
the future, the Clean Air Act allows EPA to set longer term standards based on advanced, not
just incremental technologies. This approach increases regulatory certainty for automakers and
enables them to more effectively plan new technology in this strategic manner.
New York City Law Department
In light of the City's unique vulnerability to the impacts of climate change and its on-going
efforts to reduce greenhouse gas emissions and improve air quality within the City, we write to
provide these comments in support of the proposed rules, and to highlight the rules' potential
beneficial interaction with legislation now pending before Congress that would allow states and
municipalities to set fuel economy and emissions standards for their taxicabs and other for-hire
fleets. [OAR-2009-0472-7240.1, p.l]
Northeast States for Coordinated Air Use Management
Thus, NESCAUM applauds EPA for taking an extremely important step towards reducing
transportation-related GHG emissions. The proposed rule, once implemented, will reduce
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EPA Response to Comments
lightduty vehicle GHG emissions 21 percent by 2030. The rule will also increase energy security
— the U.S. currently consumes more than 18 million barrels of oil a day, and imports about 60
percent of total consumption. Of this, more than 8 million barrels a day are consumed in
lightduty vehicles. The rule will reduce oil consumption by approximately 1.8 billion barrels
over the lifetime of the vehicles that will be sold in model years 2012 to 2016. [OAR-2009-0472-
7235.1 p.l]
[Northeast States for Coordinated Air Use Management also submitted these comments as
testimony at the New York public hearing, See docket number EPA-HQ-OAR-2009-0472-4621,
pp. 41-42.]
New York State Department of Environmental Conservation
The greenhouse gas (GHG) emission standards proposed here are an important step towards
minimizing the risk to human health and environmental quality posed by global warming. These
risks include increases in heat related illness and increases in the range of disease vectors. Sea
level rise and changes in rainfall patterns are also expected, with attendant risks to coastal
infrastructure and agricultural production. There may be too much water in some places and not
enough in others. These risks are too great to ignore. [OAR-2009-0472-7454, cover page 1]
This joint proposal is long overdue. Along with its neighbors, New York State has been at the
forefront of efforts to combat global warming. Pursuant to Section 177 of the Clean Air Act
(Act), New York has adopted California's greenhouse gas emission standards for light duty
vehicles. New York has also acted, through the Regional Greenhouse Gas Initiative, to reduce
emissions from electric power generation. We applaud EPA's decision to use its authority, under
the Act to reduce GHG emissions. [OAR-2009-0472-7454, cover page 1]
[New York State Department of Environmental Conservation also submitted these comments as
testimony at the New York public hearing, See docket number EPA-HQ-OAR-2009-0472-4621,
pp.15-18]
New York State Department of Transportation (NYSDOT)
NYSDOT commends the Obama Administration, NHTSA, and the EPA for their joint efforts to
improve the fuel economy of the light duty vehicle fleet. We also commend the Administration
and the agencies for pursuing harmonized national emissions and fuel economy standards that
are consistent with the automotive emissions control program established by the State of
California under the authority of Section 209 of the Clean Air Act and by several other states,
including New York, under the authority of Section 177 of the Clean Air Act. [OAR-2009-0472-
7531.1, p.l]
New York University School of Law, Institute for Policy Integrity (IPI)
The Institute for Policy Integrity strongly supports the efforts of the Environmental Protection
Agency (EPA) and the National Highway Transportation and Safety Administration (NHTSA) to
address the problem of greenhouse gas (GHG) emissions from light-duty vehicles in this joint
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General Comments
rulemaking. This joint proposal of new Corporate Average Fuel Efficiency Standards (CAFE)
from NHTSA and greenhouse gas emission standards (GHG Standards) from EPA for light-duty
motor vehicles is an important move toward meeting EPA's obligations under the Clean Air Act
(CAA), as defined by the Supreme Court in Massachusetts v. EPA. [OAR-2009-0472-7232.3,
p.l]
However, this is only the first step. Several petitions are pending before EPA to regulate a
variety of other mobile sources that produce significant greenhouse gas emissions, including a
petition from this Institute. In order to fully comply with its mandates under the Clean Air Act,
EPA must address all significant sources of greenhouse gas emissions and must respond to these
petitions. [OAR-2009-0472-7232.3, p.l]
We applaud the agencies efforts to respond to the legal obligations under Massachusetts v. EPA
and to the growing risks associated with GHG emissions. The recommendations contained in
these comments will allow EPA to more efficiently and effectively meet these goals. [OAR-
2009-0472-7232.3, p. 18]
NGVAm erica
NGVAmerica supports the U.S. EPA effort to regulate greenhouse gas emission from motor
vehicles. Regulating greenhouse gas emissions from transportation sources is an important part
of the overall effort to reduce greenhouse gas emissions and help mitigate America's impact on
climate. Therefore, we agree with EPA's assessment that such emissions must be controlled.
[OAR-2009-0472-7236.1, p.5]
Nissan North America
The Notice of Proposed Rulemaking is consistent with the National Program in terms of both the
stringency of the standards and the structure of the two programs. More significantly, the
proposed Joint Rulemaking is consistent with the overarching goal of encouraging and
acknowledging investment in a zero emissions transportation system. [OAR-2009-0472-6798.1,
p.l]
Pacific Unitarian Church, Green Sanctuary Project
Please support. [OAR-2009-0472-7241, p.l]
Pavley, Fran, California State Senate
In May of this year I had the honor of being present in the Rose Garden with President Obama,
Congressional leaders, and CEO's from major automobile companies, EPA and California
officials, and advocates for the passage of a comprehensive Federal program to reduce
greenhouse gas emissions from passenger automobiles and light duty trucks. It was 7 years ago
that California's Clean Cars bill, AB 1493, was signed into law, and in 2004 the California Air
Resources Board unanimously adopted the regulations. The standards to reduce greenhouse gas
emissions by 30% by 2016 were based on off-the-shelf, cost effective, and available
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EPA Response to Comments
technologies. Expert engineers were able to quantify greenhouse gas emission reductions based
on a package of technologies that could be used in different classes of vehicles, allowing for
consumer choice. Independent public opinion polls each July from 2002-2009 by the PPIC
shows that across geographic, demographic and political parties, Californians continue to
strongly support these regulations. In 2004, when these regulations were adopted, gas was nearly
$1 dollar less per gallon, and global conflicts were less threatening to our economic security. In
addition, in 2004 we did not include our target greenhouse gas reductions under AB 32, or even
the alternative fueled vehicles, such as hybrids, that are on the market today. We certainly didn't
consider the public's growing interest as well as the competitive race among automobile
companies, to build electric vehicles and plug in hybrids. [OAR-2009-0472-7275.1, pp. 1-2]
I am confident that automakers' topnotch engineers will be able to design cleaner cars to meet
these standards not just in California but also across the nation. Rising gas prices, a growing
public concern about the dependence of importing oil and how that affects our security, the
health impacts of air pollution, as well as the visible and growing impacts of global warming,
have increased the publics demand for cleaner, more fuel-efficient cars. [OAR-2009-0472-
7275.1,p.2]
In California, and many other Western states, we are in our record 3rd year of drought. We have
documented evidence of an earlier melt of our snow pack, with more rain than snow at higher
elevations, causing an unreliable water supply during our shorter springs and long hot summers.
Sea level rise along our coast as well as states like Florida are a growing concern. From salt
water intrusion into our water supply, inability to get insurance along low lying coastal
properties as well as in our dry parched hillsides, and the potential to seriously impact our state's
coastal dependent tourism economy, we are very concerned about the cost of doing too little or
nothing to address the impacts of global warming. [OAR-2009-0472-7275.1, pp.2-3]
There is a compelling link between global warming and air pollution. Warmer temperatures
increase our ozone and smog forming pollutants. We have alarming and growing respiratory
illness, asthma and cancer rates occurring among our youth and the elderly. Several intense heat
waves over weeks at a time have caused illness and deaths. Lower income neighborhoods that
often lack air conditioning are particularly at risk during heat episodes. Agricultural losses,
increases in vector borne diseases, and a dramatic increase in loss of property and air pollution
from costly wildfires have become the new normal. California is not the only state that is
impacted by air pollution. [OAR-2009-0472-7275.1, p.3]
From Denver, to Chicago, to Albuquerque New Mexico, air pollution is a serious health
problem. Two years ago, I testified in Santa Fe, New Mexico as they were having a hearing on
adopting California's Clean Car standards. Several doctors and pediatricians, on their own
initiative, came to support the policy because of their concerns of their patient's health. For
many, they said it was the first time they had ever testified at a government hearing. [OAR-2009-
0472-7275.1, pp.3-4]
[Fran Pavley also submitted these comments as testimony at the Los Angeles public hearing. See
docket LA EPA Hearing EPA-HQ-OAR-2009-0472-7283, pp. 13-20]
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General Comments
Peters, Doug
[The following comments were submitted as testimony at the Detroit public hearing. See docket
number EPA-HQ-OAR-2009-0472-6185, p. 118-122.]
I felt personally compelled to come here today to support this regulation because of the national
security aspects of climate change and our nation's dangerous dependence on both foreign and
domestic oil.
Oil dependence also threatens our economic stability. Everyone knows that. In the last year
alone we have seen the price of oil in a very volatile manner go from approximately $140 a
barrel down to $40 a barrel. We'll pay a much higher price in terms of American lives and our
economy if we delay or fail to act to reduce our oil dependence right now. This is the consensus
among national security experts and retired generals and admirals. This is why this rule is so
important. This regulation will be a tremendous first step. It is estimated this regulation will
save 1.8 billion barrels of oil over the lives of the vehicles sold between 2012 and 2016. This is
a very important step in a long road to the energy and climate security that our nation needs and,
most importantly, cannot be the last.
I spent five years in the Marine Corps. In that time I participated in both Afghanistan and Iraq
invasions. On January 9, 2002 seven Marines from my squadron became the first Marines to die
following the 9/11 attacks. Seven of my friends of which I left American soil with were the first
Marine casualties suffered by this nation. I guess my time overseas, particularly the time I spent
in Pakistan, Afghanistan, and the Middle East in general served as a true wake-up call for me. I
realized that the way America would have to interact with the world going forward had changed.
I realized that new threats had emerged, unconventional threats. I witnessed U.S. military go
from old war style of fighting to that of asymmetric warfare practically overnight.
One of those new threats, as intangible as it may seem at times, is climate change or climate
disruption. Climate disruption is obviously not one of your traditional military threats. It's what
the military refers to as a threat multiplier. Climate change has the potential to destabilize fragile
governments, turning those governments into failed states, has potential to spark mass migration
of populations, turning those populations into refugee populations, has the potential to spark
conflicts over scarce water resources and scarce agricultural resources.
In these types of environments and scenarios the possibility exists for extremists to hide, the
possibility exists for extremists to recruit and train desperate members of these populations and
turn them against us. We've already seen this happen in Bangladesh, Darfur, Somalia, and other
places in the Horn of Africa. Climate disruption is such a viable threat, the Pentagon has already
started creating contingency scenarios for them. In fact, the Pentagon will focus on its issue in
its 2010 quadrennial defense review as I believe the State Department will in its quadrennial
diplomacy and development review. In other words, U.S. military is going to be called upon to
respond to such scenarios and threats. This is in addition to the pre-existing wars and challenges
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EPA Response to Comments
the U.S. military already faces. I believe one of the most misunderstood or underfelt aspects
facing today's military is the continuous deployment cycles of U.S. troops overseas.
Now, the U.S. military will always step up, that's what we do, it's an honor and a privilege, but
when troops are on their third, fourth, and even fifth deployments overseas to either Afghanistan
or Iraq, that places a tremendous burden on the troops themselves and on their family members.
This burden will only be intensified if the military is forced to respond to such threats posed by
climate change or climate disruption. Good examples of this scenario can be found in the 2004
Indonesia tsunami when the U.S. military was called in to provide aid. The U.S. military is the
only organization in the world that has the strength, the know-how, and the resources to respond
to such conflicts or disasters. You can even take Hurricane Katrina as another example. For
these reasons, implementation of this rule is vital to our national security. It is estimated that this
rule will reduce greenhouse gas emissions by 950 million metric tons by 2016. Climate security,
in other words, is our nation security.
Equally threatening to our national security is America's dependence on oil. Now, obviously this
is not a new threat, it's been around a while. It's been realized, but I don't believe it's been as
recognized as it should be. As I mentioned, our military is already stretched very thin, and
ensuring the constant flow of oil around the globe has become a constant if not secondary
occupation and task of the U.S. military, yet this is another burden on top of the war fighting
responsibilities and the preparation we have to put in for future contingencies.
Because we simply do not have enough oil in the United States to meet our demand, we have to -
- we are forced to rely on hostile regimes such as Iran or potentially Venezuela for our oil.
Especially considering Iran and countries like Venezuela have nationalized their oil companies,
so basically we're dealing directly with the nation-states themselves.
In 2008 we sent over $386 billion overseas for oil. That's over a billion dollars a day. When this
amount of wealth is being transferred to countries like Iran, we are basically - we are actually
funding both sides of the war against terror. Everybody knows that, it's well known that Iran has
funded and trained and supported insurgents in Iraq and in broader Middle East in general. So as
I said, we are actually paying people to fight against us.
I applaud the automakers for taking this step and their support of this regulation, and I want to
thank the EPA. It's been an honor to testify before another organization whose duty it is to
protect the United States and its citizens.
Physicians for Social Responsibility, Los Angeles
[Following comments are from LA Testimony, OAR-2009-0472-7283 p.79-85]
Our organization believes this is a first good step, but it's just the beginning, and stronger action
is needed to truly protect public health and create a fleet of vehicles that we need for a greener,
healthier future.
Public Citizen and Safe Climate Campaign
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General Comments
The commitment of EPA, NHTSA, CARB, and the auto industry to move forward with these
standards to reach 250 grams of carbon dioxide per mile (gCO2/mi) by 2016 would be a historic
achievement for climate protection. [OAR-2009-0472-7050.1, p.l]
The agencies? treatment of various details in knitting the programs together will set an important
precedent for future rulemakings. We urge the agencies to give careful thought to the structure of
this program, with an eye toward additional gains needed beyond the 2016 model year. [OAR-
2009-0472-7050.1, p.l]
Sack, Emily
I applaud your work, I don't do technical work, I'm not a politician, but I thank you so much for
what you're doing and keep it up. Thank you so much. [OAR-2009-0472-4621, p. 157]
[See Docket Number OAR-2009-0472-4621, pp. 154-157 for detailed comments]
Seal, Kathy
[These comments were submitted as testimony at the Los Angeles public hearing. See docket
number OAR-2009-0472-7283 p. 147]
So I wanted to thank you for giving us some hope, for contemplating and proposing
these standards, in the future for implementing them. I'm very happy that they will reduce
greenhouse gas emissions equivalent to the shutting down of 200 more coal plants per year. I'm
really thrilled about these standards that are being proposed. At the same time, I urge you to
make them be implemented very, very strongly without loopholes, without watering them down.
Sierra Club
The Sierra Club, Safe Climate Campaign, Coalition for Clean Air, Alliance for Climate
Protection and Environment America applaud EPA and NHTSA for proposing greenhouse gas
and fuel economy standards the first outlined in President Obama's historic announcement on
May 19, 2009. Achieving the President's goals will reduce America's oil dependence, curb
global warming, cut air pollution, save consumers money at the gas pump, and create new auto
industry jobs. [OAR-2009-0472-7278.1, p.l]
We applaud the use of publicly available data as the basis for these proposed standards and the
fresh look at technologies and costs, which stands in stark contrast to NHTSA's past reliance on
confidential product plans and proprietary data. Additionally, we note EPA's ability to set
standards that address a range of greenhouse gases, including air conditioning systems and their
potent refrigerants. EPA's Clean Air Act authority is an important complement to NHTSA's
energy conservation goals and more limited assessment of impacts on CO2 emissions. [OAR-
2009-0472-7278.1, p.2]
By accelerating compliance with the 2020 fuel economy target provided in EISA, EPA and
NHTSA create the opportunity for going well beyond 35 mpg in 2020 and putting the US auto
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EPA Response to Comments
industry on a path for longer term transformation. This is the biggest single step we can take to
curb global warming, reduce air pollution, cut America's oil dependence, save consumers money
at the gas pump, and create new auto industry jobs. [OAR-2009-0472-7278.1, p.2]
EPA and NHTSA have proposed standards for both cars and light trucks in response to the
historic May 19th agreement. EPA's proposal to achieve a 250 g/mi CO2e standard is matched
with NHTSA's proposal to set CAFE standards. These are welcome standards that come after
nearly 3 decades of complete inaction on car standards and incremental change for light trucks.
This lack of standards has resulted in a technology backlog which the industry can be apply to
cost-effectively meet (and exceed) these proposed standards. Technologies, including high-
strength and light weight materials, transmissions, better engines and even tires are available
now to move standards higher, faster. [OAR-2009-0472-7278.1, p.2]
The technology exists today to significantly reduce greenhouse gas pollution from new cars and
light trucks and to slash our addiction to oil. Existing and emerging technologies will enable
automakers to make continuous improvement through 2016 and beyond, while improving safety
and consumer choice. The Sierra Club, Safe Climate Campaign, Coalition for Clean Air,
Alliance for Climate Protection and Environment America welcome the new National Program
and the direction EPA has provided in establishing the first national greenhouse gas standards for
cars and light trucks to complement NHTSA's fuel economy program. The MY 2012-2016
standard is a robust start to moving vehicle standards out of the 1970's and into the 21st century.
This NPRM establishes a foundation for stronger standards after 2016 that will be put the auto
industry on the path to continuous innovation in vehicle technology that will reduce greenhouse
gas pollution, curb our addiction to oil and keep billions of dollars here in the US. Including a
backstop, fairly considering electric vehicles to avoid the taint of FFV credits, ensuring
flexibilities and credits are tied to real reductions, and ensuring standards for the future are
technology forcing will help establish a final rule that achieves President Obama's goals - and
will both meet the need of the nation to save oil and act swiftly to protect public health and
welfare from greenhouse gases. [OAR-2009-0472-7278.1, p. 19]
[[These comments were submitted as testimony at the Detroit public hearing. See docket number
EPA-HQ-OAR-2009-0472-6185, pp. 26-27.]]
And perhaps most importantly for today, as we're in Detroit, these standards will provide
automakers with the direction they need to become leaders in efficient vehicles and make Detroit
the epicenter of a green industry. These standards acknowledge that our automakers have
technologies on the shelf to safely improve fuel economy. Technology such as Ford's EcoBoost
engine, continuously variable transmissions, and high strength, lightweight materials will
provide consumers with the safe, clean vehicles they deserve. The proposed standards will
ensure that these technologies are put to work now and lead to the development and deployment
of even more advanced technologies.
[[These comments were submitted as testimony at the Los Angeles public hearing. See docket
number EPA-HQ-OAR-2009-0472-7283, pp. 137-138.]]
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General Comments
I would like to applaud the EPA and DOT on the new vehicle standards that will
benefit consumers by allowing us to fill up less at the pump, that will benefit our nation by
reducing our dependence on foreign oil, and will benefit the world by reducing pollutants that
contribute to global warming.
The EPA and DOT's new vehicle standards are a big step in the right direction. They promote
exactly what the world needs right now, real progress towards living without dirty, unlimited
energy. Our reliance on polluting fuels now can only lead to disaster in the future.
South Carolina Department of Health and Environmental Control
We commend the EPA and the NHTSA for working together to develop a rule that will result in
significant improvements in fuel economy. Our nation needs reduced emissions and energy
security and we support these goals. In addition to reducing greenhouse gas emissions,
improving fuel economy will have the very important benefit of reducing emissions and helping
areas meet national ambient air quality standards for pollutants including ozone and particulate
matter 2.5 and will also reduce urban air toxics. These air quality improvements will have a very
positive impact on public health and the environment. [OAR-2009-0472-7202.1, p.l]
South Carolina Pulp & Paper Association (SCPPA)
SCPPA supports the National Highway Transportation Safety Administration (NHTSA) moving
forward at this time with the Corporate Average Fuel Economy (CAFE) standards as proposed
and commends the effort to develop a rule that will result in significant improvement in fuel
economy. However, SCPPA has significant concerns with the Greenhouse Gas Emission
Standards provisions in the rule, primarily related to greenhouse gases triggering of Title V and
New Source Review (NSR) permitting provisions of the Clean Air Act. [OAR-2009-0472-7479,
p.l]
South Carolina Wildlife Federation
Thank you of the opportunity to comment on this extremely important action. We fully support
your efforts and request that these new rules and standards be implemented as quickly as the law
allows. [NHTSA-2009-0059-0136, p. 2]
Although the formal comment period on the Proposed Rulemaking To Establish Light- Duty
Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards
closed on November 27,2009, a letter from Robert J Meyers, Principal Deputy Assistant
Administrator, EPA to Governor John Engler, President and CEO, National Association of
Manufactures, dated November 14,2008 indicates that closure of a formal comment period is not
the end of the dialogue or opportunity to provide input on such important issues. We understand
that EPA continues to post such comments to the docket and when moving forward with rule
making or other actions under the Clean Air Act, will use the entire docket, including late
comments, as a resource. [NHTSA-2009-0059-0136, p. 1]
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EPA Response to Comments
We wish to express our strong disagreement with specific comments critical of EPA
transparency and the time allowed for public comments expressed in a November 2 4 2009 letter
from the South Carolina Department of Health and Environmental Control (SCDHEC). South
Carolina Wildlife Federation fully supports the proposed standards for reducing vehicle
greenhouse gas emissions. [NHTSA-2009-0059-0136, p. 1]
We feel that it would be extremely short sighted to delay such regulations based on fear of the
potential collateral impacts on state and local air permitting authorities, small business and other
stationary sources as requested by SCDHEC. Additional time will not decrease but only serve to
increase potential impacts on the economic well-being of our state. It is difficult to understand
the position that such regulations would have a detrimental effect on South Carolina's economy,
a coastal state, considering the potential impact that increasing green house gases has on extreme
weather events such as hurricanes and rising sea levels. [NHTSA-2009-0059-0136, p. 2]
Increasing fees, revising state regulations, getting State legislation enacted, or increasing State
employee workload and training expressed by SCDHEC pales in comparison to the troubles our
State will face should the new rule not be promulgated. Such impacts are outlined in the final
rule for the Endangerment and Cause or Contribute Findings for Greenhouse Gases Under
Section 202(a) of the Clean Air Act (Federal Register, December 15,2009). [NHTSA-2009-
0059-0136, p. 2]
We find it ironic and unacceptable that SCDHEC, the agency charged with regulating and
controlling health and environmental matters in this state, would take such a cavalier attitude
towards protecting the health and environment of our citizens. Although new federal legislation
on greenhouse gasses may be a preferred solution, there is no assurance that such legislation will
pass in the near future. In general terms, the minimum federal environmental and health
standards passed down to the respective states is the only protection we can expect as citizens of
South Carolina because of SCDHEC's historical reluctance to look at stronger requirements,
even when threats are obvious. [NHTSA-2009-0059-0136, p. 2]
South Coast Air Quality Management District
We would also like to urge that EPA and DOT continue to support and strongly coordinate with
ARB in the development of new emission standards known in California as Pavley II.
[Comments are from LA Testimony, OAR-2009-0472-7283, pp.59-67.]
Southeastern States Air Resource Managers, Inc. (SESARM)
We commend the U. S. Environmental Protection Agency (EPA) for working closely with the
National Highway Traffic Safety Administration (NHTSA) to develop a rule that will result in
significant improvements in fuel economy. Our nation needs reduced emissions and energy
security and we support these goals. Through gubernatorial and/or legislative mandates, some of
our agencies are required to consider effective methods of mitigating greenhouse gas (GHG)
emissions, provided the measures do not result in adverse impacts to the economy, environment,
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General Comments
or jobs. We support emission reduction programs that are well designed, complementary, and
coordinated. [OAR-2009-0472-7137.1, p.l]
State of California
The attorney general of California is generally supportive of the proposed rulemaking and agrees
with comments submitted by CARB. NHTSA and EPA are proposing to adopt California's GHG
emission standards on a nationwide basis, and that can only be good for the Earth's Climate, our
nation's energy security, and putting money back in consumer's pockets.
State of Connecticut
I write to congratulate you on your groundbreaking joint effort to coordinate two very significant
regulatory efforts on vehicle fuel efficiency requirements. (CAFE) and motor vehicle greenhouse
gas (GHG) emission standards. Both of these efforts are praiseworthy by themselves; in tandem,
you have made a bold statement that energy, the economy and the environment are closely and
inexorably linked and our government's policies must reflect this undeniable fact. [OAR-2009-
0472-7499, p.l]
State of Connecticut as a front runner in climate change, strongly supports the proposed rule and
commends the interagency coordination efforts.
State of Connecticut Department of Environmental Protection
DEP congratulates the Environmental Protection Agency (EPA) and the National Highway
Traffic Safety Administration (NHTSA) on your groundbreaking joint effort to coordinate two
very significant regulatory efforts on motor vehicle greenhouse gas (GHG) emission standards
and vehicle- fuel efficiency requirements (CAPE). The mobile source sector represents a
significant source of greenhouse gas (GHG) emissions and in 2007 mobile sources contributed
4396 of GHG emissions in Connecticut. The emission reductions attributable to these rules are
necessary for Connecticut to meet its GHG reduction targets and will be similarly critical in
meeting national targets once adopted.
DEP believes the Clean Air Act is an appropriate mechanism for regulating GHG emissions. As
such, it is critical to maintain the Clean Air Act provisions protecting states' rights to adopt motor
vehicle standards - for California under Section 209 and for Connecticut under Section 177. This
effort created the technical basis and real world experience critical to the proposed national
motor vehicle GHG emissions reduction proposal. Furthermore, as directed by Governor Reli
and in accordance with a proposal now being developed by California, DEP will begin a rule
making process next year intended to deem vehicles that comply with the new federal standards
to be in compliance with our adopted state standards from 2012 through 2016. [OAR-2009-0472-
7301, p.l]
DEP also supports comments submitted by NESCAUM. [OAR-2009-0472-7301, p.3]
State of New Jersey
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EPA Response to Comments
I would like to thank you for this opportunity to testify on the joint proposal of the United States
Environmental Protection Agency and the National Highway Transportation Safety
Administration to establish light-duty vehicle greenhouse gas emission standards and corporate
average fuel economy standards. The Department of Environmental Protection supports the
proposed action as a first step in our efforts to combat climate change. New Jersey is a leader in
addressing the [These comments were submitted as testimony at the New York public hearing.
See docket number OAR-2009-0472-4621, p. 109.] control of air pollution, including
greenhouse gases, and welcomes this opportunity to comment constructively to help advance a
harmonization of the federal vehicle control program. [These comments were submitted as
testimony at the New York public hearing. See docket number OAR-2009-0472-4621, p. 110.]
Although the Department is supportive of the proposed federal vehicle control program as a
powerful first step in addressing greenhouse gas emissions from motor vehicles, additional
reductions will be needed for vehicles beyond the model year 2016. New Jersey is committed to
working with the U.S. EPA, NHTSA, California Air Resources Board, and other stakeholders to
address global climate change and the need to reduce oil consumption by developing strong
motor vehicle greenhouse gas standards for model years after 2016. [These comments were
submitted as testimony at the New York public hearing. See docket number OAR-2009-0472-
4621, p. 113.]
State of Washington Department of Ecology
Ecology especially acknowledges the Obama Administration's historic leadership of bringing
together for the first time EPA, NHTSA, California, and the auto industry to reduce this
country's greenhouse gas emissions and their contribution to global warming. The proposed
standards to reduce GHG emissions from light-duty vehicles in model years 2012 through 2016
are a very critical and commendable first step toward making light-duty vehicles in Washington
and our nation as clean as possible. [OAR-2009-0472-7299, p.l]
Steiner, John
Your continued leadership in finalizing protective standards will help wean us off of foreign oil,
reduce harmful greenhouse gases, and save families money at the gas pump. [OAR-2009-0472-
8705 p.l]
Toyota Motor North America
Last May, Toyota executives joined President Obama, Cabinet members, governors, the
California Air Resources Board, other CEOs and environmental leaders to support a commitment
to establish a coordinated national program for fuel economy standards and greenhouse gas
reductions from passenger cars and light trucks. We encouraged this agreement, which we had
sought for a very long time. Without it, our industry would be subject to overlapping and
potentially conflicting regulations from two separate federal agencies and over a dozen states.
[OAR-2009-0472-7291, p.l]
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General Comments
The Environmental Protection Agency (EPA) and the National Highway Traffic Safety
Administration (NHTSA) have jointly proposed a comprehensive set of regulations to implement
this agreement. We support EPA and NHTSA's efforts to harmonize two programs under two
quite different statutes and at the same time establish a completely new greenhouse gas (GHG)
program for motor vehicles. [OAR-2009-0472-7291, p.2]
Toyota is committed to addressing climate change and oil dependence by increasing the fuel
efficiency of our products, developing new markets for advanced vehicle technologies, and
reducing the greenhouse gas footprint of our manufacturing and distribution operations. In fact,
our top societal priority is sustainable mobility, a stance that transcends our regulatory
obligations. To us, sustainable mobility means building vehicles that meet customer needs and
expectations, while also being safe, durable, and better for the environment. [OAR-2009-0472-
7291, p.2]
To minimize our environmental footprint, we are accelerating the roll-out of conventional
hybrids across our entire line-up. In addition, we are pursuing hydrogen fuel cells, plug-in
hybrids, pure electrics and advanced batteries beyond lithium ion - all with the goal of
overcoming the barriers that currently prevent their mass deployment. On the operational side,
we've already cut carbon dioxide (C02) emissions and energy use from our manufacturing plants
on a per vehicle produced basis by 19% since 2000. [OAR-2009-0472-7291, p.2]
[[These comments were submitted as testimony at the Detroit public hearing. See docket number
OAR-2009-0472-6185, pp. 51-54.]
We welcome the development of a single coordinated fuel economy and greenhouse gas
standard. This agreement is something we have encouraged and sought for a very long time, and
it is a landmark achievement for all of us. Without it, we would be subject to overlapping and in
places conflicting regulations from two separate Federal agencies and over a dozen states. In
exchange for eliminating the patchwork, we agreed to pull forward the ambitious fuel economy
targets set by Congress for 2020 to 2016.
We applaud the efforts NHTSA and EPA have made to unify two programs under two quite
different statutes, and to establish a completely new EPA program for motors vehicles. The
proposed regulations appear to capture the key elements of our historic agreement, including the
various compliance flexibilities that were integral to reaching a consensus. We therefore believe
the proposal sets the stage for a successful final joint rulemaking that will provide certainty for
our product planners and significant environmental and energy benefits for our nation and the
world. We are now examining the details of this complex proposal, and to the extent that issues
need to be clarified we will be submitting written comments.
Make no mistake, meeting the overall fleet average of 35.5 mpg by 2016 will be a challenge for
our engineers and product planners. It will require every ounce of their ingenuity and creativity.
In the end, consumers will be the true beneficiaries of this program. A unified national program
ensures American consumers will have the choice of vehicles they need and want, as well as the
fuel efficiency and low emissions they expect, without the confusion of multiple standards.
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EPA Response to Comments
That's why the process of collaboration must continue beyond 2016 and we must continue to
seek additional areas of harmonization between the two programs.
Now I would like to step back and comment from a broader perspective just a moment. The fact
that diverse groups could find common ground on these challenges is a notable example of how
government and industry can — and should — work. It illustrates one of the cornerstones of how
Toyota approaches public policy, by fostering partnerships, with government, universities, non-
profits, and other companies. The other cornerstone is a long-range planning for and investing in
the future. At Toyota, we don't stop at regulatory compliance nor do we wait for government
regulation to address the challenges of tomorrow's transportation.
Our top public policy priority is sustainable mobility. That means building vehicles that meet
customer needs and expectations, while also being safe, durable, and better for the environment.
To minimize our environmental footprint, we are accelerating the roll-out of conventional
hybrids across our entire vehicle lineup. In addition, we are pursuing hydrogen fuel cells, plug-
in hybrids, pure electrics, and advanced batteries beyond lithium ion — all with the goal of
overcoming the barriers that currently prevent their mass deployment.
Sustainability mobility defines where we are today and where we plan to be in the future: We
are the leader in fuel-efficient vehicles in the U.S. We are the leader in hybrid technology,
having launched our first hybrid a dozen years ago and put more than 2 million in the worldwide
market to date. We are bringing a plug-in, a pure EV, and other advanced technologies to market
in the near future to complement our hybrid dominance. And we've already cut CO2 emissions
and energy use from our manufacturing plants on a per vehicle produced basis by 19 percent
since the year 2000. Just yesterday Toyota became the first car manufacturer to join the
SmartGridCity in Boulder, Colorado. 10 plug-in Prius hybrid electric vehicles will help teach us
how to reduce carbon emissions and our dependence on foreign oil, while at the same time, not
just meet, but exceed customer expectations.
We believe it is important to keep in mind that the road to sustainable mobility is a long one, and
it is not one, but actually two separate and distinct roads traveling in the same direction. One
road is the path to compliance. The other is the path to market preparedness. One is constructed
to meet the priorities of government regulation. The other is constructed to search out and
respond to the specific needs and desires of the consumer.
I believe we need both of these roads to arrive together in the same place to realize the goal of
sustainable mobility.
Transportation and Buildings Policy for the State of Massachusetts Executive Office of
Energy and Environmental Affairs
The benefits of this proposal will be far-reaching: Significant reductions of greenhouse gases,
improved fuel economy and lowered cost for the nation's drivers, reduced demand for imported
oil and economic growth for the development of advanced vehicle technologies. [OAR-2009-
0472-4621, p. 19]
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General Comments
Thus, Massachusetts strongly supports the work of the federal agencies in moving forward with
this proposed joint rulemaking. In addition to harmonizing federal regulations, this rulemaking
would for the first time align the federal motor vehicle standards with the greenhouse gas [OAR-
2009-0472-4621, p.20] standards adopted by the California Air Resources Board and the Section
177 states, a group that includes Massachusetts and 13 other states which have adopted these
more stringent standards. [OAR-2009-0472-4621, p.21]
In conclusion, Massachusetts fully supports the Obama Administration and the proposed
rulemaking of EPA and NHTSA. [OAR-2009-0472-4621, p.26]
I want to emphasize the importance of moving forward with national regulations at this time.
Climate change is the most critical environmental issue of our time and the time is now to act to
address it. [OAR-2009-0472-4621, p.26]
U.S. Coalition for Advanced Diesel Cars
The Coalition supports the twin national objectives of reducing green house gas (GHG)
emissions and petroleum fuel consumption by the U.S. light duty vehicle fleet. To that end, the
Coalition urges EPA to adopt fuel-neutral policies, standards and reality-based vehicle ratings
that will promote vigorous technology competition in the market place. Failure to adopt fuel-
neutral policies and reality-based vehicle ratings will undermine consumer choice and drive a
systematic shortfall in achieving the benefits promised by the new rulemaking. [OAR-2009-
0472-7496, p. 1]
The success of the new rules will ultimately be judged by reductions in real-world petroleum
barrels and real -world GHG tons. Moreover, the recovering auto industry cannot afford to make
investment decisions based on EPA data without an assurance that those decisions will make
long-term business sense. This is in stark conflict with President Obama's call for rules that will
'give our auto companies some long-overdue clarity, stability and predictability.' [OAR-2009-
0472-7496, p.2]
Union of Concerned Scientists
UCS applauds the work of both agencies for moving quickly to issue the proposed rulemaking to
make President Obama's commitment a reality. Overall, the proposed rule takes a dramatic step
forward. However, certain aspects of the rule could erode the potential benefits unless they are
effectively implemented and enforced. In order to maximize the environmental, economic, and
security benefits of this program, it is critical that the 250 grams per mile goal is achieved.
[OAR-2009-0472-7181.1, p.l]
We would like to commend the agencies in general on their noticeable efforts to provide high
levels of transparency in the proposed rulemaking, and particularly to laud EPA for its detailed
and thoroughly credible assessments of technology availability and technology cost. We would
like to compliment EPA on its approach of basing its finding not upon confidential business
information, as has been the practice of NHTSA in recent rulemakings, but rather upon well
documented, proven, and transparent findings. [OAR-2009-0472-7181.1, p.12]
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EPA Response to Comments
[Union of Concerned Scientists also submitted these comments as testimony at the New York
public hearing, See docket number EPA-HQ-OAR-2009-0472-4621, pp. 91-92.]
United Auto Workers
The UAW commends both agencies and the Obama administration for putting forth a proposal
that provides for a national system of fuel-economy and greenhouse gas emission regulations.
This will avoid a confusing and costly patchwork of federal and state regulation of light-duty
vehicle fuel economy and greenhouse gas emissions. This proposal contains the features of the
historic stakeholder agreement that that was announced by President Obama in May, 2009. It
will benefit the nation by reducing oil consumption and greenhouse gas emissions. In particular,
it will save more fuel and avoid more greenhouse gas emissions than would have been the case
under a state and federal regulatory patchwork. This is because it extends tougher standards
across the entire nation rather than having them limited to a minority of states that would have
chosen to follow the standards promulgated by the State of California. At the same time, by
establishing a unified national system the regulations will make it easier for automakers to meet
the tougher standards. This will facilitate investment and production in the auto sector, and help
to preserve and create jobs for American workers. [OAR-2009-0472-7056.1 p.l]
University of Miami, School of Law
We support the proposed EPA and NHTSA rule and encourage the Obama administration to
continue to find ways to curb the pollution that causes global warming. These proposed
standards allow automobile manufactures to utilize technologies that will reduce vehicle GHG
emissions and improve fuel economy. The EPA proposal would require vehicles to meet an
estimated combined average emissions level of 250 grams/mile of CO2 in model year 2016. The
NHTSA proposal would require car manufacturers to meet an estimated combined average fuel
economy level of 34.1 mpg in model year 2016. [OAR-2009-0472-6770, p. 1]
University of Michigan Transportation Research Institute (UMTRI)
The National Program is supposed to establish strong and coordinated federal greenhouse gas
and fuel economy standards for passenger cars, light-duty trucks, and medium-duty passenger
vehicles. For the National Program to be successful, stakeholders with diverse interests and
views need to cooperate. EPA, NHTSA, CARB, and the automakers are to be commended for
the cooperative beginning of the joint rulemaking process for managing automotive CAFE and
GHG emissions standards. [OAR-2009-0472-3651.1, p.l]
[[UMTRI also submitted these comments as testimony at the Detroit public hearing, See docket
number OAR-2009-0472-6185, pp. 33.]
University of Pennsylvania, Environmental Law Project
Some of the changes brought about this legislation could supplant a regulatory scheme
established by this rule by enforcing cap-and-trade strategies for carbon emissions across broad
sectors of the economy. However, given that the Senate has yet to act, there remains a great deal
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General Comments
of uncertainty in both timing of final passage and the content of specific provisions. This rule is a
useful step forward in reducing GHGs, and marks important redefinitions of the scope and
relevance of existing statutory provisions. [OAR-2009-0472-7286.1, p. 4]
Undoubtedly, the United States must adopt policies that address global climate change and
reduce its oil consumption. These proposed rules, developed in response to President Obama's
call for a National Fuel Efficiency Policy, constitute a strong and coordinated federal fuel
economy and GHG program for passenger cars and light trucks. Since the proposed rules will
provide regulatory certainty and consistency for the automobile industry while reducing
greenhouse gas emissions based on technologies that can be incorporated at reasonable cost, the
proposal represents an important effort to improve fuel economy and reduce greenhouse gas
emissions. [OAR-2009-0472-7286.1, p. 14]
It is critically important that the United States adopt policies that address global climate change
and reduce its oil consumption. These proposed rules constitute a strong and coordinated federal
fuel economy and GHG program for passenger cars and light trucks. Since the proposed rules
will provide regulatory certainty and consistency for the automobile industry while reducing
greenhouse gas emissions based on technologies that can be incorporated at reasonable cost, the
proposal represents an important effort to improve fuel economy and reduce greenhouse gas
emissions. [OAR-2009-0472-7286.1, pp. 21-22]
However, the proposal is not without its flaws. Namely, the proposal fails to gradually reduce the
disparity between efficiency requirements for 2012 and 2016 MYs. Additionally, the policy does
not create mechanisms whereby minimum reductions are ensured, nor does it address the fiction
of "zero emissions" electric vehicles. Finally, the proposal fails to make a complete lifecycle
impact analysis, and therefore may overlook deleterious consequences of its implementation.
Thus, the proposal, while timely, would benefit from an enhanced discussion of these among
other potentially problematic omissions. [OAR-2009-0472-7286.1, p. 22]
US Steel Corporation
U. S. Steel supports the intent of the Clean Air Act and the Energy Independence and Security
Act (EISA) of 2007, which together have formed the basis of this proposed rulemaking on
greenhouse gas emissions and fuel economy standards. We support EPA and NHTSA for
proposing a common national standard for light-duty vehicles (passenger cars, light-duty trucks,
and medium duty vehicles) and avoiding a patchwork of state and federal regulations that would
have added complexity and cost to compliance efforts. The proposed rule is aimed at leading our
nation to greater energy independence and our world to a condition of lower emissions and a
cleaner environment. It is important, however, to carefully analyze the methodology selected for
enforcement of the intended rules in order to ensure that the methods are technically sound,
economically feasible, and of sufficient scope to avoid unintended consequences that oppose the
objectives of the regulations. The purpose of these comments is to place on the record our
analysis concerning the likely impact of the proposed CAFE regulations on the steel industry, on
the economy, and on the emissions of CO2 and reduction of energy use. [OAR-2009-0472-
7197.1 p.2]
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EPA Response to Comments
Volkswagen Group of America (Volkswagen)
First, as a general comment Volkswagen supports the framework of this proposed regulation and
strongly supports GHG and CAFE regulations under a National structure. Volkswagen
participated in the negotiations to make a National program a reality and believes a National
solution to controlling both GHG emissions and fuel economy regulations is the best
arrangement for all parties. Volkswagen appreciates the efforts of the White House, the Federal
agencies, the state of California, the auto industry and other involved stakeholders in making a
National Program possible. [OAR-2009-0472-7210.1, p.2]
The proposed regulation is significant and historic. With this joint notice, EPA and NHTSA have
proposed stringent standards that will be challenging for the auto industry. The regulation is
technology forcing and will increase the initial purchase cost of vehicles in the future. It also
represents a major change in the treatment of fuel economy regulations and GHG emissions from
the light-duty transportation sector. Despite the development tasks and challenges the proposed
regulation represents, Volkswagen supports the overall framework and balance of the regulation.
[OAR-2009-0472-7210.1, p.2]
In addition, Volkswagen supports the continuation of a National Program beyond the 2016 MY
limit of this NPRM and urges all stakeholders to work towards that goal. Volkswagen pledges to
support and contribute to efforts to put a National Program in place for 2017 model year and
beyond. [OAR-2009-0472-7210.1, p.2]
Volkswagen supports the efforts of both agencies to harmonize the GHG and the CAFE program
as much as possible under the regulatory constraints in place for both regulations. Volkswagen
especially supports the work by both agencies to form their respective regulations to allow
averaging, banking and trading as similar as possible in both programs, and to provide as many
credit flexibilities as possible that accommodate the wide range of manufacturers. [OAR-2009-
0472-7210.1, p.2]
Volkswagen commends both NHTSA and EPA in their efforts to harmonize the GHG and CAFE
programs in this joint notice. While stringent, we support the overall level of the standards
proposed. We also support the efforts to allow as much flexibility as possible and we urge the
agencies to maintain the credit flexibilities proposed in the joint NPRM. Due to the major change
to the treatment of GHG and CAFE regulations this regulation represents, we believe the
flexibility in the proposed regulations are essential to allowing all manufacturers the time and
tools needed to adjust to the new era of regulation for GHG emissions and fuel economy. [OAR-
2009-0472-7210.1, p. 10]
Volkswagen remains committed to working with EPA and NHTSA staff to establish the best
regulation possible to achieve the goals of the country in a fair and balanced manner.
Volkswagen also supports efforts to continue a National program in 2017 MY and beyond.
[OAR-2009-0472-7210.1, p. 10]
[[These comments were submitted as testimony at the Detroit public hearing. See docket number
OAR-2009-0472-6185, pp. 112-113.]
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General Comments
Make no mistake, this regulation is very challenging, but we support a national solution to
greenhouse gas and fuel economy regulation and we support the lead time and stability of the
proposed regulation through the 2016 model year.
The Volkswagen Group urges all stakeholders to continue developing this program and working
towards a National Program for 2017 and beyond. In particular, Volkswagen supports the
government's efforts and the NPRM to provide the flexibility to the regulation that helps
manufacturers transition to the proposed national greenhouse gas/CAFE program.
The government correctly recognized that auto manufacturers are a diverse group representing
many different market segments and different sales volumes in the U.S. market. In recognizing
these differences, the agencies were able to develop credit banking and trading schemes that
offer real greenhouse gas reductions and provide all manufacturers flexibility in complying with
the regulation and with various credit pathways.
Washington State Department of Commerce
[Following comments are from LA Testimony, OAR-2009-0472-7283, pp. 121-122]
The Washington State Department of Commerce is really happy with EPA and NHTSA
working together toward a national plan.
Almost half of the greenhouse gas emissions in the State of Washington come from
transportation. Therefore, we view efficiency as a key tool for the mitigation of these emissions.
We are therefore very supportive of the development of the national plan, and we look forward
to working with you on improving the proposed rule.
The State of Washington also recognizes the work that the car industry will make to meet the
new standards. We believe that states also have a role in helping the success of this program by
incentivizing the adoption of cleaner vehicles and partnering with industry to help on the
deployment of advanced technology vehicles.
Setting vehicle performance standards is one important step toward achieving our fuel economy
and greenhouse gas emission goals. However, our information says that this will not be enough
to address the problems of greenhouse gas emissions from road transportation.
Webb, Alysha
[Following comments are from LA Testimony, OAR-2009-0472-7283, pp. 129-130]
And as I mentioned before, automakers have the technology to achieve these standards. We've
heard from a number of automakers here. They don't oppose them, but they need some certainty.
So I think these standards are very important because they're going to give the automotive
industry some certainty.
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EPA Response to Comments
So, again, I thank you for supporting the greenhouse gas standards, but I urge you not
to emasculate them by granting too many tax credits or too many credits or making
implementation too flexible.
There are a lot of areas in which I wish China would emulate U.S. policy more closely,
but where greenhouse gas emission standards are concerned, thankfully the U.S. is in some ways
following China.
But, most importantly, I urge you to continue to follow California's example in this as you
consider policies for the future.
Weiner, Jill
[Following comments are from LA Testimony, OAR-2009-0472-7283, pp.87-89]
I am happy that the Pavley standards are the basis for a new national standard, and I want
to applaud the administration and the auto industry for working together to reach an agreement.
I'm excited to see how the automakers will apply existing and new technologies to meet
these standards, and I'm looking forward to replacing my 1998 model with a cleaner, more
efficient car in the near future.
That being said, I urge you to make sure that the details of the program are such that we do, in
fact, meet the goals, both in terms of emission reductions and oil savings. Please do not allow
loopholes or excessive credits to dilute the program's results. For electric vehicles, the EPA
needs to consider the source of electricity and accurately account for how that power is generated
just as the Pavley standards do.
Winograd, Marcy
[These comments were submitted as testimony at the Los Angeles public hearing. See docket
number OAR-2009-0472-7283, pp.159-163]
I am here today to applaud the EPA and the Department of Transportation and encourage you
to work vigorously and meaningfully to achieve significant reductions in global warming
pollution.
While I am greatly encouraged by the proposed standards, we must be on guard to weed out the
devil in the details that inevitably surface in situations like these.
EPA Response:
Many commenters expressed support for the program in general, as well as for various specific
provisions the rule. Most of these commenters also had concerns about some relatively detailed
provisions of the rule — which we address elsewhere in this document and in the preamble to the
rule — but were supportive of the overall program.
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General Comments
These commenters were supportive of several key aspects of the rule including the following:
• The stringent level of the emission standards, which received support from states,
environmental organizations, and many others for the large greenhouse gas emission
reductions that will result,
• EPA's assessments of costs and GHG-reducing technologies, including support from
auto industry stakeholders,
• EPA's adopting of attribute-based standards, and using footprint at the sole attribute,
• EPA's overall analytical approach to establishing the target emission levels, which the
industry either supported or was silent about, and
• The successful effort to develop a coordinated single National Program that avoids the
need for manufacturers to comply with separate NHTSA, EPA, and state emission
requirements.
1.2. General Opposition
Organization:
American Chemistry Council (ACC)
Arizona Public Service (APS)
Devon Energy Corporation
Duke Energy
Fertilizer Institute
Hagen, David L.
Heritage Foundation
Industry Coalition
Mass Comment Campaign (48) (unknown organization)
Mississippi Department of Environmental Quality
National Automobile Dealers Association (NADA)
National Climate Coalition
Process Engineers
Shaw, Donald F.
Spurgeon, C. M.
Texas Industry Project (TIP)
Comment:
American Chemistry Council (ACC)
The Associations acknowledge EPA's desire to address GHG emissions from mobile sources
quickly, as well as NHTSA's need to set new fuel economy standards, which must be [OAR-
2009-0472-7148.1, p.l] promulgated at least 18 months before the affected model year (in this
case the 2012 model year). 49 U.S.C. § 32902(g)(2). However, as proposed, the Motor Vehicle
Rule ignores the enormous burdens the Rule would impose on stationary sources. This omission
violates legal requirements for agency rulemaking, constitutes arbitrary and capricious action,
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EPA Response to Comments
and is simply bad policy. This is especially so because nearly all the environmental benefits EPA
says will result from its promulgation of the Motor Vehicle Rule under CAA authority would
also result from the NHTSA rule alone. Yet, unlike NHTSA action to raise corporate average
fuel economy (CAFE) standards, the redundant EPA standards promulgated under the CAA
would have regulatory impacts reaching far beyond the automotive industry and would impose
billions of dollars in additional permitting and compliance costs. [OAR-2009-0472-7148.1, p.2]
Thus, although the Associations take no position on NHTSA's proposal to increase CAFE
standards, we vigorously object to EPA's proposal to finalize the superfluous Motor Vehicle
Rule under CAA Section 202. EPA's failure to account here for the PSD and Title V burdens it
elsewhere acknowledges will flow from this rulemaking renders this rulemaking legally invalid.
EPA must fully consider those burdens in this rulemaking. [OAR-2009-0472-7148.1, p.2]
[See Docket number OAR-2009-0472-7148.1, cover page 1-2 for detailed comments]
Arizona Public Service (APS)
APS has significant concerns regarding the proposed Light-Duty Vehicle Greenhouse Gas
Emission Standards and Corporate Average Fuel Economy Standards. Specifically, a comparison
of the proposed benefits resulting from the EPA program to the NHTSA program reveals the
programs to be virtually identical and that EPA's proposal provides no apparent additional
benefit. For this reason, APS believes that EPA's action is simply a means to regulate greenhouse
gas emissions from stationary sources through the Clean Air Act Prevention of Significant
Deterioration (PSD) and Title V permit programs. As such, APS also believes the economic and
environmental cost and benefits analysis of this joint proposal fails to assess impacts on
stationary sources. [OAR-2009-0472-7107.1, p.l]
If this rule is finalized, a significant number of stationary sources will become subject to PSD
and Tide V permitting requirements. However, EPA did not include the economic and
environmental consequences of triggering these rules. It is APS' position that EPA either
withdraw its portion of the rule or perform a thorough economic and environmental cost and
benefit analysis, and provide an adequate public notice and comment period to address the
impacts to stationary sources. [OAR-2009-0472-7107.1, p.l]
Devon Energy Corporation
Many scientists (myself included) doubt the "consensus" that CO2 contributes significantly to
atmospheric warming. The Earth has been warming ever since the last ice age ended, roughly
12,000 years ago in fits and starts, and it is definitely not proven that man-made CO2 is a
significant contributor to the current warming trend (last 100 years or so). But, for the sake of
argument, let's assume that CO2 does matter. Further, let's assume that global warming is a
problem (this is not proven either). Let us also assume that additional CO2 is not a benefit to
plant life, this is crazy, since it is one of their main foods, but let's assume this. Even with these
assumptions, the Environmental Protection Agency (EPA) is not justified in regulating carbon
dioxide emissions from vehicles. These regulations will only increase the cost of our cars, harm
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General Comments
our economy, and limit our transportation options. We need efficient, affordable transportation to
rebuild our economy and create American jobs.
According to the proposed regulations, EPA wants to regulate carbon dioxide emissions from
cars and trucks, "because of the critical need to address global climate change." (74 Fed. Reg.
49454).This regulation does not achieve EPA's stated goal because, according to EPA data, it
does not reduce global warming or sea level rise in a meaningful way. The regulation states that
the carbon dioxide reductions "are projected to reduce global mean temperature by
approximately 0.007-0.016°C by 2100, and global mean sea level rise is projected to be reduced
by approximately 0.06-0.15 cm by 2100." [OAR-2009-0472-10450 p.l]
Duke Energy
Duke Energy Business Services LLC ("Duke Energy"), on behalf of Duke Energy Carolinas,
LLC, Duke Energy Indiana, Inc., Duke Energy Ohio, Inc., Duke Energy Kentucky, Inc., and
Duke Energy Generation Services ("DEGS"), therefore submits the following comments on the
Joint Motor Vehicle Proposal. Specifically, the significant flaws and shortcomings of the Joint
Motor Vehicle Proposal necessitate the withdrawal of EPA's portion of the proposed rule. Duke
Energy continues to support the enactment of environmentally and economically sustainable
federal climate change legislation. Regulating GHGs under the CAA is the wrong approach.
[OAR-2009-0472-7136.1, p.2]
The U.S. Environmental Protection Agency's ("EPA") has stated its view that promulgation of
the GHG motor vehicle standards will subject GHGs to the CAA Prevention of Significant
Deterioration ("PSD") program and the permitting requirements of Title V of the CAA,
potentially as soon as the date on which the rule becomes final and effective. Duke Energy
believes, however, that EPA's legal positions in this regard and the analysis presented in the
proposed rule are seriously flawed and must be corrected. [OAR-2009-0472-7136.1, p.2]
The Joint Motor Vehicle Proposal and its supporting documentation makes clear that EPA's
proposed GHG motor vehicle emission standards are largely duplicative of NHTSA's proposed
program and that EPA's proposal will not add in any significant manner to the GHG reductions
and associated impacts of NHTSA's proposed CAFE standards. Therefore, EPA cannot properly
reach an affirmative endangerment finding to satisfy the requirements of the CAA's test for
finding "endangerment," rendering EPA's proposed GHG motor vehicle emission [OAR-2009-
0472-7136.1, p.2] standards legally (and scientifically) unjustified. Because an affirmative
endangerment finding cannot be legally made, EPA lacks the authority to finalize its proposed
GHG motor vehicle standards under section 202(a) of the CAA. [OAR-2009-0472-7136.1, p.3]
Fertilizer Institute
TFI supports the comments submitted by the National Mining Association on this NPRM. TFI
believes that GHGs should be evaluated and, if necessary, regulated under comprehensive
climate change legislation and not under the piecemeal, command and control approach of the
CAA and other existing statutory programs. Finally, it appears the economic impacts of the
rulemaking have not been fully evaluated. [OAR-2009-0472-7279.1, p.2]
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EPA Response to Comments
Hagen, David L.
I petition the Environmental Protection Agency (EPA) to reject regulating carbon dioxide
emissions from vehicles as unjustified. Such regulations unnecessarily harm the economy, limit
transportation, increase the cost of vehicles and reduce jobs. EPA proposes to regulate carbon
dioxide emissions from cars and trucks, "because of the critical need to address global climate
change." (74 Fed. Reg. 49454). This is a false very weakly founded basis. [OAR-2009-0472-
7218.1, p. 1]
Futile regulation The proposed regulation will fail to achieve EPA's stated goal. EPA's
regulation states that the carbon dioxide reductions "are projected to reduce global mean
temperature by approximately 0.007-0.016°C by 2100, and global mean sea level rise is
projected to be reduced by approximately 0.06-0.15 cm by 2100." This is a negligible result will
not affect global climate at all nor will they affect "public health and welfare" (See Clean Air
Act Sec. 202). [OAR-2009-0472-7218.1, p. 3]
This will cause a massive constraint and financial impact. The National Highway Safety
Administration (NHTSA) estimated that increasing fuel economy standards to 35 miles per
gallon by 2020 would cost the car companies $114 billion. (See Detroit News, "Fuel Plan Would
Cost Big Three" (March 1, 2007). EPA and NHTSA's plan will increase costs for car companies
and further reduce auto company jobs. Higher priced cars and trucks will make life more difficult
for American families who need affordable transportation options. [OAR-2009-0472-7218.1, p.
3]
EPA would be forced to regulate greenhouse gases under Clean Air Act, sections 108, 111, and
112. This would seriously harm our economy, reduce American jobs, and worsen our
employment situation. [OAR-2009-0472-7218.1, p. 3]
I pray the EPA not to regulate carbon dioxide or greenhouse gas emissions under the Clean Air
Act. These regulations would severely worsen our economy, and massively increase our high
unemployment. It would result in negligible reduction in global temperature while diverting
effort from the critical issue of providing alternative fuels to manage global peaking of light
oil. [OAR-2009-0472-7218.1, p. 3]
Heritage Foundation
We are writing out of serious concern for the unintended consequences along with negligible
environmental benefits likely to result if the Environmental Protection Agency moves forward
with its Proposed Rulemaking to Establish Light-Duty Vehicle Greenhouse Gas Emission
Standards and Corporate Average Fuel Economy Standards. It is unnecessary to move up the
timeframe to create a 35.5 miles per gallon vehicle fleet from 2020 to 2016 - a standard initially
put into place by Energy Independence and Security Act of 2007. The new regulations will
create headaches for struggling automakers, and those automakers will simply pass on higher
costs to the consumers.
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General Comments
The EPA estimates that the averaged increase cost of a vehicle will be $1,300 in 2016 compared
to today's prices but because consumers will save $2,800 on gas that will offset the increased
purchase price. One senior manager from General Motors' energy center said meeting the 2020
goal would cost $5,000 to $7,000 to make more fuel efficient cars and light trucks. Moving the
deadline up four years would only exacerbate these costs
The environmental benefits are dubious as well. Touted as a measure to curb global warming,
fuel efficiency standards have very little environmental impact. Newer vehicles with better
efficiency standards may emit less carbon dioxide per mile, but increased fuel efficiency often
leads to more driving and new cars constitute a miniscule source of overall carbon dioxide
emissions. The EPA's own regulation states that "the rule will lead to global mean temperature
being 16 thousandths of a degree Celsius lower (0.016°C) in 2100." [OAR-2009-0472-7052.1,
pp.1-2]
Industry Coalition
The Associations acknowledge EPA's desire to address GHG emissions from mobile sources
quickly, as well as NHTSA's need to set new fuel economy standards, which must be [OAR-
2009-0472-7673.1, p.l] promulgated at least 18 months before the affected model year (in this
case the 2012 model year). 49 U.S.C. § 32902(g)(2). However, as proposed, the Motor Vehicle
Rule ignores the enormous burdens the Rule would impose on stationary sources. This omission
violates legal requirements for agency rulemaking, constitutes arbitrary and capricious action,
and is simply bad policy. This is especially so because nearly all the environmental benefits EPA
says will result from its promulgation of the Motor Vehicle Rule under CAA authority would
also result from the NHTSA rule alone. Yet, unlike NHTSA action to raise corporate average
fuel economy (CAFE) standards, the redundant EPA standards promulgated under the CAA
would have regulatory impacts reaching far beyond the automotive industry and would impose
billions of dollars in additional permitting and compliance costs. [OAR-2009-0472-7673.1, p.2]
Thus, although the Associations take no position on NHTSA's proposal to increase CAFE
standards, we vigorously object to EPA's proposal to finalize the superfluous Motor Vehicle
Rule under CAA Section 202. EPA's failure to account here for the PSD and Title V burdens it
elsewhere acknowledges will flow from this rulemaking renders this rulemaking legally invalid.
EPA must fully consider those burdens in this rulemaking. [OAR-2009-0472-7673.1, p.2]
Mass Comment Campaign (48) (unknown organization)
The Environmental Protection Agency (EPA) is not justified in regulating carbon dioxide
emissions from vehicles. These regulations will only increase the cost of our cars, harm our
economy, and limit our transportation options. We need efficient, affordable transportation to
rebuild our economy and create American jobs.
According to the proposed regulations, EPA wants to regulate carbon dioxide emissions from
cars and trucks, 'because of the critical need to address global climate change.'(74 Fed. Reg.
49454).This regulation does not achieve EPA's stated goal because, according to EPA data, it
does not reduce global warming or sea level rise in a meaningful way. The regulation states that
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EPA Response to Comments
the carbon dioxide reductions 'are projected to reduce global mean temperature by approximately
0.007-0.016°C by 2100, and global mean sea level rise is projected to be reduced by
approximately 0.06-0.15 cm by 2100.'
To be clear, EPA is proposing to increase the price of automobiles by $1,100 per car (74 Fed.
Reg. 49460) in exchange for (according to EPA) a global temperature decrease of 16 thousandths
of a degree Celsius in 90 years. Also, according to EPA, sea level won't rise by an extra 1.5
millimeters. These tiny amounts are so inconsequential that they will not affect global climate at
all nor will they affect 'public health and welfare' (See Clean Air Act Sec. 202).
The proposed regulations will harm our economy. A few years ago, the National Highway Safety
Administration (NHTSA) estimated that increasing fuel economy standards to 35 miles per
gallon by 2020 would cost the car companies $114 billion. (See Detroit News, 'Fuel Plan Would
Cost Big Three' (March 1, 2007). Inexplicably, today NHTSA claims that achieving the 35 miles
per gallon fleetwide standard by 2016, four years earlier, would cost only $60 billion. (75 Fed.
Reg. 49479). This change from NHTSA is not credible. The cost of technology-forcing
regulations do not decrease by half as a result of companies only having half the time to comply
with the regulations.
EPA and NHTSA's plan will increase costs for car companies and further reduce auto company
jobs. Higher priced cars and trucks will make life more difficult for American families who need
affordable transportation options.
To make matters worse, these regulations would start a regulatory cascade. EPA would start
regulating emissions from millions of sources, including large buildings, churches, sports arenas,
office buildings, farms, schools, hospitals' you name it. EPA will be forced to regulate
greenhouse gases with many sections of the Clean Air Act, including sections 108, 111, and 112.
This will further harm our economy, reduce American jobs, and worsen our employment
situation. NHTSA already has the ability to regulate fuel economy without EPA further harming
the economy.
Lastly, we care about our families' safety as much as the Secret Service cares about the
President's safety. There is a clear correlation between size and weight of a vehicle and its safety.
That is why the President's limo only gets a reported 8 mpg, not 35 mpg. The Secret Service
should not have to cut corners in keeping the President safe, just as we should not have to cut
corners to keep our families safe.
EPA should not regulate carbon dioxide or greenhouse gas emissions under the Clean Air Act.
These regulations will make our high unemployment even worse. It does not make sense for
EPA to reduce American jobs, increase the price of cars and trucks, and make America less
economically competitive in exchange for an immeasurable and meaningless reduction in global
temperature. [OAR-2009-0472-10556, pp. 1-2]
Mississippi Department of Environmental Quality
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General Comments
In summary, it does not appear that EPA has properly evaluated the impacts of this rulemaking
on state and local agencies and therefore failed to meet the obligations of the Unfunded
Mandates Reform Act. The potential effects of this rulemaking on state and local agencies as
well as small business that would be subject to the CAA could be disastrous, especially in today's
economic climate. It also does not appear to be necessary to set GHG emissions standards to
obtain the goals of reduced air emissions and increase fuel economy. It is not necessary for EPA
to act now to meet any statutory requirements. Therefore, EPA should not set the proposed GHG
emission standards for Light Duty Vehicles at this time. [OAR-2009-0472-7102.1, pp. 1&5]
National Automobile Dealers Association (NADA)
Since dealers are impacted directly by vehicle production mandates, a National Program must
carefully account for potential dealership impacts and concerns. In-use passenger car and light
truck fuel economy and GHG performance will continue to improve as older, less fuel-efficient
vehicles are replaced by newer ones offering comparable performance with improved fuel
economy. To avoid impeding fleet turnover, a National Program must not unduly restrict product
availability, reduce product performance, or increase product price. [OAR-2009-0472-7182.1,
p.ll]
National Climate Coalition
The Clean Air Act Is Flawed and National Legislation Is The Best Mechanism For Regulating
Greenhouse Gases
Stabilizing atmospheric greenhouse gas concentrations will require the transformation of our
energy, manufacturing and transportation systems. We believe that this is the work of Congress.
Federal legislation should not only take a broad, flexible multi-sector approach, but also must be
designed to meet multiple objectives, including energy and transportation security, reliability and
affordability; ensuring the economic competitiveness of United States businesses; energy
conservation; strategic technology development; and environmental performance. Such
legislation should also allow for and define the appropriate involvement of other departments
and agencies with expertise in energy, environment, security and transportation in addition to
EPA - something that is necessary yet not permitted under the Clean Air Act. Our highest
priority must be for Congress to establish a uniform national program that will be consistent with
the emerging and overarching international framework. [NHTSA-2009-0059-0086.1, p.4]
For a variety of reasons, the existing Clean Air Act is a poor mechanism for addressing climate
change. Congressional intent in drafting the Clean Air Act was to identify and regulate sources
based on their relatively large emissions. Such sources typically have also been financially able
to bear the costs of regulation. By establishing major source thresholds, the Act excluded from
regulation the large numbers of smaller sources that exist in the United States. The number of
stationary sources subject to regulation has thus historically been relatively small. By all
estimates, however, this number could grow by at least an order of magnitude, perhaps two, and
affect for the first time many previously unaffected sources (e.g., large retail establishments,
schools, hospitals and government facilities) if greenhouse gases are regulated in the same
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EPA Response to Comments
manner as criteria pollutants under NSR, and Title V — let alone §112, which has even lower
thresholds for regulation. [NHTSA-2009-0059-0086.1, pp.4-5]
The permitting thresholds under the Act, however, are keyed to emissions levels that are
meaningful only in the context of regulating the local and regional health and welfare impacts of
lower-emitting criteria or hazardous air pollutants. Even small sources have emissions of CO2 as
a result of typical fuel use that would exceed current permitting thresholds on this basis. As EPA
itself underscored in the ANPR and the Tailoring Rule Proposal, the PSD and Title V programs
would sweep hundreds of thousands of sources not previously subject to regulation into the
scope of the Clean Air Act, at great cost and consequence for the functioning of the economy and
at great administrative burden on regulated sources, EPA, the states and local governments. EPA
estimates that its approach in the Tailoring Rule would avoid over $55.6 billion in the first six
years of regulation - or, stated differently, in the absence of the Tailoring Rule, the cost of
compliance for affected sources and permitting agencies will increase by more than $55.6
billion. [NHTSA-2009-0059-0086.1, p.5]
Paradoxically, forcing the square peg of greenhouse gas emissions into the round hole of the
existing Clean Air Act also has the potential to create adverse incentives that may stifle
innovation and even increase greenhouse gas emissions. This could occur, for instance, if a
company decides to delay improvements that would otherwise reduce emissions intensity to
avoid triggering regulatory requirements, as we have seen occur time and time again under the
New Source Review programs. A practical example of this situation is a turbine upgrade at an
electric generating station. While the project results in more efficient production of electricity, if
that energy efficiency were projected to result in more criteria pollutant emissions on an annual
basis due to increased operations, it is likely the project would not be pursued due to the time
consuming and expensive requirements of the New Source Review programs, including the
likely need to implement additional controls for all pollutants that exceed the NSR pollutant
thresholds. That is contrary to the desired outcome. [NHTSA-2009-0059-0086.1, p.5]
Regulation under the Clean Air Act has historically focused on control of criteria and hazardous
air pollutants to address the local or regional human health, welfare and environmental impacts.
The architecture of the Clean Air Act is thus premised on the concept that state, regional and
federal control of emissions will improve air quality in the corresponding area. This is not
accurate as to greenhouse gases. The greenhouse effect is global — and localized (or even United
States-wide) emissions reductions will not result in environmental benefits to the United States
in the absence of corresponding international action. Moreover, greenhouse gases at current and
projected atmospheric concentrations have no known direct adverse human health impacts to
which to link standards, and any environmental and welfare impacts only occur over substantial
time, due to the indirect effects of aggregate global levels of greenhouse gases. Thus, greenhouse
gases present a particular regulatory challenge. The same requirements that apply to emissions of
criteria pollutants from stationary sources are not likely optimally to control and provide the
most effective incentives to reduce greenhouse gases emissions. [NHTSA-2009-0059-0086.1,
p.5]
Because the Clean Air Act is such a poor vehicle for addressing climate change, we believe that
further federal legislation is the best approach to reduce emissions that may contribute to global
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warming. We recognize that the Supreme Court's decision in Massachusetts v. EPA may require
the Agency to commence regulatory action in absence of, or in the face of delayed,
Congressional action. Congress, however, is poised to act. Comprehensive climate change and
energy legislation has been passed by the U.S. House of Representatives, H.R. 2454 - the
American Clean Energy and Security Act of 2009 (Waxman-Markey), and the Senate is
considering stand alone climate change legislation, the "Clean Energy Jobs and American Power
Act" (Kerry-Boxer), and energy legislation, S. 1462 - the American Clean Energy Leadership
Act of 2009 (ACELA). The NCC urges EPA and the Administration to work in support of
prompt Congressional efforts, and exercise its authority only where it can adopt flexible,
appropriate measures to control greenhouse gases in a manner best designed to facilitate ultimate
Congressional action. [NHTSA-2009-0059-0086.1, pp.5-6]
The National Climate Coalition appreciates the opportunity to submit these comments and looks
forward to providing further input. We encourage EPA to work with Congress towards prompt
national greenhouse gas legislation. If EPA must continue to move ahead with rulemakings
under the Clean Air Act, then we urge the Agency to exercise its discretion to limit application of
those sections of the statute that would impose unintended economic harm and divert scarce
public and private resources without commensurate benefit in stabilizing global greenhouse gas
concentrations. As appropriate, in the course of regulating greenhouse gases under the statute,
EPA also should seek prompt Congressional confirmation that such harmful provisions may be
so limited or need not be implemented to address climate change. [NHTSA-2009-0059-0086.1,
p.8]
Process Engineers
With the confirmation of scientific fraud of AGW manifested world-wide, any and all proposed
regulations need to be suspended until after Congressional Inquiry is completed by Senator
Inholfs committee. [OAR-2009-0472-7166, p.l]
Shaw, Donald F
I oppose the implementation of the proposed requirements. I request that you consider these
comments and drop the proposed requirements. [OAR-2009-0472-7270, p. 1]
I oppose the Environmental Protection Agency (EPA) proposal to regulate carbon dioxide
emissions from vehicles. These regulations will significantly increase the cost of our cars, harm
our economy, and limit our transportation options. Significant hardships will be imposed on
every family. We need efficient, affordable transportation to rebuild our economy and create
Americanjobs. [OAR-2009-0472-7270.1, p. 1]
The $1100/car is prohibitive and will probably exceed that estimate. [OAR-2009-0472-7270.1, p.
2]
According to the proposed regulations, EPA wants to regulate carbon dioxide emissions from
cars and trucks, "because of the critical need to address global climate change." (74 Fed. Reg.
49454).This regulation does not achieve EPA's stated goal because, according to EPA data, it
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does not reduce global wanning or sea level rise in a meaningful way. The regulation states that
the carbon dioxide reductions "are projected to reduce global mean temperature by
approximately 0.007-0.016°C by 2100, and global mean sea level rise is projected to be reduced
by approximately 0.06-0.15 cm by 2100." [OAR-2009-0472-7270.1, p. 2]
The EPA is proposing to increase the price of automobiles by $1,100 per car (74 Fed. Reg.
49460) in exchange for (according to EPA) a global temperature decrease of 16 thousandths of a
degree Celsius in 90 years. Also, according to EPA, sea level won't rise by an extra 1.5
millimeters. These tiny amounts (assuming they will be realized) are so inconsequential that they
will not affect global climate at all nor will they affect "public health and welfare" (See Clean
Air Act Sec. 202). [OAR-2009-0472-7270.1, p. 2]
EPA should not regulate carbon dioxide or greenhouse gas emissions under the Clean Air Act.
These regulations will make our high unemployment even worse. It does not make sense for
EPA to reduce American jobs, increase the price of cars and trucks, and make America less
economically competitive in exchange for an immeasurable and meaningless reduction in global
temperature.
I appreciate the opportunity to comment on the proposed rule making and recognize that many
past efforts by the EPA have been beneficial to improve our environment. This proposal will
have no beneficial impact while having destructive impact on our economy. [OAR-2009-0472-
7270.1, p. 3]
Spurgeon, C. M.
The Environmental Protection Agency (EPA) is not justified in regulating carbon dioxide
emissions from vehicles. These regulations will only increase the cost of our cars, harm our
economy, and limit our transportation options. We need efficient, affordable transportation to
rebuild our economy and create American jobs. [OAR-2009-0472-7092.1, p. 1]
According to the proposed regulations, EPA wants to regulate carbon dioxide emissions from
cars and trucks, "because of the critical need to address global climate change." (74 Fed. Reg.
49454).This regulation does not achieve EPA's stated goal because, according to EPA data, it
does not reduce global warming or sea level rise in a meaningful way. The regulation states that
the carbon dioxide reductions "are projected to reduce global mean temperature by
approximately 0.007-0.016°C by 2100, and global mean sea level rise is projected to be reduced
by approximately 0.06-0.15 cm by 2100." [OAR-2009-0472-7092.1, p. 1]
EPA should not regulate carbon dioxide or greenhouse gas emissions under the Clean Air Act.
These regulations will make our high unemployment even worse. It does not make sense for
EPA to reduce American jobs, increase the price of cars and trucks, and make America less
economically competitive in exchange for an immeasurable and meaningless reduction in global
temperature. [OAR-2009-0472-7092.1, p. 2]
Texas Industry Project (TIP)
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Global climate change is a serious issue that is best addressed through concerted international
action and/or comprehensive federal legislation, rather than through unilateral agency regulation
under the current Clean Air Act ("CAA" or the "Act"). Not only did the Supreme Court make
clear in Massachusetts v. EPA that the U.S. Environmental Protection Agency ("EPA" or the
"Agency") has substantial discretion regarding the timing of any rules, but the Court of Appeals
for the District of Columbia ("D.C. Circuit") subsequently denied a petition to compel EPA
action in response to Massachusetts v. EPA. [OAR-2009-0472-7430.1, p. 1]
More importantly, Congress is moving forward quickly on comprehensive legislation that would
address the problem of climate change outside of the structure of the current Act. Despite a clear
need to proceed with the utmost caution in this important area, EPA has proposed to regulate
GHG emissions from motor vehicles in the Proposed Rulemaking to Establish Light-Duty
Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards
(the "Motor Vehicle GHG Rule"). Under EPA's current interpretation of the CAA, the Motor
Vehicle GHG Rule may (as EPA has stated in the Proposed PSD and Title V GHG Tailoring
Rule (the "PSD Tailoring Rule") trigger regulation of GHG emissions from millions of
stationary sources, including hundreds of thousands of Texas sources, many of which have never
before been regulated under the Clean Air Act ("CAA"). [OAR-2009-0472-7430.1, p. 1]
The Motor Vehicle GHG Rule, as well as its companion, the PSD Tailoring Rule, are
fundamentally flawed, both procedurally and substantively, and Texas, as the nation's leading
energy producer and a leader in chemical manufacturing and agriculture, could be significantly
impacted by these federal rulemakings. Most notably, EPA completely failed to evaluate the
burdens of triggering PSD and Title V for GHG emissions under the required federal regulatory
review statutes and Executive Orders. Furthermore, even had the Agency conducted the required
burden analysis, the rule is unlawful, would devastate the Texas and national economies, and the
burdens of regulating GHGs under CAA Section 202 far outweigh the insignificant
environmental benefits of the GHG emission standards. [OAR-2009-0472-7430.1, pp. 1-2]
Accordingly, for all of the reasons discussed in these comments, EPA should withdraw the
Motor Vehicle GHG Rule, and proceed with caution going forward by allowing both the
international community and Congress time to develop a comprehensive and sensible approach
to the global problem of climate change. [OAR-2009-0472-7430.1, p. 2] [See OAR-2009-0472-
7430.1, pp. 2-11 for specific comments related to PSD and NSR for stationary sources in Texas.]
EPA Response:
EPA received several comments opposing the proposed rule, some opposing the overall program
and other opposing various specific aspects of the rule. These comments are addressed generally
here, and in detail in the respective sections of this Response to Comments document and
elsewhere in the rulemaking documents.
Commenters opposing the overall program raised issues of EPA's statutory authority, comments
related to the EPA's separate action on "endangerment," and the relationship commenters see
between this action and the permitting of stationary sources of GHGs. (See Section 7.1 of this
document and the preamble for our discussion of permitting issues.) Many of these comments
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EPA Response to Comments
request that EPA forego action until such a time when Congress enacts comprehensive climate
and energy legislation. Some commenters support a national program that would involve new
NHTSA CAFE standards but not EPA GHG standards. Some commenters also express concerns
about whether the projected climate benefits of the program are as important and as large as EPA
projects, and are concerned about recent attention to international climate science. Some
commenters (although none from the auto industry) believe that the economic impacts of the
program on the industry and consumers are too high; some of these commenters believe there
will be impacts on vehicle performance and vehicle choice.
EPA has extensively evaluated each of these concerns about the program, and, as stated above,
address them elsewhere in this document and the rule. We have made some relatively minor but
important improvements to the proposed program in response to comments; our overall
conclusions in the NPRM remain the same:
• That the rule represents very important public policy that the Clean Air requires EPA to
take action on,
• That our action is fully authorized by and meets all requirements of the Clean Air Act,
• That our overall assessments of the costs and benefits of program are well documented
and sound, and
• That increased vehicle costs will be offset by fuel savings, and vehicle choice and
performance will not be negatively affected.
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Section 2 Reserved
2. Reserved
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EPA Response to Comments
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EPA CO2 Standards
3.OEPA CO2 Standards 2
3.1 National versus state standards and harmonization of EPA and NHTSA standards 6
3.2 Form of the standards 21
3.3 Stringency of the standards 52
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EPA Response to Comments
3.0 EPA CO2 Standards
Several commenters provided comments which touch upon two or more aspects of the
proposed EPA GHG standards, as they are broken out in this Section of the RTC
document. Splitting these comments apart according to the organization of this section
might have caused a loss of the context of the specific comment. Citing the entire
comment in each relevant subsection would have produced significant duplication. In
lieu of either of these approaches, we present these integrated comments at a relatively
high point in the organization of this section (e.g., Section 3.0) where all of the relevant
specific aspects of the comment are addressed either at that level or at a more
disaggregated level (e.g., Section 3.1).
Organization: Ford Motor Company
National Automobile Dealers Association (NADA)
New York State Department of Environmental Conservation
University of Miami, School of Law
Dr. Walter McManus, Ph.D., of the University of Michigan
Transportation Research Institute (UMTRI)
Transportation and Buildings Policy for the State of Massachusetts
Executive Office of Energy and Environmental Affairs
Comment:
Ford Motor Company
Ford supported the President's initiative to bring together key stakeholders and work out a
solution to enable a single national program for motor vehicle greenhouse gas and fuel
economy standards. A state-by-state approach to such standards is unworkable for a
variety of reasons, and would impose hardships on consumers, dealers, and
manufacturers. [OAR-2009-0472-7082.1, p.l]
[Ford also submitted these comments as testimony at the Detroit public hearing, See
docket number EPA-HQ-OAR-2009-0472-6815, pp. 16.]
[Ford also submitted these comments as testimony at the New York public hearing, See
docket number EPA-HQ-OAR-2009-0472-4621, pp. 32.]
National Automobile Dealers Association (NADA)
Above all else, the final rule must encompass a single national light-duty vehicle fuel
economy/GHG program that avoids any unworkable patchwork of state laws. The EISA
mandate for a fleet-wide combined fuel economy average of at least 35 miles per gallon
(a 40% increase) by 2020, with a commensurate reduction in GHGs of at least 30 percent,
was Congress' clear guidance on what a National Program should achieve. Notably,
EISA's ambitious Congressional mandate resulted from vigorous public debate and, in
the end, received virtually universal support from all interested parties. Unfortunately, the
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EPA CO2 Standards
proposed National Program downplays EISA's landmark mandates, opting instead for a
bureaucratic cobbling of new NHTSA CAFE standards together with separate and largely
redundant EPA GHG standards. [OAR-2009-0472-7182.1, p.3]
As the National Program proposal states, "CAFE standards address most, but not all, of
the real world C02 emissions because EPCA requires the use of 1975 passenger car test
procedures under which vehicle air conditioners are not turned on during fuel economy
testing." 74 Fed. Reg. 49458. EPA's test procedures used to calculate CAFE standards
are based on equations involving a carbon balance technique where fuel economy is
calculated from the measurement of exhaust emissions and an assumption that the
quantity of carbon in a vehicle's exhaust gas is equal to the quantity of carbon consumed
by the engine as fuel. The physics and chemistry involved spell a direct relationship;
controlling fuel economy controls GHGs and controlling GHGs controls fuel economy.
Clearly, the most straightforward and elegant National Program would be one with
NHTSA regulating tailpipe GHGs through its long-established, Congressionally-
mandated CAFE standards, supplemented by a few appropriately tailored EPA rules
governing vehicle air conditioning (under Title VI of the CAA), fuel design, and vehicle
use. Several of the comments below point to areas where EPA's tortured attempt to
overlay GHG rules on top of NHTSA's CAFE standards raise significant issues of
concern. [OAR-2009-0472-7182.1, p.3]
In any event, NAD A strongly objects to the proposal's admitted attempt to incorporate
the fuel economy/GHG rules promulgated by California's unelected Air Resources Board
(CARB). CARB's long history of appropriately addressing mobile source criteria and
hazardous pollutants, in no way justifies incorporation of its GHG rules as they are
neither practically necessary to nor legally appropriate for a well-designed National
Program. It is in this light that NADA recently challenged EPA's reversal of its prior
denial of CARB's request for authority to regulate motor vehicle fuel economy and
GHGs. NADA 's legal challenge has nothing to do with the propriety of raising
fuel economy standards, but rather arises from the unworkable impact on dealership new
vehicle commerce that would result from a "patchwork of state—based regulations.
Notably, nothing in EISA changed EPCA's explicit preemption of the adoption or
enforcement of laws "related to" fuel economy by states, an express preemption
necessary to ensure national uniformity and to avoid a patchwork of state-by-state
mandates. CARBs "flat standard" approach to regulating motor vehicle fuel economy and
GHGs clearly fails to account for all relevant criteria necessary to a National Program,
directly relates to and conflicts with the federal CAFE standards, and unquestionably
undermines the safety, job loss, equity, and consumer choice considerations mandated by
EPCA. [OAR-2009-0472-7182.1, p.3]
The National Program very ambitiously proposes to pull forward EISA's 2020 target by
four years. Recently, a top EPA official stated that EPA and NHTSA have "put together a
single national standard with one implementation." Cobbled together and christened the
"National Program," the proposal in reality is not a "single national standard," but three
fuel economy standards separately administered by NHTSA, EPA and CARB. The
proposal claims that the National Program will be "harmonized" and "consistent, " yet it
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EPA Response to Comments
is virtually impossible for the CAFE program, the CAA, and CARS's regulations
(designed to regulate GHGs only from light duty vehicles produced for sale in California)
to be so as each agency must follow separate statutory frameworks. The National
Program is in fact three different fuel economy standards, set by three different agencies,
governed by three different laws. [OAR-2009-0472-7182.1, p.5]
Automakers producing light-duty vehicles for sale in MYs 2012-2016 will have to
comply with all three standards, even when their mandates and policies conflict. This
makes for an unnecessarily complex and costly regulatory program with scant (if any)
commensurate additional benefits. While the proposal gives lip service to harmonizing
these three mandates, in reality it falls far short in that regard. For example, it fails to
adequately rationalize and equalize GHG tailpipe emissions between the NHTSA and
EPA standards. Perhaps one solution to this specific issue would be for NHTSA to adjust
its curves downward to better reflect the contribution A/C improvements will make to
overall GHG reductions. [OAR-2009-0472-7182.1, pp.5-6]
Curiously, the proposal fails to establish a "ratable" ramp-up of fuel economy targets.
The worst example of this is the unjustifiably large jump between MYs 2011 and 2012.
Put simply, the proposal's standards require too much, too soon. Given the unprecedented
targets proposed for MY 2016, the National Program should adopt a more equitable and
linear rate of annual increase for MYs 2011-2016, and even should consider back loading
higher increases into the later model years. NADA does not suggest what targets are
feasible or practicable for any given model year, as such determinations depend on an
appropriate evaluation of vast amounts of often confidential business data viewed in the
light of statutory criteria and numerous assumptions. Of course, an ongoing evaluation of
manufacturer product plan information is essential, as exemplified by NHTSA's recent
request for future data. The feasibility and practicability of compliance changes with time
for many reasons, not the least of which is the ability of economically constrained vehicle
manufacturers to develop and implement new technologies, and the willingness of the
motoring public to pay for those new technologies if and when they choose to buy or
lease a new vehicle. [OAR-2009-0472-7182.1, p.6]
Ultimately, any National Program cannot impose standards beyond those deemed to be
"maximum feasible." "Economic practicality" is one key criterion for making that
statutory determination, and any analysis of such must recognize, preserve, and capitalize
on consumer choice and affordability. Again, unless and until vehicles covered by CAFE
standards are actually purchased, projected fuel economy and GHG reduction benefits
will be illusory. Moreover, all three standards must take into account impacts on new
passenger car and light truck dealerships. Dealerships directly purchase the vehicles
produced by manufacturers. If the National Program mandates vehicles that are
unacceptable to the motoring public for cost or performance reasons, potential new
vehicle customers predictably will hold on to their existing vehicles longer or will turn to
the used vehicle marketplace. The result: unwanted new vehicles languishing on
dealership lots, with a decline in dealership sales, income, profits, and employment, and a
predictable rise in business failures. [OAR-2009-0472-7182.1, p.6]
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EPA CO2 Standards
[National Automobile Dealers Association also submitted these comments as testimony
at the New York public hearing, See docket number EPA-HQ-OAR-2009-0472-4621, pp.
80-84, 88-89.]
New York State Department of Environmental Conservation
New York will deem vehicles that comply with the new federal standards to be in
compliance with its adopted state standards from 2012 through 2016. We wish to
emphasize that the Clean Air Act provision of states' rights to adopt motor vehicle
standards - for California under Section 209 and for other states under Section 177 - was
crucial in allowing New York and other states to lay the groundwork and create the
momentum for this national vehicle GHG emissions reduction program, as it was for
many other previous ground-breaking mobile source regulatory programs. Therefore, our
statutory right to adopt more rigorous motor vehicle standards than the federal
government's proved to be a valuable catalyst for innovation and progress. [OAR-2009-
0472-7454, cover page 2] [New York State Department of Environmental Conservation
also submitted these comments as testimony at the New York public hearing, See docket
number EPA-HQ-OAR-2009-0472-4621, pp. 13-16]
The New York State Department of Environmental Conservation (Department) agrees
with EPA's stated goal of increasing the stringency of greenhouse gas emissions
standards at a rate such that manufacturers can comply by making emissions reductions
as part of regularly scheduled vehicle redesigns. We believe that the proposed standards
are reasonably achievable, and are phased in at an appropriate pace. [OAR-2009-0472-
7454, p.l]
University of Miami, School of Law
The time frame of the proposed rule nevertheless poses some concern. The standards
should not cease to apply in 2016, but should remain in effect until a comparable or more
stringent standard is permanently in place. Before drafting the rule, the EPA should make
sure to explore other related transportation-emitters that could be regulated as part of this
effort. In this way, the standards can be applied to more than 60% of emissions from
transportation. [OAR-2009-0472-6770, p. 1]
Dr. Walter McManus, Ph.D., Research Scientist, University of Michigan
Transportation Research Institute (UMTRI)
EPA and NHTSA have proposed a new methodology for analyzing potential CAFE and
GHG emissions standards that is more transparent, replicable, and accurate that the prior
methodology. [OAR-2009-0472-3651.1, p.3]
Among other objectives, Congress wants fuel economy standards that balance the
benefits from reducing negative external effects of fuel consumption with the costs of
improving vehicle fuel economy. The benefits can generally be estimated with public
data, but to estimate the costs it would be helpful to use private information on costs
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EPA Response to Comments
known only to the automakers. This information asymmetry has the potential to introduce
"gaming" into the process. [OAR-2009-0472-3651.1, p.3]
[[Dr. McManus, also submitted these comments as testimony at the Detroit public
hearing, See docket number EPA-HQ-OAR-2009-0472-6185, pp. 36-37.]
Transportation and Buildings Policy for the State of Massachusetts Executive Office
of Energy and Environmental Affairs
As a result of the differences in the EPA and NHTSA statutes, there are two key areas
that I would like to highlight. First, in the proposed rulemakings, the GHG benefits
estimated from the EPA-proposed, footprint-based standard, expressed as grams per mile
or CO2 are slightly higher than what NHTSA's proposing for CAFE. This is primarily
because the CAFE standards do [EPA-HQ-OAR-2009-0472-4621, p.24] not account for
greenhouse gas emissions from vehicle air conditioning systems. In contrast, EPA gives
the automobile manufacturers the ability to obtain credit for reducing CO2 and
hydrofluorocarbon emissions from air conditioning systems. We believe EPA's approach
is correct; requiring additional reductions from air conditioning systems represents,
quote, a whole vehicle approach which is appropriate. [EPA-HQ-OAR-2009-0472-4621,
p.25]
EPA Response:
As indicated by the organization of Section 3, there are many important aspects of the
EPA GHG standards for motor vehicles. We have attempted to separate the comments
received according to their primary focus and address each group of similar or
comparable comments together in a cohesive manner. The comments cited above in
Section 3.0 interweave many of these aspects in a way that was not easily separable.
Rather than repeating these comments in two or more of the following sub-sections of
Section 3.0, we present these comments here together. The issues which they raise,
including the interaction between state and federal programs, the overlap of the NHTSA
and EPA standards, the overall stringency of the NHTSA and EPA standards, the
stringency of the 2012-2016 standards (including the issue of EISA's direction to
NHTSA for a ratable increase in the standards through 2020) and the desirability of
carrying the current approach to standard setting forward beyond the 2016 model year
will be addressed as each of these issues is focused on more specifically in the various
sub-sections of Section 3.0 of this RTC document.
3.1 National versus state standards and harmonization of EPA and NHTSA
standards
Organization:Center for Biological Diversity
Environmental Defense Fund
Alliance of Automobile Manufacturers (Alliance)
New York University School of Law, Institute for Policy Integrity (IPI)
Volkswagen Group of America (Volkswagen)
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EPA CO2 Standards
BMW of North America, LLC (BMW)
National Association of Manufacturers (NAM)
Senator Fran Pavley, California State Senate
Consumer Federation of America
University of California, Los Angeles School of Law
State of New Jersey
State of Washington Department of Ecology
Environment New Jersey
Comment:
Center for Biological Diversity
C. The Effect of Other Motor Vehicle Standards on Fuel Economy Supports More
Stringent Standards
California has consistently led the way in seeking to set higher mileage standards, and is
a leader in the regulation of GHG emissions. Undoubtedly, this trend will continue. Thus,
the ability of California to seek additional waivers in the future to continue in this
leadership role argues for the setting of more stringent national standards as well. [OAR-
2009-0472-7265.1, p. 19]
Alliance of Automobile Manufacturers (Alliance)
In addition, the Alliance supports creation of an effective single, national program that
automakers can plan to meet and that will minimize the disruptions of multiple programs
on vehicle choice and availability. The Administration fundamentally has accomplished
this objective for the 2012-2016 timeframe. Beyond 2016, this goal must still be pursued.
It is important that all key stakeholders, including California and states adopting
California standards, be included in this process. It is also critical that the Federal
government continue working to develop an integrated approach that addresses
infrastructure, vehicles, fuels and fuel quality, and consumer behavior, as well as all other
sectors of the economy. [OAR-2009-0472-6952.1, pp. 1-2]
Harmonization of EPA and NHTSA S-Curves
Harmonization between the EPA and NHTSA programs is critical to meeting the
National Program's target of 250g CO2/mile by MY 2016. Both agencies stress the
importance of harmonization in the May 22, 2009 Notice of Intent, where the word
harmonization is mentioned nine times. The Notice of Intent describes key elements of
the National Program as follows:
EPA and NHTSA intend to propose two separate sets of standards, each under their
respective statutory authorities. EPA expects to propose a national CO2 vehicle emissions
standard ... .NHTSA expects to propose appropriate related CAFE standards. [OAR-
2009-0472-6952. l,p.31]
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EPA Response to Comments
EPA standards recognize the CO2 benefit from investing in air conditioning technology
improvements, whereas NHTSA's standards are constrained from doing so. Since the
agencies are taking different approaches to reaching the same 2016 goals, the National
Agreement states that a manufacturer should be able to build a single national fleet of
light-duty vehicles that simultaneously satisfy the requirements of both programs. For a
single product plan to meet both the EPA and NHTSA approaches, the stringency of the
tailpipe CO2 standards must be equivalent between the two programs. However, the
stringencies of the tailpipe standards are not equivalent in the proposed rule. A primary
reason for this lack of equivalency is the air conditioning assumptions being made in the
translation between the NHTSA and EPA standard curves. [OAR-2009-0472-6952.1,
pp.31-32]
Manufacturers that employ a higher level of A/C system advancements will not realize
the benefit under the NHTSA CAFE program. If the NHTSA curves fail to recognize the
A/C system improvements a manufacturer may make under the EPA framework, the
curves could have the unintended consequence of discouraging A/C system
improvements. This disconnect, effectively leads to a more stringent overall National
Program than is contemplated by the Notice of Intent. [OAR-2009-0472-6952.1, pp.33-
34]
As an example, one manufacturer may want to implement alternative refrigerants as
quickly as possible. EPA recognizes the benefits of low GWP refrigerants and rewards
this with 14.9 g/mi credit. If the manufacturer's strategy was to do this on half of its
vehicle fleet in MY 2012, the manufacturer would earn 14.9 g/mi CO2e divided by two,
or 7.5 g/mi CO2e credits for the refrigerant portion alone (plus other indirect credits).
This is more than twice the average credit level assumed. A strategy like this may be the
most technologically feasible way to overcome the steep near term increase in the MY
2011-2012 standards, while the manufacturer is implementing the longer lead time fuel
efficiency strategies. [OAR-2009-0472-6952.1, p.34]
This same manufacturer may determine that the best and most economically practicable
way (given the capital constraints currently faced by the industry) for complying with this
rule is to maximize A/C improvements in combination with fuel economy improvements.
The current NHTSA S-curve translation would penalize this approach even though
equivalent GHG reductions would be achieved. [OAR-2009-0472-6952.1, p.34]
The issue here has to do with harmonizing the two rules - a key objective of a successful
National Program. Manufacturers still have to meet the overall stringency of the joint
program. [OAR-2009-0472-6952.1, p.34]
Recommendation
NHTSA needs to adjust the S-curves downward for 2012-16 model years to allow for the
potential strategy of pursuing maximum A/C improvements to lower GHG emissions.
The Alliance's proposed adjustments can be accomplished without backsliding from the
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EPA CO2 Standards
MY 2011-15 fuel economy standards published in the April 2008 NHTSA NPRM (and
later withdrawn). 73 Fed. Reg. 24,352 (May 2, 2008). [OAR-2009-0472-6952.1, p.34]
The table below quantifies the difference in CO2e between the April 2008 NPRM and the
September 2009 NPRM. The difference in CO2e quantity (shown in column E) could be
used without backsliding from the April 2008 NPRM. NHTSA should re-translate the
EPA S-Curves by the amount in Column G. There would be no environmental loss with
such an approach because a manufacturer that does not pursue maximum air conditioning
credits would be required to achieve the necessary CO2 reductions through tailpipe
emissions. [OAR-2009-0472-6952.1, p.34]
Consideration of EPA's 2012-2016 Model Year GHG Standards
With respect to EPA's 2012-2016 GHG standards, it is important to note that the current
joint NPRM is the result of an agreement in principle between the federal government,
California, and the automakers in support of one national program for GHG and fuel
economy standards for model years 2012-2016. Under the agreement in principle, EPA
and NHTSA are working together to ensure that their respective standards are
harmonized as closely as possible, in keeping with the joint rulemaking notice.
Obviously, the harmonization effort requires both agencies to be aware of and 'consider'
what the other is doing, so they can make adjustments that align the requirements of both
the GHG and fuel economy programs. As evidenced by the NPRM, NHTSA and EPA
have been engaged in the harmonization effort for some time now, and they should
continue in that effort to the conclusion of the joint rulemaking process. This will fulfill
NHTSA's obligation to 'consider' EPA's GHG rules under Section 32902(f). Of course,
the process of 'considering' and harmonizing with EPA's GHG rules does not eliminate
NHTSA's obligation to set standards that conform to the other criteria set forth in EPCA.
For example, NHTSA must see to it that nothing resulting from the harmonization effort,
or any other aspect of the standard-setting process, will result in fuel economy standards
that are not technologically feasible or economically practicable. NHTSA has an
independent obligation under EPCA to make sure that those criteria are satisfied under
any final rule. Likewise, any regulations adopted by EPA under the Clean Air Act for
model years beyond the scope of the current proposal must be consistent with the goals
and purposes of EPCA and must respect NHTSA's primary role in setting fuel economy
standards in consultation with EPA and other agencies. [OAR-2009-0472-6952.1, p.66]
Consideration of California's 2012-2016 Model Year GHG Standards
Under the agreement in principle mentioned above, the California Air Resources Board is
expected to promulgate amendments to its regulations providing that compliance with the
federal GHG/fuel economy program is deemed to satisfy compliance with the California
program. Under this framework, as the Alliance understands it, the California GHG
standards will have no independent practical impact on fleet-wide fuel economy in the
2012-2016 time frame. Assuming that the agreement in principle is carried out as
anticipated, the existence of California GHG regulations for the 2012-2016 model years
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EPA Response to Comments
should therefore not have any impact on NHTSA's standard-setting process. [OAR-2009-
0472-6952.1, p.66]
Consideration of EPA or CARS GHG Standards for the 2017 Model Year and Beyond
The Alliance and all stakeholders have agreed that the best approach to control mobile
source GHG emissions is through a national program. The Alliance supports the concept
of a national program beyond the 2016 model year and urges all other stakeholders to do
likewise. The Alliance is confident a national approach can and will be achieved for the
post-MY 2016 time frame, and we will work diligently towards that goal. Assuming the
'one national program' approach continues beyond 2016, and the standard-setting process
for 2017 and beyond is conducted under a joint rulemaking much like the current one,
NHTSA's obligation to consider EPA's GHG rules under Section 32902(f) would be
similar to what is outlined above for the 2012-2016 time period. [OAR-2009-0472-
6952.1,pp.66-67]
New York University School of Law, Institute for Policy Integrity (IPI)
(3) Program Choice
The program proposed by EPA builds largely on the structure of its previous regulatory
programs, taking the form of traditional command-and-control regulation. [OAR-2009-
0472-7232.3, p. 14]
EPA has submitted its positive endangerment finding on greenhouse gas pollutants under
Section 202 of the Clean Air Act (CAA) to the White House Office of Management and
Budget for final approval. Once that finding is finalized, the CAA requires EPA to
promulgate regulations. As explained in IPI's report, The Road Ahead, the statutory
language in Title II of the CAA limits EPA in its choices to regulate under this section;
regulations must be in the form of emissions standards mandating some type of limit on
GHG emissions. These types of command-and-control regulations will be detrimental to
any subsequent cap-and-trade system that covers GHG emissions from vehicle fuel,
whether created by Congress or by EPA. [OAR-2009-0472-7232.3, pp. 14-15]
Assuming California's existing standards for motor vehicle emissions are close to
efficient, EPA's attempt to harmonize its proposed GHG standards with Californian
policy is the optimal regulatory choice. This harmonization will minimize any inefficient
interaction of the standards with a subsequently enacted cap-and-trade system, by
creating a single uniform regulatory regime. Through this method, EPA avoids increasing
regulatory obligations on (or creating regulatory uncertainty for) car manufacturers, as
manufacturers already need to comply with similar regulations for cars sold in California
and the seventeen other states that have adopted California's standards. [OAR-2009-
0472-7232.3, p. 15]
Although the proposed GHG regulations fulfill EPA's legal duty under Section 202, the
program does not reach an efficient level of GHG reductions in the transportation sector.
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EPA CO2 Standards
The proposal does not create a uniform regulatory framework applicable to all mobile
sources and does not effectively maximize social welfare or minimize costs. In April
2009, IPI submitted a rulemaking petition to EPA requesting the creation of a
comprehensive cap-and-trade system under Section 211 of the CAA for vehicle fuel used
in all mobile sources. A cap-and-trade rulemaking would be more effective at addressing
GHG emissions of all mobile sources, including sources such as off-road vehicles and
marine vessels, which are not subject to a similar statutory scheme as light-duty vehicles.
It would also allow EPA to regulate emissions at the source of fuel sale, manufacture, and
import rather than requiring piecemeal command-and-control regulation of various
vehicle sectors. The outlines of such a program, and the statutory authority for the
program under the CAA, are more clearly outlined in ZPFs petition and IPI's report The
Road Ahead, included as attachments to these comments. [OAR-2009-0472-7232.3, p.
15]
Volkswagen Group of America (Volkswagen)
Volkswagen has concern that the relative stringency between the EPA GHG proposed
regulation and the NHTSA CAFE: regulation is not equivalent. It is our understanding
that the EPA regulation would be more stringent than the NHTSA regulation due to the
credit flexibility offered under the EPA GHG proposal. The preamble speaks at length
about the need for harmonization and the effort spent to harmonize the NHTSA CAFE
program and the EPA GHG requirements under a National program. We expected the
stringency published for the EPA GHG as the 250 gram/mile combined car and truck
fleet target as outlined by the President's announcement on May 19, 2009 was a given
value that the collective automotive companies and other stakeholders could agree to. In
the joint NPRM, however, we were surprised to see the stringency of the NHTSA curves
when they are converted to a CO2 basis. The NHTSA curves match the stringency of the
EPA targets, especially in the earlier years of the regulation. In particular, the 2012 MY
curves are essentially the same when the NHTSA curve is converted to a CO2 basis. This
is troubling because we do not believe this increased stringency of the NHTSA targets
allows manufacturers complete confidence they can build a single fleet that complies
with both regulations. During negotiations earlier this year leading up to the
announcement of the National agreement it was thought that if a manufacturer complied
with the EPA GHG regulation that in turn meant that the manufacturer also complied
with the NHTSA CAFE regulation. Based on the current CAFE targets published in the
NPRM we see the possibility that manufacturers can achieve the EPA targets but not the
NHTSA targets, leading to the situation where a manufacturer could comply with the
EPA regulation but still pay a CAFE penalty. We ask the agencies to examine this
possibility and adjust the NHTSA targets to allow the regulations to be better
harmonized. As discussed in the Alliance comments, we agree that this issue is due to the
air conditioning credit NHTSA is assuming as they establish their curves. We
recommend that the offset between the EPA and NHTSA curves should be constant and
should be based on the maximum A/C credit that can be realized under the CO2
compliance requirements. This provides incentive to reduce GHG emissions through the
use of improved A/C system. As is mentioned several times in the regulation, the goal is
to set the relative levels of the standard to, 'represent a harmonized approach that will
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EPA Response to Comments
allow industry to build a single national fleet that will satisfy both the GHG requirement
under the CAA and CAFE requirements under EPCAIEISA' (Federal Register, Monday,
September 28, 2009, page 49468, Section 2, Level of the Standards). [OAR-2009-0472-
7210.1, pp.4-5]
CO2 uses a sales-weighted fleet average calculation. CAFE uses a harmonic sales-
weighted fleet average calculation. We only note that a consistent calculation method
between the two regulations may be preferred. If changes are made to harmonize the
calculation method, however, the relative stringency of the regulations must be
maintained. [OAR-2009-0472-7210.1, p.9]
BMW of North America, LLC (BMW)
[These comments were submitted as testimony at the New York public hearing. See
docket number EPA-HQ-OAR-2009-0472-4621, pp. 136.]
We also would like to mention 25 that we very much appreciate the collaboration of the
State of California in helping to make this National Program a reality. The greenhouse
reduction targets of California have been met with a single national standard. [These
comments were submitted as testimony at the New York public hearing. See docket
number EPA-HQ-OAR-2009-0472-4621, p. 137.]]
National Association of Manufacturers (NAM)
NAM supports the Administration's broader policy objectives of harmonizing vehicle
emission standards under a National Program and promotion of energy efficiency through
enhanced CAFE standards through the Department of Transportation (DOT). Not only
does establishment of national, uniform standards have the potential - if implemented
correctly- to create a climate of investment certainty necessary to make long-term
business decisions, but stronger energy efficiency objectives will also enhance domestic
energy security, which is a key policy priority for manufacturers. The NAM applauds the
Administration's objective to mitigate the additional costs that manufacturers would
otherwise face in having to comply with multiple sets of federal and state standards.
[OAR-2009-0472-7215.1, p.l]
The NAM supports the Administration's goal to harmonize fuel efficiency standards by
implementing a federal rule that will pre-empt disparate state and regional programs.
However, manufacturers believe that the process established by EPA, by using the Clean
Air Act as its primary statutory vehicle, is deeply flawed and will have the unintended
and unmanageable consequence of triggering regulation of millions of stationary sources.
By resorting to the CAA, the EPA has established a process that will undermine private
and public efforts to recover from the deepest economic downturn since the 1930s.
Alternatively, the EPA should promulgate a rule that adequately decouples the goal of
achieving greater fuel efficiency and reduced light-duty vehicle GHG emissions from the
consequence of regulating GHG emissions from millions of stationary facilities. Any
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EPA CO2 Standards
failure to do so will inflict harm on the manufacturing sector for which the NAM must
seek appropriate remedies, legislative or otherwise. [OAR-2009-0472-7215.1, p.5]
Senator Fran Pavley, California State Senate
One of the cornerstones of the agreement underpinning these proposed regulations is that
it strongly reiterates California's authority under the Clean Air Act to set its own
greenhouse gas standards as part of the national program, and California will continue to
be able to set new standards once the program expires in 2016. It is absolutely essential
that any ruling to extend the federal program beyond 2016 does not either consciously or
inadvertently create de-facto preemption for California and other states to move forward
with their own programs, including further regulations for automobiles and trucks. State
actions not only enable and accelerate progress toward emissions reduction goals, but
also help spur technological innovation that will benefit the entire country. This is
absolutely crucial because of California's special challenges to meet air quality standards
to protect our citizens' health and safety. [OAR-2009-0472-7275.1, p.4]
[Senator Fran Pavley also submitted these comments as testimony at the Los Angeles
public hearing. See docket LA EPA Hearing EPA-HQ-OAR-2009-0472-7283, pp. 13-20]
Consumer Federation of America
From a policy perspective, it is critically important that the Clean Air Act's framing of
standard setting, which allows EPA to take a long-term view and a technology-forcing
role, is being joined to the NHTSA approach. It must shake the standard setting process
out of its lethargy. The decision to join NHTSA and EPA creates the opportunity for a
major improvement in the regulation of automobiles because the Clean Air Act allows
EPA to take a longer-term view with greater flexibility. Moreover, the lengthy discussion
of the failure of the market to yield an efficient outcome with respect to energy efficiency
presented in Section II has two critical purposes in these comments and the process of
standard setting for both fuel economy and tailpipe emissions.
First, the explanation of why the vehicle fleet is less efficient than it should be is critical
to understanding why fuel economy standards are the right policy to address the problem
and how those standards should be set. The explanation of the "efficiency gap" (the gap
between the optimal level of efficiency and the level the marketplace yields) involves a
host of market imperfections, barriers and obstacles on both the supply and the demand
side. Our analysis shows that setting fuel economy standards is an ideal approach to
addressing the market imperfections, barriers, flaws and obstacles that underlie the
market failure.
Second, and more importantly, the law and practice of setting fuel economy standards at
NHTSA under the Energy Policy Conservation Act have severely restricted the ability of
the agency to set fuel economy standards in the public interest (see Exhibit 11-13).
Standards are the right policy instrument, and EPA is the right agency to take the lead for
a variety of reasons
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EPA Response to Comments
First, NHTSA is required to achieve only a 35-mile per gallon standard by 2020, but
beyond that there is no mandate to achieve higher levels of fuel economy. In contrast, as
a result of a recent Supreme Court ruling, EPA is obligated under the Clean Air Act
(CAA) to regulate tailpipe emissions of pollutants, such as carbon dioxide.
Second, NHTSA is severely constrained in the time frame for which it can set standards.
It must give the automakers at least 18 months advance notice of what the standard will
be and it cannot set standards more than 5 years in advance. This narrow window for
standard setting is too short for effective long term planning. The rulemaking period
barely covers a full product design cycle. NHTSA has repeatedly said that the time frame
is too short to ask the industry to do too much. The short time horizon shortchanges the
public. EPA is not under this time constraint. Therefore, it can give the industry a long-
term trajectory that promotes energy efficiency and environmental clean-up. In other
words, NHTSA has neither the legal mandate nor the ability to take a long-term view of
fuel economy, but EPA has the ability to do so for tailpipe emissions. [OAR-2009-0472-
7272.1, pp.35-36]
University of California, Los Angeles School of Law
As you work to finalize the proposed federal greenhouse gas emissions standards
referenced above, I write to urge you to resist any efforts restricting the right of
California, after 2016 and under the Clean Air Act, to regulate automobile emissions
more strictly than the federal government. [OAR-2009-0472-7263.1, p. 1]
For over 40 years, California has had the authority to set stricter standards than the
federal government for automobile emissions under the Clean Air Act. For thirty years,
other states have been permitted to adopt those tougher standards. The program has
worked exceedingly well, with California's regulations often serving (as here) as a model
for other states and even for national programs by showing what is possible. [OAR-2009-
0472-7263.1, p.1]
The tradition of state innovation benefits the country as a whole. When the Clean Air Act
was passed, California had already begun, by necessity, to regulate motor vehicle
emissions in significant ways. Congress wisely allowed California's program to remain
and allowed other states to adopt California's regulatory program. Over time, California
has shown an ability and willingness to regulate creatively in the public interest in ways
that often lead to innovative solutions. This very federal rulemaking would not have been
possible without the leadership of the states, and it should not be used as a means to
restrict states' abilities to continue to serve as leaders in the future. [OAR-2009-0472-
7263.1, pp.1-2]
Indeed, the national agreement paving the way for these regulations, signed onto by car
manufacturers, states, and federal agencies, explicitly affirms "that the proposed national
program would not alter California's longstanding authority under the Clean Air Act to
have its own motor vehicle emissions program." [OAR-2009-0472-7263.1, p. 2]
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EPA CO2 Standards
It is especially important to continue to allow California, post-2016, to address the threat
posed by emissions of greenhouse gases from cars. In part because of a strong history of
energy conservation in the state, motor vehicles are California's largest source of
greenhouse gas emissions and it will be difficult for the state to meet its GHG reduction
requirements, enshrined in laws like California's Global Warming Solutions Act, without
maintaining flexibility in dealing with passenger vehicle GHG emissions. California's
greenhouse gas laws themselves have served as models for the nation, and many are
looking to California's implementation of these laws as indicators of the potential success
of GHG emission reduction programs more generally. For this reason as well, it would be
a serious error for EPA to tie California's hands in regulating its most significant source
of GHG emissions going forward. [OAR-2009-0472-7263.1, p. 2]
State of New Jersey
These reductions are critical [These comments were submitted as testimony at the New
York public hearing. See docket number EPA-HQ-OAR-2009-0472-4621, pp. 113.] for
the state to achieve its 2020 and 2050 greenhouse gas goals. Future federal programs
should not preempt the states from establishing appropriate greenhouse gas emission
reduction programs, including additional motor vehicle programs as they are provided for
by federal law. [These comments were submitted as testimony at the New York public
hearing. See docket number EPA-HQ-OAR-2009-0472-4621, p. 114.]
Several other northeastern states who like New Jersey have already adopted and
implemented the low emission vehicle program, as well as California, we've heard from
NESCAUM and NACAA earlier today, we support their comments of the states and the
regional groups and will highlight issues covered in their testimony in our written
comments. [These comments were submitted as testimony at the New York public
hearing. See docket number EPA-HQ-OAR-2009-0472-4621, p. 114.]
State of Washington Department of Ecology
The importance of preserving the Clean Air Act provision of state's rights to adopt motor
vehicle standards - for California under Section 209 and for other states under Section
177 - cannot be overstated. The Federal Clean Air Act generally prohibits states from
adopting new motor vehicle emission standards. However, Congress specifically
authorized California to establish its own emission standards for cars. Courts upheld this
approach:
Congress intended California to continue and expand its pioneering efforts at adopting
and enforcing motor vehicle emission standards different from and in large measure more
advanced than the corresponding federal program. [OAR-2009-0472-7299, p.l] Motor &
Equipment Mfrs. Ass'n v. EPA ('MEMA I'), 627 F 2d 1095, 110-11 (D.C. Cir. 1979).
[OAR-2009-0472-7299, p.2]
According to the National Academies' National Research Council, California has used its
authority as Congress intended, by implementing more aggressive measures than the rest
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EPA Response to Comments
of the country and serving as a laboratory for technological innovation. California's
action paved the way for other states across the country to exercise their statutory
authority under Section 177 of the Clean Air Act; 14 other states have adopted
California's standards. As one of the first states to follow California's lead, Washington
adopted California's GHG regulations on May 6, 2005. [OAR-2009-0472-7299, p.2]
The federal government has been a follower, not a leader, in vehicle emissions
improvements. [OAR-2009-0472-7299, p.2]
California's statutory right to adopt more rigorous motor vehicle standards than the
federal governments, and other states' rights to opt in to California's programs, must be
acknowledged as the catalyst for this national vehicle GHG emissions reduction program.
[OAR-2009-0472-7299, p.2]
EPA should join state and local clean air agencies as an active proponent for the full
preservation of these states' rights. [OAR-2009-0472-7299, p.2]
Environment New Jersey
For most of this decade, you know, unfortunately, we've had to look to the states on clean
car legislation, clean car advocacy. Now it's time as we grapple with this crisis finally to
give the green light to clean cars on the national level and nowhere is that more
appreciated than in states like New Jersey and the other states which Steve [Steve Flint of
the Mobil Sources and Fuels Committee of the National Association of Clean Air
Agencies (NACAA) EPA-HQ-OAR-2009-0472-4621, p.53-65] mentioned and that have
become leaders on this issue. We believe firmly in the adage from Supreme Court Justice
Louis Brandeis, the states are the laboratories of democracy, and I believe that was
especially proven from the advocacy work over the course of this decade. [EPA-HQ-
OAR-2009-0472-4621, p.67]
Second, specifically on the rule proposal, that it's a first strong step but must be
strengthened to meet President Obama's proposals. [EPA-HQ-OAR-2009-0472-4621,
p.68]
And then finally I want to point out the proposal is certainly strong evidence that the
Clean Air Act is effective in addressing global warming pollution. California has
obviously been the leader on adopting emission standards than are stronger than the
federal regulations, and they have led the way, but they have allowed states like New
Jersey that have similar needs and similar air pollution problems to opt in to those
programs. We believe firmly as I stated before that states should have that right, states are
the laboratories of democracy. We certainly encourage that provision to remain. [EPA-
HQ-OAR-2009-0472-4621, p.77]
EPA Response:
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EPA CO2 Standards
As described in Section III.D.l of the preamble to the final rule, EPA and NHTSA have
worked extensively with the state of California and other states which have adopted the
California GHG emission standards, as well as many other stakeholders, to craft
a national fuel economy and GHG emission program which allows manufacturers to
build a single national fleet that will comply with EPA's GHG and NHTSA's CAFE
standards, and avoids the situation where manufacturers' sales must comply with
different standards in individual states, each with their own sales mix, etc. We believe
that we have succeeded in this task. .
EPA's final rule does not change California's authority to establish GHG standards for
MY 2017 and beyond and to request a waiver of preemption under section 209 of the
Clean Air Act for such standards, nor other states from adopting California standards
which receive such a waiver.
Regarding the interaction between the NHTSA fuel economy standards and the EPA
GHG standards, there are two reasons why EPA projects greater GHG benefits and fuel
savings for its standards. One reason, as cited by the State of Massachusetts in Section
3.0, is the inclusion of reductions in GHG emissions from the air conditioning units
present on motor vehicles. NHTSA currently declines to allow credits for GHG
reductions due to improvements in air conditioning efficiency or leakage that are not
accounted for under EPA's 1975 passenger car and light truck test procedures for CAFE.
The other reason is that manufacturers lack certain flexibilities under EPA's GHG
standards that are available under the CAFE standards, such as the use of automatic FFV
credits through in MY2020 and the option of paying fines in lieu of compliance, which is
permitted by the Energy Policy and Conservation Act. The difference in expected GHG
reductions and fuel savings from EPA's GHG standards and NHTSA's CAFE standards
can be seen in Tables 1C. 1-2 and I.C.2-1 of the preamble to the final rule.
NADA commented (cited in Section 3.0 above) that NHTSA fuel economy standards
should be used to regulate CO2 emissions from the tailpipe as measured over the two
cycle test procedure and EPA should only establish supplemental standards to address air
conditioning related emissions. EPA disagrees with this approach for several reasons.
One, the NHTSA fuel economy standards appropriately focus on the conservation of fuel
consumption by the nation, which has many benefits beyond GHG emission control. As
such, the CAFE standards do not distinguish between the carbon intensity of various
fuels. For example, vehicles fueled with gasoline and diesel fuel can have the same fuel
economy, yet have different CO2 emissions. Thus, it is appropriate for the CAFE
program to focus on the volume of petroleum-based fuel consumed in each case, while
also appropriate for EPA to distinguish between the two fuels due to their distinct carbon
(and thus, tailpipe CO2 emissions) per gallon. Two, other GHGs are emitted from the
tailpipe besides CO2, such as methane and nitrous oxide, which are not currently
controlled by the CAFE program per EPCA and EISA. Three, the combination of two-
cycle tailpipe emissions and air conditioning-related emissions in one program
provides manufacturers greater flexibility to select the most cost effective combination of
control technology for their particular vehicles. This would not be possible with two
separate programs due to the current inability of the CAFE program to accept increased
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EPA Response to Comments
air conditioning related controls in lieu of compliance with the CAFE standards
(including the statutory prohibition on such consideration for passenger automobiles).
Four, the Clean Air Act is more flexible with respect to test procedures. In
particular, EPA may find it desirable in the future to expand the test procedures used
to measure GHG emissions beyond the current FTP and HFET test cycles in order to
obtain more realistic estimates of the benefits of GHG emission control technology. Fifth,
the CAA is more flexible than EPCA with regard to providing compliance flexibilities,
which may allow opportunities for more cost-effective regulatory approaches for GHG
reductions. Finally, the commitment by California to accept compliance with federal
standards for purposes of its state GHG program is premised on issuance of EPA GHG
standards as described in the Joint Notice of Intent, and compliance by the automobile
manufacturers with EPA's GHG standards. Compliance with NHTSA CAFE standards
for just these 5 model years would not lead to this result, nor would compliance with the
much more limited GHG standards suggested by NAD A. This would lead to the loss of
this important benefit of a national program. EPA believes that these reasons amply
justify the inclusion of CO2 emissions as measured over the current two cycle test
procedure in its final GHG standards.
In the example above given by AAM, a manufacturer generating a greater level of direct
(i.e., refrigerant emission related) air conditioning emission credit relative to EPA's
projection would be able to use this "extra" credit to reduce the requisite degree of CO2
emission control over the two-cycle test procedure under the EPA program, but not under
the NHTSA program. AAM recommends that the stringency of the CAFE standards be
relaxed so that this situation could never occur.
As mentioned above, although as a practical matter, the means of achieving requirements
of the CAFE and GHG programs overlap to a large degree, they in fact have two distinct
purposes. One focuses on fuel consumption, while the other focuses on GHG emissions.
Because of these distinct goals, it is perfectly reasonable for a manufacturer to continue
to have to reduce the fuel consumption of its fleet despite implementing non-fuel related
GHG emission controls at a greater rate than projected by EPA. In any case, that is an
issue of how to set the CAFE standard under EPCA, which is under NHTSA's authority,
and not how to set the GHG standard under the CAA.
That said, the two agencies have attempted to craft their final standards in such a way as
to ensure that the additional stringency of one program relative to the other results in
valuable benefits to the nation, either in terms of fuel conservation or GHG emission
reduction. Any over-compliance with NHTSA's fuel economy standard would clearly be
applicable to compliance with EPA GHG standards. In contrast, a manufacturer which
implemented more than our projected level of air conditioning controls in the early years
of the program would still be required to comply with NHTSA's fuel economy standards.
This is essentially the issue raised by NADA in Section 3.0 above and by AAM and VW
in this section. EPA acknowledges that some manufacturers could choose to generate
more A/C credits than what we estimated in the rule for MY 2012-2015. However, the
agency believes that the differences will be small for the fleet as a whole. The agency
does not feel that this will cause any disharmony or inconsistency between the EPA and
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EPA CO2 Standards
NHTSA programs, or devalue such credits, as the manufacturers can bank any
overcompliance credits for the next model year (or beyond). The compliance situation
for the next model year may be quite different depending on that company's compliance
burden and the ramp up rate of its standards (both CAFE and GHG). Therefore EPA
disagrees with the Alliance comment that the different CAFE and GHG standard curves
can discourage A/C improvements. The EPA has every reason to believe that all
manufacturers will take advantage of these cost effective technologies to reduce GHG
emissions from automobiles.
We disagree with NADA that this rule will have a negative impact on automotive
dealerships. The two agencies appreciate the economic difficulties currently faced by
many automobile dealerships and the fact that many have or could soon be forced to
close. However, we believe that this is due to the current national and global economic
downturn and the resulting decrease in vehicle sales and financial difficulties of several
automotive manufacturers. The analysis supporting this rule clearly indicates that the
fuel savings resulting from meeting the final standards far exceed the cost of the
technology needed to achieve the standards. These costs include the costs of maintaining
vehicle performance, utility, safety, and other characteristics, so that vehicles should be
as acceptable to consumers as current models. Moreover, our analyses also reasonably
project increased vehicle sales, and do not project loss of sales attributable to the rule.
This calculation was done assuming that consumers consider only five years of fuel
savings when buying vehicles, an assumption endorsed by NADA. That, coupled with
the avoidance of the cited "patchwork" of state standards is expected to avoid any
negative impact on automotive sales. .
The analysis in section 3.1 of the RIA describes how the EPA 250 g/mi CC>2 equivalent
fleetwide standard for 2016 achieves the level of control which would have been
achieved by the California GHG standards in the State of California. However, that
equivalency is not the basis for our selection of this level of control for the final EPA
GHG standards, and we thus cannot accept the comment by NADA cited in Section 3.0.
See section HID (and in particular HID. 6) of the preamble to the final rule which
discusses the basis for the GHG standards and their feasibility. The basis for the final
standards is a balance of the technical feasibility of the standards, the cost of this
technology and the lead time needed to implement it, considerations of costs to
consumers, the cost-effectiveness of needed technology, and the benefits which will
accrue from the standards (among other factors), as described particularly in section HID
of the preamble to the final rule. Although the level of the California standards, and the
technical analysis underlying those standards, was a reasonable starting point for
evaluating a national GHG standard, the California standards are not the justification for
the federal standards. See section III.D.l of the preamble to the final rule. Achieving
some degree of equivalence with the benefits of the California standards was an
important aspect of obtaining cooperation from the state of California and the other states
which had adopted California's standards to accept compliance with the EPA standards
as compliance with their own standards. However, the standards reflect consideration of
the relevant factors under section 202 (a) (1) and are justified on that basis.
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EPA Response to Comments
With respect to the comment that the EPA GHG standards for motor vehicles will be
detrimental under a broader cap and trade regulation, this issue is currently not ripe as no
such cap and trade program exists; nor has one been proposed by the agency. EPA will
carefully consider the interaction between the final motor vehicle GHG standards and any
future cap and trade program if and when a national cap and trade program exists.
With respect to IPI's recommendation that EPA establish a broad regulation covering all
mobile source GHG emissions, EPA is taking this initial action with respect to
automobiles alone due to the impending timing of both California GHG standards and
NHTSA CAFE standards. It is highly desirable that national GHG standards be
coordinated with these other actions now versus the necessarily later date when more
comprehensive regulations covering additional mobile sources could be established.
EPA is currently working on GHG emission controls from other mobile sources, again in
coordination with NHTSA fuel economy regulation as appropriate. We will take IPI's
recommendations under consideration as the extent of GHG emission control from
mobile sources expands. See State of Massachusetts v. EPA, 549 U.S. at 533 (EPA
retains significant discretion as to timing of regulation).
We do not understand the purported distinction being made by VW regarding the
methodologies used to determine the fleet average fuel economy and GHG emissions
under the two programs. The harmonic averaging of fuel economy essentially means the
simple sales-weighted averaging of fuel consumption per mile. As fuel consumption per
mile is proportional to CO2 emissions per mile for a given fuel, the two programs
perform their sales-weighting consistently. There exist several statutory restrictions on
the trading of car and truck credits under the CAFE program which cannot be avoided.
EPA chose not to impose those restrictions, as it is not required by law to do so. This
simply makes compliance with the EPA GHG standards somewhat more flexible.
However, the analyses conducted by NHTSA demonstrate that the CAFE standards are
feasible for the vast majority of sales under the final provisions of that program. In fact,
VW is one of the manufacturers which has historically paid CAFE fines in lieu of
compliance. EPA analyses indicate that VW may need to utilize more advanced
technology on a greater percentage of its sales than most manufacturers in order to
comply with the two programs. EPA analyses indicate that this is at least partly due to
the fact that VW vehicles are heavier than other vehicles in their size classes. See Fig.
III-D.6-1 and surrounding text in the preamble to the final rule. VW has not provided
any information to demonstrate why this needs to be the case currently or in the future.
VW has also not provided any information indicating that they are unable to implement
for their U.S. sales volumes the types of advanced technologies which are already
commercially available.
EPA recognizes that several analyses have indicated that new vehicle purchasers do not
always choose technology which pays for itself in terms of fuel savings. See chapter
8.1.2 of the RIA and section III.H. 1 to the preamble to the final rule. There are several
possible reasons for this, but no consensus exists concerning the actual cause. We will
continue to study this issue, along with others in the scientific and economic community.
We believe that the implementation of the types of fuel savings and emission control
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EPA CO2 Standards
technology projected in the analyses supporting these rules will provide direct consumer
benefits far exceeding their cost, as well as important emission reduction related benefits
for the national and global communities.
3.2 Form of the standards
Organization: Mercedes-Benz (Daimler AG)
International Council on Clean Transportation
European Small Volume Car Manufacturers' Alliance (ESCA)
Comment:
Mercedes-Benz (Daimler AG)
By choosing footprint as the attribute to apply in the joint rulemaking, the agencies have,
indeed, created a mechanism for encouraging weight reduction in light trucks while
maintaining vehicle size and functionality. The safety of the light truck fleet is enhanced
by encouraging light trucks with lower centers of gravity, thereby reducing rollover risks.
Functionality is maintained even as weight is reduced because the footprint system
encourages lightweight materials. While traditionally changes in mass and size have been
directionally consistent from a compatibility standpoint, with the advent of crash
avoidance systems, expansion of crash energy distribution techniques and continued
improvement in behavioral safety, smaller vehicles with advanced emissions controls can
be safely incorporated into the current vehicle mix.
That the relative stringency of the passenger car and light truck fleet has been quite
stable, moreover, does not appear to reflect a policy determination as much as the fact
that the standards for many years remained either frozen or moved in increments which
would not have had a significant impact on the relative apportionment of the standards.
The passenger car standard has remained at 27.5 mpg since 1990, and the light truck
standard remained at 20.7 from 1996 through 2004, when NHTSA began to increase it
incrementally. When NHTSA set new standards for MY 2011, the agency readjusted the
curves to account for its decision to reclassify 2wd SUVs and crossovers as passenger
cars and thus retained the traditional relative apportionment. See 74 Fed. Reg. 14196
(March 30, 2009). NHTSA did not, however, consider the relative apportionment of
stringency as between light trucks and passenger cars as a matter of policy.
This rulemaking represents the first opportunity for the agencies to consider the
comprehensive policy objectives of the joint proposal while establishing standards for
passenger cars and light trucks. The agencies can achieve this objective, and promulgate
a final rule that is in fact "as substantially described in the May, 2009 Notice of Intent to
conduct rulemaking," by setting the stringency of the passenger car standards for the
model years leading up to MY 2016 according to a "generally linear phase-in." Doing so
would also be consistent with the goal of the rulemaking to adjust the fleet mix to
improve emissions and fuel economy performance without affecting safety. [OAR-2009-
0472-7193.2, p.2-4]
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EPA Response to Comments
International Council on Clean Transportation (ICCT)
We commend EPA and NHTSA for proposing a footprint-based adjustment to the CAFE
standards instead of weight-based adjustments. Footprint-based adjustments fully
encourage manufacturers to introduce lightweight materials, which can improve vehicle
efficiency by 20% or more in the long run. Lightweight materials also extend the electric
drive range of electric and plug-in vehicles by a similar amount. This is one area of
policymaking where the U.S. is ahead of the rest of the world. Japan, Europe, and China
have all adopted standards with weight-based adjustments that effectively discourage the
use of lightweight materials. NHTSA pioneered the footprint concept with the 2011 light
truck rule and we urge EPA and NHTSA to continue its use in the future.
We also support the proposed change to the shape of the footprint adjustments. The linear
slope for all but the largest and smallest vehicles provides a consistent signal to improve
efficiency for all vehicles within this range, while the flat line for largest vehicles creates
an incentive to make the largest vehicles smaller.
The proposed rule maintains separate footprint curves for cars and light trucks. This
subjects light trucks with the same footprint to much less stringent standards and gives
manufacturers a tremendous incentive to reclassify cars as light trucks. In the past this
has brought us such notable trucks as the Subaru Outback, Chrysler PT Cruiser, Dodge
Magnum, Mazda 5, Chevrolet HHR, Porsche Cayenne, and BMW X6, which BMW
describes as a Sports Activity Coupe. In the future it is likely to cause manufacturers to
drop many 2wd versions of their small SUVs and make less efficient 4wd versions
standard, so that they can be classified as light trucks instead of cars. This will actually
increase overall real world fuel consumption and CO2 emissions in two ways. First, it
will increase 4wd installation and directly increase the fuel consumption of the fleet.
Second, it makes it easier for manufacturers to meet the standards, so that they do not
have to implement as much technology on other vehicles.
The large majority of light trucks today are based on car platforms with unibody
construction. All minivans use unibody construction and cab-and-chassis construction for
SUVs is rapidly disappearing. Except for pickup trucks and a few relatively low volume
SUVs, such as the Jeep Wrangler and the Suburban, in the 2016 timeframe of the rule all
light trucks will be based on car platforms. In addition, due to the empty pickup bed,
pickup trucks are considerable lighter than truck-based SUVs with the same footprint and
fit much better on a single footprint line. Thus, there is no technical reason to maintain
separate footprint lines for cars and light trucks.
EPA recognized the importance of this issue when it established a single Tier 2 emission
standard for all cars and light trucks. The issue here is just as important. It is time to also
end this artificial distinction between cars and light trucks for fuel efficiency and
greenhouse gas emissions. A single footprint function will still give larger trucks a less
stringent target to meet, while avoiding vehicle classification games and helping to
ensure fuel consumption and GHG emission goals are actually met.
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EPA CO2 Standards
[OAR-2009-0472-7156.1, pp.2-3]
Organization: Toyota Motor North America
EPA also requests comments on combining the entire fleet into a single compliance
category, with a single target curve for the fleet each model year. If faced with just one
federal program with which to comply, Toyota may not object to a combined fleet
standard, since it would arguably provide manufacturer's with the greatest level of
flexibility to comply and it would remove any concerns about vehicle classifications.
However, due to the lack of harmonization with NHTSA's program that would result, and
the inflexibility afforded NHTSA in the existing CAFE statute, Toyota would not support
EPA setting a single target curve for the entire fleet of cars and trucks even though it
would result in the greatest level of flexibility. [OAR-2009-0472-7291, p.7]EPA
EPA Response:
EPA appreciates the comments concerning the relative stringencies of the NHTSA CAFE
standards for cars and light trucks prior to MY 2012. There is no need to evaluate or to
respond to these comments, however, as they are not germane to the EPA standards being
proposed for 2012 and beyond.
EPA also understands ICCT's concern that manufacturers may have an incentive to
convert two-wheel drive (2WD) vehicles SUVs to all-wheel drive (AWD) or four-wheel
drive (4WD) in order to have these vehicles classified as trucks instead of cars, and thus
reduce their applicable corporate fuel economy standard and increase their applicable
corporate GHG standard. NHTSA modified its definition of trucks in its rule
implementing the MY 2011 CAFE standards in order to counter manufacturers' actions
which shifted vehicles with many car-like designs to the truck fleet. On the one hand ,
since the vast majority of the SUVs newly classified as cars are also available in AWD or
4WD versions, manufacturers face few if any redesign hurdles in shifting these vehicles
back to the truck fleet by emphasizing AWD or 4WD sales through sales incentives or by
simply offering these vehicles in only AWD or 4WD versions. On the other hand, AWD
or 4WD vehicles cost more to produce than 2WD versions and usually have lower fuel
economy and higher CO2 emissions (though to a much lesser degree than the difference
between the car and truck standard curves). Thus many consumers still may not desire to
purchase 4WD vehicles because of concerns about cost premium and additional
maintenance requirements; conversely, many manufacturers often require the 2WD
option to satisfy demand for base vehicle models. The agencies note that many luxury
SUVs are only offered with AWD or 4WD functionality, so vehicle purchasers appear to
value these options. EPA will monitor this situation and assess the degree to which
manufacturers attempt to relax the stringency of their applicable fuel economy and GHG
standards by shifting sales of 2WD SUVs from their car fleets to their truck fleets.
Should this occur, the agencies will evaluate further changes to the definition of cars and
light trucks, as well as the relative stringency of their respective standards to address this
situation in the future.
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EPA Response to Comments
Regarding the comment that the agencies should move towards single footprint-based
standards for both cars and trucks, NHTSA addresses this issue with respect to the CAFE
standards in section IV of the preamble to the final rule. Regarding the GHG standards,
EPA believes that it is appropriate for the 2012-2016 MY period to utilize
NHTSA's definition of cars and trucks to maximize consistency between the two sets of
standards. For the purpose of this rule, the levels of the car and truck GHG curves are
closely connected to the 2011 NHTSA definitions of cars and trucks. Were EPA to either
utilize a different set of vehicle definitions or establish a single standard curve,
the overall level of GHG control would be roughly the same given the same level of
technology application. However, the impacts of specific manufacturers of doing so
would be very large in some instances. EPA believes that more leadtime should be
available before such dramatic changes to the relative stringency of the GHG standards
across manufacturers should be effected.
EPA notes that the incremental cost for a larger light truck to achieve the Tier 2 emission
standards relative to that for a car is much smaller than the incremental cost for a large
truck to achieve the fuel economy or GHG emission level of a car. In part that is because
tailpipe emissions of the criteria pollutants are largely driven by the after treatment
catalyst and related technology, while the factors that affect GHG emissions are much
more varied and involve a much wider variety of systems in the vehicle. This leads to
larger differences between vehicles as far as baseline technology that impacts GHG levels
and GHG controls. Thus, while the equivalent treatment of cars and trucks in EPA's Tier
2 emission control program is an appropriate analogy with respect to this GHG program,
the technology and economic implications are much greater and we believe that further
study would be necessary to justify such large relative economic impacts across
manufacturers.
3.2.1 Choice of footprint as the attribute and international harmonization
Organization:General Motors
Ferrari S.p.a
Toyota Motor North America
Northeast States for Coordinated Air Use Management
BMW of North America, LLC (BMW)
Lawrence Berkeley National Laboratory
SABIC Innovative Plastic
International Council on Clean Transportation
National Automobile Dealers Association (NADA)
Lotus Cars Ltd.
Cummins Inc.
Porsche Cars North America, Inc.
Fisker Automotive, Inc.
European Automobile Manufacturer's Association
New York State Department of Environmental Conservation
Ecology Center
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EPA CO2 Standards
Bright Automotive
Johnson, Kenneth C.
Comment:
General Motors
Among the highlights of the proposal is the coordinated attribute-based approach of the
two programs. [OAR-2009-0472-6185, p. 11]
GM especially supports: 1) the coordinated attribute based approach of the two
harmonized programs; and 2) the recognition of the need for mechanisms to provide for
compliance flexibility in the face of great uncertainty over future technology
developments and costs, customer acceptance of these technologies, and the price of fuels
that consumers may see in the marketplace. All of these factors make it critical that
automakers have some ability to cope with changes or unexpected outcomes, and we
believe the proposed rules provide essential flexibility. [OAR-2009-0472-6953.1, p.2]
Ferrari S.p.a
Ferrari concurs with EPA and NHTSA that the method to classify vehicles should be as
simple as possible, and based on reliable and stable attributes. Moreover, we support the
harmonization of the EPA and NHTSA rules in the National Program. Nonetheless, we
are concerned that the footprint alone does not take into account many of a vehicles'
other characteristics that greatly affect the fuel economy. For example characteristics like
the engine, transmission, curb weight, aerodynamics, etc. We treat this topic with more
details in the comments to the proposed NHTSA CAFE rule. We support the adoption of
a constrained linear rather than a constrained logistic function. We think it is not
necessary to put a "backstop" for both CO2 and CAFE standards. [OAR-2009-0472-
7214.1, p.3]
Toyota Motor North America
EPA requests comments on its proposal to use a footprint-based attribute approach for
regulating GHG emissions. Toyota supports EPA's selection of footprint, subject to the
additional comments below regarding Emissions Covered. Toyota supports
harmonization of the EPA and NHTSA programs to the greatest extent practicable. Since
NHTSA has already established footprint as the attribute upon which the CAFE program
is based, and they have continued use of footprint in the subject proposal, Toyota agrees
with EPA's selection of footprint as the attribute for its program. This approach will result
in harmonization of the two regulatory programs in terms of the attribute upon which the
standards are based. [OAR-2009-0472-7291, p.6]
Northeast States for Coordinated Air Use Management
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EPA Response to Comments
NESCAUM concurs with and supports the EPA and DOT decision to use an attribute-
based standard rather than an industry-wide average standard.
Footprint-based standard: NESCAUM agrees with EPA's approach to regulate vehicle
footprint. Consistent with the model year 2011 CAFE standards, EPA and DOT are
proposing to use footprint as the attribute for the model year 2012-2016 CAFE standards
and CO2 emissions standards. Footprint-based standards provide an incentive to use new
and advanced lightweight materials and structures that could otherwise be discouraged by
weight-based standards. Manufacturers can use them to improve a vehicle's fuel
economy without necessarily resulting in a change in the vehicle's target level of fuel
economy or CO2 emissions and without a substantial impact on the safety (in terms of
crashworthiness) of that vehicle.
EPA has crafted the proposal in a way that ensures consumers will continue to have the
variety and choice in vehicle models they have come to expect. The size-based standard
provides manufacturers with significant flexibility in meeting the proposed GHG
reductions. Furthermore, as mentioned above, technologies to reduce vehicle GHG
emissions exist in the market today. The phase-in of the standards between 2012 and
2016 allows manufacturers six years to incorporate these technologies into greater
numbers of vehicles. [OAR-2009-0472-7235.1, p.4]
[Northeast States for Coordinated Air Use Management also submitted these comments
as testimony at the New York public hearing, See docket number OAR-2009-0472-4621,
p. 43.]
BMW of North America, LLC (BMW)
With respect to one national program. BMW fully supports an attribute-based program
for passenger cars and light trucks as proposed by EPA and NHTSA. Compared to a
uniform standard for passenger cars and light trucks, an attribute-based standard drives
fuel efficiency and GHG reduction in all segments while taking into account the
manufacturer's product portfolio. However, because BMW offers a worldwide product
portfolio and most of the C02 and fuel economy regulations worldwide are based on
vehicle weight instead of footprint, BMW recommends that these regulations be
harmonized as much as possible. [OAR-2009-0472-7145.1, pp.4-5]
[BMW of North America also submitted these comments as testimony at the New York
public hearing, See docket number EPA-HQ-OAR-2009-0472-4621, p. 133.]
Lawrence Berkeley National Laboratory
Comments are directed at the choice of vehicle footprint as the attribute by which to vary
fuel economy and greenhouse gas emission standards, in the interest of protecting vehicle
occupants from death or serious injury. Comments are summarized below:
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EPA CO2 Standards
Analysis of casualty risk finds that, after accounting for drivers and crash location, there
is a wide range in casualty risk for vehicles with the same weight or footprint. This
suggests that reducing vehicle weight or footprint will not necessarily result in increased
fatalities or serious injuries.
Indeed, the recent safety record of crossover SUVs indicates that weight reduction in this
class of vehicles resulted in a reduction in fatality risks.
Computer crash simulations can pinpoint the effect of specific design changes on vehicle
safety; these analyses are preferable to regression analyses, which rely on historical
vehicle designs, and cannot fully isolate the effect of specific design changes, such as
weight reduction, on crash outcomes.
There is evidence that automakers planned to build more large light trucks in response to
the footprint-based light truck CAFE standards. Such an increase in the number of large
light trucks on the road may decrease, rather than increase, overall safety. [NHTSA-
2009-0059-0060.1, p. 1]
See all the casualty analysis related to vehicle footprint in pp.2-11 of the docket.
SABIC Innovative Plastic
SABIC-IP supports the footprint-based regulatory program proposed because it
encourages both appropriate materials substitution on existing products and the
development of a safe, lighter-weight vehicle fleet. [OAR-2009-0472-7080.1, p.2]
International Council on Clean Transportation
[[These comments were submitted as testimony at the Detroit public hearing. See docket
number EPA-HQ-OAR-2009-0472-6185, p. 58.]]
We commend EPA and NHTSA for proposing a footprint based adjustment to the CAFE
standards instead of weight based adjustments. Footprint based adjustments fully
encourage manufacturers to introduce lightweight materials, which can improve vehicle
efficiency by 20 percent or more in the long run. Lightweight materials also extend the
electric drive range of electric and plug-in vehicles by a similar amount.
This is one area where the U.S. is ahead of the rest of the world. Japan, Europe, and
China have all adopted standards with weight-based adjustments that discourage the use
of lightweight materials. NHTSA pioneered the footprint concept with the 2011 Light
Truck Rule, and we urge EPA and NHTSA to continue its use in the future.
National Automobile Dealers Association (NADA)
The proposal's vehicle attribute-based framework is essential to driving fuel economy
performance improvements while allowing dealers to access a mix of cars and trucks that
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EPA Response to Comments
meet their customer needs. As recognized by EISA, attribute-based standards offer at
least four critical benefits over "flat" standards. First, greater fuel economy and GHG
emission benefits can be expected as continuous improvements are encouraged across all
vehicle types, regardless of product mix. Second, if set correctly, an incentive to the
inexpensive downsizing or downweighting of vehicles is eliminated, helping to preserve
passenger safety. Third, an attribute based approach inherently is more equitable in that it
is largely product plan neutral, acting to spread compliance costs broadly across all
regulated vehicle manufacturers. Finally, and perhaps most importantly, by avoiding
mandated fleet mixes, an attribute-based approach recognizes and capitalizes on the
critical consumer choice factors that drive a successful fuel economy/GHG improvement
program. As stated above, hoped-for fuel economy and GHG benefits simply will not be
realized until consumers purchase and use the regulated vehicles in question. [OAR-
2009-0472-7182.1, p.4]
The National Program proposal's standards are based on a footprint (average track width
times average wheelbase) attribute and a continuous function (vs. step function) curve
similar to that first used in the 2006 light truck CAFE rule. Appropriate dispensation
must be allowed to help ensure the final National Program does not frustrate customer
demand for new light trucks as their maximum towing, cargo-hauling, and four-wheel
drive (4WD)/all-wheel drive (AWD) capabilities are essential to certain vocational and
recreational demands. Business and consumer purchasers focused on vehicle utility and
durability buy light trucks for their capability and performance characteristics and 4WD
and AWD options are popular for off-road commercial and recreational use and for on-
road handling benefits. Tow-capable configurations or "packages" are essential to many
uses. Having a wide variety of vehicles available for use in trade or business particularly
is essential to the small business community which drives the U.S. economy. Large and
powerful light trucks are essential to many business purchasers (e.g., farmers, contractors,
etc.), and larger vans and SUVs are often the first choice of growing families and
carpoolers. The stringency of the light truck curve must not constrain the ability of
vehicle manufacturers to meet these market needs, as it would leave the motoring public
no choice but to keep older, less efficient vehicles longer or to turn to the used vehicle
marketplace. [OAR-2009-0472-7182.1, pp.4-5]
The attribute-based, continuous curve framework is designed to foster real world fuel
economy improvements and GHG reductions by maintaining consumer choice, by
protecting safety, by distributing costs more equitably, and by reducing the overall cost of
regulation. These same benefits also argue for downward sloping curves without any
flattening at the lower asymptote. Any constant value or "clip" applied to the end of a
curve could serve to severely limit the availability or performance of vehicles demanded
by the motoring public, especially light trucks, effectively imposing an unwarranted
"backstop" compliance overlay. [OAR-2009-0472-7182.1, p.5]
Lotus Cars Ltd.
The proposed legislation attempts to account for differing vehicle segments with size-
based standardization; however such an approach can only work together with fleet
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EPA CO2 Standards
averaging if the fleet itself can be considered 'average'. The footprint of a vehicle does
not differentiate to a sufficient degree between vehicle segments for this approach to
work with small volume manufacturers. In practice, it is quite possible for a sports car to
have the same footprint size as a compact saloon vehicle, which would result in the
applicability of a similar greenhouse gas target. [OAR-2009-0472-7249, p.6]
Cummins Inc.
Cummins supports the attribute-based standards for setting CAFE and GHG standards;
however, we urge EPA and NHTSA to consider a secondary attribute for light-duty
trucks (with significant hauling and towing capacity as well as off road capabilities) for
determining the target fuel economy/CO2 emissions. Trucks primarily used for work
purposes (e.g. trucks equipped with diesel engines), are engineered for heavier use (more
capable components) resulting in lower fuel economy than similar truck meant for light-
load use. Cummins supports a proposal for creating a separate classification for heavy-
tow, highly capable trucks which would provide a more equitable framework for vehicles
meant for towing and cargo-hauling. The SAE J2807 recommended practice provides a
robust framework to define a tow rating for vehicles and eliminates potential gaming, as
noted by NHTSA in an earlier NPRM. [OAR-2009-0472-7205.1, p.4]
Porsche Cars North America, Inc.
Porsche's sport car average footprint (the basis for our target standards) is:
• The smallest in the industry
• 14% less than the industry average
• considerably smaller than companies known for producing small cars (e.g., Honda,
Toyota, Suzuki, etc.)
Because the standards proposed are entirely based on footprint and because our footprint
is the smallest, the proposed standards for Porsche are the most stringent. While we do
not believe that it is the intent of EPA/DOT to make Porsche the world's most fuel
efficient passenger car manufacturer or to punish Porsche, this is the consequence of the
footprint-based concept. While there is a reasonable correlation between footprint and
fuel economy and C02 for the average fleet of cars there are cars for which this does not
apply. Sports cars, especially Porsche cars have a very short wheelbase for handling
reasons in combination with high performance, which is an attribute associated with
sports cars and a selling point. Unfortunately the standard in this footprint category is set
by small, low priced sedans, a category where fuel economy is an important selling
attribute rather than performance.
In proposing to establish standards based entirely on vehicle footprint, EPA and DOT
have proposed a set of standards that would perversely require Porsche (a company
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EPA Response to Comments
predominantly manufacturing high-powered sports cars) to become the fuel efficiency
leader in the United States.
In Figure 1 [OAR-2009-0472-7431.1, p.5] below, using the proposed standards shown in
the tables above, we have plotted the percent improvement required for compliance for
each manufacturer. We show the percent improvement required relative to 2008MY
performance since this is the most recent model year for which complete fuel economy
model year data was available at the time at which these comments were initially drafted.
It should be understood that, according to the proposal, Porsche is expected to achieve a
passenger car fuel economy level of 41.4 mpg (or 204 g/mi C02) by 2016MY. This is by
far the highest mpg value demanded of any auto maker affected by the proposal. [OAR-
2009-0472-7431.1, pp. 1-6]
Fisker Automotive, Inc.
Fisker Automotive recommends a flat standard to avoid irrational trends to certain
vehicle sizes or types. That is, the standard's emissions allowance should not correlate to
footprint or separate passenger cars from light duty trucks. The regulation, as proposed,
appropriates more credits to larger vehicles and trucks, causing an economic incentive
not only to increase fuel economy, but to increase vehicle footprint and to classify as a
truck as well. The market should decide vehicle sizes and types. [OAR-2009-0472-
8732.1, p.5]
Automakers have many options available to decrease emissions, including electrification,
powertrain efficiency increase, weight reduction, and aerodynamic drag reduction, etc.
Regulation should remain neutral to allow all methods of improvement. Averaging,
banking, and trading methods are sufficient to maintain diverse consumer choice of
vehicles. [OAR-2009-0472-8732.1, p.5]
The Fisker Karma, for example, will do unusually well under the proposed footprint
method because it has a very large footprint and superb fuel economy, well beyond 2016
targets. If we chose to make a version of the Karma with a smaller footprint, it would
actually do worse under the proposed regulation, even if the utility (e.g. seating, storage
space, and performance) and fuel economy remained exactly the same. This does not
make sense. In a competitive market, automakers will be driven to sell larger vehicles and
trucks for the increased credits. We would like the freedom to design our vehicles
without concern for these footprint and classification metrics. [OAR-2009-0472-8732.1,
pp.5-6]
While larger vehicles can be made safer, this is not always the case. For example, many
large SUVs are considerably more dangerous than smaller vehicles due to rollover
concerns. NHTSA can (and does) implement safety regulations to directly address safety
issues. We consider it best to handle safety in this manner, separately from emissions. A
flat standard would remain neutral to size, as consumer demand will remain for large
vehicles. Furthermore, hybrid and electric vehicles do not suffer in fuel economy from
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EPA CO2 Standards
weight increase nearly as much as traditional vehicles due to their regenerative braking
capability. This will also serve to maintain diverse consumer choice of vehicles. [OAR-
2009-0472-8732. l,p.6]
Finally, causing a trend towards larger vehicle footprints can have adverse environmental
affects. Material requirements would increase, and unless automakers take considerable
effort to avoid it, environmental impact (e.g. CO2 emissions) of vehicle production
would increase in step. The regulation should serve to put a market value only on metrics
of concern to the regulation—GHGs and fuel. [OAR-2009-0472-8732.1, p.6]
European Automobile Manufacturer's Association
ACEA emphasizes that any legislation should in principle not be technology prescriptive.
Also, efforts with a view to increasing international harmonization of motor vehicle
regulations should be maintained where appropriate. [OAR-2009-0472-7444.1, p.l]
New York State Department of Environmental Conservation
Use of Footprint as a Basis for Standards (Preamble Section III.B.2)
EPA proposes an attribute based greenhouse gas standard, using vehicle footprint as the
basis. NHTSA is required by statute to establish attribute based CAFE standards. The
benefit of harmony between the CAFE and greenhouse gas standards outweighs any
potential benefits an alternate form of greenhouse gas standard might have, and we
believe that footprint is at least as valid as any other attribute. [OAR-2009-0472-7454,
p.l]
Ecology Center
One key aspect of the proposed rules is the attribute-based system for determining fuel
economy standards. This approach ensures that fuel-economy progress will be made
across the broad spectrum of vehicle types and sizes, rather than just through downsizing
or by certain manufacturers. In the past, the fleet average approach has tended to put full-
line manufacturers with market share in the larger vehicle segments at a significant
disadvantage. Now all manufacturers will share the burden of improving the fuel
economy of their vehicles. The Ecology Center also believes that using the vehicle
footprint attribute is the most preferable from an environmental and safety perspective to
a weight-based approach. [OAR-2009-0472-4068, pp. 1-2]
Bright Automotive
[These comments were submitted as testimony at the Los Angeles public hearing. See
docket number EPA-HQ-OAR-2009-0472-7283, pp.173-179]
I'd like to also applaud the footprint standard because, again, we do not want to force a
single solution into downsized vehicles. We want to be able to allow our customers and
Americans to drive vehicles in the size they want.
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EPA Response to Comments
That being said, lightweighting is an extremely important driver for electrification
in meeting these standards and importantly for the safety concerns as well. There is a
strong correlation between weight and size for safety, but there's even — I'm sorry.
Weight and safety. There's a stronger correlation between size and safety.
So if you can decouple weight and size, what you can get are vehicles that are large
like our 63-square-foot light truck that are safe and not just safe to the occupants but safe
to other drivers and pedestrians.
Johnson, Kenneth C.
These comments are respectfully submitted in response to the following request, on page
49685 of the Notice of Proposed Rulemaking (NPRM):
... while NHTSA tentatively concludes that footprint is the most appropriate attribute
upon which to base the proposed standards ... we seek comment on whether the agency
should consider setting standards for the final rule based on another attribute or another
combination of attributes. [OAR-2009-0472-7135.1, p.l]
One of the key recommendations of the 2002 NAS Report was the following:
Recommendation 3. Consideration should be given to designing and evaluating an
approach with fuel economy targets that are dependent on vehicle attributes, such as
vehicle weight, that inherently influence fuel use. Any such system should be designed to
have minimal adverse safety consequences, (emphasis added) [OAR-2009-0472-
7135.1, p.l]
The NPRM deviates from this recommendation by adopting a footprint attribute, which
does not inherently influence fuel use. In contrast to weight, there is no clear causal
connection between footprint and fuel economy, as evidenced by their poor correlation.
[OAR-2009-0472-7135.1, p.l]
The poor correlation is clearly evident from the current fuel economy and footprint data
provided in the NPRM, Tables IV.C. 1-2 and IV.C. l-4a. This data is plotted in the
attached Figure 1. (Each data point represents a particular manufacturer; and the X's and
O's represent passenger cars and light trucks, respectively.) By contrast, weight is
strongly correlated to fuel economy across all manufacturers and vehicle classes (Table
IV.C.l-5a, attached Figure 2). Furthermore, the weight correlation is stronger than that of
power-to-weight ratio, even though the latter is also causally related to fuel economy
(Table IV.C.l-6a, attached Figure 3). [OAR-2009-0472-7135.1, pp.1-2]
The policy rationale for favoring a footprint attribute over weight is based on the two
competing objectives of discouraging weight-changing compliance strategies that would
adversely impact safety or consumer choice, and also encouraging weight-changing
strategies that would improve fuel economy without adversely affecting consumer
welfare. The NPRM recognizes that the rulemaking does not effectively balance these
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EPA CO2 Standards
objectives. As noted on pages 49462-49463, "... even under attribute-based standards,
there is still risk that manufacturers will rely on downweighting to improve their fuel
economy (for a given vehicle at a given footprint target) in ways that may reduce safety".
Furthermore (page 49725), "NHTSA cautions that vehicle footprint is not synonymous
with vehicle size. Since the footprint is only that portion of the vehicle bounded by the
front and rear axles and by the wheels, footprint based standards do not discourage
downsizing the portions of a vehicle in front of the front axle and to the rear of the rear
axle ... The crush space provided by those portions of a vehicle can make important
contributions to managing crash energy." [OAR-2009-0472-7135.1, p.2]
The NPRM suggests that a weight-based standard would create perverse incentives to
increase weight. As noted on page 49685, "it is relatively easy for a manufacturer to add
enough weight to a vehicle to decrease its applicable fuel economy target." However, it is
not easy to add weight without also compromising fuel economy, and thereby nullifying
the advantage of a less stringent target. A weight-based standard would, by design,
neutralize - not increase - weight-changing incentives. It would nullify the large weight-
reduction incentive of an attribute-neutral standard, but would not reverse that incentive.
[OAR-2009-0472-7135.1, p.2]
The primary drawback of a weight-based standard is that it would create no incentive for
beneficial weight-changing compliance strategies. But since the regulatory incentive
would be substantially weight-indifferent, the standard would also not incentivize
detrimental weight changes; and it would not conflict with complementary policies that
are targeted specifically at creating favorable (e.g., safety-enhancing) weight-changing
incentives. [OAR-2009-0472-7135.1, p.3]
The proposed footprint attribute cannot optimally balance the tradeoff between favorable
and unfavorable weight changes because it does not discriminate between the two. For
example, the NPRM states on page 49685 that "footprint-based standards provide an
incentive to use advanced lightweight materials and structures that would be discouraged
by weight-based standards". But the standards would not incentivize downweighting
exclusively by such means. As stated on page 49727, "... weight can be removed by
downsizing, rather than material substitution, even while maintaining footprint". [OAR-
2009-0472-7135.1, p.3]
How can the weight-change conundrum be resolved? The solution can be illustrated by
analogy with a similar problem in the electricity industry. [OAR-2009-0472-7135.1, p.3]
A power utility can reduce emissions by using cleaner energy-generation technology (i.e.
reducing GHG emissions per generated kWh). It can also reduce emissions by investing
in energy efficiency (i.e. reducing kWh consumption per unit of consumer utility). For
example, it could finance or subsidize home weatherization programs, efficient lights and
appliances, etc. But an emission performance standard based on GHG emissions per kWh
would, in effect, award emission allowances in proportion to energy generation, and
would therefore provide no incentive for reducing energy consumption. How can this
problem be resolved? [OAR-2009-0472-7135.1, p.3]
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EPA Response to Comments
One approach would be to award emission allowances in relation to some kind of
attribute, such as a generating facility's "footprint," which would somehow balance the
competing incentives. But a more practical approach would be to simply recognize that
promoting clean energy generation and energy efficiency are independent, separable
problems that can be addressed with separate, complementary policies. A GHG-per-kWh
performance standard could effectively induce clean energy generation, while a separate
regulatory measure would be employed to promote energy efficiency. [OAR-2009-0472-
7135.1, p.3]
Similarly, the vehicle regulation problem can be efficiently partitioned into two separate
problems: one of minimizing emissions per unit weight, and one of minimizing weight
per unit of consumer utility. Furthermore, safely could also be addressed as a separate
regulatory problem - the regulations should not, in effect, use weight (or footprint) as a
proxy for safety. Trying to solve all of these problems with one standard, as the NPRM
proposal does, leads to regulations that are over-constrained and therefore
suboptimal. [OAR-2009-0472-7135.1, p.4]
The NPRM notes, on page 49724, that "The question of the effect of changes in vehicle
weight on safety in the context of fuel economy is a complex question that poses serious
analytic challenges ...," but these complexities can be circumvented by using a weight-
based standard that would, by design, create no significant weight-changing incentives.
Instead, the "serious analytic challenges" would be localized in a separate,
complementary regulatory measure, which would be specifically and exclusively targeted
on motivating optimal weight-changing strategies. This measure, unlike the proposed
footprint-based standard, would discriminate between strategies based on their consumer-
welfare impacts; and it would preferentially and selectively focus incentives on beneficial
strategies. [OAR-2009-0472-7135.1, p.4]
In one approach, optimal weight reduction could be incentivized by a crediting system
somewhat analogous to air conditioning credits. "Weight credits" would be awarded for
the use of qualified engineering materials based on their equivalent utility characteristics.
For example, if a vehicle manufacturer replaces 1000 Ibs of steel with 600 Ibs of
functionally equivalent, high-strength composite material, then the 400-lb difference
would be added to the vehicle weight for the purpose of determining its compliance
requirement under a weight-based standard. [OAR-2009-0472-7135.1, p.4]
Safety concerns could similarly be addressed through regulatory measures that apply
specifically to safety-related vehicle attributes. For example, vehicle safety regulations
might specify a minimum vehicle footprint-to-weight ratio, or a maximum center-of-
gravity height as a proportion of track width. [OAR-2009-0472-7135.1, p.4]
A weight-based standard, complemented with optimal weight-reduction incentives and
safety-related regulations, would achieve all of the objectives that the footprint-based
standard is intended to achieve, but without the tradeoffs inherent in a one-size-fits-all
regulatory approach. The benefits of this approach would include some or all of the
following: (1) less disparity in manufacturers' and consumers' compliance costs, (2)
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EPA CO2 Standards
improved economic feasibility (and consequently, potentially more stringent emission
targets), (3) better preservation of consumer choice, and (4) enhanced safety. [OAR-
2009-0472-7135.1, p.4]
The separate, but complementary, regulation of fuel economy and emissions by NHTSA
and EPA argues in favor of a similar separation of weight-changing and safety
regulations; and a weight-based standard would represent a step toward
harmonized international standards. (China, Japan, and the European Union use weight-
based standards.) Inasmuch as this approach has not been identified as a regulatory option
in the NPRM and appears not to have been considered by the agencies, I encourage the
agencies to do at least a cursory comparative analysis of this approach and to objectively
consider its merits, and then to reevaluate the policy rational underlying NHTSA's
selection of footprint as "the most appropriate attribute upon which to base the proposed
standards". [OAR-2009-0472-7135.1, pp.4-5]
EPA Response:
Most of the comments summarized received on this issue support the use of footprint as
the sole or at least one of the attributes upon which to base the fuel economy and GHG
standards. Most of those disagreeing with the use of footprint support the substitution of
vehicle weight for footprint for two primary reasons. One reason is harmonization with
the fuel economy, fuel consumption, CO2, or GHG emission standards of other nations.
The other is the fact that vehicle weight is a much better predictor of fuel economy and
CO2 emissions than footprint. Starting with international harmonization, EPA agrees
that the use of vehicle weight as the primary attribute upon which to base the final
standards would result in standards that, in that respect, appear to be more closely
harmonized with the standards of several nations, namely Europe, Japan, and China.
However, we believe that the benefits of this harmonization could be minimal and in any
event do not outweigh the detriments at this time. First, establishing a weight
based standard in the U.S. would not guarantee that the same vehicles could or would be
sold in all of the nations with weight based standards presently; indeed, there is little, if
any, evidence that fuel consumption and GHG emissions standards in place in Europe,
Japan, and China are leading to significantly more similar new vehicle fleets in those
regions. Even if the standard curve were the same in two or more nations, the mix of
vehicles sold would likely vary across national boundaries. Manufacturers comply with
their applicable sales-weighted standard by balancing the number of vehicles sold which
are above and below the standard (and the degree to which they are above and below the
standard, of course). Setting the appropriate level of a fuel economy or GHG
standard depends on many factors, including fleet mix and other regulations (e.g., safety
requirements, NOx and PM emissions standards). Fleet mix varies widely across national
boundaries, and some other regulations are not as stringent in other countries as in the
United States. Thus, it may not be appropriate for all nations to set the same level of fuel
economy or GHG emission standard. In fact, harmonization of fuel economy or CO2
standards internationally is most practically achieved when roughly the same level of fuel
conserving and CO2 reducing technologies can be marketed internationally. The fact that
many of technologies projected to be used to meet the final standards are already utilized
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EPA Response to Comments
commercially in Europe and Japan is an indication of that the final standards are
harmonized to some extent internationally. In addition, because the focus of EPA's
standards are GHG emissions and not fuel consumption, manufacturers have the option
(and are expected to take advantage) of generating credits through the use of high
efficiency and low leak A/C systems, which are not presently incorporated into other
nations' fuel conservation programs.
Second, as mentioned by several commenters, setting a weight-based GHG standard
eliminates the incentive for manufacturers to use weight saving materials or techniques to
reduce fuel consumption and CO2 emissions. As one commenter points out, fuel
consumption and CO2 emissions are highly correlated with weight. As described in the
Joint TSD, there are numerous ways that vehicle weight could be reduced in the future
while maintaining vehicle safety and utility. A weight based standard would simply
remove these techniques from consideration.
The fact that vehicle weight correlates much better than footprint with fuel consumption
and CO2 emissions is, however, not the most relevant factor when selecting the
attribute to use when developing the standard curve. In its 2002 report on the CAFE
program, NAS recommended that NHTSA adopt weight-based standards in order to
discourage manufacturers from responding to CAFE standards by reducing vehicle mass
in ways that would compromise highway safety. However, NHTSA has concluded and
EPA agrees that a size-based system not only more equitably distributes compliance
burdens than a flat standard, but also that, compared to a weight-based system, a size-
based system encourages high-strength lightweight materials and incurs less risk that
energy and environmental benefits will be lost to "gaming" (it being much easier to
increase a vehicle's mass than to increase its footprint).
In another comment, Cummins recommends that towing capacity be added as a
secondary attribute to the proposed truck category, as greater towing capacity increases
vehicle utility in a manner similar to greater footprint. Cummins suggests that such
vehicles be granted a numerically higher CO2 standard than other trucks. We believe
that towing capacity is already implicitly factored into the proposed (and final) car and
truck curves. Towing capacity tends to be higher for trucks than for cars and trucks are in
fact allowed to emit more CO2 than cars under the final standard. We also believe that
larger trucks tend to have higher towing capacities than smaller trucks and again, larger
trucks are allowed to emit more CO2 than smaller trucks. In other words, differences in
towing capacity are part of the reason why the GHG standard curve increases with
vehicle size and is higher for trucks than for cars. It is possible that EPA would consider
adding additional attributes like towing capacity to its standard setting function in the
future.
Several manufacturers make a similar suggestion for engine size or power. Vehicles with
higher engine power tend to have higher CO2 emissions due to the fact that the engines
operate at lower average loads over the two-cycle test procedure. Unlike passenger and
cargo capacity, however, the societal benefit of higher engine power is less clear. The
analysis supporting this rule assumes no change in the acceleration performance of
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EPA CO2 Standards
vehicles due to the rule (and the agencies' cost analysis includes the costs for preserving
acceleration performance). In other words, we have included performance vehicles in our
analysis and we have evaluated the various GHG reducing technologies in such a way to
maintain acceleration performance as much as possible. We have explicitly excluded
projecting increased sales of lower powered engines as a method of reducing CO2
emissions even in those cases where a manufacturer currently markets the same vehicle
with two or more sized engines. However, to base the GHG standard on engine size or
power would allow manufacturers to increase engine size or power with no compensating
use of emission control technology to hold emissions constant. It is not clear that a
vehicle fleet with higher acceleration performance would provide a societal benefit,
particularly for vehicles whose performance is already well above the mean. However,
although safety concerns support the adoption of a system that discourages downsizing as
a compliance strategy, they do not support the adoption of a system that discourages
reductions in the size and/or power of engines in performance vehicles. Porsche, for
example, states that the purpose of their small sports cars is to provide performance,
while that of other small vehicles is to provide fuel economy (and commensurately, low
CO2 emissions). Porsche's argument fails to consider the fact that the express purpose of
these fuel economy and GHG standards is to reduce fuel consumption and GHG
emissions. Therefore, we do not believe that it would be appropriate to base the GHG
standard using engine size or power as an explicit attribute. In fact, since it takes more
power to move a larger vehicle, the use of footprint as the attribute upon which to base
the GHG standard indirectly includes the impact of a larger engine on the GHG standard.
However, this is done to enable the utility of the larger vehicle with larger passenger and
cargo capacity. Porsche states that they would be required to be the most fuel efficient
manufacturer in the U.S. due to their small average footprint. However, other
manufacturers of small vehicles must achieve the same fuel efficiency. Porsche did not
assert, nor establish that the proposed standards were more stringent for smaller footprint
vehicles than for larger footprint vehicles. Thus, the fact that their overall average fuel
efficiency would be required to be higher than other manufacturers does not mean that
the proposed, nor final standards are more stringent for Porsche than for other
manufacturers. (Note further that the final GHG rules contain an alternative standard for
manufacturers with domestic sales of 2009 MY light duty vehicles of less than 50,000
allowing such manufacturers to select any combination of 2012 through 2015 MY light
duty vehicles to meet the Temporary Lead Time Allowance alternative standard, up to a
cumulative total of 200,000 vehicles. An additional 50,000 2016 MY vehicles may be
included under this alternative as well. Section 86.1818-12 (e) (3). Porsche may choose
this alternative (assuming it meets the various eligibility criteria in the rule) to obtain
needed leadtime to ultimately meet the main CO2 standards for its fleet.)
BMW commented that there is evidence that the footprint-based standards are leading to
increased sales of large trucks. We are not aware of such evidence. EPA's projection of
future sales of large trucks and SUVs in the NPRM did show relatively large sales
volumes. However, as discussed in the Joint TSD, this was due primarily to the mistaken
inclusion of vehicles over 8,500 pounds GVWR which are not subject to the final
standards. The design of the final footprint standards is intended to avoid incentives for
manufacturers to increase or decrease the size of their vehicles.
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EPA Response to Comments
BMW's safety related comments are addressed in section xx.
Comments concerning the flattening of the standard curves at low and high footprint
values will be addressed in section 3.2.2 below.
3.2.2 Mathematical shape of the footprint-based standards
Organization:General Motors
Ford Motor Company
Honda Motor Company
Alliance of Automobile Manufacturers (Alliance)
Toyota Motor North America
University of California, Santa Barbara, Bren Working Group on Vehicle
Fuel Economy
University of Pennsylvania, Environmental Law Project
Recreational Vehicle Industry Association (RVIA)
Comment:
General Motors
The agencies "seek comment on the ... methodology for apportioning the fleet
stringencies to relative car and truck standards for 2012-2016." GM recommends: 1)
modifying the slope of the truck curves such that large pickups have a lesser obligation,
and 2) changing the large footprint "cut points" or "clips" from 66 ft2 to 72 ft2 to parallel
the methodology applied to passenger cars (i.e. to affect only models with "extremely
low sales volumes") The statistical application of an un-weighted mean absolute
deviation places inappropriate and additional burden on large pickups and full line
manufacturers. Using a sales-weighed least square regression (as shown below) more
appropriately applies the overall industry goal across the entire fleet. [OAR-2009-0472-
6953.1,p.27]
Further, the agencies propose "to "cut off the linear portion of the passenger car function
at 56 square feet" primarily because of "extremely low sales volumes" for passenger cars
are larger than this footprint. This treatment of the data is equitable and appropriate;
however the agencies discard this equitable approach in the treatment of larger trucks. In
fact as shown in the table below (shown for 2016 MY but likewise applicable to all
model years of the program), the agencies' arbitrary "cut point" for large trucks affects a
much larger volume of the fleet. [OAR-2009-0472-6953.1, p.27]
To propose a specific solution to the curve fitting methodology, it is helpful to re-iterate
the parameters that EPA uses to define the curve:
EPA mathematically defines the piecewise linear curves as follows:
Target = a, if x < 1
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EPA CO2 Standards
Target = ex + d, if 1< x < h
Target = b, ifx>h I
in the constrained linear form applied by NHTSA, this equation takes the simplified
form:
Target = MIN [ MAX ( c * x + d , a), b]
Where:
Target = the CC>2 target value for a given footprint (in g/mi)
a = the minimum target value (in g/mi CO2)
b = the maximum target value (in g/mi CO2)
c = the slope of the linear function (in g/mi per sq ft
d = is the intercept or zero-offset for the line (in g/mi
x = footprint of the vehicle model (in square feet, rounded to the nearest tenth)
1 & h are the lower and higher footprint limits or constraints or ("kinks") or the boundary
between the flat regions and the intermediate sloped line (in sq ft)
Specifically, GM recommends: 1) Modifying the slope of the truck curves such that
large pickups have a lesser obligation; specifically increase (in EPA metric of g/mi CO2)
"c" parameter 2) Changing the large footprint "cut points" or "clips" from 66 ft2 to 72 ft2
to parallel the methodology applied to passenger cars; specifically increase (in EPA
metric of g/mi CO2) the "b" parameter. [OAR-2009-0472-6953.1, p.28]
Ford Motor Company
Fitting the Curves
Ford recommends that the agencies use the same approach when setting the truck
piecewise linear curve lower limit that was used for setting the car and truck upper limit
and the car lower limit. For example, Ford agrees with the methodology used to establish
the car upper limit that took into account the volume of vehicles (less than 10%)
represented below a certain footprint and also the unique characteristics of those vehicles.
The agencies state that the cars below a certain footprint have 'characteristics that could
make it infeasible to achieve the very challenging targets that could apply in the absence
of a constraint'. Further the agency noted the maximum value for passenger cars was
determined based on extremely low volume sales of four luxury vehicles.
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EPA Response to Comments
The agency noted that there is limited public information regarding the sales volumes of
many different configurations (cab designs and bed sizes) of pickup trucks, most of the
largest pickups (e.g., the Ford F-150, GM Sierra/Silverado, Nissan Titan, and Toyota
Tundra) appear to fall just above 66 square feet in footprint. NHTSA is therefore
proposing to 'cut off the linear portion of the light truck function at 66 square feet. Ford
disagrees with this assessment. Ford agrees with the Alliance assessment that a large
volume of the trucks are between 68-72 square feet. This significant volume of trucks
above the 66 square foot limit, makes this limit function more as a 'backstop.'
Ford strongly supports the Alliance recommendation for the agencies to move the lower
limit for the truck piecewise linear curve to 72 square feet to recognize where the fleet is
at today and avoid both market distortions and the GHG/CAFE backstop effect it could
impose. Ford further recommends that the agencies use the same methodology applied to
both the car upper and lower limit and the truck upper limit, which takes into account not
only the volume of vehicles affected by the limit, but more importantly the unique
characteristics (towing capacity and/or cargo hauling capability) of those vehicles that
could make it infeasible to achieve the very challenging targets that would apply in the
absence of the constraint adjustment. [OAR-2009-0472-7082.1, p. 4]
Honda Motor Company
Honda notes that the passenger car GHG and MPG attribute curve stringencies are
capped for vehicles with footprints smaller than 41 square feet. The 41 square foot cap
roughly aligns with the smallest 10% of the passenger car market. This cap will create the
possibility that OEMs can offer consumers lower cost solutions to greenhouse gas
reduction and higher fuel economy. In other words, as the stringency increases each year,
the only solution for OEMs to meet these tougher standards is to increase the technology
- and therefore the costs - that are applied to vehicles of the same footprint. Vehicles
small enough to fit under the footprint cap will be able to meet the increased stringency
simply by being small, and potentially less technology - and costs - need to be applied.
Consumers who choose to downsize to these smaller vehicles can benefit from the lower
greenhouse gas emissions and increased fuel economy of these vehicles while
minimizing the cost impact. [NHTSA-2009-0059-0095.1, pp.5-6]
Honda strongly supports the creation of a similar cap for the truck GHG and MPG
attribute curves. Currently the 41 square foot cap is applied to both passenger cars and
trucks, however, the 41 square foot cap for trucks does not correspond to any current
trucks on the market, so it is effectively meaningless. A similar cap for trucks would set
the cap approximately where the smallest 10% of the truck fleet can be found. According
to data from the 2011 MY CAFE NPRM, the smallest 10% of the truck fleet is found at
approximately 46 square feet (see Attachment 1). Trucks provide consumers with
increased functionality, and as such, not all consumers can downsize from trucks to cars.
By enabling truck customers to downsize within the truck category, customer choice will
be protected. [NHTSA-2009-0059-0095.1, p.6] [See [NHTSA-2009-0059-0095.1, p. 14
for Attachment 1]]
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EPA CO2 Standards
Alliance of Automobile Manufacturers (Alliance)
Truck Clip
With vehicle size-based standards (i.e., footprint) based on a continuous curve, all models
have a specific target fuel economy and CO2 emissions level. Larger vehicles receive a
standard that reflects a fundamental of physics: that a larger vehicle requires more energy
than a smaller one (with equivalent technology levels). 74 Fed. Reg. 49470. [OAR-2009-
0472-6952.1, p. 30]
This scientific relationship holds true for a continuous footprint function until clips are
imposed. A "clip" is defined as a region where the footprint-fuel economy (or CO2)
relationship is replaced with a constant ("clipped") value for fuel economy (or CO2)
regardless of footprint. [OAR-2009-0472-6952.1, p. 30]
The Alliance notes the high-side clip regions could force manufacturers to limit
production of vehicles that are above the high-side clip or cause manufacturers who
currently produce more vehicles above the high-side clip region to drastically change
their products whereas other manufacturers would not be required to make such changes.
Also, this option may deny customers the full range of vehicles that meet their needs
within the clip region - this is especially true on the truck fleet. [OAR-2009-0472-6952.1,
pp.30-31]
The high-side clip on the car fleet affects significantly less than 1% of the fleet but the
high-side clip on the truck fleet is centered on the volume of the full size pickup trucks.
[OAR-2009-0472-6952.1, p.31]
It appears EPA and NHTSA assumed that these full size pickup trucks were at or about
66 square feet, when in fact a large volume of them are at 68-72 square foot footprint. 74
Fed. Reg. 49,472. This significant volume of trucks above the clip, make this clip
function more as a "backstop." [OAR-2009-0472-6952.1, p.31]
NHTSA cannot subject a vehicle to both a class standard and an overall standard. This is
contrary to the legislative scheme of placing a vehicle is placed in a single compliance
fleet, and contrary to NHTSA's past interpretations. During the time when NHTSA set
2WD and 4WD/AWD CAFE standards for light trucks, the "combined standard" was an
option (i.e. an alternative to compliance with the class standard), and NOT an additional
requirement. Subjecting manufacturers to a CAFE backstop would perpetuate the
anticompetitive and antisafety consequences of the fleet average system that Congress
abandoned with the passage of the Energy Independence and Security Act of 2007, Pub.
L. 110-140 (EISA). [OAR-2009-0472-6952.1, p.31]
If the objective of the footprint system is to develop a regulatory framework that is
superior to the non-attribute-based fleet average system, the high-side truck clip acts as a
'GHG/CAFE backstop' and simply places a new layer of regulations on top of the
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EPA Response to Comments
footprint curve, creating more complexity for both manufacturers and the two agencies.
[OAR-2009-0472-6952.1, p.31]
The Alliance recommends that the agencies move the high-side clip on the truck curve to
72 square feet to recognize where the fleet is at today and avoid both market distortions
and the GHG/CAFE backstop effect it could impose. This would reflect a consistent
approach with the methodology that the agencies employed in setting the passenger car
high-slide clip. [OAR-2009-0472-6952.1, p.31]
Toyota Motor North America
Shape of Target Curves
The agencies requested comment on several aspects of the proposed target curves and the
manner in which the curves were developed. [OAR-2009-0472-7291, p. 11]
In general, Toyota supports the overall shape of the proposed target curves. In particular,
the proposed car target curves represent an improvement over NHTSA's 2011 model year
final rule car curve. In that rulemaking, the car curve adopted by NHTSA was quite
'steep' in the middle footprint ranges . The steepness of that curve had two possible
negative effects. First, from a competitive standpoint, competing vehicles in the
marketplace with slightly different footprints could have meaningfully different targets,
which could provide an advantage for certain manufacturers in certain market segments.
Second, a steep curve could provide an incentive to upsize a model in order to secure a
relaxed target. [OAR-2009-0472-7291, pp.11-12]
The proposed car curves are 'flatter' than the 2011 model year curve as shown in Figure 5
below, particularly in the early model years. Note the figure shows the NHTSA car
curves in MPG space, and compares the 2012 and 2016 model year slopes to the 2011
model year curve. Toyota supports this trend in flattening the car target curves. [OAR-
2009-0472-7291, p. 12]
With respect to the truck curves, the slope of the proposed curves is very similar to the
2011 model year truck curve adopted by NHTSA as shown in Figure 6. Again, the figure
shows the NHTSA truck curves in MPG space, and compares the 2012 and 2016 model
year slopes to the 2011 model year curve. Toyota supports the general continuation of
this slope for the truck curves. [OAR-2009-0472-7291, p. 12]
Another key aspect of the proposed target curves is the 'cut-off (or clip) at footprints
below 41 square feet and above 56 square feet for cars and above 66 square feet for
trucks. A comparison of the final 2011 model year car and truck curves and the proposed
2012 and 2016MY curves is shown in Figures 7 and 8. While the constrained logistic
function used for 2011 model year does not have a true clip from a
mathematical viewpoint, the 2411 model year target curves for both cars and trucks
largely flatten out to form effective clips at both ends of the curve. [OAR-2009-0472-
7291, pp.12-13]
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For smaller footprint vehicles, the current proposal extends the effective clip down to 41
square feet, requiring additional improvements in smaller cars and trucks . At the same
time, maintaining some level of clip also ensures that the smallest and most fuel efficient
vehicles are not unduly penalized by setting targets so high as to price these vehicles out
of the most price-sensitive market segment. Toyota supports the clip at the smaller
footprint range, and would not support eliminating the clip (requiring ever increasing
target for smaller vehicles). For larger footprint vehicles, Toyota has no comment other
than to recognize the current proposal clips both the car and truck curves at nearly the
same footprint as the 2011 model year car and truck curves. [OAR-2009-0472-7291,
p.13]
University of California, Santa Barbara, Bren Working Group on Vehicle Fuel
Economy
A second issue concerns the shape of the fuel economy curves. The reason for using a
curve instead of a single fuel economy target as in the original CAFE standards is to
prevent excessive downsizing as a strategy for meeting fuel economy targets. However
some downsizing is appropriate if it is done gradually. It makes little sense to structure
the regulation to actively discourage downsizing. We recommend that the slope of the
curve be made shallower over time. Making the slope flatter would raise the fuel
economy standard at the 'backstop' of 56 square feet (or 66 square feet for light trucks).
The flattening of the slope coincides with the consideration that new innovations will be
developed between now and when the enforcements are enacted. [OAR-2009-0472-
7188.1, p. 4]
It should be recognized that the stated purpose of the slope of the curve is to ensure that
there would be 'no significant effect on the relative distribution of different vehicle sizes
in the fleet, which means that consumers will still be able to purchase the size of vehicle
that meets their needs'. The sloping curve allows for regulators to apply targets to
vehicles of all sizes with relatively equal stringency. It is predicted that this equal
distribution of stringency will result in relatively similar increases in vehicle efficiency in
vehicles of all footprints, in order to prevent the proposed regulation from influencing
consumer choice and market-driven forces. [OAR-2009-0472-7188.1, p. 4]
If the manufacturer succeeds in increasing a vehicle model's footprint while minimizing
its decline in fuel economy, they may obtain emission credits that they would not have
otherwise earned, undermining the regulation's core purpose. Since the slope of the curve
currently does not change as it increases annually, this incentive will be present
throughout the 2012-2016 period. [OAR-2009-0472-7188.1, p. 5]
Therefore, we recommend an incremental increase in stringency of the footprint curve
which takes technology-forcing into account by gradually flattening the slope of the
curve, possibly attaining a flat, fleet wide fuel economy target in the future. The
flattening of the curve will pose a greater obstacle for larger, less fuel efficient cars to
meet the proposed standards, and at the same time assure the anticipated market shift
toward vehicles with smaller footprints, resulting in higher fuel economy. In addition to
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efficiency innovations, this shift toward smaller, more fuel-efficient cars is a critical
factor in making significant, tangible nation-wide reductions in vehicle greenhouse gas
emissions. By meeting and exceeding more stringent curves, American manufacturers
will place themselves at the forefront of the global technology frontier, thus helping to
regain our role as an economic leader. [OAR-2009-0472-7188.1, p. 5]
Moreover, we recommend that the method with which the curves were drawn be made
transparent in the support documentation. Any equations and formulae utilized to derive
the curve should be made publicly available. We attempted to use the VOLPE model
output data from NHTSA's website to reproduce the footprint curve, in order to assess the
method with which the curve was drawn. According to the technical support document,
the mean absolute deviation (MAD) regression was used to draw the slope between the
maximum and the minimum footprints (41sq ft to 56 sq ft for passenger vehicles).
However, we were unable to reproduce the maximum technology curve and, therefore,
could not compare the MAD methodology to alternative regressions. [OAR-2009-0472-
7188.1, p. 5]
Despite direct communication with NHTSA, we were unable to clarify these questions
and replicate the exact slope and intercept given in the VOLPE model output. According
to testimony at the Los Angeles hearings, the Environmental Defense Fund similarly had
difficulty replicating the NHTSA analysis. This is a crucial piece of information, as the
curve is the central tool with which the fuel economy targets are assigned. If the method
is made transparent, then commentators could also make better informed
recommendations to the proposal. [OAR-2009-0472-7188.1, p. 5]
University of Pennsylvania, Environmental Law Project
While it is important that the regulation avoid providing perverse incentives to vehicle
manufacturers, predictability and gradualness are also important features of the
regulation. These features ensure that the cost of compliance will be relatively low, as
auto manufacturers are given time to incorporate improvements into the standard design
timeline. Thus, we recommend that the regulation gradually reduce the disparity between
the efficiency requirements for larger and smaller vehicles such that it is
significantly reduced between model years 2012 and 2016. This reduction would take the
form of a decreasing slope in the standard curves between 2012 and 2016, as well as a
decrease in the difference between the height of the car and truck curves. [OAR-2009-
0472-7286.1, pp. 17-18]
Recreational Vehicle Industry Association (RVIA)
The NPRM proposes fuel economy/CO2 target curves for light trucks which flatten out at
the 66 square feet footprint value. It is our understanding, however, that there are light-
duty vehicle tow vehicles currently in the marketplace which have a volume [sic:
footprint] in the range of 68 to 72 square feet. In flattening out the curve at 66 square feet,
vehicles up to 72 square feet footprint range will be expected to achieve the same fuel
efficiency as vehicles having a footprint of 66 square feet. We urge EPA and NHTSA to
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correct this oversight and adjust the target curves so that these larger vehicles, especially
since they are used for towing, are not penalized by the standards. Failing to do so risks
manufacturers downsizing these tow vehicles or eliminating them altogether from the
product mix. Either of these actions will be detrimental to highway safety and to the RV
industry and individual who towRVs. [NHTSA-2009-0059-0107, p.5]
EPA Response:
There are several key aspects to the mathematical form of the footprint-based standards
which were commented upon. These were: 1) the statistical methods used to develop the
slope of the car and truck curves, including the resultant slopes of these curves, and 2) the
lower and upper footprint values where the curves flatten out. We address each of these
aspects below.
The slopes of the footprint-based standard curves in the NPRM were based on a
minimization of the sum of the absolute differences between the individual vehicle data
points and the curve, often referred to as minimum mean absolute deviation or MMAD.
Each vehicle's data point was assigned the same "weight" in this summation. The
primary alternatives to this technique would be to 1) use least-square regression and 2)
sales-weight each vehicle's data point. GM, for example, recommended that both
alternatives be used in lieu of the non-sales weighted MMAD regression.
The MMAD regression technique differs from least square regression primarily in that it
reduces the influence of data points which deviate the most from the curve. Least square
regression by definition squares this deviation before summing, while MMAD simply
adds the deviation to the sum of differences. Examination of the vehicle data used to
develop the curves indicates that the fuel consumption and CO2 emission levels of
individual vehicles having similar footprints vary widely, often by as much as 50%. This
extreme variation can indicate the absence of a normally distributed dataset, often
indicating the need to use a statistical technique that reduces the influence of outlying
data points.l
With respect to recommendations that NHTSA and EPA use weighted least-squares
analysis, the agencies find that the market forecast used for analysis supporting both the
NPRM and the final rule exhibits the two key characteristics that previously led NHTSA
1 In the case of a dataset not drawn from a sample with a Gaussian, or normal, distribution, there is often a
need to employ robust estimation methods rather than rely on least-squares approach to curve fitting. The
least-squares approach has as an underlying assumption that the data are drawn from a normal distribution,
and hence fits a curve using a sum-of-squares method to minimize errors. This approach will, in a sample
drawn from a non-normal distribution, give excessive weight to outliers by making their presence felt in
proportion to the square of their distance from the fitted curve, and, hence, distort the resulting fit. With
outliers in the sample, the typical solution is to use a robust method such as a minimum absolute deviation,
rather than a squared term, to estimate the fit (see, e.g., "AI Access: Your Access to Data Modeling," at
http://www.aiaccess.net/English/Glossaries/GlosMod/e_gm_O_Pa.htm#Outlier). The effect on the
estimation is to let the presence of each observation be felt more uniformly, resulting in a
curve more representative of the data (see, e.g., Peter Kennedy, A Guide to Econometrics, 3rd edition, 1992,
MIT Press, Cambridge, MA).
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EPA Response to Comments
to use minimization of the unweighted rather than sales-weighted analysis. The agencies'
intention is to fit a curve that describes a technical relationship between fuel economy
and footprint, given comparable levels of technology, and this supports weighting
discrete vehicle models equally. However, there are some aspects of vehicle design which
are known to influence fuel consumption and CO2 emissions, such as acceleration
performance and amenities which can increase vehicle weight. To the extent that the
distribution of these preferences is not equally distributed across the range of footprint
values, vehicles with relatively extreme attributes and low sales levels.
In conducting analysis to support its rulemaking for MY2011 CAFE standards, NHTSA
evaluated several combinations of these two aspects of the curve setting techniques.
Most combinations yielded slopes for the car curve that were believed to give
manufacturers too great an incentive to upsize their vehicles. In other words, the change
in allowed fuel consumption or CO2 emissions with an increase in size was deemed to be
greater than that which would inherently result from a larger vehicle platform, as
supported by Toyota. This belief was despite the fact that the slopes of these curves
reflected the change in fuel consumption or CO2 emissions with a change in vehicle
footprint. Considering this, and considering the technical issues discussed above,
NHTSA selected techniques that yielded a car curve with what it believed to be an
acceptable slope. NHTSA and EPA have continued to apply those techniques in
connection with the final rule, though with a constrained linear curve as opposed to a
constrained logistic curve, which in part resulted in a car curve slope lower than that in
the middle of the 2011 MY constrained logistic curve.
This choice of statistical techniques also yielded a slightly lower slope for the truck curve
than several other combinations of the available statistical techniques. A lower truck
slope increases the stringency of the standard for larger trucks relative to smaller trucks.
This appears to be GM's concern, as GM's truck sales are oriented towards the larger
truck segment of the market. GM's suggestion to use sales weighted least square
regression is not supported by any additional information beyond that provided by the
two agencies in the proposed rule. GM and Ford did challenge the two agencies'
projections that their larger trucks could meet the proposed standards. These comments
are addressed in section 4.6 of this RTC document. GM did not address the issue of the
increased slope for cars, which would accompany their recommended
statistical technique. Overall, the two agencies continue to believe that the use of
unweighted MMAD regression produces the best results for this dataset and that no
arguments exist which clearly indicate that this approach should be rejected. Thus, the
two agencies fitted the car and truck curves using the same statistical techniques as those
used in the NPRM. It is possible that EPA would reconsider the statistical techniques
used to develop the standard curves in future rulemaking based on differences in the
projected characteristics of future vehicle designs and sales.
Regarding the lower and upper footprint values where the standard curves flatten out,
GM recommends that the upper footprint value for trucks be increased to 72 square feet
from 66 square feet. Their argument is based on the fact that the upper footprint value for
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cars of 56 square feet affects very few sales. Thus, the upper footprint value for trucks
should do the same.
This argument does not address the interaction between the car and truck curves and how
they together regulate the light vehicle fleet. For example, the lower limit of the car
curve was set at 41 square feet. Roughly 10% of car sales fall below this level. Were the
lower limit of the truck curve to be set at footprint value where 10% of truck sales fell
below its value, the lower limit of the truck curve would have been well above 41 square
feet. The truck curve is already well above the car curve in terms of fuel consumption or
CO2 emissions at lower footprint values. If the truck curve were to flatten out at a
footprint value of, for example, 46 square feet as suggested by Honda, the difference
between the two curves would become even greater for vehicles below 46 square feet.
The incentive to convert cars with footprints below 46 square feet to trucks would have
been extremely large. Thus, even though few current trucks are sold with footprints
below 41 square feet, protecting the overall goal of the two programs makes it clear that
the lower footprint limit of the truck curve should be the same as or very similar to that
for the car curve. Thus, Honda's comment that the 41 square foot cutpoint for the truck
curve is meaningless is not correct.
Since trucks tend to have larger footprints than cars, it makes similar sense to set the
upper limit of the truck curve in the same way as the lower limit of the car curve (i.e., at
the point where roughly 10% of sales exceed the limit). This is roughly 66 square feet.
Analogous to the setting of the lower limit of the truck curve at the same level as the
lower limit of the car curve, we could have set the upper limit of the car curve at 66
square feet. However, there are very few car sales above 56 square feet, so the point is
essentially moot as to setting the upper limit of the car curve at 56 or 66 square
feet. GM's arguments starts by setting of the upper limit of the car curve and then setting
that of truck curve to the same level. This is incorrect from a policy perspective. The
lower limit of the two curves is set based on that vehicle class with the smaller vehicles
(i.e., cars) and the upper limit of the curves is set based on that vehicle class with the
larger vehicles (i.e., trucks).
While GM, Ford and AAM assert that a large volume of truck sales exist with footprints
between 68 and 72 square feet, detailed data supporting this claim, which could have
been incorporated into the two agencies' analyses, were not provided. As discussed in
section 3.4 of this RTC document, there is value from a policy perspective for a backstop
which increases the likelihood that the projected benefits of these rules actually occurs.
Thus, the fact that the upper limit on the truck curve serves to a small degree as an
indirect backstop on fuel consumption and CO2 emissions is not in itself a problem. We
also note that most vehicles which are marketed as "low-priced" or "economical" are very
small in size. This implies that sales of these vehicles would be the most sensitive to
increases in cost due to the addition of fuel saving technology. Trucks above 66 square
feet in footprint do not fall into this category. In contrast, these vehicles are typically on
the high end of the market in many respects and should be in a good position to absorb
the cost of the technologies which the agencies project will enable their compliance.
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EPA Response to Comments
Toyota suggests reducing the slopes of the car and truck curves over time to encourage a
gradual downsizing of both the car and truck fleets. Such downsizing would clearly
reduce fleet fuel consumption and CO2 emissions, the two main goals of these rules. The
two agencies did not decide to do this at the present time for several reasons. One was
leadtime, as the latest standard being set (i.e., 2016) was only 6 model years out. Another
was the fact that reliable consumer choice models for new vehicle purchase are still under
development. We were not able to confidently predict the impact of such a flattening of
the standard curves at this time. This meant that it would have been possible to over-do
the flattening and perturb the desirability of larger vehicle to a greater degree than
desired. The two agencies remain open to such a policy when setting standards beyond
MY 2016.
Since the fitted slopes of the two curves were based on vehicle data which reflected the
use of all available technologies other than diesel and strong hybridization, we do not
believe that there is an inappropriate incentive for manufacturers to upsize their vehicles
in order to reduce the need to add fuel saving and CO2 reducing technology.
As described in section II. C of the preamble to the final rule, NHTSA did correct several
errors in its analysis used to fit the slopes of the curves, allowing the commenters to
reproduce the results. The refitted passenger car curve is similar to that presented in the
NPRM, and the refitted light truck curve is nearly identical to the corresponding curve in
the NPRM. However, the slope of the refitted passenger car curve is about 27 percent
steeper (on a gram per mile per square foot basis) than the curve presented in the NPRM,
and would increase stringency for the smallest cars, decrease stringency for the largest
cars, and provide a greater incentive to increase vehicle size throughout the range of
footprints within which NHTSA and EPA project most passenger car models will be sold
through MY 2016. The agencies are concerned that these changes would make it unduly
difficult for manufacturers to introduce new small passenger cars in the United States,
and unduly risk losses in feasible and cost-effective energy and environmental benefits by
increasing incentives for the passenger car market to shift toward larger vehicles.
Considering NHTSA's and EPA's concerns regarding the change in incentives that
would result from a refitted curve for passenger cars, the agencies are finalizing CAFE
and GHG standards based on the curves presented in the NPRM.
3.2.3 Relative stringency of the car and truck standards
Organization: General Motors
Northeast States for Coordinated Air Use Management
International Council on Clean Transportation
University of California, Santa Barbara, Bren Working Group on Vehicle
Fuel Economy
University of Pennsylvania, Environmental Law Project
South Coast Air Quality Management District
Comment:
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General Motors
The overall industry goal of 250 CC>2 g/mile (35.5 mpg equivalent) by 2016 model year is
tough, but reasonable. This target can, however, be distributed between the separate car
and truck fleets in an infinite number of combinations. In our comments, we provide an
analysis for adjusting the proposed distribution to achieve a more equitable burden on the
truck fleet. Our analysis shows that today's most efficient, segment leading cars and
small trucks already meet the 2016 model year targets, but the segment leading and most
efficient large pickups are required to improve by 20% to meet their 2016 MY
requirements. Our analysis shows that over estimated benefits of added fuel economy
technology and future pickup truck volumes result in a disproportionate burden being
placed upon large pickups. GM recommends that in each year of the rule, the agencies
better balance the respective obligations of passenger cars and trucks - while still
reaching the same end point for the car and truck fleets combined in 2016. [OAR-2009-
0472-6953.1, p.2]
GM recommends that in each year of the rule, the agencies better balance the obligation
for large pickups as compared to passenger vehicles. Today's most efficient, segment
leading cars and small trucks already meet the 2016 model year targets but the segment
leading, most efficient large pickups are required to improve by 20% to meet their 2016
MY requirements. [OAR-2009-0472-6953.1, p.4] [[See pp.4-8 of OAR-2009-0472-
6953.1 for a discussion on GM's analysis of the truck efficiencies]]
Northeast States for Coordinated Air Use Management
Separate footprint curves for cars and light trucks: NESCAUM encourages EPA and
DOT to maintain a single footprint curve for cars and light trucks in the final regulation.
By establishing two curves as EPA and DOT have proposed, there is a significant risk
that automobile manufacturers will "game" the standard. This can be done, for example,
by making four wheel drive small SUVs rather than two wheel drive small SUVs so that
cars become classified as trucks. If manufacturers reclassify cars as light trucks as has
happened before, GHG emissions and fuel consumption could increase
significantly. [OAR-2009-0472-7235.1, p.4]
[Northeast States for Coordinated Air Use Management also submitted these comments
as testimony at the New York public hearing, See docket number OAR-2009-0472-4621,
p. 43.]
International Council on Clean Transportation
[[These comments were submitted as testimony at the Detroit public hearing. See docket
number EPA-HQ-OAR-2009-0472-6185, p. 59.]]
We also support the proposed change to the shape of the footprint adjustments. Target
standards versus the vehicle footprint provide consistent signals to improve efficiency for
most vehicles while preserving incentives to make the largest vehicles smaller.
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EPA Response to Comments
[[These comments were submitted as testimony at the Detroit public hearing. See docket
number EPA-HQ-OAR-2009-0472-6185, pp. 61-62.]]
First, the proposed rule maintains separate footprint curves for cars and light trucks. This
subjects light trucks with the same footprint to much less stringent standards and gives
manufacturers a tremendous incentive to reclassify cars as light trucks. In the past this
has brought us such notable trucks as the Subaru Outback, Chrysler P.T. Cruiser, Dodge
Magnum, Mazda 5, Porsche and BMW X6, BMW describes as a sports activity coupe.
In the future it is likely to cause manufacturers to drop many 2-wheel drive versions of
their small sport utilities and make less efficient 4-wheel drive versions standard so that
they can be classified as light trucks instead of cars. Each car to light truck sales shift
results in easier compliance for manufacturers but higher in use fuel consumption and
greenhouse gas emissions in use.
EPA recognized the importance of this issue when it established a single tier 2 emissions
standard that applied to all cars and light trucks. It is time to do the same for fuel
efficiency and greenhouse gas emissions and end this artificial distinction. A single
footprint function will still give larger trucks a less stringent target while avoiding vehicle
classification games.
University of California, Santa Barbara, Bren Working Group on Vehicle Fuel Economy
While the proposed rule itself will not alter fleet composition, the EPA and NHTSA have
projected a market-driven shift from the current mix of vehicles (51% passenger cars,
49% light trucks) towards a vehicle mix of 67% passenger cars and 33% light trucks by
2016. However, the market simply may not respond in the manner projected in the
proposal, or the shift may not occur with market power alone. The Union of Concerned
Scientists contend that vehicles slated to be reclassified as passenger vehicles (e.g. 2-
wheel drive SUVs) could be equipped with other light truck attributes to qualify for light
truck classification. As long as there is a separate, less stringent footprint-curve for light
trucks, there will be a strong incentive on the part of auto-makers to classify their
vehicles as light trucks. While the curve evenly distributes the penalties, it also rewards
vehicles with larger footprints, which inherently tend to have a lower fuel economy. Not
only does the footprint-based curve discourage downsizing of vehicles, it introduces
incentives for manufacturers to maximize the footprint for a given model, so that a model
will have a less stringent target fuel economy. This may include shifting the wheelbase to
a wider, boxy shape, or elongating the vehicle. [OAR-2009-0472-7188.1, p. 4]
University of Pennsylvania, Environmental Law Project
While it is important that the regulation avoid providing perverse incentives to vehicle
manufacturers, predictability and gradualness are also important features of the
regulation. These features ensure that the cost of compliance will be relatively low, as
auto manufacturers are given time to incorporate improvements into the standard design
timeline. Thus, we recommend that the regulation gradually reduce the disparity between
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the efficiency requirements for larger and smaller vehicles such that it is
significantly reduced between model years 2012 and 2016. This reduction would take the
form of a decreasing slope in the standard curves between 2012 and 2016, as well as a
decrease in the difference between the height of the car and truck curves. [OAR-2009-
0472-7286.1, pp. 17-18]
South Coast Air Quality Management District
Third, the South Coast AQMD staff shares the concern that the attribute basis of the EPA
program may provide certain incentives to up-weight vehicles.
For example, the EPA's program may result in auto manufacturer compliance strategies
which involve up-weighting of vehicles from two-wheel drive to four-wheel drive SUV
configurations. For this reason, the South Coast AQMD staff recommend that EPA
consider establishing some form of backstop mechanism to ensure that the vehicle fleet
is not dramatically distorted by perverse incentives occurring by selecting different
vehicle weight categories.
In conclusion, the AQMD staff certainly appreciate this opportunity to provide comment.
We compliment the EPA and NHTSA and DOT staffs for their diligent analysis. The
standards proposed by both of your organizations will significantly reduce greenhouse
gas emissions as well as criteria pollutants. We are very pleased to stand here and
strongly endorse the standards as they will provide meaningful national benefits for
decades to come.
[Comments are from LA Testimony, OAR-2009-0472-7283, pp.59-67]
EPA Response:
GM's basic comment that the burden of the standards can be more equitably distributed
between cars and trucks is a function of three aspects of the car and truck standard
curves: 1) their relative slopes, 2) their relative intercepts at zero footprint (ignoring their
flattening at a footprint value of 41 square feet), and 3) the lower and upper footprint
values where the curves flatten out (and for GM, their primary focus is the 66 square foot
cutpoint for the truck curve). The issues of the relative slopes of the car and truck curves
and the lower and upper footprint cutpoints were addressed is section 3.2.2 above. The
remaining issue to be addressed here is how the two agencies set the intercepts of the two
curves, or in other words, the degree to which the truck curve was above the car curve in
terms of fuel consumption and CO2 emissions.
This distance between the car and truck curves was based on setting each curve at the
level where estimated net societal benefits were maximized. These two curves were then
adjusted upwards (in terms of fuel consumption or CO2 emissions) to the point where the
desired fleet-average fuel consumption or CO2 targets were achieved. Thus, this analysis
reflects the cost of adding technology to both cars and trucks, smaller and larger vehicles,
as well as the benefits accruing from this technology. GM has not shown why this
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EPA Response to Comments
approach produces a greater burden on large trucks versus smaller cars. Simply
comparing current vehicles, even "market leading" vehicles, to the proposed standards
does not establish the capability of adding additional, cost beneficial technology. Current
market forces, including forces in overseas markets for some manufacturers, can lead to
the uneven addition of technology to current vehicles. Without assessing the degree to
which available technology has already been added to current vehicles, any such
comparison can be misleading. We believe that the approach of adding all cost beneficial
technology to all vehicles provides a reasonable balance of regulatory burden across the
wide variety of vehicles currently being sold in the U.S. market.
Regarding NESCAUM's suggestion for a single curve for both cars and light trucks and
other comments indicating a risk that manufacturers will shift car sales to trucks, we
believe that there are several reasons to reject this approach for the present rule. As
discussed above in section 3.0, it may be difficult under current legislation for NHTSA to
utilize a single attribute curve to regulate fuel economy of both cars and trucks.
Also, some trucks, at least, provide utility not available from cars. These include cargo
and towing capacity. The vehicle features required to provide this utility inherently
increase fuel consumption and CO2 emissions relative to vehicles without such utility.
Therefore, some distinction between car and truck standards appears justifiable. As also
discussed in section 3.0 above, we acknowledge that there is some risk that
manufacturers will increase the sale of AWD and 4WD versions of their smaller SUVs
relative to 2WD versions of these vehicles, thereby leading to increased levels of
fleetwide fuel consumption and CO2 emissions. As indicated above, we will monitor this
situation and take necessary action as we develop standards for 2017 and beyond. At the
present time, a shift from the historical approach of setting separate standards for cars and
trucks to one that would tgreat them the same or much more similarly would lead to a
large differential regulatory impact on several manufacturers. The current state of the
auto industry and the fact that the time frame of these rules only extends 6 years from
today argue against such a dramatic change at this time.
3.3 Stringency of the standards
Organization: General Motors
Northeast States for Coordinated Air Use Management
Public Citizen and Safe Climate Campaign
American Council for an Energy Efficient Economy
Sierra Club
California Air Resources Board
International Council on Clean Transportation
US Steel Corporation
University of Pennsylvania, Environmental Law Project
Eadie, R. Frank
Sack, Emily
Comment:
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General Motors
The overall industry goal of 250 CChg/mile (35.5 mpg equivalent) by 2016 model year is tough,
but reasonable. [OAR-2009-0472-6953, p.2]
The proposed standards are not easy, nor will they be inexpensive, but we are up to the
challenge. The success of our current offerings in the marketplace like the Chevy Malibu
and the Equinox and the enthusiasm over soon-to-be released products like the Chevy
Cruze convince us that we will be able to do our part, and even before this rule becomes
effective, we will have introduced the Chevy Volt, which is scheduled to start production
in late 2010 as a 2011 model year vehicle, and it will be GM's first extended range
electric vehicle. [OAR-2009-0472-6185, p.ll]
Public Citizens and Safe Climate Campaign
The agencies have not outlined an approach to setting standards that sets a precedent for
how the agencies would approach this task the next time around. The agencies
have engaged in economic hand waving, estimating that more stringent standards would
be cost-effective, but then appealing to the financial state of the auto industry in choosing
the level of standards. For example, EPA discusses other rates at which to ramp down the
CO2 standards, looking at two options: lowering allowable CO2 emissions by four
percent per year and six percent per year. These options are not indicated by any
technological or economic criteria, but merely establish a range within which the
agency's proposal fails. EPA proposes that CO2 emissions decline at approximately 4.2
percent per year for passenger cars and 4.5 percent per year for light trucks. [OAR-2009-
0472-7050. l,p.9]
EPA then discusses the relative cost of compliance with standards in each scenario, and
explains that the cost savings for setting standards at four percent instead of the proposed
level would be $73 per vehicle, whereas the six percent alternative would incur additional
costs of $493 per vehicle on average. EPA appeals to the financial state of the industry in
influencing its decision: "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 2012-2016."
EPA does not substantiate this claim with an analysis that evaluates the tradeoff in terms
of public health and welfare. [OAR-2009-0472-7050.1, p.9]
Science dictates that to avoid the worst consequences of global warming that we must
reduce emissions of greenhouse gases to 83 percent below 1990 levels by 2050. In order
for the U.S. light duty transportation sector to get there, EPA must set standards that cross
multiple product cycles and allow for much more significant transformative changes in
the light duty vehicle fleet. The CAA requires EPA to issue standards that protect public
health and welfare. The Supreme Court in Massachusetts v. EPA affirmed CAA authority
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to regulate greenhouse gases, and EPA has asserted that greenhouse gases pose a threat to
public health and welfare through its proposed endangerment finding. The agency's
approach to setting standards must reflect its responsibility to set protective standards
consistent with its statutory mandate. [OAR-2009-0472-7050.1, p.9]
EPA's consideration of health and the environment are paramount to economic
considerations in setting standards under CAA. NHTSA has significant discretion to
balance the four factors under EPCA for setting standards, and could choose
technological feasibility and the need of the nation to conserve energy as the paramount
factors in standard setting. The agency's assessment of the industry's capacity and
willingness to raise fuel economy and cut greenhouse gas emissions does not reflect
current trends. Consumer demand for fuel efficient cars has increased significantly in
light of gas price spikes in 2005 and 2008, and increased public awareness of global
warming. Major automakers have been making announcements for over a year about
ambitious plans to raise vehicle fuel economy, roll out new efficiency technology, and
move more rapidly than expected into hybrid, plug-in hybrid, and fully electric vehicles.
Both agencies' assumptions about technology adoption and willingness to increase fleet
fuel economy seem unjustifiably constrained by outdated assumptions. [OAR-2009-
0472-7050.1, p. 10]
In establishing this new program, the agencies should develop a standard-setting
methodology that satisfies each agency's statutory requirements, as well as the intent of
both laws. EPCA aims to stabilize energy prices through conservation efforts. It was
passed to establish a national energy policy that protects consumers against future price
shocks and puts the nation in a more competitive position globally by making the nation
less sensitive to price volatility. This vision was undermined by inconsistency in standard
setting, and when oil prices rose sharply in 2005 and 2008, consumers were subject to
prices shocks similar to those experienced in the 1970s. EPA has a responsibility to
protect public health and welfare by setting standards under the CAA. The threat of
global warming is clearer today than previously, and the agency's authority to regulate
greenhouse gas emissions to fulfill its mission of protecting public health and welfare has
been affirmed. [OAR-2009-0472-7050.1, p. 10]
Both agencies should start the standard setting process by establishing oil savings and
greenhouse gas reduction goals based on assessments of national needs. From these
estimates, the agencies must then apply considerations appropriate to their respective
statutes, including technological feasibility, economic considerations, and the needs of
the nation to conserve oil and reduce greenhouse gas emissions. This would result in
setting levels of stringency consistent with the needs of the nation that are the
maximum feasible, as required by EPCA, and that are as technology-forcing as
practicable, consistent with EPA's charge to place public health and welfare above
economic concerns. [OAR-2009-0472-7050.1, p. 11]
American Council for an Energy Efficient Economy
Recommendations:
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Establish in the final rule that light-duty vehicle standards in subsequent rules shall be set
to achieve medium- and long-term emissions goals for the transportation sector
commensurate with the need for emissions reductions overall.
Ensure that required emissions levels are sufficiently stringent to ensure that, at a
minimum, any incremental reductions with positive net benefits are implemented.
The stringency of the proposed rule is well below the maximum cost-effective level, as
the agencies clearly demonstrate. Table IV.F.2 (p.49700) shows that the proposed
standards would save 62 billion gallons per year, while a more stringent standard that
maximizes net benefit would save 90 billion gallons, or almost 50 percent more fuel (and
CO2 emissions). Choosing one level of standards over another that is superior on both
environmental and economic grounds is a decision that calls for a clear explanation. The
agencies' rationale for doing so is not compelling, however.
In Section HID., EPA compares the manufacturers' likely response to the proposed
standards to what would be required to achieve a 4 percent per year reduction in CO2
(slightly less stringent than the standards) and to achieve a 6 percent per year reduction
(substantially more than the standards). EPA notes that, according to its model, the
requisite application of advanced technologies to achieve 6 percent reductions would
increase fleetwide, necessitating for example an 8 percent increase in the application of
start-stop technology. Furthermore, for BMW and Daimler, for example, increases of up
to 42 percent in hybrid production could be necessary to meet the standard, (p.49557)
These observations do not support the view that a 6 percent per year rate is too ambitious.
Moreover, the concern over BMW and Daimler is reminiscent of NHTSA earlier, ill-
advised "least-capable manufacturer" approach (to nonattribute- based standards), except
that EPA has cited manufacturers less likely to elicit sympathy than those to which
NHTSA applied its approach.
EPA goes on to state that as the annual percent reduction increases from 4 to 6 percent,
"[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." (p.49557) It is not clear why EPA regards this
increase in cost-per-ton as dramatic and excessive. EPA also fails to discuss whether a
CO2 reduction rate of 5 percent per year, for example, would be feasible. EPA proposes
no objective measure of what is sufficiently stringent. Indeed, NHTSA's subsequent
discussion of the various rates of improvement the agencies considered indicates that
even a 6 percent rate of improvement is well below the optimal rate, even from a purely
economic perspective, without prioritization of environmental goals.
NHTSA presents stringency options in the form of annual percent increases in fuel
economy, with the proposed standards corresponding to a 4.3 percent per year increase.
In IV.F., NHTSA argues that 5 percent would be too aggressive, because it would
increases the per vehicle incremental cost by 30 percent while reducing fuel consumption
by only 3 percent (p. 49704). This comparison in fact provides no basis for comparison
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between the proposed standard and a 5 percent annual reduction, and certainly does not
demonstrate that the higher rate of reduction is excessively costly. If several very low-
cost technologies exist to reduce fuel consumption, the next technologies on the cost
curve might cost many times more per gallon saved while still being highly cost-
effective.
The ad hoc and narrow arguments advanced by the agencies to show that standards more
stringent than those proposed would not be reasonable are for the most part
unconvincing, especially given that the proposed standards are far below the level that
maximizes net benefits. The perilous condition of the domestic auto industry may in fact
imply that the proposed standards are the best choice for the current rulemaking.
However, the reasons for this must be clearly articulated and formulated in a way that
makes clear how "maximum feasible" levels are to be determined in the future. The
inadequate explanation for the stringency of the proposed rule could have negative
implications for subsequent rulemakings.
The governing statutes grant the agencies substantial discretion in setting stringency, and
ACEEE does not support the application of a rigid economic test to determine the
appropriate levels of the standards. However, recommending a standards even below the
maximum net benefit in economic terms calls for a special explanation. A standard that
falls below the point on the technology cost curve where marginal costs equal marginal
benefits would be widely acknowledged to fall short of the "maximum feasible" and
"economically practicable" standard required under the CAFE statute. Under the Clean
Air Act, for which economic considerations are secondary to environmental protection
needs, the appropriate standard can only be more stringent. Maximum net benefits should
therefore be considered a lower bound for stringency of the standards.
The final rule should set out the principles by which stringencies will be determined in
future rulemakings in order to ensure that standards will continue to support expeditious
reduction of fuel use and greenhouse emissions. The ability of the standards to promote
the development and deployment of new efficiency technologies is central to their role in
national climate and energy security policy, so EPA and NHTSA should make clear how
this aspect of the program will be preserved and strengthened over time.
Given that the purpose of the EPA rule is to help achieve the reductions in GHG
emissions necessary to reach sustainable atmospheric concentrations of carbon, those
emissions reduction goals should inform the setting of standards in a quantitative way.
This general approach was introduced in EPA's GHG NPRM in 2008 and begins with
certain assumptions about the percent reduction in GHG emissions, relative to 2005
levels, required in milestone years out to 2050. A default assumption that sectors and
subsectors must reduce emissions in proportion to their contribution to total emissions is
appropriate, at least until the potential for some sectors to do more is verified.
In such an approach, aggressive measures will be needed for the transportation sector,
going well beyond the standards proposed in the rule, to achieve the sector's share of the
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necessary reductions. Therefore, ACEEE believes that GHG reduction targets should be
the principal determinant of the stringency of vehicle emissions rules in the future.
[ACEEE also submitted these comments as testimony at the New York public hearing,
See docket number EPA-HQ-OAR-2009-0472-4621, pp. 139, 144-146.]
Sierra Club
The proposed National Program combines the first national greenhouse gas standards for
vehicles under the Clean Air Act with energy saving Corporate Average Fuel Economy
(CAFE) standards, all while ensuring the nation benefits from the precedent set by
California's Pavley standards. The proposed National Program is expected reduce
greenhouse gas emissions by 950 million metric tons, equivalent of 205 coal plants
shutting for one year, and reduce oil consumption by 1.8 billion barrels, resulting in
consumer savings at the pump of $193 billion. These standards must ensure the nation
benefits from the precedent set by California's Pavley standards to achieve a 30%
reduction in greenhouse gas pollution from new vehicles in 2016. A strong final rule is
needed to deliver on President Obama's promise and to pull vehicle standards out of the
1970s and into the 21st century. [OAR-2009-0472-7278.1, p.2]
This NPRM includes many elements that are identified as transitional - as both agencies
work to create a new National Program for greenhouse gas and fuel economy standards.
While the 250 g/mi CO2e standard in the NPRM is significant, we urge that both
agencies definitively end "transitional" elements in 2016 and indicate an intent to launch
a standard setting process for 2017 and beyond that will meet the urgent need of the
United States to dramatically reduce greenhouse gas pollution and conserve oil and
[OAR-2009-0472-7278.1, p.2] meet the growing demand of American consumers for
vehicles that go farther on a gallon of gas. [OAR-2009-0472-7278.1, p.3]
[[These comments were submitted as testimony at the Detroit public hearing. See docket
number OAR-2009-0472-6185, pp. 30-31.]]
EPA and NHTSA should clarify the approach to setting standards. As we know, the
proposed standards of 250 g/mi and 34.1 mpg are the result of an agreement; however,
future rounds of standards will likely not be bound by a similar agreement and, in fact,
both agencies should ensure that future standards maximize the application of cost-
effective technologies to vehicles and consumer savings at the pump. The Clean Air Act
is a technology forcing statute, and we urge EPA to clearly note the transitional aspect of
these standards in the final rule.
These standards will move us from one standard aimed at reducing oil consumption, to a
broader National Program that also guarantees greenhouse gas emissions reductions. The
proposed National Program sets the table for future standards that can finally break our
dependence on oil and create substantially cleaner vehicles.
California Air Resources Board
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First, the Final Rule needs to maintain the proposed standards' stringency in each model
year 2012 through 2016. It appears that a principal industry trade group has proposed
reducing the stringency of the proposed fuel economy standards for model year 2012-
1015, arguing that, as currently proposed the standards do not meet EISA's requirement
for the standards to increase "ratably." See Alliance of Automobile Manufacturers
(Alliance) Document ID EPA-HQ-OAR-2009-0472-6952.1. CARS strongly opposes the
Alliance proposal.
California committed to adopt the national program for model years 2012-2016 with the
understanding that it would provide equivalent or better overall greenhouse gas
reductions nationwide than California's own program coupled with its adopting sister
states; the Alliance proposal threatens that equation. First, the proposed fuel economy and
greenhouse gas requirements were designed to establish a national program with a
consistent and harmonized approach that would reduce greenhouse gas emissions and
improve fuel economy from light-duty vehicles. Because the Alliance is also
recommending that EPA's GHG standards be simultaneously stepped, the greenhouse gas
reductions projected for the national program would be significantly reduced. Second, the
proposed fuel economy and greenhouse gas requirements were established after a joint
effort by both agencies to determine standards that were technically feasible and cost-
effective in the timeframe proposed. We do not believe that a case has been made to
refute the agencies' analyses. These and other Alliance recommendations need careful
review to ensure that they do not reduce the stringency and consequent cumulative
greenhouse gas reductions California expected in committing to the National
Program. [OAR-2009-0472-7189.1, p.2]
[CARB also submitted these comments as testimony at the Los Angeles public hearing.
See docket number OAR-2009-0472-7283, pp. 21-27]
International Council on Clean Transportation
The technical analyses conducted by EPA and NHTSA are sound and demonstrate that
the proposed standards are feasible and the benefits of the rule far outweigh the costs.
The analytical framework also provides a good base for further reductions in fuel
consumption and greenhouse gas emissions beyond 2016.
US Steel Corporation
Consider the regulation targets for the year 2016 for both agencies. The target for EPA is
250 g/mile CO2 fleet average, equivalent to 35.5 mpg with allowable air conditioning
and flex fuel credits. The NHTSA combined fleet target is roughly equivalent to EPA's
standard and requires 34.1 mpg combined fleet average, but without air conditioning
credits. Should carmakers comply with these rules, the previous goal of Congress (2007
CAFE Law previously specifying 35 mpg by 2020) will have been met four years ahead
of schedule. This acceleration places the car companies in a difficult position to satisfy
the regulations by making major technical and manufacturing decisions in order to be
compliant, some of which could have negative consequences. The National Program
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similarly compresses the time frame for steel suppliers and other materials suppliers to
develop and produce those new materials, such as the required grades of advanced high-
strength steels and ultra high-strength steels, which will help build the required
improvements into cars and trucks during this period.
The overly aggressive schedule proposed by this joint NPRM may cause car companies
to select low density materials at a faster rate than would be the case if a more extended
time period were applied. The harm suffered by the steel industry, the risk to national
energy security through acceleration in the use of high-energy materials for vehicle mass
reduction, in addition to the harm to the environment and the harm to the economy could
be accelerated by this decision. The risk of selecting high energy use and high CO2
emissions materials to adhere to the standard during the 2012-2016 time period would be
significant. Our recommendation is to consider reducing the rate of improvement to the
time frame originally defined by Congress (35 mpg by 2020) or to ensure that appropriate
credits, such as those which may be associated with low energy, low emissions materials
(such as steel) in the manufacturing of the vehicle be included in the CAFE/emissions
formulae. In this way car companies will have additional time to work with suppliers and
their own development teams to acquire the best technologies for the required
improvements in fuel economy. [OAR-2009-0472-7197.1, p.7]
University of Pennsylvania Environmental Law Project
We agree with the EPA's response under the Proposed Rule in setting strict minimum
compliance levels for carbon dioxide (CO2) emissions. [OAR-2009-0472-7286.1, p. 11]
Sack, Emily
I urge you to find the strongest possible regulations to protect, to begin to reduce the
devastating impact that the pollution — the pollutants have had on our air and our water
and our quality of life. [EPA-HQ-OAR-2009-0472-4621, p. 157]
[See Docket Number EPA-HQ-OAR-2009-0472-4621, pp. 154-157 for detailed
comments]
EPA Response:
As discussed in the proposal, section 202(a)(l) provides EPA broad discretion in setting
emissions standards for new motor vehicles. 74 FR 49454, 49464-5 (September 28,
2009).
Section 202 (a) (1) of the Clean Air Act (CAA) states that "the Administrator shall by
regulation prescribe (and from time to time revise)... standards applicable to the emission
of any air pollutant from any class or classes of new motor vehicles ..., which in his
judgment cause, or contribute to, air pollution which may reasonably be anticipated to
endanger public health or welfare." If EPA makes the appropriate endangerment and
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cause or contribute findings, then section 202(a) authorizes EPA to issue standards
applicable to emissions of those pollutants.
Any standards under CAA section 202(a)(l) "shall be applicable to such vehicles ... for
their useful life." Emission standards set by the EPA under CAA section 202(a)(l) are
technology-based, as the levels chosen must be premised on a finding of technological
feasibility. Thus, standards promulgated under CAA section 202(a) are to take effect
only "after providing such period as the Administrator finds necessary to permit the
development and application of the requisite technology, giving appropriate consideration
to the cost of compliance within such period" (section 202 (a)(2); see also NRDC v. EPA,
655 F. 2d 318, 322 (D.C. Cir. 1981)). EPA is afforded considerable discretion under
section 202(a) when assessing issues of technical feasibility and availability of lead time
to implement new technology. Such determinations are "subject to the restraints of
reasonableness", which "does not open the door to 'crystal ball' inquiry." NRDC, 655 F.
2d at 328, quoting International Harvester Co. v. Ruckelshaus, 478 F. 2d 615, 629 (D.C.
Cir. 1973). Also see NRDC, 655 F. 2d at 333-34. In developing such technology-based
standards, EPA has the discretion to consider different standards for appropriate
groupings of vehicles ("class or classes of new motor vehicles"), or a single standard for
a larger grouping of motor vehicles (NRDC, 655 F. 2d at 338).
Although standards under CAA section 202(a)(l) are technology-based, they are not
based exclusively on technological capability. EPA has the discretion to consider and
weigh various factors along with technological feasibility, such as the cost of compliance
(see section 202(a) (2)), lead time necessary for compliance (section 202(a)(2)), safety
(see NRDC, 655 F. 2d at 336 n. 31) and other impacts on consumers, and energy impacts
associated with use of the technology. See George E. Warren Corp. v. EPA, 159 F.3d
616, 623-624 (D.C. Cir. 1998) (ordinarily permissible for EPA to consider factors not
specifically enumerated in the Act). See also Entergy Corp. v. Riverkeeper, Inc., 129
S.Ct. 1498, 1508-09 (2009) (congressional silence did not bar EPA from employing cost-
benefit analysis under Clean Water Act absent some other clear indication that such
analysis was prohibited; rather, silence indicated discretion to use or not use such an
approach as the agency deems appropriate).
In addition, EPA has clear authority to set standards under CAA section 202(a) that are
technology forcing when EPA considers that to be appropriate, but is not required to do
so (as compared to standards set under provisions such as section 202(a)(3) and section
213(a)(3)). EPA has interpreted a similar statutory provision, CAA section 231, as
follows:
While the statutory language of section 231 is not identical to other provisions in
title II of the CAA that direct EPA to establish technology-based standards for
various types of engines, EPA interprets its authority under section 231 to be
somewhat similar to those provisions that require us to identify a reasonable
balance of specified emissions reduction, cost, safety, noise, and other factors.
See, e.g., Husqvarna AB v. EPA, 254 F.3d 195 (DC Cir. 2001) (upholding EPA's
promulgation of technology-based standards for small non-road engines under
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section 213(a)(3) of the CAA). However, EPA is not compelled under section 231
to obtain the "greatest degree of emission reduction achievable" as per sections
213 and 202 of the CAA, and so EPA does not interpret the Act as requiring the
agency to give subordinate status to factors such as cost, safety, and noise in
determining what standards are reasonable for aircraft engines. Rather, EPA has
greater flexibility under section 231 in determining what standard is most
reasonable for aircraft engines, and is not required to achieve a "technology
forcing" result.2
This interpretation was upheld as reasonable in NACAA v. EPA. (489 F.3d 1221, 1230
(D.C. Cir. 2007)). CAA section 202(a) does not specify the degree of weight to apply to
each factor, and EPA accordingly has discretion in choosing an appropriate balance
among factors. See Sierra Club v. EPA. 325 F.3d 374, 378 (D.C. Cir. 2003) (even where
a provision is technology-forcing, the provision "does not resolve how the Administrator
should weigh all [the statutory] factors in the process of finding the 'greatest emission
reduction achievable'"). Also see Husqvarna AB v. EPA. 254 F. 3d 195, 200 (D.C. Cir.
2001) (great discretion to balance statutory factors in considering level of technology-
based standard, and statutory requirement "to [give appropriate] consideration to the cost
of applying ... technology" does not mandate a specific method of cost analysis); see also
Hercules Inc. v. EPA. 598 F. 2d 91, 106 (D.C. Cir. 1978) ("In reviewing a numerical
standard we must ask whether the agency's numbers are within a zone of reasonableness,
not whether its numbers are precisely right"); Permian Basin Area Rate Cases, 390 U.S.
747, 797 (1968) (same); Federal Power Commission v. Conwav Corp.. 426 U.S. 271, 278
(1976) (same); Exxon Mobil Gas Marketing Co. v. FERC. 297 F. 3d 1071, 1084 (D.C.
Cir. 2002) (same).
As described above, EPA has broad discretion in determining the appropriate standards to
adopt under section 202(a)(l), based on a reasonable consideration and balancing of
various factors relevant under that provision. As discussed in the preamble, including
section HID., EPA did consider and balance all of the factors discussed by commenters -
the GHG reductions achieved by the various proposed and alternative standards, the
technology to achieve such standards, lead time, cost of achieving the standards, as well
as other factors such as safety impacts. EPA explained that the final standards will
achieve very large and significant reductions in GHGs, as well as very significant fuel
savings. EPA identified a technology pathway by which manufacturers could achieve
these reductions, modeling in detail each manufacturer's fleet of cars and trucks. The
technology pathway calls for the widespread introduction across the fleet of several
different kinds of technology that are currently available but with much more limited
usage, as well as an expectation of a limited use of some more costly technology, such as
HEVs. For the near term model years at issue in this rulemaking, EPA expects that there
will only be a very limited use of advanced technologies such as EVs and PFLEVs. EPA
evaluated the cost of this spread in technology and found it reasonable both from the
perspective of costs per vehicle as well as the total benefits of the rule far outweighing
the total costs. Lead time is a critical consideration and EPA determined that there is
adequate lead time to employ the financial, engineering, and other resources needed to
2 70 FR 69664, 69676, November 17, 2005.
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achieve the standards, recognizing that a significant portion of these human and capital
resources would need to be expended during the next few years. Lead time is somewhat
constrained for these model years, as it is now 2010 and MY 2012 is only a number of
months away. The farthest model year, 2016, also is not many years from now, given the
time needed for redesigning cars and trucks for new production. EPA also took into
account that the automobile manufacturing industry has been and continues to face
serious economic and other constraints, stemming from the recent economic problems in
the U.S. and around the world. This is an important context to EPA's evaluations of cost
and lead time considerations.
The final standards will achieve very significant reductions in GHG emissions and fuel
savings, the technology to achieve these reductions is identified and commercially
available, and the costs are reasonable. EPA also recognizes that the standards will be
difficult for the manufacturers to achieve and present major hurdles for them to
overcome. While the technology is generally well understood and can be implemented
over these model years, the lead time to do so is relatively short and the capital and
human resources that must be employed are large, especially in the next few years, and
must occur in the context of current serious economic strain on this industry.
Considering all of these factors, EPA determined that the final standards are a reasonable
and appropriate balance of the relevant factors under section 202(a)(l).
US Steel commented that the rate of improvement associated with the final standards
could force the use of low density, high energy (required for production) materials before
the steel industry had time to ramp up the production capacity of high strength, low
energy (required in production) steel. We do not agree that the rate at which the final
standards require improvement will result in the permanent reduction in the use of high
strength steel. First, the overall weight reduction projected for the final standards is only
4%. As discussed in the Joint TSD, several manufacturers have already announced plans
to achieve weight reductions approaching this level. Second, several manufacturers
already utilize high strength steel components, indicating some production capacity and
general engineering awareness of its benefits. Third, given this awareness, we do not
believe that it is likely that manufacturers would lock themselves into vehicle designs
which precluded future use of the benefits of high strength steel, even if they should
decide to use another material in the very near term due to capacity constraints.
US Steel specifically suggested that we slow the rate of improvement in the fuel economy
and CO2 standards to that described in EISA. Again, we do not agree that this would be
acceptable. First, the 35 mpg fleet-wide fuel economy mentioned in EISA is a minimum
requirement, not a mandated target. Second, with the exception of several smaller
manufacturers, the final standards are not projected to require the substantial use of
hybrid or diesel technology. To promulgate more relaxed standards would reduce the use
of much more conventional technology. If manufacturers are concerned about supply of
high strength steel, which is US Steel's main concern, we believe that manufacturers
have several options available to compensate, one being increased use of hybrid and
diesel technology in market segments where they have experience with these
technologies and where consumer acceptance has been demonstrated.
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EPA also considered standards that were less stringent and more stringent than those
adopted. EPA took a similar approach in evaluating these alternative standards. EPA
considered and balanced all of the relevant factors, comparing and contrasting these to
the final standards. For example, EPA rejected an alternative of more stringent standards
that would achieve an average 6% per year increase. EPA's rejection of the 6%
alternative was based largely on concerns over the adequacy of the lead time in a context
of a significant increase in technology and costs, and a significant increase in the risk of
non-compliance by manufacturers. These real world concerns indicate that the 6% per
year alternative is not an appropriate standard for the MY 2012-2016 time frame, even
though it would by definition achieve greater GHG reductions and fuel savings than the
final standards.
With respect to the 6 percent per year standards, the levels of requisite control technology
increased substantially relative to those under the final standards, as would be expected.
Industry-wide, the largest increase was a 25 percent increase in the application of start-
stop technology and 13-17 percent increases in the use of gasoline direct injection
engines, turbo charging and dual clutch transmissions. Our projections for BMW,
Porsche, Tata and Volkswagen continue to show they are unable to comply with the CC>2
standards in 2016, so our projections for these manufacturers do not differ relative to the
final standards, though the amount of short-fall for each firm increases significantly, by
an additional 20 g/mi CCh per firm. However, Ford and Mitsubishi join this list. Five
manufacturers are projected to need to increase their use of start-stop technology by at
least 30 percent.
The 6% per year alternative represents a significant increase in both the technology
required and the overall costs compared to the final standards. In absolute percent
increases in the technology penetration, compared to the final 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 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 final standards. At the same
time, CO2 emissions would be reduced by about 8%, compared to the 250 g/mi target
level.
As noted in the preamble, EPA's OMEGA model predicts that for model year 2016,
Ford, Mitsubishi, Mercedes, BMW, Volkswagen, Jaguar-Landover, and Porsche do not
meet their target under the 6 percent per year scenario. In addition, Chrysler, General
Motors, Suzuki and Nissan all are within 2 grams/mi CO2 of maximizing the applicable
technology allowed under EPA's OMEGA model - that is, these companies have almost
no head-room for compliance. In total, these 11 companies represent more than 58
percent of total 2016 projected U.S. light-duty vehicle sales. This provides a strong
indication that the 6 percent per year standard is much more stringent than the final
standards, and presents a significant risk of non-compliance for many firms, including
four of the seven largest firms by U.S. sales.
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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 final 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 frames, 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 now and over the
next few years, under the final standards. EPA believes that the final rule (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, as discussed in the preamble, as well as in the Joint Technical
Support Document and the EPA Regulatory Impact Analysis document, the average
model year 2016 per-vehicle cost increase of roughly $950 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 reduction 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. The 6% per
year alternative standard would impose significantly increased pressure on capital and
other resources, indicating it is 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.
There is particular sensitivity to predicating these standards on more aggressive
penetration of strong hybrid technologies. The more stringent alternatives are all
projected to necessitate more extensive use of hybrid technologies. Several hybrid
technologies have already been commercially demonstrated and their use could clearly be
expanded. (Several manufacturers may even require extensive use of hybrid technology
to meet the final standards due to certain characteristics of their vehicles which lead to
unusually high fuel consumption and CO2 emissions.) However, while a couple of
manufacturers have extensive experience with high volume hybrid production and use in
smaller cars, some large volume manufacturers have minimal experience. No
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manufacturer has extensive experience across all of the market segments believed to be
suitable for hybridization. Current world-wide production capacity for hybrid
components is relatively small. Thus, the application of hybrid technology to a
significant fraction of U.S. sales in the 2012-2016 time frame would require extensive
new resources at every level: design, component production, vehicle integration, and
vehicle production. In addition, since the electric components and batteries in a fully
optimized hybrid design (capable of achieving the CO2 emission reductions projected in
the Joint TSD) usually require significant changes to the vehicle design, hybrids will
likely require separate safety assessments, increasing the need for engineering and testing
resources during a time of economic challenge.
Moreover, one of the key components of the hybrid technology is the battery or other
type of device to store energy and battery technology is developing rapidly. Establishing
2012-2016 standards which necessitate extensive use of hybrid technology each model
year would 1) require dramatic capital investment in plants needed to produce the hybrid
components, and 2) would commit manufacturers to large investments in specific battery
technologies which may not be the technology of choice in just a few years. We believe
that it is much more prudent to give this particular technology a few more years of
development before basing standards on its widespread use. We believe that the final
standards are sufficiently stringent that hybrid technology will still be used on significant
numbers of vehicles and encourage the continued development of this technology.
All of these factors apply even more strongly to the more advanced plug-in hybrid and
fully electric vehicle technologies. These vehicles require much larger battery capacity
and are much more likely to require use of the new lithium-based materials. Significant
application of these two technologies would not only require substantial increases in
lithium battery production, but would require entirely new mining production capacity, as
well.
In short, EPA believes that it has made an informed and reasoned choice in rejecting the
6% alternative, and does not accept the commenters' characterization that the basis for
the choice is unsubstantiated or otherwise arbitrary.
Certain commenters rejected EPA's approach to considering and balancing the relevant
factors under section 202(a)(l). They argued that this approach was ad hoc and narrow,
and that EPA should announce and apply a different approach to standard setting for this
rulemaking. EPA should first determine a specific goal of GHG reductions and oil
savings, based on an assessment of national needs, and then apply considerations of
technological feasibility and cost, in order to be as technology forcing as possible or
practicable. One suggestion was to have a quantitative goal - identify the country's goal
for reducing GHGs and then assign a proportionate share to the transportation sector as a
default position. Commenters also suggested that EPA should assign more priority to
achieving the environmental goal and thereby prioritizing public health and welfare,
placing that above economic or other considerations. Commenters suggested this was
required under both "the agency's ... responsibility to set protective standards consistent
with its statutory mandate" (Public Citizen) and with the CAA's mandate to "be as
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technology-forcing as possible" (Public Citizen; see also Sierra Club). Other commenters
suggested that the decision making criteria should call for a standard be no less stringent
than one that maximizes net benefits, or that this should be a presumed minimum.
The comments appear to mischaracterize CAA section 202 (a) (1), and the discretion
Congress provided to EPA under that provision. Commenters appear to read this
provision as a mandate from Congress that EPA place the greatest emphasis on achieving
a desired environmental goal, with secondary emphasis on other factors such as economic
considerations or considerations of lead time and technological feasibility. However,
Congress clearly provided very broad discretion to EPA and did not direct its discretion
in the ways suggested. For example, section 202(a) is not a provision where reducing
risk is the only or the highest priority assigned by Congress. Compare, e.g., sections
109(b) and 112(f)(2). It is also not a provision where Congress mandated a certain
minimum degree of technology or emissions reduction. See section 112(d)(3). It is not a
provision where Congress directed EPA to be technology forcing and achieve the greatest
achievable reductions from technology that will be available in the future. See section
202(a)(3) and 213(a)(3). Instead Congress referred to consideration of available
technology, its effectiveness and cost, the lead time necessary for compliance. See
generally 74 FR at 49464-65. Although section 202 (a) (1) standards may be technology-
forcing, they are not required to be. 74 FR at 49464-65. As discussed above with respect
to section 231 (a), CAA section 202(a)(l) does not specify the degree of weight to apply
to each factor, and EPA accordingly has discretion in choosing an appropriate balance
among the relevant factors. Thus EPA rejects that the approach taken in this rule of
considering and balancing the various relevant factors is inconsistent with the discretion
provided by Congress under section 202(a)(l).
EPA also disagrees that a more determinative or approach to standard setting or more
specific or objective decision making criteria are either required or called for in this
rulemaking. For example, EPA does not believe it is appropriate for this rulemaking to
try and determine a free standing national goal for reducing GHGs and saving oil, and
either assigning a specific share to these light-duty sources or using the goal as a measure
of some sorts for standard setting. In the relatively short timeframe for this rulemaking, it
would be unrealistic to try and develop such a goal, given the great complexity and
national input that this would involve. In addition, it is not at all clear that for this
specific rulemaking that such a goal would be of any more use than a more general and
qualitative goal of achieving significant reductions, given the recognized need for
significant reductions and taking into account the limited scope of the near-term model
years covered by this rulemaking. In the context of this short term rulemaking, covering
just the next handful of model years, with limited lead time to implement changes in
technology, EPA does not believe that a more specific and quantitative goal of longer
term GHG reductions for the nation and this sector would provide any better guidance to
the agency than the more qualitative but no less important goal EPA has employed -
achieving significant reductions by moving the industry to the point where available near-
term technology is broadly employed across the fleet, over the next few model years,
taking into consideration the lead time needs of the industry and other factors.
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EPA also disagrees that this amounts to a failure to place the proper priority on achieving
the health and welfare protection called for by the CAA. Section 202(a)(l) provides the
guide to Congress' intent on this issue, and EPA has employed the broad discretion
provided by that provision to aim for and achieve very significant reductions in GHGs,
after taking careful consideration of the factors relevant under that provision, as described
above. This approach is fully consistent with section 202(a)(l), and EPA's consideration
and balancing of the factors in this rulemaking gives full consideration of the need to
achieve significant GHG reductions to help reduce the risk to public health and welfare
from global climate change.
EPA also disagrees that it should use specific criteria for considering cost, using the
maximization of net benefits as a minimum. As explained above and in the preamble,
EPA has very good reasons for rejecting the 6% alternative, and that alternative is still
significantly below the level that NHTSA has estimated would maximize net benefits.
The alternative standards evaluated by NHTSA as providing the maximum net benefits
(given all of the market, technological, economic, and other inputs to the agencies'
analyses) are even more stringent and less supportable than the 6% alternative rejected by
EPA. While the relationship of marginal costs to marginal benefits is certainly a factor
for EPA to consider, and EPA has considered it, the currently-estimated relationship of
marginal costs to benefits does not, by itself, adequately determine the appropriate
balance of the several factors EPA must consider, such as consideration of lead time,
overall cost, and technological feasibility. It also assumes that all costs and befits have
been fully and accurately identified, and that is certainly not the case. Even so, per
NHTSA's analysis of this scenario, the incremental cost of the maximum net benefit
scenario exceeds that of the final standards by $700 per car for only a 2.5 mpg
improvement and $1100 per truck for a two mpg improvement. These incremental costs
are far out of proportion to those of the final standards. Numerous manufacturers were
projected to be required to exceed the 15% cap on hybridization, particularly for their
truck lines. EPA believes it is better in this rulemaking to consider this factor as one of
several factors, but not to consider it as a single or predominant criterion for setting the
standards in this rulemaking under section 202(a)(l).
As discussed above, EPA is not required under section 202(a)(l) to set standards that are
technology forcing, as under section 202(a)(3) or section 213(a)(3). However, the final
standards are readily justifiable under CAA provisions which are technology-forcing
(allowing considerations of future advances in emission control capability as well as
those already in existence and application). Neither section 202 (a) (1) nor provisions
which are explicitly technology-forcing (e.g. section 202 (a)(3) requiring "the greatest
degree of emission reduction achievable") specify the weight to accord each relevant
decision factor, leaving EPA with great discretion in determining an appropriate balance.
See Sierra Club v. EPA. 325 F. 3d 374, 378 (D.C. Cir. 2003). And although the
commenters are correct that the statute's environmental goals are a dominant
consideration in weighing the relevant factors, Husqvarna AB v. EPA, 254 F. 3d 195,
200 (D.C. Cir. 2001), EPA retains great discretion to weigh the relevant factors so long as
its resolution is within a zone of reasonable values. See, e.g. Hercules Inc. v. EPA, 598
F. 2d 91. 106 (D.C. Cir. 1978). As discussed in detail in section HID. of the preamble to
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the final rule (and in particular, in sections HID. 6 and 7), the final standards are
projected to require very significant penetration of technologies throughout the fleet and
already raise challenging issues of sufficient lead time at the selected level of stringency.
As further discussed in the preamble and in later responses in this comment response
section, EPA reasonably considers more stringent standards to be inappropriate
Several commenters were also concerned that the approach taken in this rulemaking
would limit EPA's discretion in future rulemakings for this or other sectors, and
recommended that EPA announce its approach for future rulemakings. As described
above, EPA does not believe it is appropriate to identify a more precise or quantitative
approach to standard setting for this rulemaking. These same reasons lead EPA to not
announce such an approach for a future rulemaking concerning later light-duty model
years. The discussion above and in the preamble makes it clear that the specific facts
before the agency are critical in determining the appropriate balance of the relevant
factors. It is useful to preserve the discretion to address the issues that must be
considered in standard setting under section 202(a)(l) without a predetermined approach.
That preserves EPA's discretion to take into account the detailed circumstances before it.
For example, if longer lead time is involved in a future rulemaking this could lead to
consideration of greater changes in technology, leading to greater reductions. Section 201
(a) (1) provides EPA great flexibility to tailor standards to circumstances, and EPA sees
no advantage in a priori limiting that desirable degree of regulatory discretion.
Several commenters suggest that the proposed standards were insufficiently stringent due
to the public's demonstrated shift towards smaller vehicles and away from trucks.
However, as fuel prices have stabilized at levels below $3 per gallon, truck sales have
rebounded to some extent and sales of hybrids have fallen as a percentage of overall sales
from their highs in 2008. Thus, it is not prudent to base long term purchasing trends on
potentially short term market perturbations. We believe that the technology needed to
meet the final standards will provide fuel savings which more than pay for itself over the
life of the vehicle under essentially any realistic future fuel price scenario. Again, we
also believe that the technological improvements which will occur over the 2012-2016
time period will provide a solid foundation for further improvements in the future.
One commenter suggested that standards which reflected 5% per year reductions in CO2
emissions should have been analyzed and potentially selected. Of course, numerous
additional alternative standards can be identified in addition to those analyzed. We
believe that standards beyond those being promulgated would have pushed most
manufacturers to greater hybrid use. For example, per NHTSA's analysis of this
scenario, the incremental cost of the 5% per year reduction scenario exceeds that of the
final standards by $200 per car for only a 1.1 mpg improvement and $400 per truck for a
0.8 mpg improvement. These incremental costs are much greater than those of the final
standards. From this NHTSA analysis, it appears that the standards being promulgated in
this rule require the use of nearly all of the non-hybrid and non-diesel technology
projected to be available in this timeframe for many of the large volume manufacturers.
While hybrid and diesel technologies are technically feasible and have been
commercialized in several applications, the investment costs for these technologies far
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exceeds those of the other technologies. The technology projected to be required to
enable compliance with the final standards already requires significant new investment
for dual clutch transmissions and start stop systems. Given the current economic climate,
we are concerned that manufacturers and major suppliers may not have sufficient capital
to build the capacity for large volumes of electric motors, batteries, transmission control
systems, diesel engines, nor the engineering resources to begin designing this systems
essentially immediately. We believe that the substantive addition of these major
technologies is best left to the post-2016 time period.
We appreciate the comments mentioning concern about the need to make near term
decisions about the use of weight saving materials. However, the projected reductions in
vehicle mass projected for the final standards are relatively small (e.g., 4% on average,
although some vehicles are projected to apply more mass reduction and some less).
While manufacturers are free to choose from a variety of technology with which to meet
the final standards, we believe that such weight reductions can be achieved by choosing
methods which will prove to be beneficial beyond 2016.
3.3.1 2016 Standard and selection of proposed standards versus 4% per year and
6% per year alternative standards
Organization: Center for Biological Diversity
Toyota Motor North America
New York State Department of Transportation (NYSDOT)
Consumer Federation of America
Comment:
Center for Biological Diversity
III. The Proposed Rule Sets Impermissibly Low Mileage and GHG Emission Standards
By Arbitrarily and Capriciously Undervaluing the Benefits and Overvaluing the Costs of
More Stringent Standards and Failing to Adhere to the Overriding Goal of Conserving
Energy
When Congress enacted EPCA, it specified its goals: to decrease the nation's dependence
on foreign oil imports, to enhance national security and to achieve the efficient utilization
of scarce resources. Center for Biological Diversity, 508 F.3d at 514. To achieve these
goals, EPCA expressly demands that NHTSA set the maximum feasible fuel economy
standards. 49 U.S.C. § 32902(a). In doing so, NHTSA must weigh four factors:
technological feasibility, economic practicability, the effect of other motor vehicle
standards on fuel economy, and the need of the United States to conserve energy. 49
U.S.C. § 32902(f). In balancing these factors, NHTSA "cannot set fuel economy
standards that are contrary to Congress's purpose in enacting the EPCA - energy
conservation," it cannot act arbitrarily and capriciously; it cannot advance conclusions
unsupported by the evidence; if it conducts cost-benefit analyses, it may not assign values
of zero to benefits that can be ascertained within a range; and it cannot bias its cost-
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benefit analysis. Center for Biological Diversity, 508 F.3d at 531, 534. As set forth
above, Section 202(a) of the Clean Air Act requires a similar analysis, setting control
standards no later than the availability of control technology allows, while giving
appropriate consideration to compliance costs. The Proposed Rule fails to meet the
requirements of the law because none of the relevant factors support its conclusions.
[OAR-2009-0472-7265.1, p. 5]
A. Technological Feasibility Supports More Stringent Standards
The Proposed Rule admits that "all" of the technology to improve fuel efficiency is
commercially available today:
NHTSA's and EPA's technology assessment indicates there is a wide range of
technologies available for manufacturers to consider in upgrading vehicles to reduce
GHG emissions and improve fuel economy . . . All of these technologies are already
available today, and EPA's and NHTSA's assessment is that manufacturers would be
able to meet the proposed standards through more widespread use of these technologies
across the fleet. 74 Fed. Reg. 49470 (emphasis added).
This is a stunning conclusion, as it means that if deployed, technology already in use
today could allow the U.S. light-duty vehicle fleet to meet the Agencies' 2016 mileage
standard of 34.1 miles per gallon and greenhouse gas emission standards of 250 grams
per mile in 2009, seven years earlier than here projected. Plainly, one of the four factors
NHTSA must consider - technological feasibility - points in only one direction: much
more stringent standards. Indeed, the Agencies could not defend any claim that
technological constraints prevent the achievement of much higher standards. This is so
because the average fuel economy of the vehicle fleets presently on the roads in the
European Union (at 41.8 mpg in 2008) and Japan (at 40.6 in 2007) already far exceed the
standards the Agencies are proposing for 2016.6 China's fleet, at 32.9 mpg in 2008, and
South Korea's, at 31.0 mpg in 2008, are currently not far behind the U.S. proposal for
2016. The following graph quickly illustrates the point: [See OAR-2009-0472-7265.1, p.
7 for the graph] [OAR-2009-0472-7265.1, pp. 5-7] [See OAR-2009-0472-7265.1, pp. 5-
8 for a detailed discussion of technological feasibility.]
D. The Need of the United States to Conserve Energy Supports More Stringent Standards
It should go without saying that the last of the factors to be considered under EPCA, the
United States' need to conserve energy, supports setting more stringent mileage and
tailpipe GHG emission standards. "Motor vehicles are the second largest greenhouse gas-
emitting sector in the U.S., after electricity generation, and accounted for 24 percent of
total U.S. GHG emissions in 2006." Proposed Rule, 74 Fed. Reg. 49632. The light duty
vehicles that are the subject of this rulemaking account for fully 40% of all U.S. oil
consumption. Id., 74 Fed. Reg. 49459. Increasing mileage standards for this vehicle fleet
is the single most effective and quickest available step the U.S. can take to conserve
energy and to reduce the U.S. dependence on foreign oil, and also has an immediate and
highly significant effect on total U.S. GHG emissions. Indeed, it would be difficult to
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overemphasize the critical impact on vital national interests that could be achieved if the
Proposed Rule would simply set its 2016 standards at the fuel efficiency and GHG
emission reduction levels the European Union or Japan implement today. [OAR-2009-
0472-7265.1, pp. 19-20] [See OAR-2009-0472-7265.1, pp. 20-25 for an extensive
discussion of this issue.]
Toyota Motor North America
In general, the overall level of the standards in 2016 model year is consistent with
Toyota's expectation, the agreements signed last May, and the joint Notice of Intent
(NOI) published last spring. Additional comments and responses to specific questions
posed by the agencies are covered below. Where appropriate, we have identified to which
agency's portion of the joint proposal our comments are directed. [OAR-2009-0472-7291,
p.6]
In general, the proposed standards in 2016 model year (a new vehicle fleet-wide level of
250 grams of C02 per mile - equivalent to 35.5 mile per gallon) are consistent with
Toyota's expectation, the agreements signed last May, and the joint Notice of Intent
(NOI) published last spring. While meeting these levels will be a serious challenge for
our engineers and product planners, we remain committed to the agreement and will
make every effort to meet the challenge. [OAR-2009-0472-7291, p.7]
New York State Department of Transportation
The baseline condition used in the analysis of alternatives for the previous CAFE
proposals was based on manufacturers' confidential plans for each model year, whereas
the baseline in this proposal is based on each manufacturer's actual MY 2008 fleet. We
agree that this approach will result in more complete market data and is more transparent
than relying on manufacturers' confidential plans. It is also illustrative. While the results
vary somewhat among manufacturers, the current MY 2011 baseline fuel economy is
slightly better than the baseline fuel economy that was assumed in the MY 2011 final
rule. This fact indicates that the auto industry as a whole is capable of achieving progress
in improving fuel economy more rapidly than the rate that would be required by the
proposed rule. [OAR-2009-0472-7531.1, p.2]
Since the actual MY 2011 baseline is more fuel efficient than the previously assumed
baseline, it is difficult to understand why the fuel economy projections for many of the
alternatives that were considered in developing this proposed rule are less stringent than
similar alternatives that were evaluated in the development of the MY 2011-2015
standards. For example, the 'Total Costs = Total Benefits (TCTB)' alternative that was
evaluated in the previous CAFE proposal was projected to result in a required fuel
economy of 43.3 mpg for MY 2015 passenger vehicles and 33.1 mpg for MY 2015 light
trucks. Conversely, the TCTB alternative in today's proposal is projected to only achieve
40.8 mpg for MY 2015 passenger vehicles and 30.9 mpg for MY 2015 light trucks. We
request that NHTSA and EPA provide an explanation as to why this 'backsliding' of the
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effectiveness of similar alternatives has occurred between the 2008 and 2009 proposals.
[OAR-2009-0472-7531.1, p.2]
Consumer Federation of America
[These comments were submitted as testimony at the Detroit public hearing. See docket
number OAR-2009-0472-6185, pp. 106-107.]
In particular, EPA and NHTSA should balance the three goals in the underlying statutes
of technical feasibility, economic practicability, and the need to conserve energy, and the
statutes really are in agreement here, by setting the standard at the mid point of the range
between maximum economic benefit and maximum practicable environmental benefit.
EPA Response:
Citizens for Biological Diversity (CBD) comments that because the standards are based
on performance of technology already in existence, this indicates that much more
stringent standards should be adopted, and even that the MY 2016 standards are
immediately feasible. CBD also points to fuel economy standards of other industrialized
nations as support for its proposition that much more stringent standards should be
adopted.
As explained in section HID. 7 of the preamble to the final rule, existence of
technology cannot be equated with its fleet-wide application. Significant issues of lead
time exist to allow the large-scale penetration of technology throughout the fleet to meet
the final standards, much less more stringent alternatives. Among the critical issues
(largely ignored by the commenter) are availability of sufficient capital and technical
personnel. In addition, it takes several years to redesign a vehicle, and several more to
design an entirely new vehicle not based on an existing platform. Thus, redesign cycles
are an inextricable component of adequate lead time under the Act consideration of the
time needed to design. Other lead time and cost issues are raised as well, such as the
issue of stranded capital both for the original equipment manufacturer (OEM), but up and
down the OEM supply chain. Nor is the comparison with other nations' fuel economy
standards proper, given (among other things) the different fleet mixes involved and the
different test procedures utilized. In fact, as explained in the preamble discussion, these
nations' standards are predicated on use of the same technologies projected for the final
GHG standards. Moreover, if one is to compare these standards with those of another
entity, the most directly relevant comparison is with the GHG standards for light duty
vehicles of the State of California. The federal standards are of comparable stringency,
and the California Air Resources Board in their public comments deemed their level of
stringency to be appropriate.
A comparison of the 2011 MY fuel economy and CO2 emission levels projected in
NHTSA's 2011 MY CAFE rule (including the proposed rule which contained projections
through 2016) and those projected is only minimally relevant to the projection of feasible
and cost effective standards in MY 2016. First, the sales of specific vehicle models and
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vehicle segments differ significantly between the two rulemaking analyses. The
projections for the NHTSA 2011 CAFE rule were based in large part on manufacturer
product plans which are now several years old. Those for the current rule are based on
projections made by an industry analyst, CSM International. Differences in projected
fleetwide fuel economy and CO2 emission levels would be primarily a function of
relative car and trucks sales and relative size of these vehicles. Both of these factors
change between MYs 2011 and 2016 in both sets of projections. Thus, little inference
can be drawn from MY 2011 comparisons about MY 2016.
The specific cost and effectiveness of a number of technologies has also changed
between the two rule making analyses. Future fuel prices also differ, as do a number of
other important factors, such as annual VMT per vehicle, the rebound rate, etc. Thus,
again, the comparison of the CAFE 2011 MY fuel economy levels in previous rules to
that made in the NPRM being made by NYDOT is not a reliable indicator of projections
for later model years, particularly those based on economic criteria, such as standards
projected to maximize net quantifiable benefits.
NYDOT,also recommends that EPA implement CO2 standards equivalent to the fuel
economy standards resulting from NHTSA's Total Costs Equal Total Benefits (TCTB)'
alternative for passenger vehicles and the Technology Exhaustion' alternative for light
duty trucks. These two scenarios require the application of even more technology and
involve even higher costs than that of the 6% reduction per year scenario. Thus, the same
concerns presented above for the 6% reduction per year standards apply to an even
greater extent here. This is sufficient reason to reject this recommendation on the part of
NYDOT.
3.3.2 2012-2015 Standards
Organization:Mercedes-Benz (Daimler AG)
Chrysler Group LLC (Chrysler)
Mitsubishi Motors R & D of America (MRDA)
Volkswagen Group of America (Volkswagen)
Toyota Motor North America
Recreational Vehicle Industry Association (RVIA)
Mercedes-Benz (Daimler AG)
The passenger car standards should be set to reach the MY 2016 goals through a
generally linear stringency level phase-in through MYs 2012-2015. Using a generally
linear phase-in is both consistent with the agencies' Notice of Intent and with the
overarching policy of transit! oning to a U.S. vehicle fleet. [OAR-2009-0472-7193.2, p. 1]
[The following comments are nearly the entirety of the statement for the above
subheading, from [OAR-2009-0472-7193.2, p.2-4]
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In the Notice of Intent published on May 22, 2009 and announcing EPA and NHTSA's
intention to publish joint rulemaking, the agencies made clear their intentions to propose
GHG standards capable of achieving on average 250 g/mile of CC^in model year 2016,
and further that "[t]he standards for earlier years would begin with the 2012 model year,
with a generally linear phase-in from MY 2012 through to model year 2016. NHTSA
expects to propose appropriate related CAFE standards." 74 Fed. Reg. 24007, 24008
(May 22, 2009) (emphasis added).
Rather than following the foregoing guideline, the proposed standards place a substantial
amount of emphasis on passenger car improvement in the earlier model years. This
creates additional challenges, not anticipated at the time of the Notice of Intent, for
manufacturers whose fleets are primarily composed of passenger cars, and in particular
for limited-line, lower-volume manufacturers who were to be provided lead time through
the TLAAS.
These additional challenges not only make the flexibilities and credits proposed in the
GHG program more significant, they also mandate careful consideration by the agencies
of additional flexibilities, such as including air conditioning credits in the CAFE
program. Further, placing an earlier and larger burden on the light-duty vehicle
population, as opposed to equalizing the annual increases, raises serious questions as to
whether the regulatory policy of this proposal is encouraging the appropriate type of fleet
mix to redress the serious public health and welfare and energy security concerns leading
to this rulemaking.
As noted above, the Notice of Intent expressed an intention to design a program that
would equal the levels in the California program at the end of the rulemaking period, or
by MY 2016. The Notice of Intent clearly indicates not that California levels were to be
achieved each year, but rather that they would be reached by MY 2016 and that the
interim years would be generally linear. DAG submitted a letter to Secretary LaHood and
Administrator Jackson making clear its commitments based on EPA proposing national
GHG standards and NHTSA proposing CAFE standards for MYs 2012-2016 "as
substantially described in the May, 2009 Notice of Intent to conduct rulemaking" and
certain additional actions. See DAG Commitment Letter, available at
http://www.epa.gov/otaq/climate/regulations.htm#la. While DAG nonetheless remains
committed to meeting the standards, DAG considers the movement away from generally
linear stringency changes to those focusing on MYs 2012 and 2013 to be a substantial
deviation from the description provided in the May 2009 Notice of Intent.
Chrysler Group LLC (Chrysler)
The endpoint 2016 model year EPA greenhouse gas industry fleet average standard of
250 g/mile was as expected, based on the Notice of Intent. The Notice of Intent states that
'the standards for earlier years (pre-2016) would begin with the 2012 model year, with a
generally linear phase-in from MY 2012 through to model year 2016' (emphasis added).
However, the Proposed Rules shows that the intermediate 2012-15 MY standards
increase in a significantly non-linear fashion at the start of the program - front loading a
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disproportionate amount of the task to the early years of the program. In particular, the
passenger car standard increase between the 2011 and 2012 model years is more
aggressive than necessary. [NHTSA-2009-0059-0124, p.8] [[Chrysler also submitted
these comments as testimony at the Detroit public hearing, See docket number EPA-HQ-
OAR-2009-0472-6185, p. 49.]
Moreover, President Obama's Rose Garden Remarks also noted that 'the goal is to set one
national standard that will rapidly increase fuel efficiency ... by an average of five percent
each year between 2012 and 2016, building on the 2011 standard ..., (emphasis added).
Although 2012 is the first year of the EPA program, given the 'direct and close,
relationship between tailpipe greenhouse gas emissions and fuel economy, the 2011
NHTSA CAFE standards (and their equivalent in greenhouse gas emissions terms)
should have been used when determining the phase-in to the 2016 model year goal.
[NHTSA-2009-0059-0124, p.8]
In the NPRM, excluding model years 2009-2011, EPA and NHTSA propose a generally
linear phase-in between the 2012 and 2016 model years, but the passenger car greenhouse
gas emission reduction of 11.2% between the 2011-2012 model years is extremely steep
and unprecedented. The industry average truck fleet also has the largest GHG emission
reduction of 4.6% between the 2011-2012 model years. [NHTSA-2009-0059-0124, p.8]
In addition to the numerically large increase in passenger car standards between the 2011
and 2012 model years, manufacturers need to simultaneously accommodate changes to
the passenger car fleet definition. Beginning in the 2011 model year, certain 2WD light-
duty trucks are reclassified as passenger cars. In the 2012 model year, additional light-
duty trucks are re-classified as passenger cars based on a lack of 3-row standard seating.
These reclassifications move truck-like utility vehicles from the light-duty truck category
to the passenger car category, subjecting them to more stringent standards and, as a
result, they become relatively poorer fuel economy and greenhouse gas performers,
reducing manufacturers' ability to comply with the more stringent passenger car
standards. [NHTSA-2009-0059-0124, p.9]
While the ability to earn credits and the carry-forward and carry-back credit flexibility
helps manufacturers' ability to comply, the large jump in standards is at a time when
manufacturers can do little to impact the actual fleet performance. Given typical model
year lead times, this setting of extremely aggressive 2012 model year standards does not
allow for sufficient leadtime to re-engineer vehicles to meet this stringency increase. The
type of major product changes necessary to increase vehicle efficiency by over 10%
requires sufficient time to re-engineer vehicles. This type of change normally occurs
during a product re-design or a new product release, not mid-model year modifications.
[NHTSA-2009-0059-0124, p.9]
Recommendation:
Chrysler recommends that the agencies set passenger car and light-duty truck standards
with a linear phase-in to the 2016 model year goals as envisioned during the signing of
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the May 2009 manufacturer and California Letters of Intent in response to the National
Program. Chrysler supports the general methodology of linearizing the standards
suggested by the Alliance of Automobile Manufacturers. [NHTSA-2009-0059-0124, p.9]
Mitsubishi Motors R & D of America (MRDA)
There are significant challenges in the increased stringency between the 2011 and 2012
model years. The rate of this increase will likely result in excessive costs and burdens as
many vehicles are quickly reconfigured to comply with these new standards. [OAR-2009-
0472-7125.1, p.l]
Smaller Automakers need more time to develop new technologies and to implement
design changes. The proportional effort is much greater to meet stringent standards and
far less resources are available for long term R&D to develop and introduce new
technologies. Further, smaller Automakers are unable to negotiate timely, cost effective
supplier contracts - suppliers favor high volume Automakers and limit the technology
available to smaller Automakers. Overall, it takes longer/costs more for limited line
vehicle manufacturers to introduce new technologies. [OAR-2009-0472-7125.1, p.2]
The proposed stringent standards are particularly challenging for limited line,
"intermediate volume" manufacturers, especially considering that Mitsubishi Motors was
not subject to the California AB1493 GHG regulations until the MY 2016. [OAR-2009-
0472-7125.1, p.5]
Volkswagen Group of America (Volkswagen)
In addition, Volkswagen questions the need for the large step in stringency proposed
from the 2011 MY CAFE regulation to the 2012 MY targets proposed in the NPRM. We
believe the 2016 MY target combined fleet target of 250 gram/mile is achievable and that
the targets for each model year can be adjusted to meet the same air quality targets
without such a large jump in the requirements in the first year of the regulation. [OAR-
2009-0472-7210.1, p.5]
Toyota Motor North America
Ramp Rate of the Target Curves
The rate of increase in the proposed car targets by both agencies is front-loaded and
should be adjusted. As can be seen in Figures 1 and 2, the rate of increase in the car target
curves between 2011 MY and 2012MY is inconsistent with the rates of increase in
subsequent model years. The largest increase in target values occurs in the first year of
the proposed regulation, when manufacturers have the least available lead time to
integrate technology into the fleet. While the curves are shown only for NHTSA's portion
of the joint proposal (in MPG space), EPA's proposed target curves show the same trend.
[OAR-2009-0472-7291 ,p.9]
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Consistent with comments provided by Toyota in previous CAFE rulemakings, we
suggest the rate of increase be 'smoothed' between the existing 2011 model year car
curves and the final 2016 model year proposed curves. Such an adjustment would align
more closely with product planning cycles and lead time requirements. [OAR-2009-
0472-7291,p.9] [See OAR-2009-0472-7291, pp.9-11 for a detailed discussion on this
issue]
Recreational Vehicle Industry Association (RVIA)
RVIA believes that with the non-linear standards increase proposed, to achieve
compliance, some manufacturers may opt to eliminate certain non-compliant vehicles
from their product mix since compliance otherwise may not be technologically feasible.
We are concerned that tow vehicles could be likely candidates for such eliminations since
the cost of technology to achieve such abrupt improvements may diminish their
commercial viability. To ensure that highway safety and air quality are not negatively
impacted by RV owners who tow their RV trailers with undersized vehicles or keep
older, less environmentally friendly tow vehicles on the road, we ask that you implement
a more gradual rollout of the standards. [NHTSA-2009-0059-0107, p.5]
One of the key points found in the General Motors comments dated November 20, 2009,
is that the '... the car standard detailed in the NPRM does not even 'encourage' limited
product line manufacturers to increase vehicle fuel economy.' GM goes on to state,
'Because the NPRM curves require little improvement from cars and small trucks, there is
a lost opportunity for fuels savings for the nation. As an example, increasing the
stringency of the NPRM curves by 10% for the smallest vehicles and reducing the
stringency by 5% for the largest trucks, would result in more energy savings, and enable
more economically practical application of technology across the country.' [NHTSA-
2009-0059-0107, pp.5-6]
Given that small cars are essentially already meeting the 2016 model year standards, such
a trade off makes sense. RVIA would support such a measure and encourages a careful
re-examination of the assigned mpg/C02 targets for both small vehicles and larger trucks.
[NHTSA-2009-0059-0107, p.6]
EPA Response:
EPA believes that the standards for MY 2012-2016 are consistent with the Notice of
Intent which stated that "The standards for earlier years would begin with the 2012
model year, with a generally linear phase-in from MY 2012 through to model year 2016"
Those standards likewise represent a reasonable exercise of EPA's authority under section
202 (a)(l) of the Act. See, e.g. section HID of the preamble to the final rule; see also
comment response 3.3.3.3.1. EPA acknowledges that the standards for passenger cars
have a higher rate of increase from MY 2011 CAFE standards to MY 2012 GHG
standards; however there are several reasons that this is a misleading comparison. First,
the form of the 2011 standard (the footprint based curve) differs considerably from the
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form of the MY2012-2016 standards. The baseline and reference fleets and many of the
underlying technical assumptions used to approximate the fleet targets and stringencies
for the 2011 rulemaking also differ from the ones used for this rule. The automotive
industry commenters above do not point to a specific technical issue with the standards,
but rather to their desire for a linear phase-in from the existing 2011 CAFE standards.
These arguments are addressed in NHTSA's response to comments in their preamble IV
and RIA. As to meeting the 2012 MY GHG standards, EPA notes further that the various
flexibility mechanisms in the rule (e.g. TLAAS, early generation of credits for out-
performing California standards, averaging, banking and trading with carry backward of
credits if needed) ) provide ready means for manufacturers to comply with the MY 2012
GHG standard. In one example of early credits, since the NPRM, it has come to light that
some manufacturers may be implementing more air conditioner leakage reduction
technologies than EPA had anticipated (see section III.C. 1 .a of the final preamble). This
would result in additional early credits that could be carried forward to help meet 2012
standards. Because of these arguments, and due to the support for the phase-in of the
standards from other stakeholders (including the California Air Resources Board) the
agency is not making significant changes to the MY 2012-2016 GHG standards. For
further discussion on the feasibility of the EPA standards, see section HID of the final
preamble.
3.3.3 Post 2016 standards
Organization: Sierra Club
Ford Motor Company
Northeast States for Coordinated Air Use Management
BMW of North America, LLC (BMW)
New York State Department of Environmental Conservation
State of Connecticut Department of Environmental Protection
Union of Concerned Scientists
Comment:
The industry, however, needs a longer term and stronger direction to be able to produce
dramatically cleaner vehicles. We urge EPA to move swiftly to set standards that will
apply to vehicles beyond 2017 and to consider a longer time horizon to ensure that lead
time is not a constraint on the "technology forcing" authority EPA can exercise under the
Clean Air Act. As soon as the endangerment finding is final, EPA will have the
obligation to set standards for greenhouse gas pollutants that protect public health and
welfare. To do this effectively, EPA should model where vehicle standards need to be in
2050 to achieve an 80% reduction (or the appropriate science-based emissions reductions
needed) in vehicle emissions. Starting in 2017, EPA should give a clear "technology
forcing" path to the auto industry. [OAR-2009-0472-7278.1, p. 13]
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A longer term approach is consistent with EPA's authority and statutory obligation under
the Clean Air Act and with the analysis of the industry's ability to achieve higher
standards in this NPRM. In this NPRM EPA considers three options. EPA identifies the
annual 4.3% decrease in g/mi CO2e as the preferred option - the option that yields the
250 g/mi CO2 standard President Obama announced in May 2009. The agency considers
a lower 4% and higher 6% option. EPA notes that that the 4% option 'forgoes CO2
reductions which can be achieved at reasonable cost." EPA also notes that this lower
option would be too weak to achieve equivalence with California's Pavley [OAR-2009-
0472-7278.1, p. 13] standards and would, therefore violate the agreement. The 6%
increase would increase the cost of a new vehicle by an average $500 with additional
greenhouse gas reductions. EPA determines that this level is not "technically infeasible"
but that it would be "overly stringent" given the condition of the industry and lack of lead
time. EPA concludes that the preferred option demands enough of the industry in terms
of technology change and cost. [OAR-2009-0472-7278.1, p. 14]
EPA seeks comment on its judgment regarding the three options. In sum, EPA concludes
that it "does not believe the 6% per year alternative would be an appropriate balance of
various relevant factors for model years 2012-1016." We applaud EPA for ensuring that
equivalence with California's standards are met in this first National Program, but urge
the agency to ensure that its next standards do not leave greenhouse gas reductions and
consumer savings unrealized. To do this EPA must look at the longer term and push the
industry's best technologies into new cars and light trucks that both force technology
forward and maximize their greenhouse gas potential. [OAR-2009-0472-7278.1, p. 14]
NHTSA provides a slightly different approach to a range of from a 3% per year increase
in fuel economy to 7% - but notes that the 4.3% preferred option achieves the 250 g/mi
CO2 needed for equivalence with CA's program and yields a fleetwide average fuel
economy of 34.1 mpg (equivalent to 250 g/CO2e). NHTSA, based on its statutory
obligation to consider the need of the nation to conserve oil, concludes that weaker
increases - 3 or 4% would "not produce the reductions in fuel savings and CO2
emissions that the Nation needs at this time." NHTSA's conclusion that weaker standards
leave substantial benefits on the table is not matched by the rationale for picking the
preferred option over the somewhat stronger choices. "NHTSA determined that it would
be inappropriate to propose any of the other more stringent alternatives due" to lead time
issues and "economically critical state of the industry." NHTSA diverges from past
proposals which considered setting the standards at a level that maximizes societal net
benefits. [OAR-2009-0472-7278.1, p. 14]
Ford Motor Company
Above all, Ford strongly believes that measures need to be put in place to ensure that the
national program approach outlined in this rulemaking continues beyond 2016. We were
pleased when the President brought the stakeholders together to agree on a roadmap for
harmonizing greenhouse gas emissions and CAFE standards at the federal level. The
EPA and NHTSA proposal gives us greater clarity, certainty and flexibility to achieve the
aggressive greenhouse gas emissions reduction goals that we all share. Most importantly,
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EPA Response to Comments
it avoids the patchwork and overlapping requirements that we would have faced under
the status quo. Nonetheless, it is only a first step, and it is critical that we avoid returning
to the patchwork approach after 2016. We look forward to working with the same
stakeholders toward a permanent national program for 2017 and beyond. [OAR-2009-
0472-7082.1, Cover letter, p.2]
. Although the national program created by this rule covers the 2012-2016 model years, it
is critical that measures be put in place to establish a permanent national program for the
2017 model year and beyond. [OAR-2009-0472-7082.1, p.l]
Northeast States for Coordinated Air Use Management
NESCAUM is very supportive of the proposed federal vehicle control program as a
powerful first step in addressing GHG emissions from motor vehicles. However,
additional reductions will be needed for vehicles beyond model year 2016. NESCAUM is
committed to working with the EPA, NHTSA, the California Air Resources Board, and
other stakeholders to address global climate change and the need to reduce oil
consumption by developing strong motor vehicle GHG standards for model years after
2016. These additional reductions will be critical for the states in the Northeast to achieve
their 2020 and 2050 GHG goals. [OAR-2009-0472-7235.1, p.7]
BMW of North America, LLC (BMW)
To ensure future regulatory stability for the auto industry while continuing to reduce
greenhouse gas emissions and improve fuel fleet economy, BMW strongly recommends a
comparable National Program in the model years beyond 2016. We are very, very happy
with the way the negotiations, discussions, collaboration and cooperation have gone to
come up with this single national standard and we very, very strongly support the same
process for the years 2016 and beyond. [These comments were submitted as testimony at
the New York public hearing. See docket number EPA-HQ-OAR-2009-0472-4621, p.
132.]
New York State Department of Environmental Conservation
We do not believe that the 2016 model year standards proposed here represent the
ultimate, lowest limit for light duty vehicle greenhouse gas emissions. We believe that
lower emissions will be possible in the future without sacrificing the utility these vehicles
provide their owners. We urge EPA and NHTSA to continue to evaluate the feasibility of
more stringent regulations. We do hope the nation will not have to wait another 30 years
for the next step. [OAR-2009-0472-7454, cover page 2]
State of Connecticut Department of Environmental Protection
Any standards developed for 2016 and later should comprehensively evaluate the need
for and benefits of a multi-pollutant perspective, including criteria and air toxics along
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with GHGs, that views vehicles and fuels as a system. Assuming additional standards are
warranted, the next phase of light duty vehicle standards should view the transportation
system in a holistic manner that takes into account vehicles, fuels and the transportation
infrastructure that can be designed to enable greater levels of pollution or to minimize it.
[OAR-2009-0472-7301, p.2]
Union of Concerned Scientists
Finally, I wanted to discuss the importance of establishing a strong regulatory framework
for future rulemakings as part of this process. While the immediate focus of this
rulemaking is achieving the President's goals through model year 2016, it will also set the
precedent for future standards beyond that date. [These comments were submitted as
testimony at the New York public hearing. See docket number EPA-HQ-OAR-2009-
0472-4621, p. 101.]
It is critical that future standards achieve the maximum feasible [These comments were
submitted as testimony at the New York public hearing. See docket number EPA-HQ-
OAR-2009-0472-4621, p. 101.] level of energy savings as required by EPAct and EISA
as well as fulfill EPA's obligations under the Clean Air Act. Under this rulemaking, EPA
and DOT have set standards that fall below the economically practicable levels indicated
by the agencies' own analysis. This means that Americans will not realize the full benefits
of the Nation Program through 2016. UCS recognizes that the current standards were set
at a more modest level to help automakers achieve the standards given the financial
problems facing the industry and the challenges of navigating a new regulatory structure.
However, it's critical that future standards are set at levels that achieve the maximum
benefits of the National Program. These standards should be based on sound modeling
that uses accurate technology assessments, verified costs and transparent input. [These
comments were submitted as testimony at the New York public hearing. See docket
number EPA-HQ-OAR-2009-0472-4621, p. 102.]
EPA Response:
EPA appreciates all of the comments expressing concern that 2017 and later GHG
standards be set sufficiently soon so that the lack of available lead time does not limit the
stringency of the standards. EPA is also sensitive to how complex and undertaking this
will be and that a new National Program will provide a level of certainty for the
manufacturers so that they may modify their long term product planning. We will
consider these issues seriously as we proceed to evaluate post 2016 GHG standards for
light-duty vehicles.
3.3.4 GHG Emissions Backstops
In the proposal, EPA and NHTSA recognized "that there is some possibility that low fuel
prices during the years in which MY 2012-2016 vehicles are in service might lead to less
than currently anticipated fuel savings and emissions reductions. One way to assure that
emission reductions are achieved in fact is through the use of explicit backstops, fleet
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average standards established at an absolute level." EPA stated that a backstop "could be
adopted under section 202(a) of the CAA assuming it could be justified under the
relevant statutory criteria." EPA did not propose backstop standards, but sought
comment on possible backstop approaches.
EPA and NHTSA received many comments on backstops. In this section, EPA responds
to both specific comments on GHG emissions backstops, as well as to general comments
on backstops that were submitted to both EPA and NHTSA. In the latter case, where
comments were made jointly on both EPA GHG emissions backstops and NHTSA CAFE
backstops, EPA's response only addresses the issue of GHG emissions backstops.
EPA received 26 public comments on the issue of GHG emissions backstops. There is
significant overlap among the comments on this issue, and the structure of this section is
to provide a comprehensive sampling of excerpts of these 26 comments, followed by an
EPA response to the comments organized into 3 sections:
• Whether EPA has the statutory authority to establish GHG emissions backstops
• Whether EPA should establish GHG emissions backstops
• Alternative backstop approaches to universal GHG emissions backstops
Organization: Alliance of Automobile Manufacturers (Alliance)
American Council for an Energy Efficient Economy
American Lung Association of California
Association of International Automobile Manufacturers (AIAM)
California Air Resources Board
California State Senate
Center for Biological Diversity
Connecticut Department of Environmental Protection
Environment Michigan
Environment New Jersey
Ford Motor Company
Mass Comment Campaign (2,322 comments) (unknown organization)
Mass Comment Campaign (326 comments) (Student PIRGs)
Massachusetts Department of Environmental Protection
National Automobile Dealers Association (NADA)
Natural Resources Defense Council
Northeast States for Coordinated Air Use Management (NESCAUM)
Public Citizen Safe Climate Campaign
Seal, Kathy
Sierra Club
State of New Jersey
Toyota Motor North America
Union of Concerned Scientists
United Auto Workers
University of Pennsylvania Environmental Law Project
Washington Department of Ecology
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Comment:
Ford Motor Company
Backstops
Backstops should not be combined with attribute-based standards unless specifically
required by statute. Backstops are inefficient and force manufacturers to produce vehicles
that consumers may not want. Moreover, they are unnecessary. The sloped portion of the
piecewise linear curves takes into account size based product mix differences across the
industry and adjusts automatically for changes in vehicle size mix in response to
economic conditions and consumer preferences. The flattened portion of the car and truck
curves serves a function akin to a backstop by discouraging manufacturers from building
larger vehicles. Moreover, NHTSA has commented in past rulemakings that the curve of
an attribute-based standard has several features that limit backsliding. 74 FR at 14410.
[OAR-2009-0472-7082.1, pp. 2-3]
GHG Backstops
EPA also seeks comment on the concept of'backstop' standards for GHG emissions. In
the NPRM, EPA proposes to establish motor vehicle GHG standards in the form of the
'C02 curves.' The authority and justification for the establishment of any additional
'backstop' standards underlying the CO2 curves is highly questionable. First, the Clean
Air Act (CAA) § 202(a) does not mention the concept of 'backstop' standards, let alone
authorize EPA to promulgate them. The concept of'backstop' standards would involve
promulgating two sets of standards (the main standards and the backstop standards)
applicable to a given fleet of vehicles, and there is nothing in the CAA to suggest that
Congress intended multiple 'layers' of standards to apply to vehicle emissions.
Second, EPA is presumably already taking the statutory criteria in § 202(a) into account
in its development of proposed CO2 curves. Backstop standards would need to meet the
same criteria, and the agency would need to conduct a separate evaluation of both the
backstop standards on their own, and the combination of the backstop and main
standards, under those criteria. However, it is far from clear that the § 202 criteria would
support a second set of standards for the same vehicles. Backstop standards would likely
impact individual manufacturers very differently. The most likely effect of backstop
standards would be to prevent full-line manufacturers from building and selling vehicles
that the market wants and that could otherwise be sold under the primary standards. This
could have a significant financial impact on a few individual manufacturers most affected
by the backstop standards, while having a negligible impact on overall projected
concentrations of GHGs. A key purpose of the attribute based approach is to reduce the
impact of vehicle mix and put manufacturers on a more level playing field; the addition
of backstop standards would run counter to this goal. At present, the Administrator has no
basis for concluding that backstop GHG standards are necessary to protect health and
welfare. Given the potential costs and disparate competitive impacts that backstop
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standards may impose on individual manufacturers, EPA should not pursue such
standards.
Finally, as noted above, the intent of the joint EPA/NHTSA proposal is to ensure the
greatest possible level of consistency between fuel economy standards issued by NHTSA
and CO2 emission standards established by EPA. Even if EPA had the authority under
the CAA to independently establish backstop standards, any EPA-issued CO2 emission
standards would only serve to create new inconsistencies between the two programs,
rather than further the goal of harmonization. Ford supports the harmonization of the
EPA and NHTSA standards to the maximum extent possible, consistent with the
Massachusetts v. EPA decision directing the federal agencies 'avoid inconsistency' in
regulating greenhouse gas and fuel economy. The best way to 'avoid inconsistency' in this
case is to allow NHTSA to establish the one backstop required by law for CAFE, and
avoid any other backstops in the CAFE or GHG regulations. [OAR-2009-0472-7082.1,
pp. 3-4]
Association of International Automobile Manufacturers (AIAM)
AIAM opposes the adoption of an additional "backstop" (i.e., minimum conventional)
standard as a means of preventing market shifts toward larger vehicles. A backstop
standard would defeat the purpose of the attribute format by limiting the flexibility of
manufacturers to respond to shifts in market demand. Moreover, when Congress
considered the need for a backstop standard in the similar context of CAFE standards
under EISA, it adopted a limited "minimum standard" for domestic passenger
automobiles. The EISA backstop provisions require that a manufacturer's domestic
passenger auto fleet must comply with the greater of 27.5 mpg and 92 percent of the
combined domestic/import average fuel economy of all manufacturers. See EISA, section
102(b)(4). An additional backstop standard in an EPA greenhouse gas regulatory program
would be inconsistent with Congress' intent and would be unnecessary and inappropriate.
[OAR-2009-0472-7123.1, p.18]
In Center for Biological Diversity v. NHTSA, the Ninth Circuit held that "neither the
EPCA's language nor structure explicitly requires NHTSA to adopt a backstop." Rather,
the court held that NHTSA had abused its discretion in failing to adequately consider the
"need of the nation to conserve energy," as it was required to do under 49 USC §
32902(f), and did not show that a backstop would be technologically infeasible or
economically impracticable. EISA did not expressly change this. The only backstops
required are the requirements in EISA that the combined car-truck fuel economy values
reach 35 mpg by MY2020 and that the regulations established between MY2011 and
MY2020 increase ratably to that goal. So long as NHTSA makes the showing that the
standards meet these requirements, then nothing more should be required in terms of a
backstop. [OAR-2009-0472-7123.1, p.18]
[AIAM also submitted these comments as testimony at the Los Angeles public hearing.
See docket LA EPA Hearing EPA-HQ-OAR-2009-0472-7283, pp. 28-32]
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Alliance of Automobile Manufacturers (Alliance)
EPA's Backstop Authority
As noted above, the intent of the joint EPA/NHTSA proposal is to ensure the greatest
possible level of consistency between fuel economy standards issued by NHTSA and
CCh emission standards established by EPA. Even assuming EPA has the authority under
the CAA to independently establish backstop standards, which is unclear, any EPA-
issued backstopped CCh emission standards would only serve to create inconsistencies
between the two programs, which would be contrary to the directive of the Supreme
Court in Massachusetts v. EPA that federal agencies "avoid inconsistency" in regulating
GHGs and fuel economy. See Massachusetts v. EPA, 549 U.S. 497, 532 (2007).
Because of differences between EPCA and the CAA, NHTSA's proposed CAFE rules
include domestic and import passenger car fleets, while EPA's proposed GHG rules do
not include the domestic/import distinction for passenger cars. Under EISA, as explained
above, only the domestic passenger car fleet is subject to a backstop under the NHTSA
CAFE rules. EPA cannot duplicate this under its rules; any "backstop" standards EPA
might seek to promulgate would presumably apply to all passenger cars. Were EPA to
proceed with such backstop standards, it would impose a new set of regulatory
requirements on a group of vehicles (imported passenger cars) that are not affected by the
backstop under NHTSA's rules. Such an outcome would only add to the complexity of
the manufacturers' task of producing a fleet of vehicles that complies with both sets of
rules. Furthermore, backstops are unnecessary. The concern about widespread vehicle
upsizing and a loss of anticipated benefits from the proposed standards is greatly
overstated given practical design considerations and the shape of the proposed attribute
curves.
First, upsizing doesn't necessarily present an easier compliance path. The basic concern
about upsizing is that manufacturers will be motivated to increase the footprint of their
fleet since larger vehicles have a less stringent standard under a size-based attribute
system. This premise ignores that an increase in vehicle footprint typically results in an
increase in vehicle weight. While upsizing may relax the fuel economy target,
compliance may be just as difficult due to the loss of fuel economy from the added
weight.
Second, increasing vehicle footprint may require vehicle platform changes. The
opportunity to upsize a vehicle platform is limited by product planning cycles which have
already been finalized in many cases for basic attributes such as vehicle size. Further,
changes in vehicle footprint and platform present practical design considerations such as
vehicle styling and vehicle dynamics/handling. Lastly, these platform changes are not
without cost.
Third, any erosion of the anticipated benefits is likely to be minimized by the substantial
yearly increase in the target curves as well as the shape of the curves for any given year.
For example, under the proposed standards, the efficiency of a car fleet with an average
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footprint of 45 sq ft is required to improve by 13 percent between 2012 and 2016. To
completely negate this improvement, the footprint for every vehicle in this example fleet
would have to be increased by an average of 7 sq ft over that 4-year period. For all of the
technical reasons mentioned above, such a scenario is highly unlikely, if not impossible.
Upsizing the footprint by even half this amount, while still not a reasonable scenario,
would net significant fuel economy improvements. In fact, a backstop is already built
into the standard curves to the extent the targets become constant or "clipped" as vehicle
footprint continues to increase. Therefore, the target curves already help guard against
any loss of benefit from theoretically upsizing into the "clipped" regime.
From a policy perspective, a backstop introduces an unnecessary secondary standard that
increases the complexity of the requirements and runs contrary to the intent of an
attribute-based standard. For these policy reasons and in keeping with the Supreme
Court's admonishment to "avoid inconsistency," EPA should not seek to adopt backstop
standards. [OAR-2009-0472-6952, pp 35-36]
Backstop Standards
The agencies note that NHTSA is required to set minimum "backstop" standards for
domestically-manufactured passenger cars and request comment on whether "backstop
standards, or any other method within the agencies' statutory authority, should and can be
implemented in order to guarantee a level of CO2 emissions reductions and fuel savings
under the attribute-based standards" for other categories of vehicles. Proposed
Rulemaking To Establish Light-Duty Vehicle Greenhouse Gas Emission Standards and
Corporate Average Fuel Economy Standards; Proposed Rule, 74 at 49,493. [OAR-2009-
0472-6952.1, p.37]
The agencies have not established that they have authority to set back-stop standards that
are not specifically authorized by Congress, and the Alliance is aware of no evidence
indicating that such back-stops are necessary to achieve the goals and purposes of the
national fuel economy and emissions programs. Such back-stops would unduly limit
consumer choice and the industry's ability to achieve the goals of the new national
programs as cost-effectively as possible. [OAR-2009-0472-6952.1, p.37]
Toyota Motor North America
Anti-Backsliding Standards
Anti-backsliding or backstop standards currently apply only to the domestic passenger
fleet under NHTSA's CAFE program. The Agencies request comment on whether anti-
backsliding provisions should be expanded to all vehicle fleets covered by the proposed
NHTSA and EPA standards. NHTSA additionally proposes to revise the domestic car
anti-backsliding standards that were set in the March 2009 final CAFE rule for 2011 MY.
Finally, NHTSA proposes to use projected target fuel economy when establishing the
minimum CAFE standard for the domestic passenger fleet. [OAR-2009-0472-7291,
pp.14-15]
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Expanding Anti-Backsliding Standards to All Cars and Trucks
Toyota opposes any expansion of anti-backsliding provisions beyond the domestic
passenger car fleet in the CAFE program. The clear intent of Congress has been that
NHTSA should only establish anti-backsliding standards for the domestic car fleet. As
such, EPCA requires NHTSA to establish anti-backsliding standards for domestic
passenger cars and does not authorize NHTSA to establish additional anti-backsliding
standards for import cars and trucks. [OAR-2009-0472-7291, p. 15]
In the case of EPA and CAA, there is no explicit statutory authority that either compels
or authorizes EPA to establish anti-backsliding standards for any class of light-duty
vehicle. While EPA's authority may be ambiguous, it is clear that any EPA-issued anti-
backsliding standards would create new inconsistencies between the NHTSA and EPA
programs, rather than support the goal of harmonization. NHTSA anti-backsliding
standards are limited to domestic passenger cars, and the CAA cannot be used to
duplicate a similar outcome since EPA's fleet definitions do not distinguish between
domestic cars and import cars. The most 'harmonized' outcome is for NHTSA to proceed
with the required domestic car anti-backsliding standard for the CAFE program, and for
EPA to forego any attempt to set anti-backsliding standards under the CAA. [OAR-2009-
0472-7291, p.15]
Notwithstanding the legal constraints described above, anti-backsliding standards are
unnecessary. The concern about widespread vehicle upsizing and a loss of anticipated
benefits from the proposed standards seems overstated given practical design
considerations and the shape of the proposed attribute curves. [OAR-2009-0472-7291,
p. 15] [See OAR-2009-0472-7291, pp. 15-16 for more discussion on this issue]
Northeast States for Coordinated Air Use Management (NESCAUM)
NESCAUM urges EPA and DOT to include a backstop mechanism for the standards. The
shift in the market away from cars towards light trucks in the 1990s resulted in a decrease
in the U.S. fleet average fuel economy. More recently, there has been a dramatic shift in
the market towards 4 and 6 cylinder engines and away from 8 cylinder engines. This has
been accompanied by a shift away from larger trucks and towards smaller trucks and
cars. The technical analysis conducted for this proposal by EPA and DOT assumes that
this trend will continue. Should there be a shift back toward higher CO2 emitting vehicles
(as was the case in the 1990s) the emissions reductions projected by the agency could be
greatly overestimated. A backstop which sets a floor for reductions would address this
potential problem. NESCAUM also urges the agencies to revisit the GHG standards and
incorporate changes in the light-duty vehicle fleet into baseline assumptions. NESCAUM
believes this is an important element to include in the final rule. We encourage the
agencies to revisit and revise the light-duty GHG standards to correct for mistaken future
projections. [OAR-2009-0472-7235.1, p.6]
Public Citizen/Safe Climate Campaign
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Reaching the agency's proposed standard of 250 g CO2/mi is predicated on the fleet mix
of 67 percent cars and 33 percent light trucks in 2016, versus a fleet mix of 51 percent
cars and 49 percent light trucks in 2008. Some of this shift in the market will result from
the reclassification of a large number of vehicles that were previously categorized as light
trucks to passenger cars, which will take effect in the 2011 model year, consistent with
the final rule for 2011 fuel economy standards. Many of these affected vehicles are two-
wheel drive versions of vehicles that are also sold in a four-wheel drive configuration.
[OAR-2009-0472-7050.1, p.2]
This creates a problem for automakers in manufacturing and marketing these vehicles.
Automakers would have to build a two-wheel drive version of a vehicle to fit on the "car
curve" or meet the footprint-based target for fuel economy set for the passenger car fleet
versus the light truck fleet. There is significant overlap of footprints which are on both
curves. If automakers successfully build two-wheel drive versions that get the better fuel
economy required on the car curve, it calls the two-fleet rule into question. Automakers
may respond to reclassification by simply ceasing to offer two-wheel drive configurations
of certain SUVs, which would distort the fleet mix and ultimately result in lowering fuel
economy and raising greenhouse gas emissions. [OAR-2009-0472-7050.1, p.2]
For this reason, the new standards should include backstops, or some other adjustment
mechanisms to ensure that there is a firm level below which individual automakers and
the economy-wide [OAR-2009-0472-7050.1, p.2] fleet of vehicles could not fall. The
agencies already build in an expectation value based on analysis of the extent to which it
is estimated that automakers will apply credits. EPA discusses several backstop options
in its Advanced Notice of Proposed Rulemaking (ANPRM) on greenhouse gas regulation
under the CAA. An approach that EPA outlines that could be most effective would have
the standards automatically reset to account for increases in emissions that are
inconsistent with agency projections at the time of promulgation: [OAR-2009-0472-
7050.1, p.3]
For example, at the time of promulgation, EPA could assume a certain average industry-
wide carbon dioxide g/mi emissions level for 2011-2012. If, in 2013, EPA found that the
average industry-wide emissions level in 2011-2012 was higher than projected in the
final rule (and therefore the carbon dioxide emissions reductions were lower than
projected because of higher than projected average footprint levels), then the backstop
provisions would be triggered and the footprint curves for future years (say, 2016 and
later) would be automatically changed to be more stringent and/or flatter in shape. This
approach would reframe the backstop issue in terms of industry-wide emissions
performance, rather than in terms of individual automaker emissions performance. [OAR-
2009-0472-7050.1, p.3]
A mechanism similar to this would prevent greenhouse gas emissions from rising because
of unanticipated shifts in the fleet mix. We urge EPA and NHTSA to adopt backstops for
greenhouse gas emissions and oil consumption to ensure that the goals of the program are
met, and to discourage manufacturers from continuing to use the light truck loophole to
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EPA CO2 Standards
undermine advances in fuel economy and reductions in greenhouse gas emissions. [OAR-
2009-0472-7050. l,p.3]
Union of Concerned Scientists
Given the possibility that a fleet average of 250 g/rni may not be reached - either by
renewed interest in light trucks or by industry gaming of light truck classifications - it is
critical that the agencies add a backstop in order to guarantee that the President's
emissions reductions and energy savings goals are met. While a backstop could take
numerous forms, UCS suggests one that includes an automatic re-computation or
"ratchet" of stringencies for subsequent years, such that the National Program's
cumulative emissions reductions and oil savings goals are fully achieved in 2016, even if
falling short in early years of the program. [OAR-2009-0472-7181.1, p. 5]
[Following comments are from LA Testimony, OAR-2009-0472-7283, pp. 103-113 (p.6)]
First, a backstop is necessary to meet California's standards. By 2016, new cars under the
California program are expected to emit an average of 250 grams per mile of global
warming pollution.
To meet this level of emissions, the NPRM projects that in model year 2016 the fleet will
consist of approximately two-thirds passenger cars and one-third light trucks. But in
today's new vehicle fleet, nearly half of the vehicles sold in the U.S. are light trucks.
While there has been a recent market trend away from light trucks towards cars, it
is questionable whether market pressure alone will achieve such an overall notable shift
by 2016. Additionally, automakers might strategically redesign vehicles in some classes
so they might meet higher emissions limits.
EPA and NHTSA should include a backstop in the final regulations to ensure that the
fleet-wide standards are achieved in each model year and that by 2016 the fleet average is
indeed 250 grams per mile.
[Union of Concerned Scientists also submitted these comments as testimony at the New
York public hearing, See docket number OAR-2009-0472-4621, pp. 95-98.]
Natural Resources Defense Council
GHG Standards Need "Backstop" Standards to Ensure Environmental Objectives Are
Not Undermined by Shifts in Sales Mix
The proposed GHG standards lack a regulatory "backstop" mechanism to ensure the
National Program goals for model year 2016 fleetwide average emission levels and the
cumulative greenhouse gas and oil consumption reductions are met (see section I for the
list of program goals). Such mechanisms are necessary because under an attribute-based
system that has separate car and light truck standards, the fleet sales mix could shift to
larger, higher-emitting vehicles and to a greater proportion of light trucks, resulting in
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EPA Response to Comments
greater fleetwide emissions and oil consumption thus undermining the achievement of the
program goals. [OAR-2009-0472-7141.1, p. 8]
In the proposal, the agencies recognize that attribute-based standards of the proposed
standards do not guarantee that specific fleetwide GHG emission and fuel economy levels
will be achieved. Achieving the pollution and oil reduction goals of the program are
dependent on the overall market achieving the agencies' forecasted sales and size mixes.
To reach a fleetwide average of 250 g/mi in model year (MY) 2016, the agencies have set
the individual car and light truck standards on the assumption of a specific car/light truck
sales split. However, if the automakers shift their product mix to more light trucks or if
they change the vehicle designs to classify fewer models as cars and more models as light
trucks, this car/light truck split would be changed and the GHG and oil savings goals of
the program would be undermined. This is of particular concern since the agencies'
forecast assumes a substantial increase in car sales share, from today's 50.3 percent to
66.5 percent by MY 2016.5 Starting in MY 2011, 2WD SUVs will be reclassified as
cars, which could potentially increase the car portion by 10 percent. However to avoid the
reclassification, automakers could simply cut back their 2WD SUV offerings. As a
consequence, the car sales share could be lower than forecast and the National Program's
GHG and oil reduction goals would be missed. [OAR-2009-0472-7141.1, pp. 8-9]
To prevent intentional and unintentional market shifts from undermining the
environmental and oil savings benefits of the Program, we recommend EPA and NHTSA
adopt manufacturer-specific backstop combined car and light truck standards that bar an
individual automaker from exceeding its forecast GHG emission levels by more than 2
gCO2-equivalent/mi (henceforth referred to as gCO2e/mi). Manufacturer-specific
backstop standards would ensure that specific manufacturers can be held accountable if
the overall fleet emission targets are missed. A manufacturer should be allowed no more
than three years to make up any exceedance in its manufacturer-specific backstop
standard. [OAR-2009-0472-7141.1, p. 9]
[NRDC also submitted these comments as testimony at the Detroit public hearing, See
docket number EPA-HQ-OAR-2009-0472-6185, pp. 20-21.]
American Council for an Energy Efficient Economy
The rule should include a provision to ensure that savings are not substantially
undermined by discrepancies between the future vehicle market and the vehicle market
projected by the agencies. The extent to which the standards could promote upsizing or
downsizing of vehicles depends in part upon the shape of the attribute curve. In reducing
the steepness of the car curve, the agencies have reduced the incentive to upsize vehicles,
because upsizing a vehicle will not increase the emissions target enough to offset the
natural tendency of the larger vehicle to consume more fuel (although some distortion of
the market through wheelbase manipulation could still occur). At the same time, the new
standard is not flat enough to promote downsizing, except at the upper and lower ends of
the size spectrum, which covers a negligible percent of vehicle models.
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The better choice of slope does not however address the issue of car/truck split, which
presents perhaps the principal way in which the rule could fail to deliver the promised
emissions reductions. If, for example, instead of reaching 67 percent of the market in
2016 as the agencies predict, cars remain at the 58 percent share projected for 2011,
savings attributable to the 2016 standards would be more than 10 percent less than the
agencies have claimed.
ACEEE recommends the addition of a "ratchet" mechanism that automatically increases
the stringency of standards across the board, should emissions reductions fall below a
predetermined percentage of projected reductions. Such a mechanism would be
completely compatible with the flexibility offered by an attribute-based system. The need
for a backstop will be even more evident if the agencies' approach to setting the level of
standards is changed to reflect the need to achieve certain levels of GHG emissions, as
ACEEE recommends.
Recommendation: Set an upper bound for the level of emissions and fuel consumption
that can be associated with new light-duty vehicles in a given year. Any exceedence of
that amount should result in an automatic tightening of the standard to ensure that
vehicles in the next year will achieve the intended reductions.
[ACEEE also submitted these comments as testimony at the New York public hearing,
See docket number EPA-HQ-OAR-2009-0472-4621, p. 139.]
California State Senate
I would like the EPA and DOT to develop polices to ensure this program meets its stated
goals. For example, what happens if a carmaker fails to meet your requirement and can't
meet the 2016 target? We are counting on you to achieve the emissions reductions and oil
savings that we expect from this rule. [OAR-2009-0472-7275.1, p.5]
[Fran Pavley also submitted these comments as testimony at the Los Angeles public
hearing. See docket LA EPA Hearing EPA-HQ-OAR-2009-0472-7283, pp. 13-20]
Sierra Club
Both agencies should include a backstop in the final rule and we welcome the opportunity
to comment on this essential element of a strong program. We are concerned that the joint
proposal's reliance upon attribute-based curves, whose efficacy will vary with the
composition of the fleet, imperils the President's goal of "establishing consistent,
harmonized, and streamlined requirements" to reduce greenhouse gas emissions and
improve fuel efficiency. We suggest adopting a backstop rule to prevent shifts of fleet
composition from undermining the standards and now renew that recommendation. A
backstop will address weaknesses in the attribute based system and problems that may
arise with credits - making sure the program stays on course. [OAR-2009-0472-7278.1,
p.3]
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EPA Response to Comments
But the attribute approach, on its own, is imperfect for at least two substantial reasons:
First, the ultimate effect of the curves is dependent upon the fleet mix. Both agencies
have assumed a MY 2016 sales fleet mix of 67% cars and 33% trucks, which is a
dramatic shift from the current 50/50 fleet mix. If assumptions regarding fleet mix
underestimate the number of larger vehicles sold, then net benefits across the curves will
be smaller than estimated. According to the Union of Concerned Scientists, a more truck
heavy fleet mix (42%) would miss the 250 g/mi target by 7 g/mi or nearly 1 mpg and if
the fleet mix in 2016 is similar to today's mix, the standard will be missed by 13 g/mi or
as much as 1.7 mpg. [OAR-2009-0472-7278.1, p.3]
Second, because the attribute curves for light trucks are set at consistently less ambitious
levels than those for cars, manufacturers have a strong incentive to attempt to classify
their cars as 'light trucks', thereby escaping the more stringent car curves. As we
documented in our July 1, 2008, comments on NHTSA's then-proposed 2011-15 vehicle
standards, several common vehicles, including the PT Cruiser and Subaru Outback, have
been so misclassified. While many two-wheel drive compact SUVs will be reclassified
beginning in MY 2011, manufacturers may opt to shift compact two- [OAR-2009-0472-
7278.1, p.3] wheel drive SUVs to a 4-wheel drive platform keep them on the truck curve,
affecting the outcome of the program. [OAR-2009-0472-7278.1, p.4]
To ensure that we achieve 250 g/mi and 34.1 mpg in MY 2016, both agencies
should include manufacturer-specific, automatic ratchet 'backstops' - essentially hard
fleetwide limits that would undergird the attribute curves, thereby accounting for fleet
mixes and classifications that had not been predicted. The proposed rule recognizes
the potential of backstops, acknowledging that "[o]ne way to assure that
emissions reductions are achieved is through the use of explicit backstops, fleet
average standards established at an absolute level." Another option would be to
require automakers who miss the 2016 targets make up that difference with banked
credits. Banked credits would be turned into EPA and NHTSA and therefore retired from
the system and make up for shortfalls. Yet, both EPA and NHTSA fail to adopt this
simple fail-safe approach save for in the limited case of mileage standards for domestic
cars. We urge the agencies to reconsider this choice. Below are detailed comments on
both agencies authority to adopt backstop standards. [OAR-2009-0472-7278.1, p.4]
The Clean Air Act affords EPA broad discretion to shape its rulemakings to be as
effective as possible. Section 202(a) of the Act provides that EPA shall propose
"standards applicable to the emission of any air pollutant from any class of classes of new
motor vehicles or new motor vehicle engines, which in [EPA's] judgment cause, or
contribute, to air pollution which may reasonably be anticipated to endanger public health
or welfare.28 It gives EPA significant authority to prescribe the precise form of these
standards, as the proposed rule rightly states.29 So, as the proposed rule states, "[a]
backstop . . . could be adopted under section 202(a) of the [Clean Air Act]."30 EPA has
already described the acute dangers of allowing continued increases in greenhouse gases
in its proposed endangerment and cause or contribute findings.31 Given that the statute's
"primary goal" is "pollution prevention," (42 U.S.C. §740l(c)), EPA should be taking
every measure to ensure that its proposed rule successfully drives reductions in the
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vehicular greenhouse gas emissions it has identified as an acute threat to public health
and welfare.
EPA's prior work on setting greenhouse gas standards for vehicle referenced a possible
"automatic ratchet." EPA should determine what appropriate annual targets for cars and
light trucks would be based upon a steady increase to meet the 2016 standards - and,
indeed, it has already done this in the process of developing its attribute-based curves.
Second, EPA would include a 'ratchet' mechanism in the rule that worked as follows: At
the end of every year, EPA would determine whether the actual fleet produced in that
year was consistent with its original predictions. If not, EPA would automatically revise
the attribute-based curves for the next year to make up the difference. Manufacturers
would respond by either meeting the new standards directly or by disgorging any credits
they had earned through over-compliance in past years. In this way, the 'backstop' acts
solely through adjustments in the attribute-based curves.
For the reasons we have already discussed in these comments, backstop standards help
ensure that EPA's goals will be met, acting to buffer the attribute-based curve system
from unanticipated problems. EPA should adopt this valuable tool. It is, moreover,
particularly important the EPA do so if NHTSA ultimately does not. Because EPA's rules
intertwine with NHTSA's, EPA could be badly undermined if neither it nor NHTSA put
a backstop in place. In sum, backstop standards are not hard to write and, if the system
functions properly, may never need to be implemented. They are a valuable form of low-
cost insurance, available to both agencies as they work to help America solve the "urgent
and closely intertwined challenges of energy independence and global warming."
2842U.S.C. §7521(a)(l).
29 See 74 Federal Register at 49,464 (collecting cases, including NRDC v. EPA, 655
F.2d318(D.C. Cir. 1981)).
30 74 Federal Register at 49,493; see also id. at 49,513 (describing, correctly, EPA's
broad authority to design effective rules).
31 See generally 74 Federal Register 18,886 (Apr. 24, 2009) at 49,458. We urge EPA and
NHTSA to take the prudent course and put manufacturer specific, automatic ratchet
backstops in place.
[See docket number [OAR-2009-0472-7278.1, pp. 10-11]
[Sierra Club also submitted these comments as testimony at the Detroit public hearing,
See docket number EPA-HQ-OAR-2009-0472-6185, p. 27.]
United Auto Workers
The EPA requested comments on the desirability of establishing alternative backstop
standards for greenhouse gas emissions. The UAW believes that this is undesirable and
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EPA Response to Comments
unnecessary. Doing so would jeopardize the carefully crafted harmonization the agencies
have achieved under these proposed regulations, eliminating or severely limiting the
benefits of a unified national program and raising the cost of any particular level of
regulation. [OAR-2009-0472-7056.1, p.2]
California Air Resources Board
The agencies sought comment on whether a backstop should and can be implemented to
guarantee emission reductions from these attribute-based standards. CARB strongly urges
the EPA to include a backstop measure in the final rule. The fleet composition in model
year 2008 - the baseline model year used by the agencies to project fleet composition in
future years - demonstrated a significant shift in consumer preference to smaller, more
efficient passenger cars due to an unforeseen increase in fuel prices and a declining
economy. This shift in consumer preference was also noticeable in the recent "cash for
clunkers" program. Additional uncertainties in the analysis of future fleet composition
include: the methodology used by the agencies to project future fleet composition; the
impact of early credits; future oil prices; and the impact of changing economic
conditions. A backstop measure would provide assurance that, regardless of any
unforeseen changes in fleet mix, the GHG emission reductions expected from the
program would be achieved.
Contrary to the Alliance's argument (Document ID EPA-HQ-OAR-2009-0472-6952.1),
Massachusetts et al. v. EPA said very little about EPA's and NHTSA's respective duties,
did not direct the agencies to avoid inconsistency, and does not preclude EPA from
promulgating a backstop. 549 U.S. 497, 532 (2007). Rather, the Court merely stated that
the agencies could fulfill their respective obligations while avoiding the inconsistency.
This nuanced distinction is important, as the Central Valley and Green Mountain further
delineated those obligations and found that EPA can fulfill its public health and welfare
mandate - which a backstop could serve to ensure - while NHTSA fulfills its fuel
economy mandate.
In addition, the Alliance's practical considerations, suggesting a backstop is unnecessary,
are less than reassuring. First, manufacturers can increase vehicle footprints and offset
their supposed increased weight penalty by down weighting. Second, manufacturers need
not change vehicle platforms mid-stream if their sales were originally targeted to larger
vehicle models than those estimated in the joint proposal. Third, their extreme case of
offsetting any increase in car efficiency by increasing vehicle footprint is a red herring;
backstops typically under discussion instead are proposed (as noted above) to preserve
the greenhouse gas reductions envisioned for this program should any unforeseen
changes in fleet mix occur. So rather than rely on an industry that has deftly exploited
regulatory loopholes and marketing tricks to sell larger and heavier vehicles, EPA has an
opportunity to ensure that the greenhouse gas emissions it is mandated to achieve actually
come to fruition. [OAR-2009-0472-7189.1, pp.3-4]
[CARB also submitted these comments as testimony at the Los Angeles public hearing.
See docket number OAR-2009-0472-7283, pp. 21-27]
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Center for Biological Diversity
The Proposed Rule Should Include Backstops to Assure That Minimum Mileage and
GHG Emission Standards Are Met
As the court in Center for Biological Diversity determined, although EPC A does not
explicitly require a backstop to assure that minimum feasible average fuel economy
standards are met for each model year, the Agencies cannot act arbitrarily or capriciously
in not adopting a backstop. Id., 508 F.3d at 537-538. See also 49 U.S.C. § 32902(a)(6).
Moreover, voluntary non-compliance with air pollution standards set under the Clean Air
Act is not permitted.
Proposed Rule, 74 Fed. Reg. 49522. In other words, the failure to meet a minimum
"backstop" pollution standard violates the CAA. Here, the Proposed Rule contemplates
so many credit swaps, special programs and other loopholes that it cannot predict what
fuel efficiency standard or GHG emission standard will actually be met in any given
year... .This outcome is impermissible under Center for Biological Diversity, 508 F.3d at
537-539. The Agencies should set backstops or eliminate all loopholes, credits and other
mechanisms that allow minimum standards to be flouted. [OAR-2009-0472-7265.1, p.
18]
National Automobile Dealers Association (NADA)
EPA should defer to the CAFE program by not incorporating backstops into its GHG
rules and by clarifying that it will adjust its mandates as necessary should initial
feasibility and practicability calculations prove too ambitious. Any failure to do so would
undermine the concept of a single National Program and, helping to prove the above-
stated contention that the issuance of a duplicative EPA standard makes little sense.
[OAR-2009-0472-7182.1, p.7]
Non-CO2 light-duty GHGs effectively are regulated by CAFE and, to some extent, even
by existing tailpipe standards. In light of their de minimis global warming potential
compared to CO2 separate standards/backstops for non-CO2 GHGs are unnecessary and
would be redundant. [OAR-2009-0472-7182.1, p.7]
Connecticut Department of Environmental Protection
First, DEP supports the proposed emissions standards as cost effective and technically
feasible. DEP also supports the use of flexible individual manufacturer compliance plans
as a cost mitigation policy, but believes such plans must- ultimately provide the
anticipated fuel savings and GHG emission reductions benefits associated with the
proposed rules. In the event that manufacturers default to widespread vehicle upsizing as
a compliance strategy, the proposed rules should consider a trigger under which a back
stop framework (either under the Clean Air Act, or the Energy Independence and
Security Act) would be implemented. Lacking such a critical assurance, DEP believes
future coordination among the states, the federal government and vehicle manufacturers
in the post 2016 timeframe will be difficult to maintain. [OAR-2009-0472-7301, p.2]
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EPA Response to Comments
State of New Jersey
In several places throughout the proposal, the Agencies request commenter input on their
determination to use attribute-based standards. While we understand why the Agencies
determined to rely on attribute-based standards when establishing the federal motor
vehicle control program, the Department is concerned with the attribute-based approach.
By allowing manufacturers to meet less stringent fuel economy standards through
expanding the vehicle's footprint, the attribute-based approach could encourage
manufacturers to produce larger vehicles.
If this were to occur, the greenhouse gas reductions from the proposed standards may not
be achieved. In addition, the impact of the civil penalty of $5.50 for each tenth of a mile
per gallon is negligible for the manufacturers of trucks with larger footprints. These
concerns could result in manufacturers * shifting to produce larger vehicles, which would
significantly lessen the estimated greenhouse gas reductions estimated from the
implementation of this proposal.
Because of these and other potential concerns, the Department recommends that the
Agencies establish a backstop measure in its final rulemaking to preserve the estimated
reductions in greenhouse gas emissions. The backstop could state that a certain fraction
of the estimated greenhouse gas emission reductions based on the current fleet mix must
he achieved under these rules or the backstop measure would become effective. [OAR-
2009-0472-7109.1, p.5]
Massachusetts Department of Environmental Protection
Shift of Light-Duty Trucks into the Car Category :A key element of the proposed
rulemaking is that the increase in MPG and reduction in carbon emissions will be partly
achieved by shifting most two-wheel drive SUV's into the car category, thereby falling
under a requirement for higher MPG and lower carbon emissions. Thus, it is projected
that cars, which are now around 50% of new car sales, will rise to 67% of such sales
through this adjustment. However, it would be a relatively simple matter for
manufacturers to avoid this shift by selling more four-wheel drive SUV's relative to two
wheel-drive vehicles, and to provide consumers with incentives to make such purchases.
Should this happen, the proportion of light-duty trucks in the fleet might not fall nearly as
much as EPA and NHTSA are projecting, and overall MPG could be substantially worse
than the projections in the proposal.
Massachusetts believes that EPA and NHTSA should take whatever steps are necessary
to prevent such a result. One way to do this would be to have a 'backstop' or re-
calculation of the MPG and emission requirements every couple of years, so that if the
fleet mix contains a higher proportion of light trucks than is currently forecasted, then
separate requirements on both categories would be tightened. If this backstop were
adopted in the final regulations, it could remove any incentive for the manufacturers to
encourage shifts from two-wheel to four-wheel drive sales, thereby forestalling the need
to implement the tightened standard.
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[OAR-2009-0472-7195.1, p.2]
Washington Department of Ecology
Second, history shows that efficiency and emissions reduction gains from motor vehicle
emission control can be offset by changes in the fleet mix between passenger cars and
light duty trucks. For example, the shift from cars to SUVs increased smog-forming
emissions and led California and EPA to adopt uniform emission standards for most
passenger vehicles. Ecology urges EPA and NHTSA to consider a potential backstop
mechanism to preserve the projected GHG reductions over time should the future fleet
mix change significantly. [OAR-2009-0472-7299, p.2]
Mass Comment Campaign (2322, unknown organization)
The best defense would be the establishment of a 'backstop' to preserve oil savings and
greenhouse gas reductions projected under this program. [OAR-2009-0472-5747, p. 1]
University of Pennsylvania Environmental Law Project
Another significant problem with the proposed rule is that it is based on uncertain
projections of future vehicle footprints, vehicle fleet composition, miles driven, and other
relevant variables. While it is obviously unavoidable to base the policy on uncertain
future outcomes to some degree, the policy does not guarantee any reduction in
greenhouse gas emissions. While it is desirable to maintain a degree of flexibility, it is
also essential that greenhouse gas emissions are significantly curtailed. Thus, the policy
should create mechanisms whereby minimum reductions are ensured, even if the
projections turn out to be in significant error. [OAR-2009-0472-7286.1, p. 18]
American Lung Association of California
The American Lung Association of California urges the federal EPA to move forward to
adopt the proposed Clean Cars standard, and to adopt the strengthening changes
recommended by the Natural Resources Defense Council and the Union of Concerned
Scientists. These recommendations include: 1) add an automaker specific backstop to
ensure that the expected level of greenhouse gas emissions reductions are achieved.
[OAR-2009-0472-7216, p. 2]
Environment Michigan
[These comments were submitted as testimony at the Detroit public hearing. See docket
number EPA-HQ-OAR-2009-0472-6185, p. 69.]
In addition to addressing these specific issues, we urge you to include a backstop in the
program that will ensure that the program meets the President's goals for reducing
pollution and saving oil.
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Environment New Jersey
And then, finally, we definitely want to make sure there is a backstop in the program to
make sure the program meets the President's goals for reducing pollution and saving oil.
[EPA-HQ-OAR-2009-0472-4621, p.76]
Citizen Kathy Seal
[These comments were submitted as testimony at the Los Angeles public hearing. See
docket number OAR-2009-0472-7283, p. 148]
Please consider also the backstop measures to ensure that industry stays on track, the
backstop measures that I believe other people have already described today on the panels.
Mass Comment Campaign (326, Student PIRGs)
President Obama has promised that the standards will cut carbon dioxide pollution by
950 million metric tons and oil use by 1 .8 billion barrels of oil over the lifetime of the
vehicles sold under the program. However, the proposed standards include loopholes that
put these goals at risk. To ensure that the President's goals for reducing pollution and
cutting oil use are met, please include a backstop in the final rule. [EPA-HQ-OAR-2009-
0472-11293, p.1]
EPA Response:
Whether EPA Has the Statutory Authority to Establish GHG Emissions Backstops
EPA received only a few comments that directly address the question of whether EPA
has the statutory authority to establish one or more GHG emissions backstops. Ford
claimed that EPA's statutory authority is "highly questionable," with its main legal
arguments being that the Clean Air Act does not mention the concept of backstop
standards, and that backstop standards would yield "two sets of standards" and that "there
is nothing in the CAA to suggest that Congress intended multiple 'layers' of standards to
apply to vehicle emissions." The Alliance of Automobile Manufacturers stated that EPA
authority was "unclear." Toyota stated that "EPA's authority may be ambiguous."
On the other hand, Sierra Club emphasized EPA's "broad discretion" under the CAA and
argued that EPA does have the authority to establish GHG emissions backstops. Many
other commenters (see next section) that endorsed GHG emissions backstops presumably
believe that EPA does have statutory authority in this area, though they did not address
the legal arguments.
EPA agrees with the Sierra Club and strongly reaffirms its position from the proposal that
EPA has the discretion to adopt GHG emissions backstops, where appropriate in light of
the factors relevant under section 202(a)(l).
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Whether EPA Should Establish GHG Emissions Backstops
Most of the comments that EPA received on backstops pertained to whether EPA should
or should not adopt GHG emissions backstops.
Many commenters supported the establishment of GHG emissions backstops: Northeast
States for Coordinated Air Use Management, Public Citizen/Safe Climate Campaign,
Union of Concerned Scientists, Natural Resources Defense Council, American Council
for an Energy Efficient Economy, California State Senator Fran Pavley, Sierra Club,
California Air Resources Board, Center for Biological Diversity, Connecticut Department
of Environmental Protection, State of New Jersey, Massachusetts Department of
Environmental Protection, Washington Department of Ecology, University of
Pennsylvania/Environmental Law Project, American Lung Association of California,
Environment Michigan, Environment New Jersey, and citizen Kathy Seal. EPA also
received short, "mass comments" from over 2000 private citizens supporting GHG
emissions backstops. The primary argument of supporters was that backstops were
necessary, as stated by the Natural Resources Defense Council, "to prevent intentional
and unintentional market shifts from undermining the environmental and oil savings
benefits of the Program." The most common concern cited by many of the commenters
was that the proposed truck footprint curves yield higher GHG emissions targets than the
car footprint curves, for the same footprint values, and that this could lead some
manufacturers to consider changes to increase truck market share and decrease car market
share. Doing so would decrease the overall GHG savings associated with the standards.
In addition, some commenters stated that manufacturers might build larger vehicles
("upsize") than EPA projects, for example, because any amount of slope in target curves
could encourage manufacturers to upsize.
Some commenters were opposed to GHG emissions backstops: Ford Motor Company,
Association of International Automobile Manufacturers, Alliance of Automobile
Manufacturers, Toyota Motor North America, United Auto Workers, and the National
Automobile Dealers Association. Opponents of backstops argued that upsizing was
unlikely and emphasized the anti-backsliding characteristics of the target curves (i.e., the
Alliance of Automobile Manufacturers and Toyota said that upsizing would not
necessarily make compliance with applicable standards easier, since larger vehicles tend
to be heavier and heavier vehicles tend to achieve worse fuel economy/emissions levels).
Backstop opponents also claimed that universal backstop standards could restrict
consumer choice of vehicles. Finally, opponents argued that if EPA were to adopt
backstop standards while NHTSA did not, this would create "new inconsistencies
between the two programs, rather than further the goal of harmonization" (Ford Motor
Company).
EPA is not finalizing GHG emissions backstop standards for the following reasons.
One, EPA is confident that our projections of the future fleet mix are reliable, and that
future changes in the fleet mix of footprints and sales as a result of this rule are not likely
to lead to more than modest changes in projected GHG emissions reductions. The
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agencies acknowledge that based on economic and consumer demand factors that are
external to this rule, the distribution of footprints in the future may be different (either
smaller or larger) than what is projected in this rule. However, the agencies continue to
believe that there will not be significant shifts in this distribution as a direct consequence
of this rule.
As explained elsewhere in the rulemaking documents, EPA's projections of the future
fleet are based on the most transparent information currently available. Moreover, recent
market trends are consistent with EPA's future fleet projections, showing shifts from
light trucks to passenger cars and increased emphasis on higher fuel economy and lower
greenhouse gas emissions. For example, NHTSA's March 2009 final rule establishing
MY 2011 CAFE standards was based on a forecast that passenger cars would represent
57.6 percent of the MY 2011 fleet, and that MY 2011 passenger cars and light trucks
would average 45.6 square feet (sf) and 55.1 sf, respectively, such that average required
CAFE levels would be 30.2 mpg, 24.1 mpg, and 27.3 mpg, respectively, for passenger
cars, light trucks, and the overall light-duty fleet. Based on EPA and NHTSA's current
market forecast, even as soon as MY 2011, passenger cars will comprise a larger share
(59.2 percent) of the light vehicle market; passenger cars and light trucks will, on
average, be smaller by 0.5 sf and 1.3 sf, respectively; and average required CAFE levels
will be higher by 0.2 mpg, 0.3 mpg, and 0.3 mpg, respectively, for passenger cars, light
trucks, and the overall light-duty fleet.
Two, EPA does not believe that the risk of changing vehicle offerings to "game" the
passenger car and light truck definitions is as great as some commenters imply for the
model years in question. NHTSA's recent clarification of the light truck definitions,
which EPA is adopting in its vehicle classifications for the GHG program, has reduced
the potential for gaming, and resulted in the reclassification of over a million vehicles
from the light truck to the passenger car fleet. The changes that commenters suggest
manufacturers might make may not be so simple nor so likely to be accepted by
consumers. For example, 4WD versions of vehicles tend to be more expensive and, other
things being equal, have inherently lower fuel economy than their 2WD equivalent
models. Therefore, although there is a market for 4WD vehicles, and some consumers
might shift from 2WD vehicles to 4WD vehicles if 4WD becomes available at little or no
extra cost, many consumers still may not desire to purchase 4WD vehicles because of
concerns about cost premium and additional maintenance requirements; conversely,
many manufacturers often require the 2WD option to satisfy demand for base vehicle
models. Additionally, increasing the footprint of vehicles involves platform changes,
which usually requires a product redesign phase. Alternatively, turning many 2WD
SUVs into 2WD light trucks would require manufacturers to squeeze a third row of seats
in or significantly increase their GVWR, which also requires a significant change in the
vehicle's overall design.
Three, EPA believes that the shapes of the car and truck footprint curves, including the
"flattening" at the largest footprint values, tend to avoid or minimize regulatory
incentives for manufacturers to upsize their fleet to change their compliance burden.
Given the way the curves are fit to the data points (which represent vehicle models' GHG
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emissions and fuel economy mapped against their footprint), the agencies believe that
there is little real benefit to be gained by a manufacturer upsizing its vehicles. The
agencies' analysis indicates that, for passenger car models with footprints falling between
the two flattened portions of the car footprint curve, the actual slope of fuel economy
with respect to footprint, if fit to that data by itself, is about 27 percent steeper than the
curve being promulgated today. This difference suggests that manufacturers would, if
anything, ease their compliance burden by reducing vehicle footprint than by increasing
vehicle footprint. For light trucks, the agencies' analysis indicates that, for models with
footprints falling between the two flattened portions of the corresponding curve, the slope
of fuel economy with respect to footprint is nearly identical to the curve being
promulgated today. This suggests that, within this range, manufacturers would typically
have little incentive to either incrementally increase or reduce vehicle footprint. A
number of commenters, including Honda, affirmed that this is the case.
At the same time, adding another backstop standard would have virtually no effect if the
standard was weak, but a more stringent backstop could compromise the objectives
served by attribute-based standards - that they distribute compliance burdens more
equally among manufacturers, and at the same time encourage manufacturers to apply
fuel-saving technologies rather than simply downsizing their vehicles, as they did in past
decades under flat standards. This is why Congress mandated attribute-based CAFE
standards in EISA. This compromise in objectives could occur for any manufacturer
whose fleet average was above the backstop, irrespective of why they were above the
backstop and irrespective of whether the industry as a whole was achieving the emissions
and fuel economy benefits projected for the final standards, the problem the backstop is
supposed to address. For example, the projected industry wide level of 250 gm/mile for
MY 2016 is based on a mix of manufacturer levels, ranging from approximately 205 to
315 gram/mile3 but resulting in an industry wide basis in a fleet average of 250 gm/mile.
Unless the backstop was at a very weak level, above the high end of this range, then some
percentage of manufacturers would be above the backstop even if the performance of the
entire industry remains fully consistent with the emissions and fuel economy levels
projected for the final standards. For these manufacturers and any other manufacturers
who were above the backstop, the objectives of an attribute based standard would be
compromised and unnecessary costs would be imposed. This could directionally impose
increased costs for some manufacturers. It would be difficult if not impossible to
establish the level of a backstop standard such that costs are likely to be imposed on
manufacturers only when there is a failure to achieve the projected reductions across the
industry as a whole. See comments from Ford Motor Company above supporting this
reasoning. An example of this kind of industry wide situation could be when there is a
significant shift to larger vehicles across the industry as a whole, or if there is a general
market shift from cars to trucks. The problem the agencies are concerned about in those
circumstances is not with respect to any single manufacturer, but rather is based on
concerns over shifts across the fleet as a whole, as compared to shifts in one
manufacturer's fleet that may be more than offset by shifts the other way in another
manufacturer's fleet. However, in this respect, a traditional backstop acts as a
manufacturer specific standard.
3 Based on estimated standards presented in Preamble tables III.B.1-1 and III.B.1-2.
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EPA Response to Comments
While the simplest form of GHG emissions backstop is a universal standard, i.e., a single
gram/mile level that no manufacturer could exceed, a few commenters suggested
alternative GHG emissions backstop approaches. The most common alternative
approach suggested by commenters was an industry-wide "trigger" or "ratchet" approach,
whereby EPA would build into the standards an automatic lowering or flattening of the
GHG-footprint curves if the industry-wide model mix and footprint characteristics
changed sufficiently to reduce the actual GHG emissions savings relative to the projected
GHG emissions savings. The concept of a ratchet mechanism recognizes the problem
discussed above,, and would impose the new more stringent standard only when the
problem arises across the industry as a whole. While the new more stringent standards
would enter into force automatically, any such standards would still need to provide
adequate lead time for the manufacturers. Given the short lead-time already before the
2012 model year, a ratchet mechanism in this rulemaking that would automatically
tighten the standards at some point after model year 2012 is finished and apply the new
more stringent standards for model years 2016 or earlier, would fail to provide adequate
lead time for any new, more stringent standards. Since the GHG emissions standards
remain in effect unless and until they are changed, there would be greater lead time for
future years beyond model year 2016. However, as discussed below, EPA believes the
better course is to monitor model mix and footprint characteristics, and associated GHG
emissions reductions, and reconsider this issue in the future if a problem arises.
EPA believes that it has ample reasons to choose not to exercise its discretion under
section 202 (a) (1) to adopt a backstop. EPA consequently disagrees with the Center for
Biological Diversity that any choice not to adopt a backstop would be impermissibly
arbitrary.
While EPA is not adopting GHG emissions backstops, EPA plans to conduct and
document retrospective analyses to evaluate the model mix and footprint characteristics
of the future fleet during the rulemaking timeframe and to compare these characteristics
to what EPA has projected in this rulemaking analysis. If EPA determines that there is a
significant shift in the industry's product mix resulting in a relaxation of their estimated
targets and overall GHG emissions savings, EPA will reconsider the relative merits of
GHG emissions backstops in future rulemakings under the CAA.
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4. EPA Response to Comments on Joint Issues and Technical Work 2
4.1. Baseline Market Forecast 2
4.2 Reserved 7
4.3 Reserved 7
4.4. Joint Vehicle Technology Assumptions 7
4.5 Economic Assumptions 28
4.6. Safety and Mass Reduction 81
4.7. Endangered Species Act 94
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EPA Response to Comments
4. EPA Response to Comments on Joint Issues and Technical Work
4.1. Baseline Market Forecast
Organization: International Council on Clean Transportation
Comment:
[[These comments were submitted as testimony at the Detroit public hearing. See docket
number EPA-HQ-OAR-2009-0472-6185, p. 58]
The technical analyses conducted by EPA and NHTSA are sound and demonstrate that
proposed standards are feasible and the benefits of the rule far outweigh the costs. The
analytical perimeter also provides a good base for further reductions in fuel consumption
and greenhouse gas emissions beyond 2016.
EPA Response:
The EPA appreciates the positive feedback on the methodology used in the proposal. We
continue to believe to that our methodology is a transparent way to accurately assess the
costs and benefits of the rule.
Organization: Dr. Walter McManus, Ph.D., Research Scientist, University of Michigan
Transportation Research Institute (UMTRI)
Comment:
NHTSA has historically based its analysis of potential new CAFE standards heavily on
private information—extensive and detailed product plans for vehicles, engines, and
transmissions. This private information is obtained voluntarily, and NHTSA is obligated
to prevent its public disclosure. [OAR-2009-0472-3651.1, p.3]
The new approach is more transparent. The information sources (with few exceptions),
are all either in the public domain, available to the public upon request, or available
commercially. This is arguably the most profound change in the methodology. In the
past, the process was essentially immune from rigorous review. In the new process,
anyone can repeat and review the analyses done by the agencies. [OAR-2009-0472-
3651.1,p.3]
Transparency produces some tangible benefits to consumers and automakers. The new
approach reduces the potential for errors (whether of omission and/or commission) that
have been observed in past responses to NHTSA's requests. The new approach more
accurately measures the incremental costs and benefits of the proposed standards. The
product plans submitted recently show a significant increase over prior plans in
applications of technology to improve fuel economy. To the extent that improvements
have been planned in anticipation of future increases in CAFE standards, they should not
be in the baseline. They would be in the old process. [OAR-2009-0472-3651.1, p.3]
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EPA Responses on Joint Issues and Technical Work
[[Dr. McManus, also submitted these comments as testimony at the Detroit public
hearing, See docket number EPA-HQ-OAR-2009-0472-6185, pp. 36-37.]
EPA Response:
The EPA appreciates the positive feedback on the methodology used in the proposal. We
continue to believe to that our methodology is a transparent way to accurately assess the
costs and benefits of the rule.
Organization: Public Citizens and Safe Climate Campaign
Comment:
We appreciate and support the agencies' use of publicly available information about
technology adoption. NHTSA's previous approach, using confidential product plans
made it impossible for the public to verify NHTSA's technology forecast. It also
introduced the potential for automakers to game the standard-setting process by providing
incomplete or misleading product plans. Using publicly available data makes the
standards more transparent and provides the opportunity for broader participation in
estimating the technological feasibility of improving vehicle efficiency. [OAR-2009-
0472-7050.1, p. 10]
EPA Response:
The EPA appreciates the positive feedback on the methodology used in the proposal. We
continue to believe to that our methodology is a transparent way to accurately assess the
costs and benefits of the rule.
Organization: New York State Department of Transportation
Comment:
The baseline condition used in the analysis of alternatives for the previous CAFE
proposals was based on manufacturers' confidential plans for each model year, whereas
the baseline in this proposal is based on each manufacturer's actual MY 2008 fleet. We
agree that this approach will result in more complete market data and is more transparent
than relying on manufacturers' confidential plans. [OAR-2009-0472-7531.1, p.2]
EPA Response:
The EPA appreciates the positive feedback on the methodology used in the proposal. We
continue to believe to that our methodology is a transparent way to accurately assess the
costs and benefits of the rule.
Organization: Kleinbaum, Rob
Comment:
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EPA Response to Comments
As Ronald Reagan used to say, we need to trust but verify. And that, it seems, is exactly
what the new rule does. Central to the success of both the rule and the automakers, is
transparency. [OAR-2009-0472-4074, p.2]
Much of the debate on the impact of fuel economy has been clouded by the fact that data
and assumptions are not disclosed. NHTSA has historically based its analysis of potential
new CAFE standards heavily on private information-extensive and detailed product plans
for vehicles, engines, and transmissions. This private information is obtained voluntarily,
and NHTSA is obligated to prevent its public disclosure. [OAR-2009-0472-4074, p.2]
The new rule's proposed approach is more transparent, with most sources in the public
domain or readily available. This is a critically important change in the methodology
since, in the new process, anyone can repeat and review the analyses done by the
agencies. [OAR-2009-0472-4074, p.2]
EPA Response:
The EPA appreciates the positive feedback on the methodology used in the proposal. We
continue to believe to that our methodology is a transparent way to accurately assess the
costs and benefits of the rule.
Organization: American Council for an Energy Efficient Economy
Comment:
ACEEE applauds USEPA and NHTSA for taking the enormous step towards energy
security and environmental protection that this joint rulemaking represents. The proposed
rule offers very substantial increases in fuel economy and reductions in vehicles'
greenhouse gas emissions.
The rule also reflects important analytical improvements over the approach taken in
previous rulemakings, especially the more thorough and transparent analysis of the
technical potential to reduce emissions and fuel consumption, and the associated costs. In
addition, the agencies' use of a publicly available data set fully describing the reference
fleet, rather than confidential manufacturer product plans, to develop the rule allows the
public to understand in detail the basis for the standards. [OAR-2009-0472-7260.1, p.l]
[ACEEE also submitted these comments as testimony at the New York public hearing,
See docket number OAR-2009-0472-4621, pp. 138.]
EPA Response:
The EPA appreciates the positive feedback on the methodology used in the proposal. We
continue to believe to that our methodology is a transparent way to accurately assess the
costs and benefits of the rule.
4.1.1. 2008 Baseline Fleet
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EPA Responses on Joint Issues and Technical Work
Organization: Ford Motor Company
Comment:
Pursuant to the National Highway Traffic Safety Administration's (NHTSA's) September
22nd, 2009 Request for Product Plan Information (74 FR 48192) to acquire new and
updated information regarding vehicle manufacturers' future product plans to aid in
establishing model year 2012-2016 passenger car and light truck average fuel economy
standards, Ford Motor Company (Ford) conducted an assessment of its future product
plans and concluded that they are materially unchanged from our May 1, 2009
submission. Ford requests that NHTSA and EPA continue to reference the Ford
submission to the NHTSA Office of the Chief Counsel Docket Number NHTSA-2009-
0042, Docket ID: NHTSA-2009-0042-0006.1. Ford requested and was granted
confidential treatment for designated information in that submittal. Confidential treatment
of such information continues to be appropriate until the end of the specified or
applicable model year identified in the submittal, for the reasons outlined in the May I
cover letter. Should the agency have any questions regarding Ford's product plan
information, please contact Cynthia Williams. In the event of any questions about the
confidential nature of the May 1 submittal, please contact Mark Edie, Office of the
General Counsel, Ford Motor Company, Suite 450, 1350 I St. NW, Washington D.C.
20005. [NHTSA-2009-0059-0063.1,p. 1]
EPA Response:
The EPA appreciates the update on the status of Ford's product plan. The agency has
treated all manufacturers' product plans as confidential business information and has not
released or otherwise divulged any confidential information in the baseline fleet utilized
for analytical purposes in each agency's rules. Also, it is important to note that the
baseline fleet was not updated to reflect information that would have been available at the
end of the 2009 model year. The baseline fleet continued to be constructed from publicly
available data, and based on 2008 model year vehicles for the final rulemaking. The
agencies' reasons for doing so are set out in section II.B.4 of the preamble to the final
rule.
Organization: General Motors
Comment:
On May 1, 2009, GM responded to a NHTSA request for a detailed product plan (EPA
was subsequently copied). As part of that submission, GM provided very detailed product
information, aligned with the restructuring plan submitted to the Treasury Department in
February 2009. Since that time, GM has gone through bankruptcy reorganization and has
updated its restructuring plan accordingly. Rather than recompiling the entire detailed
product plan spreadsheets for September 2009, below we have outlined the major
changes that have occurred since our prior submission and provide data as appropriate.
The changes can be summarized as follows:
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EPA Response to Comments
Discontinuation of GM Brands
The most notable change to the GM product plan is the discontinuation of 4 of our brands
and the associated models. The previous submission had included a longer wind-down of
Saturn, Saab and HUMMER, and did not anticipate the closing of Pontiac. Pontiac,
Saturn, Saab and HUMMER will no longer be part of GM in the future. Pontiac
production has already been discontinued, and we are still awaiting resolution on the
sale/disposition of Saab and HUMMER. GM is not planning on any significant 2010 MY
volume for Saturn, Saab and HUMMER and most of Pontiac (Pontiac Vibe and G6 have
2010 MY volume). [OAR-2009-0472-6953.1, p.32]
EPA Response:
The EPA appreciates the update on the status of GM's product plan. It is important to
note that the baseline fleet was not updated to reflect the new information from GM. One
reason for doing so, as noted in the preamble to the final rule, is that "although the
agencies recognize that these specific vehicles will be discontinued, we continue to
include them in the market forecast because they are useful as a surrogate for successor
vehicles that may appear in the rulemaking time frame to replace the discontinued
vehicles in that market segment.
Market share in our reference fleet are based on CSM's 4th quarter forecast that takes into
account changes to GM's brand lineup. The projections distribute GM's market share
across all of GM's 2008 model year brands. For a complete explanation of methodology
used to create the projections and fleet file for modeling, see the first chapter of the joint
technical support document.
4.1.2. 2012 - 2016 Reference Fleet
Organization: California Air Resources Board
Comment:
The agencies have requested comment on their use of publicly available data to
determine the baseline fleet for model years 2012-2016. CARB agrees with the agencies
that this approach provides greater transparency to the process and avoids some of the
inherent problems noted in the NPRM from relying on incomplete and limited data from
manufacturers' future production plans. The NPRM acknowledges that because future
fleet projections are based on the model year 2008 fleet some vehicles models
manufacturers have already announced for production in the near future are not included
in the analysis. We agree with the agencies that the likely impact of this omission is
minor. [OAR-2009-0472-7189.1, p. 10]
[CARB also submitted these comments as testimony at the Los Angeles public hearing.
See docket number OAR-2009-0472-7283, pp. 21-27]
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EPA Responses on Joint Issues and Technical Work
EPA Response:
The EPA appreciates the positive feedback on the methodology used in the proposal. We
continue to believe to that our methodology is a transparent way to accurately assess the
costs and benefits of the rule.
Organization: General Motors
Comment:
GM recommends that the agencies reduce the projections for large pickup volume in the
future fleet in every model year, thus lowering the requirements for large pickups yet still
maintaining the overall industry goal of 250 CO2 g/mile (35.5 mpg equivalent) by 2016
model year. From a baseline vehicle fleet, the agencies developed a methodology to
project the size, composition, volume and footprint of the segments of the future fleet.
The methodology projects an uncharacteristically large volume of large pickup trucks in
the future and therefore compels the results to require more reductions from this segment
of the fleet. The agencies used a forecast from CSM and added some of their own
modifications. In searching for explanations for these discrepancies, we note that the
agencies' forecast could possibly have erroneously included some volume of unregulated
pickups. Regardless, the agencies' projections of large pickups lead to higher overall
requirements for those vehicles. [OAR-2009-0472-6953.1, p.25]
EPA Response:
GM correctly posits that the 2011 and 2016 reference fleets used by the agencies in the
proposed rule over-project the number of large pickup trucks. EPA in fact came to this
same conclusion after issuing the NPRM, but before the comment period started. The
over-estimate at proposal occurred because the standard CSM forecast included heavy
duty class 2b and class 3 vehicles (which are not light duty vehicles, and so are not
subject to the rule). This had the effect of increasing the volumes of large pickup trucks
and full size vans disproportionately to the other truck classes. To correct the
overestimate, EPA used a custom forecast from CSM in projecting the reference fleets
used for analytical purposes for the final rule. This custom forecast had all class 2b and 3
vehicles that did not qualify as medium duty passenger vehicles removed from the
forecast.
4.2 Reserved
4.3 Reserved
4.4. Joint Vehicle Technology Assumptions
Organization: California Air Resources Board
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EPA Response to Comments
Comment:
The agencies requested comment on the joint technology analysis and assumptions,
including new types of analyses introduced in this joint proposal. CARB believes the
joint technological and cost analyses are fundamentally sound. CARB supports the
agencies methodology for determining component technology costs. Clearly, component
teardown costs as determined by FEV are the most reliable method for assessing
technology costs. Absent such detailed cost data, the next best option is a bill of materials
approach - used by CARB in determining costs for California's GHG standards -
supplemented by cost data from manufacturers, component suppliers, and public sources.
As additional teardown cost data becomes available, the agencies should include those
costs in the final rule. Given the uncertainties in the model inputs raised in our previous
comment on EPA's estimate of future fleet mix, EPA's use of the OMEGA model
appears to be a reasonable methodology to determine manufacturers' technology
implementation and costs for compliance with the proposed GHG requirements.
Although CARB used a different methodology to determine the cost-effectiveness of its
GHG requirements, it is not surprising that EPA has arrived at the same conclusion
regarding what levels of GHG emission reductions are reasonable and achievable in the
same timeframe.
EPA requested comment on their estimates for diesel cost, mass reduction and material
substitution generally (techniques, costs, and effectiveness), and revised hybrid system
costs. EPA's technology costs and effectiveness estimates generally match those
determined by CARB for the same technologies. This is not surprising because most of
the technologies are well known and are either already being implemented in vehicles or
are at the prototype stage. Concerning hybrid systems, CARB does not believe they are
required to meet the proposed standards. Nonetheless, the costs cited in the DRIA may be
reasonable when considered in the timeframe of the proposed GHG program. However,
we would note that the costs cited for power split systems seem high in light of Ford and
Toyota's statements that they have made significant cost improvements in their hybrid
systems and are currently making some profit from their hybrid vehicles. In addition, as
hybrid drive systems and batteries undergo further refinement, their costs are expected to
decrease near and beyond 2016.
EPA also requested specific comment on their mark-up factor of between 1.11 and 1.64,
depending on the technology. As noted in our response above, CARB supports the
methodology used by the agencies to determine component costs. CARB is also
supportive of the comprehensive analysis EPA undertook to determine indirect
component costs to the manufacturer resulting from production and retail related costs.
EPA noted in its DRIA that cost multipliers will vary between components depending
on the complexity of the technology and the timeframe. CARB agrees with EPA's
analysis that less complex and/or more mature technologies would incur lower
production and retail costs. [OAR-2009-0472-7189.1, p. 10]
[CARB also submitted these comments as testimony at the Los Angeles public hearing.
See docket number OAR-2009-0472-7283, pp. 21-27]
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EPA Responses on Joint Issues and Technical Work
EPA Response:
EPA appreciates CARB's comments and agrees with them. As regards the comment on
power-split hybrid cost estimates being too high, both agencies continue to believe that
the cost estimates used in the proposal and final rules are the best estimates available at
this time. Although the agencies agree that some manufacturers have made statements
recently about improvements to their systems having resulted in cost reductions, we
prefer instead to base estimates on engineering analysis. Note also that recent
manufacturer statements pertain to existing hybrid systems based on nickel-metal hydride
battery technology while the cost estimates in our rules are based on Li-Ion battery
technology. This adds another level of uncertainty to the press release type statements
made recently by auto makers.
Organization: BorgWarner
Comment:
(1) The need for technology-neutral legislation. As a supplier of multiple advanced
technologies named in the joint proposal for improving fuel economy and emissions,
BorgWarner supports technology neutrality. We believe there is no single 'silver bullet'
technology that meets the American consumers varied driving behaviors. It will take a
combination of several advanced technologies to meet the needs of automakers and
consumers seeking more fuel efficient vehicles. However, the joint proposal falls short of
achieving technology neutrality in several areas: the delay in the adoption of real-world
driving data in vehicle ratings, offering large credits for a select few technologies, and
using models that discourage the use of other effective technologies. [OAR-2009-0472-
7289], p. 1
Our primary concern is the delay in adopting fuel economy and CO2 rating calculations
that are closer to the real world driving behaviors. According to a 2006 EPA study,
American consumers accumulate 57% of their miles on the highway and 43% in the city.
However, the proposed rule continues to base fuel economy and CO2 ratings on outdated
1975 data that showed the American consumer accumulated 45% of their miles on the
highway and 55% in the city. As a result, existing and proposed vehicle fuel economy
and CO2 ratings are inaccurate measures of today's real-world fuel economy and CO2
production. Continuing to rate vehicles with this inaccurate data essentially discourages
any technologies that excel in highway driving conditions (speeds over 45 mph) and may
encourage an unintended bias toward vehicles that perform better in city driving
conditions. If not addressed now, the auto industry will continue to invest and make
decisions based on outdated information for another seven years. Decisions based on
outdated calculations may not lead Americans or the auto industry to the right choices to
reduce oil dependence and real-world CO2 emissions. [OAR-2009-0472-7289, pp. 1-2]
Significant long-term technology and capital decisions are being made now, and
regulations need to properly tie these decisions to real-world benefits as best as possible.
This is one of the key principles outlined in the 'Bellagio Memorandum on Motor Vehicle
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EPA Response to Comments
Policy,' which suggests policies should be based on real-world performance compared to
societal objectives, and not given special consideration for specific fuels, technologies, or
vehicle type. Since the EPA already uses the revised driving cycles of 57% highway and
43% city in other areas such as the 'Fuel Economy Trends Report,' if should be relatively
simple to change the formulas for the upfront calculations to provide a consistent
measure. No testing protocol is changed, only the weighting calculations. Implementing
this calculation change now brings us a step closer to utilizing real world measures to
provide real world results. This also supports President Obama's desire for the joint
proposal to provide clarity, stability and predictability and the EPA's own desire to tie
technologies to real-world results. [OAR-2009-0472-7289, p.2]
EPA Response:
EPA interprets the reference to "1975 data" to mean the Federal Test procedure used to
implement the standard (which reflects the relative proportions of highway/city driving
referenced in the comment). EPA believes it is premature to use different test procedures
to evaluate performance at this time as virtually all current data on technology
performance is based on 2-cycle testing. Moreover, as a matter of law, CAFE standards
for passenger cars (although not light trucks) must be established using the FTP. 42 USC
section 32904 (c). At the same time, the agencies have accounted for the difference in
real world performance in assessing the results of their respective rules, adjusting fuel
economy results by 20% to account for the difference.
4.4.1. Technologies Considered
Organization: International Council on Clean Transportation
Comment:
EPA and NHTSA conclude that 'the application of diesel engines on small vehicles is not
a viable or cost effective option'. Thus, the cost and effectiveness estimates did not
include the technology of a diesel engine with lean NOx trap (LNT) catalyst after-
treatment on a small car.
While the market share of diesel passenger cars in general is currently at a very low level
in the US (<1%), the technology should not be completely ignored for the following
reasons: (1) Volkswagen and Mercedes have a history of selling diesel cars in the US,
with regular customers eager to buy diesel cars in the future. (2) Average market share of
diesel passenger cars in Europe is about 50%. European manufacturers are interested in
exporting some of their diesel models to the US to establish an additional business
segment. (3) Diesel engines are able to meet Tier 2 standards in small cars without
needing a deNOx catalyst or urea injection (Selective Catalytic Reduction - SCR),
making compliance easier and cheaper than for larger diesel vehicles.
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EPA Responses on Joint Issues and Technical Work
Volkswagen's success in selling smaller diesel cars in the US supports this assumption.
Volkswagen of America recently announced that 5,072 diesel vehicles were sold in June
2009, representing 26% of total sales for the month. Diesel engines accounted for 81% of
Jetta SportWagen sales, and 40% of Jetta sedan sales. For 2010 VW is introducing a
diesel version of the Golf and expects that 30% of all Golf hatchbacks sold in 2010 will
be equipped with a turbocharged diesel engine.
Given this background, ICCT suggests considering diesel technology for small passenger
cars and assessing their cost and effectiveness.
[OAR-2009-0472-7156.1, pp.22-23]
EPA Response:
The final standards, of course, do not mandate any particular technology path.
Manufacturers remain free to use any package of technologies (and other compliance
strategies, such as use of credits) to achieve their fleetwide average. The OMEGA
modeling is used by EPA to forecast potential compliance paths, not to determine the
level of the standard. That being said, EPA at proposal evaluated diesel technology in its
consideration of potential technology packages for all vehicles other than small cars, and
in the final rule, included diesel technology in the technology packages for small cars as
well. EPA is not predicting that manufacturers will utilize diesel technology to comply
with the model year 2012-2016 standards because it is considerably more expensive and
less cost effective than other potential technologies. Specifically, the diesel package was
not as cost effective as other packages in the compact car vehicle type (vehicle type 2)
and was not, therefore, chosen by the OMEGA model. This does not mean that diesel
technology is not a viable technology for small cars, but rather that using the metrics used
by the OMEGA model and the model inputs used by EPA, it was not considered to be as
cost effective as other technologies. If the consumer demands diesel technology in this
market segment, a manufacturer will probably offer it, and nothing in the rule prevents
manufacturers from doing so.
Organization: University of California, Santa Barbara, Bren Working Group on
Vehicle Fuel Economy, University of Miami, School of Law
Comment:
Stringency of Targets
The stringency of the footprint-fuel economy curve at the year 2016 represents fuel
efficiencies attainable utilizing maximum technology available at present. NHTSA and
EPA's interpretation of'maximum technology' is crucial to the annual increase in
stringency of this curve; this underscores the importance of assumptions pertaining to
technological advancement. According to the NHTSA/EPA joint technical support
document, many of the technologies included in the proposed ruling are currently 'well
known' and 'readily available'. Technologies presently in the research and development
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EPA Response to Comments
phase were not considered because of uncertainty surrounding implementation. [OAR-
2009-0472-7188.1, p. 3]
We feel that it is inappropriate to base regulations for the year 2016 solely on
technologies that are available today. Technologies currently in the research and
development phase should be considered in setting the standards for the latter years of
this proposed ruling. [OAR-2009-0472-7188.1, p. 4]
We maintain that the fuel economy curves need to be more stringent as an incentive for
manufacturers to innovate and devote more capital to the research and development of
fuel saving technologies. Similar technology-forcing occurred in the 1970s during the
phase-in of catalytic converters in all automobiles. At that time, automakers unanimously
maintained that the high cost of phase-in exceeded the overall benefit and high
uncertainty in performance effects. In 1975, emissions standards necessitated automakers
to adopt these technologies though they previously deemed them undesirable. We
recommend that the fuel economy curves be stringent enough to encourage
manufacturers to reach for forthcoming technologies. [OAR-2009-0472-7188.1, p. 4]
Although many of these technologies are available today, the emissions reductions and
fuel economy improvements proposed would involve more widespread use of these
technologies across the light-duty vehicle fleet, which account for about 40% of all U.S.
oil consumption, and about 60% of transportation sector oil use. Ultimately, the
greenhouse gas emission reductions this program would bring about are equivalent to the
emissions of 42 million cars. [OAR-2009-0472-6770, p. 1]
When considering technological feasibility, the agencies should give consideration to
more than just currently applied technology, including experimental and developing
technology. Of course, the economic costs to manufacturers and consumers of this
potentially expensive technology must be given due weight. Technology that would
create prohibitive costs for manufacturers and/or consumers should not be required.
However, this should not imply that such technology be permanently overlooked [OAR-
2009-0472-6770, p. 1]
EPA Response:
Availability of adequate lead time is an essential component of both agencies' statutory
mandates. EPA indeed has sound reasons for rejecting a standard based on increasing
stringencies of 6%, and the type of approach advocated by the commenter forcing
aggressive use of still-to-be-developed technologies would be more stringent still and
hence inappropriate. See preamble section III.D.7 and comment response 3.3.3.3.1.
Even for technologies that are well known and readily available, there are two underlying
issues that affect the time frame during which these technologies can be adopted by
manufacturers. EPA determined that there is adequate lead time to employ the financial,
engineering, and other resources needed to achieve the standards, recognizing that a
significant portion of these human and capital resources would need to be expended
during the next few years. Lead time is already somewhat constrained for these model
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EPA Responses on Joint Issues and Technical Work
years, as it is now 2010 and MY 2012 is only a number of months away. The farthest
model year, 2016, also is not many years from now, given the time needed for
redesigning cars and trucks for new production. More specifically, the first set of factors
related to adequacy of lead time is manufacturers' production capacity and the ability of
automobile manufacturers and suppliers to produce these technologies in sufficient
volumes to support all applications. For example, even though the capacity of dual clutch
transmissions continues to increase, there will not be sufficient volume to supply every
vehicle sold in the United States in the 2016 MY. The second issue concerns
coordination of technology additions with manufacturers' design cycles. It takes several
years to redesign a vehicle, and several more to design an entirely new vehicle not based
on an existing platform. Thus, redesign cycles, i.e. consideration of the time needed to
design, are an inextricable component of adequate lead time under the Act. As noted in
section III.D.6 of the preamble to the final rule, Vehicle manufacturers typically redesign
their vehicles every five years and it takes several years to redesign a vehicle.
Furthermore, redesigns require a significant outlay of capital from the manufacturer.
This includes research and development, material and equipment purchasing, overhead,
benefits, etc. These costs are significant and are included in the cost estimates for the
technologies in this rule. Because of the manpower and financial capital constraints, it
would only be possible to redesign all the vehicles across a manufacturer's line
simultaneously if the manufacturer has access to tremendous amounts of ready capital
and an unrealistically large engineering staff. However no major automotive firm in the
world has the capability to undertake such an effort, and it is unlikely that the supplier
basis could support such an effort if it was required by all major automotive firms.
Consequently, EPA believes that the level of stringency chosen for the final rule is sound
and reasonable, and based on proper consideration not only of available technologies but
the costs and necessary lead time for its introduction throughout the vehicle fleet.
Organization: BorgWarner
Comment:
Finally, through the issues mentioned above and in some of the Volpe modeling, we find
the proposal offers limited credits and incentives for advanced clean diesel technologies.
The Volpe model only considers diesel technologies for vehicles with engines of 6
cylinders or more. The model does not apply diesel technologies to 4-cylinder engines,
even though these vehicles are very efficient for highway driving. In fact, clean diesels
vehicles that are emissions certified in 50 states are selling well in the US, where they are
available, as a result of their fuel efficiency. Over the next five years 4-cylinder diesel
engines will have the highest compounded annual growth rate within diesel engines in the
United States. Looking at global trends, in five years 4-cylinder diesels will account for
87% of the diesel market, and solid diesel growth is expected in even smaller engines
such as 2 and 3-cylinder engine. In 2009, the percentage of consumers selecting dean
diesel vehicles actually surpassed the percentage of consumers selecting hybrid electric
powertrain vehicles. As we transition to more fuel efficient vehicles, there is a role for
advanced light-duty diesels. Therefore, all technologies need to be on equal ground and
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EPA Response to Comments
evaluated/incentivized based on their real-world performance. [OAR-2009-0472-7289,
pp.2-3]
EPA Response:
Regarding Borg Warner's comment on clean diesels and, in particular, 4-cylinder clean
diesels, the agencies appreciate the views laid out by Borg Warner but emphasize that the
modeling done to support the proposed and final rules does not limit what can and cannot
be done by manufacturers to comply with the standards. Instead, the modeling done is
meant to evaluate the feasibility of, and the most cost effective means of complying with,
the new standards. In other words, the modeling done does not in any way prohibit the
technologies manufacturers may choose to use or that consumers may choose to buy.
Should manufacturers and/or consumers prefer diesel technology to other technologies
(downsized/turbocharged gasoline engines, hybrids, etc.), these technologies can be
utilized so long as a manufacturer meets its fleetwide standard.
Organization: American Iron and Steel Institute
Comment:
[[These comments were submitted as testimony at the Detroit public hearing. See docket
number EPA-HQ-OAR-2009-0472-6185, pp. 70-77.]
Steel is the basis for modern vehicles in the U.S. and around the world. Recent studies
over the last three years have found that the average light vehicle in North America
contains about 60 percent steel. Our goal, of course, in the steel industry is to keep steel
in the vehicle, to preserve and grow this vital market. Let me explain why this steel
industry objective supports the goals of EPA and NHTSA; that is, why steel technology
helps to reduce emissions associated with vehicles.
I would like to make three points today. One on reinventing steel, one on the importance
of collaboration, and the third on steel's greenness as measured by lifecycle analysis.
Now, first, the steel industry has reinvented its automotive steel products in the past and
must continue to do so in the future if it is to continue to provide safe, practical and
affordable means of reducing vehicle mass, which leads to emissions reductions. For
example, in my experience working in programs with GM, Ford, and Chrysler as well as
the new North American domestics including Toyota, Honda, Nissan, Hyundai, BMW,
Mercedes and others, I can tell you that all of these companies, which do manufacture
vehicles in North America, make use of state-of-the-art high-strength steel grades
manufactured by domestic steel mills. Now, this proposed rule on light-duty vehicle
emissions clearly reports the consensus by EPA and NHTSA that reducing vehicle weight
is an effective part of the overall strategy for meeting the proposed emissions and fuel
economy standards. EPA further has asked for comment on its conclusion that it is
'technically feasible to reduce vehicle weight without reducing vehicle size or footprint or
structural strength.' I would like to say that AISI does agree with this statement since that
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EPA Responses on Joint Issues and Technical Work
is exactly what is accomplished by the effective use of advanced high-strength steels or
'AHSS.' And I will explain this a little further.
These new steels have helped car makers to achieve 5-star crash ratings in their latest
models without increasing vehicle mass. This is consistent with EPA comments written
in the Weight Reduction and Vehicle Safety Draft on the Regulatory Impact Analysis,
talking mainly by reducing vehicle mass and including comments like the substitution of
lower density and/or higher strength materials — going on to explain that including high-
strength steels, aluminum, magnesium, or composite materials for components currently
fabricated from mild steels. In fact, it is these AHSS grades in today's cars and trucks,
and their growth over the last 10 years, that have made steel bodies and chassis
components considerably stronger and lighter, and more crashworthy than ever before.
Such grades include 'dual phase' and 'TRIP' steels, grades that are new to these — these
new grades now add up to about 15 percent of the average vehicle, new vehicle now
made in the U.S., and are the fastest growing materials, by the way, in today's vehicles.
These materials have already proven to reduce the mass of body structures by up to 25
percent or even more in some cases, and can do this more affordably than any other
materials considered for mass reduction. AISI believes there is more weight savings to
be gained by further using these materials in future vehicles.
My second point has to do with collaboration. AISI believes collaboration is essential for
both the steel and automotive industries to move forward and implement the technologies
that drive down emissions. Our partnering together is well known for achieving
productive results. In 1987, the Auto/Steel Partnership was formed with Chrysler, Ford,
and General Motors, and the major domestic steel mills and still operates today. In the
1990s the domestic steel companies organized with a global consortium to form the
ULSAB-ARV and Ultra-Light Steel Auto Body, consortium of those groups, that
released a study that showed the power of advanced computer-aided design or C AE
analysis coupled with advanced high strength steels could lead to weight reduction, mass
reduction, and safe and fuel efficient vehicles. One case study done by the Auto/ Steel
Partnership examined mass reduction and safety together and did this with folks on the
vehicle front rails, an important load path in determining vehicle crash performance.
Before ULSAB — these rails were mainly made of mild steel. After that study on ultra
light vehicles was released with the help of the Auto/Steel Partnership project re-
engineering the front rails, almost all front rails today in vehicles have been converted to
advanced high strength steel, AHSS. The project, in fact, demonstrated that front rails can
be built 25 percent lighter with AHSS and absorb the same crash energy. This was
engineered on the computer, of course, and validated, though, with actual frontal crash
tests.
My third point is that steel is a green material, in fact, greener than most people think,
particularly with respect to the emissions associated with every phase of a vehicle's life.
For example, did you know that steel has a much lower energy content per ton and
energy intensity and less CO2 emissions, therefore, than most other automotive structural
materials? This is particularly important in containing emissions in the manufacture of
vehicles.
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EPA Response to Comments
For example: If you compared steel to aluminum, you'd find that aluminum has over 8
times the energy intensive, magnesium 7 to 14 times, and carbon fiber over 10 times the
energy intensity of steel. Additionally, our domestic steel mills have the lowest energy
intensity per ton produced of any steel sector in the world and the domestic industry has
reduced its energy intensity by 33 percent by improvements in steel making from 1990 to
2007.
Finally, steel is really the most recycled material in the world and averages 97 percent
recycling rate, and that's the tons of automotive steel recycled divided by the tons used to
make new cars and trucks each year, and has done that for the last 20 years. This is really
why steel has such extremely low emissions when the full life cycle of the automotive
products are considered.
Therefore, let's consider really how steel contributes to emissions in three ways. In fact,
through the manufacturing phase because of its low energy emissions, in use phase
because of its ability to reduce mass, and at the end-of-life because of its high recycling
rate.
So in conclusion, the steel industry has a rich and productive history of working with its
automotive customers over the years towards objectives like mass reduction and safety -
objectives which I believe are fully consistent with those of EPA and NHTSA. Even in
these very difficult times, I can report to you that our collaborative work is going strong,
mainly because we are working on important issues for future vehicles which will lead to
vehicle emissions reductions. AISI recommends that there be serious consideration given
to the LCA or life cycle performance of materials in the manufacturing of light vehicles
in the future, mainly I mean beyond 2016. We should evaluate possible credits or
allowances for those materials which provide bona fide reduction s in emissions over a
vehicle's full life. In this way all factors will be considered towards the goal of
continuous reduction of vehicle emissions.
EPA Response:
EPA agrees with AISI that there are ways of reducing vehicle mass without negatively
affecting the vehicle's functional objectives, including safety. As AISI also noted, there
are many vehicles currently being manufactured and operated within the United States
that make use of high strength steel, and that high strength steel now makes up about 15
percent of the average vehicle. This further supports the EPA position that it is critical
that assessments of the relationship between vehicle mass and safety be performed, to the
extent possible, on data which reflects the safety performance of current production
vehicles. EPA also agrees that the issue of lifecycle emissions accounting may be
appropriate to consider for subsequent rulemakings. See also preamble discussion in
sections III.C.2.b.ii and III.C. explaining those limited instances where EPA is
considering issues of vehicles' lifecycle emissions in this rulemaking.
Organization: Motor and Equipment Manufacturers Association
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EPA Responses on Joint Issues and Technical Work
Comment:
Standards Must Be Technology-Neutral
MEMA supported attribute-based standards, as prescribed in the Energy Independence
and Security Act of 2007 (EISA), allowing changes to a vehicle's fuel economy that do
not come at the expense of safety. Incentive language in EISA noted the important role
suppliers play in research and development of the advanced technologies necessary to
meet the fuel economic goals. No specific vehicle technology will meet all of America's
driving needs. All options must be available in order to achieve our legislative and
societal objectives of improving fuel economy, reducing emissions, and advancing
energy independence. [OAR-2009-0472-7121.1, p.3]
The supplier industry innovates, creates, and integrates many types of components and
technologies for vehicles and helps vehicle manufacturers accelerate the sort of
modifications required to get more fuel efficient, lower emitting vehicles into the hands
of consumers. The variety of means to achieve marked improvements in fuel economy
and reduced emissions is why MEMA believes it is so important for any requirements not
only to be attribute-based, but also technology-neutral. Otherwise, the risk of establishing
requirements that may tend to favor one or two types of vehicle technologies over a
myriad of other competing technologies (with equal or better performance) is too great
and is counter to the intent of EISA. In addition, favoring certain technologies may
foreclose even greater opportunities for fuel savings and emissions reductions that are
available from developments in other 'non-favored' technologies or in combining
technologies. Since a true attribute-based system is not a 'one-size-fits-all' approach, it
encourages more innovation in various vehicle types to improve fuel economy and
emissions in all vehicle classes. Unfairly favoring one or two types of technology over
others also inhibits industry innovation and limits consumer choice. [OAR-2009-0472-
7121.1,p.3]
Over time, complex combinations of vehicle technologies will increase and improve fuel
efficiency and emissions. The NHTSA Volpe model adequately addresses the synergistic
effects relating to the engine, transmission, electrification, hybrids, and other vehicle
technologies. Positive synergies, for example, can be found with light weight materials
(see Section III. A. [OAR-2009-0472-7121.1, pp.4-5]). However, the EPA proposal does
not fully consider possible synergies that could be derived in air conditioning component
technologies relative to the credits system (See Section IV [OAR-2009-0472-7121.1,
pp.7-10]). All synergies must be fully examined and developed. [OAR-2009-0472-
7121.1, p.3]
EPA Response:
MEMA's comments support several facets of the rule. First, the agencies believe that
considering technologies across the entire vehicle is required in the regulation of fuel
economy and CO2 emissions. Many factors outside of the powertrain affect fuel
consumption and CO2 emissions, including aerodynamic drag, tire rolling resistance, and
electrical accessory loads and only be addressing all of them from a system perspective
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EPA Response to Comments
can the stringency required by this rule be obtained. Hence the use of a whole vehicle
approach in the standard-setting process. See, e.g. the introduction to section HID in the
preamble to the final rule. With regard to the footprint based attribute curve not
providing a technology preference, the agencies worked to provide an attribute curve that
accomplished just that, and acknowledge MEMA's endorsement of such.
Organization: Recreational Vehicle Industry Association (RVIA)
Comment:
a. Application of Technologies to Tow Vehicles
In RVIA's July 1, 2008, comments to NHTSA regarding the 2011-2016 CAFE proposal
(NHTSA - 2008-0089), we urged NHTSA to incorporate a 'heavy-tow capable' vehicle
classification so as not to negatively impact safely towing or stopping recreation vehicle
trailer combinations. While we regret that NHTSA did not incorporate this
recommendation, we appreciate the fact that the Draft Joint Technical Support Document
(TSD) prepared by EPA and DOT for this rulemaking addresses the issue of towing with
regard to the following technologies: [NHTSA-2009-0059-0107, p.2]
In discussing hybrid technologies, the draft joint TSD included the following discussion
(from pp.3-50):
Some manufacturers choose not to downsize the engine when applying hybrid
technologies. In these cases, performance is vastly improved, while fuel efficiency
improves significantly less than if the engine was downsized to maintain the same
performance as the conventional version. While this approach has been used in cars such
as the Honda Accord Hybrid (now discontinued), it is more likely to be used for vehicles
like trucks where towing and/or hauling is an integral part of their performance
requirements. In these cases, if the engine is downsized, the battery can be quickly
drained during a long hill climb with a heavy load, leaving only a downsized engine to
carry the entire load. Because towing capability is currently a heavily-marketed truck
attribute, manufacturers are hesitant to offer a truck with downsized engine which can
lead to a significantly diminished towing performance with a low battery, and therefore
engines are traditionally not downsized for these vehicles. [NHTSA-2009-0059-0107,
p.2]
In discussing electrically-driven accessories, the draft joint TSD included the following
discussion (from pp.3-60):
Indirect benefit may be obtained by reducing the flow from the water pump electrically
during the engine warm-up period, allowing the engine to heat more rapidly and thereby
reducing the fuel enrichment needed during cold starting of the engine. Further benefit
may be obtained when electrification is combined with an improved, higher
efficiency engine alternator. Intelligent cooling can more easily be applied to vehicles
that do not typically carry heavy payloads, so larger vehicles with towing capacity
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EPA Responses on Joint Issues and Technical Work
present a challenge, as these vehicles have high cooling fan loads. [NHTSA-2009-0059-
0107, pp.2-3]
In discussing integrated motor assist/crank integrated starter generator technology, the
draft joint TSD included the following discussion (from pp.3-63):
EPA relied on a combination of certification data (comparing vehicles available with and
without a hybrid system and backing out other components where appropriate) and
manufacturer-supplied information to determine that the effectiveness of these systems in
terms of CO2 reduction is 30% for small cars, 25% for large cars, and 20% for minivans
and small trucks similar to the range estimated by NHTSA for the respective vehicle
classes.. The effectiveness for small cars assumes engine downsizing to maintain
approximately equivalent performance. The large car, minivan, and small truck
effectiveness values assume less engine downsizing in order to improve vehicle
performance and/or maintain towing and hauling performance. [NHTSA-2009-0059-
0107, p.3]
In discussing 2 mode hybrid technology, the draft joint TSD included the following
discussion (from pp.3-66):
For this proposal the CAFE model considered a range of 23 to 33 percent with a midpoint
of 28 percent, assuming no engine downsizing to preserve the utility nature of medium
and large trucks (e.g., maintaining full towing capability even in situations with low
battery charge) and EPA estimates CO2 emissions reduction effectiveness to be 25
percent for large trucks (LDT3 and LDT4 categories) based on vehicle certification data.
EPA estimates an effectiveness of 40 percent for smaller vehicles. [NHTSA-2009-0059-
0107, p.3]
In discussing weight reduction, the draft joint TSD included the following discussion
(from pp.3-74):
NHTSA and EPA estimate that a 10 percent reduction in mass results in a 6.5 percent
reduction in fuel consumption while maintaining equivalent vehicle performance (i.e. 0-
60 mph time, towing capacity, etc.) which is consistent with estimates in the 2002 NAS
report. [NHTSA-2009-0059-0107, p.3]
In discussing the full series hydraulic hybrid technology, the draft joint TSD included the
following discussion (from pp.3-81):
A Full Series Hydraulic Hybrid Vehicle (HHV) is somewhat similar in concept to a full
series electric hybrid vehicle, except that the energy is stored in the form of compressed
nitrogen gas and the power is transmitted in the form of hydraulic fluid. Series
HHV technology currently under development by EPA is capable of a 40% decrease in
tailpipe CO2 emissions in the small car, large car, minivan, and small truck classes. In the
large truck class, a 30% CO2 reduction is possible. The large truck benefit is somewhat
lower than the other classes because it is assumed that a large truck requires a larger
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EPA Response to Comments
engine to maintain towing and hauling performance after the energy in the high pressure
hydraulic accumulator is exhausted. This technology is still under development and not
yet commercialized however there are technology demonstration vehicles in service with
UPS in daily package delivery service. [NHTSA-2009-0059-0107, pp.3-4]
RVIA commends the agencies for taking towing into consideration in conducting its
technology review. We encourage you to continue doing so and to incorporate provisions
that allow for the continued availability of safe, effective tow vehicles as you proceed in
finalizing the standards. [NHTSA-2009-0059-0107, p.4]
EPA Response:
First, many of the vehicles addressed by the commenter are not subject to this rule at all.
This rule only applies to light duty vehicles of less than 8500 Ibs. GVWR and medium-
duty passenger vehicles less than 10,000 Ibs. For those light trucks subject to the rule,
EPA recognizes that light duty vehicles specifically designed for towing must not be
compromised due to advanced GHG reducing technologies. EPA thus took care in its
analyses to recognize the utility to consumers of towing capacity and in its engine
packages used for modeling did not downsize engines (i.e. so that EPA did not seek to
evaluate the standard's feasibility by downsizing engines). See RIA chapter 1 Tables 1-
11 and 1-12.
4.4.2. Costs and Effectiveness of Technologies
Organization: Honeywell Transportation Systems
Comment:
Honeywell seeks clarification from EPA and NHTSA on the assumptions made in
determining the cost and efficiency benefits of turbocharged engines. We offer the
agencies additional information herein for consideration in refining its assumptions. It is
now well accepted that turbocharging enables engine downsizing by allowing a smaller
engine to satisfy the power requirements typically derived only from larger engines. The
downsized engine can now meet consumer expectations while improving fuel economy
of gasoline powered passenger vehicles. [OAR-2009-0472-7165.1, p.3]
EPA and NHTSA estimate the fuel efficiency advantage [or CO2] of a turbocharged and
downsized engine to be in the range of 3 to 6 percent compared to a naturally aspirated
engine of comparable performance and estimate the cost of implementing the technology
to be in the range of $1,100. HTS would like to submit the following to show that the
benefit to fuel economy is more in the range of 15 to 20 percent and implementing the
technology is not as costly as described within the Proposed Rule. [OAR-2009-0472-
7165.1, p.3]
Conventionally, large displacement, naturally aspirated gasoline engines are used to get
high power and torque ratings. This results in the engine being operated in a throttled
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EPA Responses on Joint Issues and Technical Work
condition most of the time, negatively impacting fuel economy. Downsizing the engine
results in less throttling and higher operating efficiency, improving the overall fuel
economy of the vehicle by 15 to 20 percent. For example, in its marketing materials, Ford
claims that the 'primary benefits delivered by the Ford EcoBoost design approach
include: optimized engine efficiency - fuel consumption and CO2 emissions reduced by
up to 20 per cent; greater driving enjoyment - strong low-end torque and responsive
performance across the full rev range; and the opportunity to downsize - large-engine
performance, but with the size, weight and fuel economy of a much smaller unit. The
technology featured in Ford EcoBoost engines builds on existing petrol engine
knowledge, and offers customers a more affordable alternative to reduce carbon
emissions than equivalent hybrid or diesel engine designs.' [OAR-2009-0472-7165.1, p.3]
Turbocharging enables this downsizing by restoring horsepower and torque rating. It is
estimated that turbocharging enables about 30 to 40 percent engine downsizing, yet
delivers enhanced performance from a smaller engine with fewer cylinders than is
possible with a non-turbocharged engine. If cylinder count is reduced, the cost savings in
parts and assembly offset the costs of turbocharging. Replacing a 6-cylinder dual
overhead cam engine with a 4-cylinder turbocharged engine may be cost neutral.
Consideration of the potential to decrease cylinder count and offset costs should be
included in calculations for fleet fuel economy and implementation costs. [OAR-2009-
0472-7165.1, p.3]
HTS used four different methods to estimate the fuel economy benefits and degree of
engine downsizing made possible by gasoline engine turbocharging.
(1) Production Vehicle Data - US Market: HTS selected vehicles for sale in the U.S. for
comparison when turbocharged, downsized engines were offered as an option instead of
larger, non-turbocharged engines. HTS used data published on manufacturers' websites
for comparison. For example, we compared the fuel economy of the following vehicles
when offered for sale with and without turbo option: Passat, Passat Wagon, Mercedes E
and C class as well as CLK, and Audi A4. The scatter in the data is wide because
turbocharging is sometimes used for 'drivability' and sometimes for fuel economy. Also,
this is not a strictly 'back to back' comparison because other changes such as direct
injection instead of port injection are also sometimes made. Nevertheless, the data is
illustrative because engine downsizing and turbocharging are the primary fuel economy
mechanisms. The data from these six vehicles show about 40 percent downsizing and
about 20 percent fuel economy improvement. [OAR-2009-0472-7165.1, p.4]
(2) Production Vehicle Data - E.U. Market: We similarly analyzed the cost and fuel
economy results from vehicles for sale in Europe, including Renault Clio, Volvo S80,
VW Golf, Opel Astra, and Audi A6. When comparing turbo and non-turbo options, it was
seen that fuel economy improvement was 12 to 18 percent with 20 to 25 percent
downsizing when the turbo option was selected. [OAR-2009-0472-7165.1, p.4]
(3) Back-to-Back Comparison - FEV Study: A study published by the power train
consulting firm FEV supports HTS' s assertion that fuel economy improvement is in the
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EPA Response to Comments
range of 15 percent when turbocharging and downsizing are employed by vehicles. The
variation in production vehicle data due to changes in several design parameters and due
to different design objectives has already been noted. HTS offers to EPA and NHTSA for
their consideration a study performed by FEV which tested specifically the fuel economy
improvements utilizing downsized engines with turbocharging. In the study FEV
replaced the original, nonturbocharged engine with a 20 percent and then a 40 percent
downsized, turbocharged engine. FEV observed a 13 percent and 18 percent
improvement in fuel economy from these downsizing steps. FEV observed this
improvement even though the compression ratio was reduced to enable high engine
boosting. This study is the closest 'back to back' comparison that appears to be available.
[OAR-2009-0472-7165.1, p.4]
(4) Vehicle Simulation: HTS conducted a methodical simulation of the effects of
downsizing to illustrate the benefits of turbocharged engines. First, HTS collected data on
fuel consumption maps of conventional, non-turbocharged and turbocharged engines.
HTS then averaged, normalized, and interpolated these data to construct fuel
consumption maps of a large displacement, non-turbocharged engine and two downsized,
turbocharged engines of the same power rating. Significantly, HTS analysis of this data
established that the fuel consumption of gasoline engines rises sharply as load is reduced.
In downsized, turbocharged engines this rise is below the majority of operating points for
typical drive cycles, resulting in significant fuel consumption reduction. [OAR-2009-
0472-7165.l,pp.4-5]
HTS selected a state of the art vehicle for this simulation. HTS did not change vehicle
specifications when it replaced the original, non-turbocharged engine with progressively
downsized turbocharged engines. We used simple equations for aerodynamic drag,
rolling resistance, and acceleration losses, along with a fixed passenger compartment
load, to calculate the engine speed and torque at each point of the FTP-75 cycle. HTS
then used this data to obtain the fuel consumption values from engine data maps second-
by-second through the FTP cycle. The consumption was summed to determine the total
fuel used over the cycle, resulting in 13 percent fuel economy improvement for 20
percent engine downsizing and 23 percent improvement for 40 percent downsizing.
[OAR-2009-0472-7165.1, p.5]
Each of these four methods shows consistently that 15 to 20 percent improvement in fuel
economy and 30 to 40 percent reduction in engine displacement are possible with the use
of turbocharging. HTS plotted all four data sets on the same graph and fitted a curve
through the combined set. This graph is shown in Figure 1 and confirms the benefits of
turbocharging, i.e. downsizing, and fuel economy improvement. [OAR-2009-0472-
7165.1, p.5]
These four methods all produce similar results: that turbo downsizing enables significant
fuel economy improvement when engine performance is maintained. HTS encourages
EPA and NHTSA to accurately reflect the true benefit of turbocharging in published data.
We believe these benefits to be in the range of 13 to 20 percent for 20 to 40 percent
engine downsizing. [OAR-2009-0472-7165.1, p.6]
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EPA Responses on Joint Issues and Technical Work
HTS supports EPA's current designation of the turbocharger as an emission related part
under section 207 of the Clean Air Act as described by EPA in Federal Guidance. EPA
identifies turbochargers as an example of other parts of your vehicle which have a
primary purpose other than emissions control but which nevertheless have significant
effects on your vehicle's emissions.' CO2 emission reduction is achieved as a direct result
of the possibility to downsize a turbo boosted engine, and not due to the turbocharger
itself. [OAR-2009-0472-7165.1, p.7]
EPA Response:
Turbocharged and downsized engines are considered an important technology for the
reduction of greenhouse gas emissions. The effectiveness of this technology will
continue to be evaluated as certification data is collected.
Organization: National Automobile Dealers Association (NADA)
Comment:
When calculating technology costs, all dealer costs-of—sales should be accounted for in
"dealer profit." The finance costs paid by over 90% of consumers also must be properly
accounted for, as should unique costs characteristics associated with leases and fleet
purchases. [OAR-2009-0472-7182.1, p. 10]
Costs associated with design changes necessary to maintain vehicle performance,
capability, and utility in conjunction with fuel economy/GHG technology improvements
must be accurately accounted for. Monetizing these costs captures the degree to which
consumers will forgo new vehicle purchases that fail to meet their needs and instead elect
to hold onto older vehicles longer, or to access the used vehicle marketplace. Importantly,
these marginal costs will result in marginal decreases in energy security and
environmental benefits. [OAR-2009-0472-7182.1, p. 10]
Future fuel price projections are the most critical lynchpin to determining the value of
fuel savings and the benefits of National Program. NHTSA and EPA should continue to
rely on the U.S. Energy Information Administration's (EIA) most recent reference case
fuel price projections. Of course, as demonstrated by the many years where EIA's
projections fell above or below reality, forecasting future fuel prices is far from an exact
science. Despite the inherent volatility and uncertainty of fuel prices, the National
Program would be remiss to not use the very best models and data available or to rely on
"high" or "low" price case projections that are inherently not probabilistic. [OAR-2009-
0472-7182.1, p.10]
Criteria pollutant reduction benefits associated with the proposed National Program may
be overstated as the negative impact of inhibited fleet turnover does not appear to be
accounted for. 74 Fed. Reg. 49674-5. With respect to GHGs, only any domestic impacts
of reducing the social costs of motor vehicle CO2, should considered given that EPCA
focuses on U.S. energy security, and all other costs and benefits evaluated with respect to
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EPA Response to Comments
CAFE standards are domestic only. NHTSA is not justified in moving away from its
prior practice in this regard. [OAR-2009-0472-7182.1, p. 10]
A discount rate of at least seven percent (or higher) should be used to estimate future
prospective benefits of the National Program. Financing rates on motor vehicle loans are
indicative of appropriate discount rates since they reflect the real-world opportunity costs
faced by consumers when buying vehicles with greater fuel economy costs associated
with them. An accurate analysis of historic loan rates and a justifiable projection of retail
loan rates for MY 2012-26 should be conducted and used. Importantly, using too low of a
discount rate, like using too high fuel price projection, will result in an overly ambitious
National Program, depressed new motor vehicle sales, and lower than projected fuel
savings and GHG reduction benefits. [OAR-2009-0472-7182.1, p.l 1]
EPA Response:
Regarding the NADA comment that dealer costs-of-sales should be accounted for in
"dealer profit", the agencies have included dealer costs-of-sales (selling costs) in the
indirect cost multiplier (ICM)—which makes up part of the final technology costs—as a
unique element. There is no compelling reason to include those costs in the "dealer
profit" element of the ICM. As for the finance costs paid by consumers, it is important
to note that from a social perspective, the costs of the rule are the technology costs
themselves and do not include the finance costs. While those costs are incurred by
consumers, they are merely transfer costs from the perspective of regulatory cost
analysis. We have included financing costs in our vehicle sales impacts analysis since
costs there are not social costs but rather personal costs.
Regarding NADA's comment on vehicle utility, it is important to note that the agencies
have made every effort to craft a national program that will have no impact on vehicle
utility. Vehicle performance characteristics should not change as a result of this rule. As
noted elsewhere (see, e.g. comment response 5.13), EPA accounted for costs needed to
preserve existing vehicle utility in its analyses, for example by retaining features relating
to performance in the baseline vehicle packages used as the basis for analyzing
technology cost and effectiveness. That said, vehicle performance characteristics may
well change due to consumer demand, but that would not be the result of the rule.l In
fact, EPA's analysis of the rule's impact on vehicle sales suggests that sales will increase
as a result of the rule because consumers will find the new, more efficient vehicles more
attractive than older vehicles. In short, we disagree with this comment and the premise
that compliant vehicles will have less utility and/or be less attractive to consumers.
Organization: General Motors
Comment:
1 We note that CARD in its public comments "agrees with the agencies' assumption that vehicle attributes
of performance, carrying capacity, safety, or comfort would not change under this regulation."
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EPA Responses on Joint Issues and Technical Work
The agencies developed a baseline fleet for cars and trucks and then applied fuel
economy technologies to the fleet to create the most cost effective set of standard curves.
In this assessment, assumptions are made about the effectiveness of each applied
technology. Included herein is a detailed analysis of the technologies applied to large
pickups. The analysis shows that the effectiveness of many of these technologies is
significantly overstated. Therefore GM recommends that the obligation for large pickups,
in each year of the rule, be reduced. [OAR-2009-0472-6953.1, p.9] [[See pp.9-16 of
OAR-2009-0472-6953.1 for a detail analysis of the following technologies: Engine
Downsizing and Boosting (Turbocharging) applied to a Full-Size Truck; Variable Valve
Timing or Valve Lift; 12V Flywheel Stop/Start System; and, Dual-Clutch Automatic
Shift Manual Transmission (DCT)]]
EPA Response:
Based on a careful review of GM's entire submission, EPA believes that the GM analysis
is largely consistent with EPA's analysis and publically data cited within Chapter 3 of the
Technical Support Document for this rule, when GM's analytical results are compared on
the basis of similar curb-weight and similar vehicle performance to what was used within
EPA's analysis. In the specific case of turbocharged gasoline direct injection engines,
EPA estimates of CO2 reduction are less than publically available data for some
turbocharged direct-injected engines for future light- truck applications (see TSD Chapter
3). We agree with GM's comments that it is unlikely that dry-DCTs will be used in light-
truck applications.
EPA's estimated effectiveness for start-stop systems is relatively conservative when
compared to publically available data and appears to be generally consistent with GM's
analysis.
EPA's estimated effectiveness of variable valve timing and lift is similar to or in some
cases overlaps GM's analysis. Insufficient detail was provided within GM's analysis to
determine the reason for any differences.
We continue to believe that wet-DCTs provide CO2 benefit, based on the results in our
analysis within Chapter 3 of the TSD and the 2008 EPA Staff Report.
Organization: International Council on Clean Transportation
Comment:
EPA and NHTSA used different models to assess costs and benefits. NHTSA used the
Volpe model, which they have evolved over their last several CAFE rulemakings. EPA
has developed an independent model with some significant simplifications and that does
not depend on confidential manufacturer product plans. While both models are capable of
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EPA Response to Comments
properly assessing costs and benefits, ICCT prefers the overall EPA approach because of
its relative simplicity and better transparency.
ICCT is generally in favor of simplifying models, as long as accuracy is maintained. For
example, the EPA model assesses technology over 5 year redesign periods, instead of for
each model year. This is a good simplification, as manufacturers' redesign plans change
frequently and annual assessments are likely to be no more accurate than assessing
technology over redesign periods.
A simplification that does not work as well is that EPA appears to assign the same
technology package improvements to each manufacturer. EPA's model begins by
determining the specific CO2 emission standard applicable for each manufacturer, based
on the footprint and projected sales of each model, and accounts for differences in
technology for the baseline model year. However, the model implicitly assumes that
every manufacturer will implement the same technologies in the same order in the future
based on industry $/kg estimates, without looking at the specific knowledge and
experience base for each manufacturer. This simplification may be missing important
differences between manufacturers. For example, Volkswagen is unique in having
heavily invested in diesel engines in the U.S. for decades and having a substantial share
of diesel engine in their fleet, but is far behind some manufacturers in developing and
introducing hybrid vehicles. Given their existing investments, Volkswagen's future
technology mix is likely to be very different from most manufacturers. Similarly, Honda
has been an industry leader in variable valve timing and cylinder deactivation, Toyota a
leader in hybrids, Nissan a leader in continuously variable transmissions (CVTs), and
Ford and a few other manufacturers have been especially aggressive in developing direct
injection, turbocharged gasoline engines. NHTSA's model is capable of assessing
leadtime, benefits, and costs independently for each manufacturer. While this is not
critical for assessing overall costs and benefits, it does help to evaluate competitive
impacts.
In the long run, the agencies should cooperate in developing a single model for setting
vehicle standards, incorporating the best features of each model while maintaining as
much simplicity and transparency as possible.
EPA is implicitly applying a separate learning curve to indirect costs, though the
reduction in the long term multiplier. However, as indirect costs are a multiple of direct
costs, learning curves applied to direct costs also reduce indirect costs. How does the
reduction in indirect costs due to learning for direct costs interact with the reduction in
the long-term multiplier?
[OAR-2009-0472-7156.1, pp. 17-18]
EPA Response:
The intent of this rulemaking is to provide the most value to the consumer while still
meeting the standard. A manufacturer has many choices to meet the standard based on
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EPA Responses on Joint Issues and Technical Work
many factors such as corporate expertise, innovative technologies, consumer choice, etc.
The goal of the EPA model is to define the lowest cost technology route for each baseline
vehicle in order for the manufacturer to meet the standard. The manufactures may
implement any common or proprietary technologies in any order they choose as long as
the standard is met.
Regarding learning curves, mathematically, the comment is not incorrect. The indirect
cost multipliers are proxies for having more detailed information about the indirect costs
associated with a new technology. The method, derived from the longstanding use of
retail price equivalent multipliers, estimates indirect costs as a proportion of direct costs.
The learning curve effects are applied only to direct costs in our analysis. However, if
direct costs go down, all else equal, the assumption of this approach is that indirect costs
will go down as well.
Organization: Gluckstern, Henry
Comment:
There is ample technology on the shelf to meet the proposed standards without unduly
burdening the industry. If automakers had acted to build more efficient cars and trucks,
consumers would not have been hit as hard by $4-a-gallon gas a little over a year ago. It
is time to put fuel efficient vehicles people want to buy on the market. No passenger car
should be getting fewer than 50 miles to the gallon in the year 2010, but precious little of
the world's fleet achieves such a number. [OAR-2009-0472-5258, p. 2]
EPA Response:
EPA appreciates these comments as we move toward reducing greenhouse gasses and
dependence on limited natural resources.
Organization: Eadie, R. Frank
Comment:
I do think that — well, it's going to need to — let me say that one thing that could be done
and I would really like to ask that the EPA consider restrictions on idling. Idling is a very,
very large source of pollutants in Manhattan, and because you spend so much time in
traffic, there's vehicles spending so much time idling, especially buses and trucks which,
of course, put out very toxic things along with the CO2 that they're admitting, and so it's -
- you know, I would suggest that, for example, that there be automatic idle — idling
restrictors on vehicles and that that be mandated, say after 20 seconds of idling, the
engine would automatically shut off on gasoline, diesel and fossil fuel burning engines.
That would save [EPA-HQ-OAR-2009-0472-4621, p. 170] a lot of lives in a fairly short
period of time, and certainly we have the technology nowadays that, for example, the
engine could be restarted by simply pushing the accelerator. That happens in the hybrid
vehicles now. So it should be mandatory on all new vehicles, maybe retrofitted after, you
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EPA Response to Comments
know, 2015 or something, that all vehicles be retrofitted with that kind of a thing. This is,
of course, a major problem. It's not just New York that has congestion problems. [EPA-
HQ-OAR-2009-0472-4621, p. 170]
So I have one other. I want to ask that you communicate with your leaders at all levels
about this new rule, that you seriously look at the new reports that are coming out and
begin to think in a very friendly way, you basically have to — I'm actually old enough to
remember the Second World War, and, you know, what happened then is what has to
happen now. We have to go on a war footing, a real war footing, not an Iraq war kind of
footing, but a real footing where the President calls together the industry leaders and the
best scientists and thinkers and organizers and works out a reorganization of the
economy. That really is what needs to happen, and nothing short of that is going to get us
close to being able to survive, and that's what I wanted to say. [EPA-HQ-OAR-2009-
0472-4621, p. 175]
EPA Response:
EPA has considered a technology that reduces CO2 emissions at idle and we anticipate
that the technology will be applied in the timeframe of the final rule. The technology is
referred to as Start-Stop and is described in detail in the Joint Technical Support
Document (TSD). The following is an excerpt from the TSD and is a brief summary of
how it works:
• 12-volt micro-hybrid (MHEV) - also known as idle-stop or start stop and
commonly implemented as a 12-volt belt-driven integrated starter-generator,
this is the most basic hybrid system that facilitates idle-stop capability. Along
with other enablers, this system replaces a common alternator with an
enhanced power starter-alternator, both belt driven, and a revised accessory
drive system.
While this rule does not mandate the implementation of any specific technology, we
recognize that CO2 emissions at idle are a significant contributor to a vehicle's overall
emissions performance. EPA modeling results show an overall penetration rate of this
technology in the 2016 MY to be 2% for cars and 4% for trucks to meet the stringency set
forth by this rule.
4.5 Economic Assumptions
4.5.1 Consumer Welfare and Valuation of Fuel Savings
Valuation of Fuel Savings
Organization:Consumer Federation of America
Institute for Energy Research
Mr. Richter - Environmental Capital Partners
Union of Concerned Scientists
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EPA Responses on Joint Issues and Technical Work
United Auto Workers
University of Michigan Transportation Research Institute (UMTRI)
Investor Network on Climate Risk
University of Pennsylvania, Environmental Law Project
State of New Jersey
James Adcock
Comment:
Consumer Federation of America
Our analysis of opinion polls and purchase decisions over the past half-decade shows that
consumers want a great deal more fuel economy than automakers have been willing to
supply (see Sections II and IV). The recent economic analysis of fuel economy by
NHTSA/EPA suggests why consumers want more fuel economy. The cost of increasing
fuel economy to 38.1 miles per gallon by putting more fuel saving technology in cars and
trucks is well below the amount consumers are willing to pay and the cost of
gasoline. [OAR-2009-0472-7272.1, p.5]
Our analysis of the failure of the market to yield an efficient outcome with respect to
energy efficiency presented in Section III has four critical purposes in these comments
and implications for the process of standard setting for both fuel economy and tailpipe
emissions. First, it demonstrates that the consumer welfare gains, which account for
almost 80 percent of the total societal welfare gains, should be included in the cost-
benefit analysis. Without these gains, a benefit cost framework would justify little if any
increase in fuel economy standards. The nature and extent of the market failure dictates
the degree of confidence in the consumer welfare gains. [OAR-2009-0472-7272.1, p.6-
7]
Exhibit 1-1 also shows the large benefits that have been left on the table as a result of the
dire circumstances of the industry. The proposed rule delivers far smaller benefits than
could be achieved if the condition of the industry were not holding the agencies back.
• The societal benefit would be $50 billion larger. • The consumer pocketbook savings
would be $37 billion larger. • Gasoline consumption would be 32 billion gallon lower.*
Greenhouse gas emissions would be 13 billion tons lower.
Our analysis of opinion polls and purchase decisions over the past half-decade show that
consumers want a great deal more fuel economy than automakers have been willing to
supply. The NHTSA/EPA analysis shows that the cost of higher fuel economy is well
below the amount consumers are willing to pay given the cost of gasoline. The cost of
saved energy, a concept frequently used in the analysis of energy efficiency, is also far
below the current cost of gasoline. [OAR-2009-0472-7272.1, p. 10]
I want to briefly highlight today one issue that I think is of paramount importance as we
move forward. The agencies must adopt a firm analytic framework that recognizes that
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EPA Response to Comments
fuel economy standards enhance consumer welfare. The billions of dollars of consumer
welfare gains estimated by the agencies in their analysis are real and substantial. The
final rule should clearly acknowledge not only the empirical estimates of these gains, it
should also conclude that the theoretical justification for incorporating consumer welfare
gains into the rulemaking is clear and solid.
Now, in the proposed rule the agency rejected claims that consumer welfare gains
shouldn't be included on the basis of the empirical finding that the models are too
imprecise. You're perfectly right to say that, but that is too weak of a rationale.
These models have a fundamental theoretical flaw. In order to conclude that consumers
do not enjoy increased welfare as a result of fuel economy standards, one must assume
that consumers have full information and perfect foresight in their vehicle purchase
decisions, and that the supply side of the market gives them a full, balanced, and unbiased
range of choices to meet their needs. None of these assumptions is correct, and that's
why we have a $100 billion market failure.
In fact, as we'll show in our comments, there's a broad range of theoretical and empirical
evidence to support the conclusion that there is a substantial market failure with respect
to efficiency and that fuel economy standards enhance consumer welfare.
Institute for Energy Research
These estimates are flawed. For example, EPA is claiming consumers would save $90
[billion] in fuel costs because of these regulations. These savings should not be
considered a benefit under this analysis because consumers' voluntary, market choices
illustrate they prefer other vehicle attributes more than fuel economy. [OAR-2009-0472-
7225.1,p.9]
Consumers demand a certain fuel economy, but consumers also want to maximize other
attributes such as performance and size (then again, maybe the fuel economy of these
cars is actually higher than consumers' actual preferences because of CAFE standards). If
consumers really demanded very fuel efficient cars, Honda would still make a car today
that gets better gas mileage than the 1985 Honda Civic Coupe HF. The Civic Coupe HF
got nearly 50 mpg on the highway a quarter century ago. Today, the Honda's most fuel
efficient car is a hybrid sedan Civic that gets 40 mpg in the city and 45 mpg on the
highway. [OAR-2009-0472-7225.1, p. 10]
Also, if there were greater consumer demand for fuel efficient cars, it is likely European
versions of automakers' cars would be sold in the United States. For example, in Europe,
Ford sells the Fiesta ECOnetic which gets 65 mpg. [OAR-2009-0472-7225.1, p. 10]
Because U.S. consumers value other attributes in their cars more highly than fuel
economy, EPA's cost-benefit analysis should not include the $90 billion in savings from
fuel economy as a benefit, or at the very least, it should include the $90 billion in savings,
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EPA Responses on Joint Issues and Technical Work
but offset it with an even larger negative figure to account for consumers' unhappiness
with the reduction in their options. [OAR-2009-0472-7225.1, p. 10]
The issue of consumer welfare due to vehicle attributes is crucially important: It may
mean the difference between a program that confers net benefits or net costs. If the loss in
consumer welfare (due to forced change in vehicle attributes) exceeds $3 billion by 2030,
then the net social benefits of the proposed rule may be negative, because the low end of
the estimated benefits (excluding fuel savings) are $21 billion, while the other estimated
costs of the program are $18 billion by 2030. [OAR-2009-0472-7225.1, p.10]
Mr. Richter - Environmental Capital Partners
Secondly, as was mentioned in the earlier panel, cars that get better gas mileage save the
consumer money in the long run. When oil prices soar, even a free car becomes
unaffordable if you can't pay to fill the car up. If you look at the Cash For Clunkers, for
instance, the top ten models purchased get almost 30 miles to the gallon. The average
mile traded in got 15.8. That's a 58 percent improvement because those purchases got an
average of 24.1 miles per gallon. Energy efficient cars represent more than an
environmental statement. For financially challenging times, they're an economic
necessity. [EPA-HQ-OAR-2009-0472-4621, p. 163]
Union of Concerned Scientists
According to UCS analysis, the standards proposed in the NPRM will reduce oil
consumption from U.S. light-duty vehicles by 1.3 million barrels per day in 2020. This
translates into a savings of nearly 20 billion gallons of gasoline in just one year.
By reducing oil consumption, consumers will save money at the gas pump. Even if prices
stay at current values, approximately $2.50 a gallon, consumers will save $32 billion in
2020. UCS calculates these savings on a net basis and includes the additional cost of fuel
saving technology. This demonstrates consumers still recognize additional benefits even
with a significantly higher purchase price of a new vehicle. If prices return to higher
levels, such as $4 a gallon, savings would nearly double to over $61 billion. [These
comments were submitted as testimony at the New York public hearing. See docket
number EPA-HQ-OAR-2009-0472-4621, pp. 92-3.]
In addition to the consumer savings, these standards will achieve a critical reduction in
the heat-trapping gases that cause global warming. Currently, cars and light trucks
account for nearly 20 percent of total U.S. global warming emissions. These standards
will reduce greenhouse gas emissions from cars and light trucks by 215 million metric
tons of carbon dioxide equivalent in 2020. That's about the equivalent of taking 32
million vehicles off the road in that year. And as the fleet turns over, the benefits will
only grow with time. [These comments were submitted as testimony at the New York
public hearing. See docket number EPA-HQ-OAR-2009-0472-4621, pp. 93-94.]
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EPA Response to Comments
All of our analysis is based on assuming the fleet achieves the 250 grams per mile fleet-
wide average in model year 2016, a level equivalent to approximately 35.5 miles per
gallon and the NHTSA standard of 34.1 in that year. [These comments were submitted
as testimony at the New York public hearing. See docket number EPA-HQ-OAR-2009-
0472-4621, p. 94.]
United Auto Workers
Fourth, the UAW commends the agencies for the extended discussion of consumer
benefits and losses in the Notice of Proposed Regulation, the Draft Regulatory Impact
Analysis, and the Draft Joint Technical Support Document. The UAW agrees with the
agencies that much more work must be done in this area, and believes that there is a
major omission in the cost-benefit analysis because there is no value given to consumer
and producer welfare losses. While the benefits of fuel savings to consumers are apparent
and easily calculated, consumer and producer welfare losses, though apparent, are more
difficult to assess. [OAR-2009-0472-7056.1, p.3]
Given that the benefits to consumers from reduced fuel expenditures, reduced fueling
time, and increased driving together comprise fully 89 percent of the benefits from these
proposed rules and dwarf the energy security and environmental benefits, the UAW
believes remedying this critical omission should be a top priority for future rulemakings.
To have balanced rulemaking, it is important that the obvious but unvalued losses for
consumers and producers be included in any cost-benefit analyses. We appreciate the
agencies' willingness and stated commitment to attempt to develop methods to value both
consumer and producer losses in future rulemakings. [OAR-2009-0472-7056.1, p.4]
The UAW would suggest that the most fruitful approach is a close examination of
consumer and producer behavior in the passenger car market. The existing CAFE
standard of 27.5 miles per gallon has not been binding on the vast majority of producers
for many years. This means that in all likelihood consumers have been demanding the
full level of fuel economy that they value in relation to other vehicle characteristics, and
that producers have been free to add features to vehicles that will maximize their
profits. [OAR-2009-0472-7056.1, p.4]
Hence, any regulation that that forces producers to market and consumers to buy
passenger cars with fuel economy that exceeds this "revealed preference" generates both
consumer and producer losses. Consumers have losses because they are forced to have
additional utility in the form of fuel efficiency when in most cases they have clearly
chosen otherwise. Producers suffer losses because they are forced to offer additional
utility in the form of fuel efficiency that customers do not want and are therefore
unwilling to pay the full cost of, and due to lost profits from the opportunity cost of not
being able to add features that provide utility for which consumers are willing to pay the
full cost. [OAR-2009-0472-7056.1,p.4]
This logic gains considerable strength from the competitive nature of the passenger car
market in the United States, and the fact that the market has become much more
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competitive over the last decade. Consumers have a wide and growing range of choices,
and any producer that saw a potential advantage to offering more fuel-efficient vehicles
would do so. Indeed, many have, resulting in average fleet-wide passenger car fuel
efficiency that exceeds the existing regulations, but is less than the levels in this proposed
rule. Although the agencies performed the technology analysis in a manner that attempted
to maintain current vehicle-class utility, this only begs the question of what vehicle
features consumers might prefer, besides additional fuel efficiency, for the extra cost
associated with achieving that fuel efficiency. [OAR-2009-0472-7056.1,p.4]
University of Michigan Transportation Research Institute (UMTRI)
Over the past few years, I have authored or co-authored a number of research reports on
the impacts of fuel economy regulations and fuel prices on automaker costs, profits, and
employment. Today I want to bring your attention to two recent reports: [OAR-2009-
0472-3651.l,p.l]
The first study, "CAFE and the U.S. Auto Industry Revisited" (written in partnership
with Citi Investment Research & Analysis, Ceres, the Investor Network on Climate Risk,
the Planning Edge, and Meszler Engineering Services) was recently released by Citi
Investment Research & Analysis. [OAR-2009-0472-3651.1, p.l]
The study analyzed two regulatory scenarios for light vehicles: CAFE 2020—an
industry-wide target of 35 mpg in 2020; and "national Pavley" (equivalent to the National
Program)—an industry-wide target of 35 mpg in 2016. In each scenario, we estimated the
impacts on sales, costs, and profits relative to a baseline forecast. [OAR-2009-0472-
3651.1, p.l]
The analysis found that the proposed National Program is likely to benefit both the
Detroit 3 and the Japan 3 by boosting profits, based on the relative value consumers put
on fuel costs compared to vehicle price, the future price of fuel, and the combined direct
and indirect costs incurred to improve fuel economy. The study found that by producing
more competitive, fuel-efficient fleets in the coming years the Detroit 3 would be able to
slow or reverse their market share erosion that has accelerated in recent years. [OAR-
2009-0472-3651.1, p.2]
According to the study, the National Program is likely to increase the Detroit 3's profits
by $3 billion per year, and to increase the Japan 3's profits by $0.8 billion per year. Unit
sales by the Detroit 3 are predicted to increase by the equivalent of two large assembly
plants, thereby saving U.S. auto worker jobs. [OAR-2009-0472-3651.1, p.2]
Consumers will also benefit, since the fuel savings from more efficient cars - even at the
present gas price of $2.50 a gallon - will more than offset the higher prices for vehicles
incorporating new fuel-saving technologies. Under the National Program, the present
value of the fuel saved will be greater on average than the increase in purchase price on
average associated with the new fuel saving technology. [OAR-2009-0472-3651.1, p.2]
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The second study, "Fixing Detroit: How Far, How Fast, How Fuel Efficient" (which my
colleague Rob Kleinbaum co-authored) was completed in June 2009. [OAR-2009-0472-
3651.1,p.2]
The report modeled the impact of three different fuel economy standard increases—30
percent (35 mpg), 40 percent (37.7 mpg) and 50 percent (40.4 mpg)—on the profitability
and sales of the auto industry. The model estimated the impact of improving fuel
economy on the costs of producing vehicles, on the retail prices of vehicles, and on
consumer demand. We used the most recent and accepted estimates of all the key
parameters, but since there is debate on many of these values, the report conducts an
extensive sensitivity analysis on the results. [OAR-2009-0472-3651.1, p.2]
Results indicated that the Detroit 3 would have increased profit (over the baseline) in all
three scenarios, and their profit gains would be larger the more aggressively they pursue
improvements in fuel economy. The Japan 3 (Toyota, Nissan, and Honda) would also
gain profit from pursuing higher fuel economy, but their gains would be smaller than
those of the Detroit 3. The profit gains are possible because higher fuel economy is worth
more to consumers than it costs the automakers to provide. [OAR-2009-0472-3651.1,p.2]
The market for clean, fuel-efficient vehicles is not a perfectly competitive market in
which consumers and automakers have perfect foresight and perfect computation ability.
In a perfectly competitive market, producers would have complete knowledge of
consumers' willingness to pay for all vehicle attributes as well as complete knowledge of
all technologies to produce vehicles with any feasible combination of attributes.[OAR-
2009-0472-3651.1, p.2]
However, recent events have demonstrated that automakers have neither complete
knowledge not perfect foresight. The shifts in consumer demand toward wanting more
fuel economy caught automakers by surprise, and significantly contributed to the
financial failure of GM and Chrysler. Consumer demand began to shift at least as early as
2002, yet automakers, the Detroit 3 in particular, did not respond with new technologies
and products until 2007. The failure to anticipate and respond to the shift in consumer
demand is clear evidence that automakers seriously underestimated the consumer value
of fuel economy. [OAR-2009-0472-3651.1, p.2]
The scenario with 30 percent improvement in fuel economy (to 35 mpg) is roughly
equivalent to the proposed standards under the National Program. We estimated the
average cost per vehicle of improving to 35 mpg to be $1,715 and the average consumer
value added per vehicle to be $2,578. [OAR-2009-0472-3651.1, p.3]
[UMTRI also submitted these comments as testimony at the Detroit public hearing, See
docket number EPA-HQ-OAR-2009-0472-6185, pp. 33-36.]
Investor Network on Climate Risk
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As long-term investors, and as members of the Investor Network on Climate Risk
(INCR), which represents over $8 trillion in assets, we are writing to express our strong
support for the National Program (the proposed fuel economy/GHG emissions standards).
The proposed regulation essentially adopts the GHG emissions standards that CA had
proposed, and will require a fleetwide average of approximately 35.5 mpg in 2016,
representing an approximately 40% increase in fuel economy over present standards.
In particular, we would like to bring your attention to the findings of the Citi report,
published on October 13, 2009. This report was produced in partnership with INCR,
Ceres, and the University of Michigan Transportation Research Institute (UMTRI), and
addresses the impacts of the National Program on automakers. The Citi report finds that
the recently proposed vehicle CAFE/GHG standards will likely boost profits and slow the
loss of market share of Detroit's Big Three automakers.
Key findings of the report include the following: Automakers' variable profits will be
greater (as compared to the case under no new regulation) under the National Program.:
The standards are likely to increase Detroit's competitiveness: 1. The Detroit Three will
be able to mitigate market share erosion by producing more competitive fuel-efficient
fleets in the coming years. 2. The Detroit Three do better than Japanese Three under the
National Program under most scenarios. 3. Sales by the Detroit Three are expected to
increase by the equivalent of two large assembly plants, thereby saving U.S. autoworker
jobs.
Consumers will benefit as well since fuel savings from more efficient cars - even at the
present gas price of $2.50 a gallon - will more than offset slightly higher prices for
vehicles incorporating new fuel-saving technologies. [OAR-2009-0472-7243.1, p.l]
[Investors Network on Climate Risk also submitted these comments as testimony at the
New York public hearing, See docket number EPA-HQ-OAR-2009-0472-4621, pp. 34-
36.]
University of Pennsylvania, Environmental Law Project
3. Expected Costs of Implementation of the Proposed Rule
As previously mentioned, some groups worry about the economic costs of rule
implementation. They argue that the proposed rule could add too much to the price of
new cars. This will lead, they say, to people sticking with their older, gas-guzzling cars
instead of buying new ones, thereby undermining the primary goal of the rule of lowering
vehicle emissions [OAR-2009-0472-7286.1, pp. 20-21].
However, most stakeholders, including the auto industry and Auto Dealers Association
support the rule and agree that this standard can be met without undue costs. They also
point to the benefits of a predictable national standard that will help to lessen uncertainty
for the auto industry when they develop new models, and lower compliance costs by
avoiding a patchwork of rules between the states. Furthermore, it will allow them time to
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build improvements into new models during the normal production and design process,
which will minimize the additional costs imposed. [OAR-2009-0472-7286.1, p. 21]
Consumers also will not only be spared from extra costs, but will save money in the long
run because of the fuel efficiencies of their new cars. [OAR-2009-0472-7286.1, p. 21]
State of New Jersey
Finally, we agree with the federal government's assessment that under realistic
assumptions, the private gains to the consumer from the joint proposal (e.g., savings in
fuel economy), together with the social gains (e.g., reduced health costs associated with
pollution, reduced reliance of foreign oil sources, etc.), will significantly outweigh the
incremental initial costs of providing these newer advanced technology vehicles. [OAR-
2009-0472-7109.1, pp.5-6]
Union of Concerned Scientists
It was disconcerting to read in the NPRM that there was some debate about the role of
private benefits in assessing the total benefits and costs of the program. The argument
against including these benefits boils down to an attempt to force the assumption of a
perfect free market on to a situation that is far from it. As noted in the NPRM, if the car
market had all the features of a perfect free market (e.g. full information, perfect
foresight, perfect substitutes, etc.) then there would be an argument for excluding the
private benefits. But we know that consumers can not have full information and perfect
foresight. For example, EPA window stickers and the EPA Fuel Economy Guide note
that "Your Fuel Economy Will Vary." Further, not even the government's Energy
Information Agency can accurately predict gasoline prices. Consumers also cannot
predict future traffic patterns, changes in job location and many other factors that will
influence how much they could save on gasoline from various vehicle choices. [OAR-
2009-0472-7181.1, p. 15]
Union of Concerned Scientists
Further, consumers save money under these standards from the minute a new vehicle is
purchased. Currently approximately 70 percent of consumers purchase a new vehicle
using loans. Assuming a typical five year loan at 6 percent interest, savings at the gas
pump due to higher fuel economy are greater than the additional cost of technology each
and every month the consumer owns the vehicle, even if gas prices were to fall to a
modest $2 a vehicle. In other words, our analysis shows that consumers will save money
from the moment they roll off the lot under these standards. [These comments were
submitted as testimony at the New York public hearing. See docket number EPA-HQ-
OAR-2009-0472-4621, p. 93.]
James Adcock
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Does CAFE in fact represent a negative to consumer utility or rather a protection of the
consumer's interests in the face of irrational discounting by the consumer? Also, the
utility of higher fuel economy DOES pass on to secondary owners - NHTSA also needs
to represent the interests of secondary owners who are even more unable to bear the
burden of high fuel costs.
EPA Response:
While most of these commenters argue that this rule will save consumers money, because
the present value of fuel savings greatly outweighs the technology costs, the Institute for
Energy Research and the UAW argue that, if consumers wanted more fuel savings, the
market would have provided them. These two commenters suggest that there must be a
loss associated with improving fuel economy, because many consumers do not purchase
highly fuel-efficient vehicles already on the market.
EPA distinguishes between the fuel savings that consumers consider when buying
vehicles and the fuel savings that consumers will get after the purchase. These two
values need not be the same. As discussed in Section 5.13.1 of this Response to
Comments document, as well as Section III.H. 1 of the Preamble and Section 8.1.2 of the
RIA, a number of reasonable explanations have been offered for the possible divergence
between these two approaches to valuing fuel savings.
OMB Circular A-4 notes that "Economists ordinarily consider market prices as the most
accurate measure of the marginal value of goods and services to society." The fuel
savings that consumers will receive are directly measurable using market prices for fuel,
while the values that consumers reveal through their purchase decisions are indirect
measures and may therefore be less reliable.
EPA, along with most commenters on the rule, find that there are cost-effective fuel
savings that the market has not at this time provided to consumers and includes those
benefits in our analysis.
As discussed more in Section 5.13.1 of this Response to Comments document, as well as
Preamble III.H. 1 and RIA Section 8.1.2, EPA believes that any adverse effects on vehicle
characteristics due to the rule are best considered in the context of the technology costs to
achieve the standards, not the fuel savings.
The University of Michigan Transportation Research Institute and the Investor Network
on Climate Risk argues that the Detroit auto makers, as well as consumers, will benefit
from improved fuel economy in vehicles. While EPA's analysis of vehicle sales impacts
(Preamble Section III.H.5 and RIA Section 8.1.1) is not able to distinguish effects for
individual auto makers, EPA estimates that vehicle sales will increase in response to the
rule.
Quantification of Consumer Welfare Impacts
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EPA Response to Comments
Organization: New York University School of Law, Institute for Policy Integrity (IPI)
Comment:
Once an agency undertakes a cost-benefit analysis and relies on that analysis in its
rulemaking, it cannot perform the cost-benefit analysis in an arbitrary and capricious
manner. If a cost-benefit analysis used in rulemaking "fail[s] to consider an important
aspect of the problem" or "runs counter to the evidence before the agency," a reviewing
court will invalidate the rule under the Administrative Procedure Act. Perhaps crucially,
NHTSA has clearly identified the potential lost consumer welfare as "an important
component of the total private costs and benefits." [OAR-2009-0472-7232.3, p. 4]
Failing to quantify an important element in a cost-benefit analysis can constitute arbitrary
and capricious action. A cost-benefit analysis must be as accurate as reasonably possible,
and agencies must estimate costs and benefits in a responsible manner. Courts have
criticized Department of Transportation rulemakings in the past for trying to justify a
failure to quantify by citing uncertainty. In Public Citizen v. FMCSA, the court warned
that:
The agency's job is to exercise its expertise to make tough choices about which of the
competing estimates is most plausible, and to hazard a guess as to which is correct...
Regulators by nature work under conditions of serious uncertainty, and regulation would
be at an end if uncertainty alone were an excuse to ignore a congressional command.
[OAR-2009-0472-7232.3, p. 4]
Similarly, in Center for Biological Diversity v. NHTSA, NHTSA believed the economic
models on the benefits of reducing greenhouse gas emissions were too uncertain and
inconsistent to support an explicit valuation. The Ninth Circuit Court of Appeals held that
NHTSA's reasoning was arbitrary and capricious because "while the record shows that
there is a range of values, the value.. .is certainly not zero." In the present rulemaking, the
agencies also fail to quantify an important element of the cost-benefit analysis and thus
unnecessarily expose themselves to legal challenges. [OAR-2009-0472-7232.3, p. 4]
EPA Response:
EPA does not accept the premise that a court must invalidate a rule as arbitrary if any
cost-benefit analysis accompanying the rule fails to consider some important aspect of the
problem. The uses to which cost-benefit analysis is put during the rulemaking determines
the degree of judicial scrutiny to which such analysis is subject - a distinction overlooked
by the commenter. Nor does EPA accept the premise that it has ignored some significant
element - evaluation of consumer welfare costs and benefits - in establishing the
standards.
In Center for Biological Diversity v. NHTSA. 538 F. 3d 1172 (9th Cir. 2008), the court
was reviewing a rule where the standard was established using a type of marginal cost-
benefit analysis such that individual inputs became output determinative. 538 F. 3d at
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1199. Under such circumstances, the agency's failure to assign any value to a critical
factor (valuation of reduced carbon emissions) was deemed arbitrary. Id. at 1202. (noting
that the omission was both arbitrary and that the omission affected the stringency of the
standard). In Public Citizen v. FMCSA. 374 F. 3d 1209 (D.C. Cir. 2004) the court found
that the agency had outright failed to consider a critical statutory decision factor - driver
safety - and so had acted arbitrarily. Id. at 1216-17. In dicta, the court also noted that a
decision not to require use of a device to monitor compliance on cost-benefit grounds
appeared arbitrary when the agency had made no attempt to quantify or otherwise
estimate either the costs or benefits of using the devices. Id. at 1221-22.
These cases are readily distinguishable from the situation here. Although EPA has
conducted a cost-benefit analysis for purposes of Executive Order 12866, and notes that
the results of that analysis support the overall reasonableness of the standards, the cost-
benefit analysis is not the main, much less sole, decision criterion. Pursuant to section
202 (a) (1) of the Act, EPA has considered such factors as available technology and its
level of performance, lead time necessary to install the technology, the costs of doing so
to both manufacturers and consumers, the cost-effectiveness of the controls, implications
for vehicle safety, and other considerations. See e.g. section HID of the preamble to the
final rule. Thus, EPA is accorded the customary broad latitude in assessing and
considering costs in adopting technology-based standards. See e.g. Kennecott v. EPA,
780 F. 2d 445, 456 (4th Cir. 1985).
Nor has EPA ignored the issue of consumer welfare. The issue is discussed at length at
proposal at 74 FR 49602 and in the final rule and record in Preamble III.H. 1 and RIA
Section 8.1.2. If the commenter's point is that EPA has not monetized consumer welfare
penalties, EPA's analysis argues that such penalties are estimated by the cost of
additional technology. Any possible unqualified effects would affect estimation of the
technology costs, which already take into account (by holding constant) effects on
performance, safety, utility, and other attributes. Moreover, the value of the monetized
fuel savings is a consumer welfare benefit. These benefits and costs are included in
EPA's benefit-cost analysis set out in Preamble Section III.H. Consequently, EPA has
considered and evaluated the effects of this rule on consumer welfare in a reasonable and
non-arbitrary manner.
Consumer Vehicle Choice Modeling
Organization: American Council for an Energy Efficient Economy
California Air Resources Board
Institute for Energy Research
International Council on Clean Transportation
Natural Resources Defense Council
Union of Concerned Scientists
James Adcock
New York University School of Law, Institute for Policy Integrity (IPI)
American Council for an Energy Efficient Economy
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EPA Response to Comments
The use of consumer choice models calibrated to historical sales data, as discussed in the
proposal, is a sure recipe for the creation of a backward-looking policy and one that
threatens the viability of auto companies. This approach ignores important factors such as
past correlation between low fuel economy and desirable design features, the role of
manufacturer advertising and consumer vehicle selection and evidence of recent shifts in
consumer preferences as shown, for example, in the Cash For Clunkers Program. The
discussion of consumer welfare in the agencies' proposal appears to raise a possibility
that future progress in fuel economy could be jeopardized by improperly formulated
economic concerns. Indeed, rapid progress toward a sustainable transportation sector is
an economic imperative. This is a time for creative thinking as to how federal standards
can best contribute to achieving the crucial and very challenging goals of major
reductions in greenhouse gas emissions and in reliance on unsustainable sources of
energy. [These comments were submitted as testimony at the New York public hearing.
See docket number EPA-HQ-OAR-2009-0472-4621, pp. 147-148.]
Recommendations: 1. Acknowledge that the standard model of individuals' behaviors is
deeply flawed, and apply it only when it is clear that it offers real insights to actual
behavior; 2. Expand the investigation of consumer welfare to include up-to-date findings,
including: work showing that consumers do not necessarily maximize utility, even absent
evident barriers to doing so; impacts of advertising and incentives on vehicle choice;
changing consumer valuation of vehicle characteristics; 3. Unless and until this research
can be adequately incorporated in a quantitative model and peer-reviewed, exclude
intangibles from the quantification of consumer welfare impacts; 4. Consistently
represent in the rule and accompanying documents NHTSA's estimates that both sales
and automotive jobs will increase as a result of the proposed standards.
California Air Resources Board
CARB agrees with the agencies' assumption that vehicle attributes on performance,
carrying capacity, safety, or comfort would not change under this regulation. In response
to the request for comment on how to explicitly estimate changes in consumer welfare,
we believe it is possible to use consumer choice modeling to obtain a reasonable
estimate. While EPA's DRIA thoroughly describes the variation in model types and
results as well as the issue of consumer valuation of fuel savings, we support EPA's
efforts to continue investigation of this type of methodology. Assumptions, data sources
and collection methods, and model specification clearly drive many of the differences in
model results. EPA's conclusion that the literature is inconsistent does not seem to have
controlled for these varying factors. We believe a closer look will reveal that when
models have similar objectives and specifications, they will produce repeatable results.
EPA also questions the reliability of consumer choice models for their predictive power
of future vehicle choices. While this is certainly a limitation of any forecast model, this
can be mitigated by including stated preference data for technologies that are currently
not in the marketplace, e.g. plug-in hybrids, fuel cell vehicles. [OAR-2009-0472-7189.1
p.6]
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[CARB also submitted these comments as testimony at the Los Angeles public hearing.
See docket number OAR-2009-0472-7283, pp. 21-27]
Institute for Energy Research
Another problem with empirically second-guessing consumers' valuations of fuel
economy is the crudeness of most modeling techniques. The estimated valuations vary by
an order of magnitude, suggesting that the econometricians do not understand this issue
very well. In practice, there are no 'controlled experiments' where consumers are offered
the choice between two otherwise identical vehicles, where one is more expensive yet has
better fuel economy. On the contrary, in the real world there are tradeoffs between
vehicles that simultaneously differ on vehicle size, acceleration, price, safety, and finally
fuel economy. More recent modeling has done a better job capturing these nuances, but
economists have still not reached a consensus on exactly what motivates consumers when
making vehicle purchases. [OAR-2009-0472-7225.1, p.13]
Another problem with the entire approach is to assume that consumers have identical
tastes regarding fuel economy. In reality, some consumers may be very concerned, while
others may not be. Thus even if the proposed rule made the "representative consumer"
better off, in practice it would still harm those consumers who (for whatever reason) do
not place a high subjective value on fuel economy. [OAR-2009-0472-7225.1, p. 14]
International Council on Clean Transportation
EPA asked for comments "on the usefulness of consumer choice modeling results and the
consistency and reliability of results from these models." The usefulness of consumer
choice models depends on establishing an appropriate consumer discount rate for the fuel
savings. As discussed, above, there are numerous unresolved questions related to
consumer welfare that reflect the lack of clarity and understanding of this issue in
general. There is no point in trying to use a consumer choice model until the issue of
consumer welfare is resolved and an appropriate discount rate established. [OAR-2009-
0472-7156.1, pp.4-5]
Natural Resources Defense Council
Consumer Vehicle Choice Models Are Not Appropriate for Welfare Analysis
EPA and NHTS A have solicited feedback on the future use of consumer vehicle choice
models to estimate welfare impacts associated with new standards. We believe such
models have a role in estimating the outcome of particular market-based policies (e.g.,
feebates, consumer incentives) or the market driven penetration rates of new
technologies. However, such models are not useful when evaluating the consumer
welfare impacts of new GHG or CAFE standards. [OAR-2009-0472-7141.1, p. 25]
The basic framework of the model, consumer utility maximization, suffers from the
identical weaknesses of using a "revealed" or "implicit" discount rate to quantify the
benefits of fuels savings. That is, the coefficients for the consumer vehicle choice models
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must be estimated using existing market data (i.e., "revealed preferences") or data from
surveys (i.e., "stated preferences"). The models simply assume, without any empirical
foundation, that the consumers are already maximizing their utility with their current
decisions. Thus, the use of such models to estimate consumer welfare impacts leads to a
circular conclusion that any changes in vehicle attributes (including fuel efficiency)
decrease consumer welfare. Clearly, given the robust discussions in the NPRM and in the
energy efficiency literature and the accepted use of low discount rate for appliance
efficiency standards, there is strong basis for the conclusion that market intervention in
the form of efficiency standards can lead to significant increases in consumer welfare by
overcoming market barriers to efficiency. [OAR-2009-0472-7141.1, p. 25]
Furthermore, we concur with the EPA discussion of the limitations of such models since
they must be estimated using existing vehicles choices which clearly do not represent a
full set of choices the consumer could face for fuel efficiency, especially in the future
market place with new technologies. The new standards have the potential to bring
significant changes to the vehicle market with improvements in fuel economies that have
not been seen for 20 years. Additionally, safety features continue to improve. Advanced
electric-drive vehicles that bear little resemblance to their conventional gasoline
counterparts are also poised to enter the market in significant numbers. The changes in
vehicle choices available by the new configuration of the vehicle market cannot be
reliably predicted by consumer choice models. [OAR-2009-0472-7141.1, p. 26]
Finally, the consumer vehicle choice models assume fixed consumer preferences and do
not consider the reality of today's marketplace which clearly has demonstrated large
shifts in consumer preferences away from large, fuel inefficient vehicles. The oil shock of
1973 serves as a historical reference for past large vehicle market changes. As EPA notes,
consumer choice modeling efforts to predict shifts in the vehicle market were ineffective.
Similarly the oil price shocks of 2007 and 2008 have also fundamentally reshaped
consumer preferences for vehicles. Future changes in consumer attitudes towards global
warming, energy security as well as oil prices will likely have an ongoing impact on
reshaping consumer preferences, rendering any model which explicitly or implicitly
depends on an assumption of fixed preferences obsolete. [OAR-2009-0472-7141.1, p. 27]
[Note that since the above comments apply to both EPA and NHTSA, they also
appear under comment summary outline heading 4.5.5.2]
Union of Concerned Scientists
The agencies should continue including the private benefits when calculating the total
benefits of the program and should not shift to a system that would include consumer
choice models in the benefits assessments. It was those same consumer choice models
that led many companies to dismiss hybrid-electric vehicles like the Prius, airbags, and
many other innovations that have seen significant market success. [OAR-2009-0472-
James Adcock
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In general consumers with differing projections of the "true" future cost of SCC and fuel
prices will make differing estimates of the utility of the purchase of a particular vehicle.
Analysis that assumes one particular "US-wide" value of SCC or fuel costs will thus
reach erroneous conclusions about vehicles Mfgs should be offering consumers -
consumers hold a wide variety of beliefs on these subjects and thus Mfgs should, if "free
market" forces are at work [which they aren't, due to huge barriers to entry into the Auto
Industry — due in part to NHTSA regulations] provide a wide variety of fuel efficiency
vehicles to consumers. But the market doesn't actually work that way. For example
Toyotas' great success with the Prius makes it LESS likely not more that other Mfgs will
attempt to compete in that segment of the market.
We support the EPA contract with RFF to develop a better model and understanding of
the vehicle market.
New York University School of Law, Institute for Policy Integrity (IPI)
Consumers can expect either increased vehicle purchase prices or different vehicle design
features (or some combination thereof). In the former case, consumers could experience
lost welfare if the fuel savings and other private benefits from greater fuel efficiency do
not fully compensate them for the increased purchase price. In the latter case, consumers
could experience lost welfare if they do not value the new fuel efficiency as highly as
they value the design features that have been sacrificed. Three economic concepts will
affect the measurement of consumer valuations: the Energy Efficiency Paradox, the
Positional Goods Effect, and the Bandwagon Effect. [OAR-2009-0472-7232.3, p. 5]
EPA Response:
Consumer vehicle choice models estimate what vehicles consumers buy based on vehicle
and consumer characteristics. In principle, they could provide a means of understanding
both the role of fuel economy in consumers' purchase decisions and the effects of this
rule on the benefits that consumers will get from vehicles. The NPRM included a
discussion of the wide variation in the structure and results of these models. Models or
model results have not frequently been systematically compared to each other. When
they have, the results show large variation over, for instance, the value that consumers
place on additional fuel economy. As a result, EPA found that further assessment needed
to be done before adopting a consumer vehicle choice model. In the NPRM, EPA asked
for comment on the state of the art of consumer vehicle choice modeling and whether it is
sufficiently developed for use in regulatory analysis.
EPA has not used a consumer vehicle choice model for the final rule analysis, due to
concerns discussed in Chapter 8.1.2 of the RIA, and because no new information became
available, during the public comment period or afterward, to resolve those concerns. In
fact, a recent review commissioned by EPA supports the finding of great variability, by
looking at one key parameter: the role of fuel economy in consumers' vehicle purchase
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decisions.2 It finds no consensus on the role of fuel economy in consumer purchase
decisions. Of 27 studies, approximately equal numbers find that consumers undervalue,
overvalue, or value approximately correctly the fuel savings that they will receive from
improved fuel economy. The variation in the value of fuel economy in these studies is so
high that it appears to be inappropriate to identify one central estimate from the literature.
Thus, estimating consumer response to higher vehicle fuel economy is still unsettled
science. It is likely that this variation exists as well in measuring consumer response to
changes in other vehicle characteristics, such as performance. Thus, there does not
appear to be evidence at this time to develop robust estimates of consumer welfare effects
of changes in vehicle attributes.3
Nonetheless, because there are potential advantages to using consumer vehicle choice
models if these difficulties can be addressed, EPA is continuing to explore options for
including consumer and producer choice in modeling the impacts of fuel economy-
related regulations. This effort includes further review of existing consumer vehicle
choice models and the estimates of consumers' willingness to pay for increased fuel
economy. We are exploring (and will continue to explore) the implications of behavioral
economics for this modeling. In addition, EPA is developing capacity to examine the
factors that may affect the results of consumer vehicle choice models, and to explore their
impact on analysis of regulatory scenarios. Under contract with EPA, Resources for the
Future (RFF) is developing a model of the vehicle market that can be used to evaluate
different policy designs and compare regulatory scenarios on the basis of changes in cost,
changes in the prices paid by consumers, changes in consumer welfare, and changes in
industry profits. It should help to shed light on whether it is more costly to rely solely on
the application of technologies to vehicles to meet a given fuel standard than when
consumer and producer behavior is taken into account. EPA plans to evaluate this work
within the context of the overall literature on consumer vehicle choices, to determine its
usefulness in informing the analysis for future rules. EPA agrees with the California Air
Resources Board that stated preference information may be useful for evaluating new
technologies not currently in the marketplace.
Economic theory provides insight into how to consider consumer welfare implications in
the absence of the use of consumer vehicle choice models. As discussed in Section HID
of this preamble, the technology cost estimates developed here take into account the costs
to hold other vehicle attributes, such as size and performance, constant. Thus, if auto
makers decide to change these characteristics, they are likely to do so only if consumers
are likely to prefer these changes to the increased vehicle costs. In addition, the analysis
assumes that the full technology costs are passed along to consumers. With these
assumptions, because welfare losses are monetary estimates of how much consumers
would have to be compensated to be made as well off as in the absence of the change,4
2 Greene, David L. "How Consumers Value Fuel Economy: A Literature Review." EPA Report EPA-420-
R-10-008, March 2010.
3 As noted in the previous response, the decision not to use these uncertain valuation methodologies is both
reasonable and was not determinative in the ultimate decision as to what standard to adopt.
4 This approach describes the economic concept of compensating variation, a payment of money after a
change that would make a consumer as well off after the change as before it. A related concept, equivalent
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the price increase measures the loss to the consumer.5 Assuming that the full technology
cost gets passed along to the consumer as an increase in price, the technology cost thus
measures the welfare loss to the consumer. Increasing fuel economy would have to lead
to other changes in the vehicles that consumers find undesirable for there to be additional
losses not included in the technology costs. At this time EPA has no available methods
to identify or estimate potential additional effects on consumers not included in the
technology cost estimates, e.g., due to changes in vehicles that consumers find
undesirable, shifts in consumer demand for other attributes, and uncertainties about the
long term reliability of new technologies. Comments on the rule generally supported
EPA's analysis of the technology costs and the assumption that other vehicle
characteristics were not adversely affected, and EPA adheres to that analysis in adopting
the final rule.
EPA's assessment is that vehicle sales may increase as a result of this rule (see Preamble
III.H.5 and RIA 8.1.1), because the fuel savings exceed technology costs even when only
a five-year payback period for those savings is considered.
EPA considers the energy efficiency paradox, the positional goods effect, and the
bandwagon effect as some of the potential explanations for why consumers do not buy
the cost-effective amount of fuel economy and discusses those in Preamble III.H.l and
RIA 8.1.2, along with Section 5.13.1 of this Response to Comments document. EPA
continues to explore the implications of these and other hypotheses (such as those cited
by the Consumer Federation of America's comments) for consumer vehicle choice
modeling and welfare analysis.
4.5.2 The on-road fuel economy "gap"
No comments were received on either the derivation or use of the on-road fuel economy
gap.
4.5.3 Fuel prices and the value of saving fuel
No comments were received on the data sources used for fuel prices.
4.5.4. Benefits of Reducing GHG Emissions (Social Cost of Carbon)
variation, estimates the income change that would be an alternative to the change taking place. The
difference between them is whether the consumer's point of reference is her welfare before the change
(compensating variation) or after the change (equivalent variation). In practice, these two measures are
typically very close together.
5 Indeed, it is likely to be an overestimate of the loss to the consumer, because the consumer has choices
other than buying the same vehicle with a higher price; she could choose a different vehicle, or decide not
to buy a new vehicle. The consumer would choose one of those options only if the alternative involves less
loss than paying the higher price. Thus, the increase in price that the consumer faces would be the upper
bound of loss of consumer welfare, unless there are other changes to the vehicle due to the fuel economy
improvements that make the vehicle less desirable to consumers.
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EPA RESPONSE A
Organizations: See table below.
Commenter Affiliation Document ID Number
California Air Resources Board EPA-HQ-OAR-2009-0472-7189.1
Center for Biological Diversity EPA-HQ-OAR-2009-0472-7265.1
Connecticut PEP EP A-HQ-O AR-2009-0472-73 01.1
Environmental Defense Fund EP A-HQ-O AR-2009-0472-7246.1
Ford Motor Company EP A-HQ-O AR-2009-0472-7082.1
Institute for Energy Research EP A-HQ-O AR-2009-0472-7225.1
Institute for Policy Integrity at EP A-HQ-O AR-2009-0472-7246.1
New York University School of
Law
National Association of Clean EP A-HQ-O AR-2009-0472-7071.1
Air Agencies
Natural Resources Defense EP A-HQ-O AR-2009-0472-7274.1
Council
National Rural Electric EP A-HQ-O AR-2009-0472-7252.1
Cooperative Association
New Jersey PEP EP A-HQ-O AR-2009-0472-7093.1
Northeast States for EP A-HQ-O AR-2009-0472-723 5.1
Coordinated Air Use
Management
Pew Center EP A-HQ-O AR-2009-0472-723 9.1
Physicians for Social EP A-HQ-O AR-2009-0472-7283, pg 81
Responsibility, Los Angeles
Private Citizen (Adcock, James) EP A-HQ-O AR-2009-0472-53 85
Private Citizen (Chew, Yuli) EPA-HQ-OAR-2009-0472-7042.1
Private Citizen (Magavern, Bill) EP A-HQ-O AR-2009-0472-7283, pg 179-186
Private Citizen (Rose, Stephen) EP A-HQ-O AR-2009-0472-7276.1
Private Citizen (Steiner, John) EP A-HQ-O AR-2009-0472-8705
Sierra Club EP A-HQ-O AR-2009-0472-6185, p. 31
Stockholm Environment EP A-HQ-O AR-2009-0472-743 2.1
Institute-US Center
Union of Concerned Scientists EPA-HQ-OAR-2009-0472-7181.1
University of California Santa EPA-HQ-OAR-2009-0472-7188.1
Barbara Bren Working Group
Comments:
Commenters presented extensive methodological input and discussed various issues,
including discount rate, uncertainly and risk, and magnitude and uses of the social cost of
carbon.
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Comments on Discount Rate
These comments identified concerns about the discount rates applied to SCC estimates
and provided different recommendations about issues such as the approach used to select
discount rates, the magnitude of the discount rate, and ways to account for uncertainty in
discount rates. Many commenters emphasized the ethical issues embedded in the
selection (e.g., 7246.1, 7239.1, and 7274.1).
In general, commenters recommended different approaches and lower rates to give more
weight to climate damages experienced by future generations. Some commenters
recommended that EPA develop a social discount rate on the basis of detailed
consideration of the scientific, ethical, and economic implications of discounting (e.g.,
7246.1 and 7274.1); several commented on using the Ramsey framework in particular to
derive the discount rate (e.g., 7432.1, 7246.1, 7274.1). Some commenters did not think it
was appropriate to infer rates from observed market behavior when considering the long
time horizons for climate damages (e.g., 7265.1, 7246.1, 7274.1). For example, the
Environmental Defense Fund and the NYU Institute for Policy Integrity stated in a joint
letter that a "simple application of a market rate of return is not justified" because of the
"special relationship of GHGs to the market rate of return and to a large range of goods
and services (both market and non-market)" (7246.1, pg 15). They noted, however, that
if EPA opted to use market rates of return, it should also analyze and consider the
underlying complexities in greater detail, such as the relationship between GHG
reductions and economic growth, and present a robust discussion about GHG reductions
"fit into an optimal portfolio of investments" (7246.1, pg 15).
In addition, two commenters suggested that EPA should not discount the SCC (7265.1,
7274.1). That is, they stated that EPA should use a discount rate of zero, thereby making
the present value of damages in the future equivalent to their value in the future,
effectively making the net present value of damages infinite.
Many of the commenters stated that the discount rates applied to the interim SCC
estimates were too high and therefore resulted in underestimates of SCC that fail to
adequately capture the value of damages experienced by future generations (e.g., 7265.1,
7246.1, 7274.1, 7239.1). In particular, some commenters disagreed with the rationale
given for use of a 5 percent discount rate. Dr. Rose stated that "a 5 percent discount rate
is inconsistent with risk-free consumption trade-offs within the current generation,"
further noting that the intergenerational timeline for GHG emissions "implies even
greater uncertainty than that reflected in intragenerational interest rates" (7276.1, pg 4).
That is, GHG mitigation represents a different kind of investment than intragenerational
investments analyzed with higher discount rates like 5 percent. The Environmental
Defense Fund and the NYU Institute for Policy Integrity concluded that there are "strong
reasons for concluding that a substantial fraction of the benefits from abatement are
uncorrelated or even negatively correlated with the returns to the economy as a whole"
(7246.1, pg 15). Other commenters agreed with this view and concluded that it would be
appropriate to view investment in GHG mitigation from a risk-averse perspective—i.e.,
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investment in mitigation as a form of insurance against uncertain future climate
damages—rather than a risky investment in mitigation technology (7274.1, 7432.1).
Furthermore, some commenters disagreed with the proposed rule's statement that 5
percent is consistent with the Ramsey framework, based on standard estimates of the
Ramsey parameters (e.g., 7239.1, 7276.1, 7246.1, 7432.1). First, the Stockholm
Environment Institute noted that controversy about appropriate estimates of Ramsey
parameters has thus far prevented standardization of the framework values. Similarly,
Environmental Defense Fund and NYU Institute for Policy Integrity stated that "[t]he
claim that 5% is 'near the middle of the range of values that are able to be derived from
the Ramsey equation' is in fact meaningless—there is no theoretical lower or upper
bound to values that could possibly be derived from the Ramsey equation" (7276.1, pg
8). Second, several commenters pointed out that the Ramsey framework normally
assumes perfect certainty about the future and needs to be adjusted to account for the
significant uncertainty inherent in GHG emissions; this would result in a lower estimate
of the discount rate (e.g., 7432.1, 7239.1). Third, the Stockholm Environment Institute
concluded that the derivation of the 5 percent discount rate from Ramsey "does not
appear to be based on a careful reading of the sources cited in supporting footnotes"
(7432.1, pg II).6
In addition, many commenters noted that the range of discount rates used in the proposed
rule did not include low enough rates and recommended using lower rates in the final rule
(e.g., 7239.1, 7432.1, 7188.1). Several specifically suggested using 2 percent and lower
and one recommended setting an upper bound that did not exceed 4 percent (7246.1,
7274.1).
The commenters presented multiple sources to support their recommendation for lower
rates. For example, several commenters stated that consideration of rates below 3 percent
would fulfill OMB Circular A-4 guidance to conduct sensitivity analysis at such rates for
intergenerational problems (e.g., 7432.1, 7274.1, and 7239.1). The Environmental
Defense Fund and NYU Institute for Policy Integrity presented evidence of lower rates
that the interagency group should consider, including a 2009 National Academy of
Science study that reporting discount rates of 1.5, 3, and 4.5 percent for SCC estimates
(7246.1).
Finally, some commenters recommended that EPA account for discount rate uncertainty
and adjust the rates in the final rule (e.g., 7246.1, 7274.1, 7432.1). The Stockholm
Environment Institute disagreed with the proposed rule's statement that the literature on
techniques to account for discount rate uncertainty, in particular time-varying discount
rates, is relatively recent. This commenter cited several papers, including a literature
review published in 2002 in AEA's Journal of Economic Literature; the review discussed
6 The Stockholm Environment Institute determined that four of the five sources cited in the proposal as the
basis for the Ramsey parameter estimates are inconsistent with the numerical estimates presented in
proposed rulemaking. See OAR-2009-0472-7432.1, pg 11.
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numerous arguments for time-varying discount rates dating back to a 1937 paper.7
Likewise, the Environmental Defense Fund and the NYU Institute for Policy Integrity
pointed out the qualitative conclusions of the work by Newell and Pizer are "reinforced in
a general theoretical setting by Gollier and Weitzman" (7246.1, pg 21).8
Likewise, the Environmental Defense Fund and NYU Institute for Policy Integrity
supported the adjustment of discount rates for uncertainty and recommended that EPA do
so to determine the principal SCC estimates, rather than limit it to sensitivity analysis.
These commenters described the choice between the Weitzman and Newell-Pizer
approaches, which define discount rate uncertainty in different ways, as a false one
because each approach supports the same conclusion: "in the presence of uncertainty over
the appropriate discount rate, future costs and benefits should be discounted at a rate that
declines over time" (7246.1, pg 21). However, they noted that if forced to choose one or
the other, they would advise Newell and Pizer because of "its careful use of historical
data, its demonstration that time-varying discount rates are rigorously justified on strictly
descriptive grounds, and its development of a rigorous analytical methodology that can
be readily applied to the computation of SCC values in the current context" (7246.1, pg
20-21).
Another commenter identified the potential time inconsistency as an issue to consider
when applying Newell and Pizer (2003) to SCC estimates. Specifically, Dr. Rose stated
that the Newell and Pizer discounting framework may present values that are inconsistent
with various alternative futures; he further noted that such inconsistencies would likely be
greater if climate impacts affect future economic growth (7276.1).
The Environmental Defense Fund and NYU Institute for Policy Integrity addressed the
critique that rank ordering of present value and future value of benefits may produce
different results when using time-differential discount rates. They maintained that the
timing of the investment decision is not arbitrary—it is made by individuals in the present
under known certainties. Rather, concerns about time inconsistency center on "a certain
pattern of discount rates ("high today, low tomorrow") that the planner nonetheless
systematically fails to anticipate," but that time-declining rates (e.g., Newell-Pizer)
involve a "discrete investment decision [that] must be made today, in the absence of full
information about the future discount rate, that will continue to yield returns far into the
future" (7246.1, pg 21-22). In sum, they concluded that no time inconsistency arises in
the latter case because "by the time we reach the future the decision will have already
been made. Declining discount rates merely provide an aid to current decision-making in
the face of risk" (7246.1, pg 21-22).
Comments on Uncertainty and Risk
Shane Frederick, George Loewenstein, and Ted O'Donoghue, "Time discounting and time preference: A
critical review," Journal of Economic Literature (2002) 40:351-401.
8 See, for example, Martin L. Weitzman, Why the Far Distant Future Should Be Discounted at Its Lowest
Possible Rate, 36 Journal of Environmental Economics and Management, 201 (1998); Christian Gollier &
Martin L. Weitzman, How Should the Distant Future Be Discounted When Discount Rates Are Uncertain?
(Working Paper, Nov. 2009),
http://www.economics.harvard.edu/faculty/weitzman/files/discountinglongterm(2).pdf.
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EPA Response to Comments
Many commenters discussed the limitations of the SCC estimates, in particular the
treatment of uncertainty, catastrophic impacts, and omitted impacts, and the implications
for the benefits assessment. For example, several commenters noted that the reliance on
model-weighted averages in the proposed rule failed to capture the uncertainty in climate
impacts. The Environmental Defense Fund and NYU Institute for Policy Integrity
recommended the final rule better account for the upward skew of uncertainty by, for
example, applying an upward adjustment to the SCC estimates.
Commenters from various environmental organizations and state and regional
government agencies observed that the models do not capture numerous and significant
climate impacts, in particular potentially catastrophic events, which contributes to the
underestimation of GHG mitigation benefits. The Union of Concerned Scientists'
conclusion that the interim SCC estimates fell "far short of capturing the potentially
immense impacts of climate change" was echoed by many other commenters (e.g.,
7265.1,7235.1, and 7274.1).
The Natural Resources Defense Council (NRDC) elaborated on the treatment of
catastrophic impacts, stating that the "SCC estimates [used in the proposed rule] are
systematically biased downward, in large part because they do not adequately reflect the
most critical issue in climate change: non-zero probabilities of extremely high and
potentially catastrophic damages" (7274.1, p. 3). NRDC observed that the set of interim
SCC estimates misrepresented the probability distribution of climate damage estimates,
which includes "a 'fat' right tail (low to medium probabilities of relatively high
damages), extending toward infinity (very low probabilities of profound catastrophes)"
(7274.1, pg 12). Specifically, NRDC noted that while the lower bound of the interim
SCC estimates was representative of the left tail of the distribution of damage estimates,
the upper bound was not. NRDC recommended that SCC estimates instead go to the
right of the central estimates to better represent the right-skew of the distribution. NRDC
further supports this recommendation by referring to Weitzman's (2009) observation that
"climate change presents a long chain of tenuous inferences with huge uncertainties in
every link that undermine the capability of [integrated assessment models] to estimate
damages" (7274.1, pg 14).
Comments on Magnitude and Uses of Social Cost of Carbon
Many commenters stated that the interim SCC estimates were too low (e.g., 7301.1,
7181.1, 7093.1, 7239.1), although one commenter said SCC overstates the benefits of
GHG mitigation (7225.1). Some commenters expressed concern that EPA is using an
underestimate of the SCC to determine the stringency of the vehicle rule's GHG
standards (e.g., 7239.1, 7265.1, 7093.1). Commenters recommended that EPA consider
higher values in the analysis to better represent the possibility of catastrophic climate
damages; some recommended specific numbers to use as the upper bound (e.g., 7189.1)
or other analyses to setaminimum lower bound (7181.1).
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Commenters discussed additional uses of SCC in rulemaking analyses as well as
presentation. For example, the Environmental Defense Fund and NYU Institute for
Policy Integrity recommended that the interagency group specify how agencies should
use SCC in traditional regulatory impact analysis and agency rulemaking. The
Stockholm Environment Institute also commented on the use and purpose of SCC, and
noted that policies designed from an insurance perspective "would not be framed in terms
of cost-benefit calculations," but that economic analysis would inform selection of a
least-cost strategy for meeting a risk-based standard (7432.1, pg 13).
Other recommendations regarding the use and presentation of SCC included:
• Present an even number of SCC estimates (7276.1)
• Expand the presentation of information about the basis for the estimates,
including discussion about omitted impacts, a broader set of descriptive statistics,
and probability density functions (e.g., 7274.1, 7246.1)
• Considering using CC>2 mitigation cost in lieu of SCC estimates (7082.1)
• Incorporate a broader range of SCC estimates into the benefits analysis rather than
rely on central estimates (e.g., 7246.1).
EPA Response A:
As discussed in preamble III.H.6, EPA and NHTSA used new SCC estimates in this final
rule that were recently developed by an interagency process, in which both agencies
participated. EPA and NHTSA critically evaluated the decisions of the interagency
group and the new SCC estimates and endorsed them as reasonable for this final rule for
the reasons presented in preamble III.H.6. The remainder of this response discusses
EPA's consideration of and response to the comments on discount rate, uncertainty and
risk, and magnitude and uses of the social cost of carbon, and, as relevant, how the
interagency modeling exercise addressed the methodological comments.
EPA has responded to the commenters' other SCC comments elsewhere. Specifically,
refer to Response [B] for EPA's response to comments regarding the interim SCC
estimates and methodology, the use of integrated assessment models, and equity-
weighting, and to Response [C] for EPA's response to comments regarding global and
domestic valuations of SCC.
Discount rate
Many of the comments on SCC identified concerns about the discount rates applied to the
interim SCC estimates and provided different recommendations about: (i) approach used
to select discount rates; (ii) the magnitude of the discount rate, and; (iii) ways to account
for uncertainty in discount rates.
EPA's continued assessment of the SCC literature and review of the extensive public
comments about discount rate selection reaffirms the complexity and sensitivity of this
task. Recognizing the lack of consensus about an appropriate discount rate to use in this
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context and uncertainty regarding how interest rates might change over time, EPA
selected three rates to span a plausible range of certainty-equivalent constant discount
rates: 2.5, 3, and 5 percent per year. Although EPA selected discount rates for this
exercise that differed from some of those recommended by commenters, the agency
regards its approach as defensible and transparent given its consistency with current
benefit-cost analysis principles as well as OMB's guidelines for such analysis as
embodied in OMB Circular A-4. The Technical Support Document, Social Cost of
Carbon for Regulatory Impact Analysis Under Executive Order 12866 (hereafter, "SCC
TSD"), discusses in detail the basis for the discount rate selection.9
(i) Response to Comments on the Approach Used to Select Discount Rates
EPA considered the comments and recommendations regarding both prescriptive
approaches for discount rate selection and descriptive approaches that infer discount rates
from observed market behavior. As stated in the SCC TSD, the selection of discount
rates drew on both approaches but relied primarily on the descriptive approach.
In sum, average returns on longer-term investments were used to inform selection of
certainty-equivalent discount rates. This approach was consistent with the comments on
consumption-based rates as well as the literature. EPA recognizes its limitations but
finds this approach to be the most defensible and transparent given its consistency with
the standard contemporary theoretical foundations of benefit-cost analysis and with the
approach outlined in OMB's existing guidance. See the SCC TSD for a detailed
explanation.
Prescriptive Approaches. EPA considered all recommendations for prescriptive
approaches, including selection of rates at 2 percent and lower within the Ramsey
framework and use of a zero discount rate (i.e., not discounting). As noted in the SCC
TSD, Ramsey (1928) argued that it is "ethically indefensible" to apply a positive pure
rate of time preference to discount values across generations. After considering the
comments and relevant literature, however, EPA ultimately decided that within the time
constraints of this rulemaking, use of observed market behavior was a more transparent
and defensible approach consistent with the federal government's current guidelines on
intergenerational discounting. See the SCC TSD for the detailed rationale and
discussion.
NRDC presented an interesting observation regarding the relationship between damage
functions and growth rates, and maintained that declining economic growth requires a
negative discount rate. However, negative growth does not automatically imply negative
discount rates because the discount rate is a function of both rho and the product of eta
9 Interagency Working Group on Social Cost of Carbon, U.S. Government, with participation by Council of
Economic Advisers, Council on Environmental Quality, Department of Agriculture, Department of
Commerce, Department of Energy, Department of Transportation, Environmental Protection Agency,
National Economic Council, Office of Energy and Climate Change, Office of Management and Budget,
Office of Science and Technology Policy, and Department of Treasury, "Social Cost of Carbon for
Regulatory Impact Analysis Under Executive Order 12866" February 2010. EPA-HQ-OAR-2009-0472
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and growth. Therefore, one could have low, but positive discounting depending on the
value of rho.
Regardless of the relationship between economic growth and discount rate, the modeling
exercise supporting the final rule could not allow for negative discount rates because it
used constant discount rates. Moreover, negative discount rates cannot be justified using
EPA's current discounting approach—reliance on observed market behavior to infer
discount rate. Application of a negative discount rate would involve explicit
consideration of ethical aspects of intergenerational discounting and ultimately the
selection of an appropriate social discount rate.
EPA agrees with the NYU Institute for Policy Integrity and the Environmental Defense
Fund (IPI, EDF) that use of prescriptive approaches would necessitate explicit
consideration of philosophical and legal issues (7246.1, pg 4). While EPA has
considered these comments and remains keenly aware of the normative dimensions of
discount rate selection, the selection of discount rates in the recent modeling exercise
focused primarily on economic considerations and the guidelines for intergenerational
discounting specified in OMB Circular A-4 and EPA's guidance.
Using Market Rates to Inform Discount Rates. Several commenters expressed a
preference for explicitly prescriptive approaches but also provided comments for the
agency to consider if it used market rates to inform discount rate selection (e.g., see IPI,
EDF, NRDC). EPA agrees with IPI and EDF's clarification that regardless of the
approach, the choice of a discount rate is not a "value-free 'objective' decision" and
involves "deep ethical and moral judgments" (7246.1, pg. 4). While using observed
market behavior was the best approach feasible for this analysis, EPA recognizes its
limitations and will continue to seek opportunities, such as convening workshops to
explore economic and non-economic aspects of discounting, to aid our understanding of
the relevant issues. The SCC TSD explains in greater detail the rationale for using
market rates to inform discount rate selection.
EPA concurs with the comments regarding the need to carefully select an appropriate
market rate, given the numerous rates available, as well as the comments on
consumption-based discount rates. EPA carefully reviewed the literature and considered
various complexities involved in discounting over long time horizons. For example, IPI
and EDF noted that it would be difficult to justify the selection of high rates on the basis
that the returns from alternate investments would be available as compensation for those
impacted by climate change because this is unlikely to be feasible over long time
horizons. As discussed in the SCC TSD, EPA opted to use average returns on longer-
term investments rather than short term rates.
In addition, IPI and EDF stated that if EPA uses market rate of returns, it should also
analyze and consider the underlying complexities in greater detail, such as the
relationship between GHG reductions and economic growth. In particular, IPI and EDF
referred to Weitzman's observations about a limitation of integrated assessment models:
the models' assumption of perfect correlation between GHG damage and aggregate
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economic activity is a function of the model design, not "the result of any reasoned
argument" (Weitzman 2007) (as quoted in 7246.1, pg 15). Indeed, the modeling exercise
has raised questions about the relationship between mitigation benefits and economic
growth in the models. While more analysis is required before EPA can reach definitive
conclusions, the agency recognizes this as a key issue that should be explored when
refining SCC or applying it to benefit analyses.
(ii) Magnitude of Discount Rate
EPA determined lower rates are appropriate and used rates of 2.5 and 3 percent.
Consistent with the rationale presented by several commenters, risk-free rates of return
informed the selection of discount rates. However, average returns on longer-term
investments rather than short-term rates were used. The lower rates are also consistent
with the comments suggesting that mitigation should be viewed as a form of insurance
against climate damages rather than a rate of return on risky assets (e.g., NRDC,
Stockholm Environment Institute).
Many commenters disagreed with the rationale for and use of a 5 percent discount rate in
the proposed rule. In particular, several commenters stated that GHG mitigation
represents a different kind of investment than intragenerational investments analyzed
with higher discount rates like 5 percent. IPI and EDF concluded that there are "strong
reasons for concluding that a substantial fraction of the benefits from abatement are
uncorrelated or even negatively correlated with the returns to the economy as a whole."
Other commenters agreed with this view and concluded that it would be appropriate to
view investment in GHG mitigation from a risk-averse perspective—i.e., investment in
mitigation as a form of insurance against uncertain future climate damages—rather than a
risky investment in mitigation technology. Consideration of SCC estimates based on a 5
percent discount rate could not be ruled out, however, and was included to represent the
view that climate damages are highly correlated with market returns, under which the
appropriate discount rate would be expected to exceed the risk-free rate.
In addition, IPI and EDF recommended 4 percent as an appropriate upper bound. While
EPA agrees with IPI and EDF that "the uncertainty (more properly the risk) over the
temperature changes resulting from a ton of GHG emissions does not justify a higher
discount rate," it is not clear how this concern argues for setting 4 rather than 5 percent as
the upper bound (7246.1, pg 24).
In sum, EPA applied three constant certainty-equivalent discount rates (2.5, 3, and 5
percent) to the SCC estimates to account for various perspectives about risk and
uncertainty. The upper value of 5 percent accounts for the view that there may be a high
correlation between climate damages and market returns while the rest of the SCC
analysis centers on a discount rate consistent with concerns about risk aversion. See SCC
TSD for more details about the rationale for using 5 percent.
(iii) Uncertainty in discount rates
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The comments informed the ongoing consideration of how GHG benefits analysis could
account for discount rate uncertainty through differential discounting. The SCC TSD
presents the basis for EPA's decision to account for discount rate uncertainty by using
certainty-equivalent constant discount rates, in particular inclusion of 2.5 percent to
incorporate the concern that interest rates are highly uncertain over time.
The SCC TSD also summarizes the consideration of the approaches discussed by
commenters (e.g., Newell and Pizer (2003), Weitzman (2001), and the UK's "Green
Book" for regulatory analysis) and concludes that the proper way to model discount rate
uncertainty remains an active area of research.
In particular, key questions about potential time inconsistencies arising with differential
discounting remain unresolved. For example, in its 2008 critique of the EPA Economic
Guidelines, the EPA Science Advisory Board (SAB) found that in cases with uncertain
discount rates, "rank ordering of policies by present values and future value may differ."
The SAB advised EPA to use caution when interpreting the results of time differential
discounting and noted that more research is warranted. Similarly, Dr. Rose noted that
there is an inconsistency between the Newell and Pizer (2003) discounting and various
alternative futures.
Several commenters considered the potential for and implications of time inconsistency
issues. For example, the Stockholm Environment Institute stated that "there is minimal
risk" of time inconsistency problems and that regardless, "no one.. .has the life span or
resources to arbitrage against multi-century public policies" (7432.1, pg 12). IPI and
EOF noted that the timing of the investment decision is not arbitrary—it is made by
individuals in the present under known certainties. They maintain that concerns about
time inconsistency center on "a certain pattern of discount rates ('high today, low
tomorrow') that the planner nonetheless systematically fails to anticipate," but that time-
declining rates (e.g., Newell-Pizer) involve a "discrete investment decision [that] must be
made today, in the absence of full information about the future discount rate, that will
continue to yield returns far into the future" (7246.1, pg 22). IPI and EDF conclude that
no time inconsistency arises in the latter case because "by the time we reach the future
the decision will have already been made. Declining discount rates merely provide an aid
to current decision-making in the face of risk" (7246.1, pg 22). Although the
commenters presented a valid point, in light of uncertainty about how interest rates may
change over time, EPA uses a low certainty-equivalent discount rate to incorporate the
concern that interest rates are highly uncertain over time.
IPI and EDF also point out that the "choice of starting point cannot be made
independently of the underlying financial instrument used to estimate real returns over
time. The simulated paths are extensions of a particular time series, and thus correspond
to a particular financial instrument" (7246.1, pg 23). They state that the time-differential
discounting literature, which has thus far relied on lower discount rates as the starting
point, provides sufficient empirical evidence for EPA to use a similar starting point. IPI
and EDF suggest that the agency would first need to gather empirical evidence before
using alternative starting points, in light of the likely differences that would result from
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instruments with different risk levels. However, given the lack of agreement about the
starting point and proper adjustment to use in differential discounting, EPA could not
justify relying on this technique.
EPA agrees with a comment from Dr. Rose that clarifies the difference between dynamic
discount rates and uncertain rates. The SCC modeling exercise supporting the benefits
analysis in this rulemaking used certainty-equivalent constant discount rates and did not
change over time. The SCC TSD discusses in greater detail how the discount rates
accounted for uncertainty.
Uncertainty and Treatment of Impacts in the Models
Many commenters discussed the limitations of the SCC estimates, in particular the
treatment of uncertainty, catastrophic impacts, and omitted impacts, as well as the
implications for the benefits assessment. EPA has responded to these concerns by
providing a more robust discussion about these important issues that complements the
SCC estimates and better informs policy makers.
EPA considered these limitations and, as a participant in the interagency group, used best
available information and techniques to quantify such impacts as feasible and supplement
the SCC with qualitative assessments. Overall, presentation of the revised SCC estimates
in the final rule responds more fully the uncertainties and risks associated with climate
change (see the SCC TSD for discussion).
In particular, the revised estimates more fully capture uncertainty through Monte Carlo
analysis and are accompanied by a fuller discussion of the uncertainties and risks
associated with climate change, as well as the limitations of SCC. In addition to the
uncertain parameters in each model, EPA assessed three parameters—climate sensitivity,
socioeconomic and emissions trajectories, and discount rate—and sought to model them
probabilistically for purposes of formal uncertainty analysis in the interagency modeling
exercise. A probability distribution was specified for climate sensitivity and used as an
input in the three models. A probability distribution was not specified for the other two
parameters because of uncertainty about how to model them probabilistically for
purposes of formal uncertainty analysis. For example, while models can project potential
emissions pathways, assigning probability weights to different states of the world in an
analytically rigorous way proved challenging given the dearth of information on the
likelihood of a full range of future socio-economic pathways. Therefore, the modeling
exercise used multiple scenarios that span a range of socio-economic parameters and
multiple values for the discount rate.
Consistent with the commenter's recommendations, EPA has provided much more
information about the SCC estimates and the underlying parameters in the record to the
final rule. For example, the SCC TSD shows how SCC values for 2010 vary across
model, scenario, and discount rate; it also presents the distribution of SCC estimates,
including benefit estimates at the 95th and 99th percentiles. However, EPA believes that
it is more appropriate to place the technical information in the rulemaking's technical
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supporting documents, rather than in the preamble text, which is intended to provide a
high-level discussion of the policy issues related to the economic analysis. Therefore,
EPA has presented a summary of the SCC results in the preamble along with references
to the other rulemaking documents that provide data and methodological details
necessary to replicate the analysis.
EPA also considered the emerging literature about the treatment of risk of catastrophic
impacts and commenters' recommendations on this issue. For example, EPA considered
the findings from Weitzman (2009) suggesting that catastrophic damages are so large that
they would dominate the effect of the discount rate in a present value calculation and
result in an infinite willingness-to-pay for GHG mitigation today. However, EPA
determined that this research requires further exploration before its generality is known
and the optimal way to incorporate it into regulatory reviews is understood. EPA also
considered ways to account for risk aversion in the SCC estimates, such as inclusion of a
risk premium, suggested by IPI, EDF, and the Pew Center on Global Climate Change.
The review showed that further research in this area is needed to develop a reasonable
approach to account for catastrophic risks in regulatory analyses. In addition, an adder
was not used given the lack of a rigorous method to select the number; choosing an adder
value would at this point amount to an arbitrary decision. Finally, available information
did not support rigorous inclusion of an option value, as recommended by the IPI and
EDF. See the SCC TSD for more about the consideration of catastrophic risk.
Instead, low probability, high impact events are incorporated into the SCC values through
explicit consideration of their effects in two of the three models as well as the use of a
probability density function for equilibrium climate sensitivity (see the SCC TSD).
Treating climate sensitivity probabilistically results in more high temperature outcomes
than analyzing climate sensitivities of specific values (e.g., 1.5 or 4.5), which in turn lead
to higher projections of damages. EPA has also presented a detailed qualitative
assessment of potential catastrophic damages and the implications for SCC estimates in
the SCC TSD. EPA remains interested in research about practical and robust methods to
address this important consideration.
The SCC TSD further emphasizes the need to explore the sensitivity of the results to
other aspects of the models, in particular how the damage functions incorporate
adaptation, technological change, and catastrophic damages. While it is not possible at
this time to provide a precise list of each model's treatment (i.e., included, excluded) of
climate impacts, EPA has presented a robust discussion of this key analytical issue and
placed more detailed model information in the docket.
In particular, the SCC TSD discusses in detail how each model estimates climate impacts,
the known parameters and assumptions underlying those models, and the implications of
incomplete treatment of impacts (catastrophic and non-catastrophic) for the SCC
estimates. This discussion underscores the difficulty in accurately distilling the models'
treatment of impacts in table-form. Most notably, the use of aggregate damage
functions—which consolidate information about impacts from multiple studies—in two
of the models poses a challenge in listing included impacts. For example, within the
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broad agricultural impacts category, some of the sub-grouped impacts are not explicitly
modeled but are highly correlated to other subcategories that are explicitly modeled.
Therefore, it may be misleading to identify these kinds of impacts as either "included" or
"omitted" from the model. Along those lines, impacts may be included in models but not
directly; the Dynamic Integrated Climate and Economy (DICE) model represents
adaptation implicitly through the choice of studies used to calibrate the aggregate damage
function, and the Climate Framework for Uncertainty, Negotiation, and Distribution
(FUND) model includes adaptation both implicitly and explicitly (see the SCC TSD for
details).
Accordingly, EPA recognizes the need for a thorough review of damage functions—in
particular, how the models incorporate adaptation, technological change, and catastrophic
damages. EPA has considered the Pew Center on Global Climate Change's
recommendation to conduct an expert elicitation on the value of omitted impacts, but
determined that conducting a rigorous and complete expert elicitation was not possible
within the rulemaking timeline. However, the Federal government is committed to
exploring these models—e.g., determining which impacts are included and omitted—and
how they can be modified to produce more accurate estimates of the SCC. EPA regards
the SCC TSD as a starting point in the inquiry into the models' treatment of impacts and
to motivate new research.
Regarding recommendations to modify model parameters that were not adjusted in this
exercise, see Response B for EPA's response.
Magnitude and Uses of the Social Cost of Carbon
EPA considered various comments about the magnitude of SCC estimates (e.g., interim
SCC was too low). Many commenters recommended that EPA consider higher values in
the analysis to better represent the possibility of catastrophic climate damages; some
recommended specific numbers to use as the upper bound (e.g., CARB) or other analyses
to set a minimum lower bound (e.g., Union of Concerned Scientists). In response, EPA
has focused on developing a rigorous methodology to improve its characterization of
SCC rather than selecting estimates from the published literature. Accordingly, EPA
continued to review the SCC literature, participated in the interagency review of SCC,
and conducted the modeling exercise (see the SCC TSD for detailed discussion about the
basis for the modeling exercise, the methodology, and results). Consistent with
recommendations to justify any weighting schemes used, the SCC TSD explains why
each model and two of the parameters (socioeconomic emissions trajectories and
discount rates) are weighted equally; it also presents the rationale for the probability
distribution for climate sensitivity.
EPA disagrees with one commenter who said that SCC overstates the benefits of
mitigation and attributed it to emissions leakage, i.e., shifting emissions from the region
subject to the GHG mitigation requirements to a location without such requirements.
Emissions leakage could reduce or negate the net reduction in global emissions.
However, emissions leakage would affect the estimate of total emissions and it is not
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relevant to the value of a one ton reduction in CO2 emissions (i.e., SCC) in this case. As
discussed in the SCC TSD, we have assumed that this rule would result in small
(marginal) impacts on cumulative global emissions. Even in the unlikely event that
emissions leakage occurred under this rulemaking, it would not alter the cumulative
global emissions trajectory underlying the SCC estimates. Regarding the potential for
leakage under this rule, EPA finds the commenter's suggestion that people will move to
other countries to avoid purchasing cars with higher fuel economy standards highly
implausible. See Preamble III.H.5 for further discussion about considerations of turnover
rate for the vehicle fleet and the implications thereof. See also the prior sections of this
response for detailed discussion about treatment of uncertainty in SCC estimates, in
particular the treatment of omitted impacts, and the implications for the benefits
assessment.
On the other hand, the SCC TSD does not, as another commenter recommended,
explicitly direct agencies to view the SCC as a minimum value for GHG reduction
benefits. Instead, the SCC TSD presents detailed methodological information and a
discussion of the SCC limitations, thereby enabling interpretation of the estimates as they
are used in this analysis.
EPA also considered comments about the use and presentation of SCC in rulemaking
analyses. For example, IPI and EDF recommended that the interagency group specify
how agencies should use SCC in traditional regulatory impact analysis and agency
rulemaking. In response, the SCC TSD identifies the purpose of SCC and details how to
use it to estimate the benefits of policies resulting in marginal reductions in CC>2
emissions. The SCC TSD further notes that there is a separate question of whether the
SCC is an appropriate tool for calculating the benefits of reduced emissions from policies
that have a large (non-marginal) impact on global cumulative emissions. The analysis
supporting this final rule does not attempt to answer that question.
Overall, EPA recognizes the importance of traditional regulatory impact analyses and the
EPA Regulatory Impact Analysis (RIA) presents four new SCC estimates used to
estimate benefits of the marginal reductions in CO2 emissions under this final rule (see
EPA RIA 7.5).
In response to Ford's recommendation to consider using CO2 mitigation cost in lieu of
SCC estimates, EPA has determined that doing so would eliminate useful information
from the economic analysis about the CO2 benefits of the standards. Indeed, Executive
Order 12866 states that agencies are required, to the extent permitted by law, "to assess
both the costs and the benefits of the intended regulation and, recognizing that some costs
and benefits are difficult to quantify, propose or adopt a regulation only upon a reasoned
determination that the benefits of the intended regulation justify its costs." Other sections
of the economic analysis consider the costs to achieve the standards in this final rule (e.g.,
see Preamble Section III.H.3 for discussion about the annual cost per ton of GHG
reduction).
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In addition, SEI commented that policies designed from an insurance perspective "would
not be framed in terms of cost-benefit calculations," but that economic analysis would
inform selection of a least-cost strategy for meeting a risk-based standard. EPA
continues to recognize that the estimates do not include all significant climate changes
damages and are therefore underestimates. As a result, EPA has supplemented the
quantified benefit estimates with a qualitative discussion about benefits.
It is also useful to recognize the somewhat limited role that the monetary value placed on
the SCC plays in the determination of what emissions standards should be adopted in this
final rule. EPA used the benefit-cost analysis as one consideration among many to
evaluate the overall reasonableness of the emissions standards chosen. See preamble
section HID for a complete discussion of the various factors analyzed and balanced by
EPA in determining the stringency of the final standard. In this case, the benefits of the
standards are significantly greater than the costs, and this would be the case whether EPA
considered the domestic value for the SCC, the global value for the SCC, or a range of
values including higher SCC values. The specific range or values used in this analysis
are therefore not outcome determinative as far as deciding what emissions standards to
adopt, as the standards adopted by EPA would still be reasonable from a net benefits
perspective under a wide range of SCC.
EPA considered Dr. Rose's comments about the number of SCC estimates presented and
basis for deciding on an appropriate SCC estimate. In response, EPA has presented four
SCC estimates and calculated benefits at each SCC value. The SCC TSD discusses in
detail the methodological soundness of and treatment of uncertainty and risk in the four
SCC estimates. In sum, the four SCC estimates are considered to capture many of the
uncertainties involved in regulatory impact analysis.
Regarding the commenters' concerns about omitted impacts and recommendations to
expand the presentation of information about the estimates, see above section,
Uncertainty and Treatment of Impacts in Models, for EPA's response. In addition, the
SCC TSD presents the distribution of SCC estimates, including benefit estimates at the
95th and 99th percentiles. Variation in climate sensitivity is reflected, along with other
parameters that are treated as uncertain in the models, in differences between SCC
estimates for a given socio-economic trajectory and discount rate. EPA has also made the
full model results available in the docket for this rule; see OAR-2009-0472.
In addition, EPA notes IPI and EDF's recommendation for the interagency group to "give
explicit direction to agencies on how to account for ancillary benefits associated with
GHG reductions" (7246.1, pg 42). As noted above, the SCC TSD reiterates the need to
document more thoroughly omitted impacts and monitor the literature for emerging
research. As the research evolves, the Federal government, including EPA, is committed
to exploring how modeling can be improved so that these aspects are better reflected in
the SCC.
EPA agrees with the Center for Biological Diversity's observation that omission of
impacts from the SCC estimates effectively assigns such impacts a value of zero, but
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disagrees with the Center's interpretation of the Ninth Circuit's decision that agencies
must quantify non-zero benefits. First, EPA has provided a non-zero estimate of the
benefits of this rulemaking's reduction in CC>2 emissions. As discussed at length above
and in the SCC TSD, some of the benefits cannot currently be quantified in a rigorous
manner and were therefore presented in a qualitative manner. Both the qualitative and
quantitative presentation of benefits incorporates the results of the Federal government's
extensive review of SCC and recent modeling exercise, which was based on best
available information. Second, the Center for Biological Diversity's argument applies
most directly to rulemakings in which the economic analysis determines the stringency of
the standard. See 538 F. 3d at 1201-02 (court found arbitrary NHTSA's determination
not to monetize social cost of carbon when utilizing a marginal cost benefit analysis and
where this decision directly influenced the stringency of the standard). Moreover, that
case involved a situation where the agency assigned no monetary value to the social cost
of carbon, clearly not the case here. As noted above and in our other comment responses,
the stringency of this rulemaking's standard, in fact, is not determined by the monetized
benefits of GHG reductions. As discussed further below, the benefit-cost analysis used
for this rule played a part in EPA's overall conclusion that the rule is reasonable, but did
not determine the standard's stringency. See, for example, preamble section HID, which
discusses the basis for EPA's determination and notes that issues of technology
availability, cost (to both manufacturers and consumers), and available leadtime are the
critical decision factors.
EPA RESPONSE B
Organization: See table below.
Commenter Affiliation Document ID Number
California Air Resources Board EPA-HQ-OAR-2009-0472-7189.1
Center for Biological Diversity EPA-HQ-OAR-2009-0472-7265.1
Environmental Defense Fund EPA-HQ-OAR-2009-0472-7246.1
Ford Motor Company EP A-HQ-O AR-2009-0472-7082.1
Institute for Policy Integrity at EPA-HQ-OAR-2009-0472-7246.1
New York University School of
Law
Natural Resources Defense EP A-HQ-O AR-2009-0472-7274.1
Council
New Jersey PEP EP A-HQ-O AR-2009-0472-7093.1
Pew Center EP A-HQ-O AR-2009-0472-723 9.1
Private Citizen (Adcock, James) EP A-HQ-O AR-2009-0472-53 85
Private Citizen (Rose, Stephen) EP A-HQ-O AR-2009-0472-7276.1
Stockholm Environment EP A-HQ-O AR-2009-0472-743 2.1
Institute-US Center
Union of Concerned Scientists EPA-HQ-OAR-2009-0472-7181.1
University of California Santa EPA-HQ-OAR-2009-0472-7188.1
Barbara Bren Working Group
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Comments:
EPA received extensive comments about the methodology used to derive the interim SCC
estimates as well as comments on the use of integrated assessment models, and equity-
weighting.
Comments on the Methodology Used for Interim SCC Estimates
While the Ford Motor Company noted that the interim methodology was acceptable
given available data, many commenters—representing academic and environmental
organizations—expressed concerns that the filters were too narrow and stated that model-
weighting averaging was inappropriate. In general, the latter group of commenters
observed that averaging and model-weighting the filtered estimates further restricted the
SCC dataset and obscured the variability among published SCC estimates.
For example, the Stockholm Environment Institute (SEI) characterized the interim
methodology as biased and reflective of an incomplete reading of the economic literature,
and stated that other studies and models should have been included (7432). In particular,
SEI identified the peer-review filter as problematic because it resulted in the exclusion of
SCC estimates from the heavily scrutinized Stern Review, which "offered an innovative,
rigorous analysis leading to a relatively high estimate of the SCC, $85 per ton of CCV
(7432.1, pg 3). Although the Stern Review authors did not release their results in a peer-
reviewed journal, their study received a level of scrutiny "far beyond the normal peer
review process for articles published in academic journals" (7432.1, pg 3).
Similarly, Dr. Rose identified reliance on the most recent versions of each model as
problematic. He stated that because there has been little change in SCC modeling since
2001, it was incorrect to assume that the most recent estimates are superior. The
commenter concluded that limiting consideration to "the most recent results reduces
sample size and makes results highly contingent on most recent applications and
assumptions used" (7276.1, pg 1-2).
Moreover, the Natural Resources Defense Council (NRDC) described the interagency
group's reliance on model-weighted averages, which further compounded this distortion
and failed to capture estimates for extreme climate events, as "astonishing," based on the
current understanding of climate science (7274.1, pg 14). Other commenters likewise
concluded that the filters and model-weighting procedures exacerbated what is widely
understood to be a partial accounting of mitigation benefits (e.g., 7432.1, 7276.1).
Several commenters expressed concerns about averaging SCC estimates from different
discount rates; one commenter clarified that this is incorrect because the discount rates
represent different judgments about "the value of temporal trade-offs" (7276.1, pg 3; see
also 7188.1, 7208.1). That is, estimates from each discount rate encompass inconsistent
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assumptions about the type of investments made and how their value changes over time.
In addition, EPA received extensive comments about the selection of discount rates,
which is discussed separately in Response to Comments [A].
Finally, one commenter recommended an alternative approach to monetize the benefits of
reductions in CC>2 emissions (see 5385, pg 3). Specifically, this commenter
recommended extrapolating the results of local-scale ecosystem service valuations, such
as one for Puget Sound, to a global estimate of SCC.
Comments on Use of Integrated Assessment Models
Three commenters discussed the limitations of the integrated assessment models,
concluding that the interagency group's selection of models and reliance on the model
authors' datasets contributed to the downward bias of the interim SCC estimates (7432.1,
7239.1, 7274.1). One commenter observed that the integrated assessment models rely
heavily on projections of GHG emissions and temperatures from the Intergovernmental
Panel on Climate Change (IPCC) to estimate the value of economic damages and cited
evidence to support the view that these projections are conservative.10
Indeed, the Stockholm Environment Institute characterized all three models' default
datasets as "embodying] controversial judgments" (7432.1, pg 4). The Stockholm
Environment Institute presented numerous examples of such judgments, including the
"surprisingly low" estimate of climate damages in DICE. The Stockholm Environment
Institute clarified that DICE relies on estimates of agricultural impacts developed in the
1990s that were "excessively optimistic about potential benefits from warming, and
contained some basic analytical errors" (7432.1, pg 6). The Stockholm Environment
Institute further noted that a UC-Berkeley economist has run DICE using the current data
and found that climate damages in the U.S. could be four times greater than those derived
using the DICE default dataset (7432.1, pg 6).
Accordingly, these commenters recommended the agencies run the models with other
datasets and also modify some of the models' assumptions. For example, they suggested
modifying certain model parameters in the exercise—e.g., global value of a statistical life
(VSL), an adaptation function, and damage functions allowing cross-sectoral impacts
(7274.1,7432.1).
Comments on Equity Weighting
EDF and IPI discussed an inconsistency between the discounting approach used in the
proposed rule, which applies differential equity weights on a timescale, and "the decision
10 Commenter stated that "following every IPCC assessment report (four to date), many predictions have
turned out worse than expected. Each IPCC assessment report is grimmer than the previous. There are
already signs that the last assessment report of 2007 (the Fourth Assessment Report, FAR) had overly
optimistic 'best guesses.'" Commenter cited findings published after release of the FAR, including
evidence that summer sea ice could disappear by 2030, much sooner than the IPCC's projection of
disappearance by the end of the century. See Science Magazine 326(5955): 926-928. (OAR-2009-0472-
7274.1,pglO).
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not to apply differential equity weights to the impacts on different income groups within
a single generation" (7276.1, pg 8). They clarified the point "is not necessarily to
recommend that equity weights be applied for intratemporal transfers: although there
would appear to be strong ethical grounds for such an approach, the determination of
those equity weights would be an enormous challenge in itself (7276.1, pg 8).
NRDC likewise noted an inconsistency and stated that "failing to weigh damages by
income levels is inconsistent with economic theory" (7274.1, page 5). NRDC further
noted it is "difficult to justify [not using equity weights] on ethical grounds: most of the
world's poor neither emitted the CC>2 emissions responsible for current atmospheric
concentration levels, nor economically benefited from them—resulting in the poor having
the least ability to absorb climate damages" (7274.1, page 6). NRDC recommended that
EPA apply equity-weights to the SCC estimates by taking into account the relative
reductions in wealth in different regions of the world and use a number for the VSL that
is equal between all countries and populations. See EPA-HQ-OAR-2009-0472-7274.1
for further discussion.
EPA Response B:
The commenters' input informed the development of the new SCC estimates. This
response addresses the following issues identified by the commenters: the methodology
used to derive the interim estimates, the use of integrated assessment models, and equity-
weighting (see letters from California Air Resources Board, Center for Biological
Diversity, Ford, NJ DEP, Natural Resources Defense Council, Pew Center on Climate,
Dr. Rose, Stockholm Environment Institute, University of California Santa Barbara Bren
Working Group, and Union of Concerned Scientists). EPA has responded elsewhere to
the commenters' other comments related to SCC. Specifically, refer to Response [A] for
EPA's response to comments regarding discount rate, uncertainty and risk, and
magnitude and uses of the social cost of carbon, and to Response [C] for EPA's response
to comments regarding global and domestic valuations of SCC.
Methodology Used to Derive Interim Estimates
EPA received and considered extensive comments about the methodology used to derive
the interim SCC estimates. EPA recognized the limitations of the interim approach—a
meta-analysis that relied on published SCC estimates—but judged it as the best option
given the limited time available to coordinate among federal agencies and develop SCC
estimates for the proposed rule. However, EPA did not continue with its interim
approach and instead developed new SCC estimates for this rule. Specifically, the
interagency SCC group, in which EPA participated, reconvened on a regular basis to
generate improved SCC estimates that respond to the concerns raised by commenters. As
noted in Preamble III.H.6, EPA has critically evaluated the decisions of the group and the
new SCC estimates and endorses them as reasonable for this final rule.
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The revised SCC methodology responds to comments in several key ways. First, we
agree with the commenters' concerns about the use of model-weighted means (e.g., see
NRDC, SEI, Dr. Rose). The new results are weighted equally by model because the
exercise produced an equal number of estimates for each model. Second, we agree that it
is inappropriate to combine SCC estimates across discount rates. None of the revised
SCC estimates has been averaged across discount rates. (See Response to Comment A
for consideration of comments about the rationale for discount rates, approach used to
select rates, the magnitude of rates, and treatment of uncertainty.) The Technical Support
Document, Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order
12866 (hereafter, "SCC TSD"), also responds to these comments by presenting the
rationale for discount rate selection.u Third, as discussed further in Response to
Comment A, the modeling exercise resulted in a fuller distribution of SCC estimates and
better accounted for uncertainty through a Monte Carlo analysis. See the SCC TSD for
detailed explanation about probabilistic treatment of climate sensitivity in the modeling
exercise.
The commenters also had concerns about the filters used to narrow down the pool of
existing SCC estimates for consideration in the proposed rule, noting that they were
overly restrictive, or that the sample otherwise excluded key studies (e.g., Dr. Rose, SEI,
UC-Santa Barbara Bren Working Group). In response, EPA notes that the approach used
in this final rule—conducting new model runs—has avoided this particular challenge. As
noted in the SCC TSD, the modeling exercise produced a vast amount of data for
consideration.
In addition, EPA considered comments about the selection of a growth rate applied to
climate damages for the interim SCC estimates (CARB, Center for Biological Diversity).
Rather than assuming a constant annual growth rate, we estimated the growth rate of the
SCC directly using the Dynamic Integrated Climate and Economy (DICE), Policy
Analysis of the Greenhouse Effect (PAGE), and Climate Framework for Uncertainty,
Negotiation, and Distribution (FUND) models. This approach helped to ensure that the
estimates are internally consistent with other modeling assumptions. See the SCC TSD
for a table that illustrates how the growth rate for these four SCC estimates varies over
time; the SCC TSD also presents the full set of annual SCC estimates between 2010 and
2050.
The California Air Resources Board presented a valid critique about the non-trivial
variation in climate scenarios underlying the interim SCC estimates; Dr. Rose also
described the selection of socioeconomic emissions scenarios for the interim estimates as
limited. For the new SCC estimates, we used socio-economic and emission trajectories
that span a range of plausible scenarios. Five trajectories were selected from the recent
11 Interagency Working Group on Social Cost of Carbon, U.S. Government, with participation by Council
of Economic Advisers, Council on Environmental Quality, Department of Agriculture, Department of
Commerce, Department of Energy, Department of Transportation, Environmental Protection Agency,
National Economic Council, Office of Energy and Climate Change, Office of Management and Budget,
Office of Science and Technology Policy, and Department of Treasury, "Social Cost of Carbon for
Regulatory Impact Analysis Under Executive Order 12866" February 2010. EPA-HQ-OAR-2009-0472
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Stanford Energy Modeling Forum exercise, EMF-22; each trajectory was used
consistently in the three models. Four trajectories represent potential business-as-usual
(BAU) growth in population, wealth, and emissions and are associated with CC>2 (only)
concentrations ranging from 612 to 889 ppm in 2100. The fifth trajectory represents an
emissions pathway that achieves stabilization at 550 ppm CO2e (i.e., CO2-only
concentrations of 425 - 484 ppm or a radiative forcing of 3.7 W/m2) in 2100, a lower-
than-BAU trajectory.
We note Dr. Rose's comment that "it would be arbitrary to use SCC estimates off of
aspirational pathways for policies that generate small net changes in global emissions.
Instead, estimates off of baseline projections are more consistent with current policy
decisions with marginal global GHG emissions implications, as well as a risk
management approach designed to internalize risks that the USG wishes to avoid or
hedge against" (7276.1, pg 2). However, as explained in the SCC TSD, the modeling
exercised relied primarily on BAU trajectories but also included a lower-than-BAU
trajectory that would be consistent with widespread action by countries to mitigate GHG
emissions. The lower-than-BAU trajectory was chosen because it represents the most
stringent case analyzed by the EMF-22 where all the models converge: a 550 ppm, not to
exceed, full participation scenario. See the SCC TSD for complete discussion.
Regarding Dr. Rose's question about why the Hope (2006) estimates were labeled as 5
percent: One common equation used to calculate the discount rate is the Ramsey
equation: r = p + g*r|, where p is the pure rate of time preference, g is the growth rate,
and r| is the elasticity of the marginal utility of consumption. The pure rate of time
preference cited in the Hope (2006) article is 3% per year. While the actual discount rate
varies over time, it is relatively common to refer to the discount rate as the pure rate of
time preference plus 2%, where the 2% is roughly the growth rate times the elasticity of
the marginal utility of consumption. A more accurate categorization would be
"approximately 5%" or "a pure rate of time preference of 3%." As noted in Response A,
EPA used a different approach to discount SCC estimates in the final rule.
Dr. Rose also requested more information to understand the application of Newell and
Pizer discounting to the interim SCC estimates. The undiscounted stream of benefits was
not available for each of the studies included in this analysis. The way that the Newell
and Pizer (2003) findings were adapted for the interim values was to apply the adjustment
factors implied by either their preferred random walk model or mean-reverting model.
According to the random walk model, SCC estimates based on a 3% or 5% discount rate
are increased by 70.733% and 89.8%, respectively. The mean-reverting model implies
increases of 10.733% and 16.8% for estimates based on a 3% or 5% discount rate.
Note Newell and Pizer based adjustment factors were not applied to estimates from Guo
et al. (2006) that use a different approach to account for discount rate uncertainty.
EPA notes Dr. Rose's recommendation to ensure consistency in presenting the SCC
analysis in each agency's section of the joint rule. Tables in the proposed rule, for
example, used different dollar years to report the same SCC estimates (e.g, 2007$ in
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EPA's preamble section and 2006$ in NHTSA's preamble section). The agencies agree
with the commenter's recommendation and have ensured to the extent possible that the
sections in this rule are consistent. Moreover, the same detailed analysis of SCC
presented in the SCC TSD supports the entire rulemaking.
In response to Dr. Rose's request for information about base years and Newell and Pizer
discounting, please see the table below.
Base year (Best available Year Dollars (Best available
Model Study info) info)
FUND Anthoffetal. 2009 2000 2000
FUND Link and Tol 2004 1995 1995
FUND Guo et al. 2006 1995 1995
Wahba & Hope
PAGE 2006 2000 2000
PAGE Hope 2006 2000 2000
DICE Nordhaus2008 2005 2005
Additionally, the commenter requested a complete list of references. The references are
as follows:
• Anthoff, D., C. Hepburn, and R. Tol. 2009. Equity weighting and the marginal
damage costs of climate change. Ecological Economics 68: 836:849.
• Guo, J., C. J. Hepburn, R. Tol, and D. Antoff. 2006. Discounting and the social
cost of carbon: a closer look at uncertainty. Environmental Science and Policy 9:
205-216.
• Hope, Chris. 2008. Optimal carbon emissions and the social cost of carbon over
time under uncertainty. The Integrated Assessment Journal 8(1): 107-122.
• Hope, Chris. 2006. The Marginal Impact of CO2 from PAGE2002: An Integrated
Assessment Model Incorporating the IPCC's Five Reasons for Concern. The
Integrated Assessment Journal 6(1): 19-56.
• Link, P.M., and R. Tol. 2004. Possible economic impacts of a shutdown of the
thermohaline circulation: an application of FUND. Portuguese Economic Journal
3:99-114.
• Newell, R., and W. Pizer. 2003. Discounting the distant future: how much do
uncertain rates increase valuations? Journal of Environmental Economics and
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Management 46: 52-71.
• Nordhaus, William. 2008. A Question of Balance: Weighing the Options on
Global Warming Policies. New Haven, CT: Yale University Press.
• Tol, R. 2008. The Social Cost of Carbon: Trends, Outliers and Catastrophes.
Economics: The Open-Access, Open-Assessment E-Journal 2(25): 1-24.
• Wahba, Mohammed, and Chris Hope. 2006. The marginal impact of carbon
emissions under two scenarios of future emissions. Energy Policy 34: 3305-3316.
Other Methodology Comments. Consistent with Dr. Rose's recommendation to "strive
for an enduring and transparent methodology that can be readily and transparently
updated," the SCC TSD presents a detailed discussion of the development of the
interagency modeling exercise and the resulting SCC estimates. As noted in the SCC
TSD, the main objective of this process was to develop a range of SCC values using a
defensible set of input assumptions grounded in the existing scientific and economic
literatures. In this way, key uncertainties and model differences transparently and
consistently inform the range of SCC estimates used in this rulemaking process.
Furthermore, the Federal government has committed to updating the new SCC estimates
as the science and economic understanding of climate change and its impacts on society
improves over time. The interagency group set a preliminary goal of revisiting the SCC
values within two years or at such time as substantially updated models become
available, and to continue to support research in this area.
EPA notes with interest the valuation of Puget Sound ecosystem services identified by
commenter 5385, but regards the commenter's suggestion to extrapolate these results to a
national or global SCC as problematic. In particular, the commenter's recommendation
does not incorporate findings from the existing scientific and economic literature about
climate change impacts on other sectors. Furthermore, while the estimated value of
ecosystem services in Puget Sound could inform assessments of the monetized value of
climate change impacts in that region, it does not assign a dollar value to the impacts
associated with a marginal unit of CO2 emissions. In short, it lacks a defensible approach
that accounts for the various complexities involved in projecting CO2 emissions and
associated climate impacts on global scale.
In contrast, the integrated assessment models used to estimate the new SCCs combine
climate processes, economic growth, and feedbacks between the climate and the global
economy into a single modeling framework. As discussed in the SCC TSD, these models
translate emissions into changes in atmospheric greenhouse concentrations, atmospheric
concentrations into changes in temperature, and changes in temperature into economic
damages. The emissions projections used in the models are based on specified socio-
economic (GDP and population) pathways. These emissions are translated into
concentrations using the carbon cycle built into each model, and concentrations are
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translated into warming based on each model's simplified representation of the climate
and a key parameter, climate sensitivity.
Use of Integrated Assessment Models
Several commenters discussed the use of the integrated assessment models, concluding
that the interagency group's selection of models and reliance on the model authors'
datasets contributed to the downward bias of the interim SCC estimates.
Model choice. EPA agrees with SEI that DICE, FUND, and PAGE are not the only
relevant climate economics models and has clarified its characterization of these models
as well as its rationale for continuing to use them in the final rule. Overall, we find
DICE, FUND, and PAGE useful because they combine climate processes, economic
growth, and feedbacks between the climate and the global economy into a single
modeling framework, but we recognize that this advantage comes at the expense of a
more detailed representation of the underlying climatic and economic systems. However,
as noted by SEI, these models have "been widely used by other investigators, precisely
because of their simplicity and transparency" (7432.1, pg 4). Moreover, other integrated
assessment models have not linked physical impacts to economic damages. The limited
amount of research linking climate impacts to economic damages makes this exercise
even more difficult (see the SCC TSD for more information).
Others commented on the version of the models used to derive the interim SCC
estimates. Pew noted that few studies have been published using the most recent version,
but identified several expected to be released by the time of the final rule and encouraged
EPA to account for those. As discussed in the SCC TSD, EPA used SCC estimates from
new model runs rather than selecting from those in the literature; EPA has continued to
review developments in the SCC literature.
We note that Pew's comments about the values resulting from the most recent version of
FUND are incorrect. According to EPA's March 2010 communication with Dr. Anthoff,
all of the deterministic SCC estimates were positive for the discount rates investigated in
a paper that he prepared for Pew using FUND 3.5; this does not mean that FUND 3.5
produces positive SCCs for any discount rate. Also, FUND uses a Major.Minor
numbering system rather than calendar year to label the versions. EPA used the latest
version of this model, FUND 3.5, that was available at the time of the modeling exercise.
Datasets used in models. NRDC observed that the integrated assessment models rely
heavily on projections of GHG emissions and temperatures from the Intergovernmental
Panel on Climate Change (IPCC) to estimate the value of economic damages and cited
evidence to support the view that these projections are conservative. Also, SEI
characterized all three models' default datasets as "embodying] controversial
judgments" (7432.1, pg 5). SEI presented numerous examples of such judgments,
including the "surprisingly low" estimate of climate damages in DICE, and clarified that
DICE relies on estimates of agricultural impacts developed in the 1990s that were
"excessively optimistic about potential benefits from warming, and contained some basic
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analytical errors" (7432.1, pg 6). SEI further noted that a UC-Berkeley economist has
run DICE using the current data and found that climate damages in the U.S. could be four
times greater than those derived using the DICE default dataset (7432.1, pg 6).
EPA regards with interest the commenters' specific recommendations to modify model
parameters that were not adjusted in the exercise—e.g., global value of a statistical life
(VSL), an adaptation function, and damage functions allowing cross-sectoral impacts
(e.g., NRDC and SEI). Research gaps and practical constraints required us to limit
modification of the models to socioeconomic and emissions scenarios, climate sensitivity,
and discount rate. Therefore, the modeling exercise relied on the default values in the
latest available version of each model for the remaining parameters. Moreover,
continuing to use the models' default values for some parameters allowed the exercise to
account for different approaches to quantifying damages. While EPA recognizes that the
models' translations of physical impacts to economic values are incomplete, approximate,
and highly uncertain, it regards them as the best available representations.
As noted in Response A, the SCC TSD further emphasizes the need to explore the
sensitivity of the results to other aspects of the models, in particular how the damage
functions incorporate adaptation, technological change, and catastrophic damages. The
Federal government is committed to supporting new research and exploring how to value
the benefits of reduced GHG emissions. As the research evolves, the Federal government
is also committed to exploring how modeling can be improved so that these aspects are
better reflected in the SCC. The interagency group plans to revisit the SCC estimates
within two years.
Equity weighting and value of statistical life
NRDC recommended that EPA apply equity-weights to the SCC estimates by taking into
account the relative reductions in wealth in different regions of the world and use a
number for the VSL that is equal between all countries and populations. As noted in the
SCC TSD, we recognize the inconsistency between accounting for wealth differences
over time through the discount rate and declining to do so on a geographical scale.
However, after considering the literature on equity-weighting, we decided not to use
equity-weights because putting it into practice and defending it for domestic regulatory
analysis would raise complex conceptual, empirical, and normative problems (see the
SCC TSD).
As discussed in Response A, the modeling exercise relied on the default values for VSL
because it was not one of the parameters chosen to be held constant across all three
models.
EPA RESPONSE C
Organization: See Table below.
Commenter Affiliation Document ID Number
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Environmental Defense Fund EPA-HQ-OAR-2009-0472-7246.1
Georgia-Pacific EPA-HQ-OAR-2009-0472-7122.1
National Automobile Dealers EPA-HQ-OAR-2009-0472-7182.1
Association (NADA)
National Petrochemical & EPA-HQ-OAR-2009-0472-7234.1
Refiners Association
Natural Resources Defense EPA-HQ-OAR-2009-0472-7274.1
Council
NYU Institute for Policy EPA-HQ-OAR-2009-0472-7246.1
Integrity
Pew Center EPA-HQ-OAR-2009-0472-7239.1
Private Citizen (Adcock, James) EPA-HQ-OAR-2009-0472-5385
Private Citizen (Rose, Stephen) EPA-HQ-OAR-2009-0472-7276.1
Texas Chemical Council EPA-HQ-OAR-2009-0472-7290
University of California Santa EPA-HQ-OAR-2009-0472-7188.1
Barbara Bren Working Group
Comment Summary:
Seven commenters, representing academia and environmental organizations, supported
the proposed rule's preference for global SCC estimates while several industry groups
stated that under the Clean Air Act, EPA is prohibited from using global estimates. The
commenters supporting a global SCC described it as the most appropriate way to account
for the public good aspects of GHG emissions and climate protection.
The Environmental Defense Fund and NYU Institute for Policy Integrity described
climate stability as a special public good case because it is a global one, meaning that no
single actor can provide climate stability. Maintaining or achieving the public good—
climate stability—must involve coordination of many sovereign countries, all of which
have an incentive to do nothing and enjoy global benefits when other countries incur the
costs of GHG mitigation (7246.1, pg 37).
Moreover, the Environmental Defense Fund and NYU Institute for Policy Integrity
maintained that consideration of domestic SCC does not solve the global public good
problem. These commenters stated that if all countries based GHG reductions on
domestic SCC values, it would "result in sub-optimal protection of climate stability
[because] the global SCC is not a population-weighted average of domestic SCCs, but
instead the aggregate of all of the harms associated with climate change" (7246.1, pg 37).
For more details regarding comments that support use of a global SCC, see EPA-HQ-
OAR-2009-0472-7246.1, -7274.1, -7239.1, -7276.1, -7188.1, and -5385.
One commenter who supported use of global SCC estimates stated that it was unclear
how the agencies planned to use domestic estimates, thereby making it difficult to
comment on domestic SCC estimates (7276.1). NRDC also noted a lack of clarity
regarding the agencies' intentions for domestic SCC estimates but concluded that it
would be inappropriate to use domestic estimates in any situation (7274.1).
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NRDC based its support for use of a global SCC on the global, public goods aspect of
GHG emissions as well as ethical considerations. Specifically, NRDC stated that from an
ethical standpoint, it cannot support a U.S. SCC estimate, which would effectively assign
a value of zero to the damages imposed on other countries by U.S. emissions. NRDC
found this particularly troubling because "many countries, especially poor ones, did not
contribute to the current CC>2 levels in the atmosphere, yet will suffer the worst
consequences. Perversely, developed countries obtained their income status by emitting
greenhouse gases, and as a result have more resources to absorb climate damages, while
the opposite is true of the poor countries" (7274.1, pg 24).
The commenters that disagreed with use of a global SCC argued that EPA cannot
permissibly consider a global value because it lacks authority to consider the international
effects of domestic emissions in crafting emission standards under section 202 (a). These
commenters further argued that Congress was explicit when it wanted such effects to be
considered, referring to section 115 of the Act, which authorizes regulation of domestic
pollutant emissions due to their international effect under specified circumstances. The
commenters also referred to the general presumption that Federal statutes are presumed
not to have extra-territorial effect. For more details, see EPA-HQ-OAR-2009-0472-
7234.1, -7290, -7182.1, and -7122.1.
EPA Response C:
This response presents EPA's consideration of and response to comments from regarding
the use of global and domestic valuations of SCC (see comments from Dr. Rose, National
Automobile Dealers Association, NYU Institute for Policy Integrity and Environmental
Defense Fund, University of California Santa Barbara Bren Working Group, Pew Center
on Climate, Natural Resources Defense Council, and Texas Chemical Council).
In sum, the final rule continues to focus on global SCC values because of the global,
public good aspects of greenhouse gas emissions. EPA prefers a global measure of GHG
mitigation benefits because of the unusual aspects of the climate change problem—i.e.,
GHG emissions cause the same damage regardless of the location of their emission;
climate change occurs over very long time horizons, and it represents a problem that the
United States cannot solve independently (see the Technical Support Document, Social
Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866 (hereafter,
"SCCTSD")).12
Several commenters argued that EPA cannot permissibly consider a global value because
it lacks authority to consider the international effects of domestic emissions in crafting
emission standards under section 202 (a) (1). These commenters further argued that
12 Interagency Working Group on Social Cost of Carbon, U.S. Government, with participation by Council
of Economic Advisers, Council on Environmental Quality, Department of Agriculture, Department of
Commerce, Department of Energy, Department of Transportation, Environmental Protection Agency,
National Economic Council, Office of Energy and Climate Change, Office of Management and Budget,
Office of Science and Technology Policy, and Department of Treasury, "Social Cost of Carbon for
Regulatory Impact Analysis Under Executive Order 12866" February 2010. EPA-HQ-OAR-2009-0472
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Congress was explicit when it wanted such effects to be considered, referring to section
115 of the Act, which authorizes regulation of domestic pollutant emissions due to their
international effect under specified circumstances. The commenters also referred to the
general presumption that Federal statutes are presumed not to have extra-territorial
effect.
The commenters have misapprehended the analysis of global and domestic SCC. First,
EPA's regulation does not exercise extraterritorial effect. The regulation sets standards
for new motor vehicles produced or imported into the United States; hence, the activity it
regulates is domestic activity. The issue here is not the extraterritorial exercise of
regulatory authority over conduct occurring overseas, but how to place a monetary value
on a reduction in domestic emissions, with the commenter arguing that EPA may not
consider effects occurring outside the borders of the US when valuing the benefits of
reductions achieved under section 202(a) (1). In this case, the emissions reductions will
marginally reduce the overall global contribution of GHG emissions to the atmosphere,
affecting the global atmospheric concentrations of GHGs. This will then have a marginal
effect on global climate change, with resulting impacts both inside the US and around the
world. There is no issue that the impacts from global climate change that occur in the US
are appropriate to consider in valuing the benefits of these domestic GHG reductions.
However, there is also a value to the US from domestic emissions reductions that reduce
the harm occurring globally. First, impacts from climate change occurring overseas can
create economic, trade, humanitarian and national security issues for the US. For
example, climate change may exacerbate problems (e.g., food security or water supply) in
relatively poor and politically volatile countries that raise humanitarian issues and
national security issues for the United States.13 Second, the US will gain the greatest
benefit from reducing domestic emissions of GHGs if there is a global response to the
global problem of climate change. Given the nature of the public good at issue, a global
response would maximize the benefits the US receives from reducing GHGs. Using a
global SCC in valuing the domestic reductions from this final rule is most consistent with
this outcome, while using a domestic SCC is not. For both of these reasons, considering
the global SCC is an appropriate way to value the benefits to the US from domestic GHG
reductions under section 202(a) (1).
Second, this situation is not analogous to section 115 of the Act, which calls for control
of domestic emissions if certain conditions are met concerning emissions in the U.S.
causing or contributing to air pollution that is reasonably anticipated to endanger
public health or welfare in a foreign country. Mandating control of domestic emissions
in certain circumstances based on the impact of those emissions on a foreign country does
not indicate any intention by Congress on the very different issue involved here. Use of
the global SCC in the benefits analysis for this rule is not an issue of the authority or the
obligation to regulate domestic emissions of GHGs from new motor vehicles. Our
authority to adopt standards stems from the endangerment and contribution findings that
13 See US EPA, Technical Support Document, Endangerment and Cause or Contribute Findings for
Greenhouse Gases under Section 202 (a) of the Clean Air Act, December 8, 2009, for a complete discussion
about the implications of international climate impacts for the US, in docket EPA-HQ-OAR-2009-0171.
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have been made under section 202(a) (1). The issue here is how to value those domestic
emissions reductions in considering the benefits of the reductions. That is not the issue
Congress addressed in section 115, when it authorized regulatory controls if certain
conditions were met. Congress' decisions on that issue in section 115 do not limit or take
away any of EPA's discretion on how to value the benefits of GHG reductions from the
emissions standards adopted under section 202(a).14
Finally, it is useful to recognize the somewhat limited role that the monetary value placed
on the SCC plays in the determination of what emissions standards should be adopted.
As noted above, the value of the SCC is not relevant to whether EPA has the authority or
the obligation to adopt emissions standards, as that stems from the endangerment and
contribution findings. In addition, the levels of the standards adopted by EPA have been
determined based on the effectiveness of the technology that will be available, their cost,
and the appropriate leadtime for incorporation of that technology in the light-duty vehicle
fleet. See the detailed explanation in section III. D of the preamble to the final rule for
further discussion of this issue. The cost-benefit analysis is used to help evaluate the
overall reasonableness of the emissions standards chosen by EPA. In this case, the
benefits of the standards are significantly greater than the costs, and (as noted earlier in
this response) this would be the case whether EPA considered the domestic value for the
SCC, the global value for the SCC, or a range of values including higher SCC values.
The specific range or values used in this analysis are therefore not outcome determinative
as far as deciding what emissions standards to adopt, as the standards adopted by EPA
would still be reasonable from a net benefits perspective under a wide range of SCC.
Nonetheless, EPA considered the available estimates of domestic SCC values to
determine how global SCC values could be adjusted to national or regional levels. As
explained further in the SCC TSD, EPA regards this approach as highly speculative and
recognizes that there is no a priori reason why domestic benefits should be a constant
fraction of net global benefit estimate. While there is compelling evidence suggesting
that the US represents a non-constant fraction of global values, a rigorous manner to
quantify that fraction in has not emerged. Indeed, current models do not quantify many
of the spillover effects identified by commenters IPI, EDF, and NRDC, such as the U.S.
military position in the world. Accordingly, the final rule presents only global SCC
values; the SCC TSD presents a range of values that should be used to adjust the global
SCC to calculate domestic effects.
4.5.5 Vehicle Sales Assumptions
14 The commenters are also incorrect in maintaining that because Congress addressed in section 115 the
issue of an obligation to adopt emissions controls based on the effect domestic emissions have outside the
US, it necessarily precluded consideration of those effects under section 202(a). See Catawba County v.
EPA. 571 F. 3d 20, 34 (D.C. Cir. 2009) (a congressional mandate in one section and silence in another
often "suggests not a prohibition but simply a decision not to mandate any solution in the second context,
i.e., to leave the question to agency discretion.' (internal citation omitted, emphasis original)). In any case,
as explained above, section 115 addresses the different issue of authority to regulate, and does not address
how to value a reduction of domestic emissions for purposes of evaluating the costs and benefits of an
otherwise authorized regulation.
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Organization: National Automobile Dealers Association
Comment:
The National Program proposal reasonably assumes buyers will value any fuel savings
associated with the purchase of a new motor vehicle over a five-year period, rather than
over a vehicle's full useful life. 74 Fed. Reg. 49669-70. Even at high fuel prices,
consumers who view fuel economy as an important purchase criteria will be hard pressed
to make the case for buying a more fuel efficient new vehicle if the up-front capital costs
associated with doing so cannot be recouped in short order. Of course, for purposes of
calculating payback, real-world purchaser finance costs, opportunity costs, and additional
maintenance costs all should be accounted for.
EPA Response:
EPA has continued to use the assumption that consumers will consider fuel savings over
a five-year period for its vehicle sales impact analysis. The payback analysis in Preamble
Section III.H.5 has included additional purchasing costs, such as sales tax, insurance, and
financing costs, as detailed in EPA's RIA Section 8.1.3. As discussed in Preamble
Sections HID. and III.H.l, the opportunity costs of these standards are addressed through
cost estimation based on holding vehicle performance, utility, safety, and other attributes
constant while improving fuel economy.
Organization: James Adcock
Comment:
Assuming a 5-year horizon for the consumer's valuation of MPG improvements is the
same as assuming vehicle purchasers assume that they will sell their vehicles in 5 years
and be able to receive no premium on that sale for high MPG. But, on the contrary
consumer are well-aware and it has been well-reported that higher MPG vehicles hold
their resale value better than lower MPG vehicles - and that low MPG SUVs and Trucks
are hard to unload at all! Thus the need for the "Cash for Clunkers" program to allow
owners of low MPG vehicles to unload these vehicles on the US government since there
was no other willing buyer. Setting these low MPG standards simply is setting up the US
Government for "Cash for Clunkers 2 .0" in another decade's time! In general NHTSA's
leniency towards large trucks negates the current administration's investment in "Cash for
Clunkers" — the one hand works against the other.
E-134: 5-year cutoff on payback period on the assumption that consumers only value a
vehicles' MPG technology on the first five years - is not a rational assumption because
consumer well-know how hard it is to unload gas guzzlers - hence the need for a "Cash
for Clunkers" program. Choosing this irrational 5-year cutoff assumption in turn
represents a large reduction in "duration" effectively causing a much higher depreciation
rate than the claim 3% societal discount rate.
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EPA Response:
EPA's five-year payback period is for average consumer behavior. Some consumers will
put more emphasis on fuel economy when buying vehicles, and others may use shorter
payback periods. The analysis does not adjust vehicle resale value for the fuel economy
of the vehicle, based on uncertainty of the role of fuel economy in vehicle purchase
decisions (discussed in RIA Chapter 8.1). The analysis does include resale value as a
proportion of initial vehicle price; if vehicles with more fuel economy are more
expensive, their resale values will be higher.
4.5.6 Vehicle survival assumptions
No comments were received on vehicle survival assumptions. Several comments on total
lifetime VMT are found in Section 5.3.2 of this document.
4.5.7. Total Vehicle Use
Organization: New York State Department of Environmental Conservation
Comment:
Vehicle Lifetime Mileage (Preamble page 49521)
EPA and NHTSA use 190,971 miles as the lifetime for cars and 221,199 miles, for light
trucks. The derivation of these lifetimes is unclear to us, as is the rationale for a
difference between cars and light, trucks . The composition of the light truck fleet, as well
as the use these vehicles see, has changed significantly in the past 30 years, to more
closely resemble the passenger car fleet. The source of these lifetime mileages should be
discussed in the rulemaking documents, and available for public review. [OAR-2009-
0472-7454, p. 1]
EPA Response:
The procedures used by EPA and NHTSA to derive their estimates of expected lifetime
VMT for passenger cars and light trucks, as well as the agencies' estimates of the total
number of miles driven by model year 2012-16 cars and light trucks during each year of
their lifetimes, were described in detail in the rulemaking documents and available for
public review. Specifically, the methodologies and assumptions used in developing these
estimates were described in detail in EPA and NHTSA's Draft Joint Technical Support
Document, Section 4.2.4, pp. 4-7 to 4-15. The updated FRM analysis is available in EPA
and NHTSA' Joint Technical Support Document Section 4.2.3. The lifetime VMT
numbers used in the final rulemaking increased slightly because of a decrease in
projected fuel prices between AEO 2009 and AEO 2010. The resulting values are
195,264 miles for cars and 225,865 miles for trucks.
As noted in the documentation, the analysis is based upon the January 2006 NHTSA
report "Vehicle Survivability and Travel Mileage Schedules," (Docket ID: EPA-HQ-
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OAR-2009-0472-0126) which incorporates the best available data on fleet composition
and use.
4.5.8. Accounting for the rebound effect of higher fuel economy
Organization: State of New Jersey
Comment:
The fuel economy rebound effect refers to the fraction of fuel savings expected to result
from an increase in vehicle fuel economy - particularly one required by higher fuel
efficiency standards -that is offset by additional vehicle use. The Department believes the
rebound rate of 10 percent used by the USEPA in the proposal is justified given the
historical decline in the magnitude of the rebound effect. The Department also supports
the proposal's findings regarding vehicle sales whereby the proposal projects a positive
impact on vehicle sales due to reduced fuel costs outweighing the costs of meeting the
new emission standards. [OAR-2009-0472-7109.1, p. 10]
EPA Response:
EPA appreciates New Jersey's comments supporting our proposed value of 10 percent for
the rebound effect. Based in part on these comments, we have decided to maintain the 10
percent rebound value for the final rulemaking.
Organization: California Air Resources Board
International Council on Clean Transportation
Missouri Department of Natural Resources, Air Pollution Control
Program
Comment:
CARB supports the decision to reduce the rebound effect to 10% from previous analyses
using 15%. As previously commented (Document ID No. NHTSA-2008-0089-0173),
CARB believes 10% to be the upper bound for the rebound effect. Thus, the agencies
may wish to consider further reducing this effect to 5%, which is more consistent with the
latest results from Small (2009) on the projected dynamic rebound effect accounting for
fuel economy regulations. NHTSA's sensitivity analysis shows that this adjustment in
rebound effect would increase fuel savings and emission reductions by 5% and
discounted benefits by 4%. (PRIA p.456) Thus, the regulation impacts are somewhat
sensitive to the assumption on the magnitude of the rebound effect and a lower value
could be justified [OAR-2009-0472-7189.1, p.16]
[CARB also submitted these comments as testimony at the Los Angeles public hearing.
See docket number OAR-2009-0472-7283, pp. 21-27]
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The agencies used a fixed estimate of 10% for the rebound effect. A wide range of
historical studies was considered by the agencies in arriving at this estimate and NHTSA
conducted some modeling of their own. Recent studies by Small and VanDender (2007)
and Greene (2009) demonstrate that the rebound effect is linked to personal income and
vehicle efficiency, as well as fuel prices, and has been declining over time.
EPA stated that if they used a dynamic estimate of the future rebound effect based upon
the Small and VanDender work, they would use a value of 5% or lower. EPA invited
comments:
-"on other alternatives for estimating the rebound effect".
- "on the extent to which the short run elasticity of demand for gasoline with respect to its
price can provide useful information about the size of the rebound effect".
- "on whether it would be appropriate to use the price elasticity of demand for gasoline,
or other alternative approaches, to guide the choice of a value for the rebound effect".
The Small and VanDender work is the proper basis for calculating the rebound effect.
Small and VanDender made a major contribution to the field by incorporating economic
impacts and the cost of driving into calculations of price elasticity of demand. This is
much more appropriate than assuming a fixed 10% rebound effect that does not take into
account future changes in vehicle efficiency, fuel prices, and future income. Dynamic
estimates should be used to calculate the future rebound effect.
ICCT believes that estimates of the short run elasticity of demand for gasoline with
respect to price can provide a useful point of comparison for rebound estimates derived
by other methodologies, but should not be used to guide the choice of a value for the
rebound effect.
[OAR-2009-0472-7156.1, pp.14-15]
Although it is somewhat reasonable to assume that some people will drive more if their
vehicles get better gas mileage, there is no evidence presented in the report showing that
the average consumer automatically increases the amount they drive when they get more
miles per gallon. Nor does the report fully explain why 10% is assumed to be the
estimated increase. In addition, the report's assumption that the rebound effect will result
in no overall emissions reductions from the actual driving of vehicles appears to be
extremely conservative in the estimation of emissions reductions resulting from higher
CAFE standards. In the notice, EPA acknowledges that some recent studies have shown
that as time goes on, the rebound effect is actually lower than 10%, especially in future
years: Therefore, using an across the board 10% value should be reconsidered. Another
important consideration should be the price of gasoline. Regardless of the increase' in
miles per gallon for a vehicle, gasoline prices have been shown to have a very significant
impact on miles driven. The negative effects of gasoline prices on driving was clearly
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shown in the summer of 2008, when gas prices climbed to record rates, and drivers
nationwide dramatically decreased their driving. [OAR-2009-0472-7480, p.2]
EPA Response:
Although CARB supported EPA's use of a 10 percent rebound effect, CARB stated that
10 percent represented the upper bound for the rebound effect. CARB, Missouri
DNR, and ICCT all suggested that EPA should consider a rebound effect that is lower
than 10 percent. All three commentors referenced the recent work by Small & Van
Dender as justification for using a lower rebound effect. The Small & Van Dender
methodology estimates a dynamic rebound effect that varies over time, taking into
account expected future changes in factors such as income, fuel prices, and urbanization.
Based on these variables, the Small & Van Dender methodology projects that the rebound
effect will decline significantly over time. The hypothesis that the rebound effect is
declining over time is also supported by recent work by Dr. David Greene. See TSD
Chapter 4 for additional details on these studies.
EPA agrees with the commenters that the most recently published literature supports a
lower rebound effect, which is one of the reasons we have a adopted a value of 10
percent, which is lower than the 15 percent used by NHTSA in its previous
rulemaking. While EPA appreciates the input provided by commenters, we did not
receive any new data or analysis to justify revising our initial estimates of the rebound
effect at this time. Based on the positive comments we received, we will continue using
the dynamic rebound effect to help inform our estimate of the rebound effect in future
rulemakings. However, given the relatively new nature of this analytical approach, EPA
believes the larger body of historical studies should also be considered when determining
the value of the rebound effect. As we described in the Chapter 4 of the joint Technical
Support Document, the more recent literature suggests that the rebound effect is 10% or
lower, whereas the larger body of historical studies suggests a higher rebound effect.
Therefore, we will continue to use the 10% rebound effect for this rulemaking. However,
we plan to update our estimate of the rebound effect in future rulemakings to further
consider the newer work of Small and Van Dender and David Greene.
EPA also appreciates ICCT's comments discouraging the use of the short run elasticity of
demand for gasoline with respect to price as a proxy for the rebound effect. Based in part
on these comments, we have not used this metric as a replacement for the estimates of the
rebound effect.
Organization: Hyde, James
Comment:
Rebound Effect: The proposal assumes a 10% rebound effect. The increased VMT
attributed to this rebound is sufficient to offset the pollutant decreases derived from the
reduced production and distribution of fuels. The discussions of the upstream and
downstream emissions highlights some shortcoming of the available data and models to
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compute impacts. The assumption that the 'rebound effect' 'continues throughout the life
of the vehicle' [DRIA, pS17] is unfounded. If these is a 'rebound effect' it is a
psychological phenomenon which can last only as long as the original owner can remain
aware of the fuel economy change AND as long as the fuel economy change is not
overwhelmed by increases in the cost per gallon or other expenses. Fuel cost is only one
component, and not a large component, of the cost of operating a motor vehicle. [OAR-
2009-0472-7258.1, p. 1]
EPA Response:
While the response of consumers to an increase in fuel economy may vary depending on
the individual, this analysis of the rebound effect generally relies on aggregate changes in
VMT based on historical national or state-level data. Many historical studies have shown
a correlation between changes in total VMT and changes in fuel economy, even when
other factors such as gasoline prices are taken into account. EPA agrees with the
commenter that fuel costs are only one component of the full cost of driving. Therefore,
EPA's analysis takes into account future projections of other factors such as income, fuel
prices, and congestion when estimating the potential future rebound effect.
4.5.9 Benefits from Increased Vehicle Use
No comments were received on the benefits from increased vehicle use.
4.5.10. The Value of Increased Driving Range
Organization: Washington State Department of Commerce
Comment:
[Following comments are from LA Testimony, OAR-2009-0472-7283, p. 125]
We urge, however, EPA and NHTSA to include two additional costs related to the
reduction in driving costs brought about by increased standards: A, the increase in per-
mile fuel consumption resulting from driving in heavier traffic conditions, which is partly
a consequence of the rebound effect; and, B, the increase in urban sprawl by incentivizing
low-density urbanization, partly a root of the rebound effect.
The latter is particularly important as it counters efforts to reduce VMT and may
contribute to the carbon impacts of land-use change from new urban developments
EPA Response:
In both proposal and final rule, EPA included the cost of increased congestion-related
delays in its analysis of the program. As discussed in Section II.F of the preamble, and
Chapter 4.2.10 of the Joint TSD, this cost is approximately $0.05 per rebound mile. The
agency did not account for a potential partial offset of the real world GHG benefits due to
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altered drive cycles (increased delay due to increased congestion). We believe these
potential losses to be minimal.
Any reduction in the cost of intra-urban travel (whether by auto, transit, or any other
mode) provides some incentive for households and businesses to locate farther from their
workplaces and other frequently-visited destinations (in the case of households), or
farther from sources of raw materials, labor, and final markets (in the case of businesses).
In comparison to the effects of infrastructure investment and financing decisions, together
with pricing policies (indirect pricing of highway use through fuel taxes, and heavily-
subsidized transit fares), the effect of making vehicles more fuel-efficient and thus less
costly to operate on the cost of urban travel is likely to be trivial. This effect is unlikely
to offset more than a small fraction of benefits from reducing fuel consumption.
The relationship between vehicle CC>2 standards, fuel economy, travel patterns, and land
use change is a complex and emerging science. The agency may evaluate this
relationship further in future rulemakings.
4.6. Safety and Mass Reduction
Organization: US Steel Corporation
Comment:
The economic impact of the proposed new CAFE rules will be affected by at least two
competing factors. Initial response to the new regulation by automakers will change the
mix of vehicles, typically growing the smaller and lighter C-segment and, perhaps, B-
segment vehicles in place of more standard or larger-footprint cars and trucks. Smaller
vehicles use less steel, and the reduction in demand for automotive steel could have a
negative effect on the health of the North American steel industry. Also, the tendency to
assign more expensive lower density materials to satisfy the regulation could exacerbate
the harm. Smaller vehicles reduce steel demand, steel jobs, and the profitability necessary
for steel companies to continue to invest in new products and new process technology.
Additionally, a CAFE law focused only on use phase fuel economy invites consideration
of low density materials that will lessen the demand for automotive steels and reduce the
profitability of automotive steelmakers. [OAR-2009-0472-7197.1, pp.6-7]
Much has been written about the impact of vehicle size and weight on passenger injury
severity. Recent summary data suggest that the daily toll on worldwide roadways is 3,000
deaths and 30,000 serious injuries. Because of technological advancement in vehicle
engineering, including optimized crumple zones, rigid passenger compartments,
strengthened side structures, air bags, electronic stability control, antilock brakes and so
forth, the historical relationship between vehicle size, weight, and collision severity may
be certainly influenced by design and structural improvements over time. Efforts to
standardize bumper heights to prevent large vehicles from overriding smaller passenger
cars in collisions are also important.
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In spite of all these advances designed to protect occupants, it is clear that large, heavy
vehicles are preferred to smaller ones in head-to-head collisions. Work by Desapriya and
others have demonstrated that occupants in passenger sedans are more than two times
likely to be injured than drivers or passengers in larger pickup trucks and SUVs. Resent
testing conducted by the Insurance Institute of Highway Safety (IIHS) concluded that in
head on collisions between small and large cars, the small car sustains significantly more
damage, even though it has been rated as "Good" in the standard IIHS testing. The new
NPRM, because of its schedule, assures that car makers will be manufacturing smaller,
lighter vehicles in order to comply. This is likely to occur while significant large volumes
of heavy trucks and SUVs are still on the road. There is a high probability that the rate of
serious injury will increase because of the increase in the proportion of smaller vehicles
and the higher probability that smaller cars will collide with the larger vehicles.
U. S. Steel research with the Auto/Steel Partnership and in programs supported by the U.
S Department of Energy, that the use of new AHSS steel grades can enable the mass of
critical crash structures, such as front rails and bumper systems, to be reduced in weight
by 25 percent. Such vehicle structures with reduced mass can perform as well as their
heavier counterparts in standard NHTSA frontal or IIHS offset instrumented crash tests.
However these tests do not address relative vehicle size, hence in spite of these
accomplishments with high-strength steels, it is unlikely that the "vehicle footprint"
formula will totally negate the disadvantage that drivers of smaller vehicles have in
collisions with heavier vehicles like pickup trucks and SUVs.
U. S. Steel believes that more time is needed to allow powertrain development to occur in
order to achieve the targeted higher fuel economy. The development of electrification in
powertrains (like in battery-electric vehicles or plug-in hybrids), more efficient internal
combustion engines, and alternative energy sources (such as biofuels or hydrogen)
requires time. The extension of the CAFE timetable to pace the required fuel economy
targets according to technological capability of carmakers will prevent a rush to smaller
vehicles that are less safe on roadways also populated by vehicles twice their mass or
more. [OAR-2009-0472-7197.1, pp.7-8]
[[These comments were submitted as testimony at the Detroit public hearing. See docket
number EPA-HQ-OAR-2009-0472-6185, pp. 97-102.]]
The core of my message today is that steel can play an important role in reducing the
energy consumption and CO2 emissions in all phases of a vehicle's life, the
manufacturing phase, driving phase, and end-of-life recovery. Over the past few decades
working with our automotive customers I have seen a remarkable evolution of both the
materials we supply and their application that have positively impacted the vehicle and
meeting the NHTSA and EPA regulations. Historically the focus of CAFE regulations
has been the use of the driving phase of the automobile. Fuel has been and will remain
important to automakers' efforts to improve fuel economy. Steel's role is to enable mass
production while maintaining safety and affordability. Today steel is the dominant
material in the vehicle in the United States and around the world representing 60 percent
of the vehicle material content. We have maintained that dominance for the last 100
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years of the vehicle. However, it's not been the same steel. In the 60s and 70s we
replaced cold walled steels that rust with zinc coated steels, in the 80s and 90s, replaced
mild steels with high-strength steels. This decade we are replacing the high-strength
steels with lightweighting advanced high- strength steels, and a decade from now we will
be replacing those steels with new advanced lightweighting products. Today the
advanced high-strength steels are the fastest growing material in vehicle designs —
whereas in 1999 there were nearly no applications of advanced high-strength steels, today
they represent 15 percent of the vehicle steel content. Each and every new vehicle launch
increases the content of these grades with the vehicle makers expected to reach 50
percent within the next decade. Our customers' demand for these products is a result of
their lightweighting capability that enable affordable designs within their existing
manufacturing facilities.
The need for these materials has come to result in the increase in crash requirements
which have changed the vehicle structure from a stiffness-dominated design to a strength-
dominated design. Strength is where steel performs better than any other automotive
material. Advanced high-strength steels are four, five, and six times stronger than the
steels that they are replacing. What has this meant to lightweighting of the vehicle?
Material lightweighting is a function of design flexibility, strength, and density. What
steel lacks in low density relative to competing materials, it more than compensates for
with strength and design flexibility. To demonstrate that capability, the steel industry has
invested in many projects demonstrating 25 to 30 percent mass reduction. We have
worked with our customers to incorporate that technology in each and every new vehicle
being launched today. These new vehicle structures are twice as strong as previous
designs with mass reductions in excess of 20 percent while meeting the increased crash
requirements and maintaining affordability.
And, remember, this technology is not yet fully integrated. Advanced high-strength steel
content will increase from 15 percent today to 50 percent in the next decade, enabling
additional mass savings on future vehicles.
Clearly steel is and will continue to play a role in reducing the energy used in CO2
emissions of the vehicle in its driving phase.
However, as I mentioned at the outset, steel can also play an important role in reducing
the energy use in CO2 emissions in the other phases of a vehicle's life, in particular, the
manufacturing phase, and end-of-life recovery.
EPA and NHTSA have an important opportunity to use this rulemaking to formulate
policy guidance that best encompasses the entire environmental impact associated with
the vehicle, and, consequently, encourages vehicle manufacturers to choose the materials
that result in the lowest environmental impact over the entire vehicle life. The advanced
high-strength steels energy, and CO2 intensity is the same as conventional steels. So in
the manufacturing phase, a 25 to 30 percent mass reduction enabled by these materials
means we produce 25, 30 percent less steel for each vehicle, with the accompanying
reduction in raw material use, energy use, and CO2 emissions. This mass reduction then
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improves fuel economy reducing energy use and CO2 emissions in the driving phase.
Then at the end of a vehicle's life, 100 percent of the vehicle is recycled back in the very
same steel products or future steel products for the next generation of vehicles.
In contrast, the low-density competing metals such as aluminum or magnesium have a
much different story. On a per-pound basis, the energy and CO2 intensities of these
materials are 7 to 18 times more than steel, resulting in a corresponding increase in the
vehicle's manufacturing energy and CO2 intensity. These materials may provide a mass
advantage. Unfortunately, what is gained in fuel economy in the driving phase through
the weight reduction can be easily overcome by the selection of high-energy, CO2-
intensive, low-density materials. And this concept goes beyond material selection. It
applies to many technology options that may perform well within the envelope of
regulated tailpipe emissions, but perform poorly when that boundary is expanded to
address the total life cycle. To address these unintended consequences, a life cycle
assessment approach is needed that considers all the phases of a vehicle's life.
EPA Response:
As stated in several places in the rule, the footprint curves established by NHTSA and
EPA are designed to minimize the incentive for reducing vehicle size to meet stringency.
EPA recognizes that based on economic and consumer demand factors that are external
to this rule, the distribution of footprints in the future may be different (either smaller or
larger) than what is projected in this rule. However, the agencies continue to believe that
there will not be significant shifts in this distribution as a direct consequence of this rule.
With regard to mass reduction and the propensity of manufacturers to apply more
expensive, lower density materials: EPA has partially based its position on information
provided by AISI that the mass of a vehicle may be reduced through the application of
High Strength (HSS) and Advanced High Strength Steels (AHSS). In AISI's comments,
they noted that the mass of certain structures could be reduced by 25% through the
application of AHSS. Given the magnitude of the mass reduction anticipated in support
of this rule, the majority of the mass reduction could and most likely will
be accomplished through additional applications of HSS and AHSS. These premium
steel products are also more expensive than mild steel at a given weight. As a result,
even though the application requires less steel by weight, the end product could be profit
neutral to the steel companies.
During the Public Hearing, U.S. Steel commented that new vehicle structures
incorporating high-strength steel would twice as strong as previous designs and were
capable reducing mass by 20 percent while still meeting increased crash safety
requirements and maintaining affordability. This appears to contradict their written
comments that heavy vehicles would always be preferable to lighter vehicles in frontal
collisions. The written comments also appear to ignore the fatalities in lighter vehicles
struck by heavy vehicles. The 2010 Kahane Report,' 2005 DRI studies"'"' and 2006 work
by Robertson1V indicate that reducing the mass of the heaviest light-duty trucks can result
in an overall reduction of fatalities due to reduced fatalities in lighter vehicles struck by
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light-duty trucks. The results from EPA's modeling also show a higher mass reduction is
expected for larger vehicles and as such should help to alleviate the in vehicle weight
disparity and crash incompatibility in small vs. large vehicles. See RIA chapter 7.6.1 and
RIA chapter 4.7 table 4-14.
Organization rSpurgeon, C M
Shaw, Donald F.
Wood, J.S.
Comment:
Lastly, we care about our families' safety as much as the Secret Service cares about the
President's safety. There is a clear correlation between size and weight of a vehicle and its
safety. That is why the President's limo only gets a reported 8 mpg, not 35 mpg. The
Secret Service should not have to cut corners in keeping the President safe, just as we
should not have to cut corners to keep our families safe. [OAR-2009-0472-7092.1, p. 2]
The safety of vehicles meeting this requirement will be significantly reduced with
increased deaths and injury. [OAR-2009-0472-7270.1, p. 1]
Lastly, we care about our families. There is a clear correlation between size and weight of
a vehicle and its safety. That is why the President's limo only gets a reported 8 mpg, not
35 mpg. The Secret Service should not have to cut corners in keeping the President safe,
just as we should not have to cut corners to keep our families safe. [OAR-2009-0472-
7270.1, p. 3]
EPA Response:
In the proposed rule EPA made reference to two major studies on the effects of vehicle
mass and fatalities. The first was an analysis completed in 2003 by NHTSA which
determined that vehicle fatalities increased with a reduction in curb weight. The second
analysis was performed by Dynamics Research Incorporated (DRI) and determined that
there were other factors involved other than just the curb weight of the vehicle.
Specifically, they determined that a reduction in curb weight without a reduction in a
vehicle's footprint will improve a vehicle's ability to avoid a crash, improve the
survivability in the impacted vehicle, and reduce fatalities in rollovers. The EPA has
studied these reports as well as input from automotive manufacturers, material suppliers,
and government laboratories and believes that mass can be removed from a vehicle
without adversely affecting safety. In fact, mass reduction techniques have already been
employed in most, if not all, light duty vehicles to meet current FMVSS regulations and
increase feature content.
The 2010 Kahane Report, 2005 DRI studies and 2006 work by Robertson indicate that
reducing the mass of the heaviest light-duty trucks can result in an overall reduction of
fatalities due to reduced fatalities in lighter vehicles by struck by light-duty trucks. The
results from EPA's modeling of how vehicle manufacturers may respond to GHG
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regulations also show a higher mass reduction is expected for larger vehicles and as such
should help to alleviate the in-vehicle weight disparity and crash incompatibility in small
vs. large vehicles.
With regard to specific comments about the Presidential limousine, this vehicle was
reportedly built using a GMC Topkick/Chevrolet Kodiak heavy-duty truck platformv,
which is rated at 19,500 Ibs. GVWR and thus is classified as a heavy-duty vehicle. This
final rule only applies to passenger cars and light-duty trucks (<8,500 Ibs. GVWR) and
thus does not include heavy-duty vehicles. The regulation also does not specifically
mandate any changes in vehicle mass, although it is likely that small reductions in vehicle
mass that maintain safety will occur as detailed in EPA's regulatory impact analysis due
to the cost effectiveness of curb weight reductions of less than 10% in reducing CC>2.
Organization: State of Connecticut Department of Environmental Protection
Comment:
DEP is not expert in the economic analysis of safety considerations that influenced the
development of the proposed CAFE and GHG emission standards. We note, however,
differing conclusions reached by EPA and NHTSA on safety issues. DEP requests that
EPA and NHTSA work to resolve these differences using the latest science, most recent
available data and a forward looking approach that balances the safety interests of drivers
and passengers with the protection of public health and the environment for all. [OAR-
2009-0472-7301, p.2]
EPA Response:
The Connecticut Department of Environmental Protection is correct in their assessment
of the respective positions of NHTSA and EPA regarding mass reduction and safety in
the NPRM. The two agencies are working closely to resolve these differences with the
understanding that we both hold public safety in the highest regard. The agencies
discussion is focused on not only the historical analyses, but also the engineeing and
science behind vehicular safety as it relates to mass reduction. For the final rule, EPA
and NHTSA have added a joint section on safety within section II of the final preamble.
Organization: Competitive Enterprise Institute
Comment:
Fuel economy mandates lead to reductions in vehicle size and weight.
Downsizing, however, has a direct negative impact on vehicle crashworthiness. In
general, there is a positive correlation between vehicle size and safety, and between
vehicle weight and safety. Fuel economy, on the other hand, is negatively correlated with
size and weight. For this reason, there is a clear tension between crashworthiness and
efforts to improve fuel economy. Given the direct connection between fuel economy and
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CO2 emissions, EPA's proposed rule raises this very same safety problem. [OAR-2009-
0472-7281.l,p.4]
New technologies and "attribute-based" regulation will not eliminate the safety trade-off.
Although EPA acknowledges that CAFE regulation in the past has diminished auto safety
by decreasing vehicle mass, EPA assures us that this time things will be different,
because the GHG standards will not lead to downsizing. Under the Energy Independence
and Security Act (EISA), enacted in 2007, fuel economy targets vary according to a
vehicle's "footprint" (the area formed by multiplying the wheelbase by the vehicle's track
width). NHTSA and EPA have "carefully chosen" the "footprint curve (or function)" so
that it "neither encourages manufacturers to increase nor decrease the footprint of their
fleet." Consequently, says EPA, automakers will have no incentive to reduce a vehicle's
"crush and crumple zones." Yet on the very same page, EPA acknowledges that, "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 a greater
or smaller weight reduction..."
In short, the average vehicle will have less mass to absorb collision forces than would be
the case absent the rule. On average, each vehicle will be less safe than it would
otherwise be. Despite being "attribute-based," the rule will limit production of heavier,
safer vehicles. Consumers will not be able to buy all the safety they are willing to pay
for. [OAR-2009-0472-7281.1, p.5]
EPA Response:
The Competitive Enterprise Institute (CEI), in their comments to the proposed rule, stated
that vehicle downsizing and weight reduction, while being effective at reducing fuel
consumption, will reduce the safety of vehicles. The two terms, downsizing and weight
reduction, are used somewhat interchangeably in their comments when in fact these are
two distinct attributes which must be addressed separately.
In an effort to discourage and otherwise eliminate incentives to downsize vehicles to
meet the standards, NHTSA and EPA have created a footprint based attribute curve as the
form of the standards. CEI was incorrect in their statement that the Energy Independence
and Security Act (EISA) enacted a footprint based strategy. EISA mandates that the
stringency be controlled by a vehicle attribute. NHTSA and EPA chose footprint as that
attribute. EPA believes that the slope of the footprint attribute standard has been
designed to minimize the incentive for manufacturers to make smaller vehicles
(minimizing any regulatory benefit from downsizing by flattening the curve only for the
smallest vehicles of 41 sq. ft. and lower footprint). In this effort the agencies feel they
have been successful in addressing vehicle downsizing concerns. EPA recognizes that
based on economic and consumer demand factors that are external to this rule, the
distribution of footprints in the future may be different (either smaller or larger) than
what is projected in this rule. However, the agencies continue to believe that there will
not be significant shifts in this distribution as a direct consequence of this rule.
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Weight reduction as a cost effective means of improving fuel economy and reducing CO2
emissions has been adopted by both NHTSA and EPA in their projections of technologies
which could be utilized in a cost-effective manner to meet the standards. While the
agencies differ slightly in their application of mass reduction, both agencies believe that it
may be accomplished without sacrificing vehicle safety. Mass reduction can be
accomplished through several mechanisms without changing a vehicle's impact
performance and/or size. They include: Material Substitution, where a lower density
material replaces a higher density material; Smart Design, which consists of optimizing
designs to minimize mass and/or combining functions of co-located components; and
finally, Mass Compounding which allows for resizing ancillary systems that are directly
dependent on vehicle mass, such as brakes and suspension components.
Organization: University of Pennsylvania, Environmental Law Project
Comment:
While a number of studies have found that smaller vehicles are less safe for their
occupants, many researchers have called this conclusion into question. The
evidence indicates, instead, that disparities in vehicles size are likely to lead to injuries.
Further, there is strong evidence that larger vehicles such as SUVs and light trucks
impose significant safety risks on the drivers of other cars. Thus, despite claims that
safety is served by maintaining vehicle size, the evidence is, at best, ambiguous on this
point. Given evidence that larger vehicles impose high safety risks on non-occupants, and
that large size disparities create the greatest risks, there is significant reason to question
the disparate efficiency and emissions standards imposed on large and small vehicles.
While there are clear reasons to maintain the market's role in providing consumers with
choices, there are also clear reasons why the regulations propagated by EPA and NHTSA
should not greatly encourage the manufacture of larger vehicles, which both impose
greater safety risks and emit more greenhouse gases. [OAR-2009-0472-7286.1, pp. 16-
17]
EPA Response:
EPA agrees with the University of Pennsylvania Environmental Law Project's comments
regarding the rule's effect on vehicle safety. The rule is specifically designed to create no
incentive to produce either larger or smaller vehicles. The results from EPA's modeling
show a higher mass reduction is expected for larger vehicles and as such should help to
alleviate the disparity in vehicle weight in small vs. large vehicles.
Organization: American Iron and Steel Institute
Comment:
Further, in Section III-f-4 (Weight Reduction and Potential Safety Impacts), p. 49589-
49590, Federal Register) and in the recently released Draft Regulation Impact Analysis
(DRIA), Section 3.2.1.2, there is discussion about weight reduction (mass reduction) as a
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technology that supports fuel economy. Regarding the methodology, the document states
'A footprint attribute also would not discourage the use of lightweight materials, as a
lighter vehicle with no change in footprint would more easily comply with its CO2
target'. The proposed rule documents identify two paths to the achievement of materials-
based mass reduction, one based on the use of low density materials and the second based
on the use of high-strength materials like high-strength steels in place of mild steel
grades. AISI supports this classification and considers both approaches equally viable to
increasing fuel economy for a carmaker within the proposed standard. However, if mass
reduction is achieved through materials substitution of certain 'lower density materials'
the total life cycle energy use and OHO emissions may not be equivalent to reducing
mass (vehicle weight) with high-strength steels. This is of significant concern if the
EPA/NHTSA objective is to reduce the total energy use and OHO footprint of the
automotive fleet. [OAR-2009-0472-7088.1, p.4]
By using conventional high-strength steels (HSS), advanced high strength steels (AHSS),
and ultra-high-strength steels (UHSS) together with modem structural computer-aided
design and engineering (CAD, CAE), mass reductions of over 25 % have been realized
both in research studies and in actual applications. The use of HSS and AHSS simply
reduces the amount of steel required to do the same job in the vehicle. This mass
reduction achieved by using steel more efficiently benefits fuel economy (driving cycle
emissions reduction) equivalent to the mass reduction accomplished by application of a
lower density material (such as aluminum, composites, or magnesium). However, the
substitution of low-density materials can lead to increases in the energy and greenhouse
gas emissions associated with manufacturing such materials. Comparative charts of the
greenhouse gas emissions and the energy associated with making specific automotive
materials are shown in Figures 3a and 3b, respectively. Here it is easily seen that
alternative structural materials considered as possible substitutes for steel can produce 6
to 17 times the GHG emissions and consume 8 to 15 more energy as steel while
achieving mass reduction in a vehicle. Unfortunately, what is gained in fuel economy in
the driving phase of the vehicle life through weight reduction can be easily lost by
selection of such high-energy, GHG-intensive, low-density materials. [OAR-2009-0472-
7088.1, pp.4-5]
Much has been written about the impact of vehicle size and weight on passenger injury
severity. Recent summary data suggest that the daily toll on worldwide roadways is 3,000
deaths and 30,000 serious injuries. Because of technological advancements in vehicle
engineering, including optimized crumple zones, rigid passenger compartments,
strengthened side structures, air bags, electronic stability control, antilock brakes and so
forth, the historical relationship between vehicle size, weight, and collision severity may
be influenced by design and structural improvements over time. Efforts to standardize
bumper heights to prevent large vehicles from overriding smaller passenger cars in
collisions are also important. [OAR-2009-0472-7088.1, pp.7-8]
In spite of all these advances designed to protect occupants, it is clear that large, heavy
vehicles are preferred to smaller ones in head-to-head collisions. Work by Desapriya and
others have demonstrated that occupants in passenger sedans are more than two times
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likely to be injured than drivers or passengers in larger pickup trucks and SUVs. Resent
testing conducted by the Insurance Institute for Highway Safety (IIHS) concluded in
head-on collisions between small and large cars, small cars sustained significantly more
damage, despite a 'Good' in the standard IIHS testing [which really only tests a vehicle
against standard barriers and not against larger vehicles]. [OAR-2009-0472-7088.1, p.8]
The aggressive schedule for implementing the proposed rule assures that carmakers will
be manufacturing smaller, lighter vehicles in order to comply. This is likely to occur
while a high percentage of heavier SUVs and light trucks are still on the road. We believe
there is a high probability the rate of serious injury will increase because of the increase
in the percentage of smaller vehicles and the higher probability that smaller cars will
collide with the larger vehicles. [OAR-2009-0472-7088.1, p.8]
AISI has shown in its research with the Auto/Steel Partnership and in programs supported
by the U. S Department of Energy, the use of new AHSS steel grades can enable the mass
of critical crash structures, such as front rails and bumper systems, to be reduced by 25
percent. Such vehicle structures with reduced mass can perform as well as their heavier
counterparts in standard NHTSA frontal or IIHS offset instrumented crash tests. However
these tests do not address relative vehicle size, hence in spite of these accomplishments
with high-strength steels, it is unlikely that the 'vehicle footprint' formula will totally
negate the disadvantage drivers of smaller vehicles have in collisions with trucks and
SUVs. [OAR-2009-0472-7088.1,p.8]
AISI believes more time is needed to allow powertrain development to occur to help
achieve higher fuel economy. The development of electrification in powertrains (such as
in battery-electric vehicles or plug-in hybrids), more efficient internal combustion
engines, and alternative energy sources [biofuels and hydrogen] will take time. Matching
the compliance timetable for this rule to technological capability of carmakers will
prevent a rush to smaller vehicles that are less safe on roadways also populated by
vehicles twice their mass or more. [OAR-2009-0472-7088.1, p.8]
EPA Response:
See also the earlier response to similar comments by U.S. Steel Corporation in this same
RTC section. AISI also noted that: "AISI has shown in its research with the Auto/Steel
Partnership and in programs supported by the U.S. Department of Energy, the use of new
(Advanced High Strength Steel) AHSS steel grades can enable mass of critical crash
structures, such as front rails and bumper systems, to be reduced by 25 percent. Such
vehicle structures with reduced mass can perform as well as their heavier counterparts in
standard NHTSA frontal or IIHS offset instrumented crash tests." This is exactly the type
of material substitution that EPA noted in the NPRM. In this case a vehicle can be made
lighter without a concomitant decrease in crush and crumple zones.
On the other hand, AISI also commented that "the aggressive schedule for implementing
the proposed rule assures that carmakers will be manufacturing smaller, lighter vehicles
in order to comply". Porsche and IIHS had similar comments implying that footprint
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standards will increase the risk that manufacturers will make vehicles smaller. In section
II. C and HID of the preamble to the final rule, the EPA describes in detail why we
disagree with these statements. EPA believes that the slope of the footprint attribute
standard has been designed to minimize the incentive for manufacturers to make smaller
vehicles (minimizing any regulatory benefit from downsizing by flattening the curve only
for vehicles with the small 41 sq. ft. and lower footprint). In this effort the agencies feel
they have been successful in addressing vehicle downsizing concerns. EPA recognizes
that based on economic and consumer demand factors that are external to this rule, the
distribution of footprints in the future may be different (either smaller or larger) than
what is projected in this rule. However, the agencies continue to believe that there will
not be significant shifts in this distribution as a direct consequence of this rule. EPA
believes that manufacturers will make vehicles lighter for increased fuel efficiency, but
are not likely to reduce vehicle footprint to make them significantly smaller in response
to the GHG standards contained in this final rule.
Organization: Dynamic Research, Inc
Comment:
The Proposed Rule contains a number of statements in its Section IIIF.4 with respect to
DRI's research. A few of these statements contain misstatements or misinterpretations.
The following text first quotes each such misstatement or misinterpretation and then
presents DRI's comments on it. [OAR-2009-0472-7238.1, p.5]
1. "The DRI work focused on four major points...:
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."
The four major points listed in Section III.F.4 of the Proposed Rule are only some of the
points and conclusions in DRI's work. The DRI work focused on the effects of vehicle
size and weight (i.e., curb weight, wheelbase, and track) on vehicle crash avoidance,
crash-worthiness, and compatibility, based on accident and fatality data. There were
numerous conclusions in addition to those listed, including the benefits of both increased
size and reduced weight. [OAR-2009-0472-7238.1, pp.5-6]
For example, Tables 1 and 2 summarize the DRI results that for both the passenger car
fleet and light truck and van fleet, weight reduction produces a statistically significant
decrease in estimated fatalities, while track reduction results in a statistically significant
increase in estimated fatalities. In addition, for the passenger car fleet, wheelbase
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reduction also produces a statistically significant increase in fatalities. Overall these
results indicate a consistent trend for both fleets. These trends are also consistent with the
DRI results for the "1991-1998 4-door non-police passenger car only" fleet preferred by
NHTSA, as shown subsequently in Table 4. It is unknown why NHTSA was unable to
reproduce these results, however several possible reasons are discussed herein. [OAR-
2009-0472-7238. l,p.6]
2. "Directional control and therefore crash avoidance improves with a reduction in curb
weight."
This is an accurate but incomplete summary of one of DRI's conclusions. The empirical
results in Table 3 of the 2005 DRI report indicated that crash avoidance improves with
reduction in curb weight and/or with increases in wheelbase and track. The 2005 DRI
also offered possible explanations for these results in Section III of the report, noting that
"Crash avoidance can depend, amongst other factors, on the vehicle directional control
and rollover characteristics." As just one example, wheelbase is a parameter in the quasi-
steady vehicle directional equations of motion. These equations "indicate that passenger
cars with shorter wheelbases tend to have smaller characteristic speeds, resulting in
higher [yaw rate] natural frequency and less damping, based on analysis of quasi-steady
vehicle equations-of-motion." Therefore, based on various theoretical models and
empirical crash data, DRI concluded that "These results indicate that vehicle weight
reduction tends to decrease fatalities, but vehicle wheelbase and track reduction tends to
increase fatalities." [OAR-2009-0472-7238.1, p.8]
3. "... when DRI and NHTSA separately analyzed individual vehicle attributes of mass,
wheelbase and track width, DRI and NHTSA obtained different results for passenger
cars."
This is an accurate statement which warrants further explanation. The differences found
may be due to the different assumptions about the linearity of the curb weight effect and
control variables for driver age, vehicle age, road conditions, and other factors. NHTSA's
analysis was based on a bi-linear model for curb weight with two different weight groups
(less than 2950 Ibs, and greater than or equal to 2950 Ibs). The DRI analysis assumed a
linear model for curb weight with a single weight group. The bi-linear model used by
NHTSA may be over-parameterized because it has one additional curb weight coefficient
to be estimated as well as a smaller curb weight range to estimate each curb weight
coefficient, compared to the DRI analysis. NHTSA also used 8 different control variables
for driver age instead of the three variables used in the 1997 NHTSA analysis and DRI
analyses. It is also unclear what other control variables were used in the comparison to
the DRI results. The control variables in the DRI analyses were originally those selected
by Kahane. This bi-linear approach used by NHTSA approach and possible differences in
the control variables could explain the 'widely differing results.' [OAR-2009-0472-
7238.1, pp.8-9]
This difference between the NHTSA and DRI methods seems to be related to differences
in the basic research question and related assumptions and the available data used. A
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brief chronology of the NHTSA and DRI reports is listed in Table x, for reference. The
objective of the DRI study was to estimate the first-order (i.e., linear) independent effects
of vehicle curb weight, wheelbase, and track on safety (i.e., assuming that these effects
are linear). The objective of the NHTSA study appears to be to estimate both the first-
order and the second-order (i.e., non-linear) effects of curb weight (which was assumed
to be a surrogate for both vehicle size and weight) on safety (i.e., assuming that the size
and weight effects are fully correlated with each other and inseparable). In our opinion it
is not possible to estimate both the first-order (i.e., linear) and the second-order (i.e., bi-
linear) effects of vehicle curb weight, wheelbase, and track on safety, and at the same
time to have both the first-order and second-order terms be statistically significant, given
the available historical data. Therefore, the NHTSA objective appears to have been self-
defeating from the start. [OAR-2009-0472-7238.1, pp.9-10]
EPA Response:
EPA acknowledges that the points listed in the preamble to the proposed rule, cited in the
DRI comment, were not comprehensive, and were better interpreted as some of the major
contrasts between Kahane's and DRI's methodology and results. The four points are as
follows, with #1 and #4 discussed in greater detail below.
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 and/or increases in wheel base and track.
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 potentially
lower center of gravity and lower loads on the roof structures.
In addition to DRI's comments on EPA's results summary, DRI identified a clarification
required for the second point (as it was stated in the NPRM). DRI commented that a
decrease in wheel base or track could result in an increase in fatalities. DRI offered
results from the application of the "quasi-steady vehicle directional equations of
motion". These results show "that passenger cars with shorter wheelbases tend to have
smaller characteristic speeds, resulting in higher [yaw rate] natural frequency and less
damping, based on analysis of quasi-steady vehicle equations of motion". The EPA
concurs with DRI's analysis and has adjusted point #2 accordingly in the discussion in
section 7.6.1 in the final RIA.
Organization: Honda Motor Company
Comment:
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[Following comments are from LA Testimony, OAR-2009-0472-7283, pp.96-103]
Safety and downsizing. Much has been written and researched about the impact of size,
weight, and fuel economy regulation on safety.
As we have previously testified, Honda believes that size is a much better attribute
than weight, and we believe that the argument over the safety differences between a size-
based attribute and a weight-based attribute misses a larger point. The larger issue, it
seems to us, is the need to downsize the fleet.
The size-based attribute introduced as an option in 2008 and mandatory from 2011
essentially reduces incentives to downsize from the current fleet mix. This means that the
only way to improve fuel economy is through the application of technology and,
therefore, higher costs.
In the previous regulation, consumers could downsize their vehicles and save money.
Downsizing the fleet with an intelligent approach to safety has the salutary effect of
greatly lowering the cost of greenhouse gas reductions. We believe that, as the fleet size
and weight trend down, safety can be improved on a fleet-wide basis and efficiency can
be improved at a lower overall cost to consumers.
Towards that end, the cap on passenger car requirements below 41 square feet, roughly
the smallest 10 percent of the market, is an important step in the right direction. We
recommend that a similar cap be set on the smallest 10 percent of the truck market as
well.
Overall consideration should be given towards encouraging more fleet downsizing in
order to promote safety and lower the cost of greenhouse gas reductions.
EPA Response:
The agencies acknowledge Honda's position in support of the footprint based attribute
curve, and the relationship between vehicle size and safety. Both NHTSA and EPA offer
this statement as corroborating and validating the agencies' goal of developing standards
based on the footprint attribute in a manner which provides no encouragement or
incentives to produce smaller vehicles as a compliance strategy.
4.7. Endangered Species Act
Organization: Center for Biological Diversity
Comment:
As noted in our previous comments on the DEIS, incorporated herein by reference, the
agencies must also conduct an Endangered Species Act Section 7 consultation to fully
inform their decision making prior to issuing final standards. [OAR-2009-0472-7265.1, p.
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25] Previous comments submitted on the DEIS review Endangered Species Act
requirements; assert that direct, indirect and cumulative emissions from regulated
vehicles "may affect" listed species and that NHTSA must therefore initiate consultation
under Section 7; refer to several listed species (including polar bears and listed coral
species) and include an exhibit identifying 143 listed species for which a recovery plan
has been adopted that references climate change or a projected impact of climate change
as a threat to the species; and assert that the rule will impact species in ways beyond
global warming and ocean acidification with a reference to vehicles as a primary source
of excess nitrogen which contributes to several environmental issues. [NHTSA-2009-
0059-0053.1, p. 9; NHTSA-2009-0059-0090.1]
EPA Response:
EPA has considered the commenter's reference to Endangered Species Act (ESA)
Section 7 consultation as well as the separate comment addressing ESA issues submitted
by the same commenter and others (which is incorporated by reference into this
comment) on NHTSA's DEIS for their CAFE Standards. EPA has worked with NHTSA
to assess ESA requirements and develop the agencies' responses to these comments.
EPA notes that NHTSA's response to the comment submitted on its DEIS is found in
Appendix G of its Final EIS. As set forth below, EPA adopts the reasoning of NHTSA's
response as applied to EPA's rulemaking action.
ESA Section 7(a)(2)
Section 7(a)(2) of the ESA requires federal agencies, in consultation with the National
Oceanic and Atmospheric Administration Fisheries Service (NOAA Fisheries) and/or the
U.S. Fish and Wildlife Service (FWS, and, with NOAA Fisheries, the Services), to ensure
that actions they authorize, fund or carry out are not likely to jeopardize the continued
existence of federally-listed threatened or endangered species, or result in the destruction
or adverse modification of designated critical habitat of such species. 16 U.S.C. §
1536(a)(2). Under relevant implementing regulations, consultation is required only for
actions that "may affect" listed species or critical habitat. 50 CFR § 402.14. Consultation
is not required where the action has "no effect" on such listed species or critical habitat.
Under this standard, it is the federal agency taking the action that evaluates the action and
determines whether consultation is required. See 51 FR 19926, 19949 (June 3, 1986).
The effects of the action are defined by regulation to include both the direct and indirect
effects on species or critical habitat. 50 CFR § 402.02. Indirect effects are those that are
caused by the action and are later in time, but still are reasonably certain to occur. Id.;
Cf, 51 FR at 19932-19933 (discussing "reasonably certain to occur" in the context of
cumulative effects analysis and noting that only matters that are likely to occur - and not
speculative matters - are included within the standard).
Pursuant to Section 7(a)(2) of the ESA, EPA has considered the effects of its rule and has
reviewed applicable ESA regulations, case law, and guidance to determine what, if any,
impact there may be to listed species or designated critical habitat. EPA has considered
issues relating to emissions of carbon dioxide (CO2) and other greenhouse gases (GHGs)
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as well as issues relating to emissions of non-GHG air pollutants. Based on this
assessment, EPA has determined that the agency's rulemaking action, which, as
described below, will generally result in emissions reductions from what would otherwise
occur in the absence of the rule, does not require consultation with the Services under
Section 7(a)(2) of the ESA.
Department of the Interior Views Regarding ESA Requirements and GHG
Emissions
The FWS and Department of the Interior (DOT) have considered issues concerning ESA
Section 7(a)(2) requirements in the context of federal agency actions relating to sources
of GHG emissions on a number of occasions. In the context of the final listing of the
polar bear as a threatened species under the ESA (73 FR 28212 (May 15, 2008)), FWS
determined, with supporting analysis provided by the U.S. Geological Survey, that the
best currently available scientific data do not support drawing a causal connection
between GHG emissions from particular sources and effects on listed species or their
habitats, for ESA purposes. In addition, FWS explained that it does not believe there is
sufficient data to establish that any such impacts are reasonably certain to occur, for ESA
purposes. Based on these conclusions, FWS determined that federal action agencies need
not consult under Section 7(a)(2) of the ESA with respect to any such impacts.15
As FWS explained in the final polar bear listing:
Formal consultation is required for proposed Federal actions that "may affect" a
listed species, which requires an examination of whether the direct and indirect
effects of a particular action meet this regulatory threshold. GHGs that are
projected to be emitted from a facility would not, in and of themselves, trigger
formal section 7 consultation for a particular licensure action unless it is
established that such emissions constitute an "indirect effect" of the proposed
action. To constitute an "indirect effect," the impact to the species must be later
in time, must be caused by the proposed action, and must be "reasonably certain
to occur" .... [T]he best scientific data available today are not sufficient to draw a
causal connection between GHG emissions from a facility in the conterminous 48
States to effects posted to polar bears or their habitat in the Arctic, nor are there
sufficient data to establish that such impacts are "reasonably certain to occur" to
polar bears. Without sufficient data to establish the required causal connection -
to the level of "reasonable certainty" - between a new facility's GHG emissions
and impacts to polar bears, section 7 consultation would not be required to
address impacts to polar bears.
15 See Memorandum from H. Dale Hall, Director, U.S. Fish and Wildlife Service re: "Expectations for
Consultation on Actions that Would Emit Greenhouse Gases" (May 14, 2008), Docket No. EPA-HQ-OAR-
2009-0472-11676; Memorandum from Mark D. Myers, Director, U.S. Geological Survey re: "The
Challenges of Linking Carbon Emissions, Atmospheric Greenhouse Gas Concentrations, Global Warming,
and Consequential Impacts" (May 14, 2008), Docket No. EPA-HQ-OAR-2009-0472-11677.
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73 FR at 28300. Subsequent to the final polar bear listing, DOT issued a Solicitor's
Opinion explaining DOI's view that actions that involve the emission of GHGs do not
meet the "may affect" threshold set forth in the ESA regulations and therefore do not
trigger the consultation requirements of Section 7(a)(2) of the ESA.16 The Solicitor's
Opinion explains that, for purposes of the ESA "may affect" test, neither direct effects
nor indirect effects would result from GHG emissions from particular sources. The
Opinion concludes that where the effect at issue is climate change, proposed actions that
involve the emission of GHGs cannot pass the "may affect" test and therefore are not
subject to ESA consultation.
FWS also addressed this issue in finalizing a special rule to protect the polar bear under
Section 4(d) of the ESA, 16 U.S.C. § 1533(d). 73 FR 76249, 76265-76266 (December
16, 2008). At that time, FWS again considered whether federal actions associated with
GHG emissions require consultation under ESA Section 7(a)(2). As FWS stated:
We have specifically considered whether a Federal action that produces GHG
emissions is a "may affect" action that requires section 7 consultation with regard
to any and all species that may be impacted by climate change. As described
above, the regulatory analysis of indirect effects of the proposed action requires
the determination that a causal linkage exists between the proposed action, the
effect in question (climate change), and the listed species. There must be a
traceable connection from one to the next, and the effect must be "reasonably
certain to occur." This causation linkage narrows Section 7 consultation
requirements to listed species in the "action area" rather than to all listed species.
Without the requirement of a causal connection between the action under
consultation and effects to species, literally every agency action that contributes
greenhouse gases to the atmosphere would arguably result in consultation with
respect to every listed species that may be affected by climate change. This
would render the regulatory concept of "action area" meaningless. There is
currently no way to determine how the emissions from a specific action both
influence climate change and then subsequently affect specific listed species. As
we now understand them, the best scientific data currently available do not draw a
causal connection between GHG emissions resulting from a specific Federal
action and effects on listed species or critical habitat by climate change.
73 FR at 76266. FWS also cited to the October 3, 2008, DOT Solicitor's Opinion
confirming the conclusions that, given the current state of available science, a causal link
cannot be made between GHG emissions associated with a proposed federal action and
specific effects on a listed species. Id. FWS thus concluded that GHG emissions from
such actions cannot pass the "may affect" test and are not subject to consultation under
the ESA and its implementation regulations. Id.
16 See Memorandum from David Longly Bernhardt, Solicitor, U.S. Department of the Interior re:
"Guidance on the Applicability of the Endangered Species Act's Consultation Requirements to Proposed
Actions Involving the Emission of Greenhouse Gases" (Oct. 3, 2008), Docket No. EPA-HQ-OAR-2009-
0472-11678.
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The FWS' final rule under Section 4(d) became effective on January 15, 2009.
Following the change in administration, FWS reviewed and retained the 4(d) rule without
alteration. As FWS stated during that review:
It is currently not possible to directly link the emission of greenhouse gases from
a specific power plant, etc. to effects on specific bears or bear populations. This
direct "connect the dots" standard is required under the Act and court rulings.
Therefore, Fish and Wildlife Service's policy guidance to its field staff is not to
require such consultations... .Pending further review and analysis, the Department
does not believe that a project-by-project ESA review of proposed actions that
have the potential to increase greenhouse gas emissions, regardless of where they
occur or how much they contribute to global greenhouse gas emissions, is the
appropriate tool for addressing climate change impacts.
U.S. Department of the Interior, Polar Bear 4(d) rule - Q's and A's (May 8, 2009)
17
Consistent with FWS' and DOI's guidance, EPA agrees that there must be a causal
connection between a federal action and a potential effect on listed species or designated
critical habitat for Section 7(a)(2) consultation requirements to apply, and that the
potential effect must be reasonably certain to occur. EPA believes that any possible
impacts on listed species or critical habitat of changes in GHG emissions associated the
light duty motor vehicle rule fall within the analytical framework laid out in the polar
bear documents and Solicitor's Opinion, in which FWS concluded that consultation under
Section 7(a)(2) of the ESA was not required.
EPA's Prior Analysis of ESA Requirements and GHG Emissions
EPA has also previously considered issues relating to GHG emissions from stationary
sources in connection with the requirements of ESA Section 7(a)(2). In correspondence
to the Services, EPA has acknowledged that the legal and technical analysis undertaken
by FWS and DOI concludes that Section 7(a)(2) consultation on single-source GHG
emissions is not required due to an absence of causation and reasonably certain effects,
for ESA purposes.18 As an additional basis for considering Section 7(a)(2) obligations,
17 Available at: http://www.fws.gov/home/feature/2009/pdf/QandApolarbear4drule.pdf (last accessed Feb.
19, 2010). FWS has continued to consistently state this view of ESA requirements in connection with
GHG emissions, including in its recent proposal of designated critical habitat for the polar bear. See 74 FR
56058, 56070 (Oct. 29, 2009) (stating that the underlying causes of climate change are complex global
issues beyond the scope of the ESA); Polar Bear Proposed Critical Habitat Questions & Answers
(reaffirming that the current state of the science is unable to connect a particular source of GHG emissions
to effects on listed species or critical habitat). Available at:
http://alaska.fws.gov/fisheries/mmm/polarbear/pdf/PB%20PropCH.QsAs.Final.pdf (last accessed February
18, 2010).
18 See Letter from Robert J. Meyers, Principal Deputy Assistant Administrator, Office of Air and Radiation
re: "Endangered Species Act and GHG Emitting Activities (Oct. 3, 2008), Docket No. EPA-HQ-OAR-
2009-0472-11679.
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EPA also conducted a modeling analysis of single-source GHG emissions to assess the
potential risk of harm to listed species - including the polar bear and listed coral species
under NOAA Fisheries' jurisdiction. In light of EPA's considerable expertise in global
climate change research and experience in utilizing available models to analyze GHG
emissions, EPA believes that this prior analysis remains both relevant and instructive to
our determination that the light duty motor vehicle rule is outside the scope of ESA
consultation.
In this prior analysis, EPA noted that to date, research on how emissions of CC>2 and
other GHGs influence global climate change and associated effects has focused on the
overall impact of emissions from aggregate global sources. EPA also stated that the
climate change research community has not yet developed tools specifically intended for
evaluating or quantifying end-point impacts attributable to the emissions of GHGs from a
single source, and that EPA was not aware of any scientific literature regarding the
climate effects of individual, facility-level GHG emissions. Additionally, because the
global and regional-scale models lack the capability to represent explicitly many
important small-scale processes, EPA further noted that confidence in regional- and sub-
regional-scale projections is lower than at the global scale. There is thus limited
scientific capability in assessing, detecting, or measuring the relationship between single-
source emissions of GHGs and any localized impact on a listed species, its habitat, or its
members for ESA purposes. EPA affirmed that its understanding of the available
modeling tools was consistent with statements made by the U.S. Geological Survey (see
footnote 1 above) in the context of the polar bear listing (i.e., that it is beyond the scope
of existing science to identify a specific source of CO2 emissions and designate it as the
cause of specific biological responses).
Notwithstanding the inherent uncertainties associated with modeling single-source
emissions and localized regional or sub-regional end-point impacts, EPA analyzed the
potential effect on temperature and tropical ocean pH of emissions from a hypothetical
single source, which, as described in EPA's letter, was a substantially larger source of
emissions than any actual facility then awaiting permitting action by EPA.19 EPA's
analysis projected at most only extremely small impacts on average global temperature
and global atmospheric CC>2 concentrations over and beyond the anticipated functional
lifetime of the hypothetical source. Although regional modeling and associated
downscaling introduced untested approaches and additional uncertainties, EPA
downscaled the projected global temperature changes to the Arctic and Caribbean regions
in light of expected higher relative temperature increases at the poles. Ultimately, EPA
concluded that any temperature and ocean acidification outputs from the modeled source
would be extremely small, beyond physical measurement or detection in the habitat of
listed corals or polar bears, and at a scale below any specific adverse temperature or
19 For GHGs, EPA's analysis used emissions estimates of 14,132,586 metric tons per year of CO2, 273.6
metric tons per year of nitrous oxide, and 136.8 metric tons per year of methane. With regard to non-GHG
pollutants, the analysis used: Ozone (180.7 metric tons per year of volatile organic compounds); Carbon
monoxide (6019 metric tons per year); Sulfur dioxide (3609 metric tons per year); and Nitrogen oxides
(3018.5 metric tons for first five years, then 2326.2 annual metric tons for the remaining 45 years). In
addition, EPA assumed that the model facility would have a useful life of approximately 50 years.
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EPA Response to Comments
acidification effects identified in the scientific literature for those species. Because the
principal climate model used in the analysis would be the first step in any similar
assessment for any species, EPA determined that similar conclusions would also apply to
other species and locations. EPA concluded:
In these circumstances, and also in light of the uncertainties in attempting to use
the models' outputs to predict impacts at a local level, EPA has determined that
the risk of harm to any listed species, including the listed corals or polar bears, or
to the habitat of such species based on the anticipated emissions of the model
facility as described above, or any facility with lower emissions, is too uncertain
and remote to trigger ESA section 7(a)(2) obligations. Section 7(a)(2)'s purpose
of ensuring no likely jeopardy to listed species and no destruction or adverse
modification of designated critical habitat is not implicated by such remote
potential risks. See, e.g., Ground Zero Center for Non-Violent Action v. U.S.
Department of the Navy, 383 F.3d 1082 (9th Cir. 2004) (where the likelihood of
jeopardy to a species is extremely remote, consultation is not required). This
reasoning is consistent with the conclusion reached by FWS and DOT that
consultation under ESA section 7(a)(2) is not required for GHG emissions from a
single source.20
EPA's ESA Analysis Re: GHGs
The comment states that EPA must conduct ESA Section 7 consultation on its
rulemaking action. Among other things, the comment submitted on NHTSA's DEIS
(which is incorporated by reference in the comment submitted on the rules) identifies 143
listed species for which, the comment asserts, "a recovery plan has been adopted that
specifically identifies climate change or a projected impact of climate change as a direct
or indirect threat to the species, as a critical impact to be mitigated, as a critical issue to
be monitored, and/or as a component of the recovery criteria." See Docket No. NHTSA-
2009-0059-0090.1. Although EPA agrees that climate change and related issues are
relevant considerations in regard to the recovery of many species, including species listed
under the ESA, EPA believes that, as applied to EPA's rulemaking, the comment
generally misunderstands the effect of EPA's action, and misapplies ESA Section
7(a)(2)'s requirements.
For instance, the comment appears to attribute the entire volume of emissions from the
regulated sector - including a reference at one point to "increased greenhouse gas
emissions" - to the current actions. Id EPA notes, however, that at present, there are no
federal restrictions on GHG emissions from new light duty motor vehicles. In fact,
EPA's light duty vehicle GHG rule, for the first time, adopts federal controls on those
emissions. It does not license, issue permits for, or otherwise allow emissions to occur.
Rather, the rule controls emissions of GHGs pursuant to, and subject to the requirements
' See supra footnote 4.
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EPA Responses on Joint Issues and Technical Work
of, section 202(a)(l) of the Clean Air Act.21 EPA has consequently analyzed the rule's
impacts in terms of the GHG emission reductions achieved by the rule.22 Because EPA's
rule results in the reduction of GHG emissions from the regulated sector, the rule would
reduce the severity of climate change as analyzed at a global scale and can, therefore, be
expected to have a beneficial effect with respect to global climate change (and therefore
could not have an adverse effect on listed species that are negatively affected by climate
change). The comment presents no information and raises no issue with regard to these
potential effects and ESA considerations.
EPA is also mindful of the significant legal and technical analysis undertaken by FWS
and DOT as well as EPA's prior analysis regarding GHG emissions and the ESA. With
regard to the light duty motor vehicle rule, EPA's analysis determined that the rule would
reduce GHG emissions over the lifetime of MY2012-2016 passenger cars and light trucks
in the amount of 962.0 million metric tons of CC>2 equivalent. RIA Table 5-3. Based on
these reductions, EPA modeled the anticipated potential effect on climate change and
found that in year 2100, the rule would reduce temperature increases by 0.006-0.015
degrees Celsius, and the reduction in sea-level rise would be 0.06-0.14 centimeters. EPA
has also projected a reduction in CC>2 concentration of 2.9 parts per million in 2100,
which corresponds to a projected ocean pH increase of 0.0014 units in 2100. See RIA
chapter 7.4.2. Thus, EPA expects the agency's action would have a beneficial overall
effect on temperature, sea level rise and ocean acidification by decreasing the severity of
climate change and CC>2 concentration as assessed on a global scale. However, as
described above in the prior analyses undertaken by FWS, DOT, and EPA, any efforts to
translate these small global changes to effects in the specific habitats of any listed species
or to effects on such species is problematic.
For instance, as noted above, EPA believes that changes in GHG emissions associated
with the rule are within the framework of the FWS/DOI analysis, which concluded that
Section 7(a)(2) consultation is not required due to the absence of a causal connection and
reasonably certain effects on listed species. Although this rule involves GHG emissions
reductions from mobile sources rather than from a single stationary source, EPA believes
that FWS'/DOI's analysis regarding causation would be identical for the mobile sources
regulated by the rule. In this regard, FWS'/DOI's analysis and conclusion that it is
impossible, for ESA purposes, to trace a causal link between a single stationary source's
GHG emissions and any reasonably certain effect on a specific species in a specific
habitat would apply equally to the reductions of emissions from this rule relating to
mobile sources. The commenter presents no information to the contrary.
21 That provision requires, for instance, that EPA's standards be premised on a finding of technological
feasibility, taking costs into consideration, and that there be sufficient lead time "to permit the development
and application of the requisite technology." See generally 74 FR at 49464-65. This means, among other
things, that EPA cannot adopt such infeasible and cost-prohibitive measures as prohibiting all GHG
emissions from the regulated vehicles. Nor can EPA's rule force the use of control technologies beyond
the point of their availability, taking costs into account, during model years 2012-2016. The basis for the
stringency of the standard is set out in section III.D of the preamble to the final rule.
22 EPA analyzed impacts on criteria pollutants in the same manner. See Preamble section III.G.
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EPA Response to Comments
In addition, as EPA has previously done in the context of stationary sources, EPA has
considered the magnitude of change to GHG emissions resulting from implementation of
the rule. As described above, notwithstanding uncertainties and novel model
applications, EPA previously attempted to analyze the emissions of a single large
stationary source with respect to impacts on temperature and tropical ocean pH. EPA's
conclusion was that any such potential effects would be so small as to be beyond physical
measurement or detection in the habitats of listed species and outside the scope of any
potential effect on such species/habitat identified in the scientific literature that EPA
reviewed. EPA has determined that the same conclusion applies to changes in GHG
emissions associated with the light duty motor vehicle GHG rule. The commenter
presents no information to the contrary.
EPA notes that the predicted changes in global mean temperature and oceanographic pH
attributable to this rule are roughly one to one and one-half orders of magnitude greater
than those evaluated by EPA in the October 3, 2008, Meyers letter, and are also
direct!onally different - i.e., improvements in climate-related effects rather than
decrements. These slight differences in the climate signal do not change EPA's ultimate
conclusion. The predicted effects remain directionally important, yet small and
attenuated in time. EPA knows of no modeling tool which can link these small, time-
attenuated changes in global metrics to particular effects on listed species in particular
areas. Extrapolating from global metric to local effect with such small numbers, and
accounting for further links in a causative chain, remain beyond current modeling
capabilities. EPA has particularly evaluated the potential effect of the predicted
improvement in oceanographic pH on listed corals, since the chain of causation between
CC>2 concentration and corals is somewhat less indirect than chains of causation for other
listed species (e.g., climate effects on polar bears which, among other things, involve
assessments of additional complex factors relating to the life history of the species and
polar sea ice dynamics). Even in this instance, the predicted improvements in pH are so
small that there is no evidence in the literature that there would be an effect on listed
coral species. The commenter presents no information to the contrary.
Based on these results, and consistent with EPA's prior analysis and the Ground Zero
decision noted above, EPA also believes that any potential for a specific impact to listed
species in their habitats associated with these very small changes in average global
temperature and ocean pH is too remote to trigger the threshold for ESA Section 7(a)(2)
consultation.
EPA's Analysis Re: Other Air Pollutant Emissions
EPA has also carefully considered issues relating to changes in non-GHG emissions
expected to result from implementation of the rule. As part of its rulemaking, EPA has
estimated the total changes in national criteria and air toxic pollutant emissions annually
to 2030. For most pollutants, there is a net decrease in emissions as the rule is
implemented. For other pollutants, there are small emissions increases as the rule is
implemented over time. For all of the non-GHG pollutants, the estimated national
reductions - and, for a few pollutants, the estimated potential increases - are of extremely
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EPA Responses on Joint Issues and Technical Work
small magnitudes (substantially smaller by several orders of magnitude than estimated
reductions in GHG emissions). The following chart provides EPA's estimated changes
for each of the non-GHG pollutants.
Impacts of Program on Non-GHG Emissions (Short Tons per year)
POLLUTANT
A 1,3-Butadiene
A Acetaldehyde
A Acrolein
A Benzene
A Carbon Monoxide
A Formaldehyde
A Oxides of Nitrogen
A Particulate Matter
(below 2.5 micrometers)
A Oxides of Sulfur
A Volatile Organic Compounds
CALENDAR
YEAR
2020
-95.1
760.0
0.8
-889.9
3,980.3
-49.4
-5,916.1
-2,402.9
-13,853.4
-60,305.4
CHANGE
VS. 2020
REFEREN
CE
-0.38%
2.26%
0.01%
-0.48%
0.01%
-0.06%
-0.02%
-0.03%
-0.42%
-0.51%
CALEND
ARYEAR
2030
-21.1
668.1
4.7
-523.1
170,648.6
15.1
-21,845.0
-4,574.8
-27,492.8
-115,816.5
CHANGE
VS. 2030
REFEREN
CE
-0.10%
2.18%
0.07%
-0.29%
0.56%
0.02%
-0.07%
-0.05%
-0.82%
-1.02%
Source: RIA Table 5-2
EPA has carefully considered the potential effects of these pollutants and is unaware of
information identifying any effects on listed species from such small fluctuations in
pollutant amounts.23 Further, EPA notes that the modeling tools available for EPA's
regulatory analysis are not designed to trace fluctuations in ambient concentration levels
to potential impacts on particular species. EPA believes that such models do not,
therefore, attribute any biological response or impact on listed species to the ambient
concentration changes with the degree of reasonable certainty required under the ESA.
The commenter again has presented no information challenging this conclusion. For
similar reasons as explained above regarding GHG emission changes, EPA thus believes
that ESA consultation is not required with respect to non-GHG emission changes
attributable to the light duty motor vehicle rule.
Among other things, EPA's review included consideration of the information contained in the Integrated
Science Assessments for both Particulate Matter and Ozone (see U.S. EPA 600/R-08/139F, "Integrated
Science Assessment for Particulate Matter" (2009), Docket No. EPA-HQ-OAR-2009-0472-11295; US
EPA, 600/R-05/004aF-cF "Air Quality Criteria for Ozone and Other Photochemical Oxidants" (2006),
Docket Nos. EPA-HQ-OAR-2009-0472-0099, -0100, -0101). These documents are developed pursuant to
section 108(a)(2) of the Clean Air Act, and "accurately reflect the latest scientific knowledge useful in
indicating the kind and extent of all identifiable effects on public ... welfare which may be expected from
the presence of such pollutant in the ambient air."
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EPA Response to Comments
1 "Relationships Between Fatality Risk, Mass, and Footprint in Model Year 1991-1999 and Other Passenger
Cars and LTVs," Charles J. Kahane, NCSA, NHTSA, March 2010, available within Docket NHTSA-2009-
0059. We note that this report has not yet been externally peer-reviewed, but that NHTSA has begun the
process for peer review in accordance with OMB guidance by the time of publication of this final rule. The
results of the peer review and any subsequent revisions to the report will be made available in a public
docket and on NHTSA's website as they are completed.
11 "Supplemental Results on the Independent Effects of Curb Weight, Wheelbase and Track on Fatality
Risk", Dynamic Research, Inc., DRI-TR-05-01, May 2005.
111 "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 Light Trucks and Vans", Van Auken, M., Zellner J. W., SAE
Technical Paper Number 2005-01-1354, 2005.
1V "Blood and Oil: Vehicle Characteristics in Relation to Fatality Risk and Fuel Economy", L.S. Robertson,
American Journal of Public Health, Vol. 96, No. 11, November 2006.
v "2009 Cadillac Presidential Limousine" David Gluckman, Car and Driver Magazine, January 2009.
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EPA Vehicle Program, Feasibility, and Estimated Impacts
5. EPA Vehicle Program, Feasibility, and Estimated Impacts 2
5.1 Vehicle Categories and Test Procedures 2
5.2 Reserved 17
5.3. EPA Averaging, Banking, and Trading Provisions 17
5.4 Temporary Lead-time and Small Volume Manufacturers 36
5.5. N2O and CH4 standards 91
5.6. EPA Small Entity Exemption 120
5.7 EPA Additional Credit Opportunities for CO2 Fleet Averaging Program 123
5.8 Feasibility of the CO2 Standards 280
5.9. Reserved 288
5.10. EPA Certification, Compliance, and Enforcement 288
5.11. EPA Estimates of GHG Emissions Reductions and Their Associated Effects 385
5.12. EPA Estimated Impact on Non-GHG Emissions and Their Associated Effect 395
5.13 EPA Estimated Cost, Economic, and Other Impacts 403
5.14. Statutory and Executive Order Reviews 447
5.15. Comments on EPA Regulatory Text 457
5-1
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EPA Response to Comments
5. EPA Vehicle Program, Feasibility, and Estimated Impacts
5.1 Vehicle Categories and Test Procedures
5.1.1. Vehicle Categories
OrganizationrFord Motor Company
Hyundai Motor Company
California Air Resources Board
National Association of Clean Air Agencies (NACAA)
National Automobile Dealers Association (NADA)
Toyota Motor North America
Comment:
Ford Motor Company
Ford supports the use of footprint-based standards with separate car and truck fleets based on
NHTSA vehicle definitions for both the GHG and CAFE programs. Ford and the auto industry
have long supported separate car and truck attribute-based standards because cars and trucks
have different functional characteristics even if they have the same footprint. For example, the
Edge and the Taurus have the same footprint (and base curb weights within 100 Ibs), but
significantly different towing capabilities. The Edge can tow up to 3500 Ibs with the trailer tow
package, but the Taurus can only tow 1000 Ibs. Some of the key features incorporated on the
Edge that enable the larger tow capability include an engine oil cooler, larger radiator, and
updated cooling fans. This is one of many examples that show the functional difference between
car and truck and further support the need to maintain separate car and truck attribute-based
standards. [OAR-2009-0472-7082.1, p. 2]
Hyundai Motor Company
NHTSA is required by the Energy Independence and Security Act to maintain separate passenger
car and truck CAFE compliance categories, but EPA has authority to implement a single fleet
program. We would support a single fleet program, because it would provide greater compliance
flexibility for manufacturers, while maintaining energy and environmental benefits.
Of course, for the two agencies to diverge on compliance categories would reduce the
harmonization between the two programs. Thus, it would be optimal if the statutory
inconsistencies could be resolved to allow a single national program with a single fleet. If
statutory inconsistencies are not resolved, then harmonization between EPA and NHTSA
programs should remain a priority. Regardless, any future changes to compliance categories and
vehicle classifications within those categories should provide ample lead time prior to
adoption. [OAR-2009-0472-7231.1, p.3]
California Air Resources Board
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EPA Vehicle Program, Feasibility, and Estimated Impacts
EPA requested comment on whether the proposed separate car and light truck standards are
sufficient to avoid concerns over emission reductions that could be lost if vehicles are upsized.
CARB supports separate greenhouse gas standards for passenger cars and light-duty trucks as
proposed. As noted in the Joint Proposal, vehicle attributes such as load carrying and towing
capacity differ between these two categories and, therefore, are appropriately addressed by
separate fleet average requirements. [OAR-2009-0472-7189.1, p. 10]
[CARB also submitted these comments as testimony at the Los Angeles public hearing. See
docket number OAR-2009-0472-7283, pp. 21-27]
National Association of Clean Air Agencies (NACAA)
Finally, in November 26, 2008 comments to EPA on the agency's Advance Notice of Proposed
Rulemaking on regulating GHG emissions under the Clean Air Act, NACAA encouraged EPA to
develop and enforce GHG standards for all key vehicle, engine and equipment subsectors within
the overall transportation sector. We reiterate this recommendation now, especially with respect
to onroad heavy-duty engines for which EPA should develop federal regulations without delay in
close cooperation with the states. States are keenly aware of the pressing environmental need to
garner GHG emissions reductions from onroad heavy-duty engines. In the absence of federal
action, states will be pressed to move ahead using other authorities under the Clean Air Act so
that emissions reductions from this sector can be achieved as soon as possible. [OAR-2009-
0472-7071. l,p.4]
National Automobile Dealers Association (NADA):
The National Program should only apply to passenger cars and light trucks with a gross vehicle
weight rating (GVWR) of up to 10,000 Ib. (excepting large pick-up trucks and cargo vans ("work
trucks") and certain vehicles manufactured in two or more stages). Existing definitions set out in
49 CFR Part 523 should be retained. EISA did not make, let alone suggest changes to existing
vehicle classification definitions, least of all that certain SUVs and all minivans be reclassified as
passenger cars". Moreover, for purposes of the National Program, EPA must harmonize its
definitions to those set out in 49 CFR Part 523. [OAR-2009-0472-7182.1, p.9]
Toyota Motor North America:
As required by law, NHTSA proposes to set CAFE standards for three regulated fleets -
domestically produced passenger vehicles (domestic cars), non-domestically produced passenger
vehicles (import cars), and non-passenger vehicles (trucks) . Under NHTSA's CAFE proposal,
the footprint-based attribute curve for both domestic cars and import cars in a given model year
is based on a single maximum feasible target curve when considering the combined fleet of
import and domestic cars . While there is but a single target curve established for cars each
model year, compliance with the target curve must be calculated separately for import cars and
domestic cars (in addition to a separate domestic car anti-backsliding standard). [OAR-2009-
0472-7291, p.6]
5-3
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EPA Response to Comments
Unlike NHTSA, EPA is not required by law to regulate vehicle GHGs or tailpipe CO2 using any
predetermined vehicle fleets. As such, EPA proposes to regulate based on two vehicle fleets -
cars and trucks. For the purpose of regulating GHGs, EPA also proposes to use the same
regulatory definition for 'cars' and 'trucks' as used by NHTSA in the CAFE program, albeit
without the distinction between import and domestic car for compliance calculations. [OAR-
2009-0472-7291, p.6]
Toyota supports EPA's proposal to regulate based on two fleets (cars and trucks), as well as
EPA's proposal to use the same definitions of'car' and 'truck' as NHTSA. While EPA's proposal
is not perfectly harmonized with NHTSA's three-fleet approach, both agencies are, in fact,
setting just two sets of target curves - one for cars and one for trucks. The harmonization
difference lies in the compliance calculations, and the fact that NHTSA is forced by statute to
require separate calculations for import cars and domestic cars. Toyota supports EPA's use of
two fleets for its program because it provides greater compliance flexibility for manufacturers
without creating additional burden. [OAR-2009-0472-7291, pp.6-7]
EPA also requests comments on combining the entire fleet into a single compliance category,
with a single target curve for the fleet each model year. If faced with just one federal program
with which to comply, Toyota may not object to a combined fleet standard, since it would
arguably provide manufacturer's with the greatest level of flexibility to comply and it would
remove any concerns about vehicle classifications . However, due to the lack of harmonization
with NHTSA's program that would result, and the inflexibility afforded NHTSA in the existing
CAFE statute, Toyota would not support EPA setting a single target curve for the entire fleet of
cars and trucks even though it would result in the greatest level of flexibility. [OAR-2009-0472-
7291, p.7]
Concerning EPA's adoption of NHTSA's car and truck definitions for the purpose of vehicle
GHG regulations, Toyota supports this approach in order to maintain harmonization and avoid
complex bookkeeping requirements that would be needed in the absence of harmonized
definitions. The issue of whether NHTSA (and by extension EPA) should revise the current
definitions of cars and trucks for fuel economy and GHG regulation purposes is addressed later
in these comments. [OAR-2009-0472-7291, p.7]
EPA Response:
In general there was widespread support for separate car and truck attribute-based standards
based on harmonized definitions of car and truck between the EPA and NHTSA programs.
Although Hyundai commented that "We would support a single fleet program, because it would
provide greater compliance flexibility for manufacturers, while maintaining energy and
environmental benefits," they acknowledged that there were statutory constraints that would
prohibit a harmonized program based on a single fleet. Hyundai concluded that harmonization
of the two programs was the first priority, and thus in the absence of statutory changes there
should be separate but harmonized fleets.
As explained in section III.B.l of the preamble to the proposed rule (74 FR at 49516/2), and
reiterated in the preamble to the final rule and supported by many of the public comments, EPA
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EPA Vehicle Program, Feasibility, and Estimated Impacts
is not finalizing a single fleet standard. First, some vehicles classified as trucks (such as pick-up
trucks) have certain attributes not common on cars which contribute to higher CC>2 emissions—
notably high load carrying capability and/or high towing capability. Due to these differences, it is
reasonable to separate the automobile fleet into two segments. Second, the segmentation of the
automobile fleet is a key program design element of the GHG standards that EPA believes
should be harmonized with NHTSA's CAFE program. NHTSA is required by statute to set
separate standards for passenger cars and for non-passenger cars. Finally, because manufacturers
are able to transfer credits between their car and truck fleets under both the NHTSA and EPA
programs, most of the advantages raised by commenters of a single fleet standard for all
automobiles are also present in the two-fleet program being finalized. Because EPA is allowing
credit transfers between a manufacturer's car and truck fleets, the two fleets can effectively be
viewed as a single fleet when manufacturers consider compliance strategies. The one benefit of a
single light-duty fleet not captured by a two-fleet approach is that a single fleet prevents potential
"gaming" of the car and truck definitions, whereby manufacturers might try to design vehicles
most similar to passenger cars but which meet the regulatory definition of trucks. EPA does not
believe at this time that concern is sufficient to outweigh the other reasons for separate car and
truck fleet standards.
Consistent with the comment from NAD A, EPA is finalizing as proposed the overall fleet
covered by the standards, i.e., all vehicles up to 8500 pounds GVWR plus the limited category of
passenger vehicles between 8500 and 10,000 pounds GVWR known as medium-duty passenger
vehicles. These are the vehicles to which the current Tier 2 emission standards apply, and,
starting with the 2011 model year, to which the CAFE program will apply (the CAFE program
expands to cover the medium-duty passenger vehicles starting in the 2011 model year).
The National Association of Clean Air Agencies (NACAA) recommended that EPA regulate
GHG emissions for all key engine and equipment subsections within the overall transportation
sector, "especially for onroad heavy-duty engines for which EPA should develop federal
regulations without delay in close cooperation with the states In the absence of federal action,
states will be pressed to move ahead using other authorities under the Clean Air Act so that
emissions reductions from this sector can be achieved as soon as possible."
On October 20, 1999, the International Center for Technology Assessment (ICTA) and 18 other
environmental and renewable energy industry organizations filed with EPA a "Petition for
Rulemaking and Collateral Relief Seeking the Regulation of Greenhouse Gas Emissions from
New Motor Vehicles under Section 202 of the Clean Air Act." As discussed in the proposal (74
FR 49507, September 28, 2009), on April 2, 2007, the U.S. Supreme Court held in
Massachusetts v. EPA that greenhouse gases were air pollutants under the Clean Air Act and
remanded the case to the U.S. Court of Appeals for the District of Columbia Circuit for further
action. Heavy-duty vehicles are among the vehicle classes addressed by the petition and it is
likely that EPA will respond to the petition as part of a future rulemaking.
In addition, EISA added a new provision, 49 U.S.C. 32902 (k), requiring DOT, in consultation
with DOE and EPA, to examine the fuel efficiency of commercial medium- and heavy-duty on-
highway vehicles and work trucks and determine the appropriate test procedures and
methodologies for measuring their fuel efficiency, as well as the appropriate metric for
5-5
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EPA Response to Comments
measuring and expressing their fuel efficiency performance and the range of factors that affect
their fuel efficiency. DOT is authorized to develop fuel economy standards for these vehicles as
part of this effort. Work on addressing these requirements is on-going.
5.1.2. Test Procedures
Organization: Association of International Automobile Manufacturers (AIAM)
Manufacturers of Emission Controls Association
National Renewable Energy Laboratory
American Council for an Energy Efficient Economy
Sierra Club
Cummins Inc.
Fisker Automotive, Inc.
University of California, Santa Barbara, Bren Working Group on Vehicle Fuel
Economy
U.S. Coalition for Advanced Diesel Cars
Hyde, James
Comment:
Association of International Automobile Manufacturers (AIAM):
AIAM does not support fundamentally changing the fuel economy/greenhouse gas test
procedures at this time. Our reluctance to support such changes is due to the impact that such
changes could have on the effective stringency of the standards. Any future changes should be
accompanied by offsetting changes in the stringency of the standards and should provide
adequate lead-time for manufacturers to make necessary changes to test equipment and reflect
the new procedures in their compliance plans. [OAR-2009-0472-7123.1, p.17]
It is necessary to have consistent and similar test procedures for battery electric vehicles, plug-in
hybrids, and fuel cell vehicles. AIAM urges EPA to pursue the development of such test
procedures in conjunction with the Society of Automotive Engineers. [OAR-2009-0472-7123.1,
p.17]
[AIAM also submitted these comments as testimony at the Los Angeles public hearing. See
docket LA EPA Hearing EPA-HQ-OAR-2009-0472-7283, pp. 28-32]
Manufacturers of Emission Controls Association:
MECA supports 5-cycle approach: MECA believes that any regulatory requirements associated
with greenhouse gas emissions should be based on real-world driving or usage patterns in order
to ensure that regulatory standards reflect actual vehicle operations and deliver the greenhouse
gas emission reductions that are needed. [OAR-2009-0472-7108.2, p.6]
National Renewable Energy Laboratory:
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EPA Vehicle Program, Feasibility, and Estimated Impacts
In the alternate SCO3 test procedure, there is only a 10 minute soak with solar lamps. This is not
a sufficient duration for thermal load reduction technologies to have a significant impact on
interior temperatures. A longer thermal soak period with lamps is recommended. [OAR-2009-
0472-4798.1, p. 1]
Thermal preconditioning of the passenger compartment is being considered to reduce A/C fuel
use in PHEVs and EVs. When using grid power, this strategy effectively reduces vehicle
powered A/C usage and eliminates the cool down A/C fuel use. It is not clear if this strategy
would be allowed under the proposed test procedure. It is recommended that the test procedure
allow the use of cabin thermal preconditioning as a method to reduce A/C fuel use. [OAR-2009-
0472-4798.1, p. 1]
American Council for an Energy Efficient Economy:
EPA should take the opportunity offered by the new regulatory regime for GHGs to establish an
emissions test that reflects real-world emissions to the extent possible. As EPA demonstrated in
its rulemaking to update fuel economy labels, the best available estimate of real world fuel
economy is some twenty percent lower on average than the CAFE value. The discrepancy
between label values and CAFE values is a constant source of confusion to consumers and
legislators, and may also constitute an obstacle to achieving fuel use and GHG emissions
reductions in a timely fashion [OAR-2009-0472-7260.1, p. 14]
While NHTSA cannot change fuel economy test procedures for cars without a change in law,
this need not hinder EPA's adoption of realistic test methods. EPA and NHTSA standards could
still be harmonized with the use in the near term of a "correction factor" to reconcile test
differences, just as EPA has allowed manufacturers to generate label values on an interim basis
through calculations using the outdated city and highway test values. [OAR-2009-0472-7260.1,
pp.14-15]
Further work beyond that done for EPA's labeling rule may be warranted to produce a
satisfactory vehicle testing protocol update. If this work cannot be completed before the light
duty vehicle GHG rule is finalized, EPA should state in the rule a date certain, within the next
few years, by which the switch to a more accurate testing protocol will be adopted. [OAR-2009-
0472-7260.1, p.15]
Recommendation: Include in the final rule a statement that GHG emissions testing will be
improved to represent real-world emissions and provide a date by which this improvement will
occur. [OAR-2009-0472-7260.1, p. 15]
Sierra Club:
Finally, the need for off-cycle credits highlights the inadequacy of current test procedures.
Although the 5-cycle test is a much improved approach, compared to the FET and HFET, there is
a clear need to update certification test procedures to account for all available technologies as
well as current driving conditions and behaviors. Updating test procedures will allow for broader
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EPA Response to Comments
integration of "off-cycle" technologies in future rounds of standards. We discuss updating
certification test procedures later in our comments. [OAR-2009-0472-7278.1, p.15]
Cummins Inc.:
Cummins recommends that EPA and NHTSA adopt test procedures and methodology to measure
fuel economy and GHG emissions that are more reflective of real-world conditions. This would
ensure a fair and level playing field for all technologies based on their inherent strengths, and
above all ensure that the proposed regulations maximize the societal benefits. [OAR-2009-0472-
7205.1,p.2]
Cummins urges EPA to update its test procedure and calculations to reflect real-world driving.
EPA has adopted a 5-cycle fuel economy test for fuel economy labeling purposes, but for CAFE,
the Agency still uses the 2-cycle test made up of the Federal Test Procedure-75 (FTP, or "city"
driving) and the Highway Fuel Economy Test (HFET, or "highway" driving). In order to
maximize the societal benefits the standards are meant to produce, EPA and NHTSA should
adopt test cycles and procedures which reflect realworld driving. Administering standards based
on test cycles the agencies know are not reality-based will lead to the design of vehicles
according to artificial standards and will fail to maximize the societal benefits. [OAR-2009-
0472-7205.1, p.2]
Fisker Automotive, Inc.:
Fisker Automotive recommends the following process to calculate emissions and fuel economy.
[OAR-2009-0472-8732.1, p.7]
1. Collect data directly from a range of vehicles to assess driver behavior specific to vehicle
class. Data should come directly from vehicles—via data loggers and GPS— rather than via
survey methods, in order to yield reliable data and reduce costs.
2. Define drive cycles that characterize a vehicle. For example, sweep through the full range of
acceleration profiles and speeds possible by the vehicle at various loads and conditions.
3. Digitally map the test results of #2 to the class-specific driver behavior data of #1. This will
yield how the tested vehicle will perform as drivers of that class will use them.
4. Report the average of these #3 results onto the fuel economy label, as shown in Figure 3.
Make additional data available online.
5. Allow automakers to submit their own data on how their specific vehicle is being used and
actually performing. This data would supplant data from #1 and 2, respectively. This will
encourage a plethora of fuel-saving and behavior-changing practices and technologies that fall
outside possible drive cycles. Some examples include the following.
a. Displays that communicate and reward efficient driving
b. Automaker promotion of efficient driving
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EPA Vehicle Program, Feasibility, and Estimated Impacts
c. GPS route optimization, including traffic
d. More convenient charging methods for plug-in vehicles
e. Photovoltaics (solar panels) [OAR-2009-0472-8732.1, p.7]
Drive cycles that attempt to imitate average driver behavior encourage automakers to design for
the drive cycles, which inevitably disregards a great deal of vehicle operation. Corrective
calculations which aim to adjust the cycle data to approximate reality further distance these
figures from the original intent, and do not apply well to diverse technologies. For example,
electric, hybrid, and gasoline powertrains have wildly different efficiency maps. Even within the
same category, these efficiency maps vary widely depending on the specific architecture and
components used. Correction calculations based on the US light duty vehicle fleet may apply
moderately well for the most common types of vehicles, but vehicles that fall outside the
majority will be unjustly rewarded or penalized by calculations that do not apply well to the
specific vehicle. [OAR-2009-0472-8732.1, p.7]
University of California, Santa Barbara, Bren Working Group on Vehicle Fuel Economy:
Current Emissions Testing Protocols
We commend the EPA's efforts to develop tests that provide an accurate method for anticipating
fuel economy achieved in real world driving; however, we have found some areas of concern in
the current testing procedures and we see potential for improvement in methodology. Our first
concern is the discrepancy between testing procedures for cars versus light trucks. We propose
that cars and light trucks be tested using as similar a methodology as possible. There are also
concerns over the brief testing time of 10 minutes, which does not reflect the average US
commute times of 24.3 minutes. We encourage the EPA to increase the length of testing time to
reflect these figures and allow more opportunity for variable conditions during testing. Another
area where we would like to see increased testing is in the number of new vehicles lines
analyzed. The EPA reports that 30 percent of new vehicle models are tested. To get the best
measure of total fleet efficiency, we think that a greater percentage of models should be tested
off the line. Additional concerns include constant temperature, pressure and engine fluid volume
assumptions that likely do not reflect real world conditions. We suggest more variation be added
to these tests to cover a more accurate range of on-road vehicle conditions. [OAR-2009-0472-
7188.1, p. 9]
[University of California, Santa Barbara, Bren Working Group on Vehicle Fuel Economy also
submitted these comments as testimony at the Los Angeles public hearing. See docket number
OAR-2009-0472-7283, pp. 119-121]
U.S. Coalition for Advanced Diesel Cars:
The Coalition takes note of EPA's conclusion, based on a computer simulation, that light duty
diesels are not a Viable or cost effective option.' EPA makes this statement even as 2009 demand
for diesel engines by American consumers is strong on vehicles where a powertrain choice is
available. In fact, after only a year in the market, the percent of customers selecting clean diesel
engines has already matched or eclipsed the percent selecting gasoline hybrids on vehicles that
offer consumers a choice . Further, EPA's computer-model driven conclusions are completely at
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EPA Response to Comments
odds with market realities in Europe, a carbon-constrained region where advanced diesel
technology continues to set the bar for drivability, fuel consumption and GHG emissions in real-
world driving. In fact, for the Top 10 vehicles sold in Europe last year, diesel-powered versions
delivered 17 percent lower GHG emissions than the nearest comparable gasoline engine
available. [OAR-2009-0472-7496, p.4]
The Coalition urges EPA to reflect on a few fundamental questions:
-How would the agency's conclusion on diesel technology change if its modeling functions were
not anchored on obsolete driving patterns?
-How would it change if the model comprehended off cycle emissions holistically across all
technologies, rather than the narrow and selective treatment found in the proposed rules?
-How would it change if the Agency factored in the off-cycle performance of technologies on
light duty vehicles American's use to earn a living? [OAR-2009-0472-7496, p.4]
Each day in our country, millions of Americans use their vehicles to load, haul and tow and they
are the backbone of our economy. We urge EPA to bring this real-world perspective into the
rulemaking so Americans have an opportunity to buy vehicles that deliver the best fuel-saving
performance in real-world duty cycles. And the best cost/benefit equation for real-world
American families. [OAR-2009-0472-7496, p.4]
The Coalition believes Congress has made its intent clear: sharply reduce light duty petroleum
consumption and GHG emissions by 2020 while protecting the consumer's right to affordable
and safe products without systematically diminishing consumer choice. The intent of Congress
will be frustrated by a regulatory approach that is reliant on paper-based fleet
reduction calculations versus one that is built atop real-world conditions where American fuel is
consumed and GHG emissions are created. [OAR-2009-0472-7496, pp.4-5]
To better understand driving habits of U.S. consumers, EPA proceeded to complete an
exhaustive analysis of real-world driving patterns in the U.S. and the impact of driving patterns
and off-cycle energy consumption (e.g., mobile air conditioners) on real-world fuel consumption.
This authoritative analysis resulted in the promulgation of new rules in 2006, in which EPA
asserted:
'A fundamental issue with today's fuel economy estimates is that the underlying test and
calculation procedures do not fully represent current real-world driving conditions.' [OAR-2009-
0472-7496, p.5]
Changing the test cycle weighting based on EPA data is a step in the right direction to reality that
can and should be done now. The Collation believes it is EPA's obligation: (1) To provide the
automotive industry with a reality-based calculation procedure on which to compare the
effectiveness of technology choices to regulated parties under rapidly changing limits, and (2) to
align these choices with a reasonable estimate of the petroleum fuel and GHG emissions
reductions policy makers can expect to achieve as a result of the Administration's rules. [OAR-
2009-0472-7496, p.5]
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EPA Vehicle Program, Feasibility, and Estimated Impacts
[[See Docket Number OAR-2009-0472-7496, pp.5-7 for a background discussion on CAFE and
Label Fuel Economy.]]
Maximize Fuel and GHG Efficiency for Highest Per Capita Fuel Users is Vital
According to data compiled by the U.S. Department of Transportation, the average owner of a
new passenger car accumulates 14,200 miles per year while the average light truck owner
accumulates 16,100 miles per year. These values for the 'average' American connect to the EPA's
2006 analysis that proved 57 percent of national vehicle miles traveled were at speeds akin to
highway conditions, or above a speed cut point of 45 mph. DOT's analysis shows a substantial
share of the American driving public is accumulating miles at a rate above the national average.
In fact, the data shows 25 percent of all light vehicle owners accumulate more than 18,000 miles
per year with nearly 9 percent accumulating more than 36,000 miles per year. The Coalition
urges EPA to recognize the following:
-Above average American drivers, in all likelihood, are accumulating more than 57 percent of
their annual miles in highway conditions.
-These Americans are the highest per capita consumers of petroleum fuel in the nation where
consumption is a function of vehicle efficiency and distance traveled. [OAR-2009-0472-7496,
p.7]
We believe EPA should embrace rules, policies and procedures that do not penalize
manufacturers that choose to commercialize vehicle technologies that maximize fuel and GHG
efficiency in higher speed, higher load operating conditions. EPA should not deter manufacturers
from commercializing fuel and GHG reducing technologies that appeal to the highest per capita
users of fuel in the U.S. Clearly, vehicle fuel economy and GHG certification calculations that
over-weight stop-and-go city driving by 28 percent and understate highway driving by 27
percent (55/45 vs. 43/57) will bias manufacturer technology implementation away from
operating conditions in which the majority of U.S. fuel is consumed. [OAR-2009-0472-7496,
p.7]
EPA Proposes Continued Inconsistencies Through 2016
In summary, EPA is employing entirely inconsistent calculation methods as it embarks on
ground-breaking GHG regulations that will fundamentally govern forward research, technology
implementation, capital investment, and job creation in the automobile industry.
-For purposes of regulating vehicles and manufacturers as well as for educating American
consumers, EPA proposes to maintain a test cycle weighting that places the primary emphasis on
city driving (55/45)
-For purposes of measuring national fuel consumption and GHG emissions reductions - the
benefits to be delivered by its rules - EPA is utilizing a mileage weighting that places the
emphasis on highway driving (43/57). [OAR-2009-0472-7496, pp.7-8]
Mr. James Hyde:
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EPA Response to Comments
Temperature Impacts: All the testing done for the proposed CAFE and C02 standards would be
done at in the specified temperature range for EPA testing of 68 to 86°F. The origin of this
temperature range is somewhat obscure, but originated when the testing was done primarily for
purposes related to summertime ozone problems and to easily accommodate test cell controls.
EPA has espoused the concept of'proportional benefits'. That is, a reduction of a certain
magnitude in the test would be reflected by a real-world reduction of about the same magnitude.
Perhaps this assumption was valid in the past. There is amble evidence that this does not apply in
all circumstances with regard to technologies incorporated for fuel economy increases. There is
currently a cold (20° F) standard for carbon monoxide; and this will be extended to
hydrocarbons. Regulating and measuring C02 and fuel economy at reduced temperatures is
important as most driving is done at temperatures outside the EPA certification temperature
range. [OAR-2009-0472-7258.1, p. 1]
It has also been well established that not all fuel economy and emission control measures are as
effective at lower (or higher) temperatures as they are at the current test temperatures. This is
very clear for hybrid electric vehicle (HEV) technology which is often disabled at low
temperatures as an element of the vehicle's design. Design elements which are less effective
outside standard test temperatures should not be credited with fuel or C02 reductions which the
vehicles do not achieve in actual year-round operation. [OAR-2009-0472-7258.1, p. 1]
C02 Measurement Issues: The current proposal would result in a fleet average C02 level of 250
g/mi by 2016. Based on EPA's assumption that the 250-g/mi standard would be met by passenger
cars achieving an average of224 g/mi and light trucks an average of302 g/mi, and assuming that
City emissions are 1.5 times Highway emissions 1 , the expected emissions ofC02 are shown in
Table 2. [OAR-2009-0472-7258.1, p. 4] [See OAR-2009-0472-7258.1, p. 4 for Table 2]
These averages can only be achieved by having a substantial number of vehicles with C02
emissions below the average. But the averages themselves are extremely low compared to the
C02 emissions currently measured. For model year 2009 the fleet average was 440 g/mi
compared to the expected 2016 average of 250 g/mi. In fact for all the vehicle tests reported for
model year 2009 only four had City emissions at or below 264 g/mi; and only six had Highway
emissions below 176 g/mi. This indicated that what is now a rare occurrence will be
commonplace in 2016. [OAR-2009-0472-7258.1, p. 4]
The ability of the test procedures in 40 CFR Part 86 to measure C02 accurately and precisely at
these levels needs to be investigated. Because of the reciprocal relationship between C02
emissions and fuel economy, the uncertainly in fuel economy measurements increases
dramatically as the C02 level is reduced. This is illustrated in figure below. [OAR-2009-0472-
7258.1, p. 4] [See OAR-2009-0472-7258.1, p. 4 for the figure]
The larger, red triangles on the base are the observed average for MY2009 and the two standard
deviation range boundaries. About 95% of the observed values were in this range. To achieve an
average of 250 g/mi the center red triangle would need to move from its current location at 440
g/mi to the smaller green triangle on the left. [OAR-2009-0472-7258.1, p. 5]
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EPA Vehicle Program, Feasibility, and Estimated Impacts
In the new range of C02 measurements the change in mpg resulting from a 1.0 g/mi C02 change
would be about 0.1 to 0.3 mpg instead of the 0.02 to 0.15 mpg now encountered. When EP A
regulated the impacts of certification gasoline on fuel economy they stated: [OAR-2009-0472-
7258.1, p. 5]
EPA believes that test fuel specifications, are sufficiently tight when changes in fuel property
values within the specified tolerance do not change fuel economy test results by more than 0.01
miles per gallon (mpg). This is the degree of precision EPA has used in determining the effect of
other test procedure changes on CAFE. This precision is necessary since as little as 0.01 mpg can
affect manufacturers' CAFE as rounded off to the nearest 0.1 mpg. [OAR-2009-0472-7258.1, p.
5]
Clearly this goal cannot be met with current measurement methods. [OAR-2009-0472-7258.1, p.
5]
EPA Response:
Major Test Procedure Changes
Many commenters supported using the current city and highway test procedure for CAFE and
greenhouse gas emissions.1 However, comments from the American Council for an Energy
Efficient Economy, Cummins, Fisker Automotive, Sierra Club, U.S. Coalition for Advanced
Diesel Cars and the University of California, Santa Barbara recommended that EPA make major
changes to test procedures so that the tests would more accurately reflect real-world conditions.
For example, the American Council for an Energy Efficient Economy recommended that EPA
"Include in the final rule a statement that GHG emissions testing will be improved to represent
real-world emissions and provide a date by which this improvement will occur."
The Manufacturers of Emission Controls Association "supports a 5-cycle approach."
Fisker recommended that EPA "Define drive cycles that characterize a vehicle. For example,
sweep through the full range of acceleration profiles and speeds possible by the vehicle at
various loads and conditions. Digitally map the test results to the class-specific driver behavior
data. Allow automakers to submit their own data on how their specific vehicle is being used and
actually performing. This will encourage a plethora of fuel-saving and behavior-changing
practices and technologies that fall outside possible drive cycles."
1 Comments from the Alliance did not directly address the city/highway test procedure, but did indirectly support the
use of the current city and highway test procedures. For example, Alliance comments indicated that "The Alliance
supports the joint rulemaking, including the proposed coordinated framework and structure. Further, the Alliance
supports the proposal that both NHTSA and EPA use an attribute-based approach." AIAM indicate that "AIAM
does not support fundamentally changing the fuel economy/greenhouse test procedures at this time. Our reluctance
to support such changes is due to the impact that such changes could have on the effective stringency of the
standards."
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EPA Response to Comments
Mr. James Hyde (public citizen) commented that it may not be appropriate for EPA to require
proposed CAFE and CO2 testing to be conducted at the EPA certification temperature range of
68 to 86 degrees F. Mr. Hyde commented that "There is currently a cold (20°F) standard for
carbon monoxide; and this will be extended to hydrocarbons. Regulating and measuring CO2
and fuel economy at reduced temperatures is important as most driving is done at temperatures
outside the EPA certification temperature range." Regarding hybrid vehicles, Mr. Hyde's
comments indicate that hybrid electric vehicle technology "is often disabled at low temperatures
as an element of the vehicle's design. Design elements which are less effective outside standard
test temperatures should not be credited with fuel or CO2 reductions which the vehicles do not
achieve in actual year-round operation."
The U.S. Coalition for Advanced Diesel Cars commented that "We believe EPA should embrace
rules, policies and procedures that do not penalize manufacturers that choose to commercialize
vehicle technologies that maximize fuel and GHG efficiency in higher speed, higher load
operating conditions." Their comments also indicated that "Further, EPA's computer-model
driven conclusions are completely at odds with market realities in Europe, a carbon-constrained
region where advanced diesel technology continues to set the bar for drivability, fuel
consumption and GHG emissions in real-world driving. In fact, for the Top 10 vehicles sold in
Europe last year, diesel-powered versions delivered 17 percent lower GHG emissions than the
nearest comparable gasoline engine available."
University of California, Santa Barbara commented that "We commend the EPA's efforts to
develop tests that provide an accurate method for anticipating fuel economy achieved in real
world driving." However, their comments also provided several recommendations including
increasing the length of the testing time to "allow more opportunity for variable conditions
during testing;" to increase the number of vehicles tested by EPA, and suggested that "more
variation be added to these tests to cover a more accurate range of on-road vehicle conditions."
The American Council for an Energy-Efficient Economy (ACEEE), Cummins, and Sierra Club
all suggested using more real-world test procedures.
It is not feasible at this time to base the final CC>2 standards on EPA's five-cycle fuel economy
formulae. Consistent with its name, these formulae require vehicle testing over five test cycles,
the two cycles associated with the CC>2 standards, plus the cold temperature FTP, the US06 high
speed, high acceleration cycle and the SC03 air conditioning test. EPA considered employing
the five-cycle calculation of fuel economy and GHG emissions for this rule, but there were a
number of reasons why this was not practical or otherwise appropriate. As discussed extensively
in the Joint TSD, setting the appropriate levels of CC>2 standards requires extensive knowledge of
the CC>2 emission control effectiveness over the certification test cycles. Such knowledge has
been gathered over the FTP and HFET cycles for decades, but is severely lacking for the other
three test cycles. EPA simply lacks the technical basis to project the effectiveness of the
available technologies over these three test cycles, and therefore could not adequately support a
rule which set CC>2 standards based on the five-cycle formulae. The benefits of today's rule do
presume a strong connection between CC>2 emissions measured over the FTP and HFET cycles
and onroad operation. Since CC>2 emissions determined by the five-cycle formulae are believed
to correlate reasonably with onroad emissions, this implies a strong connection between
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EPA Vehicle Program, Feasibility, and Estimated Impacts
emissions over the FTP and HFET cycles and the five cycle formulae. However, while we
believe that this correlation is reasonable on average for the vehicle fleet, it may not be
reasonable on a per vehicle basis, nor for any single manufacturer's vehicles. Thus, we believe
that it is reasonable to project a direct relationship between the percentage change in CC>2
emissions over the two certification cycles and onroad emissions (a surrogate of which is the
five-cycle formulae), but not reasonable to base the certification of specific vehicles on that
untested relationship. Furthermore, EPA is allowing for off-cycle credits to encourage
technologies that may not be not properly captured on the 2-cycle city/highway test procedure
(although these credits could apply toward compliance with EPA's standards, but not toward
compliance with the CAFE standards for the reasons given in the next paragraph). For future
analysis, EPA will consider examining new drive cycles and test procedures for fuel economy
Second, any possible revision to the existing test procedures would also need to consider
potential implications for other programs, including the stringency of EPA emission standards
(for criteria pollutants and CO2 emissions); fuel economy labeling requirements, and notably,
CAFE requirements and gas guzzler requirements. In addition, for CAFE testing of passenger
cars EPA is required by statute to "use the same procedures for passenger automobiles the
Administrator used for model year 1975 (weighted 55 percent urban cycle and 45 percent
highway cycle), or procedures that give comparable results;" Section 49 USC 32904(c) and 40
CFR 600.510-08. Although EPA is not prohibited from developing a different test procedure to
evaluate fuel economy of light duty trucks, doing so would yield a mismatch in testing
procedures (an undesirable result, as noted by the University of California Working Group in
their comments), and would lead to disharmonized programs, undermining a key and legitimate
objective of the joint rulemaking effort. In any case, doing so in this rulemaking is well beyond
its scope as explained above and in section III.B.I.
Third, to revise the city and highway test procedures would be expected to increase the burden
on the automobile industry substantially. Thus, EPA would need to consider appropriate lead
time for automakers to address changes in test procedures.
Fourth, the 43/57 weighting factors developed during the 5-cycle fuel economy labeling rule are
directly and inherently connected with the use of five-cycle estimates for both city and highway
driving the resulting fuel economy values. These weighting factors are not independent and
should not be applied to city and highway fuel economy estimates (or CO2 emission values)
based solely on the FTP and HFET test cycles. For example, when the methodology used to
develop the 43/57 weighting factors is applied to city and highway driving based on the FTP and
HFET test cycles, respectively, the result is essentially 55/45, not 43/57. Thus, it would not be
consistent with the technical underpinnings of the 5-cycle fuel economy label rule to change the
weighting factors used in the present rule.
In summary, EPA considers any major revisions to city and highway test procedures to be
outside of the scope of this GHG rule. However, EPA will consider test procedures in the
context of future rules setting standards for GHG emissions.
Note that additional information about test procedures is contained in section 5.10.2 of this
Response to Comments document.
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EPA Response to Comments
Test Procedures for Advanced Technology Vehicles
AIAM commented that "It is necessary to have consistent and similar test procedures for battery
electric vehicles, plug-in hybrids, and fuel cell vehicles. AIAM urges EPA to pursue the
development of such test procedures in conjunction with the Society of Automotive Engineers."
Although EVs and FCVs will have compliance values of zero grams/mile, PHEV compliance
values will be determined by combining zero grams/mile for grid electricity operation with the
GHG emissions from the 2-cycle test results during operation on liquid fuel, and weighting these
values by the percentage of miles traveled that EPA believes will be performed on grid
electricity and on liquid fuel, which will vary for different PHEVs. EPA is currently considering
different approaches for determining the weighting factor to be used in calculating PHEV GHG
emissions compliance values. EPA will consider the work of the Society of Automotive
Engineers Committee J1711, as well as other relevant factors. EPA will issue a final rule on this
methodology by the fall of 2010, when EPA expects some PHEVs to initially enter the market.
Accuracy of the CO2 Test Procedure
Mr. James Hyde (public citizen) commented that in the future model years, the CO2 levels of
some vehicles will become much lower than the CO2 levels of current vehicles, e.g. less than
176 grams/mile. Mr. Hyde recommended that "The ability of the test procedures in 40 CFR Part
86 to measure CO2 accurately and precisely at these levels needs to be investigated. Because of
the reciprocal relationship between CO2 emissions and fuel economy, the uncertainty in fuel
economy measurements increases dramatically as the CO2 level is reduced."
EPA Response:
EPA is confident that the current CO2 analyzers are more than adequate to measure CO2
emissions at these levels. The same general type of analyzers which are used to measure CO2
emissions are also used to measure carbon monoxide (CO) emissions. We note typical CO
emission levels on the city and highway tests are approximately two to three orders of magnitude
lower than typical CO2 emissions. For example, the current Tier 2 Bin 5 (50,000/120,000 mile
useful life) emission standards for CO on the FTP (city) test are 3.4 and 4.2 grams/mile,
respectively. Typical CO emission levels range from 0.1 to 4.2 grams/mile on the city and
highway tests.
Beyond the accuracy of the equipment used to measure CO2 emissions, EPA is concerned, as a
matter of principle moving into a new era of greenhouse gas control, that greenhouse gas
reductions reported for purposes of compliance with the standards adopted in this rule will be
reflected in the real world and not just as calculated fleet average emission levels or measured
certification test results. Therefore EPA will pay close attention to technical details behind
manufacturer reports. For example, EPA intends to look closely at each manufacturer's
certification testing procedures, GHG calculation procedures, and laboratory correlation with
EPA's laboratory, and to carefully review manufacturer pre-production, production, and in-use
testing programs. In addition, EPA plans to monitor GHG performance through its own in-use
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EPA Vehicle Program, Feasibility, and Estimated Impacts
surveillance program in the coming years. This will ensure that the environmental benefits of the
rule are achieved as well as ensure a level playing field for all.
5.2 Reserved
5.3. EPA Averaging, Banking, and Trading Provisions
Organization: Alliance of Automobile Manufacturers
General Motors Corporation
Toyota Motor North America
Hyundai
Mercedes-Benz USA
Volkswagen
Ford Motor Company
Ferrari S.p.a
Environmental Defense Fund
Public Citizen and Safe Climate Campaign
Sierra Club
Bright Automotive
Porsche
Comment:
Alliance of Automobile Manufacturers
Compliance flexibilities are absolutely necessary to meet the challenging fuel economy and
greenhouse gas emissions standards that are being proposed. The flexibilities are crucial because
they enable companies to choose different paths for achieving the same CCh reductions and fuel
economy improvements. As a result, the anticipated benefits of the proposed standards will be
realized while enabling companies to comply in the most efficient way given specific product
plans and business circumstances. EPA has long recognized that flexible compliance
mechanisms such as those being proposed are a necessity for achieving both environmental
protections and economic growth, and for this reason have been a staple of EPA emissions
regulations.
It is precisely this combination of environmental benefit and implementation efficiency that
made the proposed compliance flexibilities integral to the various stakeholders being able to
reach consensus on the National Program. [OAR-2009-0472-6952.1, p. 7]
General Motors Corporation
GM especially supports: ... the recognition of the need for mechanisms to provide for
compliance flexibility in the face of great uncertainty over future technology developments and
costs, customer acceptance of these technologies, and the price of fuels that consumers may see
in the marketplace. All of these factors make it critical that automakers have some ability to cope
with changes or unexpected outcomes, and we believe the proposed rules provide essential
flexibility. [OAR-2009-0472-6953.1, p. 2]
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EPA Response to Comments
Toyota Motor North America
The agencies propose a variety of credit programs and compliance flexibilities, which Toyota
generally supports. Not only are these credits and flexibilities consistent with the agreements
signed last May and the joint NOT published last spring, but they were integral to Toyota's
decision to enter into a commitment. Flexible credit programs allow manufacturers to better
manage technology investment and deployment while achieving overall environmental goals.
[OAR-2009-0472-7291.1,p. 14]
Toyota generally supports EPA's proposed credit trading program, although it remains unclear,
for competitive or other reasons, the extent to which manufacturers will engage in trading with
one another or in trading through a third party. Nonetheless, this uncertainty does not argue
against establishing such a program in the event credit trading makes sense for the parties
involved. [OAR-2009-0472-7291, p. 19]
Hyundai
Hyundai is pleased that EPA proposed various forms of credits for compliance flexibility in the
joint proposal. Credits can be important for providing a cost-effective means of achieving the
standards. [OAR-2009-0472-7231.1, p. 3]
Mercedes-Benz U.S.A
The flexibilities and credits proposed for the greenhouse gas program are essential to allow
limited-line manufacturers, such as DAG, to meet these dual responsibilities. They are the only
mechanism through which companies in DAG's position can meet the proposed requirements for
these model years and continue to invest in advanced technologies that will significantly reduce
greenhouse gas emissions over the longer term. [OAR-2009-0472-7193.1, p. 2]
Volkswagen
Volkswagen especially supports the work by both agencies to form their respective regulations to
allow averaging, banking, and trading as similar as possible in both programs, and to provide as
many credit flexibilities as possible that accommodate the wide range of manufacturers. [OAR-
2009-0472-7210.1, p. 2]
Ford Motor Company
CO2 Averaging, Banking and Trading Program
Part §86.1865-12, 'How to comply with the fleet average CO2 standards,' states that 'there are no
property rights associated with CO2 credits generated under this subpart. Credits are a limited
authorization to emit the designated amount of emissions. Nothing in this part or any other
provision of law should be construed to limit EPA's authority to terminate or limit this
authorization through a rulemaking'. 74 FR at 49761.
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EPA Vehicle Program, Feasibility, and Estimated Impacts
The need for this provision is unclear, and it should be dropped. Compliance planning is a
complex coordinated process that considers many factors including vehicle refreshening
cadence, manufacturability and credit management. The availability of credits is an important
part of a manufacturer's plan to comply with the regulations, and manufacturers rely on the
existing rules and credit provisions in their planning process. Abrupt changes in the credit system
could upend a manufacturer's plans, potentially making compliance impossible or necessitating
drastic, costly actions in order to maintain compliance. The regulations should be designed to
prevent the occurrence of such situations. If the agency decides to terminate or limit any flexible
mechanisms, then the rules should require adequate lead time for a manufacturer to develop
alternative credit schemes and to make the necessary adjustments to its compliance plan. Since
manufacturers typically begin to firm up their product plans roughly five years in advance of
actual production, the regulation should be amended to allow at least 5 years' lead-time in
advance of any changes to the credit provisions of the rules. [OAR-2009-0472-7082.1, p. 10]
Ferrari S.p.a
Ferrari strongly supports the Averaging, Banking, and Trading (ABT) program for CO2
emissions credits, because this approach gives more flexibility to comply without any negative
effects for the National Program final target to reduce GHGs. [OAR-2009-0472-7214.1, p.7]
Environmental Defense Fund
You asked a question about all of the various flexibility proposals. We support them all,
including obviously trading among manufacturers. The more flexible the better, so long as the
accounting is good, the reporting, the monitoring is good and the enforcing is good, but there are
cost differences that ought to be respected. [These comments were submitted as testimony at the
New York public hearing. See docket number EPA-HQ-OAR-2009-0472-4621, p. 124.]
Public Citizen and Safe Climate Campaign
Banking, borrowing, transfer and trading also obfuscates automakers' compliance with
the program. In the fuel economy program, banking and borrowing alone, without transfer and
trading, make it nearly impossible to know whether a manufacturer has complied in a particular
model year. The long window in which automakers can trade credits back and forth obscures
compliance in a given model year, impeding clear reporting of whether automakers are meeting
or falling short of standards. Based on publicly available data, Public Citizen was not able to
verify that Ford, GM, Chrysler and Nissan had complied with standards for several model years
from 1978-2007. An analysis of records of automaker use of carry-forward and carry-back
credits used from 1978-2008 Public Citizen obtained from NHTSA through a Freedom of
Information Act (FOIA) request, revealed that Detroit manufacturers avoided $3.1 billion in
CAFE fines that otherwise would have been paid, and delayed oil savings associated with
these shortfalls. [OAR-2009-0472-7050.1, p.4]
Sierra Club
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EPA Response to Comments
Ensure that credits do not undermine oil savings and emissions reduction goals. History has
shown that credits weaken the standards and erode oil savings. We urge that the agencies avoid
repeating this history by establishing credits that will undermine needed oil savings and pollution
reductions. EPA proposes a range of new credits that [OAR-2009-0472-7278.1, p.14] can be
banked, borrowed and traded to increase flexibility. We are concerned that a broad range of
credits may erode oil savings and cause emission reductions to go unrealized. To achieve the oil
savings and greenhouse gas emission reductions goals President Obama announced, credits (if
awarded) must be tied to actual emission reductions and be part of a transparent system that is
publicly reviewable. [OAR-2009-0472-7278.1, p.15]
It is critical that the credits banked, borrowed and traded within this system represent actual
emissions reductions. To ensure emission reductions, credits that do not represent actual
reductions, including FFV credits and advanced technology vehicle credits, should not be traded
or transferred. Additionally, manufacturers should not be allowed to trade or transfer borrowed
credits. The vast array of credits and the wide flexibilities proposed for credit banking,
borrowing, and trading create a compelling need for compliance transparency. [OAR-2009-0472-
7278.1, p.16]
Bright Automotive
Number two is the trading component of this could be a significant incentive or
driver, particularly if trading is harmonized. There's one series of product to be traded, not one
for NHTSA and not one for EPA, to be able to decide and meet the overall oil and carbon
production objectives at the least cost so a company like Bright Automotive would be to able to
receive credits to incentivize more production of our vehicles and accelerate their development.
Porsche
Fourth, EPA should modify the credit program so that deficits reflect real world manufacturer-
specific lifetime vehicle miles traveled. As proposed by EPA, debits are to be calculated based
on a fleet average vehicle miles traveled figure for all of industry as follows:
Debits = [mfr's CO2 deficit x vehicles sold x vehicle lifetime miles)/!,000,000
Where, for passenger cars, vehicle lifetime miles = 190,971 for light trucks, vehicle lifetime
miles = 221,199
If a manufacturer can demonstrate to EPA that its passenger car or light truck fleet vehicle
lifetime mile numbers are less than the industry averages proposed for inclusion in the above
formula, then the deficit should be reduced accordingly.
EPA Response:
Averaging, Banking and Trading Flexibilities
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EPA Vehicle Program, Feasibility, and Estimated Impacts
In general, there was considerable support for the proposed averaging, banking and trading
flexibilities. Manufacturers generally view these provisions as essential for implementing the
GHG standards.
EPA is finalizing an overall credit program which is very similar to that proposed (although we
are finalizing a number of detailed changes to the individual credit programs for advanced
technology vehicles, alternative fuel vehicles, air conditioning leakage, air conditioning
efficiency, and off-cycle technology credits). In the main ABT credit program, the manufacturer
will average the CC>2 emissions within each of the two averaging sets (passenger cars and trucks)
for each model year's production and compare that with its respective fleet average standards
(which in turn will have been determined from the appropriate footprint curve applicable to that
model year and averaging set). In addition to this within-company averaging, when a
manufacturer's fleet average CC>2 values 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 sell or otherwise distribute to another manufacturer
(trading). 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.
EPA continues to believe the ABT provisions are an essential part of the overall program. As
noted in section III. C of the preamble to the final rule, ABT is important because it can help to
address many issues of technological feasibility and lead-time, as well as considerations of cost.
For the GHG standards, which include consideration of credit availability and use, ABT is an
integral part of the standard setting itself, and is not just an add-on to help reduce costs. See
Husqvarna AB v. EPA. 254 F. 3d 195, 202 (D.C. Cir. 2001) (use of ABT as a factor in providing
proper consideration of cost and lead time)In many cases, ABT resolves issues of lead-time or
technical feasibility, allowing EPA to set a standard that is either numerically more stringent or
goes into effect earlier than could have been justified otherwise. This provides important
environmental benefits and at the same time it increases flexibility and reduces costs for the
regulated industry.
Averaging, Banking, and Trading (ABT) of emissions credits have been an important part of
many mobile source programs under CAA Title II, both for fuels programs as well as for engine
and vehicle programs. These programs have operated successfully and without incident for
many years with some degree of transparency, and EPA continues to work to improve the
transparency of these programs. For example, EPA routinely publishes vehicle emission test
results that are associated with the manufacturers' compliance with the Tier 2 ABT program, and
in recent years an annual compliance report has provided details regarding the fleet average
emissions achieved by manufacturers under the Tier 2 emissions program. Given the successful
operation of existing ABT programs, EPA is confident that modeling the new GHG program on
these programs is appropriate. EPA will track the use of ABT through its certification and
compliance program and, in response to commenters' concerns regarding transparency, plans to
make compliance information publicly available, as discussed below. EPA believes that ABT
provisions will help manufacturers comply with emissions standards and achieve the emissions
reductions associated with the standards.
Credits Must be Tied to Actual Emission Reductions
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EPA Response to Comments
The Sierra Club commented that EPA should ensure that credits do not undermine oil savings
and emissions reduction goals and recommends that "credits (if awarded) must be tied to actual
emission reductions and be part of a transparent system that is publicly reviewable." Public
Citizen and Safe Climate Campaign recommended that EPA limit the level by which credit
transfers and credit trades may reduce a manufacturer's standard, in line with the limitations
contained in the fuel economy program.
EPA is finalizing several key changes to the credit programs which we believe will address the
comments of the Sierra Club. We believe that these changes (combined with the limitations
being finalized on credit transfers and trades) will also address the concerns of Public Citizen
and Safe Climate Campaign.2 For example, EPA is finalizing the following provisions: (1) the
phase-out in the 2016 model year of the credit program for flexible-fueled vehicles (FFVs) that
are based on the EISA calculation methodology (consistent with EPA's proposal); (2) the phase-
out in the 2016 model year of the credit program using the EISA methodology for dedicated
alternative fuel vehicles (again, as EPA proposed); (3) changes in the implementation of the off-
cycle technology credit program; and (4) changes to the provisions for advanced technology
vehicle incentives for electric vehicles, plug-in hybrids, and fuel cell vehicles, as outlined below.
Flexible Fueled Vehicles: EPA acknowledges that prior to MY 2016, FFV credits may not
necessarily represent real-world emissions reductions. However, as EPA noted in the proposal
(74 FR 49531), and as many automotive manufacturers confirmed and documented in their
public comments, it is necessary to retain these credit opportunities through MY 2015 because
automakers have acted in reliance upon them and would lack needed lead time to meet the
standards without these opportunities. See also the discussion in section III.C.2 of the preamble
to the final rule.
As proposed, in the 2016 and later model years, the calculation of FFV emissions differ
substantially from prior years in that the determination of the CC>2 value to represent an FFV
model type will be based upon the actual use of the alternative fuel and on actual emissions
while operating on that fuel. In essence, these vehicles will largely be evaluated like all others
for purposes of ABT starting with MY 2016, so that actual emissions performance will
determine potential credit generation. EPA's default assumption in the regulations is that the
alternative fuel is used negligibly, and the CC>2 value that will apply to an FFV by default would
be the value determined for operation on conventional fuel. However, if the manufacturer
believes that the alternative fuel is used in real-world driving and that accounting for this use
could improve the fleet average, the manufacturer has two options. First, the regulations allow a
manufacturer to request that EPA determine an appropriate weighting value for an alternative
fuel to reflect the degree of national use of that fuel in FFVs relative to real-world use of the
conventional fuel. Section III.C of the preamble describes how EPA might make this
determination. Any value determined by EPA will be published by EPA, and that weighting
value would be available for all manufacturers to use for that fuel. The second option allows a
manufacturer to determine the degree of alternative fuel use for their own vehicle(s), using a
2 EPA is not finalizing credit transfer and trading limits similar to those contained in the fuel economy program as
recommended by Public Citizen and Safe Climate Campaign. However EPA is finalizing several key changes to
EPA's credit programs and several proposed limitations on buying and selling credits to better assure that any
credits transfers or trades are tied to actual in-use GHG emission reductions.
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EPA Vehicle Program, Feasibility, and Estimated Impacts
variety of potential methods. Both the method and the use of the final results must be approved
by EPA before their use is allowed. In either case, whether EPA supplies the weighting factors
or EPA approves a manufacturer's alternative fuel weighting factors, the CO2 emissions of an
FFV in 2016 and later would be based on real-world emissions, as follows (assuming non-zero
use of the alternative fuel):
(Wl xCO2conv)+(W2xCO2alt),
where Wl 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. Comments on the FFV credits provisions are
discussed in detail in section 5.7.2.
Dedicated alternative fueled vehicles: For MY 2016 and later, like the FFV credit program
described above, these credits will 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.
Off-Cycle Technology Credits: For off-cycle credits, EPA has taken steps to ensure that credits
are based on real-world emissions reductions. Indeed, the real issue is transparency of
documentation. As proposed, off-cycle technology credits will be available for certain new or
innovative 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.
EPA finalized 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, these credits will
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 is 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 GHG regulations contain provisions that describe how to
calculate 5-cycle CO2 values (see section 600.114-08 (to be codified in 40 CFR)). The
manufacturer will have to design a test program that accounts for vehicle differences if the
technology is installed in different vehicle types, and enough data will have to be collected to
address data uncertainty issues. Manufacturers seeking to generate off-cycle credits based on a
5-cycle analysis will be required to submit a description of their test program and the results to
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EPA Response to Comments
EPA for approval. Given that this procedure will involve application of an existing test
procedure, EPA does not believe public notice and comment would be necessary.
As discussed in Section 5.7.4, the manufacturer-developed testing, data collection, and analysis
program will require additional EPA approval. EPA received considerable comment from
environmental and public interest organizations, as well as from Honda, suggesting that EPA's
decisions about which technologies merit off-cycle credit and the amount of such credit should
be subject to public notice and comment. Environmental organizations were generally concerned
about ensuring that credits under this program are associated with real-world emission
reductions, while Honda expressed an interest in maintaining fairness among auto manufacturers.
EPA agrees that a public process will help ensure a fair review and alleviate concerns about
potential problems with the off-cycle credit calculation and accounting methodology. Therefore
EPA intends provide public notice and to seek public comment whenever manufacturers apply
for off-cycle credit and do not use the 5-cycle approach to quantify emission reductions. In such
instances, EPA will consider any comments it receives in determining whether and how much
credit is appropriate. Manufacturers should submit proposals well in advance of their desired
decision date to allow time for these public and EPA reviews.
Advanced Technology Vehicle Incentives for Electric Vehicles, Plug-in Hybrids, and Fuel Cell
Vehicles: Comments and responses on advanced technology vehicle incentives are provided in
section 5.7.3.
Transparency
In general, EPA agrees with Sierra Club's comments that GHG compliance information should
be part of a transparent system that is publicly reviewable. EPA's response to comments related
to program transparency is provided in section 5.10.1.
EPA's Ability to Terminate or Limit Credit Provisions
The proposed regulations contained text about the credit process, stating that "Nothing in this
part or any other provision of law should be construed to limit EPA's authority to terminate or
limit authorization through a rulemaking." (74 FR 49761). Ford Motor Company commented
that this statement should be dropped because of lead-time concerns. Ford stated that "Since
manufacturers typically begin to firm up their product plans roughly five years in advance of
actual production, the regulation should be amended to allow at least 5 years lead-time in
advance of any changes to the credit provisions of the rules."
This language, which has been incorporated in every light-duty ABT program to date, ensures
that EPA has the regulatory authority to make appropriate determinations regarding credit
balances when issuing new regulations. For example, if EPA were to issue another GHG
regulation taking effect in 2017, the incorporation of this regulatory language would allow EPA
to decide the extent to which manufacturers may or may not continue to hold or use credits from
the prior GHG program. However we believe that the rulemaking process is quite robust in
nature and more than adequate to consider manufacturers' lead-time needs. Indeed, as noted
above and in section III.C.2 of the preamble, legitimate considerations of lead time are the reason
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EPA Vehicle Program, Feasibility, and Estimated Impacts
EPA is not adjusting FFV credits until model year 2016. While each rulemaking involves a
unique set of circumstances, EPA has historically attempted to balance the genuine concerns and
needs of the automobile industry as part of its consideration of availability of control technology,
cost, necessary lead time and other factors relevant under section 202 (a) (1) consistent with the
ultimate statutory objective of improved health and welfare of the American public. In
summary, EPA understands the concerns of the commenter, but continues to believe that our
cautionary statement is both needed and appropriate.
Manufacturer-Specific Lifetime VMT for Credit Calculations
Porsche recommended that "EPA should modify the credit process so that deficits reflect real
world manufacturer-specific lifetime vehicle miles traveled."
As explained in the proposal, the purpose of assigning lifetime VMT values to credits is to allow
fungible credit transferring (from car to truck programs and vice-versa) and fungible credit
trading programs between manufacturers, given the fact that trucks are typically driven more
miles than cars. It is important for the regulations to account for the difference in expected
lifetime vehicle miles traveled (VMT) between cars and trucks in order to preserve CC>2
reductions when credits are transferred between cars and trucks. Assigning lifetime VMT
values to car/truck credits and debits thus enables an important flexibility to manufacturers - the
ability to transfer credits across fleets. For example, as stated in the proposal (74 FR 49516)
"Because EPA is proposing to allow unlimited credit transfer between a manufacturer's car and
truck fleets, the two fleets can essentially be viewed as a single fleet when manufacturers
consider compliance strategies. Manufacturers can thus choose on which vehicles within their
fleet to focus GHG reducing technology and then use credit transfers as needed to demonstrate
compliance, just as they would if there was a single fleet standard."
Regarding Porsche's request to allow the use of manufacturer-specific VMT, such an approach
would introduce an immense level of complexity into the process of buying and selling credits
and raises significant questions and concerns about implementation and transparency. For
example, if EPA were to consider such a request, the next logical step would be to differentiate
VMT by vehicle models, or by technologies. For example, are Ford Mustangs driven more miles
than Chevrolet Corvettes? Or are convertibles driven fewer miles than non-convertibles? Is there
a difference in VMT between minivans and two-door sedans? Or between one person and their
neighbor? The answer to all of these questions may be yes (or 'sometimes'), but EPA simply
does not have the capacity to readily, accurately, and fairly consider these issues at this point in
time or to include such consideration in the final rule. If EPA were to entertain Porsche's
concept, EPA would be obligated to evaluate the driving behavior of all manufacturers' vehicles
to ensure a level playing field between manufacturers whose vehicles are driven more miles and
those whose vehicles are driven fewer miles.
Additionally, if EPA were to allow such an option, manufacturers would only request use of this
option if it were to their benefit. In other words, manufacturers earning deficits would seek to
use lower VMT values so that they would have to offset a smaller deficit (as is the case with
Porsche; the specifically stated that they believe their vehicles are driven fewer miles), and
manufacturers earning credits would seek to enhance their earnings by requesting to use higher
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EPA Response to Comments
VMT values. Thus the only equitable way to account for differing VMT across manufacturers
would be to require every manufacturer to provide EPA with a rigorous and statistically
significant analysis that would estimate the lifetime VMT of their fleet. Continual updates would
be required to reflect changes to a manufacturer's fleet that occur with each model year, as well
as changing driving behavior and conditions. Such a program would quickly become
unmanageable and unduly complicated from a bookkeeping and transparency perspective. EPA
recognizes that fundamentally any vehicle make or model may be driven more or less than
another make or model, and that the use of an average lifetime VMT factor will, by definition,
not represent the specific experience of every manufacturer, make, or model. However, as noted
above, the purpose of the lifetime VMT factor is to preserve emission reductions when
transferring vehicles between car and truck fleets, and EPA believes that this purpose is served
adequately by the use of average lifetime VMT values.
EPA and NHTSA Credit Programs
Bright Automotive suggests that there should not be separate and independent credits systems for
the EPA and NHTSA programs. EPA understands that one system might offer advantages for
manufacturers but EPA believes that the two programs must remain separate. The two programs
have been carefully constructed to achieve similar objectives from a fuel economy and CO2
reduction stand-point. However, the two agencies' programs have several differences, due to
differences in statutory authority and EPA's program includes several credit programs that are
not part of the NHTSA program. This and other differences make the suggested approach
unworkable.
5.3.1. Five Year Carry-forward/Three Year Carry-back
OrganizationrHyundai Motor Company
Center for Biological Diversity
Toyota Motor North America
Natural Resources Defense Council
United Auto Workers
Kia Motors
Chew, Yuli
Comment:
Hyundai Motor Company
EPA will use the same five-year carry-forward and three-year carry-back time periods for credits
allowed under NHTSA's CAFE program. Additionally, we support a phase-out or discounting of
credits under EPA's GHG program after the five-year carry-forward period. To align with the
California GHG program in this area, we recommend that EPA adopt the credit discounting
permitted under California's GHG program as follows: [OAR-2009-0472-7231.1, p.3]
[Following comments are from LA Testimony, OAR-2009-0472-7283 p.67-72]
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EPA Vehicle Program, Feasibility, and Estimated Impacts
[[These comments were submitted as testimony at the Detroit public hearing. See docket number
EPA-HQ-OAR-2009-0472-6185, pp. 80-81.]]
More specifically, we support the proposed credit carry-forward and carry-back time periods
under both EPA and NHTSA programs.
In addition, we would support expanding the carry-forward provisions under the GHG program
to include a phase-out or discounting of credits after the five-year period. This practice was
permitted under the California regulations and would provide even further compliance flexibility.
Center for Biological Diversity
Third, deficit "carry-back" credits must be avoided. As proposed, manufacturers who fail to
comply with the standards for up to three years could earn credits if they exceed the standards in
the following year, and use these credits to avoid penalties for having failed to comply in the
preceding years. "Carry-back" credits, however, undermine the purpose of the Agencies' efforts
not only because they would incentivize delays in investment and technological innovation and
thus undercut EPCA's intent, but also because the benefits of avoiding the emission of a ton of
GHGs today exceed the benefits of avoiding the release of the same ton of GHGs several years
from now. In fact, the Proposed Rule already recognizes this fact but fails to apply it. As the
Proposed Rule correctly notes, GHGs remain in the atmosphere for decades and, in the case of
CO2, for millenia. Proposed Rule, 74 Fed. Reg. 49583. "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." 74 Fed. Reg. 49589. As a consequence, remedial efforts get more expensive the longer
they are delayed: "SCC is expected to increase over time, because future emissions are expected
to produce larger incremental damages as physical and economic systems become more stressed
as the magnitude of climate change increases. Indeed, an implied growth rate in the SCC can
beproduced by most of the models that estimate economic damages caused by increased GHG
emissions in future years." 74 Fed. Reg. 49613. Or, as stated elsewhere in the Proposed Rule,
"[d]elaying mitigation efforts could result in substantially higher costs of stabilizing CO2
concentrations." 74 Fed. Reg. 49613. Even setting aside the potential of triggering catastrophic
events and assuming arguendo that the SCC grows by no more than a linear 3% per annum as
EPA assumes, it is undoubtedly vastly preferable to remove a given ton of carbon in Year 1
rather than in Year 4, when it has wrought that much more damage.23 Moreover, also as
acknowledged elsewhere in the Proposed Rule, "voluntary non-compliance is impermissible for
the GHG standards proposed under the CAA," 74 Fed. Reg. 49522; thus, a rule allowing
manufacturers to choose not to comply with a standard in any given year is illegal. In sum,
deficit "carry back" credits are bad economic and environmental policy as well as in violation of
EPCA and the CAA.
Fourth, while over-compliance "carry forward" credits (i.e., the ability to apply credits for over-
compliance in Year 1 to remedy compliance failures in Year 1+n) are commendable within limits
because they indeed incentivize early technological investment and innovation, and initially
accelerate the rate of removal of GHGs from the atmosphere, allowing such "carry forward"
credits for a period of five years is excessive. A five year "carry forward" period would remove
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EPA Response to Comments
the incentive to incorporate newly developed technology into the nation's vehicle fleet for far too
long, and, after the initial spurt, stagnate rather than drive progress. These detriments could be
balanced against the evident benefits of limited "carry forward" credits by selecting a shorter
application period, such as one or two years. Moreover, no such credits should be allowed unless
a manufacturer can demonstrate additionality and quantify and verify the amount by which its
performance actually exceeded the standard. [EPA-OAR-HQ-0472-7265.1]
Toyota Motor North America
As directed by EISA and interpreted by NHTSA in previous rulemakings, CAFE credits earned
by a manufacturer in a model year after 2007 can be applied (subject to certain adjustments and
limits) for a period of up to five model years after the year in which they were earned. This 5-
year 'carryforward' provision is also proposed by EPA, although subject to different adjustments
and limits . Further, EISA provides manufacturers the flexibility to 'borrow' credits up three
years into the future (again, with certain adjustments and limits) to address potential compliance
shortfalls in a given model year. This 3-year 'carryback' provision is also proposed by EPA,
although subject to different adjustments and limits. [OAR-2009-0472-7291, p. 18]
Notwithstanding the comments above concerning the adjustment factors proposed by the
agencies for transferring credits, Toyota supports the 5-year carryforward and 3-year carryback
proposals by EPA in order to maintain consistency between the two programs for the purpose of
technology and product planning. [OAR-2009-0472-7291, pp.18-19]
Natural Resources Defense Council
Restrictions on Average, Banking, and Trading Provisions for GHG Standards are Necessary to
Preserve Environmental Benefits and Avoid Delays in Adoption of New Technologies
NRDC does not oppose EPA's proposal for MYs 2012 to 2016 to limit credit banking to five
years and deficit carry-forward to three years. We recommend, however, that EPA evaluate the
credit banking and deficit carry-forward time periods to determine if they can be reduced for MY
2017 and subsequent model years. Long banking and borrowing periods have the potential delay
deployment of cost-effective GHG control technologies. As MY 2012-2016 vehicles are
produced and sold, EPA should carefully evaluate whether or not the allotted banking and deficit
carry-forward time periods are necessary for cost-effective achievement of the GHG emissions
standards. [OAR-2009-0472-7141.1, p. 9]
Finally to prevent any credit "shell games" from delaying the adoption of new technologies,
manufacturers should also be prevented from banking, transferring or trading credits in any given
year if they are running deficit [sic] in either their car or truck fleet in that year. This prevents,
for example, any manufacturer from simultaneously banking credits while carrying forward a
deficit. [OAR-2009-0472-7141.1, p. 10]
United Auto Workers
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EPA Vehicle Program, Feasibility, and Estimated Impacts
Third, the UAW supports the proposals in the regulations for program flexibilities to help
automakers achieve compliance with the tougher standards. These provide a sensible transition
to a regime of annual increases in light-duty vehicle fuel efficiency after a long period of
regulatory inaction. We believe that EPA made the correct decision that it should limit its
proposal for carry-back and carry-forward credits to the limits established by the Energy Policy
and Conservation Act for the CAFE program. [OAR-2009-0472-7056.1, p.3]
Kia Motors
[These comments were submitted as testimony at the Los Angeles public hearing. See docket
number EPA-HQ-OAR-2009-0472-7283, p. 172]
While we fully support the five-year carry-forward period for credits under both the greenhouse
gas and fuel economy programs, we would also support the addition of a phase-out or
discounting of credits under the greenhouse gas program after the five-year carry-forward period.
Chew, Yuli
For EISA transfer caps issue, I notice that the limit of 1-year carry-forward and 3-year carry-
backward is different from what had been adopted in CARS's Greenhouse Gas Regulation.
While the Regulation is stricter than CARS's, it will create confusion among CA and other
Section 177 States. I support that GHG standard should have a 5-year carry-forward as specified
by CARS for Large Volume Manufacturers to allow for advance notice period. [OAR-2009-
0472-7042.1, p. 1]
As consistent in California's Greenhouse Gas Standards, I support that the carry-forward of
GHG credits be allowed for Small Volume and Independent Volume Manufacturers until 2016
Model Year or 3 Model Years after their size category classification changed to Large Volume
Manufacturers. [OAR-2009-0472-7042.1, p.l]
I support harmonization with California's Standard of using a 5-years fleet average method,
which means, 5 years carry-back provision as compared to 3 year carry-back provision as in
EISA. Any deficit at the end of 5 years will have to be made whole or face CAA violation at the
end of the following year. [OAR-2009-0472-7042.1, p.l]
I am concerned that the two fleet approach will result in some manufacturers would begin
producing bigger trucks and thus able to gain a lot of credits to subsidize the deficiency in the
passenger car standard. I would suggest that the credits from trucks have a useful lifespan of just
2 years if they are use to equalize the deficits in the passenger cars. This will maintain the stricter
standard of passenger car and reducing the incentives of "gaming" the benefits of gaining large
quantities of credits from trucks which are based on looser standards. [OAR-2009-0472-7042.1,
pp.2-3]
For the compliance program, I am concerned about the divergence from CARB's Regulation on
the time limit on the compliance, such as based on 5-year Fleet Average as in CARB as
expressed in. I am also concerned that Intermediate Volume Manufacturers is treated the same
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way for compliance, 1-year carry forward credits and 3-year carry backward provisions without
given them sufficient time to comply. [OAR-2009-0472-7042.1, p.4]
EPA Response:
EPA received a number of comments regarding the credit carry-back and carry-forward
provisions. Many supported the proposed consistency of these provisions with EISA and the
flexibility provided by these provisions, and several offered qualified or tentative support. For
example, NRDC encouraged EPA to consider further restrictions in the 2017 and later model
years. Public Citizen expressed concern regarding the complexity of the program and how these
provisions might obscure a straightforward determination of compliance in any given model
year. The Center for Biological Diversity expressed concerns regarding the provisions,
particularly with respect to allowing manufacturers to carry a deficit forward. At least two
automobile manufacturers suggested modeling the program after California, which allows credits
to be carried forward for 5-years, plus a phase-out or discounting of credits in the 6th year
(discounted to 50%) and the 7th year (discounted to 25%). In the California program, any unused
credits would expire after the end of the seventh year.
For other of its Title II emission control programs, EPA has sometimes initially restricted credit
life to allow time for the Agency to assess whether the credit program is functioning as intended.
When EPA first offered averaging and banking provisions in its light-duty emissions control
program (the National Low Emission Vehicle Program), credit life was restricted to three years.
The same is true of EPA's early averaging and banking program for heavy-duty engines. As
these programs matured and were subsequently revised, EPA became confident that the
programs were functioning as intended and that the standards were sufficiently stringent to
remove the restrictions on credit life. EPA has also previously allowed a limited deficit carry-
forward, for example in the NLEV and Tier 2 programs. EPA is therefore acting consistently
with our past practice in finalizing reasonable restrictions on credit life and a limited deficit
carry-forward in this new program. Section 202(a)(l) of the Clean Air Act clearly allows EPA
the discretion to include provisions such as these, and as noted above EPA has used these
provisions in the past in programs that have significantly advanced environmental protection and
air quality improvements.
The inclusion of these provisions in these regulations accounts for the ability of credit
generation as well as limited deficit carry-forward to address lead time issues such as a variation
in the percentage of models that are redesigned each year by a manufacturer, as discussed in
Section HID of the preamble, and to address inaccuracies that can occur in a manufacturer's
projections for future vehicle sales for any given model year, leading to not achieving the fleet
average for that model year. For example, fuel price fluctuations and other factors can influence
consumer attitudes and buying behavior. By the time it becomes clear at the end of a model year
that the manufacturer did not achieve their fleet average standard, their product line for the next
model year is essentially locked in and the subsequent model years are already well along in the
development process. EPA believes that allowing a deficit carry-forward of three years gives
manufacturers enough time to adequately respond to variations in a model year with appropriate
limitations that provide for continued improvements in emissions. In particular, note that the
regulations provide restrictions on carrying deficits forward that prevent a "shell game" of
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continually moving deficits forward and never actually being in compliance. These provisions
require that manufacturers not have a deficit in any year in which they are paying off a deficit
from a prior year. For example, if a manufacturer incurs a deficit in three consecutive model
years, then they have to "pay off all three years of deficits. They are not allowed to pay off the
deficit from three years in the past and carry forward the deficit forward from the other past
years; allowing this would clearly allow a continual shifting forward of deficits that would be
unacceptable. (See the following response for the applicable regulatory citations.) In addition,
the long term nature of the greenhouse gases at issue means that there is no significant
environmental difference by allowing this limited carry-forward. EPA believes that this and
other provisions provide effective protections and that the environmental benefits of the program
are not at risk as a result of the deficit/credit provisions. Finally, EPA notes that this is also
consistent with the CAFE program being adopted by NHTSA.
The Agency believes that a credit life of five years represents an appropriate balance between
promoting orderly redesign and upgrade of the emissions control technology in the
manufacturer's fleet and the policy goal of preventing large numbers of credits accumulated
early in the program from interfering with the incentive to develop and transition to other more
advanced emissions control technologies. Early credits generated by a manufacturer are also
subject to the five year credit carry-forward restriction based on the year in which they are
generated. This limits the effect of the early credits on the long-term emissions reductions
anticipated to result from the new standards. EPA continues to believe that the approach of five
year carry-forward and three year carry-back of credits is appropriate.
Banking and Trading Restrictions:
The National Resources Defense Council (NRDC) recommended that manufacturers should "be
prevented from banking, transferring or trading credits in any given year if they are running [a]
deficit in either their car or truck fleet in that year. This prevents, for example[,] any
manufacturer from simultaneously banking credits while carrying forward a deficit."
Regarding the NRDC comments, EPA proposed that the manufacturer must use any credits
earned to offset any deficit that had accrued in the current year or in a prior model year that had
been carried over to the current model year. Thus EPA proposed, and is finalizing, exactly what
NRDC recommended. Specifically, section 86.1865-12(k)(7)(i) in the final regulations states:
"Before trading or carrying over credits to the next model year, a manufacturer must apply
available credits to offset any deficit, where the deadline to offset that credit deficit has not yet
passed." NRDC also commented that such a provision is necessary to prevent credit "shell
games" from delaying the adoption of new technologies. EPA's Tier 2 program includes such a
restriction, and EPA is applying an identical restriction to the GHG program. Simply stated, a
manufacturer may not bank (or carry forward) credits if that manufacturer is also carrying a
deficit. In such a case, the manufacturer is obligated to use any current model year credits to
offset that deficit. Specifically, section 86.1865-12(k)(8)(i) of the final regulations addresses this
concern by requiring that "Manufacturers are not permitted to have a credit deficit for four
consecutive years." In other words, if they have carried a deficit forward for three years after the
year in which it is generated, as allowed by the regulations, they can not have a deficit in the
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following model year. This prevents the "shell game" approach of continually being in a deficit
situation.
5.3.2. Credit Transfers
OrganizationrFord Motor Company
Alliance of Automobile Manufacturers (Alliance)
Toyota Motor North America
State of New Jersey
Chew, Yuli
Comment:
Ford Motor Company
Ford supports EPA's streamlined megagram approach to account for expected vehicle lifetime
miles traveled (VMT) between cars and trucks in order to preserve CC>2 reductions when credits
are transferred between cars and trucks. [OAR-2009-0472-7082.1, p. 9]
Alliance of Automobile Manufacturers (Alliance)
Vehicle Miles Traveled Adjustment Factors
In NHTSA's MY 2011 final rule, the agency requires an adjustment to credits for lifetime
vehicle miles traveled (VMT). NHTSA's finalized adjustment factors are 152,000 miles for
domestic and imported passenger cars and 179,000 miles for light trucks. 74 Fed. Reg. at 14,432.
[OAR-2009-0472-6952.1, p.53]
In the joint 2012-2016 proposal, EPA proposes that VMT adjustment factors should be 190,971
for cars and 221,199 for trucks. 74 Fed. Reg. 49,572. [OAR-2009-0472-6952.1, p.54]
Recommendation:
These adjustment factors are almost identical. To better harmonize the 2012-2016 regulations,
the Alliance recommends that the agencies agree upon one set of VMT adjustment factors for
use in credit calculations for both EPA and NHTSA. [OAR-2009-0472-6952.1, p.54]
Toyota Motor North America
NHTSA's existing CAFE regulations specify the method by which credits (or deficits) are
calculated for a regulated fleet in a given model year. In its rulemaking establishing 2011 model
year CAFE standards, NHTSA established an adjustment factor to be applied when credits are
transferred from one fleet into another. The procedure takes into account the difference in base
fuel economy of the fleet generating the credits and the fleet to which credits are transferred, and
also takes into account the different lifetime mileage accumulation between cars and trucks
(when credits are transferred between one of the car fleets and the truck fleet, or vice-versa).
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These adjustments are intended to 'balance' the fuel savings when credits are transferred, and are
intended to address the sales-weighted harmonic averaging basis of CAFE compliance. [OAR-
2009-0472-7291, p. 18]
Because CO2 emissions are mass-based, EPA proposes that credits (or deficits) be calculated on
the basis of a sales-weighted arithmetic averaging of emissions within a fleet, expressed in mega
grams. Toyota supports this approach. Because these credits (or deficits) are mass-based, the
only adjustment needed when transferring between fleets is to account for differences in lifetime
mileage accumulation between the fleets in which credits are earned and used. EPA proposes
lifetime mileage accumulation rates for cars and trucks this purpose. [OAR-2009-0472-7291,
p.18]
In essence, both agencies are seeking to accomplish the same objective - that is, to base credits
transferred between fleets on 'consumption' in order to value credits on a one-to-one basis,
regardless of the fleet in which the credit is generated or the base fuel economy (or emission)
level of the fleet. Toyota recognizes the rationale for this approach, but urges the agencies to use
the same mileage accumulation rates for cars and trucks in order to maintain relative equivalency
in each program for credits transferred between fleets. Toyota has no preference concerning the
use of EPA's mileage accumulation rates or NHTSA's rates, but common values should be used
for cars and trucks in both programs. [OAR-2009-0472-7291, p. 18]
Credit Transfers Between Fleets
Toyota fully supports EPA's proposal to allow unlimited credit transfers between the car and
truck fleets (subject to the carryforward and carryback provisions). From an environmental
viewpoint, offsetting a compliance shortfall in one fleet with over compliance in another fleet
achieves the same result as marginal compliance in both fleets. The atmosphere does not
recognize the difference between a ton of carbon saved from a car or from a truck, nor is there a
difference between saving a gallon of gasoline from a car or truck - both have equal energy
security benefits. Toyota has long held the view that artificial limits on credit transfers between
regulated fleets in the CAFE program are counterproductive, serve to reduce manufacturer
flexibility and increase costs for consumers. [OAR-2009-0472-7291, p. 19]
State of New Jersey
The Department supports the proposal's determination to express credits based on vehicle
lifetime mileage estimates. [OAR-2009-0472-7109.1, p.8]
Chew, Yuli
I would suggest limit the usefulness of credits obtained from trucks for MY 2012-2016 to
equalize the deficits of passenger cars to just two years or less. After which, these credits can
only be used for trucks only. [OAR-2009-0472-7042.1, p.6]
In the final rule, I suggest limit the usefulness of the credits from trucks to be able to counter the
deficits from the passenger cars to just, say 3 years or less; alternatively, slowly phrase down the
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percentage of deficits from passenger cars that can be balanced by credits from trucks over a
period, e.g. reducing 20% per year from 2012 and these trucks credits cannot be used to average
out the deficits in the passenger cars. [OAR-2009-0472-7042.1, p.6]
Public Citizen and Safe Climate Campaign
The agencies both propose to allow manufacturers to bank, borrow, transfer and trade credits.
Automakers have availed themselves of the option to bank and borrow credits for their respective
car and light truck fleets since the fuel economy program started in 1978. EPCA, as amended by
EISA, provides clear restrictions on the extent to which credit transfer and trading can degrade
the level of fuel economy a manufacturer achieves in a given model year. Although the C AA
does not have a specific restriction regarding credit transfer and trading, EPA does not propose
limiting it. EPA also proposes to adopt the three years of carry-back and five-years of carry-
forward from the fuel economy standards in the interest of harmonizing the two programs. EPA
need not water down the stronger statutory authority of the CAA to suit NHTSA's standard
setting under EPCA. The CAA expressly requires that EPA issue protective standards to ensure
public health and welfare. It is particularly egregious to then extend the weaknesses of EPCA
further than NHTSA has in its standards. [OAR-2009-0472-7050.1, p3]
EISA extended the carry-forward window from three to five years, and allowed for credit
transfer between fleets and trading among manufacturers. These changes were made based on
recommendations in the 2002 National Academy of Sciences (NAS) evaluation of the fuel
economy program. Since credit trading and transfer will not occur under the fuel economy
program until the 2011 model year, we have no data on how manufacturers might use this
program. There is significant uncertainty about whether automakers would actually trade credits
and the implications of creating a market for these credits. To the extent that credits are traded
among manufacturers in both programs, we urge that EPA limit the level by which credit transfer
and trading may reduce a manufacturer's standard, in line with the limitation contained in the
fuel economy program. [OAR-2009-0472-7050.1, p.3]
EPA Response:
Overall Credit Transfer Approach
Ford, Toyota and the State of New Jersey supported the proposed unlimited credit transfers
between car and truck programs. They also supported EPA's proposed megagram approach to
account for expected vehicle lifetime miles traveled (VMT) differences when transferring credits
between cars and trucks (and visa-versa), which is discussed below. EPA is finalizing these
approaches with very little change from the proposal.
Mr. Yuli Chew recommended "limiting the usefulness of credits obtained from trucks for MY
2012-2016 to equalize the deficits of passenger cars to just two years or less. After which, these
credits can only be used for trucks only." Regarding Mr. Chew's recommendation, EPA finalized
averaging, banking, and trading provisions which are generally consistent with those included in
the CAFE program, with a few notable exceptions. As with EPA's approach, the CAFE rules
allow five year carry-forward of credits and three year carry-back. Under CAFE, transfers of
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credits across a manufacturer's car and truck averaging sets are also allowed, but with limits
established by EISA on the use of transferred credits. The amount of transferred credits that can
be used in a year is limited, and transferred credits may not be used to meet the CAFE minimum
domestic passenger car standard. CAFE rules allow credit trading, but again, traded credits
cannot be used to meet the minimum domestic passenger car standard. EPA did not propose, and
is not adopting, these constraints on the use of transferred credits. Commenters did not submit
any analysis justifying such restrictions, and EPA continues to believe that such restrictions
would be inappropriate, adding costs to the CAA program by reducing manufacturers'
flexibilities, and would do so without corresponding environmental benefit since the overall
stringency of the GHG standards could be affected.
Mr. Chew's recommendation was not adopted in the final rule because EPA continues to believe
that the proposed approach is reasonable and does not believe there is a reason provided that
would justify making a change to the program.
In general, EPA is also not adopting the limits on credit transfers and trading that are contained
in the NHTSA program. EPA historically has not placed limits on the amount of credits that
may be transferred or traded in light-duty vehicle programs such as Tier 2 and does not believe
such limits are necessary for the GHG program. Where needed, EPA is placing restriction on
certain credit provisions such as MY2009 early credits, as described in section 5.7. EPA is also
finalizing certain credit restrictions in the TLAAS program as described in 5.4. EPA believes it
is appropriate to narrowly tailor credit restrictions where necessary to address specific issues
rather than a general restriction on how credits may be transferred or traded.
VMT Adjustment Factors for Passenger Car and Truck Credits
The Alliance, AIAM and Toyota commented that the NHTSA and EPA should use the same
lifetime vehicle miles traveled (VMT) adjustment factors to facilitate GHG credit transfers
between car and trucks. EPA is promulgating VMT values that differ from the proposal. The
difference is attributable to lower projected fuel prices relative to those used in the NPRM
analysis. EPA's proposed and finalized VMT values are as follows:
Vehicle Type Proposed VMT Finalized VMT
Car 190,971 195,264
Truck 221,199 225,865
The regulations use these VMT values to account for the difference in expected lifetime
vehicle miles traveled (VMT) between cars and trucks in order to preserve CC>2 reductions when
credits are transferred between cars and trucks. As directed by EISA, NHTSA accomplishes this
in the CAFE program by using an adjustment factor that is applied to credits when they are
transferred between car and truck compliance categories. Rather than use a conversion factor
that would apply to credit transactions, EPA is expressing credits when they are generated in
total lifetime Megagrams (metric tons). In this way credits may be freely exchanged between car
and truck compliance categories without the need for adjustment. A discussion of the derivation
of the estimated expected vehicle lifetime miles traveled can be found in Chapter 4 of the Joint
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Technical Support Document. NHTSA's response to this issue can be found in Chapter VIII of
NHTSA's Final Regulatory Impact Analysis.
5.4 Temporary Lead-time and Small Volume Manufacturers
5.4.1 Temporary Lead-time Program
Organization: Jaguar Land Rover
Mercedes-Benz (Daimler AG)
Association of International Automobile Manufacturers (AIAM)
Alliance of Automobile Manufacturers (Alliance)
Volkswagen Group of America (Volkswagen)
Toyota Motor North America
BMW of North America, LLC (BMW)
Center for Biological Diversity
Public Citizen and Safe Climate Campaign
Union of Concerned Scientists
American Council for an Energy Efficient Economy
Sierra Club
National Automobile Dealers Association (NADA)
Society of Motor Manufacturers and Traders Limited
Porsche Cars North America, Inc.
New York State Department of Environmental Conservation
Mass Comment Campaign (2,332) (unknown organization)
Pendleton, Tom
Comment:
Jaguar Land Rover
Following separation from Ford Motor Company in June 2008, JLR has become a low volume
niche manufacturer producing on average 60,000 vehicles (per model year) across both brands
for the US market. In California JLR is recognized as an Intermediate Volume Manufacturer and
consequently adheres to alternative emissions regulations. Prior to separation, JLR comprised
just 3% of Ford's US Passenger Car and Light Duty Truck fleet. [OAR-2009-0472-7504, p.2]
The Temporary Lead-Time Allowance Alternative Standard enables qualifying manufacturers to
achieve a target which is 125% of the footprint based target for a limited number of vehicles
between 2012 and 2015. This flexibility was recognized and supported by the wider industry in
the Alliance of Automobile Manufacturers comments on this rule. [OAR-2009-0472-7504, p.6]
JLR also submitted substantial information regarding their product plans and emissions reduction
capabilities. This information was submitted as confidential business information.
Mercedes-Benz (Daimler AG)
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The Temporary Lead Time Allowance Alternative Standards (TLAAS) is critical to ensuring that
the National Program actually works. EPA has carefully constructed the TLAAS to provide
essential lead time for limited-line, lower-volume manufacturers to transition to a GHG program
that is devoid of the compliance alternative available in the CAFE program. As a mechanism to
provide lead time to a defined subset of manufacturers, the TLAAS falls squarely within and is
an appropriate exercise of EPA's discretion.
When prescribing regulations to reduce air pollutants, the Clean Air Act directs EPA to consider
the time "necessary to permit the development and application of the requisite technology." 42
U.S.C. § 7521(a)(2). The Clean Air Act entrusts the scope of lead-time allowances to the sound
discretion of EPA. See, e.g., Husqvarna AB v. EPA, 254 F.3d 195, 202 (D.C. Cir. 2001)
(showing lead-time provisions evaluated by courts for "substantial evidence"); Natural
Resources Defense Council, Inc. v. EPA, 22 F.3d 1125, 1137-40 (D.C. Cir. 1994)
(acknowledging that EPA has authority to select implementation deadlines where statute does
not specify deadlines explicitly).
Courts have repeatedly deferred to the Agency's evaluation of the time needed to implement the
technology contemplated in a new rule. See National Resources Defense Council, Inc. v. EPA,
655 F.2d 318, 331 (D.C. Cir. 1981). This is largely because courts have recognized that the
Agency is best placed to evaluate the various factors that tell in favor of lead time. See, e.g.,
Geier v. American Honda Motor Co., Inc., 529 U.S. 861, 879 (2000) (acknowledging four
factors cited by NHTS A justifying the lead-time period for passive restraints in automobiles);
Sierra Club v. EPA, 325 F.3d 374, 378 (D.C. Cir. 2003) (acknowledging the Agency's discretion
to consider various factors in fashioning lead-time provisions).
Indeed, EPA has previously implemented or supported targeted lead-time provisions, similar to
the TLAAS, with the approval of the federal courts. When promulgating new levels of
acceptable lead additives in gasoline, for example, EPA "exempted small refiners from the lead
content rules ... in recognition of the special lead-time problems faced by this group." Similarly,
EPA's 1997 Rule concerning Compliance Assurance Monitoring (CAM) incorporated a
staggered lead-time provision that afforded different "sources" different amounts of time to
comply.
EPA has properly recognized the need for limited-line, lower-volume manufacturers to be
accorded sufficient lead time to enable their fleets to transition to the structure of the GHG
program. Significantly, the TLAAS does not alter these companies' responsibility to comply, but
rather makes allowance so that the standard applicable to these companies better reflects the
traditional composition of their fleets in the U.S. market during the model years covered by this
regulation. The necessity and structure of the TLAAS fall squarely within the types of lead time
allowances EPA has adopted and the federal courts have previously approved as an appropriate
exercise of agency authority under the Clean Air Act.
Just as with the passive restraint phase-in upheld in Geier, various considerations support the
TLAAS. First, the proposed standards are aggressive and will require not only the provision of
various new technologies, but also a transition of the fleet. This transition requires additional
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flexibilities for limited-line manufacturers with fewer vehicles and lower-volumes able to be
transitioned in the shorter term.
Second, the program eliminates the traditional compliance alternative available to limited-line
manufacturers in the CAFE program. Companies that have previously met their obligations
through monetary payment in order to continue to offer substantially advanced vehicles must
transition to a new regulatory regime in which that option is no longer available.
Third, the TLAAS helps to provide leeway for industry leaders such as DAG to continue to
pioneer advanced technologies, such as fuel cell and full battery electric vehicles, while
simultaneously meeting the aggressive standards applicable to their lower-volume fleets. As
such, the TLAAS continues to facilitate the development of new technology.
Fourth, recognizing that the companies entitled to the TLAAS have also been technology
leaders, the TLAAS promotes further public acceptance of new powertrains and furthers the
commercialization of new vehicle types. This is particularly significant since DAG's consumer
base (like that of similarly situated companies) is often more able and more willing to try new
technology - and especially new vehicle technologies - than the majority of the public.
Finally, the benefits far outweigh the costs. EPA's own data confirms that any adverse
environmental impact from these lead-time provisions will be negligible. The agency estimates
that the maximum potential impact of the TLAAS is for GHG emissions to increase by no more
than 0.4% over the lifetime of the affected vehicles. Yet, by encouraging the further
commercialization of more advanced powertrains during the same time frame, the longer term
GHG benefits are substantial. See Bluewater Network, 372 F.3d at 412. [OAR-2009-0472-
7193.2, p.5]
[Mercedes-Benz also submitted these comments as testimony at the New York public hearing.
See docket number EPA-HQ-OAR-2009-0472-4621, pp. 51-52.]
Alliance of Automobile Manufacturers (Alliance)
In general the Alliance supports all aspects of the flexibilities that EPA has proposed for
compliance, including the provisions of the Temporary Lead-time Allowance Alternative
Standards (TLAAS). Some Alliance member companies intend to file separate comments
regarding additional flexibilities beyond TLAAS for very small volume manufacturers (below
100.000 units/year). [OAR-2009-0472-6952.1, p.8]
Volkswagen Group of America (Volkswagen)
An important aspect of the EPA proposal is the EPA's Temporary Lead-time Allowance
Alternative Standard (TLAAS) fleet. Volkswagen supports this concept and believes the
Administration and the EPA realized that some manufacturers may need additional time and
flexibility to adjust their product plans to a new regulation administered under the Clean Air Act.
The TLAAS provision will allow smaller vehicle manufacturers that have paid CAFE fines in the
past or smaller manufacturers with a limited product line additional time and flexibility to
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prepare for a new era of fuel economy and GHG control. We support the EPA and the White
House efforts to create a fair and balanced transitional period that allows all manufacturers the
ability to react to these very challenging and historic proposed regulations. [OAR-2009-0472-
7210.1, p.3]
[[Volkswagen also submitted these comments as testimony at the Detroit public hearing, See
docket number EPA-HQ-OAR-2009-0472-6185, p. 113.]]
With regards to the additional restrictions the EPA has applied to the TLAAS pathway,
Volkswagen believes that these restrictions are contrary to the concept of providing flexibility to
the regulation for smaller volume automakers. The EPA has proposed that manufacturers
choosing to utilize the TLAAS provision can only do so if all existing banked credit is
transferred within the manufacturer's fleets to minimize debits and all banked credit available
within the manufacturer's fleet is exhausted. Volkswagen does not believe that the restrictions
are necessary. Our understanding is that the EPA already accounted for the GHG impact of the
TLAAS fleet assuming that all manufacturers that qualified for the provision utilized it to the
maximum extent possible. It is also our understanding that the air quality impact is negligible
even if the TLAAS provision is fully utilized by all manufacturers qualified to use it. Per the
EPA's calculation cited on page 49522 of the notice, if every manufacturer eligible for the
TLAAS utilized the option to the fullest extent, the increase on the total fleet GHG emissions is
less that 0.4 percent. Due to this small impact we do not see the need to place additional
restrictions on the use of a potential TLAAS fleet. [OAR-2009-0472-7210.1, p.3]
Toyota Motor North America
Toyota understands that additional lead time through relaxed standards may be necessary for the
unique circumstances described in the proposal. To ensure the provisions are limited to the
intended purpose and to avoid potential gaming, Toyota agrees that robust conditions and
restrictions must govern access to and continued use of the program. In particular, Toyota fully
supports the requirement that all credits must be exhausted before entering the TLAAS program
and that credits may not be banked while participating in the program. The ability to participate
in the program while having a positive credit balance would indicate the TLAAS provision is
unnecessary. To ensure a level playing field, it is critical that the TLAAS program encourages
the proper investment in CC>2 compliance technologies and a timely exit from the program.
[OAR-2009-0472-7291, p.32]
BMW of North America, LLC (BMW)
BMW sells neither pickup trucks nor lightweight large-wheelbase vehicles that receive special
flexibility in the calculation method and curves. Based on a projection of the composition of
BMW's fleet in model year 2016, EPA estimates using the footprint-based calculation that
BMW's fleet average will need to meet a nearly 4% more stringent fleet standard than the
projected combined US fleet average of 250 grams CC>2 /mile. At an average 4% reduction per
year for the US fleet, this means BMW will have to meet an extra year's worth of reductions by
2016. Other limited-line manufacturers are in the same situation. Therefore, the greenhouse gas
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and CAFE compliance options for flexibility outlined in this proposal are, in our view, essential
to the successful and fair implementation of a national program. [OAR-2009-0472-7145.1, p.5]
In particular, the proposed optional temporary lead-time allowance alternative standards that
would be available in model years 2012-2015 for auto manufacturers such as BMW with model
year 2009 U.S. vehicle sales of less than 400,000 is a fair option for manufacturers who sell
'feature-dense' vehicles and no pickup trucks. Furthermore, it will be limited to a maximum of
100,000 vehicles total for 4 years, and ends in model year 2015, before the most stringent target
year of 2016. This flexibility is needed because most of the companies with limited lines will
have to meet a more stringent fleet standard by 2016 than full-line manufacturers. [OAR-2009-
0472-7145.1, p.5]
[BMW of North America also submitted these comments as testimony at the New York public
hearing, See docket number EPA-HQ-OAR-2009-0472-4621, pp. 133-135.]
Now, TLAAS may seem unusual to some, but it must be remembered that many of the
companies with limited lines will have to meet a more stringent fleet standard by 2016 than full
line manufacturers. TLAAS is so constructed and the other components of flexibility are so
designed that no one gets a free ride. Every manufacturer contributes their fair share to the
improvement. [These comments were submitted as testimony at the New York public hearing.
See docket number EPA-HQ-OAR-2009-0472-4621, p. 135.]
National Automobile Dealers Association (NADA)
The proposed TLAAS provides additional compliance lead time for certain manufacturers that
historically may have paid penalties in lieu of compliance under CAFE. The necessity for
TLAAS demonstrates the folly of trying to regulate fuel economy under the CAA, a statute that
was not designed for that purpose. Since, as is discussed below, the CAA's mobile source
penalty structure is particularly ill-suited for fuel economy regulation, the TLAAS was devised
to avoid driving certain automakers out of the U.S. market. Importantly, manufacturers who will
qualify for this program are committed to continuous fuel economy improvements, but tend to be
narrow line manufacturers with generally heavier and more powerful vehicles. [OAR-2009-
0472-7182.1, p.7]
[National Automobile Dealers Association also submitted these comments as testimony at the
New York public hearing, See docket number EPA-HQ-OAR-2009-0472-4621, pp. 88-89]
Society of Motor Manufacturers and Traders Limited
The proposed temporary lead-time alternative allowance standard and small entity conditional
exemption will not, in their proposed format, offer a suitable solution for UK based niche and
small volume manufacturers. SMMT fully expects its individual members to be making more
detailed submissions to EPA/NHTSA to set out some possible solutions. SMMT hopes that these
can be developed by the stakeholders to ensure challenging yet achievable long term targets for
manufacturers can be set. [OAR-2009-0472-7229.1, p. 1]
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Within the EPA/NHTSA proposal the 'Temporary Lead-time Alternative Allowance Standard'
(TLAAS) to 2016 is welcome. This allows manufacturers selling less than 400,000 cars to apply
for a target of 125% of proposed industry-wide footprint target level. However, due to the high
initial target faced by UK niche/SVMs this flexibility is insufficient to enable them to comply
with the standard. The benefit of TLAAS to niche manufacturers is also limited by the 100,000
volume cap on eligible vehicles, compelling such manufacturers to use their 100,000 allowance
in the early years of the rule, thus increasing the shortfall in later years. SMMT would therefore
support an increase in this cap to 200,000 over the same period. In addition, the unrealistically
high footprint based target for niche manufacturers would remain unachievable once the benefit
of the TLAAS has ended. SMMT would therefore support an extension in the provision of the
TLAAS or an equivalent for a further period to be agreed with the regulatory
authorities. [OAR-2009-0472-7229.1, pp.3-4]
An alternative approach to provide additional flexibilities for niche manufacturers would be to
adopt a similar mechanism to the EU CC>2 legislation within the existing TLAAS provision.
SMMT would support such a provision, providing an alternative CO2 reduction target for
manufacturers who utilize the TLAAS but may still need additional flexibility to comply. Such a
target would exceed the estimated industry average reduction requirement of 22% but be lower
than the fleet based target faced by qualifying manufacturers. This target could be available for
manufacturers responsible for fewer than 100,000 new Passenger Car and Light Duty Truck sales
in the US per model year in order to minimize the impact on the overall US car fleet. [OAR-
2009-0472-7229.1, p.4]
The proposed TLAAS allowance is also only available to vehicle manufacturers with vehicles
for sale in MY 2009. Some SVMs are not currently selling into the US market, in part due to the
current economic climate. They would therefore be excluded from being able to use the TLAAS
in future. [OAR-2009-0472-7229.1, p.4]
Porsche Cars North America, Inc
Unlike the situation with CAFE where a manufacturer has the ability to pay a CAFE penalty for
failure to comply with the fleet average requirement, this is not the case with the C02 rule
proposed by EPA. As discussed in the NPRM, if a manufacturer does not meet the fleet average
standard and the manufacturer is unable to acquire credits to offset its debits, then the
manufacturer will likely pay civil penalties and certificates for vehicles in production or already
sold with be voided. Absent credits, some modification to the credit program, deficit reduction
measures, or an alternative standard, the imposition of these enforcement measures will almost
certainly force Porsche out of the U.S. market. There is simply no business case to support
buying back vehicles or paying large civil penalties. And since the footprint approach makes
compliance not feasible for many years, we would anticipate a ratcheting up of the civil penalties
to a point where in a short period of time they could be far larger than any profit associated with
selling the vehicle. As a result, we believe that the rule as proposed, absent some modification to
the rule or a merger with a larger multi-line manufacturer, we would be forced us out of the
market. Based on today's numbers, this could result in the closure of 86 standalone Porsche
dealers who employ 4,049 persons. It could also negatively impact another 115 dualed dealers
who employ 9,933 persons. Two hundred fifty plus persons employed by Porsche Cars North
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America, Inc. would also lose their jobs. Port jobs and shipping jobs would also be lost. These
are the direct job losses that could be expected. There are certainly many more indirect supplier-
related jobs linked to Porsche both in the U.S. and abroad that would be lost as well. [OAR-
2009-0472-743 l.l,pp.8-9]
First, for small limited-line manufacturers like Porsche, the required cumulative percent
improvement relative to a manufacturer's current baseline performance should not exceed the
annual percent improvement which the agencies' are using to establish standards for larger
multiline manufacturers. In other words, if EPA and DOT finalize standards based on a goal of
improving fuel economy annually by 5%, the percent improvement required of small niche
limited-line manufacturers like Porsche should then also not exceed the 5% per year
improvement which EPA and DOT believe to be the maximum feasible improvement
practicable. Hence, for the 2012MY to 2016MY period, relative to our current baseline
performance, the improvement required of small niche limited-line manufacturers like Porsche
should not exceed 25% (5% times five model years). This limit would serve to correct for the
fact that the assumed relationship of FE/C02 vs. footprint does not work well for our sports car-
based passenger car fleet, and importantly, the limit would not reduce the burden on Porsche in a
way that is inconsistent with the goal of the regulation.
Second, as an alternative to the modification above, we would recommend that EPA modify the
proposed Temporary Lead-time Allowance Alternative Standards (TLAAS) provision by
establishing standards for small limited line manufacturers that are consistent with the 5% per
year limit. Given that it is EPA's intention to eventually establish standards through the 2020
model year, we recommend that the TLAAS provision be made available until that time.
Third, EPA should modify the credit program so as to provide manufacturers greater certainty
that credits will actually be available. Because our competitors are unlikely to help us stay in the
market by selling us credits, we recommend that EPA modify the rule to specify that
manufacturers' expiring credits, which would otherwise be worthless, be sent to an EPA credit
pool account for acquisition by those companies with deficits. We would recommend that
manufacturers tasked with implementing the largest percent improvements be given priority in
acquiring credits from this account. Manufacturers with credit balances should not be permitted
to use this pool to acquire additional credits. Also, to assist manufacturers in future compliance
planning, EPA/DOT should publish annual reports online showing the credit/deficit balances for
each manufacturer. [OAR-2009-0472-7431.1, pp.9-11]
Center for Biological Diversity
The Agencies propose an exception that would provide for an additional temporary leadtime
allowance for manufacturers that produce less than 400,000 vehicle sales per year and make
"high performance" vehicles with high CO2 emissions, but sell no high mileage cars against
which to balance those emissions. Proposed Rule, 74 Fed. Reg. 49483.20No such exception is
allowed under either EPCA or the Clean Air Act. Moreover, it would reward manufacturers
flouting the rules while penalizing those that have complied and indeed surpassed past standards.
In addition, such manufacturers have other options: they could begin to offer vehicles that truly
are "high performance" in terms of fuel efficiency; they could "decreas[e] the mass of the
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vehicles and/or decreas[e] the power output of the engines," 74 Fed. Reg. 49554; they could
purchase credits from other manufacturers; or they could take advantage of "off-cycle technical
credits" the Agencies intend to introduce - i.e., those that improve fuel efficiency but are not
captured by current testing methodologies, such as solar panels, adaptive cruise control, or active
aerodynamics. In short, this proposal is bad public policy, unnecessary, and illegal. [OAR-2009-
0472-7265.1, p. 15]
Public Citizen and Safe Climate Campaign
EPA proposes to allow all but the six largest manufacturers to create a separate averaging fleet
for up to a total of 100,000 vehicles for model years 2012-2015. Currently, the six largest
manufacturers are Toyota, GM, Ford, Honda, Chrysler and Nissan, meaning that manufacturers
like BMW and Daimler are given this dispensation even though they produce 400,000 vehicles
per year. Companies like BMW and Daimler, who pride themselves on being technologically
advanced, should be subject to the same standards as Ford, GM, and Toyota. EPA explains that
the purpose of providing additional lead time is to permit manufacturers who have traditionally
met their CAFE obligations by paying fines to come into compliance with the greenhouse gas
emissions program. The CAA does not have a mechanism for manufacturers to pay fines to come
into compliance, and the CAA penalties are much steeper than the CAFE fines. [OAR-2009-
0472-7050. l,p.7]
We urge the EPA to retain its position on trading from a company's special averaging fleet to it's
primarily fleet. If the agency does not explicitly prohibit such trades, it might create an incentive
for manufacturers to take advantage of the TLAAS system to generate additional credits. [OAR-
2009-0472-7050.1, p.7]
Union of Concerned Scientists
While consumers and the environment would be better off if all automakers had to meet EPA's
standards on the same schedule, we acknowledge the EPA's rationale for this allowance because
its effect will be to phase out NHTSA's system of fines that allow some manufacturers to pay to
avoid meeting fuel economy standards. Manufacturers that have previously relied on the
payment of fines as a regulatory compliance option no longer have that option under the Clean
Air Act, and limited interim year leniency at the level proposed will help transition those
manufacturers to the more stringent system. That said, in order to prevent this flexibility from
becoming simply another loophole eroding energy and emissions savings, it is critical that the
temporary lead-time allowance alternative standards be kept at the proposed levels and, further,
kept as a temporary measure. This is a transition mechanism that will allow certain
manufacturers to shift from one form of compliance to another; broadening the scope of these
[OAR-2009-0472-7181.1, p. 11] allowances or extending their use beyond this period would
undermine the goal of assisting in a swift transition to adoption of clean technologies. [OAR-
2009-0472-7181.1, p.12]
Additionally, with respect to EPA's proposal to restrict the use of banking and trading between
companies of credits in the primary program in years in which the TLAAS is being used, UCS
concurs and supports such a restriction. [OAR-2009-0472-7181.1, p.12]
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American Council for an Energy Efficient Economy
The Temporary Lead Time Allowance Alternative Standards (TLAAS) should be eliminated, or
at least more carefully tailored to meet the needs of low-volume manufacturers. The suggested
sales cutoff of 400,000 is too high and allows certain manufacturers that fall just below that
cutoff to shirk their fuel economy and GHG reduction responsibilities. It also discriminates
against U.S. manufacturers by providing luxury European manufacturers with more lead time to
adapt to new fuel economy and GHG standards. These manufacturers face ambitious GHG
reduction standards in their primary (EU) markets, and permitting them to delay their responses
to new standards on either side of the Atlantic will not serve any parties well.
ACEEE's estimates of possible per-vehicle emissions increases resulting from the TLAAS start
at 2.4 grams per mile in 2012 and decline to 0.5 grams per mile in 2016. These figures are very
close to the Upper Bound Scenario provided by EPA (DRIA p.5-43). EPA estimates that the
actual values will be only 15-20 percent of these upper bounds, but it is unclear how the agency
arrived at those estimates.
Recommendations: 1. Exclude the TLAAS from the final rule. 2. If the TLAAS are included,
reevaluate the criteria for eligibility and ensure that no extension of the program occurs in future
rulemakings. EPA should also justify its estimate of the likely impact of the alternative
standards.
[ACEEE also submitted these comments as testimony at the New York public hearing, See
docket number EPA-HQ-OAR-2009-0472-4621, pp. 139-140.]
Sierra Club
Under the Clean Air Act, automakers will no longer be able to pay fines as a compliance option.
EPA's proposal for Temporary Lead-time Allowance Alternative (TLAA) Standards, if included
in the final rule, should contain the limitations in the proposed rule and EPA should be clear that
TLAA Standards are temporary and will not be revived in standards beyond 2016. Many
automakers who stand to benefit from this program already meet more stringent standards in the
European Union. We support the EPA proposal to restrict the use of banking and trading of
credits between companies in the primary program during the TLAA Standards timeframe.
[OAR-2009-0472-7278.1, p.15]
New York State Department of Environmental Conservation
EPA proposes an interim program for intermediate volume manufacturers, the Temporary Lead-
time Allowance Alternative Standards, which allows some vehicles to be certified to a
significantly less stringent standard: Manufacturers making use of these provisions [OAR-2009-
0472-7454, p.l] should not be accumulating credit balances else where in the model years in
which they are utilizing the Temporary Lead-time Allowance Alternative Standards. [OAR-
2009-0472-7454, p.2]
Mass Comment Campaign (2,332) (unknown organization)
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The 'luxury loophole' for small volume manufacturers must not become a boon to manufacturers
currently meeting or exceeding standards. Any manufacturer taking advantage of extra lead time
must be barred from trading credits. [OAR-2009-0472-5747, p.l]
Pendleton, Tom
The proposed rules provide that automakers that sell fewer than 400,000 vehicles in the United
States would be allowed to meet a weaker standard to keep per-unit costs down. This group
includes Mercedes-Benz, BMW, Volkswagen and Subaru.
Mercedes Benz should NOT be eliminated from this standard as they also have a diesel powered
high mileage vehicle in their "A" series that should do well here. Subaru could also easily meet
the new standards even if forced to do so by bouncing the Tribeca and improving the remainder
of the fleet. BMW and VW both have high mileage diesels and should also be forced to adhere to
the new standards...
The BMW, Ford, Mercedes-Benz, Subaru and VW companies operate in the EU with those strict
standards so why can't they do the same here in the USA? Is this political gamesmanship or
something uglier? [OAR-2009-0472-2094, pp. 2-3]
EPA Response:
Base TLAAS Program
After carefully considering the public comments, EPA continues to believe that the TLAAS
program is essential in providing necessary lead time and flexibility to eligible manufacturers in
the early years of the standards. First, EPA believes that it is acting well within its legal
authority in adopting the various TLAAS provisions. EPA is required to provide sufficient lead
time for industry as a whole for standards under section 202 (a) (1), which mandates that
standards are to take effect only "after providing such period as the Administrator finds
necessary to permit the development and application of the requisite technology, giving
appropriate consideration to the cost of compliance within such period." Thus, although section
202 (a)(l) does not explicitly authorize this or any other specific lead time provision, it affords
ample leeway for EPA to craft provisions designed to provide adequate lead time, and to tailor
those provisions as appropriate. See Husqvarna AB v. EPA, 254 F. 3d 195, 202 (D.C. Cir. 2001)
(upholding provisions adopted under section 213 (b) (a provision worded nearly identically to
section 201 (a) (2) with respect to consideration of cost and lead time) which allowed for
additional lead time for manufacturers with smaller production levels). The types of technology
penetrations required for TLAAS-eligible vehicles in the program's earlier years raise critical
issues as to adequacy of lead time. As discussed in the EPA feasibility analysis provided in
preamble section III.D.6 and III.D.7, several manufacturers eligible for TLAAS are projected to
face a compliance shortfall in MY2016 without the TLAAS program. This is projected to occur
even with the full application of technologies assumed by the OMEGA Model, including hybrid
use of up to 15 percent. These manufacturers include BMW, Daimler, Jaguar Land Rover,
Porsche, and Volkswagen In addition, the smaller volume manufacturers of this group (i.e.,
Jaguar Land Rover and Porsche) face the greatest shortfall (see preamble Table III.D.6-4). Even
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with TLAAS, these manufacturers will need to take technology steps above and beyond those of
other manufacturers to comply with standards. These manufacturers have relatively few models
with high baseline emissions and this flexibility allows them additional lead time to adapt to a
longer term strategy of meeting the final standards within their vehicle redesign cycles. Also, for
CAFE, they have paid fines occasionally, and therefore have greater emissions reductions to
achieve in order to comply with standards.
Second, EPA has carefully evaluated other means that eligible manufacturers can use to meet the
standards, such as utilizing available credit opportunities. Indeed, eligibility for the TLAAS, and
for temporary deferral of regulation for very small volume manufacturers, is conditioned on first
exhausting the various programmatic flexibilities including credit utilization. At the same time,
a basic reason certain manufacturers are faced with special lead time difficulties is their inability
to generate credits which can be then be averaged across their fleet because of limited product
lines. And although purchasing credits is an option under the program, there are no guarantees
that credits will be available. Historic practice in fact suggests that manufacturers do not sell
credits to competitors. Although some of the smaller manufacturers covered by the TLAAS
program may be in a position to obtain credits, they are not likely to be available for the TLAAS
manufacturers across the board in the volume needed to comply without the TLAAS provisions.
At the same time the TLAAS provisions have been structured such that any credits that do
become available would need to be used before a manufacturer would turn to the more restricted
and limiting TLAAS provisions.
As discussed in preamble Section III.C., off-cycle credits are available if manufacturers are able
to employ new and innovative technologies not already in widespread use, which provide real-
world emissions reductions not captured on the current test cycles. Further, these credits are
eligible only for technologies that are newly introduced on just a few vehicle models, and are not
yet in widespread use across the fleet. The magnitude of these credits are highly uncertain
because they are based on new technologies, and EPA is not aware of any such technologies that
would provide enough credits to bring these manufacturers into compliance without TLAAS lead
time flexibility. Manufacturers first must develop these technologies and then demonstrate their
emissions reductions capabilities, which will require lead time. Moreover, the technologies
mentioned in the proposal which are the most likely to be eligible based on present knowledge,
including solar panels and active aerodynamics, are likely to provide only small incremental
emissions reductions.
We agree with the comment from Citizens for Biodiversity that reducing vehicle mass or power
are potential methods for reducing emissions that should be employed by TLAAS-eligible
manufacturers to help them meet standards. However, based on our assessment of the lead time
needed for these manufacturers to comply with the standards, especially given their more limited
product offerings and higher baseline emissions, we believe that additional time is needed for
them to come into compliance. EPA can permissibly consider the TLAAS and other
manufacturers' lead time, cost, and feasibility issues in developing the primary standards and has
discretion in setting the overall stringency of the standards to account for these factors. Natural
Resources Defense Council v. Thomas. 805 F. 2d 410, 421 (D.C. Cir. 1986) (even when
implementing technology-forcing provisions of Title II, EPA may base standards on an industry-
wide capability "taking into account the broad spectrum of technological capabilities as well as
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cost and other factors" across the industry). EPA is not legally required to set standards that
drive these manufacturers or their products out of the market, nor is EPA legally required to
preserve a certain product line or vehicle characteristic. Instead, EPA has broad discretion under
section 202(a)(l) to set standards that reasonably balance lead time needs across the industry as a
whole and that consider vehicle availability. In this rulemaking, EPA has consistently
emphasized the importance of obtaining very significant reductions in emissions of GHGs from
the industry as a whole, and obtaining those reductions through regulatory approaches that avoid
limiting the ability of manufacturers to provide model availability and choice for consumers.
The primary mechanism to achieve this is the use of a footprint attribute curve in setting the
increasingly stringent model year standards. The TLAAS provisions are a temporary and
strictly limited modification to these attribute standards allowing the TLAAS manufacturers lead
time to upgrade their product lines to meet the 2016 MY GHG standards. EPA has made a
reasonable choice here to preserve the overall stringency of the program, and to afford increased
flexibility in the program's early years to a limited class of vehicles to assure adequate lead time
for all manufacturers to meet the strictest of the standards by MY 2016.
DAG comments that the TLAAS program also allows them and other smaller volume
manufacturers to continue to pioneer advanced technologies, such as fuel cell and full battery
electric vehicles, while simultaneously meeting the aggressive standards applicable to their
lower-volume fleets. As such, the TLAAS continues to facilitate the development of new
technology. EPA understands that some smaller volume manufacturers are developing advanced
technologies to achieve future emissions reductions and the TLAAS program provides them with
more time to continue with the development of technology.
EPA agrees with comments that the program should remain limited and temporary. Although
EPA has added some limited additional flexibility and lead-time for manufacturers with annual
sales below 50,000 vehicles, EPA has tailored the program as narrowly as possible to address
lead-time concerns and the program will be phased-out by MY 2016 for most eligible
manufacturers.
With regard to the 400,000 unit eligibility cut-point, ACEEE comments that the cut-point is too
high and "allows certain manufacturers that fall just below that cutoff to shirk their fuel economy
and GHG reduction responsibilities. It also discriminates against U.S. manufacturers by
providing luxury European manufacturers with more lead time to adapt to new fuel economy and
GHG standards." EPA continues to believe the 400,000 unit cut-point is appropriate and is
retaining it. For reasons described above, manufacturers falling below this threshold need the
additional lead-time provided by TLAAS. EPA reviewed the sales volumes of manufacturers
over the last few years, and determined that manufacturers below this level typically fit the
characteristics discussed above, and manufacturers above this level did not. Thus, EPA chose
this level because it functionally identifies the group of manufacturers (i.e., manufacturers who
have traditionally paid CAFE fines instead of complying with the CAFE fleet average, and as a
result at least part of their vehicle production currently has significantly higher CC>2 and lower
fuel economy levels than the industry average), recognizing that there is nothing intrinsic in the
sales volume itself that warrants this allowance. EPA was not able to identify any other
objective criteria that would more appropriately identify the manufacturers and vehicle fleets
described above.
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This approach seeks to balance the need to provide additional lead-time without reducing the
environmental benefits of the proposed program. EPA believes that 100,000 units over four
model years achieves an appropriate balance as the emissions impact is quite small, but does
provide companies with some flexibility during MY 2012-2015. For example, for a
manufacturer producing 400,000 vehicles per year, this would be a total of up to 100,000
vehicles out of a total production of up to 1.6 million vehicles over the four year period, or about
6 percent of total production. In addition, EPA has quantified the potential impact of the
program (see RIA chapter 5 A). As shown there, the likely impact of the program is less than a
1% loss of emission reductions (assuming feasibility in early model years for all manufacturers -
an unlikely assumption) and less than 3% even assuming the unrealistic possibility of completely
maximized use of the program. Given the very considerable issues relating to needed lead time
for TLAAS-eligible manufacturers and these modest emission increases associated with the
provision, EPA believes it a reasonable balance of considerations of technological feasibility and
lead-time to provide the temporary allowance. See Sierra Club v. EPA, 325 F. 3d 374, 378 (D.C.
Cir. 2003) (weighing of statutory factors of cost and lead time in determining stringency and
phasing in of technology-forcing standards). EPA also notes that the provisions apply not only to
European manufacturers but to all manufacturers below the eligibility cut-point.
In response to comments that certain TLAAS-eligible manufacturers could meet standards by
selling diesels, EPA recognizes that diesels offer CO2 emissions reductions. However, due to the
high cost of diesel technology, EPA is not projecting significant market penetration for diesels.
EPA also notes that diesel fuel has a higher carbon concentration than gasoline and so diesels are
not as effective from a CO2 stand-point as they are from a fuel economy perspective.
EPA does not agree with NADA comments that the "necessity for TLAAS demonstrates the
folly of trying to regulate fuel economy under the CAA". The CAA provides broad discretion
for EPA to consider the lead-time needed by manufacturers and the ability to provide additional
flexibility as needed. Provisions are often included in CAA-based mobile source rulemaking to
address lead-time issues and these provisions are tailored to the particular needs for the rule.
Additional Flexibility for Smaller Volume Manufacturers
EPA received extensive comments that the TLAAS program would not provide sufficient lead
time and flexibility for companies with sales of significantly less than 400,000 vehicles. Jaguar
Land Rover, which separated from Ford in 2008, commented that it sells products only in the
middle and large vehicle segments and that its total product range remains significantly more
limited in terms of segments in comparison with its main competitors which typically have
approximately 75% of their passenger car fleet in the small and middle segments. Jaguar Land
Rover also commented that it has already committed $1.3 billion of investment to reducing CC>2
from its vehicle fleet and that this investment is already delivering a range of technologies to
improve the fuel economy and CC>2 performance of its existing vehicles. Jaguar Land Rover
submitted confidential business information regarding their future product plans and emissions
performance capabilities of their vehicles which documents their assertions.
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Porsche commented that their passenger car footprint-based standard is the most stringent
of any manufacturer and this, combined with their high baseline emissions level, means that it
would need to reduce emissions by about 10 percent per year over the 2012 - 2016 time-frame.
Porsche commented that such reductions were not feasible. They commented that their
competitors will be able to continue to offer their full line of products because the competitors
have a wider range of products with which to average. Porsche further commented that their
product development cycles are longer than larger competitors. Porsche recommended for small
limited line niche manufacturers that EPA require an annual 5 percent reduction in emissions
from baseline up to a total reduction of 25 percent, or to modify the TLAAS program to require
such reductions. Porsche noted that this percent reduction would be in line with the average
emissions reductions required for larger manufacturers.
EPA also received comments from several very small volume manufacturers that, even with the
TLAAS program, the proposed standards are not feasible for them, certainly not in the MY
2012-2016 MY time frame. These comments are addressed in Section 5.4.2
EPA carefully considered the comments of smaller volume manufacturers and believes
additional lead time is needed. After assessing the issues raised by commenters, EPA believes
there are two groups of manufacturers that need additional lead time. The first group includes
manufacturers with annual U.S. sales of less than 5,000 vehicles per year. Comments regarding
these small volume manufacturers are addressed in Section 5.4.2, below. The second group
includes manufacturers with MY 2009 U.S. sales of less than 50,000 vehicles but above the
5,000 vehicle threshold being established for small volume manufacturers. EPA has selected a
cut point of 50,000 vehicles in order to limit the additional flexibility to only the smaller
manufacturers with much more limited product lines over which to average. EPA has tailored
additional TLAAS flexibility for these manufacturers as narrowly as possible to provide
additional lead time only as needed by these smaller manufacturers. We estimate that the
TLAAS program, including the changes below, will result in a total decrease in overall emissions
reductions of about one percent of the total projected GHG program emission benefits. The basis
for these estimates is provided in RIA Chapter 5 Appendix A.
As discussed in the EPA feasibility analysis provided in section III.D.6 and III.D.7 of the
preamble several manufacturers eligible for TLAAS are projected to face a compliance shortfall
in MY2016 without the TLAAS program, even with the full application of technologies assumed
by the OMEGA Model, including hybrid use of up to 15 percent. These include BMW, Daimler,
Jaguar Land Rover, Porsche, and Volkswagen In addition, the smaller volume manufacturers of
this group (i.e., Jaguar Land Rover and Porsche) face the greatest shortfall (see preamble Table
III.D.6-4). Even with TLAAS, these manufacturers will need to take technology steps to comply
with standards above and beyond those of other manufacturers. These manufacturers have
relatively few models with high baseline emissions and this flexibility allows them additional
lead time to adapt to a longer term strategy of meeting the final standards within their vehicle
redesign cycles.
For some of the companies such as Jaguar Land-Rover and Porsche, the reduction from baseline
CC>2 emissions required to meet the standards is clearly greater than for other TLAAS-eligible
manufacturers (to say nothing of other manufacturers). Compared with other TLAAS-eligible
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manufacturers, these companies also have more limited fleets across which to average the
standards. These companies have only a few vehicle models all of a similar utility, and thus their
averaging abilities are extremely limited posing lead time issues of greater severity than other
TLAAS-eligible manufacturers. In addition, with fewer models with which to average, there is a
higher likelihood that phase-in requirements may conflict with normal product redesign cycles.
EPA's feasibility analysis provided in preamble Section HID. shows that these companies face a
compliance shortfall significantly greater than other TLAAS companies (see preamble Table
III.D.6-4). .
Therefore, for manufacturers with MY2009 U.S. sales of less than 50,000 vehicles, EPA is
finalizing additional TLAAS compliance flexibility through model year 2016. These
manufacturers will be allowed to place up to 200,000 vehicles in the TLAAS program in
MY2012-2015 and an additional 50,000 vehicles in MY2016. To be eligible for the additional
allotment above the base TLAAS level of 100,000 vehicles, manufacturers must demonstrate
each year that they have diligently make a good faith effort to purchase credits from other
manufacturers in order to comply with the base TLAAS program, but that sufficient credits were
not available. Manufacturers must secure credits to the extent they are reasonably available from
other manufacturers to offset the difference between their emissions reductions obligations under
the base TLAAS program and the expanded TLAAS program. Manufacturers must document
their efforts to purchase credits as part of their end of year compliance report. All other aspects
of the TLAAS program, including the 1.25x adjustment to the standards and the credits provision
restrictions, remain the same as described above for the same reasons. This will still require the
manufacturers to reduce emissions significantly in the 2012-2016 time-frame and to meet the
final emissions standards in MY2017. The standards remain very challenging for these
manufacturers but these additional provisions will allow them the necessary lead time for
implementing their strategy for compliance with the final, most stringent standards.
The eligibility limit of 50,000 vehicles will be treated in a similar way as the 400,000 vehicle
eligibility limit is treated, as described above. Manufacturers with model year 2009 U.S. sales of
less than 50,000 vehicles are eligible for the expanded TLAAS flexibility. Manufacturers whose
sales grow in later years above 50,000 vehicles without merger or acquisition will continue to be
eligible for the expanded TLAAS program. However, manufacturers that exceed the 50,000
vehicle limit through mergers or acquisitions will not be eligible for the expanded TLAAS
program in the model year following the merger or acquisition, but may continue to be eligible
for the base TLAAS program if the MY2009 sales of the new company would have been below
the 400,000 vehicle eligibility cut point. The use of TLAAS by all the entities within the
company in years prior to the merger must be counted against the 100,000 vehicle limit of the
base program. If the 100,000 vehicle limit has been exceeded, the company is no longer eligible
for TLAAS.
Porsche commented that EPA should modify the credits program to provide manufacturers with
greater certainty that credits will be available to purchase from other manufacturers. EPA is not
finalizing any mechanisms that would compel manufacturers with credits to sell those credits to
other manufacturers. It is not clear how to implement such mechanisms, but EPA will monitor
the credits market, and EPA plans to make this type of information available to the public.
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Please see Section 5.10.1 for EPA's full response to comments regarding data transparency and
availability.
In response to smaller volume manufacturer lead-time concerns, EPA is modifying the TLAAS
program to provide smaller manufacturers with more lead-time, as noted above.
Credit Restrictions
EPA received several comments in support of the proposed credit restrictions for the TLAAS
program including from Toyota, Public Citizen and Safe Climate Campaign, Union of
Concerned Scientists, and Sierra Club. On the negative side, Volkswagen commented that the
restrictions were not necessary, saying that the restrictions are counter to providing
manufacturers with flexibility and that the emissions impacts estimated by EPA due to the full
use of the program are small. However, EPA continues to believe that the restrictions are
appropriate to prevent the potential gaming described below, and to ensure that the TLAAS
program is used only by those manufacturers that have exhausted all other readily available
compliance mechanisms and consequently have legitimate lead time issues.
EPA is thus finalizing a number of restrictions on credit trading within the TLAAS program, as
proposed. EPA is concerned that if credit use in the TLAAS program were unrestricted, some
manufacturers would be able to place relatively clean vehicles in the TLAAS fleet, and generate
credits for the primary program fleet. First, credits generated under TLAAS may not be
transferred or traded to the primary program. A consequence of this restriction is that any
unused credits under TLAAS expire after model year 2015 (or 2016 for manufacturers with
annual sales less than 50,000 vehicles). EPA believes that this is necessary to limit the program
to situations where it is needed and to prevent the allowance from being inappropriately
transferred to the long-term primary program where it is not needed.
Second, EPA is finalizing two additional restrictions on the use of TLAAS by requiring that for
any of the 2012-2015 model years for which an eligible manufacturer would like to use the
TLAAS, the manufacturer must use two of the available flexibilities in the GHG program first in
order to try and comply with the primary standard before accessing the TLAAS - i.e., TLAAS
eligibility, which is premised on the need for additional lead time, is not available to those
manufacturers with other readily-available means of compliance . Specifically, before using the
TLAAS a manufacturer must: (1) use any banked emission credits from previous model years;
and, (2) use any available credits from the companies' car or truck fleet for the specific model
year (i.e., use credit transfer from cars to trucks or from trucks to cars). That is, before using the
TLAAS for either the car fleet or the truck fleet, the company must make use of any available
intra-manufacturer credit transfers first. Finally, EPA is restricting the use of banking and
trading between companies of credits in the primary program in years in which the TLAAS is
being used. No such restriction is in place for years when the TLAAS is not being used. EPA
continues to believe this provision is necessary to prevent credits from being earned simply by
removing some high-emitting vehicles from the primary fleet. Absent this restriction,
manufacturers would be able to choose to use the TLAAS for these vehicles and also be able to
earn credits under the primary program that could be banked or traded under the primary
program without restriction.
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Emissions Impact Calculations
ACEE expresses two concerns regarding EPA's analysis of emissions impacts associated with
the TLAAS program: 1) that EPA did not provide documentation of the impact calculations for
the TLAAS program, and 2) that EPA underestimated the impact of the program.
Regarding the first point, a detailed methodology of the impact calculations concerning TLAAS
was made available in DRIA chapter 5, Appendix A. In this final rule, similar calculations are
documented in RIA Chapter 5, Appendix A. As in the proposal, the calculations are also
separately available in the docket, in a spreadsheet titled "Achieved CC>2 standards worksheet."
While ACEE provided contrasting estimates of TLAAS impacts, it did not provide its
calculations. EPA disagrees with the commenter's estimates of the impacts from the TLAAS
program, and is concerned that several errors may have been made. It appears that the
commenter may have projected the TLAAS impacts ending in MY 2016, but in fact the TLAAS
program, for most eligible manufacturers (those above 50,000 vehicle sales but below 400,000
sales) ends in 2015. Further, ACEE projected impacts that are near or above EPA's highly
unlikely "upper bound scenario" where every eligible manufacturer is projected to fully utilize
the TLAAS program for the full program allotment, and place its largest vehicles in the program
(RIA Chapter 5A). This would require companies such as Porsche and BMW to sell specific
vehicle models (such as the Boxster and Phantom) in unprecedented numbers.
EPA's analysis shows that even if the TLAAS program was fully utilized, the emission impacts
are still slight relative to the overall benefits of the program. Further, EPA considers it highly
unlikely that every manufacturer will utilize the full TLAAS program for each year which the
manufacturer is eligible. Several manufacturers which are eligible for the TLAAS program
currently produce vehicle fleets with fuel economy ratings which are higher than required by the
MY 2008 or MY 2011 standards.
Further, utilizing the TLAAS program potentially offers several distinct disadvantages. The
manufacturers with vehicles in the TLAAS program will need to be in compliance with the main
program when the TLAAS program ends, and consequently need to be making continual
progress toward meeting the MY2016 standard. Further, manufacturers utilizing the TLAAS
program will be subject to several restrictions on credit banking and trading.
EPA therefore disagrees with the commenter on both points.
TLAAS Eligibility Comments
Organization: Association of International Automobile Manufacturers (AIAM)
Ford Motor Company
National Automobile Dealers Association (NADA)
Saab Automobile AB (Saab)
Volvo Car Corporation
Cummins Inc.
Comment:
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Association of International Automobile Manufacturers (AIAM)
AIAM has one other serious concern with the TLAAS program as it is proposed by EPA. As
proposed, "manufacturers with no U.S. sales in model year 2009 would not qualify for the ...
program." See 74 FR at 49523. This criterion is patently unfair to manufacturers which may
decide to market vehicles in the U.S. in the future but did not do so in the 2009 MY. EPA should
redefine the program to allow such manufacturers to qualify for this program. Additionally, any
new SVMs entering the market should be treated similarly as SVMs currently marketing vehicles
in the U.S. [OAR-2009-0472-7123.1, p.ll]
[AIAM also submitted these comments as testimony at the Los Angeles public hearing. See
docket LA EPA Hearing EPA-HQ-OAR-2009-0472-7283, pp. 28-32]
National Automobile Dealers Association (NADA)
The TLAAS should not be limited only to manufacturers with sales in the US in MY 2009.
[OAR-2009-0472-7182.1, p.7]
Ford Motor Company
Temporary Lead-time Allowance Alternative Standards
EPA proposes to allow 'temporary lead-time allowance alternative standards' (TLAAS) for
manufacturers who sell vehicles in the U.S. in MY 2009 whose vehicle sales in that model year
are below 400,000 vehicles. According to the proposal, total sales of would be aggregated in the
same manner as CAFE, and '[Corporate ownership or control relationships would be based on
determinations made under CAFE for model year 2009.' Based on our understanding of the
preamble and the proposed rule at 86.1818-12(e) there would be a onetime determination of
eligibility for TLAAS based on the relationships that exist in the 2009 model year.
A one-time determination of eligibility for TLAAS would base future regulatory obligations on a
snapshot of the industry as it exists in the 2009 model year. It would not take into account the
fact that corporate relationships in the auto industry are in flux, and will continue to change in
the 2010 model year and beyond. To the extent that further changes in corporate relationships
result in the creation or spin-off of new entities with vehicle sales below 400,000-unit cut-point
prior to the 2016 model year, these entities should qualify for TLAAS as well. Such entities
would have 'a limited line of vehicles' and be 'unable to take advantage of averaging emissions
performance across a full line of production,' cited by EPA as the reasons for allowing TLAAS
in the first place. To deny such entities access to TLAAS would be to place them at a regulatory
disadvantage vis-a-vis their direct competitors. Likewise, a smaller-volume manufacturer that
becomes part of a larger one should not continue to qualify for TLAAS. A more flexible
provision is needed to allow for changes to the industry over time.
Ford has two recommendations here. First, the initial determination of eligibility for TLAAS
should be based on corporate determinations for CAFE in the 2010 model year, not the 2009
model year. The GHG rules will not be final until approximately April 1 of 2010, when the 2010
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model year is well underway and manufacturers will already be selling some 2011 model year
vehicles. Corporate relationships that existed in the 2009 model year may already be outdated by
the time these rules are finalized. Second, Ford recommends that qualification for the alternative
standard should be reassessed in each model year subsequent to the 2010 model year based on
control relationships in existence during each model year. A small manufacturer spun off from a
larger one in 2010 should have the same compliance opportunities as any other small
manufacturer. Likewise, if a small manufacturer becomes part of a larger one, it should not
continue to qualify for a compliance option that other similarly-situated manufacturers cannot
utilize. It may be appropriate to pro-rate the total of 100,000 vehicles that are subject to the new
standards based on the total number of model years that the manufacturer is eligible for TLAAS.
[OAR-2009-0472-7082.1, pp. 24-25]
Saab Automobile AB (Saab)
Saab appreciates that the EPA recognizes the difficulties of a lower volume limited line
manufacturer in meeting the requirements of the proposed rule by providing the flexibility
inherent in the Temporary Lead-Time Allowance Alternative Standards (TLAAS). Unfortunately
due to the proposed definition of a TLASS "qualifying manufacturer", Saab would be excluded
from utilizing the flexibility of this provision. [OAR-2009-0472-7103.1, p.l]
The proposal applies the definition to the 2009 model year, even though many manufacturing
relationships will be radically different when the rule takes effect. For example, in the 2009
model year Saab was owned by General Motors (GM). Due to this ownership, Saab would be
excluded as a TLAAS qualifying manufacturer. However, in February 2009 GM announced that
it was selling or closing Saab by the end of the 2009 calendar year. That sale is nearing
completion and when final will create a small fully independent Saab that under the proposed
definition would still be excluded from utilizing the TLAAS. Following is Saab's
recommendation:
In §86.1818-12 (e) (i) EPA proposed the definition of a qualifying manufacturer as: A
qualifying manufacturer is a manufacturer with sales of 2009 model year combined passenger
automobiles and light trucks in the United States of less than 400,000 vehicles, except that
manufacturers with no U.S. sales in the 2009 model year do not qualify for the optional interim
standards. [OAR-2009-0472-7103.1, p.l]
Saab recommends the following addition to §86.1818-12 (e) (i):
A qualifying manufacturer may include a manufacturer that during the 2009 model year was
wholly owned by a large volume manufacturer and as a result of a change in corporate
relationship reported to the NHTSA pursuant to 49 CFR Part 534, subsequently separated from
the larger manufacturer before the end of calendar year 2010, provided that the branded sales of
the smaller manufacturer for 2009 model year combined passenger automobiles and light trucks
in the United States would have been less than 400,000 vehicles if said manufacturer sales were
totaled separately. [OAR-2009-0472-7103.1, p.l]
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This addition to the definition of qualifying manufacturer accommodates the extraordinary
developments that have been occurring in the US automotive industry. By incorporating this
addition, a more equitable application of the TLAAS will be possible while maintaining and
strengthening its original intent. [OAR-2009-0472-7103.1, p.2]
Volvo Car Corporation
The discussion in the preamble further explains that "the total sales number applies at the
corporate level, so if a corporation owns several vehicle brands the aggregate sales of the
corporation would be used ... In other words, corporations grouped together for purposes of
meeting CAFE standards, would be grouped together for determining whether or not they are
eligible under the 400,000 vehicle cut point." 1 Based on our understanding of the preamble,
EPA's current assumption is that there would be a one-time determination of eligibility for
TLAAS based on the corporate relationships and production volumes that exist in the 2009
model year. This approach is arbitrary and it is not consistent with either the stated purpose
behind TLAAS, or the regulatory language proposed for codification at section 86.1818-12(e).
As explained below under I. B, the proposed regulatory language can be reconciled with the
purpose and intent behind TLAAS, even if EPA chooses not make appropriate clarifications, and
in spite of the way EPA describes the criteria in the preamble.
A one-time determination of eligibility for TLAAS would base future regulatory obligations on a
snapshot of the industry as it exists in the 2009 model year. It would not take into account the
fact that corporate relationships in the auto industry are in flux, and will continue to change in
the 2010 model year and beyond. To the extent that further changes in corporate relationships
result in the creation or spin-off of new entities with vehicle sales below 400,000-unit cut-point
prior to the 2016 model year, these entities should qualify for TLAAS as well. Such entities
would have 'a limited line of vehicles' and be 'unable to take advantage of averaging emissions
performance across a full line of production,' cited by EPA as the reasons for allowing TLAAS
in the first place. To deny such entities access to TLAAS would place them at a regulatory
disadvantage vis-a-vis their direct competitors.
VCC fits squarely within the categories of manufacturer that TLAAS was designed to address.
EPA's proposal expressly recognizes the need for additional lead-time requirements for
companies with fleets traditionally subject to CAFE penalties and/or companies with a limited
line of vehicles unable to take advantage of averaging emissions performance across a full line of
products. Consistent with the purposes of TLAAS, the allowance should be made available to
manufacturers whose products have been sold in the U.S. but which have previously been
aggregated into the fleet of a full-line, larger-volume manufacturer.
Access to TLAAS is especially appropriate for a newly independent company that has
traditionally been a leader in bringing advanced safety technology to the market, like Volvo.
Such access will allow VCC to continue that leadership while simultaneously working towards
full compliance with the GHG program. TLAAS would not change VCC's responsibility to
comply with the program on the same timeframe as other similarly sized manufacturers. Instead
it would simply establish a standard for VCC that better reflects the composition of its fleet as a
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EPA Response to Comments
stand-alone manufacturer and the fact that has previously been aggregated into a larger fleet with
the other brands of its parent company.
EPA has also correctly recognized that the ability of a manufacturer to successfully implement
new technologies necessary to meet increased emissions standards is proportional to the size a
manufacturer's total annual production of vehicles. In light of this fact, it would be arbitrary and
inappropriate to allow manufactures with 2009 sales of up to 400,000 vehicles to use TLAAS,
while prohibiting significantly smaller volume producers like VCC from participating in the
program. As noted above, VCC's recent annual U.S. sales of approximately 100,000 are only
25% of the maximum threshold for TLAAS.
The special circumstances of a newly independent manufacturer fall squarely within EPA's
discretion under the Clean Air Act to consider and adjust appropriate lead-time allowances. See
42 U.S.C. § 7521(a)(2). Similar lead time provisions have been provided and upheld by the
federal courts. See, e.g., Ethyl Corp. v. EPA, 541 F.2d 1
VCC recommends the following regarding TLAAS:
First, the initial determination of eligibility for TLAAS should be based on the actual corporate
status and relationship in the calendar year in which the GHG regulations apply (2012-2016).
Alternatively, at the very soonest, eligibility should be based on actual corporate status and
relationships that exist in calendar year 2010, when the final regulations are adopted, not the
2009 model year as proposed. The GHG rules will not be final until approximately April 1 of
2010, when the 2010 model year is well underway and manufacturers will already be selling
some 2011 model year vehicles. Corporate relationships that existed for the 2009 model year
may already be completely outdated by the time these rules are finalized. As explained above,
the arbitrary selection of model year 2009 would be especially harmful to VCC. Similarly, the
initial fleet size determination should be based on the 2010 model year at the earliest, which will
be the current model year at the time the final regulation is published, and not the 2009 model
year as proposed.
Second, the qualification for the alternative standard should be reassessed in each model year
subsequent to the 2010 model year based on control relationships in existence during each model
year. A small manufacturer spun off from a larger one in 2010 should have the same compliance
opportunities as any other small manufacturer. Likewise, if a small manufacturer becomes part of
a larger one, it should not continue to qualify for a compliance option that other similarly-
situated manufacturers cannot utilize.
Finally, EPA should clarify the regulations and preamble discussion to make it clear that
manufacturers that meet the definition of "manufacturer" under the CAFE program qualify for
TLAAS, regardless of whether their vehicles were aggregated with another manufacturer's fleet
under the definition of "automobiles manufactured by a manufacturer." [OAR-2009-0472-
7168.1, pp.2-6]
Cummins Inc.
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Cummins supports the temporary lead time allowance alternative standards (TLAAS) proposed
by EPA as a mechanism to provide lead time to certain manufacturers (e.g. small volume
manufacturers with a very limited range of vehicles). The environmental impact of such
provision is expected to be small and at the same time provides the necessary lead time for
manufacturers to comply with strict GHG standards in the MY 2012-2016 timeframe. However,
EPA is proposing that a manufacturer with no U.S. sales in MY 2009 does not qualify for
TLAAS. Cummins strongly urges EPA to revise this proposal. New manufacturers entering the
U.S. market are likely to have relatively small fleets (footprint range) and would face the same
challenge as other existing small volume manufacturers with limited product line-up. Hence, it is
reasonable to extend the TLAAS to new manufacturers. Such provision would support new
manufacturers entering the market with promising GHG reduction technologies. [OAR-2009-
0472-7205.1, p.5]
EPA Response:
EPA received several comments on its proposed approach of basing eligibility on MY2009,
including comments that there are companies in the U.S. market are in the process of becoming
independent and should be eligible and comments that companies entering the market later
should be eligible. EPA also received comments that companies that are initially eligible should
lose eligibility if they merge with larger companies
EPA understands the concerns raised by Volvo and Saab that basing eligibility strictly on
MY2009 sales would be problematic for these companies, which are being spun-off from larger
manufacturer in the MY2009 time frame due to the upheaval in the auto industry over the past
few years. They offer a variety of suggestions including using MY2010 as the eligibility cut-off
instead of MY2009, reassessing eligibility on a year-by-year basis as corporate relationships
change, or allowing companies separated from a larger parent company by the end of 2010 to use
their MY2009 branded U.S. sales to qualify for TLAAS. In response to these concerns, EPA
recognizes that these companies currently being sold by larger manufacturer will share the same
characteristics of the manufacturers for which the TLAAS program was designed and is needed.
As newly independent companies, these firms will face the challenges of a narrower fleet of
vehicles across which to average, and may potentially be in a situation, at least in the first few
years, of paying fines under CAFE. Lead time concerns in the program's initial years are in fact
particularly acute for these manufacturers since they will be newly independent, and thus would
have even less of an opportunity to modify their vehicles to meet the standards. Therefore, EPA
is finalizing an approach that allows manufacturers with U.S. "branded sales" in MY2009 under
the umbrella of a larger manufacturer that become independent by the end of calendar year 2010
to use their MY2009 branded sales to qualify for TLAAS eligibility. In other words, a
manufacturer will be eligible for TLAAS if it produced vehicles for the U.S. market in MY 2009,
its branded sales of U.S. vehicles were less than 400,000 in MY2009 but whose vehicles were
sold as part of a larger manufacturer, and it becomes independent by the end of calendar year
2010, if the new entity has sales below 400,000 vehicles. This approach is consistent with the
recommendations provided by SAAB, and we believe addresses Volvo's concerns as well, and
EPA believes it is a reasonable approach to addressing the issue.
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EPA Response to Comments
EPA does not support comments from Ford, AIAM, NAD A, and Cummins suggestion of a year-
by-year eligibility determination because it opens up the TLAAS program to an unknown
universe of potential eligible manufacturers, with the potential for gaming. Year-by-year
eligibility determinations would open the program to post-2009 MY new entrants to the U.S.
market, such EPA does not believe the TLAAS program should be available to new entrants
since these manufacturers are not transitioning from the CAFE regime which allows fine paying
as a means of compliance to a CAA regime which does not, and hence do not present the same
types of lead time issues. Manufacturers entering the U.S. market for the first time thus will be
fully subject to the GHG fleet-average standards.
Ford also commented that a smaller-volume manufacturer that becomes part of a larger one
should not continue to qualify for TLAAS. EPA agrees with this comment. EPA recognizes the
dynamic corporate restructuring occurring in the auto industry and believes it is important to
structure additional provisions to ensure there is no ability to game the TLAAS provisions and to
ensure no unintended loss of feasible environmental benefits. Therefore, EPA is finalizing a
provision that if two or more TLAAS eligible companies are later merged, with one company
having at least 50% or more ownership of the other, or if the companies are combined for the
purposes of EPA certification and compliance, the TLAAS allotment is not additive. The
merged company will only be allowed the allotment for what is considered the parent company
under the new corporate structure. Further, if the newly formed company would have exceeded
the 400,000 vehicle cut point based on combined MY2009 sales, the new entity is not eligible for
TLAAS in the model year following the merger. EPA believes that such mergers and
acquisitions would give the parent company additional opportunities to average across its fleet,
eliminating one of the primary needs for the TLAAS program. This provision will not be
retroactive and will not affect the TLAAS program in the year of the merger or for previous
model years. EPA believes these additional provisions are essential to ensure the integrity of the
TLAAS program by ensuring that it does not become available to large manufacturers through
mergers and acquisitions.
Additional TLAAS Comments
Organization: Mitsubishi Motors R & D of America (MRDA)
Comment:
Limited line manufacturers specifically need additional lead-time and compliance flexibility,
especially considering that Mitsubishi Motors was not subject to the California AB1493 GHG
regulations until the MY 2016. [OAR-2009-0472-7125.1, p.l]
Mitsubishi Motors supports the Temporary Lead-time Allowance Alternative Standards
(TLAAS) program to remedy the unique concerns of all limited line manufacturers. [OAR-2009-
0472-7125.1, p.2]
Market fluctuations cause greater risk of noncompliance for limited line manufacturers. For
instance, for a manufacturer with few models, what if consumer acceptance of a particular model
is much lower than its projected sales? As explained to industry, the TLAAS program was
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intended to help reduce limited line manufacturers' costs and burdens to meet the new GHG
emissions standards. [OAR-2009-0472-7125.1, p.3]
EPA should craft the TLAAS program to be beneficial to all limited line manufacturers as
indicated in the Notice of Intent (NOT). TLAAS as currently drafted has limited flexibility to
account for unanticipated market fluctuations. As currently proposed, some limited line
manufacturers will not use TLAAS and only Automakers who traditionally pay CAFE fines will
use it. [OAR-2009-0472-7125.1, p.4]
TLAAS should accomplish two tasks:
1. Allow limited additional time for resource constrained, limited line manufacturers to cost
effectively develop and produce low GHG emission vehicles to comply with the proposed
standards, and
2. Provide some protection against market fluctuations [OAR-2009-0472-7125.1, p.4]
The NOT indicated that the TLAAS program would be available to manufacturers producing a
specific number of vehicles, i.e. 400,000 in a predetermined MY, i.e. MY 2008 or MY 2009. The
NPRM introduced new threshold criteria - eligible manufacturers must first demonstrate that
they have tried to use banked or transferred credits and are still unable to meet the standard.
[OAR-2009-0472-7125.1, p.4]
As written, TLAAS severely restricts the ability of limited line manufacturers to utilize the
TLAAS program. Interpretation of the NPRM suggests that eligible manufacturers, prior to the
start of a model year, must determine whether or not to participate in the TLAAS program. For
example, due to market fluctuations, manufacturers committing to using the TLAAS program, in
a year in which it is not actually needed, could result in the loss of credits. Alternatively,
manufacturers committing to forgo the use of the TLAAS program may be subject to
noncompliance due to market fluctuations. EPA should carefully review the regulatory language
to clearly allow limited line manufacturers to "opt-in" or "opt-out" of the TLAAS program at the
conclusion of the model year. [OAR-2009-0472-7125.1, p.4]
Another concern with the TLAAS program as described in the NPRM is the complete loss of
credits in the primary fleet, i.e. the non-TLAAS fleet, whenever a manufacturer chooses to
participate in the TLAAS program. This leaves limited line manufacturers again at significant
risk of noncompliance from market fluctuations. Given this particular restriction on banking
credits, the TLAAS program does not effectively provide relief to all limited lane manufacturers.
[OAR-2009-0472-7125.1, p.4]
Mitsubishi Motors recommends that upon exiting the TLAAS program, Automakers should be
allowed to carry forward only the primary fleet credits the Automaker earns in its last TLAAS
program year. Given EPA's own estimates, the impact of the TLAAS program upon GHG
reductions is minimal and will not impact the National Program's overall GHG reduction goals,
and therefore should be allowed. [OAR-2009-0472-7125.1, p.4]
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[The following comments are from LA Testimony, OAR-2009-0472-7283, pp.85-87]
Intermediate volume manufacturers like Mitsubishi face additional challenges in attaining these
standards. Smaller companies have less financial resources and fewer vehicle lines to implement
cost-effective major changes. This makes the credit flexibilities outlined in the NPRM
very important, easing the transition to these new standards.
I remind you that this is especially important considering that Mitsubishi Motors was not subject
to California AB 1493 regulations until the 2016 time frame. Therefore, one of the important
methods to ease this transition is the temporary lead-time allowance EPA is proposing to help
smaller manufacturers adapt to these new regulations.
EPA Response:
Mitsubishi commented that the program is restrictive due to the requirement that manufacturers
must decide prior to the start of the model year whether or not and how to use the TLAAS
program. EPA did not intend for manufactures to have to make this determination prior to the
start of the model year. EPA expects that manufacturers will provide a best estimate of their
plans to use the TLAAS program during certification based on projected model year sales, as
part of their pre model year report projecting their overall plan for compliance (as required by
§600.514-12 of the regulations). Manufacturer must determine the TLAAS program's actual use
at the end of the model year during the process of demonstrating year-end compliance. EPA
recognizes that depending on actual sales for a given model year, a manufacturer's use of
TLAAS may change from the projections used in the pre-model year report. Also,
manufacturers can make an annual decision on whether or not to use the TLAAS program for
that year at the end of the model year.
For reasons discussed above in the previous response, EPA is retaining the credit restrictions
regarding earning credits in the primary program during years that the TLAAS program is being
used. Credits generated in the primary program in years that a manufacturer is using TLAAS
may not be banked or traded. EPA continues to believe this provision is necessary to prevent
credits from being earned simply by removing some high-emitting vehicles from the primary
fleet.
OrganizationrHyundai Motor Company
Kia Motors
Comment:
Hyundai Motor Company
Under the California greenhouse gas (GHG) program, Hyundai was exempt from the early years
of the program due to our status as an intermediate volume manufacturer (IVM). EPA also
provides a relief mechanism in its proposed GHG program, the TLAAS, to assist intermediate
and smaller automakers in achieving the Federal standards. However, Hyundai is not eligible for
relief through TLAAS. Despite the disparity in Hyundai's treatment between the California and
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Federal programs, we do not seek parity with the relief we were afforded by California. As a fuel
economy leader, Hyundai does not need special treatment. In addition, the use of a TLAAS-like
provision would not be consistent with our overall corporate responsibility to address fuel
efficiency, energy security and the environment. [OAR-2009-0472-7231.1, p.7]
Kia Motor Company
[These comments were submitted as testimony at the Los Angeles public hearing. See docket
number EPA-HQ-OAR-2009-0472-7283, p. 172]
On the subject of alternative standards, Kia does not expect to be eligible for the temporary lead-
time allowance alternative standards as proposed in the EPA regulations. Although this does not
provide us with the same relief afforded to us under the CARB regulations, we support the
EPA proposal.
EPA Response:
EPA understands that the TLAAS program is structured differently than the California
intermediate volume manufacturer provisions and that the commenters are not seeking
harmonization. EPA appreciates the comments supporting the proposed approach.
Organization: Chrysler Group LLC (Chrysler)
Comment:
EPA proposes a 'temporary lead-time allowance alternative standard' ('TLAAS') to address
situations where 'more lead time is needed, based on the level of emissions control technology
and emissions control performance currently exhibited by certain vehicles.' EPA envisions that
this program will provide the additional lead time necessary for certain manufacturers 'who have
traditionally paid CAFE fines' or 'who have a limited line of vehicles and are unable to take
advantage of averaging emissions performance across a full line of production.' While Chrysler
supports the concept of this program, we disagree with its limitation to manufacturers with total
2009 model year U.S. sales of less than 400,000 vehicles. [NHTSA-2009-0059-0124, p.33]
Any loosening of the greenhouse gas standards for a limited number of manufacturers places the
remaining manufacturers, the majority of which are domestic manufacturers, at an economic and
competitive disadvantage, especially in the early program years where the proposed standards
represent an extremely large passenger car efficiency increase from the 2011 model year CAFE
standards. EPA notes that 'Porsche, Tata, Mazda, Mitsubishi, Suzuki, Daimler, Subaru, BMW,
Volkswagen, Hyundai, and Kia' are potentially eligible for the TLAAS program. [NHTSA-2009-
0059-0124, p.23]
All manufacturers will need to invest in greenhouse gas emission improvements; a competitive
advantage is gained by those who are allowed additional time to make the necessary investments.
The TLAAS program allows those eligible manufacturers, many of which are the most profitable
in the U.S. market, to defer some investments to later model years, whereas larger manufacturers
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must make the investments immediately to meet the aggressive 2012 and subsequent model year
passenger car standards, immediately placing those manufacturers at an economic and
competitive disadvantage. [NHTSA-2009-0059-0124, p.34]
Recommendation:
Chrysler recommends that the TLAAS program be expanded to all manufacturers. [NHTSA-
2009-0059-0124, p.34]
An expansion of the TLAAS program to all manufacturers regardless of size will not result in a
significant reduction in greenhouse gas benefits, but will remove the competitive inequity
created by the program as currently proposed. The TLAAS program is very strictly proscribed to
prevent a manufacturer who must use it from gaining greenhouse gas credit advantages by
shifting a portion of their fleet to a lower standard. These measures will effectively limit the
programs use to only those manufacturers who absolutely need the program to allow additional
time to develop technologies to meet the normal standards. Given current economic conditions
within the automotive industry including the recent bankruptcies of General Motors and Chrysler
LLC, an expansion of the program to all manufacturers will level the playing field for larger
manufacturers. [NHTSA-2009-0059-0124, p.34]
EPA Response:
EPA does not believe that it would be appropriate to allow large manufacturers to use the
TLAAS program. EPA developed the wide range of flexibilities in the primary program with
large full-line manufacturers in mind. Averaging, credit banking, and credit transfers, along with
the opportunity to generate credits such as early credits and FFV credits, will provide full-line
manufacturers with sufficient flexibility to transition to the new standards. Smaller volume
manufacturers have less ability to use some of these flexibilities due to their narrow product
lines. For example, averaging and credit transfers are less helpful to such manufacturers. In
addition, as discussed in detail above, smaller volume manufacturers have higher baseline
emissions and therefore must achieve larger reductions to meet emissions standards. Finally, if
all manufacturers were allowed to use the TLAAS program, the stringency of the overall
program would be significantly reduced and EPA would forego emissions reductions that are
feasible and cost effective during the early years of the program.
5.4.2 Small Volume Manufacturer Provisions
OrganizationrFerrari S.p.a
Aston Martin Lagonda
Association of International Automobile Manufacturers (AIAM)
Volkswagen Group of America (Volkswagen)
Vehicles Services Consulting, Inc
National Automobile Dealers Association (NADA)
Society of Motor Manufacturers and Traders Limited
Lotus Cars Ltd.
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Koenigsegg Automotive AB
Lance Tunick
MD McLaren Automotive Ltd.
Morgan Motor Company Ltd.
Spyker Cars
KTM-Sportsmotoercycle AG
European Small Volume Car Manufacturers' Alliance (ESCA)
Artega Automobil GmbH & Co. KG
Wiesmann GmbH
Comment:
Ferrari S.p.a
For small-volume niche manufacturers there has never been a bigger challenge than this
proposed rule. Without some further flexibility for such manufacturers it will be extremely
difficult to continue to certify vehicles in U.S.A. in the future. In fact, taking into account the
technical (and economic) infeasibility of achieving the proposed standards, even with the use of
best availability technology that can be adopted in certain types of vehicles, along with the
prerequisite of maintaining their distinctive characteristics (otherwise they cannot be sold) and
the great uncertainty regarding the availability on the market of CC>2 credits for small-volume
manufacturers, Ferrari feels that further flexibilities must be present in this rule. The EPA
assumptions that small-volume manufacturers can comply with the proposed standards are based
on an optimistic forecast. EPA should also consider a worst-case scenario where no credits will
be available to offset debits. [OAR-2009-0472-7214.1, p.2]
Specific provisions for SVMs and small-volume test groups should be part of the future EPA
GHG final rule, to be consistent with the EPA (and CARB) longstanding policy to guarantee
more flexibility for such categories of manufacturers/vehicles on the grounds of technical
feasibility, limited car lines, and negligible contribution to the annual GHG emissions, along
with the gasoline consumed. Moreover it is well known that to comply with CC>2 standards is
different to comply with criteria pollutants standards. [OAR-2009-0472-7214.1, p.5]
The category of small-volume manufacturers is clearly defined in both federal (EPA), California
(ARE) regulations as well as in FMVSSs (NHTSA). SVMs are typically those that within the
criteria you have mentioned are much smaller than intermediate or large manufacturers. The
threshold of < 400,000 vehicle sold in U.S.A. in model year 2009 is two orders of magnitude
larger than what the typical small-volume manufacturer produces. In any case, we kindly point
out that you cannot consider that really small companies like Ferrari could solve the compliance
problem with the same temporary allowance for very big companies (based on worldwide
production, and U.S. sales). In other words, we deem not fair to give the same temporary
allowance for manufacturers that belong to completely different categories. Both EPA and
CARB have implemented rules with specific provisions for small-volume manufacturers. CARB
makes further distinctions of manufacturer categories: Small, Independent-Low, Intermediate-
Volume, and Large. [OAR-2009-0472-7214.1, p.6]
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The Temporary Lead-time Allowance Alternative Standards (TLAAS) allows for up to a total of
100,000 vehicles in MYs 2012-2015 for manufacturers that sold less than 400,000 vehicles in
U.S.A. in 2009 MY. This provision seems tailored for intermediate and large manufacturers.
Small-volume manufacturers can use it as well, but it does not solve the problem for them
because:
• the 25% higher standards is not sufficient, taking into account the achievable CC>2 level of
certain kinds of vehicles, likewise high-performance sports cars; and
• the compliance problem for small vehicle companies is not temporary, but strictly related to
vehicle characteristics that cannot be completely changed.
Consequently, it cannot be fixed only by adding more lead-time. Now it seems that EPA's
position is that it is logical to offer the same temporary allowance of alternative standards for
small and large companies. As noted in EPA's analysis, the above mentioned temporary
alternative higher standards could be used by really large or even giant manufacturers, simply
because they sold less than 400,000 vehicle in U.S.A. in 2009 MY. Such manufacturers have a
wide range of different types of vehicles, with many different engines, transmissions and
footprints. We do not oppose to temporary measures Docket No. EPA-HQ-OAR-2009-0472 and
NHTSA-2009-0059 - NPRM GHG-CAFE MYs 2012-16 - Ferrari Comments. 7 for them, but
we kindly request other more specific provisions for the well defined category of small-volume
manufacturers. If all manufacturers eligible certify to these higher standards up to the max.
100,000 total sales during the first four model years of the rule, a few hundreds thousands
vehicles could be certified with such higher stds. The related total increase of CO2 emissions due
to this allowance could correspond to the total CC>2 emissions of the entire small-volume
manufacturer's fleets for several model years in U.S.A. [OAR-2009-0472-7214.1, p.6]
In summary, Ferrari supports the following specific provisions for small-volume manufacturers:
a) Specific CC>2 standards, based on the average value of the most recent model years of the
vehicles certified by SVMs in U.S.A., and on the feasible improvements that can be reasonably
achieved, using the best technologies that can be adopted, taking into account the need to keep
the distinctive characteristics of the affected vehicles, b) The specific CC>2 standards should be
defined not only for the first model years of the proposed rule, but beyond the 2016 MY, because
the technical infeasibility to respect the general standards is related to the vehicle characteristics.
Eventually, the standards could be revised after a certain period. They could be higher in the first
model years (2012-2016) and reduced later.
c) Alternatively, instead of CC>2 standards equal for the category of small-volume manufacturers,
EPA could define CC>2 standards tailored for each SVM, i.e. on a case-by-case basis. [OAR-
2009-0472-7214.1, p. 10]
There is some inconsistency in the A/C efficiency leaks and maximum allowed credits. We
caution EPA that, even with the best solution that should be available to reduce both direct and
indirect A/C system emissions, these contributes are not sufficient to comply for small-volume
manufacturers, based on the present certification data. [OAR-2009-0472-7214.1, p. 11]
Comments Submitted by Ferrari on 2/3/2010 via e-mail
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Subject: Small Volume Manufacturer (SVM) Recommendations
Thank you for meeting with Ferrari SpA and Ferrari North America, Inc. representatives on
January 25, 2010 to discuss the issue of treatment of Ferrari as a "Small Volume Manufacturer"
(SVM) under the proposed GHG rules. Ferrari produces approximately 6000 vehicles per year
worldwide. Ferrari's U.S. sales average about 1500 per year. As noted in previous comments
submitted to EPA, Ferrari's operations are completely independent of any other vehicle
manufacturer. Therefore, Ferrari believes it is critical to the company's survival to retain this
status, as decided some time ago by EPA, CARB, NHTSA (Attached are two recent
determinations NHTSA has made under the Safety Act regarding Ferrari vehicles). We also
agree that a specific GHG standard should be set for Ferrari, as for other Small Volume
Manufacturers. [ Redacted text]
As a result of this set of problems, Ferrari has examined the existing EPA SVM regulations, as
well as directives by the European Union, the text of EPCA, and California's A.B. 1493
regulations to determine an approach which could be implemented by EPA that would allow
independent companies like Ferrari to remain in SVM status, while not having the unintended
consequence of creating problems for other manufacturers. Ferrari believes a strict percentage
ownership test does not fully recognize the independence of companies such as Ferrari from
those who may have an ownership interest.
The existing EPA SVM regulations contain an aggregation of sales based primarily on a
percentage ownership test. Ferrari proposes to keep this as a primary means, but to allow a
manufacturer to apply to EPA to maintain (or establish) SVM status based on the independence
of its R &D, testing, design and manufacturing from another firm that may have an ownership
interest in the manufacturer. To establish this status, a manufacturer would need to present
information to EPA that demonstrates that its R & D and design efforts, testing and
manufacturing/production facilities are independent of another firm who may own an interest in
the manufacturer.
In order to accomplish this, EPA could revise the existing 40 CFR 1838-01(b)(3) to read:
(3) Sales aggregation for related manufacturers Except as provided in (v), the projected or
actual sales from different firms shall be aggregated in the following situations: ...
(v) Upon application by any firm, the Administrator may determine that such firm's
sales shall not be aggregated with any other firm upon showing that it operates its research,
development and design, testing and production facilities separately from any other firm.
As noted above, this approach is consistent with the European Union EC 443 / 2009 Article 11
approach, and is consistent with determinations NHTSA has made under the Safety Act.
Further, it conforms with the structure in EPCA for small volume manufacturers contained in 49
USC 32902(d) and the definition in 49 USC 32901 (a)(4), which is based on control versus a
percentage ownership test. Finally, California has chosen to defer the application of the A.B.
1493 GHG standards to small independent companies.
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[ Redacted text ]
You had asked at the meeting for a number of vehicles that should be eligible for SVM status
under the GHG rules. To retain a consistent approach with the European Union Directive and
EPCA, Ferrari recommends a level of 10,000 vehicle sales per year (or a total of 30,000 per three
consecutive years, which is current CARB practice) in the U.S. However, it also recommends
that the 15,000 level be retained for other emission standards.
In the event a manufacturer's status should change due to altered circumstances, it is important
that EPA provide some period during which that manufacturer can operate in the SVM status.
An abrupt "light-switch" approach would cause huge disruption, and as noted above, could have
serious unintended consequences for other manufacturers. Thus, a period of 5 years should be
provided to allow both the SVM and any other manufacturer to accommodate this change in
status.
Finally, you have asked for a level that should apply to Ferrari assuming it retains SVM status.
Since this information will contain CBI, we will submit this to you under separate cover.
Thank you for working with Ferrari on a matter that is critical to its U.S. operations. Ferrari will
be happy to respond to any questions you may have regarding this matter.
Ferrari also submitted confidential business information regarding their product plans and
emissions reduction capabilities.
Aston Martin Lagonda
Aston Martin is an independent automotive manufacturer based in the UK, with a long history of
specializing in the design and manufacture of high-end luxury sports cars. Aston Martin annual
global volume prior to the economic downturn was circa 7,000 units (2007 calendar year), with
exports forming approximately 75% of this output.
Aston Martin is committed to doing its fair share in reducing overall CC>2 emissions. We are
committed to reducing our fleet CC>2 emissions and between 2000 and 2008 have achieved a fleet
average reduction of circa 25%. For comparative purposes, this is approximately double the
improvement found across the EU new car market over the same period. [OAR-2009-0472-
7217.1, p.l]
It is the view of Aston Martin that the TLAAS does not provide sufficient lead times for SVMs
and that EPA should defer SVM compliance with its GHG standards until MY 2016.2 EPA's
usual policy is to allow SVMs to defer compliance with a new requirement until the end of a
phase-in. See e.g. 40 CFR 1811-04. Under the proposed EPA CO2 rule, the period 2012-2015 is
analogous to a phase-in of the new GHG requirements, and accordingly, EPA should defer SVM
compliance until after this period, i.e. until 2016 and later. [OAR-2009-0472-7217.1, p.3]
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Aston Martin is committed to doing its fair share in reducing CC>2 emissions. As such, we
support a consistent and harmonized national standard, whilst raising the issue that such a
standard should promote diversity of the industry and maintain choice for the consumer.
Aston Martin recommends that Small Volume Manufacturers are deferred during the effective
phase-in period (in line with the California SVM provisions), to allow sufficient time for product
plans to be aligned with legislative requirements.
Aston Martin further recommends that the definition of a Small Volume Manufacturer, for the
purposes of this legislation, is in accordance with the current EPA definition. The EPA definition
of a Small Volume Manufacturer is one who sells fewer than 15,000 vehicles in all states and
territories of the United States within a given model year. Aston Martin believes that a
manufacturer with sales figures above this threshold could reasonably be expected to meet either
the large volume requirements, or such requirements adjusted by the TLAAS allowance. Aston
Martin further believes that the application of such a threshold based on vehicle sales within US
territories and states represent the best determination for whether to classify a manufacturer for
small volume allowances. Manufacturers who sell vehicles in other territories, which may have
significantly differing regulatory requirements, are not necessarily better positioned to meet the
legislative requirements of EPA and/or NHTSA.
Proposal in summary:
• SVM compliance starts at end of effective phase-in period
• SVM definition as per EPA legislation
• SVM compliance through parallel referral to the stricter CARB GHG rule (enabling
challenging yet fair options for SVM compliance)
The joint EPA/NHTSA legislative proposal seeks to "achieve substantial reductions of
greenhouse gas (GHG) emissions and improvements in fuel economy from the light-duty vehicle
part of the transportation sector". Due to the particularly low volumes of vehicle involved, Aston
Martin asserts that the above recommended amendments to the proposed regulations will not
have any significant impact on the ability of such legislation to achieve these aims within the
transportation sector. [OAR-2009-0472-7217.1, p.6]
Aston Martin also submitted confidential business information regarding their product plans and
emissions reduction capabilities.
Association of International Automobile Manufacturers (AIAM)
The proposed greenhouse gas regulatory program makes accommodations for two groups of
smaller manufacturers. For mid-sized companies (those with U.S. annual sales levels below
400,000 units), EPA has proposed "temporary lead-time allowance standards." EPA states that
these alternative standards provide additional compliance lead-time for mid-sized manufacturers
that offer narrow product lines in the U.S. Some of these companies have traditionally paid
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CAFE civil penalties as an alternative to compliance, but would not be able to follow that
approach under greenhouse gas standards. For these companies, EPA proposes to provide
additional compliance lead-time for model years 2012-15. See proposed section 86.1818-12(e).
EPA has also proposed to defer setting standards for entities that meet "small business" size
criteria under U.S. Small Business Administration (SBA) regulations, 13 CFR 121.201. See
proposed section 86.1801-12(j). The small business entities that would be exempted include two
manufacturers, Saleen and Tesla, as well as independent commercial importers and alternative
fuel vehicle converters. See preamble at 49745. For a manufacturer to qualify as a small
business, it must have no more than 1000 employees. EPA justifies this exemption based on the
minimal greenhouse gas emissions of these companies due to their very small volume. See, e.g.,
preamble at 49629. [OAR-2009-0472-7123.1, p.8]
There are a small number of manufacturers that fall between the two size categories addressed by
EPA and for whom no relief is proposed by EPA. These companies produce a very limited
number of models consisting entirely of luxury/high performance vehicles that, because of their
essential features would not be able to meet greenhouse gas standards. Aston Martin and
McLaren are examples of independent companies of this type. Ferrari and Maserati are
independently operated companies that also fall into this category. These vehicles are very
expensive, are sold in very small volumes, and are inherently unique and special high
performance vehicles that typically accumulate few miles per year. As a result, their impact on
total greenhouse gas emissions is negligible, as with the small business category. [OAR-2009-
0472-7123.l,p.9]
While it is reasonable to project some improvement in greenhouse gas emissions for this
category of vehicles, it is unrealistic to project that these vehicles could meet the generally
applicable standards in the 2012-2016 period. While it is possible that these small volume
manufacturers (SVMs) might be able to comply with greenhouse gas standards by purchasing
credits from other manufacturers, this is far too speculative a solution. The market for credits is
unpredictable at this point. Other than exiting the U.S. market, therefore, the only other possible
solution for an independent SVM would be to sell an equity interest in the company to a larger,
full-line manufacturer, so that the emissions of the luxury vehicles could be averaged in with the
much larger volume of other vehicles produced by the major manufacturer, This cannot possibly
be the outcome EPA intends, especially when measured against the minimal, if any,
environmental benefit that would result. The proposed regulations recognize the acute difficulty
which SVMs may face in complying with the fleet average emission and fuel economy
requirements. In discussing the proposal for the Temporary Lead-Time Allowance Alternative
Standards (TLAAS), EPA states:
Manufacturers with limited product lines may be especially challenged in the early years of the
proposed program. Manufacturers with narrow product offerings may not be able to take full
advantage of averaging or other program flexibilities due to the limited scope of the types of
vehicles they sell. For example, some smaller volume manufacturers focus on high performance
vehicles with higher CC>2 emissions, above the CC>2 emissions target for that vehicle footprint,
but do not have other types of vehicles in their production mix with which to average. Often,
these manufacturers pay fines under the CAFE program rather than meeting the applicable
CAFE standard. See 74 FR at 49483. [OAR-2009-0472-7123.1, p.9]
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AIAM believes that this assessment is correct and that either a more generous lead-time
allowance or an alternative, relaxed standard would be the appropriate solution for these types of
SVMs. [OAR-2009-0472-7123.1, p.9]
There is ample legal authority for EPA to provide SVMs a more generous lead-time allowance or
an alternative standard. Indeed, EPA recognizes such authority in the proposal for a small entity
deferment (for those companies defined under the Small Business Administration's regulations),
see 74 FR at 49574, and in the TLAAS. These provisions are consistent with previous EPA
rulemaking under the Clean Air Act which offer relief to SVMs. For example, in the Tier 2
program, EPA exempted SVMs from the phase-in requirements in the early model years of the
emission exhaust and evaporative standards. See 40 C.F.R. § 86.1811-04(k)(5). In doing so, EPA
correctly found that "phase-in schedules, in general, add little flexibility for manufacturers with
limited product offerings because a manufacturer with only one or two test groups can not take
full advantage of a 25/50/75/100 percent or similar phase in." See Control of Air Pollution From
New Motor Vehicles: Tier 2 Motor Vehicle Emissions Standards and Gasoline Sulfur Control
Requirements; Final Rule, 65 FR 6698, 6743 (February 10, 2000). Accordingly, "[f]or
manufacturers meeting EPA's definition of 'small volume manufacturer,' [EPA] proposed to
exempt those manufacturers from the phase-in schedules and require them to simply comply
with the final 100% compliance requirement." Id. Other agencies likewise offer such relief for
SVMs that may face particular compliance hurdles on account of their size. See, e.g., Nat'l
Highway Traffic Safety Administration, Early Warning Reporting Regulations, 74 FR 47740
(September 17, 2009) (creating a small manufacturer exemption where the underlying statute
was silent on the availability of such exemption). It should also be noted that the NHTSA CAFE
program and the California greenhouse gas standards program both provide relief for
manufacturers in the size range in question, although the NHTSA program is statutorily
mandated. In fact, the California standards exempt SVMs (and intermediate sized manufacturers)
until the 2016 MY. There is also nothing in the Clean Air Act that would prevent EPA from
providing an alternative and more relaxed emissions standard for SVMs. Section 202(a) does not
require a one-size-fits-all standard that would be applicable to each and every manufacturer.
Rather, that section requires EPA to set "standards applicable to the emission of any air pollutant
from any class or classes of new motor vehicles or new motor vehicle engines." 42 USC §
7521 (a) (emphasis added). The statute does not restrict EPA's discretion in how the "classes of
new motor vehicles" should be defined. [OAR-2009-0472-7123.1, pp.9-10]
While AIAM believes the correct approach is for EPA to set an alternative, relaxed standard for
SVMs, we recognize that there is insufficient time available in this rulemaking proceeding
between now and the final rule projected for completion by March 31, 2009, for EPA to collect
the relevant product plans and technology feasibility information from SVMs, conduct the
necessary reviews and modeling that may be needed, consult with the stakeholders, issue a
supplemental proposal for an alternative, relaxed standard for SVMs for public comments, and
then determine the appropriate final standard. Indeed, when California adopted its GHG vehicle
standards in 2004 it recognized the difficulties in grouping all SVMs together and provided three
compliance options for them. One California SVM compliance option is an alternative standard,
but California, even then, recognized that lead-time would be needed to develop an alternative
standard and provided for development of an SVM standard by 2012 for compliance in 2016.
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EPA Response to Comments
Therefore, we believe it appropriate for EPA to defer decisions on the SVM alternative standard
to the next rulemaking for the 2017+ MY. [OAR-2009-0472-7123.1, p.10]
For these reasons, AIAM recommends that EPA adopt the same approach for SVMs as it
proposed for the small business entities. EPA should defer setting standards for these companies
now, but should consider setting standards in a future proceeding. Conceptually, the future small
volume standards should be set on a class basis for all vehicles produced by these companies.
Such a standard could assure that these vehicles make a contribution to reducing overall
greenhouse gas emissions, although their total emissions are extremely small. The nature of the
small volume class standard should reflect the fundamental nature of the vehicles. AIAM also
urges EPA to apply the definition of SVM used in the EPA current small volume certification
program of less than 15,000 annual U.S. sales. See 40 CFR § 86.1838-01(b)(l)(i). [OAR-2009-
0472-7123.l,p.lO]
Volkswagen Group of America (Volkswagen)
An additional topic that could lend flexibility to the regulation is consideration of small volume
test group or brands. EPA considered this possibility when it issued last year's ANPRM,
'Regulating GHG Emissions Under the Clean Air Act'. In an EPA document published June 23,
2008 entitled, 'Light-Duty Vehicle Greenhouse Gas (GHG) Certification and Compliance
Program Options' (Karl Simon Memorandum - Docket 10 No. EPA-HQ-OAR-2008-0318), EPA
discussed the possibility of allowing separate standards for a small volume of vehicles such as
sports cars or exotic vehicles that do not have a large percentage of the market and have a small
contribution to the GHG emission related to light duty vehicles. EPA ultimately concluded that
the volume of vehicles allowed under the current small volume test provisions (15,000 vehicles)
would result in a volume of vehicles not subject to fleet average standards that was excessive.
The EPA also noted concern that a small volume test group provision could result in gaming by
manufacturers. Volkswagen recommends that EPA revisit this concept and consider a permanent
small volume of vehicles that are exempt from the fleet average approach and that comply with a
fixed value. As noted in the Karl Simon Memorandum, the fixed standard would still ensure that
even high performance exotic vehicles have a significant task to reduce GHG emissions. We
believe the volume and gaming issues could be resolved by limiting the provision to existing
small brands under the financial control of a parent company but with an independent business
plan and independent styling and marketing functions. [OAR-2009-0472-7210.1, p.7]
Vehicles Services Consulting, Inc
This comment will address the proposed EPA GHG standard from the point of view of small
volume automobile manufacturers (SVMs). The EPA proposal jeopardizes the stated goal of
consumers having a full range of vehicle choice in that it endangers the ability of certain SVMs
to sell into the US market. [OAR-2009-0472-7083.1, p.2]
As an initial matter, when VSCI uses the term "SVM", we mean the definition of SVM as
currently found in EPA's regulations, that is, a company with fewer than 15,000 USA sales per
year, calculated in accordance with EPA's "10% related-company aggregation rule". [OAR-
2009-0472-7083.1, p.2]
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EPA expressly solicited comment on the question of SVM lead-time. The proposal states:
'... EPA recognizes that [s]ome ... companies ... are significantly smaller niche firms, with sales
volumes closer to 10,000 vehicles per year worldwide; an example of this type of firm is Aston
Martin. EPA anticipates that there are a small number of such smaller volume manufacturers,
which have claimed that they may face greater challenges in meeting the proposed standards due
to their limited product lines across which to average. EPA requests comment on whether the
proposed .. .program ... provides sufficient lead-time for these smaller firms to incorporate the
technology needed to comply with the proposed GHG standards." [OAR-2009-0472-7083.1, p.2]
EPA SHOULD DEFER SVM COMPLIANCE UNTIL AFTER MY 2016
EPA should defer SVM compliance with its GHG standards until after 2016.3 EPA's usual
policy is to allow SVMs to defer compliance with a new requirement until the end of a phase-in.
See e.g. 40 CFR 1811-04. Under the proposed EPA CO2 rule, the period 2012-2016 is analogous
to a phase-in of the new GHG requirements, and accordingly, EPA should defer SVM
compliance until after this period, i.e. until 2017 and later. [OAR-2009-0472-7083.1, p.2]
EPA failed to include such an SVM deferral provision in its proposal. Rather, EPA proposed two
provisions that addressed lead-time but failed to provide the needed SVM flexibility:
-First, EPA proposed a temporary lead-time allowance for manufacturers whose MY 2009
vehicle sales are below 400,000 vehicles. This 400,000 unit per year proposal is certainly not an
SVM proposal, since EPA defines SVM as a company with fewer than 15,000 USA sales per
year. See proposed regulation, section 86.1818-12(e). [OAR-2009-0472-7083.1, p.3]
-Second, EPA proposed a provision allowing a GHG exemption BUT ONLY FOR CERTAIN
small businesses - those that meet the Small Business Administration (SBA) criteria contained in
13 CFR 121.201.6 With this limitation, however, the proposed exemption appears to apply only
to USA companies. The "US only" limitation may be in violation of WTO requirements. In
addition, the "small entity" provision is limited to auto manufacturers with fewer than 1000
employees - a criterion that is irrelevant to a manufacturer's ability to comply with emissions
standards (whereas the factor historically determining SVM status - vehicle sales - does affect
ability. [OAR-2009-0472-7083.1, pp.3-4]
SVMs Face Lead-Time Problems Meeting The Proposed Standards Due To Their Limited
Product Lines Across Which To Average
EPA has acknowledged that SVMs face lead-time problems meeting the proposed standards due
to their limited product lines across which to average. EPA stated:
Manufacturers with limited product lines may be especially challenged in the early years of the
proposed program. Manufacturers with narrow product offerings may not be able to take full
advantage of averaging or other program flexibilities due to the limited scope of the types of
vehicles they sell. For example, some smaller volume manufacturers focus on high performance
vehicles with higher CO2 emissions, above the CO2 emissions target for that vehicle footprint,
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but do not have other types of vehicles in their production mix with which to average. Often,
these manufacturers pay fines under the CAFE program rather than meeting the applicable
CAFE standard. See 74 Fed. Reg. at 49,483. [OAR-2009-0472-7083.1, p.4]
The simple fact is that an SVM whose product line consists of a single type of vehicle (such as
sports cars) simply is not in a position to have a diverse fleet which permits use of the averaging
approach. [OAR-2009-0472-7083.1, p.4]
As recognized by California in its staff report supporting the California GHG rule, "low volume
manufacturer offerings need to be preserved in the marketplace to ensure continued consumer
choice of specialty vehicles. Given their more limited resources to make major revisions to their
powertrains, it was also important to provide such manufacturers with greater lead time to make
improvements to their products. In addition, staff needed to consider that major volume
manufacturers could produce specialty offerings in direct competition with these smaller
manufacturer offerings, but offset their potentially poorer GHG emission performance by making
other easier to control cars in their fleet incrementally cleaner." See Exhibit 1. [OAR-2009-0472-
7083.1, p.4]
Moreover, many SVMs are dependent on large manufacturers for their powertrains and since the
large manufacturer can take advantage of averaging, an SVM is often unsure when the specific
drivetrain that the SVM is using will in fact on its own meet a given requirement. In addition,
because the new CO2 requirements are challenging - a fact acknowledged in the proposal —
major engine technology suppliers will concentrate their efforts on working with large volume
manufacturers, and, thus, SVMs will, at first, have limited access to advanced technology.
Further complicating matters, because SVMs build so few vehicles, the costs of developing new
engine systems compared to potential profits discourages suppliers from cooperating with SVMs.
[OAR-2009-0472-7083.1, p.5]
Additional Reasons Why Deferral Of The SVM Compliance Date Is Appropriate
There are three additional reasons why deferral of the SVM compliance date is appropriate:
1. The proposed EPA enforcement mechanism would render illegal the vehicles of an SVM that
could not comply with the CO2 standard. This is a harsh penalty (as compared to the CAFE
enforcement mechanism whereby fines are imposed). EPA has explained that the structure of the
Clean Air Act mandates the enforcement scheme EPA proposed. Assuming this to be the case,
the equitable solution is to defer SVM compliance to allow EPA and SVMs more time to identify
a reasonable compliance strategy.
2. The effect on the environment from an SVM deferral date would be de minimis - the net
increase in greenhouse gas emissions would be less than 0.1%. See Lotus Cars Limited analysis
attached as Exhibit 2. The vehicles of SVMs are typically very expensive, sold in very small
volumes, and are inherently unique and special high performance vehicles that typically
accumulate few miles per year. As a result, their impact on total greenhouse gas emissions is
negligible.
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3. The proposal's credit provisions do not help SVMs during the period 2012- 2016. The credit
provisions in EPA's proposal are illusory as regards SVMs during the period MY 2012-2016.
EPA provided no explanation of how credits will be available for purchase during this period.
Indeed, the whole reason for the EPA GHG proposal is that the national vehicle fleet is not
sufficiently efficient, so it is difficult to understand how credits would be generated for use
during the period MY2012-2016. [OAR-2009-0472-7083.1, p.5]
EPA SHOULD ALSO PROMULGATE AN SVM HARDSHIP PROVISION, THE SAME AS
WHAT WAS PROMULGATED IN THE FEBRUARY 2000 EPA TIER 2 RULE
In its February 2000 Tier 2 rule, EPA included a hardship provision for SVMs (40 CFR 1811-
04(q) which allowed, upon a showing of need, an extra year of lead-time on a case-by-case basis.
EPA should adopt a similar provision in its GHG rule. [OAR-2009-0472-7083.1, p.6]
GHG AND SVMs FOR MY 2017 AND LATER: TWO POSSIBLE APPROACHES
Even with a deferral of the SVM GHG effective date until MY 2017, the question remains "what
is the appropriate SVM GHG regulatory strategy after MY 2016?" [OAR-2009-0472-7083.1,
p.6]
The EPA proposal of September 28, 2009 is at times described by the agencies as covering only
MY 2012-2016. For example, the Federal Register notice states as follows: "This joint proposal
covers passenger cars, light-duty-trucks, and medium-duty passenger vehicles built in model
years 2012 through 2016. ... [The agencies will have] a future rulemaking to address standards
for model year 2017 and thereafter." [OAR-2009-0472-7083.1, p.6]
On the other hand, the preamble to the EPA proposed regulations also states: "The 2016 CO[2]
standards would remain in place for 2017 and later model years, until revised by EPA in a future
rulemaking." [OAR-2009-0472-7083.1, p.6]
Indeed, the proposed regulatory language in 40 CFR 86.1818-12 sets a GHG standard for "MY
2016 and later". [OAR-2009-0472-7083.1, p.7]
Taking the view that the EPA notice proposes to set GHG standards for the period after MY
2016, SVMs require one of two possible regulatory approaches to be included in the EPA final
rule: either (1) finalize 40 CFR 1801-12(j) so that it applies to all SVMs, not just "small entities";
or (2) include an SVM "California Compliance Option" in the final rule. [OAR-2009-0472-
7083.1, p.7] [[See Docket Number OAR-2009-0472-7083.1, pp.7-9 for a detailed discussion on
the tow possible regulatory approaches mentioned above]]
National Automobile Dealers Association (NADA)
EPA also proposes to completely exempt manufacturers with less than 1000 employees. This
proposed exemption should be replaced with one exempting all manufacturers with less than
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15,000 annual U.S. vehicle sales. Note that CARB's fuel economy/GFIG rules regulate only
some 6—7 automakers and exempt all others. [OAR-2009-0472-7182.1, p.7]
[National Automobile Dealers Association also submitted these comments as testimony at the
New York public hearing, See docket number EPA-HQ-OAR-2009-0472-4621, pp. 88-89.]
Society of Motor Manufacturers and Traders Limited
SMMT is concerned that the proposed standards will be impossible for niche and small volume
manufacturers to meet. These manufacturers represent approximately 0.5% of US registrations.
They typically have a limited model range, occupying particular segments of the market, rather
than the broad ranges of a volume manufacturer. They do not have the same economic or
technical resources available to meet the standards. They will be further penalized by the
proposed footprint metric. [OAR-2009-0472-7229.1, p.l]
Niche and small volume manufacturers understand they have to make improvements in their
environmental impact, and in many cases they are very efficient in their own particular segments.
If they were to be forced out of the US market along with their innovative technologies, this
would have little environmental impact and would be to the detriment of market
diversity/consumer choice and have a large economic impact: 10,000 US jobs, 80,000 UK jobs
and £2bn export value. [OAR-2009-0472-7229.1, p.l]
SMMT is particularly concerned about how niche and small volume manufacturers (SVMs) will
be treated within the proposed legislation. Definitions:
-In previous legislation the EPA defines SVMs as those selling less than 15,000 vehicles per
annum in the USA (see EPA's '10% related-company aggregation rule' - 40 CFR 86.1838-
01). [OAR-2009-0472-7229.1, p.2]
-Niche manufacturers we would define as typically selling less than 100,000 units per year in the
US. Such manufacturers do not operate in all segments of the market but primarily specialize in
particular types of vehicle. They require special consideration as they can face more stringent
targets and have less flexibility to meet them than competitors who happen to operate across all
market segments. [OAR-2009-0472-7229.1, p.2]
SMMT is very mindful of the importance of the US market for UK producers and that failure to
meet the proposed targets would exclude them from the US market. UK niche and small volume
manufacturers employ almost 10,000 people in the USA, through headquarters, dealers and
servicing centers. A further 80,000 plus jobs are dependent upon those manufacturers back in the
UK. Approximately 25% of what is built by these manufacturers is exported to the USA, with a
value of some £2 billion. If these UK manufacturers were to be forced out of the US market this
would jeopardize exports to other countries in North and South America that are reliant upon
linked export lines. Also, given the importance of US sales volumes, this would put the entire
business case for those UK companies at risk. [OAR-2009-0472-7229.1, p.2]
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UK niche/SVMs are independent companies, without the significant resources and economies of
scale available to the volume manufacturers. They also have a limited model range (in some
cases just one model) and predominantly occupy specific market segments, such as sports cars
and 4x4s, which tend to be higher CO2 emitting. [OAR-2009-0472-7229.1, p.3]
These types of products may also be further penalized by the footprint metric. Sports cars tend to
be small, with powerful engines, while 4x4s often also have higher CC>2 emissions than standard
saloon cars because they need more powerful engines to perform the off road tasks they are
legitimately designed for. [OAR-2009-0472-7229.1, p.3]
Having a limited model range creates less ability to spread the impact of the regulation. Given
the limited resources low volume manufacturers may tend to also have longer model replacement
cycles (needing greater time to recover investment costs), ensuring a more limited ability to
develop the vehicles. Furthermore, as low volume manufacturers often buy-in technologies from
volume manufacturers there maybe be a time lag on when those technologies are
available. [OAR-2009-0472-7229.1, p.3]
Independent SVMs are often competing against brands that are part of larger manufacturer
groups, who sell across a wider segment range. Those brands that are part of a wider group will
be in a better position to off-set their performance than an independent manufacturer. They
would also have the resources available to them of the larger manufacturers, which a niche/SVM
would not. [OAR-2009-0472-7229.1, p.3]
Whilst the trading element could provide a possible remedy for meeting the targets, this creates a
large element of uncertainty: will allowances be available and at what price? This would be
difficult to build into a business plan. These companies want to be able to comply. They do not
want to be left with no option but to plan to buy credits from a company that we must not forget
is a competitor. SMMT believes it would be better regulation to structure the proposal to enable
them to comply and make a direct contribution to its aims. [OAR-2009-0472-7229.1, p.3]
Exclusion from the US market would also lead to job losses in the US, through closure of dealer
and servicing centres, as well as distribution and marketing companies. It could also threaten the
overall viability of those businesses in total, with the US representing up to 40% of their
worldwide sales (average 25%). [OAR-2009-0472-7229.1, p.5]
Lotus Cars Ltd.
Lotus Cars is concerned that the costs generated by EPA and NHTSA for analysis are not
applicable to small volume manufacturers. In effect, the engineering effort and development cost
to re-engineer a part/system with the goal of increased efficiency will likely remain relatively
consistent irrespective of future production volume. However, when that cost is evaluated as a
'cost per vehicle', a small volume manufacturer has far fewer production vehicles over which to
spread the cost, hence the cost per vehicle will be dramatically higher. Lotus Cars does not
believe that the EPA and NHTSA joint Technical Support Document provides consideration of
'cost per vehicle' technology introduction with regard to small volume manufacturers.
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EPA Response to Comments
Furthermore, searches of the EPA and NHTSA joint Technical Support Document using terms
such as 'small volume', 'SVM', 'niche', etc, yield zero results. This is understandable, as
attempting to quantify the predicted cost effects of the proposed legislation for small volume
manufacturers would simply demonstrate that a 'one size fits all approach' is not appropriate for
these manufacturers. The unique nature of small volume manufacturers necessitates legislation
that retains a sufficient degree of flexibility to maximize emissions improvements without
regulating such manufacturers out of the market. [OAR-2009-0472-7249, pp.6-7]
TLAAS is effectively a flexible phase-in allowance on route to total compliance with the fleet
average greenhouse gas emissions standards. EPA has requested comment from small volume
manufacturers, as to whether TLAAS provides sufficient lead-time for achievement of the fleet
average greenhouse gas standards. As the proposed legislation is not currently considered
appropriate for small volume manufacturers, Lotus Cars asserts that the TLAAS allowance is not
conducive to effective greenhouse gas emission reductions from manufacturers within this
classification. It is, however, important to note that small volume manufacturers are often reliant
on inheriting new technology from large volume manufacturers. Such technology is generally
only available for a small volume manufacturer to develop and incorporate into future products
once one or more large volume manufacturers has the technology in full production. Therefore,
lead-time allowances for small volume manufacturers are an important consideration with all
new legislation that is at least partially reliant upon newer technologies. Lotus Cars has
previously found EPA's standard procedure for small volume manufacturers to be appropriate,
whereby an exclusion from new legislation is permitted during any phase-in period. This is
considered reasonable given the limited production volumes, access to new technology, and very
limited number of models produced by such manufacturers.
Partial justification for the TLAAS allowance is attributed to the following statement: EPA
projects that the environmental impact of the proposed TLAAS program will be very small. If all
companies eligible to use the TLAAS use it to the maximum extent allowed, total GHG
emissions from the proposal will increase by less than 0.4% over the lifetime of the MY 2012-
2016 vehicles. This allows for a number of manufacturers (11 in total, based on 2008MY sales
figures) to produce 100,000 vehicles each over a 4 model year period with significantly higher
greenhouse gas emissions (total 1.1 million vehicles). A small number of small volume
manufacturers each producing less than 15,000 vehicles per annum with fleet average
greenhouse gas emissions higher than the standards applicable for large volume manufacturer
fleet averages, would clearly have a minute impact on total greenhouse gas emissions in
comparison. Such figures could be used to demonstrate that greenhouse gas limiting legislation is
not appropriate in any way to small volume manufacturers, and that removing SVM's from all
such legislative requirements would have no significant impact on total greenhouse gas
emissions. However, Lotus Cars does not believe that this sets an appropriate example, and as
such seeks to achieve an appropriate level of legislation that would both encourage and require
greenhouse gas emissions reductions, whilst still supporting both new and existing small volume
manufacturers. [OAR-2009-0472-7249, pp.7-8]
Lotus recommends revisions to the proposed legislation that would provide similar small volume
manufacturer provisions to current CAFE legislation, whereby small volume manufacturers
would have the ability to petition EPA/NHTSA with proposed green house gas fleet average
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emissions targets. Such petitions should contain evidence as to the relevance of the proposed
target (considering the vehicle type(s) in production), together with details of the work a
manufacturer is undertaking to reduce greenhouse gas emissions of its vehicles, irrespective of
vehicle type(s). In accordance with EPA's standard procedure for new legislation, Lotus Cars
recommends that small volume manufacturers are excluded from legislative requirements during
the effective phase-in period, to allow sufficient time for product plans to be aligned with
legislative requirements. Lotus further recommends that the definition of a small volume
manufacturer, for the purposes of this legislation, is in accordance with the current EPA
definition. The EPA definition of a small volume manufacturer is one who sells fewer than
15,000 vehicles in all states and territories of the United States within a given model year. Lotus
Cars believes that it is correct to define a manufacturer with sales figures below this threshold as
a small volume manufacturer, given the different product lines and development procedures
employed. Lotus Cars further believes that the application of such a threshold based on vehicle
sales within US territories and states represents the best determination for whether to classify a
manufacturer for small volume allowances. Manufacturers who sell vehicles in other territories,
which may have significantly differing regulatory requirements, are not necessarily better
positioned to meet the legislative requirements of EPA and/or NHTSA.
Proposal in summary: 'SVM compliance starts at end of effective phase-in period 'Manufacturer
specific GHG emission targets for SVM's' Targets determined through manufacturer proposal,
with administrator final decision 'SVM definition as per EPA legislation.
The joint EPA/NHTSA legislative proposal seeks to 'achieve substantial reductions of
greenhouse gas (GHG) emissions and improvements in fuel economy from the light-duty vehicle
part of the transportation sector'. Due to the particularly low volumes of vehicle involved, Lotus
Cars asserts that the above recommended amendments to the proposed regulations will not have
any significant impact on the ability of such legislation to achieve these aims within the
transportation sectors. Indeed, calculations using worst case emissions and sales figures show
that the proposed amendments would affect net greenhouse gas emissions from new vehicles in
the light-duty vehicle industry by less than 0.1%. [OAR-2009-0472-7249, p.9]
Lotus also submitted confidential business information regarding their product plans and
emissions reduction capabilities.
Koenigsegg Automotive AB
We hereby support the comment filed by Vehicle Services Consulting, Inc. as regards the GHG
proposal and small volume manufacturers. [OAR-2009-0472-7194.1, p.l] [See Vehicle Services
Consulting, Inc.'s comments in outline section 5.4.2.]
Tunick, Lance
This comment is being filed on behalf of small volume specialty vehicle manufacturers who do
not qualify as 'Small Volume Manufacturers' (SVM) under EPA regulations.
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EPA Response to Comments
This comment concerns EPA and NHTSA's joint proposal to establish a National Program
consisting of new standards for light-duty vehicles that will reduce greenhouse gas emissions and
improve fuel economy. 74 FR 49454, September 28, 2009 . EPA is proposing greenhouse gas
emissions standards under the Clean Air Act, and NHTSA is proposing Corporate Average Fuel
Economy standards under the Energy Policy and Conservation Act, as amended. These standards
would apply to passenger cars, light-duty trucks, and medium-duty passenger vehicles, covering
model years 2012 through 2016, and represent a harmonized and consistent National Program.
We address here the proposed EPA C02 standard from the point of view of a small volume test
group (S VTG) of a small volume specialty vehicle manufacturer that: —does NOT qualify as an
SVM under EPA regulations (40 CFR 86.183 8) only due to the fact that it is part of a larger
automobile group and hence lose SVM status under the EPA '10% aggregation rule' that governs
how to calculate US sales when considering the 15,000/yr SVM limit, but —operates its own
engineering center and production facilities.
In this comment, the above type of manufacturer will be referred to as a 'Operationally
Independent Small Volume Manufacturer', 'OI-SMV.
We fully support a GHG standard that makes OI-SVMs do their fair share and that does not give
them a 'free ride'. There is, however, a significant factor that must be considered when deciding
what is 'fair share': OI-SVMs that manufacturer high performance specialty vehicles cannot, by
virtue of their characteristics, meet the C02 requirements proposed by EPA.
We therefore propose that for a SVTG of an OI-SVM there be a special C02 rule as discussed
below. There is already an important EPA precedent for the idea of certain SVTG having a
special rule allowing reduced compliance: in 40 CFR 86.1845, the in-use testing requirement,
certain very low volume SVTG are exempt from such testing if the annual US sales of the test
group are below 5001. We propose a similar C02 rule for SVTG that have fewer than 5001 US
sales.
A special SVTG rule as regards C02 could follow one of two possible paths: 1. The first path is
the one already taken by the European Union (see Article 11 of Regulation (EC) No 443/2009).
The essence of the rule would be that as regards an SVM or an OI-SVM having an SVTG with
fewer than 5001 US sales, the SVM or OI-SVM would receive an alternative C02 standard
determined on a case-by-case basis based on feasibility. 1 2. The second possible path is to
follow the theory behind EPA's entire C02 proposal - to reduce C02 emissions in MY 2016 by
20% as compared to MY 2008. To this end, EPA could calculate the average C02 emissions
from MY 2008 SVTGs having fewer than 5001 US sales, and then require for MY 2016 a 20%
reduction of the MY 2008 value for all such SVTG.
We further propose that final rule delay the effective date of the EPA C02 standard until MY
2016 for SVTG of OI-SVM that have fewer than 5001 US annual sales in order to allow an
orderly compliance transition.
The joint proposal does not adequately address the needs of SVTGs of OI-SVM. To this end, the
final rule should delay the effective date of the EPA C02 standard until MY 2016 for certain
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SVTG as discussed above and should, as regards model years starting with 2016, adopt one of
the SVTG strategies set forth above. [OAR-2009-0472-7208.1, pp. 1-2]
[[These comments were submitted as testimony at the Los Angeles public hearing. See docket
number EPA-HQ-OAR-2009-0472-7283, pp. 140-144]]
First, EPA's usual policy is to allow SVMs to defer compliance with a new requirement until
the end of phase-in. In my opinion, under the proposed EPA rule, the period 2012 through 2015
is analogous to a phase-in, and, accordingly, EPA should defer SVM compliance until after this
period, that is, until 2016. That is what California is doing in its GHG rule.
But, again, EPA failed to include any such deferral. Instead, EPA only proposed a temporary
lead-time allowance for manufacturers with vehicle sales below 400,000. This 400,000-unit-
per-year proposal, however, is certainly not an SVM proposal.
Once again, we urge that the final rule defer SVM compliance until 2016 as California did in its
rule.
And, in fact, EPA has acknowledged the potential need for this deferral. In the preamble, EPA
recognized that some manufacturers are niche firms with sales volumes well below 10,000
vehicles per year worldwide. And, in fact, EPA gave the example of Aston Martin.
EPA correctly anticipated that a number of SVMs will face greater challenges in meeting the
proposed standards due to their limited product lines and limited with no ability to average.
EPA therefore requested comment on whether the proposed 400,000-unit-per-year program
provided sufficient lead time for these SVMs in order for them to incorporate technology
needed to comply with the proposed standards.
The California type of section that I am urging would require SVMs to meet, beginning in 2016,
the average CC>2 equivalent emissions of all 2012-comparable vehicles produced by the major
vehicle manufacturers.
My third point today is that the SVM provision that EPA did include in its proposal concerns
certain limited SVM exemptions, but the exemptions are only for SVMs that meet the Small
Business Administration criteria contained in 13 CFR.
With this limitation, the proposed exemptions appear to apply only to American companies.
This U.S.A-only limitation may very well run afoul of the World Trade Organization
requirements.
Fourth, the credit provisions in EPA's proposal do not offer a solution for SVMs during the
period 2012 to 2015. It is difficult to understand how credits will be available to SVMs in the
short term, that is, during this 2012 to 2015 period.
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EPA Response to Comments
It is certainly risky at best for an SVM to plan its compliance strategy around the possibility of
such credits being available.
My fifth and last point is that the proposed EPA enforcement mechanism would render illegal
SVM vehicles that did not comply with the CC>2 standard. This is a very harsh penalty as
compared, for example, to the CAFE enforcement program that has monetary fines.
But EPA has explained that the structure of the Clean Air Act mandates the enforcement scheme
that EPA has proposed. Assuming this to be the case, the equitable solution is to adopt a
reasonable GHG standard for SVMs.
MD McLaren Automotive Ltd.
EPA proposed a temporary lead-time allowance for MY 2009 manufacturers based on vehicle
sales below 400,000 vehicles. This 400,000 unit per year proposal is not consistent with an SVM
proposal, because EPA defines SVM as a company with fewer than 15,000 USA sales per year.
This proposal also states that this allowance is not applicable to new manufacturers introducing
products to the market that did not sell vehicles under their nameplate in the US in MY 2009, a
criterion that is not relevant to a manufacturer's ability to comply with emissions standards.
The EPA should consider that in the case of McLaren Automotive, we have been designing and
producing cars that are homologated and sold in the US market since 2003, including MY 2009.
However, since the 716 SLR McLaren cars sold during this time in the US were sold under the
Mercedes badge, we would not be eligible for any type of TLAAS. Additionally, we have been
developing the MP4-12C model since well prior to this proposed rulemaking, investing capital
with the anticipation of distributing, selling and servicing our cars through a U.S. distribution
network that will employ over 200 people.
The TLAAS provision does not provide McLaren Automotive, as an SVM, with an achievable
GHG limit: McLaren Automotive has a limited product line focused on the sports car segment
and cannot therefore average. Large volume manufacturers are able to offset emissions from
higher emission vehicle types, with lower emissions from lower performance vehicle types. In
this way, several large manufacturers will be allowed to sell cars in the marketplace that compete
directly against our MP4-12C, but have much higher C02 emissions, while we would be
excluded from the market. McLaren Automotive's new models are class-leading and introduce
new technologies into the auto industry, but no technologies exist, or will exist in the near future,
that will permit the cars we produce to meet the current required fleet average. Any allowances
or deferrals are currently not applicable to McLaren Automotive as we technically did not sell a
car in the US in MY 2009 under our own nameplate.
As such, the proposed TLASS provision is inappropriate for both McLaren Automotive and
other small volume manufacturers.
McLaren Automotive would like to propose that under the TLAAS rule, the period 2012-2016 is
analogous to a phase-in of the new GHG requirements, and accordingly. EPA should defer SVM
compliance until after this period (i.e. until 2017 and later)B. This would align with EPA's usual
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policy to allow SVM's to defer compliance with a new requirement until the end of a phase-in.
(See e.g. 40 CFR 1811-04).
The proposed provision allowing an SVM exemption for the period 2012-2016 is only for certain
small businesses; those that meet the Small Business Administration criteria contained in 13
CFR 121.201.10. With this limitation, however, the proposed exemption appears to apply only to
US companies, which would exclude the vast majority of SVM's. McLaren Automotive would
like the rulemaking to clarify that this deferment applies to non-US companies or adopt an
additional standard for a deferment that does apply to SVM companies such as McLaren
Automotive that plan to distribute, sell and service their vehicles in the US.
In addition, the SB A provision is limited to auto manufacturers with fewer than 1000 employees.
McLaren Automotive believes that this criterion is not relevant to a manufacturer's ability to
comply with emissions standards (as significant portions of work could be outsourced to give an
appearance of fewer than 1000 employees) and would propose that if EPA leaves in place the
employee standard that it also incorporate an alternative standard that relates to vehicle sales.
One such approach would be for EPA to consider the historically determining EPA SVM status
of 15,000 vehicle sales as the standard.
Under the Small Entity Deferment, EPA embraced both the idea of omitting certain small entities
from the final rule, as well as the idea that SVM's, such as McLaren Automotive, need a
specially structured program. Since the total SVM GHG effect on the environment is minimal, it
would be logical to follow this approach. McLaren Automotive proposes that the same statutory
authority permitting the small entity exemption applies to SVM's and requests that EPA extends
the idea to all SVM's, rather than only some. [NHTSA-2009-0059-0078, pp.6-7]
McLaren Automotive achieved class leading CC>2 and safety results without any assistance from
large OEM's. We expect the 12C to sell between 250-350 cars annually into the US market.
Moving forward, McLaren Automotive has planned a range of other models which will not only
significantly reduce the price point of models available with these technologies, but will also
introduce (over the next 3-5 years) new, innovative technologies designed to improve efficiency
even further. Over this time period, we hope to grow US sales annually through a US distribution
system that will employ over 200 people. Thus, we are clearly in a class of small manufacturers
that would be eliminated from the U.S. marketplace under the proposed rule.
The best approach to this issue is that taken by the State of California staff report supporting the
California GHG rule: 'low volume manufacturer offerings need to be preserved In the
marketplace to ensure continued consumer choice of specialty vehicles. Given their more limited
resources to make major revisions to their powertrains, it was also important to provide such
manufacturers with greater lead-time to make improvements to their products. In addition, staff
needed to consider that major volume manufacturers could produce specialty offerings in direct
competition with these smaller manufacturer offerings, but offset their potentially poorer GHG
emission performance by making other easier to control cars in their fleet incrementally cleaner
The California SVM provisions provided an exemption from the phases in period and proposed a
methodology for an alternative SVM standard. [NHTSA-2009-0059-0078, p.5]
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EPA Response to Comments
EPA suggests that 'for a few very small volume manufacturers, EPA projects that manufacturers
will likely comply using a combination of credits and technology.'
The proposal's credit provisions do not help SVM's during the period 2012-2016. Large
manufacturers may themselves need to balance the credits between their own fleets and there is
no requirement for large manufacturers to sell credits, nor is there an agreed price or proposal of
how the credits will be available for purchase during this period. A large manufacturer that also
produces sports cars that compete directly against McLaren Automotive would certainly prefer to
exclude a competitor from the market rather than sell it credits at a fair price so that it could
compete.
As such, the market for credits is unpredictable and there is no guarantee that credits will be
available to an SVM during the period 2012-2016. [NHTSA-2009-0059-0078, p.7]
[The following is from NHTSA-2009-0059-0078, p.8]
McLaren Automotive proposes that EPA include the definition of an SVM within the new
proposal. The EPA definition of a small volume manufacturer is one who sells fewer than 15,000
vehicles in all states and territories of the United States within a given model year. EPA should
then defer the GHG standards for SVM's to at least 2017 Model Year, considering the methods
below:
1. Under the proposed TLAAS rule, the period 2012-2016 is analogous to a phase-in of the new
GHG requirements, and accordingly, EPA should defer SVM compliance until after this period,
(i.e. until 2017 and later). This would align with EPA's usual policy to allow SVM's to defer
compliance with a new requirement until the end of a phase-in.
2. Include the SVM definition in the conditional exemption from greenhouse gas emissions
standards permitting the small entity exemption to all SVM's.
3. Deferrals included in the proposal should not be limited to sales in any previous Model Year,
but should be made available to all new entrants to encourage the introduction of new
innovations.
4. EPA could then consider appropriate GHG standards for SVM's as part of a future regulatory
action.
5. EPA should apply the historic definition of an SVM.
Note that during this period, McLaren Automotive, and other SVM's, would still be required to
meet all NHTSA CAFE and CARS regulations.
In addition, McLaren Automotive proposes that the GHG standards should follow a similar
process to the current NHTSA CAFE legislation. The SVM should have the ability to petition
EPA with a proposed GHG fleet average target based on the model mix. This will ensure that a
vehicle from a SVM has a comparable GHG target when assessed against a comparable vehicle
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from a large manufacturer. The petitions should contain evidence as to the relevance of the
proposed target together with details of the work a manufacturer is undertaking to reduce
greenhouse gas emissions of its vehicles, irrespective of vehicle type.
A second approach to handling the post 2016 Model Year period for SVM's would be to adopt an
SVM 'California Compliance Option' which would allow SVM's to comply with the SVM
provisions in the California GHG standard as a means of achieving federal compliance.
California, under CAA waivers, has routinely established SVM standards that differ from
California standards for large volume manufacturers.
There is clear EPA precedent for a California Compliance Option approach such as the OBD
requirements set forth in 40 CFR 1806-05. Under that section, compliance with California OBD
regulation satisfies EPA requirements. The EPA has already considered the question of whether
a 'California Compliance Option' is permissible under the CAA, and has, without hesitation,
concluded that it is. The same rationale should apply here.
McLaren also submitted confidential business information regarding their product plans and
emissions reduction capabilities.
Morgan Motor Company Ltd.
Morgan Motor Company Ltd files these comments as regards EPA and NHTSA's joint proposal
to establish a National Program consisting of new standards for light-duty vehicles that will
reduce greenhouse gas emissions and improve fuel economy. 74 FR 49454, September 28, 2009.
We hereby support the comment filed by Vehicle Services Consulting, Inc. as regards the
GHG proposal and small volume manufacturers.
Spyker Cars
We hereby support the comment filed by Vehicle Services Consulting, Inc. as regards the GHG
proposal and small volume manufacturers. [See Vehicle Services Consulting, Inc.'s comments in
outline section 5.4.2.]
KTM-Sportsmotoercycle AG
We hereby support the comment filed by Vehicle Services Consulting, Inc. as regards the GHG
proposal and small volume manufacturers. [See Vehicle Services Consulting, Inc.'s comments in
outline section 5.4.2.]
The temporary lead-time alternative allowance standard is more applicable to firms significantly
larger than us, and that the proposed footprint metric will further penalize our particular type of
product. [OAR-2009-0472-7183, p.l]
We would like better provision for small volume manufacturers to be developed, as established
in the European Union's new car CO2 regulation, so we can contribute to reducing CO2
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emissions but in a manner that adequately reflects our economic and market potential and that
also ensure diversity within the market place can continue. [OAR-2009-0472-7183, p.l]
There are several ways forward that we would support, such as developing specific emissions
target reductions for small volume manufacturers as in the EU new car CC>2 regulation makes
provision for. [OAR-2009-0472-7183, p.l]
KTM is developing a number of initiatives to reduce our CC>2 and other GHG emissions.
However, we are a very low volume producer, with limited economic and technical resources,
especially when compared with a volume manufacturer. [OAR-2009-0472-7183, p.l]
European Small Volume Car Manufacturers' Alliance (ESCA)
ESC A members represent less than 0.5% of US registrations. They typically have a limited
model range, occupying particular segments of the market, rather than the broad ranges of a large
volume manufacturer. They do not have the same economic or technical resources available to
meet the standards. They will be further penalized by the proposed footprint metric. Exclusion
from the US market would lead to job losses in the US, through closure of dealer and servicing
centers, as well as distribution and marketing companies. It could also threaten the overall
viability of those businesses in total, with the US representing up to 40% of worldwide sales
(average 25%). [OAR-2009-0472-7287.1, p.l]
ESCA member companies welcome challenging but achievable emissions reduction targets.
European based manufacturers have invested significant sums of money in developing lower
emitting vehicles and low volume manufacturers in particular have been innovative, particularly
in terms of light-weighting products, such as use of aluminum chassis, carbon fiber and bonded
rather than welded structures. [OAR-2009-0472-7287.1, p.l]
Access to the US market is critical for European SVMs. Failure to meet the proposed targets
would exclude ESCA member companies entirely from selling automobiles in the US. Small
volume manufacturers understand the need for improvements in their environmental impact and
in many cases they are very efficient in their own particular segments. If they were to be forced
out of the US market along with their innovative technologies, this would have little
environmental impact and would be to the detriment of market diversity/consumer choice and
have a large economic impact namely, up to 10,000 US jobs, 100,000 EU jobs and up to € 21/2
billion export value. [OAR-2009-0472-7287.1, p.2]
ESCA is particularly concerned about how SVMs will be treated within the proposed legislation.
In previous legislation the EPA defines SVMs as those selling less than 15,000 vehicles per
annum in the USA (see EPA's '10% related-company aggregation rule' - 40 CFR 86.1838-01).
The proposed temporary lead-time alternative allowance standard and small entity conditional
exemption will not, in their proposed format, offer a suitable solution for European small volume
manufacturers. ESCA hopes that solutions can be developed to ensure challenging yet achievable
long term targets for manufacturers. Our evaluation of the EPA/NHTSA proposal is attached as
an annex. [OAR-2009-0472-7287.1, p.2]
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ESC A companies are also now looking forward to complying with the requirements of the pan-
European new car CO2 regulation, which begins in 2012. Article 11 of this regulation makes a
provision for SVMs to agree targets more appropriate to their economic and technological
potential (see Regulation 443/2009, Art. 11). ESCA is particularly concerned that in the current
US proposal for lower volume manufacturers, the temporary lead time allowance alternative
standards and the small entity conditional exemption, do not offer a suitable provision for
European SVMs. [OAR-2009-0472-7287.1, p.2]
ESCA member companies have limited ability to spread the impact of the proposed US
regulation. Given limited resources low volume manufacturers may tend to also have longer
model replacement cycles (needing greater time to recover investment costs), ensuring a more
limited ability to develop vehicles. Furthermore, as low volume manufacturers often buy-in
technologies from volume manufacturers there may be a time lag for when those technologies
are available. Also, we compete against brands that are part of larger manufacturer groups, who
sell across a wider segment range. Large manufacturers have resources available to them which
SVMs do not. [OAR-2009-0472-7287.1, p.2]
Whilst the trading element could provide a possible remedy for meeting the targets, this creates a
large element of uncertainty: will allowances be available and at what price? This would be
difficult to build into a business plan. These companies want to be able to comply. They do not
want to be left with no option but to plan to buy credits from a company that we must not forget
is a competitor. ESCA believes it would be better regulation to structure the proposal to enable
them to comply and make a direct contribution to its aims. [OAR-2009-0472-7287.1, p.2]
Europe's SVMs remain committed to lowering CO2 emissions, improving fuel economy and
providing consumers with choice and diversity. European SVMs represent less than 0.5% of US
sales, but are keen to participate. However, the limitations of their financial resources and ability
to develop or access technology need to be taken into account. [OAR-2009-0472-7287.1, p.3]
Within the EPA/NHTSA proposal the 'Temporary Lead-time Alternative Allowance Standard'
(TLAAS) to 2016 is welcome. This allows manufacturers selling less than 400,000 cars to apply
for a target of 125% of proposed industry-wide footprint target level. However, due to the high
initial target faced by European SVMs this flexibility is insufficient to enable them to comply
with the standard. [OAR-2009-0472-7287.1, p.4]
The proposed TLAAS allowance is also only available to vehicle manufacturers with vehicles
for sale in MY 2009. Some SVMs are not currently selling into the US market, in part due to the
current economic climate. They would therefore be excluded from being able to use the TLAAS
in future. [OAR-2009-0472-7287.1, p.4]
Artega Automobil GmbH & Co. KG
As an EU based small volume manufacturer we believe the proposed standards will be
impossible to meet. We would like better provision for small volume manufacturers to be
developed, as established in the European Union's new car CO2 regulation, so we can contribute
to reducing CO2 emissions but in a manner that adequately reflects our economic and market
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potential and that also ensure diversity within the market place can continue. [OAR-2009-0472-
7481.1,p.l]
The temporary lead-time alternative allowance standard is more applicable to firms significantly
larger than us, and that the proposed footprint metric will further penalize our particular type of
product. [OAR-2009-0472-7481.1, p.l]
There are several ways forward that we would support, such as extending the small entity
conditional exemption to all small volume manufacturers, or developing specific emissions target
reductions for small volume manufacturers as in the EU new car CC>2 regulation makes provision
for. [OAR-2009-0472-7481.1, p.2]
Artega Automobil GmbH & Co. KG is developing a number of initiatives to reduce our CO2 and
other GHG emissions. However, we are a very low volume producer with limited economic and
technical resources, especially when compared with a volume manufacturer. [OAR-2009-0472-
7481.1, p.2]
Wiesmann GmbH
As an EU based small volume manufacturer we believe the proposed standards will be
impossible to meet. We would like better provision for small volume manufacturers to be
developed, as established in the European Union's new car CC>2 regulation, so we can contribute
to reducing CC>2 emissions but in a manner that adequately reflects our economic and market
potential and that also ensure diversity within the market place can continue. [OAR-2009-0472-
7198, p.l]
The temporary lead-time alternative allowance standard is more applicable to firms significantly
larger than us, and that the proposed footprint metric will further penalize our particular type of
product. [OAR-2009-0472-7198, p.l]
There are several ways forward that we would support, such as developing specific emissions
target reductions for small volume manufacturers as in the EU new car CC>2 regulation makes
provision for. [OAR-2009-0472-7198, p.l]
Wiesmann is developing a number of initiatives to reduce our CO2 and other GHG emissions.
However, we are a very low volume producer, with limited economic and technical resources,
especially when compared with a volume manufacturer. [OAR-2009-0472-7198, p.l]
IMPCO Technologies, Inc.
EPA is proposing to defer setting greenhouse gas emissions standards for entities meeting the
Small Business Administration criteria of a Small Business.
IMPCO falls under the definition of a "Small Entity", however, because EVIPCO is part of a
larger holding company, the overall organization does not qualify as a Small Entity. Therefore,
IMPCO would be subject to the same CH/t, and N2O emissions standards as those for automotive
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manufacturers. Given the relative size of EVIPCO's U.S. operations and volume of fuel systems
to be sold, this directly puts IMPCO at a tremendous disadvantage. [OAR-2009-0472-7282.1
p.3]
EPA Response:
EPA agrees with comments that the standards would be extremely challenging and potentially
infeasible for very small volume manufacturers, absent credits purchased from other
manufacturers, and that such credit availability at this point is highly uncertain. Although these
companies are planning to introduce significant GHG-reducing technologies to their product
lines, they are still highly unlikely to meet the standards by MY2016. Because the products
produced by these manufacturers are essentially unique, these manufacturers were not included
in EPA's OMEGA modeling assessment of the technology feasibility and costs to meet the
proposed standards. These manufacturers have only a few models and have very high baseline
emissions. TLAAS manufacturers are projected to be required to reduce emissions by up to
39%, whereas SVMs in many cases would need to cut their emissions by more than half to
comply with MY2016 standards (e.g., Based on MY2009 CAFE levels, one of these
manufacturers has baseline emissions of 468 g/mile).
Given the unique feasibility and related lead time issues raised for these manufacturers, EPA is
deferring establishing CC>2 standards for manufacturers with MY2008 or MY2009 sales of less
than 5,000 vehicles. This will provide EPA more time to consider the unique challenges faced
by these manufacturers. The deferment only applies to CC>2 standards; SVMs must meet N2O
and CH4 standards. EPA plans to set standards for these manufacturers as part of a future
rulemaking in the next 18 months. This future rulemaking will allow EPA to fully examine the
technologies and emissions levels of vehicles offered by small manufacturers and to determine
the potential emissions control capabilities, costs, and necessary lead time. This timing may also
allow a credits market to develop, so that EPA may consider the availability of credits during the
rulemaking process. See State of Mass, v. EPA, 549 U.S. at 533 (EPA retains discretion as to
timing of any regulations addressing vehicular GHG emissions under section 202 (a)(l)). We
expect that standards would begin to be implemented in the MY2016 time frame. Several
commenters supported the approach of deferring standards to a future rulemaking. This
approach is also consistent with that envisioned by California for these manufacturers, as noted
by several commenters. EPA estimates that eligible small volume manufacturers currently
comprise less than 0.1 percent of the total light-duty vehicle sales in the U.S., and therefore the
deferment will have a very small impact on the GHG emissions reductions from the standards.
In addition to the 5,000 vehicle per year cut point, to be eligible for deferment each year,
manufacturers must also demonstrate due diligence in attempting to secure credits from other
manufacturers. Manufacturers must secure credits to the extent they are available at a reasonable
price from other manufacturers to offset the difference between their baseline emissions and
what their obligations would be under the TLAAS program starting in MY2012. Several small
volume manufacturers commented that they would be willing to purchase credits from other
manufacturers as a way to comply with standards, assuming that the credits are available at a
reasonable cost.
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Several commenters noted in their recommendations that EPA has historically used an annual
sales cut point of 15,000 vehicles in defining small volume manufacturers in the past for Tier 2
and other rules. EPA, however, believes 5,000 vehicles is sufficient to address small volume
manufacturers and that using 15,000 vehicles would not result in covering additional
manufacturers. Small volume manufacturers, including many of those that commented in
support of additional leadtime, typically sell 1,000-2,000 vehicles per year and therefore the
5,000 vehicle cut point provides a reasonable margin for sales growth. In the interest of
establishing the small volume manufacturer provisions as narrowly as possible while still
accomplishing the purpose of the provisions, EPA has decided to use a cut-point of 5,000
vehicles.
EPA received comment from Ferrari that EPA should allow a manufacturer to apply to EPA to
establish small volume manufacturer status based on the independence of its research,
development, testing, design, and manufacturing from another firm that may have an ownership
interest in that manufacturer. EPA has reviewed these comments, but is not finalizing such a
provision at this time. EPA believes that this issue likely presents some competitive issues,
which we would like to be fully considered through the public comment process. Therefore,
EPA plans to consider this issue and seek public comments in our proposal for small volume
manufacturer CC>2 standards, which we expect to complete within 18 months. In determining
eligibility for SVM deferment, manufacturers must be aggregated according to the provisions of
40 CFR 86.1838-01(b)(3), which requires the sales of different firms to be aggregated in various
situations, including where one firm has a 10% or more equity ownership of another firm, or
where a third party has a 10% or more equity ownership of two or more firms.
Small Volume Test Groups
EPA received comments that EPA should consider exempting small volume test groups from the
fleet average approach and allow them to comply with a fixed value. This concept is similar to
establishing separate standards for small volume manufacturers, but would allow all
manufacturers to use the separate standards for a subset of their fleet. EPA did not propose this
concept and is not including such a provision in the final rule. Instead, EPA has included a wide
range of flexibilities available to manufacturers it believes will be sufficient to address issues
with low volume test groups. These flexibilities include averaging, TLAAS, and credits
programs.
Comments Concerning Natural Gas Vehicles
Organization: NGVAmerica
Clean Energy Fuels
Comment:
NGV America
EPA's notice exempts small volume manufacturers and aftermarket conversion manufacturers
who are small businesses from having to meet the new greenhouse gas emission regulations. See
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EPA Vehicle Program, Feasibility, and Estimated Impacts
EPA NPRM, p. 49629. The proposed rule also includes a phase-in period for small volume
manufacturers. Aftermarket conversion manufacturers who satisfy the small volume
manufacturer requirements potentially would qualify for the phase-in. There would be no
exemption for aftermarket conversion manufacturers who are not small businesses, however. See
EPA NPRM, p. 49575. We agree with EPA's assessment that exempting small businesses from
the proposed regulation will have a negligible impact on greenhouse gas emissions. [OAR-2009-
0472-7236.1, p. 11]
EPA should also exempt aftermarket conversion manufacturers of alternative fuel systems who
are not small businesses from having to comply with the greenhouse gas regulations. These
manufactures currently provide a valuable service by offering systems that enable vehicles to
operate on alternative fuels. In the light duty vehicle market, there are few original equipment
manufacturer (OEM) options for consumers interested in acquiring natural gas fueled vehicles.
The alternative fuels industry benefits from having large businesses manufacture, certify and sell
aftermarket conversion systems. Subjecting the larger businesses to requirements that are
different from their smaller competitors could discourage such businesses from providing
aftermarket alternative fuel systems. In addition, the new requirements will be equally difficult
for both large and small aftermarket manufacturers since both rely on the catalysts used by the
original equipment manufacturer. EPA should exempt large businesses that provide aftermarket
conversion systems for alternative fuel vehicles. [OAR-2009-0472-7236.1, p. 11]
Clean Energy Fuels
EPA's notice exempts small volume manufacturers and aftermarket conversion manufacturers
who are small businesses from having to meet the new GHG emission regulations. See EPA
NPRM, p. 49629. The proposed rule also includes a phase-in period for small volume
manufacturers. Aftermarket conversion manufacturers who are not small businesses, however,
are expected to comply with the new GHG emission requirements. See EPA NPRM, p. 49575.
We agree with EPA's assessment that exempting small businesses from the proposed regulation
will have a negligible impact on GHG emissions. [OAR-2009-0472-7220.1, p.9]
EPA and NHTSA should also exempt aftermarket conversion manufacturers of alternative fuel
systems who are not small businesses from having to comply with the GHG regulations. These
manufactures currently provide a valuable service in providing alternative fuel systems, which
for the most part are not available from original equipment manufacturers. We think the
alternative fuels industry benefits from having large businesses manufacture, certify and sell
aftermarket conversion systems. Subjecting the larger businesses to requirements that are
different from their smaller competitors could discourage such businesses from providing
aftermarket alternative fuel systems. Thus, EPA should exempt large businesses that provide
aftermarket conversion systems for alternative fuel vehicles. [OAR-2009-0472-7220.1, p.9]
EPA Response:
EPA is deferring standards for small volume manufacturers with sales of less than 5,000 vehicles
regardless of the size of the company, as discussed above. EPA believes that it is appropriate for
large companies producing more that 5,000 vehicles to be covered by the program. Allowing
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EPA Response to Comments
natural gas vehicle manufacturers regardless of the size of the business or the number of vehicles
produced to be exempt from the standards is not warranted. Natural gas vehicle manufacturers
raised concerns about meeting the proposed CFLt standards, and while EPA believes the CILt
standards are feasible, EPA nevertheless is allowing vehicles to comply with the standards on a
CC>2 equivalent basis to address these concerns. (See Section 5.5). Therefore, EPA does not
anticipate that natural gas vehicles will have difficulty meeting the standards.
Comments Concerning Manufacturers in Developing Countries
Organization: People's Republic of China
Comment:
It provides for the "Special and Differential Treatment of Developing Country Members" in
Article 12 of the WTO/TBT Agreement, which stipulates the obligation of developed Members
in this respect. For manufacturers of developing countries, there is still a long way to go to meet
the requirement of the notified regulation, requiring long-term and huge input in technical R&D
and product test, etc. We suggest the United States considering providing developing countries
with longer transition period and preparatory period, and offering technical assistance to
developing countries, such as offering testing technology and testing equipment, etc. [OAR-
2009-0472-11269, p.3]
We note that, vehicles of the small entity are not subject to the restriction of the notified
regulation, and are deferred implementing GHG emissions reduction standards. We believe,
small volume of import vehicles will have a negligible impact on the GHG emissions reductions,
in order to reflect the sufficient competition of the market, and according to the National
Treatment principle of WTO, small volume of import vehicles should be treated according to
relevant regulations for vehicles of small entity. It is suggested that small volume is defined as
the annual import volume in a single model year is not greater than 0.01% of American annual
total sales volume. [OAR-2009-0472-11269, p.3]
EPA Response:
Developing country members' automobile manufacturers, as well as U.S. manufacturers that
meet the small entity business size criteria are eligible for the small entity exemption. EPA is
also deferring standards for small volume manufacturers with U.S sales of less 5,000 vehicles in
MY2008 or MY2009, as discussed above. EPA does not believe it is appropriate to extend the
SVM deferment to larger companies selling more than 5,000 vehicles or those not already
established in the U.S. market. This would open up the deferment to an unknown universe of
potential eligible manufacturers, with the potential for gaming. In addition, the TLAAS
flexibilities would also apply to eligible developing country manufacturers. Lastly, the primary
purpose of this program is to protect public health and welfare. We do not believe it is therefore
appropriate or necessary to provide any additional flexibilities beyond the ones included in the
final program, similar to how we have treated this issue under previously adopted mobile source
programs.
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5.5. N2O and CH4 standards
Organization: Alliance of Automobile Manufacturers (Alliance)
Association of International Automobile Manufacturers (AIAM)
Yuli Chew, Private Citizen
Center for Biological Diversity
Chrysler Group LLC (Chrysler)
Clean Energy Fuels
Cummins Inc
Environmental Defense Fund
Ferrari S.p.a
Ford Motor Company
Georgia Department of Natural Resources
Honda Motor Company
IMPCO Technologies, Inc
Manufacturers of Emission Controls Association (MECA)
Mercedes-Benz (Daimler AG)
Mississippi Department of Environmental Quality
Mitsubishi Motors R & D of America (MRDA)
National Association of Clean Air Agencies (NACAA)
Natural Resources Defense Council
Northeast States for Coordinated Air Use Management (NESCAUM)
New York University School of Law, Institute for Policy Integrity (IPI)
NGV America
State of New Jersey
Toyota Motor North America
University of California, Santa Barbara, Bren Working Group on Vehicle Fuel
Economy
Volkswagen Group of America (Volkswagen)
Volvo Car Corporation
Comment:
Alliance of Automobile Manufacturers (Alliance)
• EPA would not be saddled with establishing and maintaining "backstop" standards for CH4
and N2O that may or may not be applicable to all fuels and/or vehicle technologies. [OAR-2009-
0472-6952.1, p.44]
• Since EPA has already proposed an assigned DF for CO2, all other DF issues would be
eliminated. [OAR-2009-0472-6952.1, p.44]
EPA should establish that the CH4+N2O factor be set equal to 1.9 gm/mile, which is the same as
the factor that is allowed for California Air Resources Board CO2-equivalent calculations. If, in
the future, EPA should determine that CH4 or N2O are becoming larger contributors to the CO2-
equivalent value, they could simply increase the CH4+N2O factor to account for the change.
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EPA Response to Comments
This proposal would achieve the GHG reductions as the EPA proposal, but in a much more
simplified and cost-effective fashion. [OAR-2009-0472-6952.1, p.44]
• N2O Is not currently measured in a high-production certification-quality volume. To do so will
require major test facility upgrades which will take several years to complete because of the
technical challenges that have not yet been resolved with regard to the measurement of N2O.
There is insufficient lead time to accomplish these tasks in time for MY 2013 implementation.
• The proposed "backstop" standard is too stringent and may preclude the introduction of some
alternative technology vehicles.
• The proposal to have N2O be a useful life standard will require manufacturers to establish
deterioration factors (DFs), and this will require manufacturers to rerun all forms of durability
and data vehicle testing for MY 2013. [OAR-2009-0472-6952.1, p. 43]
• Manufacturers would not be required to upgrade all test facilities to measure N2O, thereby
making the rule more cost-effective. [OAR-2009-0472-6952.1, p.44]
N2O Measurement Devices and Interference Verification for N2O Analyzers (Proposed
regulations in 40 C.F.R. 86.167-12 and 86.168-12)
The proposed regulations contain multiple references to 40 C.F.R. Part 1065 (1065.145,
1065.205, 1065.275, 1065.307, 1065.342, 1065.750). These sections in turn reference other Part
1065 sections which affect other test site hardware, software, calculations and procedures. One
example of this can be found in 40 C.F.R. 86.167-12(a) which states:
General component requirements. We recommend that you use an analyzer that meets the
specifications in Table 1 of 40 C.F.R. 1065.205. Note that your system must meet the linearity
verification in 40 C.F.R. 1065.307. [OAR-2009-0472-6952.1, p.44]
The linearity verification in 40 C.F.R. 1065.307 requires non-N2O chassis dynamometer gas
analyzers to meet the heavy duty engine dynamometer Part 1065 requirements. In addition, other
chassis dynamometer systems will have to comply with Part 1065, including exhaust gas dilution
systems (CFV's) and their related pressures, temperatures, and batch sampler flow rates; gas
dividers, PM balance; barometer; exhaust back pressure; and stand-alone test cell pressures and
temperatures. This reference may also bring in new requirements relating to the chassis
dynamometer torque, speed and total work (even though these are listed for an engine
dynamometer). [OAR-2009-0472-6952.1, pp.44-45]
Recommendation:
Making generic references to the heavy duty Part 1065 procedures quickly affects most of
today's light-duty test cell systems, could affect stringency, and is contrary to Part 86, Part 600
and California ARB regulations. The Alliance therefore recommends these 1065 references be
deleted and replaced with specific language compatible with Parts 86, 600 and California ARB
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regulations. In support of this approach recognize the small N2O contribution to GHG emissions
as follows. [OAR-2009-0472-6952.1, p.45]
While CO2 represents 95% of transportation GHG emissions (per GWP), EPA acknowledges
that N2O only accounts for 1.6% of these transportation GHG emissions. Other studies also
support this low number for N2O emissions. A 1999 study by Ford Motor Company (Environ.
Sci. Technol., 1999, 33, 4134-4139) estimated that between 1-3% of the transportation
greenhouse gases was attributable to N2O. In addition, a review of over 200 representative
tests conducted by vehicle manufacturers on gasoline and E85 (shown in the summary chart
below) shows that N2O emissions from cars and trucks are negligible in comparison to CO2.
[OAR-2009-0472-6952.1, pp.45-46]
The Alliance acknowledges that more data is needed concerning N2O contribution and supports
EPA's efforts to expand the current N2O knowledge base for inventory purposes. However,
EPA's proposed approach for generating the desired N2O information during the emissions
certification and fuel economy testing processes would entail time and expense that is
disproportionate to the overall GHG contribution of N2O emissions. Instead, the Alliance urges
EPA to enter into a joint test program with industry as a cost-effective means to learn more
about N2O emissions. The results of this test program could then be used to determine whether
separate measurement of N2O emissions is warranted. [OAR-2009-0472-6952.1, pp.46-47]
Absent any new data from a joint test program, EPA is urged to consider allowing the use of a
default value for N2O (0.006 grams per mile) in lieu of measuring N2O in the exhaust. This
factor is identical to that allowed for use by ARE and can be further refined through future
studies. [OAR-2009-0472-6952.1, p.47]
As for the proposed N2O measurement and reporting provisions, there is a high level of concern
about incorporating the engine dynamometer test procedures specified in 40 C.F.R. §1065 into
the chassis dynamometer test procedures for light-duty vehicles, light-duty trucks, and medium-
duty passenger vehicles. 40 C.F.R. §1065 is a complete rewrite of many engine dynamometer
test procedures such as heavy-duty on and off road engines, locomotive, marine, small spark
ignition, etc. Many of these procedures, specifications, hardware requirements and equations are
not compatible with current light-duty test sites and, in some cases, contradict current light- and
medium-duty regulations. More specifically:
• Adopting 40 C.F.R. §1065 equipment requirements into the chassis-certified regulations could
impact the stringency of current standards for the light-duty vehicles, light-duty trucks, and
medium-duty passenger vehicles that certify to current regulations with existing test facilities,
equipment, procedures and diagnostics.
• The requirements of 40 C.F.R. §1065, will conflict with the requirements of 40 C.F.R. §86 and
§600 for light-duty vehicles, light-duty trucks, and medium-duty passenger vehicles.
Specifically, the standard setting sections, 40 C.F.R. §86 Subparts A & S and 40 C.F.R. §600,
require the use of the test procedures set forth in 40 C.F.R. §86 Subparts B & C for certification.
In addition, the requirements of 40 C.F.R. §1065, will conflict with the state of California
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regulations (and the regulations of other states "Cal LEV" states), because the California
regulations base their test procedures on those in 40 C.F.R. §86 and §6005.
• 40 C.F.R. §1065 provisions will require significant hardware, software, license and acquisition,
and procedural and diagnostic modifications to existing chassis dynamometer test facilities.
These changes will be expensive depending upon the number of test cells at each manufacturer
and it will not be possible for manufacturers to modify today's robust chassis dynamometer
certification test sites by MY 2013 (certification testing done in CY2012).
• N2O emissions measurement requires a new N2O calibration gas to be NIST (National Institute
of Standards and Technology) traceable, typically within ±1.0% of the NIST accepted value. To
our knowledge, there are no such standards available "off the shelf from vendors or NIST.
NIST has in the past analyzed special batches of N2O gas for industry, but these were one-off
custom bottles. [OAR-2009-0472-6952.1, p.47]
For the above reasons, the Alliance recommends that all 40 C.F.R. §1065 requirements be
deleted from all chassis dynamometer certification testing of light-duty vehicles, light-duty
trucks, and medium-duty passenger vehicles. We recommend retaining the existing Parts 86 and
600 requirements with modifications to include N2O instrument specific test procedures in the
appropriate sections of 40 C.F.R. §86 Subpart B. These modifications could be similar to the
analyzer specific procedures being proposed for 40 C.F.R. §1065 minus any criteria that are
contrary to current Parts 40 C.F.R. §86 and §600. [OAR-2009-0472-6952.1, p.48]
By doing this, EPA would bring executable measurement certainty for the OEMs trying to meet
the GHG requirements and will provide compatibility with the existing light-duty, Part 86
compliant test equipment, software and procedures. In addition, deleting the Part 1065 references
provides OEMs with firm guidance as to what the requirements are for long term facility
planning purposes, and removes the uncertainty with the evolving nature of the HD Part 1065
procedures. [OAR-2009-0472-6952.1, p.48]
In the event that EPA decides to pursue actual N2O measurement and reporting, as proposed,
EPA should provide sufficient lead-time (at least until MY 2013) to implement such a program.
EPA should also limit the certification test modes for N2O emissions measurement (e.g., FTP
mode on emission data vehicle only) to minimize manufacturers' burden. [OAR-2009-0472-
6952.1, p.48]
Note that the N2O measurement issues could also be avoided if EPA accepts the previously
stated recommendation to eliminate the N2O emission standard. [OAR-2009-0472-6952.1, p.48]
Association of International Automobile Manufacturers (AIAM)
EPA proposes capping emission rates for nitrous oxide and methane at current emissions levels.
As EPA notes, even after adjusting for the higher global warming potential of these substances,
they collectively account for less than 1 percent of light vehicle greenhouse gas emissions. See
74 FR 49507. EPA initially projects no economic impact resulting from these caps (see 74 FR
49511); however, the Agency later notes that this is not the case. Measuring and reporting these
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emissions will involve additional costs for manufacturers, particularly in the case of nitrous
oxide. Additional test equipment will be needed to measure nitrous oxide emissions, with
resulting facility costs for manufacturers. Id., at 49525. Our members report that the currently
available commercial laboratory test equipment for nitrous oxide measurement is not capable of
accurately and repeatably measuring the very low levels of nitrous oxide emissions, i.e., 0.001
g/mile level, in vehicle exhaust, thus potentially increasing overall test burden due to voided tests
as well as normal testing. [OAR-2009-0472-7123.1, p.5]
In addition, the nitrous oxide standard proposed by EPA is a vehicle-specific standard, not a fleet
average standard as is provided for carbon dioxide, potentially creating an additional burden on
manufacturers to assure consistent compliance across all vehicle models. EPA notes that nitrous
oxide emissions vary with different types of catalyst designs, so it would be necessary for
manufacturers to assure that each catalyst design in their fleet of vehicles would not increase
emissions of that substance. Since current emission control technologies for NOx emissions also
tend to control N2O, there is no current basis for concluding that overall N2O emissions could
increase in the future. [OAR-2009-0472-7123.1, p.5]
AIAM concludes that a methane cap is unnecessary. The only potential scenario for an increase
in vehicle methane emissions cited by EPA is a substantial increase in the production of CNG
vehicles. Id. at 49525. EPA notes that current emission controls tend to achieve reductions in
methane as well, so there is no basis for anticipating that methane emissions would generally
increase. EPA subsequently states that recent CNG vehicles meeting Tier 2 standards have had
methane levels consistent with conventional vehicles. See Id at 49526. [OAR-2009-0472-
7123.1,p.5]
Available data and information provide no basis for anticipating that either nitrous oxide or
methane emissions will increase in the future, and current Tier 2 (and potentially future standards
as well) would tend to reduce emissions of these substances. Additional testing and
administrative burdens would be required to comply with the proposed caps, and new test
equipment would be needed to measure nitrous oxide emissions. For these reasons, we urge EPA
to adopt a default CO2 equivalent emission value for these substances for the 2012-2016 model
years, similar to the approach that CARB took. Testing and reporting of these emissions should
not be required. Certification should be based on manufacturers' providing engineering
evaluations and statements. [OAR-2009-0472-7123.1, pp.5-6]
If EPA believes further information is needed to assure that emissions of these substances do not
increase, we urge the agency to work with auto manufacturers to pursue a research-type program
to conduct testing of new vehicles for these substances. The level of testing for such a program
would be less than that required if standards were adopted and would focus on technologies that
EPA believes are most likely to produce higher emissions of the two substances. AIAM would
be willing to support a request to Congress for additional budget resources for EPA to conduct
such a program. As noted below, AIAM proposes a similar approach to address speculative
concerns about in-use deterioration of greenhouse gas emissions and testing of air conditioning
systems. [OAR-2009-0472-7123.1, p.6]
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Notwithstanding the concerns expressed above, should EPA determine that nitrous oxide and
methane regulation in some form are necessary, those substances should be regulated on a
carbon dioxide-equivalent, fleetwide default basis, as California has done. In that way,
manufacturers would have greater flexibility in choosing methods to achieve equivalent levels of
greenhouse gas emission reductions. However, in the case of nitrous oxides, if EPA should adopt
testing requirements, then significant lead-time is needed to address the measurement accuracy
and quality control issues mentioned above. In the case of methane, current EPA test methods
and required equipment allow the measurement of this gas; therefore, AIAM members are
willing to voluntarily collect and report that information as part of certification testing. [OAR-
2009-0472-7123.1, p.6]
Center for Biological Diversity
(v) EPA Should Seek to Reduce the Emissions of Nitrous Oxide and Methane, Rather Than Just
Holding Their Emissions Constant
EPA proposes to hold emissions of greenhouse gases other than carbon dioxide (nitrous oxide
and methane) to a constant level, rather than attempting to reduce these emissions, at zero cost to
the auto industry. Proposed Rule, 74 Fed. Reg. 49511. The agency states that it has not identified
"clear technical steps" available today to "significantly reduce" these emissions, 74 Fed. Reg.
49513. However, EPA fails to analyze whether any technologies are available to reduce these
emission by any amount, and if so, what the costs and benefits might be. This failure is arbitrary
and capricious. EPA justifies its position by pointing out that methane and nitrous oxide
emission levels "are extremely low and represent only about 1% of total light vehicle GHG
emissions." Id. However, particularly in light of the potent warming potential of both methane
(25 times that of carbon dioxide over a 100 year period) and nitrous oxide (298 times that of
CO2 over a 100 year period), that approach cannot be justified. Indeed, in its proposed
Endangerment Finding, EPA has already rejected any claims that GHG emission reductions are
unnecessary because their impact is relatively small: "Importantly, because no single greenhouse
gas source category dominates on the global scale, many (if not all) individual greenhouse gas
source categories could appear too small to matter, when, in fact, they could be very significant
contributors in terms of both absolute emissions or in comparison to other similar source
categories within the U.S." Endangerment Finding, 74 Fed. Reg. 18907. The Proposed Rule
should be revised to remedy these deficiencies, [footnote] While we believe a CO2 equivalency
standard is necessary and should be set, we also advocate for separate emission levels for all
other greenhouse gases to allow more targeted application of relevant technologies. [OAR-2009-
0472-7265.1, p. 18]
Chew, Yuli, Private Citizen
I favor a "technology-forcing" approach for proposed N2O and CH4 standards, similar to
NMOG Standard in CARS's Regulation. For example, there are already CARB SULEV certified
CNG / LPG vehicles, there is no reason to "cap" the standard at a static level of say, Tier 2 Bin 5.
This will also ensure that more of the alternative fuel aftermarket engines can be retrofitted into
used vehicles with equal to or better than the original standards. [OAR-2009-0472-7042.1, p.3]
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Chrysler Group LLC (Chrysler)
N2O is currently not measured during certification testing and will require additional resources
and test facility upgrades if standards are adopted. N2O is an insignificant portion of the exhaust
composition of gasoline-fueled vehicles and is less than two percent of the total greenhouse gas
contribution. The N2O standard as proposed could also pose an impediment to the widespread
introduction of promising advance lean-bum technologies that have been demonstrated to reduce
greenhouse gas emissions. [NHTSA-2009-0059-0124, p.38]
Recommendations:
Since N2O is a relatively insignificant vehicle greenhouse gas and requires additional analytical
resources and costly test facility upgrades to measure, manufacturers should be provided with the
option to use assigned values for a representative vehicle/fuel technology. [NHTSA-2009-0059-
0124, p.38]
Clean Energy Fuels
EPA is proposing a methane (CH4) emissions standard or cap of 0.03 g/mi as measured on the
Federal Test Procedure, to apply beginning with model year 2012 for both cars and trucks. EPA
further believes that this level for the standard would be met by current gasoline and diesel
vehicles, and 'would prevent large increases in future methane in the event that alternative fueled
vehicles with high methane emissions, like some past dedicated compressed NGVs, become a
significant part of the fleet.' However, EPA also notes that this source of emissions accounts for
as little as 0.2% of the GHG gases from cars and light trucks. [OAR-2009-0472-7220.1, p.7]
Clean Energy is concerned that the notice appears to take the position that the cap is not
technologically forcing but rather is meant to ensure methane emissions do not increase. The
notice states that '[tjhese caps are designed to ensure that N2O and CH4 emission levels do not
rise in the future, rather than to force reductions in the already low emission levels .... these
standards are not designed to require automakers to make any changes in current vehicle
designs.' At the same time, EPA appears aware that NGV s in the past have had much higher
methane emissions than gasoline vehicles. EPA appears to be confident that controls necessary to
meet the more demanding Tier 2 standards will result in lower levels of CH4 emissions for
NGVs. But the notice offers up no data or citations to support these conclusions. Without the
ability to review the same data that EPA is relying upon, we lack the confidence that EPA
apparently has regarding the ability of NGVs to meet the proposed CH4 cap. As noted above, our
research into this issue has not revealed any data showing that NGVs will meet the proposed cap.
[OAR-2009-0472-7220.1, p.8]
Even if some NGVs can meet the cap, we believe adopting a CO2 equivalent average is
warranted with methane and nitrous oxide emissions appropriately weighted for their global
warming potential. Providing a CO2 equivalent approach as part of the rule would ensure that the
caps do not become an obstacle to NGVs, while at the same time ensuring GHG emissions from
such vehicles are no greater than for gasoline vehicles. Therefore, we strongly urge EPA and
NHTSA to allow NGVs to meet an average standard that includes averaged emissions for CO2,
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CH4, and N2O. If this is done, we are confident that NGVs will not only achieve the standard
but surpass gasoline powered vehicles. Failure to adopt such a standard would seem illogical as
the result would disallow vehicle strategies that could provide less overall GHG gas emissions on
a WTW basis. [OAR-2009-0472-7220.1, p.8]
[[Clean Energy also submitted these comments as testimony at the Detroit public hearing, See
docket number EPA-HQ-OAR-2009-0472-6185, pp. 137-139.]]
Cummins Inc.
EPA is proposing stand-alone N2O and CH4 standards for light-duty vehicles. Cummins
recognizes that EPA is setting such standards to cap emissions of N2O and CH4 to ensure that
these emissions do not increase in the future with the introduction of new CO2- reducing
technologies. While Cummins supports the overall goal, we believe that EPA can achieve the
same results with a less costly and less burdensome approach. The new standards would require
that all manufacturers upgrade their facilities to measure N2O and CH4. The California Air
Resources Board proposed a set value of N2O and CH4 emissions which manufacturers can use
to calculate equivalent CO2 emissions from a vehicle. This approach makes sense since it is
known thatN2O and CH4 are a small percentage of overall greenhouse gas emissions from
vehicles. This set value could be adjusted in the future if new GHG-reducing technologies
increase the N2O and CH4 emissions compared to average values of N2O and CH4 emitted by
current vehicles. This would also ensure that a new technology which reduces the overall GHG
emissions is not prevented from entering the market because of the stand-alone N2O and CH4
standards. Cummins recommends that EPA adopts an approach similar to California to account
forN2O and CH4 emissions. [OAR-2009-0472-7205.1, p.5]
Environmental Defense Fund
Just as important as EPA's choice to regulate light-duty vehicles is EPA's decision to include
carbon dioxide (CCh ), methane (CH4), nitrous oxide (N2O) and hydrofluorocarbons (HFCs) as
regulated GHGs under the proposal rule which account for the preponderance of light-duty GHG
emissions when weighted by global warming potential.38 Whether these compounds are
considered individually or collectively, EPA has a statutory duty to establish "standards
applicable to the emission of any air pollutant from any class or classes of new motor vehicles or
new motor vehicle engines, which in his judgment cause, or contribute to, air pollution which
may reasonably be anticipated to endanger public health or welfare."39 See 42 U.S.C.
§7521(a)(l). [OAR-2009-0472-7285.1,p. 10]
Ferrari S.p.a
CH4 is currently measured to determine NMHC emissions, whereas the N2O measurement
requires additional instruments for emission laboratories, with increased costs. Since present
emission control technologies for NOx emissions also tend to control N2O, there is no current
basis for concluding that overall N2O emissions could increase in the future. The same
conclusion could be drawn for methane. The burdens (laboratory update, testing, reporting)
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associated with the measurement of tailpipe nitrous oxide is not justifiable in terms of
costs/benefits analysis. For these reasons, we deem that it is not necessary to set these new
additional exhaust standards for CH4 and N2O. [OAR-2009-0472-7214.1, p.3]
Ford Motor Company
We do not believe EPA is compelled to establish full useful life standards for N2O and CH4; the
attachment addresses this in more detail. To the extent that EPA desires to pursue this issue
nonetheless, the regulations could continue to allow manufacturers to make an 'engineering
judgment' attestation - in lieu of formal compliance testing — beyond just the first couple of years
as proposed. Alternatively, EPA could establish generic emissions factors for N2O and CH4 and
roll these into the proposed CO2 standard. [OAR-2009-0472-7082.1, Cover letter, p. 2]
As we continue to move towards an integrated approach that considers the vehicle, the fuel, and
the consumer, it is worth highlighting other policies that could do more to reduce greenhouse gas
emissions from actual in-use operation of motor vehicles compared to some of the additional
requirements that EPA is proposing under this rulemaking. For example, EPA is proposing full
useful life standards for CH4 (methane) and N2O (nitrous oxide) in addition to the fleet-average
CO2 requirements. The relative contribution of methane and nitrous oxide to a vehicle's overall
greenhouse gas emissions is small compared to CO2 - on the order of 1-3% and 0.3-0.4%
respectively. The benefit of expanding the existing criteria pollutant emissions durability
requirements to include these greenhouse gases is negligible, relative to other potential measures
that could have a much more significant impact on actual in-use greenhouse gas emissions.
[OAR-2009-0472-7082.1, Cover letter, p.]
Regulating Methane(CH4 and Nitrous-oxide (N20)
Ford does not support EPA's proposal to regulate CH4 and N20 as stand-alone greenhouse gases.
It is well documented that CO2 comprises greater than 90% of the total greenhouse gas
emissions from vehicles. There is a simple relationship between CO2 emissions and fuel
economy for gasoline and diesel fueled vehicles. In addition, studies conducted by Ford and
others in the research arena have shown that the relative contribution of methane and nitrous
oxide to a vehicle's overall greenhouse gas emissions is small compared to CO2 - on the order of
1-3% and 0.3-0.4% respectively. Therefore, Ford does not support EPA's proposal to regulate
CH4 and N20 as stand alone greenhouse gases.
In addition, regulating CH4 and N20 could have an unintended negative CO2 impact and
severely limit, restrict, or legislate out of existence CO2-friendly technologies such as CNG, E85
(nominally 85% ethanol/15% gasoline), HCCI, pHCCI, lean gasoline, or clean diesel in the U.S.
market. For example, a cap on CH4 could limit compressed natural gas technologies.
EPA is not compelled to establish not-to-exceed standards for N20 and CH4. Under Section 202
(a)(l) of the CAA, the Administrator has considerable discretion to determine whether or not an
air pollutant 'causes or contributes' to an endangerment of public health and welfare and
therefore regulation. EPA need not regulate every emission or substance no matter how small or
inconsequential its effect. In Ethyl Corp. v. EPA, 541 F.2d 1, (D.C. Cir., 1976), the court
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considered a similar issue under Section 211 of the CAA. The court held that even under a
'cumulative impact theory' in which all emissions of a substance are believed to contribute to an
environmental problem, 'emissions must make more than a minimal contribution to total
exposure in order to justify regulation under § 211 (c)(l )(A).' 541 F. 2d. at 31, note 62. Here, in
light of the minor contributions of N20 and CH4 relative to that of CO2, we believe EPA has the
discretion to refrain from regulating the emission of these substances from motor vehicles on the
grounds that their overall contribution to GHG emissions is minimal.
To the extent that EPA desires to pursue this issue nonetheless, the regulations could continue to
allow manufacturers to make an 'engineering judgment' attestation — in lieu of formal
compliance testing - beyond just the first couple of years as proposed. Alternatively, EPA could
establish generic emissions factors for N20 and CH4 and roll these into the proposed CO2
standard. According to the latest Intergovernmental Panel on Climate Change Radiative Forcing
of Climate Change Report, the global warming potentials of N20 and CH4 are 296 and 23,
respectively. Prior CARB analysis suggests that the average values for N20 and CH4 are 0.006
and 0.005. Based on this information, Ford recommends the following factor to be used to
determine a carbon dioxide equivalent (CO2e) equation, in lieu of regulating CH4 and N20 as
standalone components.
Recommended equation:
CO2e(gas) = CO2 (gas) + 296N20+23CH4
= CO2 (gas)+ 296 (0.006) +23 (.005)
=CO2(gas) + 1.9g/mi
[OAR-2009-0472-7082.1,pp. 11-12]
[Ford also submitted these comments as testimony at the Detroit public hearing, See docket
number EPA-HQ-OAR-2009-0472-6185, pp. 15-16.]
[Ford also submitted these comments as testimony at the New York public hearing, See docket
number EPA-HQ-OAR-2009-0472-4621, pp. 31-32.]
[Following comments are from LA Testimony, OAR-2009-0472-7283, pp.90-96]
For example, EPA is proposing full useful life standards for CH4, methane, and N2O,
nitrous oxide, in addition to the fleet average CO2 requirements. The relative contribution of
methane and nitrous oxide to a vehicle's overall greenhouse gas emissions is small compared to
CO2, on the order of 1 to 3 percent and 0.3 to 0.4 percent, respectively.
The benefit of expanding the existing criteria pollutant emissions durability requirements to
include these greenhouse gases is minimal relative to other potential measures that could have a
much more significant impact on actual in-use greenhouse gas emissions. Such measures would
go beyond the vehicle's design.
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For example, significant additional greenhouse gas emissions reductions could be achieved by
reducing the carbon intensity of the nation's overall fuel supply through the introduction of
alternative low-carbon fuels.
In addition, further reductions could also be achieved through more efficient
transportation control measures designed to manage increased travel demand. These could
include congestion mitigation initiatives, eco-driving education and awareness programs, and
other incentives to encourage consumers to drive more efficiently.
We do not believe EPA is compelled to establish full useful life standards for N2O and CH4, and
our written comments will address this in more detail.
To the extent that EPA desires to pursue these issues nonetheless, the regulations could continue
to allow manufacturers to make an engineering judgment attestation in lieu of a formal
compliance testing beyond just the first couple of years as proposed.
Alternatively, EPA could establish generic emissions factors forN2O and CH4 and roll
these into the proposed CO2 standard.
Georgia Department of Natural Resources
Also, EPA states in the proposed rule that emissions of N2O and CH4 are low and that the rule is
not designed to require technology to reduce emissions of N2O and CH4 at this time. EPA then
justifies the inclusion of the proposed emission standards with the unsupported and conflicting
statement that the agency is concerned about those emissions increasing in the future. Because of
the enormous, unintended consequences of regulating GHG emissions under the Clean Air Act at
this time, and because the proposed rule does not result in any emission reductions of N2O or
CH4, EPA should not finalize any emission standards for N2O or CH4 as part of this
rulemaking. [OAR-2009-0472-7150.1, pp.4-5]
Honda Motor Company
EPA requested comment on the idea of developing CO2-equivalent emissions standard for model
years 2012 through 2016. Honda is concerned that newer technologies currently under
investigation (HCCI, direct injection and others) may be adversely affected by EPA's proposed
cap. Since methane and nitrous oxide can easily be converted into CO2-equivalent emissions,
Honda recommends taking a CO2-equivalent approach which AIAM also recommends, and
Honda supports. [NHTSA-2009-0059-0095.1, pp.6-7]
As the measurement of N2O is phased-in, as recommended above, Honda suggests that EPA use
a fixed number for CH4 and N2O emissions (e.g., 1.9 g/mile allowed by California Air Resources
Board (CARB)). Additionally, the CO2 standard needs to be adjusted upward to become a CO2e
standard, taking into consideration CH4 and N2O, for example, 250 grams/mile target for the
2016 fleet becomes 251.9. [NHTSA-2009-0059-0095.1, p.7]
IMPCO Technologies, Inc.
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For over 50 years IMPCO has been the leader in the industrial, power generation and stationary
engines sectors. At one time IMPCO was the leader in the U.S. automotive market, but has not
been involved in this market segment for over 10 years. IMPCO is reentering the North
American alternative fuel vehicle market. To confirm this commitment, in February EVIPCO
formed its US Automotive Operations Division, dedicated to the design, development, and
certification of fuel systems that enable vehicles to operate on alternative fuels. This NPRM
directly affects IMPCO's ability to enter the U.S. automotive market.
Fuel Systems Solutions, Inc. (Nasdaq: FSYS) is the holding entity for two companies: IMPCO
Technologies, Inc. based in California, and BRC S.r.L. based in Italy. Both IMPCO and BRC are
engaged in designing, manufacturing, marketing and supplying advanced products and systems
to enable internal combustion engines to run on clean-burning gaseous fuels such as natural gas
and propane. In 2008 alone, over 800,000 engines around the globe were converted to operate on
these alternative fuels using IMPCO and BRC fuel systems.
EPA has proposed very stringent CH4 and N2O emissions standards for alternative fuel vehicles
without using substantiating data from alternative fuel vehicles. Meeting these standards could
require expensive catalyst design and validation, which would have a significant impact upon the
time and cost involved to certify these alternative fuel systems.
Without sufficient evidence to demonstrate that the gasoline-specific and diesel-specific
emissions data presented in the NPRM are representative of emissions from natural gas or
propane vehicles, IMPCO proposes the following:
• Implement a CO2-equivalent greenhouse gas emission standard with an optional default N2O
value; or
• Allow manufacturers to choose whether to meet a CO2-equivalent standard or meet separate
CO2, CH4, and N2O emissions standards; or
• Postpone this NPRM as it applies to CH4 and N2O emissions standards for natural gas and
propane vehicles until alternative fuel-specific data can be collected and evaluated IMPCO
sincerely appreciates the opportunity to comment on the subject Proposed Rulemaking as this
topic is of paramount importance to IMPCO and to the alternative fuel vehicle industry as a
whole.
1. Implement a CO2-Equivalent Approach for Alternative Fuel Vehicles Given that the goal of
this NPRM is to reduce greenhouse gases from light-duty vehicles, a CO2-equivalent approach is
the most practical and cost-effective method in which to achieve this goal. Setting individual
CH4 and N2O emissions standards does not help to achieve this goal. [OAR-2009-0472-7282.1,
p.5]
2. N2O Emissions Standards - Aftermarket Vehicles IMPCO performs all of its vehicle
emissions testing at outside laboratories. These laboratories are currently not capable of
measuring N2O, therefore, IMPCO is relying on them to upgrade their equipment. One local
laboratory will charge an additional $250 per emissions test to measure N2O. This will add
several thousand dollars to the development and certification cost of the fuel system. Given the
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inherently low total greenhouse gas emissions from natural gas and propane vehicles, directly
measuring and controlling N2O will provide no environmental benefit.
IMPCO proposes that EPA offer an optional default N2O value that can be used in lieu of
directly measuring these emissions. For example, the California Air Resources Board allows
manufacturers to use N2O = 0.006 grams per mile in lieu of measuring N2O exhaust emissions.
Alternatively, the GREET N2O emission factor of 0.012 grams per mile could be used. [OAR-
2009-0472-7282.1, p. 1]
Manufacturers of Emission Controls Association
While total N2O emissions are much lower than CO2 emissions, N2O is approximately 310
times more powerful than CO2 at trapping heat in the atmosphere. One of the anthropogenic
activities producing N2O in the U.S. is fuel combustion in motor vehicles. In 2006, N2O
emissions from mobile source combustion were approximately 9% of total U.S. N2O emissions.
It is estimated that the N2O emissions account for about 2% of the total GHG emissions from a
typical light-duty vehicle. N2O is emitted directly from motor vehicles and its formation is
highly dependent on temperature and the type of emission control system used. Temperatures
favorable for N2O formation are achieved inside catalytic converter systems, especially during
cold-start conditions when engine exhaust temperatures are lower.
Catalyst efficiency and age are also important factors in N2O formation. At higher efficiencies
and lower ages, N2O formation is lower. In addition to direct N2O emissions, NOx emissions
from mobile and stationary sources have a significant impact on atmospheric N2O levels. On late
model light-duty gasoline vehicles, modern three-way catalyst-based emission control
technology combined with effective cold-start engine calibration strategies are very effective at
controlling vehicle nitrous oxide emissions. Light-duty vehicle N2O emission tests results
recently published by ARB and Environment Canada in Atmospheric Environment (vol. 43,
2009) indicate that vehicles certified to the lowest emission certification categories (e.g.,
certified to ARB's SULEV standards) also have extremely low N2O emissions (in the range of
0.0-1.5mg/km).
Tightening of hydrocarbon and NOx emission standards over time with the parallel introduction
of more effective emission control systems have resulted in lower emissions of N2O from
today's vehicles compared to older vehicles certified to less stringent hydrocarbon and NOx
standards. The performance of NOx emission control technologies for diesel vehicles such as
SCR catalysts and lean NOx adsorber catalysts can also be optimized to minimize N2O
emissions from diesel engines.
According to the United Nation's International Panel on Climate Change (IPCC), methane is
more than 20 times as effective as CO2 at trapping heat in the atmosphere. Over the last 250
years, the concentration of CH4 in the atmosphere has increased by 148%. Methane is a
byproduct of imperfect fuel combustion. Methane emissions from mobile sources are emitted
from exhaust from vehicles using hydrocarbon fuels, but the anthropogenic contribution of road
transport to the global methane inventory is less than 0.5%. Emissions of CH4 are a function of
the type of fuel used, the design and tuning of the engine, the type of emission control system,
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the age of the vehicle, as well as other factors. Although CH4 emissions from gasoline vehicles
are small in terms of global warming potential when compared to N2O emissions, they can be
high in natural gas-fueled vehicles, as methane is the primary component of natural gas.
On light-duty gasoline vehicles, modern three-way catalyst-based emission control technology is
effective at reducing all hydrocarbon exhaust emissions including methane. Tightening of
hydrocarbon emission standards over time with the parallel introduction of more effective
emission control systems have resulted in lower emissions of methane from today's vehicles
compared to older vehicles certified to less stringent standards. Catalyst designs can also be
optimized in concert with engine control strategies to oxidize methane exhaust emissions from
motor vehicles, including vehicles that operate exclusively on natural gas or bi-fuel vehicles that
can operate on either natural gas or gasoline.
Advanced gasoline and diesel powertrains for light-duty vehicles in conjunction with advanced
emission control technologies can be optimized to minimize emissions of both N2O and CH4
emissions. In their proposal, EPA has included an emissions cap for both N2O (a 10 mg/mi cap
over the FTP test cycle) and CH4 emissions (a 30 mg/mi cap over the FTP test cycle) to ensure
that climate change impacts of these two potent greenhouse gases are minimized on future light-
duty vehicles. These proposed emission caps are absolute with no provisions for averaging
among light-duty vehicles included in the proposal. MECA believes that these emission caps are
achievable with today's light-duty vehicle powertrain options and should be included in the final
EPA regulations.
Mercedes-Benz (Daimler AG)
DAG strongly supports the recommendations set forth by the Alliance of Automobile
Manufacturers with regard to the proposed CH4 and N2O standards. The standards as proposed
would have a deleterious impact on both clean diesel vehicles and direct-injection gasoline
vehicles, as well as CNG vehicles. DAG welcomes the opportunity to work with EPA to develop
data and analysis that can better support and define these standards and to ensure that appropriate
facilities can be in place for testing and certification to these standards. DAG supports
establishment of a focused research program to study a sample of vehicles rather than a reporting
and testing program for all vehicles. Doing so would provide EPA with detailed and robust data
on these GHGs while reducing time and cost burdens on manufacturers. [OAR-2009-0472-
7193.2, p.21]
Mississippi Department of Environmental Quality
Also, EPA admits that emissions are low and that the proposed rule is not designed to require
technology to reduce emissions of N2O and CH4 at this time. EPA then justifies the inclusion of
the proposed emission standards with conflicting statement that it is concerned about those
emissions increasing in the future. Because of the enormous, unintended consequences of
regulating GHG emissions under the Clean Air Act at this time, and because the proposed rule
does result in any emission reductions of N2O or CH4, EPA should not finalize any emission
standards for N2O or CH4as part of this rulemaking. [OAR-2009-0472-7102.1, p. 5]
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Mitsubishi Motors R & D of America (MKDA)
Mitsubishi Motors does not support the new requirement to measure nitrous oxide (N2O) which
will require the acquisition of expensive analyzers that are currently not available on the market.
[OAR-2009-0472-7125.1, p.2]
EPA proposes a cap on N2O emissions with very little data on the amount of N2O actually
emitted from vehicles. Additionally, it is unknown whether the stringency of the proposed cap
will affect the introduction of any advanced technologies to improve fuel economy. Clearly, EPA
should better understand N2O emissions before establishing standards. Therefore, we propose
that EPA should conduct a research test program to determine whether standards are necessary
and if so, the appropriate level and measurement method. [OAR-2009-0472-7125.1, p.3]
During their N2O emissions data collection, EPA should consider adopting the method proposed
by California in their GHG regulations. This method creates a default value for N2O emissions,
which would ease the increased expense and uncertainty Automakers would encounter
developing a process to measure and report N2O emissions. Even though EPA has provided an
extra year, i.e. MY 2013, before requiring N2O emissions to be reported, there are still many
challenges for Automakers. Since true N2O emissions are unknown and not measureable,
Automakers will find it difficult to state "vehicles meet the standard (cap) for MY 2012,"
especially if added enforcement of in-use or confirmatory N2O testing for MY 2012 will be
required. Further, a full useful life standard for N2O emissions will require Automakers to
conduct extensive test programs to establish deterioration factors - for a compound with an
undetermined measurement method. MMC has serious practical concerns on how to measure
N2O. [OAR-2009-0472-7125.1, p.3]
MMC currently does not own an appropriate N2O analyzer and has never measured N2O
emissions at the levels proposed. There are a limited number of N2O analyzers marketed, none
of which can accurately measure to the levels required in the proposed regulation. At this time,
one leading analyzer manufacturer estimates at least one more year of research is needed before
an appropriate measurement method will be determined. Then, a commercial analyzer will need
to be developed. Consequently, to meet the current regulatory proposal, analyzer prices will be
very high and delivery time will create a significant compliance risk. Analyzers are not the only
instruments that will be needed for Automakers to measure N2O emissions - many other facility
changes will be necessary, including software and computer upgrades requiring significant lead-
time. [OAR-2009-0472-7125.1, p.3]
National Association of Clean Air Agencies (NACAA)
Fifth, we are pleased that EPA is seeking to establish standards that would control emissions of
CO2, hydrofluorocarbons, nitrous oxide and methane from light-duty vehicles. However, we
recommend that the agency also establish standards to regulate black carbon, which recent
scientific evidence shows is another important pathway for climate change. [OAR-2009-0472-
7071.1, p. 3]
Natural Resources Defense Council
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Nitrous Oxide and Methane Emissions Should be Regulated by Standards that Apply to the
Useful Life of Vehicles
NRDC strongly supports the proposed standards for nitrous oxide (N2O) and methane (CH4).
According to EPA, these high global warming potential greenhouse gases account for 2.9 percent
of emissions from cars and light duty trucks. Placing a standard on these emissions will ensure
that their contribution does not grow, even with new technology introduction. EPA notes that
inattention in the design of nitrogen oxides (NOx) emissions control technology, especially for
lean burn gasoline and diesel engines, could result in increases in N2O. However, the tradeoff is
not necessary and having a standard in place will signal to developers of control technology that
N2O emissions must not increase. [OAR-2009-0472-7141.1, p. 11]
A standard on CH4 emissions is also critical to preventing emissions increases, especially if
automakers produced more vehicles powered by natural gas. Today, CH4 can be controlled using
catalyst control technology required for Tier 2 NMOG certification. However, unburned fuel
from natural gas vehicles has the potential to slip by the catalyst causing CH4 emissions. We
support EPA's proposal to set standards on CH4 emissions to ensure that engine and exhaust
controls are maintained on future natural gas—and other vehicles—to prevent CH4 emission
increases. [OAR-2009-0472-7141.1, pp. 11-12]
Standards on N2O and CH4 should apply for the useful life of the vehicles. Therefore, auto
manufacturers should demonstrate thatN2O and CH4 controls are have the durability to
maintain emissions levels at or below the standard levels. [OAR-2009-0472-7141.1, p. 12]
NESCAUM
NESCAUM commends EPA for proposing to regulate nitrous oxide, methane, and
hydrofluorocarbons in addition to CO2. These gases have very high global warming potential
and as such should be regulated in addition to CO2. Carbon dioxide represents 95 percent of
global warming emissions from light-duty vehicles, but nitrous oxide, hydrofluorocarbons, and
methane are potent greenhouse gases, and thus it is appropriate that these gases should be
controlled in addition to CO2. EPA's ability to regulate GHG emissions from all aspects of
vehicle operation and all vehicle-related pollutants will maximize reductions from the national
program. We ask, however, that the agency include other pollutants in the final rule such as
black carbon which is a potent greenhouse forcing agent. Ozone is also a greenhouse gas, and
while the pollutants that contribute to ozone are regulated under the Tier 2 program, there should
be a mechanism to quantify the impact of ozone on global warming and to require more stringent
standards if it is deemed necessary. At a minimum, we ask the agency to establish a mechanism
to evaluate and include additional pollutants as scientific understanding of climate forcing agents
evolves. [OAR-2009-0472-7235.1, p. 6]
New York University School of Law, Institute for Policy Integrity (IPI)
4) Caps for Methane and Nitrous Oxide
EPA proposes separate regulations imposing a per-vehicle cap on emissions of methane (CH4)
and nitrous oxide (N2O), two potent GHGs, from cars and light trucks. EPA should rethink these
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separate caps, and consider combining these gases into a single standard along with carbon
dioxide (CO2) emissions, accounting for all gases on a CO2-equivalent basis. [OAR-2009-0472-
7232.3, p. 16]
EPA's proffered justification for this policy choice is that vehicles produce CH4 and N2O
"largely independently]" of CO2, and that potential control technologies and strategies for these
pollutant differ. EPA also notes that it lacks information on the emissions of CH4 and N2O from
vehicles. [OAR-2009-0472-7232.3, p. 16]
Even if these gases are produced "largely" independently of one another, there is still some
overlap as emissions of all these gases are caused by vehicles' combustion systems. Motor
vehicles emit carbon dioxide during the fossil fuel combustion process. During combustion, the
carbon stored in the fuels is oxidized and emitted as CO2 and smaller amounts of other carbon
compounds. Motor vehicles emit methane through methane content in motor fuel, hydrocarbons
passing uncombusted through the engine, and any post-combustion control of hydrocarbon
emissions (such as catalytic converters). Motor vehicles produce nitrous oxide when nitrogen
and oxygen react during fuel combustion. [OAR-2009-0472-7232.3, p. 16]
Current and future control technologies for these pollutants may overlap or may not. That is,
however, irrelevant. EPA's goal in these regulations is to attempt to reduce global warming
effects by reducing the amount of GHGs emitted by motor vehicles. In order to do this in the
most efficient and effective way, EPA should create a single standard to allow manufactures the
most flexibility in achieving GHG reductions to allow for the most cost-effective
compliance. [OAR-2009-0472-7232.3, pp. 16-17]
EPA's proposed scheme limits manufacturers' ability to reduce GHG emissions in the most
efficient way possible. For example, it may be cheaper for a manufacturer to produce a vehicle
that emits additional methane but less carbon dioxide, rather than maintain the vehicle's current
methane emission level and decrease CO2 emission only. EPA's goal is to achieve the most
GHG reductions at the least cost, but the proposed regulations would not allow the manufacturer
to opt for that cheaper option. [OAR-2009-0472-7232.3, p. 17]
Further, EPA's choice to introduce different rules for these two gases further complicates an
already complex regulatory scheme, imposing more compliance costs on manufacturers.
Manufactures must now comply with CAFE standards, carbon dioxide standards, methane
standards, and nitrous oxide standards—and achieving reductions in one area cannot be counted
toward meeting reductions in another area. A simpler and more efficient regulation would set
one standard for all GHG emissions on a carbon-dioxide equivalent basis. [OAR-2009-0472-
7232.3, p. 17]
It is unclear what additional information EPA needs to make this policy choice. As long as a
single standard takes into consideration all GHGs produced by the vehicles and weighs them on
a CO2-equivalent basis, that standard will not allow for any total GHG emission increase. [OAR-
2009-0472-7232.3, p. 17]
NGV America
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NGVAmerica and the Canadian Natural Gas Vehicle Alliance respectfully submit the following
comments in regards to the U.S. Environmental Protection Agency's (EPA) proposed
greenhouse gas emission standards for new light-duty vehicles. These comments arise from the
concern that the proposed rules will seriously impact and inhibit natural gas vehicle production
in North America to the detriment of realizing the environmental benefits of increased use of
natural gas vehicles. Our organizations are very concerned that the proposed methane cap will
discourage large manufacturers, including original equipment manufacturers (OEMs), from
offering natural gas vehicles. We also are concerned about the negative impact the rules could
have on aftermarket conversion manufacturers. While the proposed rules exempt small volume
manufacturers of natural gas vehicles if they are small businesses, small volume manufacturers
who are not small businesses are not exempt from coverage. Thus, in the case of aftermarket
conversion manufacturers, the proposed rules could have the unintended consequence of
discouraging large businesses from continuing to offer aftermarket conversion systems. [OAR-
2009-0472-11310, p.1]
NGV America previously submitted comments on this issue prior to the close of the comment
period. In its comments, NGV America urged EPA to develop a carbon dioxide equivalent
standard as opposed to a cap on methane and nitrous oxide emissions. We believe that a carbon
dioxide equivalent approach is more appropriate. However, we would support a cap on methane
emissions — if properly structured. The comments submitted here underscore the importance of
this issue to our associations, and come at a time when Canadian officials are considering similar
regulations, largely based on EPA's proposed regulations. [OAR-2009-0472-11310, p. 1]
Based on discussions with EPA, it also has become evident that additional data could assist
authorities in making a more reasoned decision. Therefore, these comments provide data
recently collected from NGV manufacturers. [OAR-2009-0472-11310, p. 2]
If EPA does move forward with a methane cap, our primary concern with the proposed
regulations is the plan to impose a cap of 0.03 gram per mile for CH4 emissions. EPA has
indicated that the cap is designed to limit future emissions increases, primarily from natural gas
vehicles, and prevent backsliding from current emissions levels by gasoline and diesel fueled
vehicles. EPA's preamble also indicates that the cap on methane emissions is not designed to
require automakers to make any changes to emission control designs. Moreover, EPA has
indicated that proposed cap on methane emissions will have no economic impact on
manufacturers. [OAR-2009-0472-11310, p. 2]
Comments
It is respectfully submitted that the proposed methane cap of 0.03 gram per mile is unreasonable
with respect to dedicated and bi-fuel natural gas vehicles (NGVs). It appears that the decision to
impose such a standard on natural gas vehicles has largely been made based on the current
performance of gasoline- and diesel-fueled vehicles and noton the emissions performance of
current NGVs. Based on data collected from NGV manufactures and provided below, we
propose that a more appropriate standard for such vehicles is 0.5 g/mile. Although higher than
that proposed by EPA, the cap we proposed would not negate the fact that NGVs produce less
overall greenhouse gas emissions than petroleum fueled vehicles. As with gasoline- and diesel-
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fueled vehicles, the methane level we propose would ensure that there is no backsliding with
respect to current methane emissions from NGVs. [OAR-2009-0472-11310, p. 2]
Based on data collected from natural gas vehicle manufacturers, methane emissions for NGVs
appear to fall within the range of about 0.1- 0.4 g/mile — an insignificant global warming
potential compared to vehicles' CO2 production. The resulting increase in methane emissions
for NGVs compared with that of other vehicles does not undermine the 20-30% reduction in
CO2 values arising from use of these vehicles. Limiting the use of NGVs through an
unreasonable cap, therefore, would be counterproductive to reducing greenhouse gases compared
with the environmental benefits of their increased use. [OAR-2009-0472-11310, p. 2]
It is evident that EPA did not have access to representative CH4 emissions data for NGVs.
NGVAmerica and the Canadian Natural Gas Vehicle Alliance have therefore assembled a set of
emissions data from North American manufacturers, representative of the industry norm for CH4
emissions. The emissions data covers both dedicated and bi-fuel NGVs from MY 2005-MY
2009. [OAR-2009-0472-11310, p. 2]
Table 1 [See OAR-2009-0472-11310, p. 5 for Table 1] shows the useful life NGV emissions by
model year, model, and fuel configuration for CH4, CO2, and N2O emissions for a
representative sample of five vehicles. The Table includes data with global warming potential
factors applied to CH4 and N2O emissions, resulting in total global warming potential of all
emissions in g/mile, and the percentage increase in the total global warming potential compared
to the CO2 baseline. [OAR-2009-0472-11310, pp. 2-3]
Table 2 [See OAR-2009-0472-11310, p. 6 for Table 2] shows CH4 and CO2 emissions data from
16 representative bi-fuel MY07-09 NGVs, including CO2e/CO2 ratios. [OAR-2009-0472-
11310, p. 3]
Table 3 [See OAR-2009-0472-11310, p. 7 for Table 3]shows CH4 and CO2 emissions data from
6 representative MY06-09 dedicated NGVs, including CO2e/CO2 ratios. [OAR-2009-0472-
11310, p. 3]
Two significant conclusions can be drawn from this data. The first is that the industry norm,
covering both bi-fuel and dedicated NGVs, is 0.1-0.4 g/mile CH4. The second is that, at these
levels, the increase in global warming potential created by CH4 and N2O from natural gas
vehicles is in the order of 1% over that of CO2 alone. This should be compared against the 20-
30% reduction in total global warming potential realized by NGVs compared with gasoline
vehicles. [OAR-2009-0472-11310, p. 3]
Reducing CH4 emissions from these values would create a significant economic impact on
manufacturers, with minimal environmental benefit, and cause changes to current designs,
including replacing OEM catalysts with expensive methane specific catalysts having higher
loadings of precious metals. EPA has indicated that it does not intend the caps to impose
additional costs or require new emission controls. With respect to methane and nitrous oxide
emissions, EPA's preamble acknowledges that it "has not identified clear technological steps
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EPA Response to Comments
available to manufacturers today that would significantly reduce current emission levels." [OAR-
2009-0472-11310, p.3]
Conclusion
NGVAmerica and the Canadian Natural Gas Vehicle Alliance urge EPA to give full
consideration to these comments and accordingly modify its proposed regulations with respect to
natural gas vehicles. Based on the industry norm of CH4 emissions data shown above, and
recognizing that manufacturers normally calibrate to certify their emissions at about 50% of the
standard, we urge EPA to adopt a CH4 cap at 0.5 g/mile methane for natural gas fueled vehicles.
This proposal is in line with the logic followed by EPA with respect to the limits it has proposed
for such emissions from gasoline vehicles. This will allow manufacturers to continue to produce
NGVs on an economic basis, without any backsliding, while providing significant greenhouse
gas reductions. [OAR-2009-0472-11310, p. 4]
With respect to methane emissions (CH4) and nitrous oxide (N2O) emissions, EPA has proposed
a cap, limiting CH4 emissions for all vehicles to no more than 0.030 g/mi and N2O emissions to
0.010 g/mi. With respect to these two pollutants, manufacturers are not free to sell vehicles with
emission higher than the cap. In addition, the proposed regulations do not allow manufacturers to
use CO2 reductions to offset higher CH4 or N2O emissions. [OAR-2009-0472-7236.1, p.6]
NGV America has several concerns with respect to the CH4 and N2O caps proposed by EPA.
Providing an average for CO2, while imposing a cap on other greenhouse gas emissions, goes
against the trend in how most analyses look at greenhouse gas emissions. In fact, California
opted for a CO2-equivalent average that included CO2, methane, and nitrous oxide emissions.
We believe an averaging approach is optimal if the goal is reducing greenhouse gas emissions.
We also are concerned that the proposed regulation focuses exclusively on tailpipe emissions and
ignores the upstream emissions or full fuel cycle impacts of operating motor vehicles. The focus
on tailpipe emissions might be necessary in terms of the actual regulation but upstream emissions
should not be ignored. As indicated above, NGVs provide real reductions in terms of full fuel
cycle greenhouse gas emissions when compared with gasoline vehicles. This is especially true
with respect to renewable natural gas. These benefits should be taken into account when deciding
whether to allow averaging of different pollutants and also when developing the credit program.
As currently proposed, it is not clear that the benefits of NGVs will be delivered if the caps
imposed on methane emissions are adopted. [OAR-2009-0472-7236.1, p.6]
Based on a search of available emission studies, NGV America could not find any instances of
NGVs able to meet the proposed CH4 limit of 0.030 g/mi - despite having significantly less
CO2-equivalent tailpipe emissions when methane and nitrous oxides are included. A review of
the results from the GREET model's full-fuel cycle analysis further indicates that typical NGVs
are unlikely to be able to meet the proposed cap. GREET currently estimates that vehicle related
emissions of methane are about 0.146 g/mi for dedicated NGVs. Thus, it appears that the current
proposal could be prohibitive for manufacturers wanting to produce and sell NGVs in the U.S. It
is not clear whether EPA has fully considered the proposed rules impact on NGVs. The rule does
provide ample discussion of the issue, however, it is not clear what data EPA is relying upon for
its conclusions and it is not clear whether the conclusions regarding the ability to meet the
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methane cap apply to NGVs or whether these conclusions pertain to gasoline powered vehicles.
[OAR-2009-0472-7236.1, pp.6-7]
EPA's notice indicates that the intent of the caps is to ensure that emission levels of these
pollutants do not increase as CO2 emissions are reduced. EPA also indicates a number of times
that the imposition of the caps is not intended to be technology forcing. At the same time, EPA
appears aware that NGVs in the past have had much higher methane emissions than gasoline
vehicles. EPA appears to be confident that controls necessary to meet the more demanding Tier 2
standards will result in lower levels of CH4 emissions for NGVs. But the notice provides no data
or citations to support these conclusions. Without the ability to review the same data that EPA is
relying upon, we lack the confidence that EPA apparently has regarding the ability of NGVs to
meet the proposed CH4 cap. As noted above, our research into this issue has not revealed any
data showing that NGVs will meet the proposed cap. [OAR-2009-0472-7236.1, p.8]
Even if some NGVs can meet the cap, we believe adopting a CO2-equivalent average is
warranted with methane and nitrous oxide emissions appropriately weighted for their global
warming potential. Providing a CO2-equivalent approach as part of the rule would ensure that
the caps do not become an obstacle to NGVs, while at the same time ensuring greenhouse gas
emissions from such vehicles are no greater than for gasoline vehicles. Therefore, we strongly
urge EPA to allow NGVs to meet an average standard that includes averaged emissions for CO2,
CH4, and N2O. If this is done, we are confident that NGVs will not only achieve the standard
but surpass gasoline powered vehicles. [OAR-2009-0472-7236.1, p.8]
CARB currently allows manufacturers to use a static value of 0.006 g/mi for N2O emissions
instead of requiring direct measurement of such emissions. Since N2O is currently not measured
over the federal test procedures for emissions and since many emission testing shops are unlikely
to have such equipment for several years, it would be advisable to accept the CARB default
measurement. This is necessary because the aftermarket industry relies on emission testing
facilities operated by other businesses. While the new rule appears to require facilities to upgrade
equipment in order to be able to test for N2O emissions, aftermarket conversion system suppliers
are concerned that they will be unable to satisfy the new N2O requirements if businesses they
rely on for emission testing do not acquire the necessary equipment. Therefore, in lieu of
requiring testing for N2O emissions, we urge EPA to allow the use of the default figure used by
CARB. [OAR-2009-0472-7236.1, pp.8-9]
State of New Jersey
The Department is supportive of the USEPA's proposed approach to regulate methane (CH4) and
nitrous oxide (N2O) by means of per-vehicle emission standards that would act to cap emissions
for model years 2012 through 2016 at the current levels. The USEPA's proposal to separately
regulate methane for the first time is a particularly important initial step to ensure that this high
global warming potential gas is controlled in the transportation sector. [OAR-2009-0472-7109.1,
pp.9-10]
Toyota Motor North America
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EPA Response to Comments
Toyota has concerns with setting separate emission standards for N2O and CH4 proposed by
EPA. The proposed level only serves as a backsliding measure and offers little in terms of GHG
reduction benefits. Furthermore, Toyota is concerned with the prospect that these standards may
inhibit future technology introduction needed to comply with this regulation. Specifically, EPA
should not set the proposed N2O cap standard because emissions from direct injection lean burn
and diesel engines tend to be higher and these technologies were not considered in developing
the cap. EPA should not set the CH4 cap standard because it may exclude the introduction of
CNG technology as a means to mitigate CO2. If EPA does intend to move forward with a CH4
standard, Toyota would like EPA to strongly consider allowing exemption for carryover
vehicles. [OAR-2009-0472-7291, p.9]
Instead of separate emission standards, Toyota suggests EPA incorporate N20 and CH4 into a
fleet average calculation. The fleet average adjustment would resemble the AB 1493 calculation
of: (CO2 + 296 x N2O + 23 x CH4} . For N2O, Toyota proposes to use a constant value (i.e.
N2O = 0.006 grams/mile, per AB1493). Merits of the fleet average proposal include the fact that
the fleet average does not obstruct the introduction of specific technologies that may be needed
to comply with EPA's rule. Toyota's proposal to use the N2O concept also eliminates the
challenge of N2O measurement accuracy at the proposed level of .010 gram per mile. [OAR-
2009-0472-7291, p.9]
EPA proposes a per-vehicle N2O emission standard, measured over the FTP, which would
become effective in 2012MY. EPA believes that current technology gasoline vehicles can meet
the standard at no cost and acknowledges that diesels may have modest associated costs to meet
the standard. EPA acknowledges the short lead time for facility upgrades necessary for N2O
measurement and will allow a compliance statement for 2012MY. [OAR-2009-0472-7291, p.8]
University of California, Santa Barbara, Bren Working Group on Vehicle Fuel Economy
Standards for Non-CO2 GHGs
We support the EPA's proposal to cap non-CO2 GHG emissions at their current levels—CH4 at
0.030 g/mile (p. 49525) and N2O at 0.010 g/mi (p. 49524)—due to their respective multiplicative
global warming potential of 21 and 310 times greater than CO2. The emissions of N2O and CH4
contribute significantly to total CO2-equivalent emissions of GHGs from the lifecycle of
conventional and alternative transportation fuels and technologies. Emissions from these potent
GHGs vary significantly depending on a number of factors, including the type of fuel consumed.
As Table 1 illustrates [See OAR-2009-0472-7188.1, p. 7 for Table 1], N2O and CH4 jointly
account for approximately 15% of the lifecycle CO2-equivalent GHG emission impacts from
conventional gasoline vehicles, and more than 29% from some alternative fuel vehicles. [OAR-
2009-0472-7188.1, p. 6]
Unlike CO2, CH4 and N2O are a function of many complex dynamics, such as the combustion
pressure, temperature, and air-to-fuel ratio, the type of fuel used, as well as the age and type of
emission control systems operating. CH4 and N2O emissions cannot be derived from one or two
basic characteristics of a fuel, thus the EPA's plan to measure CH4 and N2O emissions during
the CAFE tailpipe test will ensure a more accurate assessment. [OAR-2009-0472-7188.1, p. 7]
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Placing a cap on non-CO2 GHG emissions at current levels and disallowing fleet averaging or
emission-level trading is a straightforward means of assuring that CH4 and N2O levels do not
increase per vehicle. This approach, as opposed to embedding non-CO2 GHG emissions as CO2-
equivalent emissions in the ruling, discourages manufacturers from making other changes to
avoid delivering significant CO2 reductions. [OAR-2009-0472-7188.1, p. 7]
Vehicle age affects N2O and CH4 emissions. Sasaki and Kameoka found that older vehicles
produced much higher emissions than newer vehicles with similar emission control equipment.
In this study, the oldest vehicle tested (which had an odometer reading of 52,000 km) produced
several times the N2O emissions of the newest vehicle (with only 1,000 km of use). Lipman &
Delucchi research also suggests that for most fuels—both nonpetroleum and petroleum based
fuels—CH4 emissions increase with the age of the catalyst. Based on these findings, it becomes
increasingly important to test CH4 and N2O emissions over the vehicle lifetime, and we
recommend these tests be included and reported as part of the In-Use Verification Program
(IUVP). While the EPA claims not to have 'sufficient data' to determine the appropriate
thresholds for CO2, N2O, and CH4 emissions, we do not agree with excluding these emissions
from the In-Use Confirmatory Program (IUCP). Given that the goal of this ruling is to reduce
overall GHG emissions, and the fact that this decision will have ramifications for many years to
come, it is important the EPA ensure that the fleet maintains, within reason, the standards
established in this ruling. [OAR-2009-0472-7188.1, p. 7]
While we encourage the EPA to enforce the cap on CH4 and N2O emissions, we also
recommend that the EPA remain flexible with regard to possible future technologies. New
technologies may significantly reduce the level of carbon dioxide while slightly increasing CH4
or N2O, but result in a net reduction to overall CO2 emissions equivalents. This is due to the
characterization factors assigned to CH4 and N2O, as shown in the following: [OAR-2009-0472-
7188.1, p. 7]
CO2 emission standard/footprint > 21 * ACH4 + 310 * AN2O + -ACO2
For instance, a technology change in air conditioning could improve fuel consumption by as
much as 20%, thus reducing not only pressure on fuel sources, but also emissions of CO2 and
other tailpipe emissions. However, it may be denied employment despite the offsetting effects of
reductions to fuel consumption due to a small non-CO2 increase in GHGs directly from use. If
the impacts from CH4 and N2O are increased, but the total emission of CO2-equivalent is
lowered by using the new technology, the technology should be permitted. However, all
emissions must remain below the approved CAFE standards for the proposed year. [OAR-2009-
0472-7188.1, p. 7]
[The following comments are from LA Testimony, OAR-2009-0472-7283, pp.118-119]
Our third point concerns standards for non-CO2 GHGs. We support the EPA's proposition to cap
methane and nitrogen dioxide at current levels due to their respective multiplicative global
warming potential of 21 and 310 times greater than CO2 according to the IPCC.
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EPA Response to Comments
We agree that the cap on methane and nitrogen dioxide is more effective than using CO2
equivalency measures as such measures dilute the primary goal of reducing CO2.
However, we ask that the EPA remain flexible with regard to possible future technologies that
might reduce the level of carbon dioxide while increasing methane and nitrogen dioxide or
vice versa but result in a net reduction in global warming potential. However, total CO2
emissions must remain below the approved CAFE standards for the proposed year.
Given the potency of methane and nitrogen dioxide in contributing to climate change, we
also request the inclusion of incentives, such as a credit system, for reducing nitrogen dioxide
and methane emissions below the proposed cap as a means to motivate innovation in clean
technologies.
Volkswagen Group of America (Volkswagen)
Volkswagen does not believe standards for CH4 and N2O are necessary or warranted, at least in
the timeframe of this rulemaking. As EPA points out in the NPRM, the contributions from N2O
(2.7%) and CH4 (0.2%) to the total GHG emissions attributed to passenger cars and light-duty
trucks is small. In addition, Volkswagen is concerned that the levels proposed by the EPA could
result in precluding some future powertrain concepts with significant C02 reduction potential.
Initial test results Volkswagen performed on a CNG vehicle and a flexible fuel concept indicate
that the CH4 standard as proposed by EPA may prevent future certification of alternate fuel
vehicles. Additionally the N2O results as measured on the CNG concept shows a variability
which needs to be investigated in detail. [OAR-2009-0472-7210.1, p.2]
With the test results above, Volkswagen believes that more data are necessary to set a reasonable
and appropriate CH4 standard. It appears the CH4 standard in the NPRM is derived from the
EPA's database but is focused on conventional concepts only. The source for the N2O standard
proposed is not obvious but the first test results on an alternate vehicle concept using CNG
indicate that more data specifically on these concepts are necessary. Based on these results
Volkswagen strongly recommends to postpone the standards in the current CO2 proposal and
delay regulatory actions on CH4 and N2O to a later point, allowing more time for engineering
evaluation on possible and appropriate standards. As initially stated, it is possible these cap
standards may be challenging for certain concepts with significant CO2 reduction potential.
[OAR-2009-0472-7210.1, p.6]
The cap standards as proposed by EPA are full useful life standards. These will result in
manufacturers establishing deterioration factors and a certification level lower than the proposed
standards. We question the usefulness of the proposed cap standards. [OAR-2009-0472-7210.1,
p.6]
Also, by EPA's admission there is not a large amount of data available for these emission
compounds. In EPA's Memorandum to the Docket dated November 19,2009 entitled, 'Derivation
of Proposed N2O and CH4 Cap Standards' (Docket EPA-HQ-OAR-2009-0472), EPA
acknowledges that there is little data available regarding CH4 and N2O. For this additional
reason Volkswagen suggests delaying consideration of standards for N2O and CH4 until more
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emission data is available and a better understanding of trade-offs with CO2 reduction strategies
is available. EPA notes it is concerned with the possibility of increased CH4 and N2O emission
levels in the future and suggests that the proposed standards would act as caps to prevent future
increases. Volkswagen maintains there is time to examine this issue in more detail and still issue
standards in the future if an increase In these emissions is noted or a future cap is warranted.
[OAR-2009-0472-7210.1, p.6]
In addition, addling standards for N2O and CH4 result in a testing burden. As EPA notes, new
test equipments is required to measure N2O. [OAR-2009-0472-7210.1, p.6]
As discussed, due to the small GHG impact, the possible challenges to alternative fuel vehicles,
the lack of test data, the in-use compliance issues, and the increased test burden, we recommend
EPA postpone setting standards for N2O and CH4 until more study of the overall impact of such
standards is understood. [OAR-2009-0472-7210.1, p.7]
If EPA is compelled to account for CH4 and N2O emissions, Volkswagen supports the Alliance
comments that a CO2 equivalent factor is appropriate. The application of a factor at least
eliminates concerns regarding test burden and in-use issues. [OAR-2009-0472-7210.1, p.7]
Volvo Car Corporation
EPA requests comments on N2O and CH4 emission standards. Given the insignificant
contribution of N2O and CH4 from vehicles and the burden of implementing such standards,
VCC supports the Alliance proposing that EPA instead rely on the use of a factor to account for
these emissions. This approach would enable introduction of certain vehicle technologies that
have an overall GHG benefit. [OAR-2009-0472-7168.1, p.7]
EPA Response
N2O and CH4 Standards - General
EPA received many comments on the proposed N2O and CH4 "cap" standards. A range of
stakeholders supported the proposed approach of "cap" standards and the proposed emission
levels, including most states and environmental organizations that addressed this topic. These
commenters stated that EPA needs to address all mobile greenhouse gases under the Clean Air
Act, and N2O and CH4 are both more potent contributors to global warming than CO2. The
Manufacturers of Emissions Controls Association (MECA) was also supportive.
EPA agrees with the NGO, state, and other commenters that light-duty vehicle emissions of these
two compounds are currently small but important contributors to the U.S. inventories of
emissions. As discussed in detail in Section III.A.2 of the preamble, under section 202(a) (1) the
Administrator has significant discretion in how to structure the standards that apply to the
emission of the air pollutant at issue here, the aggregate group of six greenhouse gases, including
N2O and CH4. EPA has the discretion under section 202(a) (1) to adopt separate standards for
each gas, a single composite standard covering various gases, or any combination of these. In
this rulemaking EPA is finalizing separate standards for nitrous oxide and methane, and a CO2
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standard that provides for credits based on reductions of HFCs, as the appropriate way to issue
standards applicable to emission of the single air pollutant, the aggregate group of six
greenhouse gases.
Some auto industry commenters proposed that EPA not set standards at this time, but rather,
organize a government-industry test program to better understand N2O emissions characteristics
and controls. Since as discussed below the cap standards we are establishing are well above
most emission levels of most current conventional vehicles, we do not believe that there is a need
to delay the setting of standards while gathering additional data. In the future, further such
research could be warranted if EPA were considering more stringent, technology-forcing
standards.
Stringency of the N2O and CH4 "Cap" Standards
A number of commenters, primarily auto manufacturers, expressed concerns that the levels of
the proposed cap standards for N2O and CH4 could pose technological challenges for some
vehicle technologies and potentially restrict the development of some technologies that could
reduce overall GHG emissions. Auto industry commenters, including the Alliance and AIAM,
were concerned that the N2O standard could impede the introduction of, for example, lean-burn
gasoline and diesel technologies. Also, these organizations, as well as natural gas vehicle
advocates, were concerned that the CH4 standard could impede the expanded production and sale
of CNG or LNG vehicles.
Notably, the focus of these organizations' concerns about the stringency of the standards is on
alternative technologies and fuels, not on conventional vehicles. As we discuss in detail in
Section III.B.7 of the preamble, EPA's intent was to establish the cap standards at levels
consistent with those seen in the vast majority of conventional gasoline and diesel vehicles,
which we expect to be able to comply with little or no new technological effort or expense on the
part of auto manufacturers.
However, we recognize that, in the absence of a limitation, the potential for significant emission
increases exists with the evolution of new vehicle and engine technologies or the expanded
penetration of existing low-production technologies into the fleet. Indeed, several industry
commenters concede as much in stating that they are contemplating introducing vehicle
technologies that could result in emissions exceeding the cap standard levels. For example,
Volkswagen provided limited data on compressed natural gas (CNG) and FFV concept cars and
NGV America provided limited data on several vehicles (although some of these were vehicles
certified as heavy-duty vehicles, so those results are not relevant to this rule). These data
generally show higher N2O and/or CFLt levels than current gasoline and diesel vehicles. The
organizations submitting this data do not specify any new or improved emission control
technologies that could be applied to these vehicles, or how costly such improvements might be.
Clearly, manufacturers wishing to introduce or significantly expand production of vehicles
incorporating some of these alternative vehicle or fuel technologies may need to make
improvements, or make use of the optional CO2 equivalent compliance approach described
below, in order to achieve N2O and/or CFLi emission levels similar to conventional gasoline
vehicles and meet the cap standards. Given this lack of information and the availability of a
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CO2-equivalent compliance option, as described below, EPA does not ascribe costs to the N2O
and CH4 cap standards.
Although the overall GHG program that EPA is establishing is designed to encourage innovative
technological responses to GHG standards, our general intent is not to trade off emissions of one
GHG for another. We recognize that catalytic NOx control technologies can maintain or reduce
N2O emissions in certain cases - for example, NOx control approach used on current Tier 2-
compliant diesel vehicles do not tend to favor the formation of N2O emissions - while in other
cases these technologies can also increase N2O emissions. Diesel cars and light trucks with
advanced emission control technology, for example, are in the early stages of development and
commercialization. To the extent that this segment of the vehicle market develops, the N2O
standard could require these manufacturers to incorporate control strategies that would minimize
N2O formation above the cap standard. (Available approaches for these vehicles may include
using electronic controls to limit catalyst conditions that might favor N2O formation and
consideration of different catalyst formulations.) Although some of these approaches may have
modest associated costs, EPA believes that they will be small compared to the overall costs of
the advanced NOx control technologies already required to meet Tier 2 standards. In any event,
these phenomena are not well understood or easily predictable today.
Similarly, hydrocarbon control catalysts can be designed to reduce CH4 emissions - for example,
Honda has certified a dedicated CNG vehicle for several years with CHt emissions well below
the new CH4 cap standard - while some designs of natural gas and ethanol fueled vehicles can
produce higher levels of CH4 emissions than do similar gasoline fueled vehicles. Thus, the cap
standards we are establishing for both N2O and CH4 are meant to encourage developers of new
vehicle technologies to address all vehicle GHG emissions simultaneously as these technologies
enter the market more broadly (e.g., N2O control for lean-burn combustion technologies, and
CH4 controls for natural gas or ethanol fuel technologies.) For each of these potential of
existing (low-production) vehicle and fuel technologies, there are as yet no clear indications from
manufacturers for significant production plans.
As the data from commenters above reinforces, some new technologies would need more
technological effort to reach the cap standards than others. Also, as discussed below,
manufacturers have raised concerns about test burdens. For these reasons, the final rule includes
an approach to N2O and CH4 standards providing an optional pathway to compliance if a
manufacturer chooses to market a vehicle with N2O and/or CH4 emissions approaching or
exceeding the cap standards. The final regulations thus allow a manufacturer to use an optional
CO2-equivalent approach, as suggested by several commenters. In the proposal, EPA sought
comment on an approach of expressing N2O and CH4 in common terms of CO2-equivalent
emissions and combining them into a single standard along with CO2 emissions. 74 FR at
49524. (California's "Pavley" program adopted such a CO2-equivalent emissions standards
approach to GHG emissions.) Several auto industry commenters and the Institute for Policy
Integrity (NYU) supported this type of compliance approach. In lieu of complying with the
separate N2O and CH4 cap standards, the compliance alternative allows a manufacturer
(including manufacturers that convert vehicles to alternative fuels) to choose to convert its N2O
and CH4 test results (or, as described below, substitute a default N2O value for MY 2012-2014)
into CO2-equivalent values and add this sum to their CO2 emissions. To avoid issues of
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consistency across a manufacturer's product line, a manufacturer choosing this option for one test
group will need to apply this approach to all of the test groups in its fleet. This approach is more
environmentally protective overall than the cap standard approach, since the manufacturer will
need to reduce its CO2 emissions to offset the higher N2O (and/or CH4) levels, but will not be
allowed to increase CO2 above its footprint target level by reducing N2O (or CH4).
Manufacturers using the compliance alternative to address N2O and/or CH4 challenges with an
alternative vehicle or fuel technology should face no additional compliance costs. This is
because in most cases the alternative vehicle and fuel technologies would likely result in CO2
levels lower than comparable conventional vehicles, and so could comply without additional
expenditures on controls of N2O or CH4 emissions.
The N2O and CH4 values to be used in the optional CO2-equivalent formula will be the measured
emission values for these GHGs, except N2O in model years 2012 through 2014. For these
model years, in response to manufacturer testing concerns discussed below, manufacturers may
use a default N2O value of 0.010 g/mi, the same value as the N2O cap standard. For MY 2015
and later, the manufacturer would need to provide actual test data on the emission data vehicle
for each test group. (That is, N2O data would not be required for each model type, since EPA
believes that there will likely be little N2O variability among model types within a test group.)
EPA believes that its selection of 0.010 g/mi as the N2O default value is an appropriately
protective level, on the high end of current technologies, as further discussed in Section III.B.7
of the preamble.
Two commenters, the Center for Biological Diversity (CBD) and a private citizen, supported
more stringent cap standards. CBD commented that in light of the potency of these compounds,
EPA should develop standards that do not just maintain current levels, but reduce emissions over
current levels and that EPA had not analyzed either the technologies or the costs of doing so.
EPA did not propose and is not prepared at this time to establish "technology forcing" standards
for N2O and that would require manufacturers to reduce emissions of these compounds below the
levels generally seen in current conventional gasoline and diesel vehicles. We believe that the
stringent Tier 2 program and the associated NOx fleet average requirement already result in
significant N2O control in conventional gasoline vehicles, and the agency does not expect current
N2O levels to rise for these vehicles. Moreover, EPA believes that the CO2 standards will be
challenging for the industry and that these standards should be the industry's chief focus in this
first phase of vehicular GHG emission controls.3 Further, to reduce current emissions would
result in costs that would need to then be included in the overall economic impacts of the
program and accounted for in establishing a different, potentially less stringent CO2 standard.
Although as discussed above we recognize that some technological approaches may exist for
vehicles with alternative fuel and vehicle technologies to address N2O or CH4 emissions above
the cap standards, we are not aware of technologies that could in the time frame of this rule
reduce these emissions significantly and consistently below the cap levels, since this could
require broad improvements to gasoline vehicle emission controls across the fleet. The
3 See Massachusetts v. EPA. 549 U.S. at 533 (EPA has significant discretion as to timing of GHG regulations); see
also Sierra Club v. EPA. 325 F. 3d 374, 379_(D.C. Cir. 2003)_(upholding anti-backsliding standards for air toxics
under technology-forcing section 202 (1) because it is reasonable for EPA to assess the effects of its other
regulations on the motor vehicle sector before aggressively regulating emissions of toxic vehicular air pollutants.
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commenters do not suggest any technologies that could do so. EPA could revisit this decision
in the future if such technologies emerge.
Test Burden Issues for NiO
Auto manufacturers were almost unanimous in raising concerns about the impacts of a new
testing requirement for N2O on their test facilities, equipment, and procedures. On the other
hand, there were very few concerns about new burdens for CH4 testing. This disparity in
comments can be explained by the fact that manufacturers have historically developed CH4
testing capability and experience for a number of purposes, including compliance with non-
methane organic gases (NMOG) standards. Thus, for CH4, the new CH4 cap standard will not
result in new test burdens.
We recognize that N2O testing will be new to most manufacturers. However, we do not believe
that such testing will impose unreasonable new burdens, especially in relation to the cost of
complying with the overall GHG standards. As discussed in Section III.B.7 of the preamble,
N2O measurement equipment capable of accurate measurement of emissions in the range of the
cap standard is now readily available at costs that, while not trivial, are not unreasonable
compared to other traditional emission measurement equipment. For example, EPA in the last
two years has purchased and installed cost-effective photo-acoustic analysis equipment and has
been using it successfully for N2O and other testing. Manufacturers ,may need to modify their
test facilities and patterns of testing to integrate N2O testing into their emission testing programs,
but again, these changes are not unusual and will not be excessively costly in most if not all
cases.
Still, given the relatively short lead-time before the N2O cap becomes effective and the newness
of N2O testing to this industry, EPA proposed that manufacturers be able to apply for a
certificate of conformity with the N2O standard for model year 2012, provided that they supply a
compliance statement based on good engineering judgment. Under the proposal, beginning in
MY2013, manufacturers would have needed to base certification on actual N2O testing data.
This approach was intended to reasonably ensure that the emission standards are being met,
while allowing manufacturers lead time to purchase new N2O emissions measurement
equipment, modify certification test facilities, and begin N2O testing. After consideration of the
comments, EPA agrees with manufacturers that one year of additional lead-time to begin actual
N2O measurement across their vehicle fleets may be still be insufficient for manufacturers to
efficiently make the necessary facility changes and equipment purchases. Therefore, EPA is
extending the ability to certify based on a compliance statement for two additional years, through
model year 2014. For 2015 and later model years, manufacturers will need to submit
measurements of N2O for compliance purposes. We believe that this additional leadtime before
testing is required also addresses more detailed technical concerns manufacturers raised about
N2O testing early in the program.
Other Comments
Some manufacturers raised questions and concerns about how EPA could best address
potential deterioration of emissions of N2O and CH4 over the life of the vehicles. Although
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catalytic emission control systems generally deteriorate in effectiveness over time, EPA is not
aware of information on current technology vehicles that would allow specific conclusions on
the degree of emissions deterioration. (One commenter, the Bren Working Group at UC Santa
Barbara, referenced studies from 1992 and 2002 that indicated that vehicles of those relative eras
showed significant deterioration of N2O and CH4, respectively.) EPA believes that some degree
of emissions deterioration in current catalytic control systems is likely, but given the limited
information available on current technology vehicles, we are not able to determine appropriate
independent values for such deterioration. However, we are not aware of information on current
vehicles that would indicate that deterioration of these emissions would be significantly different
- higher or lower - than those of similar conventional emissions. EPA recognizes that
manufacturers may not be able to develop DFs for N2O and CH4 for all their vehicles in the 2012
model year, and thus EPA is allowing the use of alternative values through the 2014 model year.
For N2O the alternative value is the DF developed for NOx emissions, and for CH4 the
alternative value is the DF developed for NMOG emissions.
Auto industry commenters also expressed concerns that requiring measurement of N2O using
newer, more general test procedures developed to apply to all types of vehicles and engines
would inherently require a wholesale shifting by manufacturers away from traditional light-duty
test procedures. We believe that the requirements we proposed and are now finalizing do not
have this effect, and that the manufacturers' concerns are unfounded. The regulatory language
being finalized is very specific, referring to 40 CFR Part 1065 in a targeted way to only make
reference to those requirements necessary for measurement of N2O. The regulations state very
clearly and unambiguously that it is N2O measurement devices alone — not laboratory hardware,
software, calculations, or procedures — that must meet Part 1065 specifications. That is, a
manufacturer can continue to use current light-duty test procedures for all other purposes while
using the N2O analyzer specifications in Part 1065 for N2O testing.
A commenter from the natural gas vehicle industry suggests that EPA include upstream fuel
GHG emissions in its compliance approach. We agree that the production and distribution of
natural gas can produce lower emissions of GHGs than comparable upstream emissions from the
petroleum fuels. However, EPA as discussed in detail in Section III.C.3 of the preamble, EPA
has concluded that for this rule, we will only consider upstream emissions for electric vehicles,
given that electricity upstream GHG emissions are about three times higher than gasoline
upstream GHG emissions. By comparison, the difference in upstream GHG emissions for both
diesel fuel from oil and CNG from natural gas are relatively small compared to differences
associated with electricity. EPA will continue to assess the issue of upstream emissions in future
rulemakings.
5.6. EPA Small Entity Exemption
Organization: Association of International Automobile Manufacturers (AIAM)
Vehicles Services Consulting, Inc
KTM-Sportmotorcycle AG
Clean Energy Fuels
European Small Volume Car Manufacturers' Alliance (ESCA)
Artega Automobil GmbH & Co. KG
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Wiesmann GmbH
Comment:
Association of International Automobile Manufacturers (AIAM)
The regulatory language proposed in section 86,1801-12(j) is as follows:
Businesses meeting the Small Business Administration size standard defining a small business as
described in 13CFR 121.201 are eligible for exemption from the greenhouse gas emission
standards specified in § 86.1818-12and associated provisions.
So, in order to qualify for the small business exemption, the manufacturer must meet the SB A
"size standard." The "size standards" in 13 CFR 121.201 are specified only in terms of a number
of employees, 1000 in the case of vehicle manufacturers. The EPA regulation does not state that
the manufacturer must meet the definition of "small business concern" (which excludes foreign
entities) under the Small Business Act in order to be exempted. There is no justifiable reason to
limit the small business exemption to U.S. based companies, and doing so would present serious
concerns under international trade agreements. If EPA decides to maintain this small business
exemption in the final rule, it should clarify that the exemption is available to small entities
regardless of location. This issue could be avoided entirely if EPA adopts our recommendation to
use the small volume certification criterion of 15,000 units U.S. sales annually to exclude small
manufacturers for the 2012-16 period.
Vehicle Services Consulting, Inc.
EPA proposed a provision allowing a GHG exemption BUT ONLY FOR CERTAIN small
businesses - those that meet the Small Business Administration (SBA) criteria contained in 13
CFR 121.201.6 With this limitation, however, the proposed exemption appears to apply only to
USA companies. The "US only" limitation may be in violation of WTO requirements. In
addition, the "small entity" provision is limited to auto manufacturers with fewer than 1000
employees - a criterion that is irrelevant to a manufacturer's ability to comply with emissions
standards (whereas the factor historically determining SVM status - vehicle sales - does affect
ability. [OAR-2009-0472-7083.1, pp.3-4]
KTM-Sportsmotorcycle AG
The small entity conditional exemption appears to be only available to US based firms [OAR-
2009-0472-7183, p. 1]
There are several ways forward that we would support, such as extending the small entity
conditional exemption to all small volume manufacturers. [OAR-2009-0472-7183, p.l]
Clean Energy Fuels
[[These comments were submitted as testimony at the Detroit public hearing. See docket number
EPA-HQ-OAR-2009-0472-6185, p. 140.]]
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EPA Response to Comments
In terms of the Proposal to Defer Standards For Manufacturer's Meeting SBA's Definition of
Small Businesses:
Clean Energy believes this deferral is appropriate, and we look forward to working closely with
EPA and NHTSA in the coming years to design appropriate GHG standards for small volume
manufacturers as part of a future regulatory action.
European Small Volume Car Manufacturers' Alliance (ESCA)
There is a provision in the regulation for the 'small entity conditional exemption'. However, the
definition applied to small volume manufacturers in this instance is the Small Business
Administration criteria (<1,000 employees), which only allows for US producers to apply for the
SECE. If the SECE was extended beyond SVMs based in the US, then this would allow several
EU SVMs to participate. [OAR-2009-0472-7287.1, p.4]
ESCA would also support the definition of small entities being based on less than 15,000 sales in
the US per annum, rather than the SBA definition. Several ESCA members have submitted
detailed proposals. We hope that EPA/NHTSA is able to consider these proposals and work with
the European industry to achieve a workable solution for both the regulator and the businesses.
[OAR-2009-0472-7287.1, p.4]
Artega Automobil GmbH & Co. KG
The small entity conditional exemption appears to be only available to US based firms. [OAR-
2009-0472-7481.1, p. 1]
Wiesmann GmbH
The small entity conditional exemption appears to be only available to US based firms [OAR-
2009-0472-7198, p. 1]
There are several ways forward that we would support, such as extending the small entity
conditional exemption to all small volume manufacturers. [OAR-2009-0472-7198, p.l]
Society of Motor Manufacturers and Traders Limited
There is a provision in the regulation for the 'small entity conditional exemption'. However, the
definition applied to small volume manufacturers in this instance is the Small Business
Administration criteria (<1,000 employees), which only allows for US producers to apply for the
SECE. If the SECE was extended beyond SVMs based in the US, then this would allow several
UK (and EU) SVMs to participate. [OAR-2009-0472-7229.1, p.4]
SMMT would also support the definition of small entities being based on <15,000 sales in the
US per annum, rather than the SBA definition. [OAR-2009-0472-7229.1, p.4]
EPA Response:
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EPA is clarifying that foreign as well as U.S. manufacturers meeting the SBA size criteria are
eligible for the exemption. EPA in fact intended this result at proposal, although the commenters
properly pointed out that this intent was not clearly expressed. EPA is retaining the SBA size
criteria to define small entities and believes that it is important to do so to ensure that all small
entities are exempt regardless of sales volume. EPA also proposed that otherwise-exempt small
entities submit a one-time notification to EPA. For the reasons stated in Section III.B.8 of the
preamble to the final rule, EPA has determined that such a condition is unnecessary.
Consequently, small entities (as defined using SBA size criteria) are exempt from all
requirements of the final rule.
In addition, EPA is also deferring standards for small volume manufacturers until a future
rulemaking. Comments regarding small volume manufacturers and how EPA is implementing
the small volume manufacturer deferment, including determining small volume manufacturer
eligibility, are discussed in Section 5.4.2.
5.7 EPA Additional Credit Opportunities for COi Fleet Averaging Program
5.7.1. Air Conditioning Related Credits
OrganizationrChrysler Group, LLC (Chrysler)
Alliance of Automobile Manufacturers (Alliance)
Volkswagen Group of America (Volkswagen)
Toyota Motor North America
BMW of North America, LLC (BMW)
Honeywell International, Inc.
Nissan North America,
SABIC Innovative Plastic
Pittsburg Glass Works
California Air Resources Board
State of New Jersey
National Renewable Energy Laboratory
University of California - Santa Barbara
Guardian Industries Corp.
Environment Michigan
Schade, Michael T.
Comment:
Chrysler Group, LLC
Adjustment of NHTSA Standards for EPA Air Conditioning Credits
Harmonization between the NHTSA and EPA programs is a key component to successful
implementation of a single National Program. Both agencies realized the importance of
harmonization in the Notice of Intent, in which harmonization is mentioned nine times. That
Notice describes the harmonization of the EPA and NHTSA programs as follows:
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'EPA and NHTSA intend to propose two separate sets of standards, each under their respective
statutory authorities. EPA expects to propose a national CO2 vehicle emissions standard ....
NHTSA expects to propose appropriate related CAFE standards.' [NHTSA-2009-0059-0124,
p.ll]
We believe that there is a significant discrepancy between the NHTSA and EPA standards when
addressing air conditioning credits. In EPA's portion of the NPRM, investments made in A/C
system improvements to lower greenhouse gas emissions are explicitly recognized with
greenhouse gas credits. A/C credits are not explicitly available in the NHTSA CAFE rule; credits
are assumed in the development of the NHTSA attribute-based standards in order to ensure the
'appropriately related' threshold is met. However, the standards remain inconsistent. [NHTSA-
2009-0059-0124, p.ll]
We believe not all factors were adequately taken into account (e.g. phase-in of alternative
refrigerants) to arrive at the industry average AIC credit approximation. [NHTSA-2009-0059-
0124, p.ll]
The issue here has to do with harmonizing the two rules - a key objective of a successful
National Program. Manufacturers still have to meet the overall stringency of the joint program.
[NHTSA-2009-0059-0124, p. 12]
Recommendation:
Chrysler recommends that NHTSA recognize each manufacturer's air conditioning improvement
plan for 2012-16 model years. [NHTSA-2009-0059-0124, p.14] [[See NHTSA-2009-0059-0124,
pp. 11-15 for more discussion on this issue]]
Provision of Fuel Economy Air Conditioning Credits
Chrysler believes that the EPA Administrator has authority to define and calculate a
manufacturer's average fuel economy. See 49 U.S.C. § 32904(c) ('the Administrator shall
measure fuel economy for each model and calculate average fuel economy for a manufacturer
under testing and calculation procedures prescribed by the Administrator.'). EPCA provides the
EPA Administrator with broad discretion to determine how to calculate a manufacturer's average
fuel economy. [NHTSA-2009-0059-0124, p. 16]
The Administrator therefore may exercise her discretion to calculate fuel economy in a manner
that recognizes the GHG reduction from improved air conditioning systems. She can do this by
adding the value of the A/C credits to each model's fuel economy when calculating a
manufacturer's corporate average fuel economy. [NHTSA-2009-0059-0124, p. 16]
In effect, the NPRM already accomplishes part of this task by setting forth industry average A/C
credits and requiring that they be taken into account when GHG values are translated to fuel
economy values. Unfortunately, the NPRM' s use of average A/C credits for this translation,
rather than the earned A/C credits, creates a discrepancy between the GHG values and A/C
credits that is contrary to the regulatory compatibility goal of the National Program. In addition,
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it discourages manufacturers from applying technology that will exceed the industry average, as
the benefits from that added technology will not be recognized in the CAFE program. [NHTSA-
2009-0059-0124, p. 16]
It is important to note that the process through which the agencies can apply A/C credits in the
CAFE program involves only the calculation of a manufacturer's average fleet fuel economy. It
does not involve in any way the process through which each vehicle model is to be tested and its
fuel economy measured. [NHTSA-2009-0059-0124, p. 16]
Alliance of Automobile Manufacturers (Alliance)
The Alliance supports the inclusion of credits for mobile air conditioner (MAC) improvements in
EPA's GHG regulation. If structured appropriately, these MAC provisions can provide
significant near-term GHG benefits at comparatively low cost. The inclusion of MAC credit
provisions was a critical element that enabled the industry to reach agreement in May 2009 with
the Administration on a regulatory path forward to reduce vehicle GHG emissions. [OAR-2009-
0472-6952.1, p.8]
Volkswagen Group of America (Volkswagen)
Volkswagen supports the comprehensive comments the Alliance has issued in the topic of air
conditioning credit. [OAR-2009-0472-7210.1, p.4]
Toyota Motor North America
"To comply with the CO2 fleet-wide average standards, EPA proposes that manufacturers be
able to generate and use credits for improved air conditioner (A/C) systems. EPA has structured
the A/C provisions to account for A/C direct emissions (leakage reductions) and A/C indirect
emissions (efficiency improvements). Additionally, the proposed leakage reduction credit would
take into account the reduced GHG impact from the use of an alternative refrigerant. [OAR-
2009-0472-7291, p.20]
In general, Toyota supports the inclusion of credits for MAC (mobile source air conditioner)
improvements in EPA's GHG regulation. The comments provided are aimed at ensuring that
MAC credit provisions remain effective in delivering the appropriate GHG reduction credits and
for providing some incentive for introducing future MAC technology improvements. [OAR-
2009-0472-7291, p.20]
BMW of North America, LLC (BMW)
BMW supports credits for improved air conditioning systems as an effective method for
reducing GHG emissions and improving fuel economy provided vehicle test procedures remain
unchanged. [OAR-2009-0472-7145.1, p.7]
The proposal on mobile air conditioning neglects measures which reduce the transmission of
solar energy into a vehicle's interior and the demand for cooling. Therefore, as a technology to
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reduce GHG emissions, improved glazing and shading should also be taken into account and
receive appropriate credit. More specifically, we suggest revising the proposed regulatory
language at §86.1866-12 (c) Credits for improving air conditioning system efficiency to state that
air conditioning efficiency credits will also be made available for other technologies, upon
approval by the EPA Administrator, if the manufacturer demonstrates that such technologies
allow the air conditioning system to achieve C02-equivalent grams per mile emissions reductions
comparable to those associated with the technologies identified in §86.1866-12 (c)(l) (i)-(vi).
[OAR-2009-0472-11294.1, pp. 1-2]
Honeywell International, Inc.
Honeywell supports the establishment of credit opportunities for improved air conditioner (A/C)
systems and leakage control technologies to be used in compliance with the fleet wide CO2
emissions average standards. [OAR-2009-0472-7206.1, p.3]
Nissan North America
Similarly, Nissan has invested and will continue to invest in advancements to reduce CO2
emissions associated with air conditioning. The early air conditioning credits as well as the
ongoing air conditioning credits, serve to promote ongoing advances to a vehicle system with the
potential to significantly reduce CO2 emissions regardless of vehicle miles traveled. This is
particularly true because the structure of the proposed air conditioning credit programs predicates
credits upon exceeding a baseline average for the industry. Only those manufacturers who
exceed the industry average can earn credits. [OAR-2009-0472-6798.1, p.6]
SABIC Innovative Plastic
The Air Conditioning Credit Should Not Discourage or preclude Polycarbonate Glazing.
Because polycarbonate is significantly less dense and weighs substantially less than traditional
glass, it offers substantial greenhouse gas reduction opportunities when used in glazing. The
potential for polycarbonate to be incorporated in to areas of fixed glazing-roof panels, rear
quarter panels and backlites - during the model years covered by this rulemaking is strong unless
EPA discourages the development by incorporating to the list of air conditioning technologies
one which is focused on reducing solar generation to the cabin through the use of solar reflective
and absorbing technologies designed specifically for glass. Including these technologies would
have the unintended effect of discouraging adoption of lightweight polycarbonate glazing.
The EPA greenhouse gas program should not incorporate into its credit system technologies that
would have the result of discouraging the greenhouse gas emissions achievable through lighter
weight polycarbonate glazing. [OAR-2009-0472-7080.1, p.4]
Pittsburg Glass Works
It has been estimated by the EPA and Department of Energy's National Renewable Energy
Laboratory (NREL) that about 7 billion gallons of fuel are used annually for air conditioning in
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light duty vehicles. Of this 7 billion gallons, almost 2.5 billion gallons of fuel could be saved
with technologies that reduce AC power by 30%. Fortunately, several technologies are
commercially available that can accomplish this objective. A national fuel savings of 2.5 billion
gallons annually, and GHG emissions reduction of 22 billion Kg annually could be accomplished
with the heat load reduction technology. The current proposal by EPA would not credit these
technologies because the test procedures do not allow for the evaluation of these technologies.
A recent study conducted by NREL under the auspices of the Society of Automotive Engineers
and sponsored by the EPA demonstrated that heat load reduction of 30% is possible with
commercially available technologies. The heat load reduction technologies resulted in 12 deg C
reduction in breath air temperature when compared to a base line vehicle. This temperature
reduction was then shown to reduce the Air Conditioning load by 30%. Based on 11,998 annual
vehicle miles traveled, and average Air Conditioning use of 32.6%, NREL calculated that the
average fuel consumption could be decreased by 11.2 gallons on an annual basis. When
multiplied by the total number of vehicles on the road, these fuel savings would amount to over
2.5 billion gallons on an annual basis.
The current and proposed test procedures call for a 10 minute heat soak before the SCO3 test
cycles begins. This test soak is performed at 85 deg F. Firstly, these conditions do not reflect real
world conditions where vehicles are parked in the sun for long durations. It is our
recommendation that the soak time be extended to thirty (30) minutes to allow for a more real
world heat soak.
The value of heat load reduction technology has an even greater fuel economy and CO2 impact
on vehicles using hybrid and electric technologies. Recent testing with NREL
(www.osti.gov/servlets/purl/957994-YmvAS2/) has shown that using Infra-Red Reflective
Glazing on the windshield and rear window in a Plug-in Hybrid Vehicle will increase the
adjusted, utility factor-weighted fuel economy from 36.8 to 42.9 miles per gallon during the
UDDS cycle. Since the use of Plug-in Hybrid vehicles is projected to increase in the coming
years, the reduction of CO2 emissions from these vehicles will be too large to ignore.
Infra-Red Reflective glazing has been commercially used in the United States since 1990. The
technology has been proven to lower the interior cabin temperature and reduce the air
conditioning fuel usage. Recent regulations issued by the California Air Resources Board
(http://www.arb.ca.gov/cc/cool-cars/cool-cars.htm) require the use of heat load reducing glass,
starting with the 2012 Model Year vehicles sold in California. The performance requirement is
strengthened to all-around glazing starting with the 2016 Model Year. CARB has calculated the
fuel savings and CO2 benefits of the glazing technology and determined that it has a net cost
savings for the consumer. If the EPA/NHTSA recognize the national impact of these
technologies, the cost effectiveness of the glazing technology will improve even further. Since
the technology is already going to be commercially available and used by the auto
manufacturers, it is only natural for the EPA/NHTSA to recognize the contribution this
technology makes to the CO2 reduction on a national basis.
Fuel consumption and CO2 emissions can be reduced with heat load reduction technologies that
are currently not credited by the EPA/NHTSA. Sufficient scientific data exists to corroborate the
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value of the these technologies in the real world. Savings of over 2.5 billion gallons of fuel and
reduction of CO2 emissions over 22 billion Kg annually are going to be wasted if these
technologies are not included amongst the technologies by the EPA/NHTSA. Economic analysis
by CARB has shown that the Infra-Red Reflective glazing will actually save the consumer
money while reducing the CO2 emissions. This is an overwhelming argument for the
EPA/NHTSA to consider in its evaluation of technologies to reduce fuel consumption and reduce
CO2 emissions.
We would be glad to provide any further information that the EPA/NHTSA may need for its
analysis. [OAR-2009-0472-7244.1, pp. 1-3]
California Air Resources Board
CARB staff conducted a comparison of the AC credit approach in this proposed rulemaking
against California's Pavley I program in effect and the more recent Environmental Performance
Label regulation. The analysis addresses a need to understand how the various AC credit
schemes compare and the reason for differences in the credit amounts. CARB's analysis was
provided to EPA for reference. Overall expected AC emissions credits and associated GHG
reductions appear similar. While CARB is not suggesting changes to the Final Rule, we
recommend that CARB and EPA continue dialogue on this issue to reconcile the California and
federal approaches so that one uniform approach could apply for the 2017 and later model years.
[OAR-2009-0472-7189.1, p.13]
[CARB also submitted these comments as testimony at the Los Angeles public hearing. See
docket number OAR-2009-0472-7283, pp. 21-27]
State of New Jersey
It is clear based on numerous studies that air conditioners while in use reduce motor vehicle
miles per gallon in the range of 20 percent or more, and that because they are used on the
average on a national basis about 25 percent of the time, air conditioners decrease overall fleet
mileage by 5 percent or more. To encourage automobile manufacturers to produce more efficient
air conditioning systems, the Department supports the USEPA's proposal to amend the current
CAFE fuel economy test procedures for light-trucks to provide for air conditioner operation
during testing and to take other steps for improving the accuracy and representative of fuel
economy measurements. These steps should be taken as soon as practical and the Department
agrees that having the implementation of these amendments begin in model year 2017 seems
reasonable. The Department also supports the more immediate interim alternative step of
providing CAFE program credits under the authority of 49 U.S.C. 32904(c) for light trucks
equipped with relatively efficient air conditioners for model years 2012-2016. The Department
agrees that if such credits were adopted, it would be necessary to reflect them in the setting of the
CAFE standards for light trucks for the same model years. Since this available data on the
impacts of air conditioning demonstrates that the fleetwide average fuel economy obtained from
the implementation of this joint rulemaking in actuality will be at least 5 percent less than the
commitment of 35 mpg, it is critical that air conditioning operation and use be considered in all
future standard settings. [OAR-2009-0472-7109.1, p.7]
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National Renewable Energy Laboratory
In Table III.C. 1.1, there are no credits available for passenger compartment thermal load
reduction technologies. Reducing the thermal load reduces the A/C fuel use during passenger
compartment cool down and steady state. It is recommended to provide credits for thermal load
reduction technologies that would encourage use of these technologies and result in further
reductions in GHG emissions. [OAR-2009-0472-4798.1, p.l]
University of California - Santa Barbara, Bren Working Group on Vehicle Fuel Economy
Mobile Air Conditioning (MAC). Given the potency of CH4, N2O, and other non-CO2 gases in
contributing to climate change, we also recommend that efficient air conditioning units be treated
as a fuel saving technology. Thus we encourage the EPA to include incentives, such as a credit
system, for reducing N2O and CH4 emissions below the proposed cap as a means to motivate
innovation in clean technologies. [OAR-2009-0472-7188.1, p. 8]
One pound of HFC-134a (a common GHG used in MAC) released to the atmosphere has the
same global warming potential as 1,300 pounds of CO2. In the United States alone, MAC use
consumes over 7 billion gallons of gasoline every year, emitting over 58 million metric tons of
carbon dioxide. Refrigerant leakage adds the equivalent of over 50 million metric tons of CO2 to
the atmosphere. The National Oceanic and Atmospheric Administration (NOAA) reports that
20% of the HFC-134a present in equipment is emitted to the atmosphere each year. In 2004,
MAC use emissions accounted for 52% of total U.S. HFC-134a emissions: 24,539 metric tons,
equivalent to 35,090,770 metric tons of CO2. Though this represents only 0.1 percent of global
greenhouse gas emissions from all human activities, reducing these higher forcing substances
can yield extra positive effects by increasing fuel efficiency. [OAR-2009-0472-7188.1, p. 8]
Industry experts have recognized the ability to cut emissions and produced a list of
recommended actions for doing so in a 2007 report to the EPA. Because of the amplified effects
of refrigerants on climate change, the EPA should take special care to regulate and encourage the
reduction of leakage. [OAR-2009-0472-7188.1, p. 8]
In addition to refrigerant leakage, MAC use reduces efficiency of gas consumption. Well
engineered MAC systems account for about 5% of a car's real fuel consumption, while poorly
engineered and low cost systems can use 20% or more. A European study showed that by
changing the technology of MAC in a car, fuel efficiency was improved by 0.3 liters/lOOkm and
CO2 tailpipe emissions were reduced by 7 grams/km.23 The total CO2 equivalent reduction for
such a technology change was 12g/km. By reducing the use of these higher forcing substances,
extra positive effects can also result from increasing fuel efficiency. [OAR-2009-0472-7188.1,
pp. 8-9]
Changes in MAC efficiencies can reduce CO2 emissions not only directly, but also indirectly via
better fuel consumption. Furthermore, more efficient systems can keep refrigerants with more
forcing power than CO2 captured within the system. We believe this multiple impact merits
attention from the EPA. [OAR-2009-0472-7188.1, p. 9]
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EPA Response to Comments
Guardian Industries Corp.
Guardian is committed to the improvement of fuel economy through technology advances. We
note, however, that proposals to improve the efficiency of air conditioning systems miss the clear
benefit provided by reducing the actual heat load on vehicle cabins. Focusing on actual load
reduction through technologies that can keep the heat out can actually have greater total benefit
than improving the efficiency of mechanical cooling systems. [OAR-2009-0472-7124.1, p.2]
The California Air Resources Board (CARB) has recognized this fact. On June 25, 2009, CARB
adopted a regulation requiring reduced solar transmission of the glazed openings in vehicles in
California starting with model year 2012. CARB based its benefit calculations on testing
published by NRELIEP A demonstrating that vehicle soak temperatures can be significantly
reduced using solar reflective glazing. The estimated cool-down load reduction results in a 26%
drop in A/C fuel consumption. CARB estimated that the rule as adopted in California will reduce
CO2 emissions by approximately 0.861 MMT per year and if carried nationwide could generate
a saving of 8.30 MMT per year. This estimated benefit is based only on soak temperature
reduction and ignores the additional dynamic benefit of heat load reduction while operating the
vehicle. Glazing heat load reduction technology will pay for itself over time at the consumer
level through reduced fuel consumption while providing a more comfortable environment for
vehicle occupants. The CARB estimated that the fuel savings generated would pay back the
option cost to the consumer in approximately 7 years after which savings would continue to
accrue for the life of the vehicle. [OAR-2009-0472-7124.1, p.2]
Guardian recommends that any Federal emissions standard allow credit for heat load reduction
through reduced solar transmission through the glazing openings of the vehicle. Allocating
appropriate emissions credits to heat load reduction technologies will add a proven effective
method for OEM's to meet the ultimate requirements for efficiency. [OAR-2009-0472-7124.1,
p.2]
Environment Michigan
[[These comments were submitted as testimony at the Detroit public hearing. See docket number
EPA-HQ-OAR-2009-0472-6185, p. 68.]]
Credits for air conditioning have already allowed the Department of Transportation to set a fuel
economy standard of 34.1 mpg, lower than the President's goal of 35.5 miles per gallon. The
administration should not further weaken the program by allowing automakers to rack up
unnecessary credits and comply with the standards without building more efficient vehicles.
Schade, Michael T.
A/C on or off? I would doubt that many people could explain how A/C operation is addressed in
calculating the window sticker numbers that they use to help decide upon a vehicle purchase.
Almost every vehicle now has A/C and the manufacturers just don't have much of an incentive
to design and supply more efficient A/C systems. Is that because they know that there has been
no direct CAFE benefit because the A/C systems are mandated to be off during fuel economy
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testing? On a personal basis, my family drives Ford Focuses and my observed fuel economy
penalty is 10% on the highway and 15 to 20% in the city based upon repeated observations with
each vehicle. And the damper ventilation system always heats the ambient air 12 degrees before
entering the passenger space so I need to use A/C most of the year. My family has had three
Focuses and they are all the same. Yes, a poor design, but is it atypical? Probably not. Again, a
legislative fix to include realistic levels of A/C operation is probably required. But let's do it
now in a clear and unambiguous manner with a simple and straightforward description of how
A/C plays into the fuel economy. [OAR-2009-0472-7261.1, p.2]
EPA Response:
Window Glazing
The commenters are correct that the rules do not provide air conditioner credits for the use of
window glazing technologies, or technologies which reduce solar load. However, the EPA does
provide for other flexibilities where technologies such as solar load-reducing window glazing
may be eligible for "off-cycle" (rather than A/C) credits under the final rule. That is, they may
qualify if EPA believes these technologies are "innovative and novel" and produce CO2e
reductions which are not significantly measureable on the FTP. See section 86.1865-12 (d) (1)
(i) and (ii). Manufacturers would have to meet the other requirements of that regulation,
including obtaining EPA approval, before claiming such credits.
Support for Credits
Many commenters noted that the credits are necessary in allowing them to transition to the new
GHG emissions standards. Many commenters also expressed support for the A/C crediting
program. EPA is grateful for the positive support for this aspect of the program
Consideration of A/C Credits Under CAFE
Several commenters urged EPA to take steps to take A/C improvements into account under the
CAFE program. Chrysler argued that EPA can do so as part of the calculation process mandated
under 49 U.S.C. § 32904(c). Under that subsection, EPA measures fuel economy for purposes of
assessing manufacturers' compliance with CAFE standards and then calculates average fuel
economy. Chrysler argued that EPA has broad discretion under EPCA (32904(a)(l)) to
determine how to calculate average fuel economy. The State of New Jersey urged EPA to
amend its test procedures to account for use of improved A/C systems by light trucks. In
response, by statute, fuel economy for passenger cars must be measured using the Federal Test
Procedure, which does not account for air conditioning since it is not turned on during the test
procedure. See 49 USC section 32904 (c) and 74 FR at 49458 and 49465. This raises the issue
of whether EPA has the discretion to calculate fuel economy for passenger vehicles in a manner
that involves adding A/C improvement credits to the measured fuel economy of a vehicle. EPA
need not reach that question as such a step would require amending its calculation procedure
regulation. Doing so is effectively beyond the scope of this proceeding due to time limitations.
There is no statutory bar to EPA's amending the test procedure in measuring light truck fuel
economy, but is not doing so in this proceeding. In addition to this effectively being beyond the
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EPA Response to Comments
scope of this proceeding due to time limitations, such a difference in test procedures would
necessitate a reanalysis of the maximum feasible average fuel economy level for light trucks for
each model year under EPCA.
5.7.1.1. A/C Leakage Credits
OrganizationrFord Motor Company
Jaguar Land Rover
Toyota North America
European Automobile Manufacturers Association
Association of International Automobile Manufacturers (AIAM)
Chrysler Group, LLC (Chrysler)
Alliance of Automobile Manufacturers (Alliance)
Volvo Car Corp.
Hyundai Motor Company
Union of Concerned Scientists
Honeywell International, Inc.
New York State Department of Environmental Conservation
Comment:
Ford Motor Company
With regard to determining direct air conditioning emissions credits for low leak systems, Ford
supports EPA's use of the latest version of the Society of Automotive Engineers (SAE)
International Surface Vehicle Standard, J2727, to estimate annual refrigerant leakage from motor
vehicles air conditioning systems. SAE J2727 includes conservative allowances for part
variability and assembly robustness and is more representative and more conservative than bench
tests and is correlated to real-world leakage. Ford believes these reliability improvements
carryover the life of the vehicle resulting in reduced service and fewer re-charges. Ford strongly
supports the use of SAE J2727 to quantify mobile air conditioning refrigerant reductions as it
provides a common approach for all manufactures to evaluate their A/C systems direct
emissions. [OAR-2009-0472-7082.1, p. 5]
Jaguar Land Rover
Jaguar Land Rover supports the principle of using leakage data generated by SAE J2727 to
estimate refrigerant leakage from mobile air conditioning systems. Since the leakage formula
published in the August 2008 version of SAE J2727 differs slightly from that published in the
July 2007 version of SAE J2727, Jaguar Land Rover wishes to state that it regards the August
2008 formula as being the correct version to use. [OAR-2009-0472-7213, p. 1]
Toyota Motor North America
EPA's A/C leakage credits assign larger credits to system designs that are expected to result in
greater leakage reduction and are proportionally larger for lower GWP refrigerants over the
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current R134a. The proposed method for calculating these credits is to choose from a menu of
equipment and components and establish a leakage score. Credits would be generated from
leakage reduction improvements that exceed average fleet-wide leakage rates. [OAR-2009-0472-
7291, p. 20]
EPA's NPRM A/C leakage credit proposal is based closely on that being developed through
IMAC and the SAE Surface Vehicle Standard J2727, August 2008 version. In the NPRM, EPA
references the J2727 leakage scoring system as generally representing a reasonable correlation
with real world leakage in vehicles. Similarly, EPA's proposed credit approach would associate
each component with a specific leakage rate in grams per year, which is identical to the values in
J2727. The proposed A/C leakage credit provision also provides larger credits as the GWP
(Global Warming Potential) value approaches zero. Hypothetically, a refrigerant with a GWP of
1 would attain maximum credits because the GHG concern from leakage would be
eliminated. [OAR-2009-0472-7291, p. 20]
Toyota supports EPA's proposal for calculating the amount of credit based on J2727 scores.
However, Toyota believes that EPA should directly reference and incorporate the J2727
methodology since requirements to calculate these J2727 scores are currently in place in
Minnesota and in California for ARB's Environmental Performance Label. In doing so, EPA's
regulation would harmonize with the other regulations and provide consistency for
manufacturers to provide the same J2727 reporting data. [OAR-2009-0472-7291, p. 20]
European Automobile Manufacturers Association
Credits for leakage reduction
Calculation of leakage rate of refrigerant should be defined by reference to SAE J2727 and not
by separate definition. Reason: any technical improvement of the SAE J2727 would imply a
revision of the law. [OAR-2009-0472-7444.1, p.l]
Association of International Automobile Manufacturers (AIAM)
AIAM supports EPA's proposal to rely on a menu-based approach to assess air conditioning
refrigerant leakage, as set forth in proposed section 86.166-12. The leakage rate of refrigerants is
very low, and direct measurement of leakage would require expensive new test facilities and the
development of new test procedures, as EPA notes. See preamble at 49527. Moreover, given
anticipated movement toward lower global warming potential (GWP) refrigerants, leakage
impacts on climate change will likely be substantially reduced. However, EPA should allow the
flexibility for manufacturers to provide data to substantiate the achievement of lower leakage
rates than predicted by the EPA menu that is based on SAE Standard J2727. [OAR-2009-0472-
EPA proposes to use a slightly modified version of the SAE J2727 protocol for the menu-based
leakage assessment. Instead, EPA should rely on the J2727 protocol as adopted by SAE. The
SAE Interior Climate Control Committee reviews the standard regularly and updates it as
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EPA Response to Comments
needed. EPA will obtain the best engineering estimates for leakage by using the most current
version of J2727 without modification. [OAR-2009-0472-7123.1, p.12]
AIAM supports the Agency's proposed approach for credits for alternative refrigerants with low
Global Warming Potential. We believe it is appropriate to base these credits on the relative GWP
values of the current versus alternative refrigerants. In addition, we support EPA's proposal for
additional credit for the end-of-life benefits associated with alternative refrigerants. [OAR-2009-
0472-7123.1,p.l3]
Since the legacy fleet of vehicles, which uses the current refrigerant with a higher GWP, will be
in use for many vehicles into the future, AIAM encourages EPA to work with the SAE
committee, auto manufacturers, and the auto service industry to enhance air conditioning
maintenance and refrigerant recovery/recycling. [OAR-2009-0472-7123.1, p.13]
Chrysler Group, LLC (Chrysler)
Leakage Credit and SAE J2727 Methodology
The EPA direct credit methodology assumes zero credit for vehicles above a set leakage
threshold (20.7 gm/year for trucks and 16.6 gm/year for cars) and clips the credit amount for
vehicles below a leakage threshold (8.3 g/year for cars and 10.4 gm/year for trucks). The
Minnesota Pollution Control Agency 2009 MY leakage reporting database illustrates that EPA is
not counting approximately 22% (58 plus 22 out of 363 vehicles) of the vehicle population by
setting these thresholds. The lower and upper limits are disincentives to air conditioning system
leakage improvements. [NHTSA-2009-0059-0124, p. 17]
Recommendation:
The practice of excluding vehicles does not follow the attribute-based approach used for other
facets of this rule. EPA should base credits on a continuous curve and recognize the entire range
of potential leakage rates. [NHTSA-2009-0059-0124, p. 17]
Effects of System Aging to Leakage
Chrysler believes there would be no benefit in modifying SAE J2727 to account for system aging
effects. There is very limited data to support modifications of this type. A properly designed
research program to define such modifications would take considerable time. [NHTSA-2009-
0059-0124, p.17]
Recommendation:
Based on industry and government anticipation of the quick adoption of a low global warming
potential ('GWP') refrigerant, the development of such modifications are not required. The
NPRM provides incentive to reduce leakage in the short term while final preparation is done to
introduce low GWP refrigerants. [NHTSA-2009-0059-0124, p.18]
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Alliance of Automobile Manufacturers (Alliance)
The Alliance supports EPA's proposal to utilize the unmodified SAE J2727 standard for
estimating refrigerant leakage as a basis for awarding credits for MAC refrigerant leakage
reductions. The SAE J2727 standard is a design-based calculation that was developed based on
its correlation with vehicle fleet tests and bench test data in a mini-shed. The results have been
correlated well to mini-shed tests and vehicle fleet tests conducted in Europe and Japan. The
SAE Improved Mobile Air Conditioning ("IMAC") program also showed good correlation
between SAE J2727 and SAE J2763 mini-shed tests. We agree with EPA's conclusion that an
actual vehicle or bench test program for leakage mandated by this regulation would be
exceedingly difficult to conduct, and would provide little useful additional information.
Furthermore, the SAE calculation includes conservative adjustments for assumed error rates in
assembly, whereas any test program would use correctly assembled systems. Thus, SAE J2727
provides an accurate — or even somewhat conservative — estimate of MAC leakage rates for new
vehicles. We also agree with EPA's determination that MAC service and repair needs will be
reduced as leakage rates fall, and that service-related emissions should be expected to fall
proportionally. [OAR-2009-0472-6952.1, p.9]
In addition, requirements to calculate J2727 scores are currently in place in Minnesota and in
California for ARB's Environmental Performance Label. Automobile manufacturers have
systems in place to gather this data, and the Alliance would encourage EPA to remain
harmonized with these other regulations through the use of unmodified J2727 data. [OAR-2009-
0472-6952.1, p.9]
The Alliance also supports EPA's proposal for calculating the amount of credit to award based
on the J2727 scores. This formula awards credits for improvements down to the level of a J2727
score of approximately 8 grams per year of refrigerant leakage. The industry-wide database
compiled by the state of Minnesota for 2009 models shows that almost no vehicles currently
achieve such a low score. Thus, an appropriate incentive would be created for essentially all
vehicles to make improvements in system integrity, and we would expect prompt and broadbased
action by the industry to implement vehicle improvements under this framework, resulting in
significant cost-effective GHG reductions. [OAR-2009-0472-6952.1, p.9]
EPA is incorrect, however, in assuming that electric compressors will not achieve significant
penetration levels within the time frame of this regulation. In fact, electric compressor
penetrations could become high enough to be meaningful, and this technology should be
encouraged. The Alliance therefore recommends that EPA add a provision allowing a higher
level of MAC direct credit for systems that use an electric compressor. [OAR-2009-0472-6952.1,
p.9]
There would be little value in modifying the J2727 standard for these credit provisions, such as
by attempting to account for system aging effects that would occur later in the vehicle's life.
There is no data on which to base any factors to adjust SAE J2727 calculations for in-use
deterioration over time. A new research program to gather this data would be needed, and this
would take time to conduct. Given the favorable outlook for introducing a new, low-GWP
refrigerant in the next few years, the development of a SAE J2727 aging factor need not be a
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high priority. EPA makes a reasonable assumption that the improvements in new vehicles
leak rates should result in proportional reductions throughout the life of the vehicle. The current
EPA proposal provides a good, workable incentive structure that will significantly improve
MAC leak rates in the near term; in the longer term, leak rates will not be an environmental
issue, since low GWP refrigerants will predominate. [OAR-2009-0472-6952.1, pp.9-10]
Volvo Car Corp.
VCC is currently reporting annual MAC leakage to Minnesota and CARB (included in the
MAC-credit package). Both Minnesota and CARB accepts alternative refrigerant leakage
measurement methods. Volvo uses SAE J2763 (real measurement from mini-shed) and VCC
would like to propose acceptance of SAE J2763 as an alternative to J2727 for leakage credit
calculation. Please see Attachment 1.
Mobile Air Conditioning (MAC) Credits: EPA proposes to credit manufacturers for improved
MAC efficiencies and the use of low global warming potential refrigerants. The inclusion of
MAC credit provisions was a critical element that enabled the industry, the Administration, and
California to reach agreement in May 2009 on a regulatory path forward to reducing vehicle
GHG emissions. The Alliance supports the concept of MAC credits and has provided
constructive suggestions for improving EPA's proposed approach, including the elimination of
unnecessary idle air conditioning test procedures. To fulfill the objectives of this rule, EPA also
needs to remove any obstacles (i.e., SNAP approval) to commercially available alternative
refrigerants for the 2012 model year.
MAC efficiency-improving technologies and credits. VCC suggests an alternative to the
technology list (Proposed Rule making, Table III C.l-1) proposed for MAC efficiency credits.
Such alternatives would promote development of design improvements not included in the
proposed list.
[[Comments on the proposed SAE standards]]
VCC continuously develops the climate system in order to reduce AC leakage and improve
durability. As example VCC is mostly using steel as material in the AC pipes compared to most
manufactures who are using aluminum which has a lower yield-point, limited resistance to
external corrosion, wear and chafing.
VCC performs physical test mini-SHED according to test method prescribed as F-gas directive
706/2007/EC . Volvo is convinced that physical measurements reflect real vehicle emissions
more accurately than calculations and estimations. The new proposed leakage measurement
standard SAE J2763 (Test procedure for determining R134a leakage rates of Mobile Air
conditioning systems in a Mini-shed) is equal to the 706/2007/EC directive.
VCC would like to point out several reasons why the actual measured leakage (according to SAE
J2763) is lower than the calculated leakage (according to SAE J2727):
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[extensive discussion and evidence on the above point continues from OAR-2009-0472-7 168.1,
pp.8-10]
Hyundai Motor Company
Hyundai supports EPA's proposal to base the A/C leakage credits on SAE J2727. As EPA notes,
refrigerant leakage rates are too low to be measured with current test equipment and would
require new test facilities and procedures in order to measure leakage rates (74 FR 49527). As a
result, a design-based methodology is appropriate for determining A/C leakage credits. [OAR-
2009-0472-723 1.1, p.6]
Union of Concerned Scientists
UCS supports the availability of credits tied to A/C leakage and efficiency improvements.
However, we believe it is critical that credit magnitudes accurately reflect real-world emissions
reductions. We were surprised by the discrepancy between individual credits specified in the
proposed rule, and those previously specified by the California Air Resources Board. We
speculate this may be a result of differing baselines chosen by EPA and CARB, though other
factors could be contributing to this as well. Since accurately reflecting emissions benefits
offered by improved A/C systems is the ultimate goal, we suggest EPA have additional
conversations with CARB to assess discrepancies before issuing its final rule. [OAR-2009-0472-
Additionally, on the issue of system efficiency with the use of alternative refrigerants,
EPA states, [OAR-2009-0472-7 18 1.1, p. 11]
It is possible that alternative refrigerants could, without compensating action by
the manufacturer, reduce the efficiency of the A/C system (see discussion of the A/C Efficiency
Credit below.) However, EPA believes that manufacturers will have substantial incentives to
design their systems to maintain the efficiency of the A/C system, therefore EPA is not
accounting for any potential efficiency degradation. [OAR-2009-0472-7 18 1.1, p. 11]
The agency does not elaborate on the "substantial incentives" manufacturers have
for maintaining the efficiency of the A/C system. Given that the A/C system's efficiency (or lack
thereof) will not appear on the 2-cycle test, it strikes us that manufacturers, rather, would
not have the incentive to maintain the A/C efficiency system. We recommend the agency review
this issue to account for efficiency degradation associated with certain alternative refrigerants.
[OAR-2009-0472-7 18 1.1, p. 11]
Honeywell International, Inc.
Direct Emissions from A/C leakage and corresponding leakage credits should accurately reflect
real-world scenarios and the best available science
Leakage rates should be determined from a regional-cross section of real world operating
conditions and vehicle life
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During Honeywell's initial reading of the Proposed Rule, it appeared that the EPA offered credits
that were insufficient for real leakage rates in motor vehicles over time across the varying
operating conditions. For example, the assumed emission (leakage), Avglmpact term, rates of
16.6 to 20.7 g/year for the average annual impact of A/C leakage from the use of HFC-I 34a
refrigerant is only representative of refrigerant emission rates for new motor vehicle A/C
systems. These rates do not reflect leakage from vehicles that are 'off-the-lot' or 'used', which
have higher emission rates. Aged systems experience all of the following conditions that increase
their emission rates: seasonal, daily and in operation thermal cycles; vibrations; hardening of
hoses and 0- rings; drying out of the shaft seal due to non-operation (or continuous operation for
clutchless models); collisions; service (engine or mobile A/C system); and corrosion leaks.
[OAR-2009-0472-7206.1, p.4]
The Supplemental Draft Regulatory Impact Analysis Proposed Rulemaking to Establish Light
Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy
Standards, EPA-420-D-09-003, was subsequently released by EPA on September 28,2009 (the
'DRIA'). Upon our analysis of the DRIA, the contribution of the MaxCredit term to reflect those
conditions impacting aged systems becomes clear. As a result, Honeywell agrees with EPA that
the magnitude of the MaxCredit term is correct to use as a multiplier in the proposed credit
equation. [OAR-2009-0472-7206.1, p.4]
Honeywell concurs with EPA's emissions equation to determine the net fleet effect of direct
emissions due to refrigerant leakage. In summary, Honeywell agrees that the LeakScore may be
used to estimate the leakage of new motor vehicle A/C systems, the MaxCredit term is the
correct order of magnitude to account for fleet aging through the vehicle lifetime, and the GWP
Refrigerant term accounts for the GWP impact of alternative refrigerants compared to the current
RI34a refrigerant, GWP100 = 1430. [OAR-2009-0472-7206.1, p.4]
EPA should update its leakage emissions assumptions based upon the best available technical
studies
Through our analysis of the crediting program, we identified two additional recent publications
that we bring to EPA's attention. EPA may wish to consider adding these studies to its analysis
as additional data sources for refrigerant leakage rates of new and used systems. Honeywell
asserts that the addition of these studies will quantify more accurately the per-vehicle per-year
average leakage rates and will update EPA's assumptions based upon the best-available science
through the use of the MaxCredit and Avglmpact terms. [OAR-2009-0472-7206.1, pp.4-5]
a. Doctoral Thesis of David Souse, Mines ParisTech, Study of Refrigerant Emissions from
Mobile Air-Conditioning Compressor Shaft Seals, Dec 2008. This study found that compressors
leak at rates between 5 and 40 g/year (Figure 2-27). Aged compressors tested leak at rates of 97
to 1800 g/year when pressurized with refrigerant (Table 2-4).
b. Denis Clodic, Final Report on Establishing the Leakage Rates of Mobile Air Conditioners,
2004. This study found that the average leakage rate of MAC systems from 1 to 6 years old is
52.4 g/year ± 4.6 g/year. [OAR-2009-0472-7206.1, p.5]
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The inclusion of these studies may impact EPA's assumptions regarding average leakage rates
associated with mobile A/C systems and provide a stronger basis for understanding direct A/C
emissions due to the leakage of the hydrofluorocarbon refrigerant in use today. [OAR-2009-
0472-7206.1, p.5]
The SAE J 2727 Standard Mobile Air Conditioning System Refrigerant Emissions Chart is not
an appropriate standard for measuring lifetime leakage
EPA proposes that § 86.166-12 of the Proposed Rule utilizes the SAE J2727 design-based
procedure as the basis for generating Leakage Credits. We disagree with the use of this standard
because it does not adequately reflect leakage over the lifecycle of a vehicle. In the DRIA, EPA
states that the SAE Standard J2727 - HFC-134a Mobile Air Conditioning System Refrigerant
Emissions Chart may be used to provide an estimate of the emission rates of new, properly
constructed passenger vehicles. However, Honeywell argues that this standard is not appropriate
for determining the leakage rate for vehicles as they progress through their lifetime. [OAR-2009-
0472-7206.1, p.5]
We propose that companies wishing to submit for credits based on leak tightness of their systems
also be allowed the opportunity to design a component life test based on SAE Standard 12763,
Test Procedure for Determining Refrigerant Emissions from Mobile Air Conditioning Systems.
The use of test protocols would give a true indication of the correct selection of leakage
reduction parts, as well as provide for the development of additional credit goals for
manufactures to reduce the overall leakage rate. [OAR-2009-0472-7206.1, pp.5-6]
The adoption of a test procedure in lieu of set credits will better quantify the A/C Leakage
reduction credits. Honeywell recommends that these test protocols be developed through a
consortium involving the industry with Governmental Energy Efficiency Improvement Funding.
The consortium can build upon existing research that seeks to quantify such efficiencies. For
example Souse, 2008, developed such a test protocol for compressor shaft seals that we feel can
be adapted to test standstill, running mode, and endurance cycling tests to age a system over a
temperature range, vibration conditions, and oxygen/temperature control for plastics
embrittlement. [OAR-2009-0472-7206.1, p.6]
New York State Department of Environmental Conservation
Air Conditioning Leakage Credits (Preamble Section III.C.I)
Reductions in air conditioning refrigerant leaks can reduce overall greenhouse gas emissions.
The regulation should provide a mechanism to encourage designs that reduce refrigerant leakage
over the life of the vehicle, and to award appropriate credit. The Department agrees with EPA's
proposal to use an engineering analysis based approach rather than emissions testing. [OAR-
2009-0472-7454, p.2]
We question the credit formulas proposed in Section 86.1866-12, which differentiate between
cars and trucks. While we agree that a larger system has the potential to leak a greater volume of
refrigerant this potential is better measured by interior volume (which relates to the volume of air
that must be controlled) rather than an arbitrary classification. Using the proposed formulas, a 15
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EPA Response to Comments
gram/mile CO2-equivalent HFC134a system would qualify for 1.2 grams/mile credit in a
passenger car. The same system would qualify for 4.3 grams per mile credit in a light truck.
[OAR-2009-0472-7454, p.2]
EPA Response:
Support for AC Leakage Credits
EPA appreciates the supportive comments for our AC leakage crediting program. EPA based the
leakage calculation method described in the regulations (§86.166-12) on the August 2008
version of SAE J2727. Note that SAE J2727 is not incorporated by reference into the EPA
regulations, and that any future revisions or modifications by SAE to the August 2008 version
are not approved for calculating a leakage score unless EPA amends the regulations. While we
agree with Honeywell that the SAE J2727-base approach to estimating refrigerant leakage can be
improved (in terms of quantifying how leakage increases as the A/C components age), but we
also believe that further study into the relationship between component age and leakage is
needed before an industry-wide adjustment to the leakage impact can be considered.
In addition, EPA recognizes that there are differences between CARB's approach to A/C-related
CO2 emissions and the rule we are finalizing. The principal difference between these two
approaches is in the method used to determine the impact of direct (leakage) and indirect (A/C
power consumption) CO2e emissions: the CARB approach used a model tailored to the climate
and A/C usage conditions specific to California, whereas the EPA approach used a 48-State
model for climate and use conditions. Since this is a national rule, it is reasonable to use a 48-
State model. In addition, EPA also bases leakage rates on J2727 scores, whereas CARB does not.
Flexibility on Test Procedures
Concerning the comment on allowing flexibility for manufacturers to demonstrate lower leakage
rates, EPA will only allow the calculation-based method described in the regulations. While EPA
generally prefers performance testing, for an individual vehicle A/C system or component, there
is not a strong inherent correlation between a performance test using SAE J2763 and the design-
based approach we are adopting (based on SAE J2727, as discussed below).4 The SAE J2763
test can generate artificially low leakage rates: tests are conducted under idealized conditions
(assembled in a laboratory and tested in a hermetically sealed chamber) which reduce the real-
world influence of seal contamination and production variability. Consequently, before such test
results could be validly considered as a surrogate for the 12727-based scores, the test method and
the J2727 scores would have to be correlated. Establishing such a correlation would require
testing of a fairly broad range of current-technology systems in order to establish the effects of
such factors as production variability and assembly practices (which are included in J2727
scores, but not in J2763 measurements). To EPA's knowledge, such a correlation study has not
been done. At the same time, there are indications that much of the industry will eventually be
moving toward alternative refrigerants with very low GWPs. EPA believes that even if such a
4 However, there is a some correlation between the two in that J2763 measurements were used in the development
of J2727 scores and to validate the effect on leakage of various technologies, but J2763 test results were never
found to be equivalent the J2727 (which considers other factors, such as variance in assembly procedures).
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EPA Vehicle Program, Feasibility, and Estimated Impacts
correlation were established (and confirmed the appropriateness of the J2763 procedure as an
option for assessing availability of credits), and some manufacturers were willing to accept the
greater testing burden and expense of a 12763-based approach, the program would likely be
obsolete at inception due to the expected transition to low-GWP refrigerants. For these reasons,
EPA is not adopting such an optional direct measurement approach to addressing refrigerant
leakage at this time.
Electric A/C Compressors
EPA acknowledges that A/C compressors powered by electric motors (e.g. as used today in
several hybrid vehicle models) were not included in the IMAC study, and we also acknowledge
that this type of compressor does allow for leakage emission rate reductions beyond our estimate
for systems with conventional, belt-driven compressors. EPA agrees with these comments and
has incorporated lower minimum emission rates (i.e. minimum allowable leakage score) into the
formula in order to allow additional leakage reduction credits for vehicles that use sealed electric
A/C compressors. The minimum rates allowed for electric compressors are 4.1 and 5.2 g/yr for
cars and trucks, respectively - which is 50% lower than the rates for belt-driven compressors.
See section 86.1866-12 (b) (2) (definition of the Leakage term in the credit equation).
Leakage Score Calculation
AIAM and others commented that EPA should not set a lower limit on the overall leakage score,
even for non-electric compressors. EPA has determined not to do so. First, although there do
exist vehicles in the Minnesota data with lower scores than our minimum scores, there are very
few car models that have scores less than 8.3, and these range from 7.0 to about 8.0 and the
differences are small compared to our minimum score.5 More important, lowering the leakage
limit would necessarily increase credit opportunities for equipment design changes, and EPA
believes that these changes could discourage the environmentally optimal result of using low
GWP refrigerants. Introduction of low GWP refrigerants could be discouraged because it may be
less costly to reduce leakage than to replace many of the A/C system components. Moreover, due
to the likelihood of some in-use deterioration, even a leak-free (according to J2727) R134a
system will have some emissions due to manufacturing variability, accidents, deterioration,
maintenance, and end of life emissions, a further reason to cap the amount of credits available
through equipment design. The only way to guarantee a near zero emission system in-use is to
use a low GWP refrigerant. For these reasons, and in view of the otherwise overwhelming
support by commenters for the program as proposed, EPA has decided for the purposes of this
final rule to not change the minimum score for belt driven compressors.
Leakage Deterioration and In-Use Adjustment Factors
Many commenters stated that no adjustments for in-use deterioration/aging in J2727 approach to
calculating refrigerant leakage are necessary. Honeywell, however, commented that real-world
leakage rates are higher that those we cite in our rule, and recommended that we increase the
5 The Minnesota refrigerant leakage data can be found at
http://www.pca. state.mn.us/climatechange/mobileair.html#leakdata
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EPA Response to Comments
impact of refrigerant leakage in our analysis to account (among other things) for deterioration in
use. Given the level of effort needed to measure in-use leakage rates due to deterioration (as well
as the complexity in determining a statistically-significant, industry-wide leakage-vs-age
relationship), EPA is not considering a refrigerant leakage deterioration adjustment factor for this
rule. Awarding credits for surpassing leakage-based performance also appears to be an
undeserved windfall: credits are based on exceeding a baseline reflecting good performance.
Moreover, as explained in the previous response, EPA is structuring the A/C credit provisions so
as to encourage the ultimate solution of use of low GWP refrigerants, and use of such
refrigerants obviates any need to account for in-use deterioration.
5.7.1.2. A/C Efficiency Credits
OrganizationrDenso International America, Inc.
Ford Motor Company
Jaguar Land Rover
Association of International Automobile Manufacturers (AIAM)
Chrysler Group, LLC (Chrysler)
Volvo Car Corp.
Alliance of Automobile Manufacturers (Alliance)
Toyota Motor North America
BMW of North America, LLC (BMW)
Public Citizen and Safe Climate Campaign
Motor and Equipment Manufacturers Association
Clean Energy Fuels
Honeywell International, Inc.
European Automobile Manufacturers Association
New York State Department of Environmental
Comment:
Denso International America, Inc.
DENSO strongly supports the inclusion of Mobile Air Conditioning (MAC) credits as part of the
GHG Rulemaking. These MAC credits have the ability to provide significant GHG benefits in
the very near term. Our comments on MAC credits address some of the technical aspects of how
indirect credits are awarded and offer some technical suggestions on how the effectiveness of
this process could be increased.
DENSO supports the use of a menu-based approach for awarding credits as a short-term
approach. In the absence of a well-established test methodology, it provides a clear measure for
how credits will be awarded. To further enhance the usefulness of this menu, we would like to
make 3 suggestions:
1) Add compressors and internal heat exchangers (MX) to the list of components that receive
credit when exhibiting a COP improvement relative to the 'previous design.' Efficiency
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improvements in the compressor and implementation of an IHX show a significant reduction in
engine load and thus, the GHG emitted as a result of operating the MAC system.
2) Make a graduated credit amount based on the COP improvement exhibited by each 'improved'
air conditioning component. Such an approach would promote incremental improvements in
technologies. Such an additional incentive would doubtless result in the additional reduction of
GHG due to MAC systems.
3) Remove evaporators from the list of components that are awarded credit if a COP
improvement is exhibited. Throughout its history in the MAC system, the evaporator component
has not been optimized for the purposes of reducing GHG. The optimizations that have been
made to the evaporator were done to reduce packaging size while maintaining the same
performance. This typically results in a thinner, smaller evaporator that fits into a tighter space in
the vehicle. However, this does not add additional efficiency to the MAC system. [OAR-2009-
0472-8765, pp. 1-2]
Ford Motor Company
Ford supports the EPA technology based approach for quantifying indirect air conditioning
emissions credits. Ford believes that EPA should expand the technologies listed in Table III.C.l-
1 to include the technologies highlighted in red. The high efficiency blower and cooling fan
should be separated and granted the appropriate credits listed. Recirculated air control with a
humidity sensor should be added to the list of technologies adding a humidity sensor enables
more aggressive use of recirculated and evaporator temperature control, thus allowing the system
to operate more efficiently. Consistent with the Alliance comments, NC control strategies are
more sophisticated than simply defaulting to recirculation whenever the outside ambient
temperature exceeds 75° F and must manage a host of factors. The requirement should be
changed to state, defaults to recirculation whenever the outside ambient temperature exceeds 75°
F with provisions for managing cabin defogging and passenger comfort. Thermal expansion
valves should also be added to the list of technologies as it improves the air conditioning system
efficiency and reduces compressor loads. Likewise, the internal heat exchanger allows the
compressor to work more efficiently and should also be added.
For 2014 and later model years, the proposed requirement to demonstrate at least 30%
improvement over current average efficiency levels in order to qualify for credits should be
changed. A manufacturer should not have to achieve such a large step function in order to
receive some credit. A more appropriate method may be to allow full credit for a system that
achieves a 30% improvement, and partial credit for systems that achieve less, at least through
2016. This proposal would allow systems that achieve up to 30% improvement the maximum
credit allowed, but would also reward other systems that achieve reductions. A system that
achieves, for example, an 18% or a 26% improvement also benefits the environment, and there is
no valid justification for denying proportional credits for such systems. Improvement in
performance can be demonstrated through vehicle system modeling, bench or vehicle level
testing. See Table I below [See OAR-2009-0472-7082.1, p. 6 for Table 1] for a recommended
approach to partial credits.
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EPA Response to Comments
Ford has consistently improved the efficiency of the A1C systems in its vehicles. For systems that
use alternative refrigerants with global warming potential (GWP) < 150, Ford recommends that
EPA extend the technology based approach through 2016 model year. As noted by the EPA,
alternative refrigerants may have reduced efficiency. The physical properties of refrigerants are
the primary factors in the refrigerant system efficiency. Performance assessments of alternative
refrigerants have been conducted by the automotive industry. It has been demonstrated that the
physical properties of the alternative refrigerant R1234yf could result in a reduction of efficiency
by 5 to 10 percent compared to R134a in use today with a similar refrigerant system and controls
technology. The environmental benefit of the reduction in GWP, 1430 to 4, far outweighs the
delta in the system efficiency and thus warrants the maximum credit currently allowed. [OAR-
2009-0472-7082.1, pp. 5-7]
Jaguar Land Rover
Jaguar Land Rover supports the principle of air con credits and the credit categories suggested by
EPA certainly form a useful basis for discussion. We believe that interaction with the industry
will enable EPA to refine the categories and include categories not previously identified. [OAR-
2009-0472-7213, p. 1]
We would recommend that EPA look into:
introducing new credits for humidity sensors;
introducing new credits for efficient solar glazing;
establishing separate credit values for evaporators and condensers;
basing heat exchanger credits on best technology (not on 10% of previous condition);
establishing separate credit values for evaporator blower fans and condenser cooling fans;
introducing new credits for internal heat exchangers that boost evaporator and condenser
performance. [OAR-2009-0472-7213, p.l]
The comment above, on using best technology heat exchangers, recognizes that Jaguar Land
Rover already uses state of the art heat exchangers and would have difficulty in improving by
10% to qualify for credits. It also recognizes that other OEMs, working from an older baseline,
might be able to improve by 10% and qualify for credits whilst still using heat exchangers less
efficient than ours. We would like to be credited for what we already do well, not just for
improvement. [OAR-2009-0472-7213, p.l]
In relation to credits for the use of recirculated air, this has generated a lot of discussion. On the
one hand, using recirculated air undoubtedly saves energy. On the other hand, excessive use of
recirculated air can cause screen and window misting, increase CO2 levels in the cabin, cause
dry eye problems (especially for contact lens wearers), cause odor problems and even increase
the risk of respiratory infection. Jaguar Land Rover uses a sophisticated control strategy to
optimize the balance of economy, comfort and safety, frequently making use of partial
recirculation. The EPA proposal is too simple as it stands and we would encourage EPA to seek
a consensus in the industry, on the optimum way to word this part of the credits proposal.
[OAR-2009-0472-7213, p.l]
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EPA Vehicle Program, Feasibility, and Estimated Impacts
One item on the current air con credits list that surprised us was credits for an electronic
expansion valve. We don't see this as a huge benefit, as there is generally some conflict of
interest between the attempts of the compressor to maintain a stable evaporator temperature and
the attempts of the expansion valve to maintain a small amount of superheat. The compressor
always wins and having an electronic expansion valve does not alter this. [OAR-2009-0472-
7213, p.l]
Association of International Automobile Manufacturers (AIAM)
With regard to air conditioning system efficiency credits, EPA also proposes to base credits on a
technology menu approach, but only for model years 2012-2013. Thereafter, EPA proposes to
require that manufacturers justify credits based on testing using an idle test developed by the
Agency. We have several concerns regarding the Agency's proposed idle test approach for a
performance-based measurement of air conditioning system efficiency. There are many existing
technologies and new ones in development to improve the energy efficiency of air conditioning
systems. The efficiency improvement resulting from the application of each technology does not
necessarily apply under all operating conditions. For instance, efficiency improvements in engine
cooling fans will typically be apparent at engine idle but not necessarily at road speeds. Variable
displacement piston compressors are the original and one of the highest value technologies for
improving MAC energy efficiency; however, their benefit occurs at low and mid-load conditions
- typically road speeds. Testing at high load conditions would not detect their energy benefit
when compared to fixed displacement piston compressors. Series Reheat Reduction provides
benefits primarily at mid-load conditions. Air Inlet Mixture control provides its benefit at mid
and high load conditions when the HVAC system is not already in recirculation mode. [OAR-
2009-0472-7123.1,p.l2]
In the preamble, EPA requested comments on the potential for using the SC03 test cycle for
assessing air conditioning efficiency. While there may be some merits of using the SC03
cycle for this purpose, as we note below, AIAM believes that a focused test program should be
carried out in conjunction with industry and other interested stakeholders to determine the best
performance test for assessing air conditioning system efficiency. [OAR-2009-0472-7123.1,
pp.12-13]
AIAM recommends that the Agency defer action on the adoption of a performance test to assess
air conditioning system efficiency and rely on the menu-based approach. EPA should work with
the Society of Automotive Engineers Interior Climate Control Committee to develop a more
robust test approach that accurately measures system efficiency over a broad range of engine
operating conditions. This test procedure could be used to verify the accuracy of the credits set
forth in the menu and revise those items as necessary, consistent with the research program
recommended above. In addition, such a test program could also assess what, if any, effects new
low GWP AC systems may have on test procedure development. It would be especially
important to consider the impact of these new AC systems since they will be the dominant AC
designs for the foreseeable future. It may be appropriate for EPA to consider an improved
performance test for the 2017+ program. [OAR-2009-0472-7123.1, p. 13]
Chrysler Group, LLC (Chrysler)
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EPA Response to Comments
Re-evaluate the cap on indirect air conditioning credits.
EPA has imposed a cap on the maximum amount of indirect credits at 5.7 g/mi. The indirect
credit methodology is a design-based approach that picks from a menu of technologies that are
available for credit. The menu is not inclusive of all GHG reducing technologies (e.g., humidity
sensor). [NHTSA-2009-0059-0124, p.18]
Recommendation:
Chrysler supports EPA's menu-based approach, as Chrysler and EPA cooperate in this all new
GHG reducing arena. However, we believe that the indirect credit cap should be increased to be
more in line with NREL and ARB studies, which suggest a maximum indirect credit of 10 to 12
g/mi. [NHTSA-2009-0059-0124, p.18]
Design-Based Approach
Chrysler supports a design-based approach using a technology menu as a simple method that
comprehensively captures A/C system efficiency improvements. [NHTSA-2009-0059-0124,
p.18]
The OEM's ability to receive credit for indirect A/C emission improvements is limited because
not all available technologies are on the menu. These omitted technologies offer significant
benefits and need to be recognized for credit. [NHTSA-2009-0059-0124, p.18]
Recommendation:
We support EPA's technology menu design-based approach. However, EPA should consider
adding other technologies to this menu without reallocating the current credit values.
Reallocating the current credit values is unnecessary since total indirect credits are capped.
Adding items to the menu only provides flexibility to manufacturers to use different approaches
to achieve GHG reductions. [NHTSA-2009-0059-0124, p.18]
Partial Credits
The indirect credit technology menu should not utilize an 'all or nothing approach.' Partial credit
should be given for partial GHG reduction. [NHTSA-2009-0059-0124, p.18]
For example, a system with a pulse width modulated ('PWM') HV AC blower and a resistor
controlled cooling fan should qualify for a portion of the 1.1 g/mi total credit from the PWM
blower and fan technology menu item. The NPRM does not recognize the reduced GHG benefit
of these partial implementations even though they provide significant GHG reductions.
[NHTSA-2009-0059-0124, p. 19]
Recommendation: EPA needs to recognize the GHG benefits of system efficiency improvements
with partial indirect credit. [NHTSA-2009-0059-0124], p. 19
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Reduced Reheat Strategies
Reducing the amount of air reheated after cooling is a highly effective strategy to reduce A/C
system-related GHG emissions. [NHTSA-2009-0059-0124, p.19]
Automatic Recirculation Strategy
Chrysler agrees with EPA that increased use of air recirculation can significantly reduce the
thermal load on a vehicle air conditioning system, thereby reducing the load on the evaporator
and decreasing the compressor workload. Increasing the use of recirculation will also allow
customers to reduce the blower speed more quickly, saving more energy. [NHTSA-2009-0059-
0124, p.20]
The NPRM would grant credits only if the A/C system always defaults to recirculation whenever
the outside ambient temperature exceeds 75° F. In practice, actual A/C control strategies are
more sophisticated than this, managing factors such as passenger compartment air quality,
window defogging, and rear passenger comfort. The definitions in the proposed rule for
obtaining these credits require modification of these factors. [NHTSA-2009-0059-0124, p.20]
Several studies describe the concern with cabin air quality and CO2 concentration while driving
in recirculation mode. SAE International published the most recent study suggesting that with the
A/C system in recirculation mode, CO2 can build-up in as little as 15 minutes during slow
driving conditions. [NHTSA-2009-0059-0124, p.20]
Strategies to mitigate C02 build-up such as switching to fresh mode (outside air), partial
recirculation mode or other methods after the cool down phase of the driving cycle should be
allowed. EPA should allow individual manufacturers flexibility in choosing and implementing
strategies for maintaining passenger compartment air quality while still earning credits for
efficiency improvements. [NHTSA-2009-0059-0124, p.20]
Recommendation:
Chrysler agrees with EPA's proposal to employ recirculated cabin air above 75 °F ambient
temperature. Chrysler recommends that the regulation should allow flexibility in using managed
amounts of fresh air primarily for safety and customer comfort. The proposal should not require
100% recirculated air while the system is in heater, blend or defrost modes. [NHTSA-2009-
0059-0124, p.20]
The regulation should require that above ambient temperatures of 75 °F the vehicle must default
to recirculation mode during the cool down portion of the drive cycle. This portion of the drive
cycle is defined to be when the blower is set to 50% or higher. The system may then shift to
managed intake of outside air or partial recirculation based on customer comfort, safety or other
factors. [NHTSA-2009-0059-0124, p.20]
Air distribution modes that direct air to the windshield or side glass should be exempt from
requiring recirculation mode. These modes are typically run in ambient temperatures where
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EPA Response to Comments
recirculation mode would not provide much energy saving to begin with but could have
significant impact on passenger comfort and safety. A recirculation strategy that is ambient
temperature-based and compensated for A/C system modes that distribute air to the vehicle glass
should be qualified for A/C credit. [NHTSA-2009-0059-0124, p.20]
Electronic Expansion Valve (EXV)
There are concerns with electronic expansion valves harming compressor durability due to the
risk of sending liquid refrigerant to the compressor when trying to control to low superheat. The
benefits of the electronic expansion valve were minimized when evaluated on vehicles during the
SAEIMAC studies. The benefit from electronic controlled expansion valves is further reduced
when using reduced reheat strategies. [NHTSA-2009-0059-0124, p.21]
Recommendation:
Chrysler would recommend removing the credit for the electronic expansion valve and allow
other GHG reducing technologies on the menu. [NHTSA-2009-0059-0124, p.21]
Oil Separator
Chrysler believes that better definition of an oil separator to qualify for credits is required. The
effectiveness of an oil separator varies based on operating conditions such as evaporator and
condenser load, ambient conditions and engine speed. [NHTSA-2009-0059-0124, p.21]
The amount of oil must also be balanced to meet overall compressor durability. Insufficient oil
circulation will increase compressor operating temperature and wear. Both of these conditions
could lead to increased compressor work and reduced A/C system coefficient of performance
('COP'). [NHTSA-2009-0059-0124, p.21]
Recommendation:
The definition of an oil separator should be based on an easily verifiable set of design features
that uses centrifugal force to separate the oil from refrigerant on either the high or low pressure
side. [NHTSA-2009-0059-0124, p.21]
If a test is required to verify the effectiveness of an oil separator then it should be performed on
the supplier's bench and be limited to 3000 rpm or less, (typical vehicle usage speed).[NHTSA-
2009-0059-0124, p.21]
Humidity Sensor
Mobile A/C systems remove moisture from incoming air to control air discharge temperature.
Compressor control is one way by which this is accomplished. Compressor operation quickly
removes sensible heat from the air thereby lowering the temperature. Frequently the compressor
continues cooling the air by removing the latent heat due to moisture from incoming air.
However, the compressor is cycled when occupant comfort is determined by indirect means
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(e.g. discharge air temperature) and compressor control is less refined than could be had with a
humidity sensor. The humidity sensor helps determine the amount of dehumidification needed to
achieve passenger comfort and therefore the amount of compressor on-time needed. Controlling
humidity in a passenger cabin can significantly reduce indirect GHG emissions related to A/C
system operation. [NHTSA-2009-0059-0124, pp.21-22]
Recommendation:
Chrysler recommends that EPA add humidity sensor to the indirect technology menu and assign
a value of at least 5 g/mi CO2e credit. [NHTSA-2009-0059-0124, p.22]
Non-A/C Equipped Vehicles
Vehicles that are not equipped with an A/C system cannot leak refrigerants and do not consume
fuel for A/C system operation. As such they should be rewarded maximum A/C credit. [NHTSA-
2009-0059-0124, p.24]
Volvo Car Corp.
If MAC idle test is kept, VCC believes the proposal needs to be clarified. Please see MAC
recirculation. Several studies describe concerns with CO2 concentrations in the air of the
passenger compartment while driving in recirculation. High CO2 concentrations lead to
drowsiness, headache, fogging etc that may reduce the driver's ability to safely drive the vehicle.
There are several ways to mitigate CO2 build-up e.g., by switching to outside air, partial outside
air or other methods after the cool down phase. These strategies are best managed by the vehicle
manufacturers on a vehicle-specific basis. EPA should allow the manufacturers the flexibility to
choose among these strategies to maintain relevant air quality levels for safe driving while still
earning credits for efficiency improvements.
Alliance of Automobile Manufacturers (Alliance)
Although there are substantial potential MAC efficiency improvements based on known
technologies, the EPA proposal needs modifications in order to create the right incentives to
fully utilize these technological improvements. Prior to 2014, EPA proposes basing MAC
indirect credits on the application of MAC efficiency technologies from a list, with a credit
amount assigned to each technology on the list. Beginning with MY 2014, EPA discusses first
testing MAC efficiency in either an idle test or a modified SC03 test, and then allowing those
vehicles that surpass fleet averages by a minimum threshold on the test to then earn credits based
on their use of technologies from the list. [OAR-2009-0472-6952.1, p.10]
MAC efficiency is best evaluated over a range of operating conditions that are, in total,
representative of the real world. Because of the wide range of temperature, humidity, solar load,
and other climate conditions that drivers encounter in various regions and seasons, precise
estimates of overall efficiency are best derived from analytical techniques such as computer
simulations. The GREEN MAC Lifecycle Climate Change Performance (LCCP) model
developed with EPA provides a good framework for evaluations across a representative range of
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operating conditions. It is not practical to attempt either vehicle or MAC system efficiency tests
over such a wide range of conditions as are actually encountered by most drivers. While
automobile manufacturers each have proprietary energy consumption analysis simulation tools, it
would take some time for EPA to establish a common, public one for purposes of this regulation.
Therefore, the proposed "menu" technology list approach is a good, simplified way to get an
early start toward incentivizing implementation of more efficient technology. [OAR-2009-0472-
6952.1, p.10]
Some modifications to the technology list would create a better incentive structure for rapid
progress toward implementing these technologies. [OAR-2009-0472-6952.1, p. 10] [[See OAR-
2009-0472-6952.1, pp. 10-26 for a detailed discussion about the modifications to the technology
list]]
Toyota Motor North America
EPA proposes that manufacturers making improvements in A/C systems to increase efficiency
should be awarded credits based on the CO2 emissions reductions that would result. EPA's
proposal uses a design based menu approach to quantify improvements in A/C efficiency and
also proposes to begin requiring manufacturers to confirm that technologies applying for these
efficiency credits are measurably improving the system efficiency. [OAR-2009-0472-7291,
pp.20-21]
Prior to 2014, EPA proposes basing MAC indirect credits on the application of MAC efficiency
technologies from a menu, with a credit amount assigned to each technology on the menu. Figure
10 below shows Toyota's estimates of A/C power consumption reduction that can occur through
the adoption of improved A/C technologies. This analysis is based on Toyota Prius - a highly
improved A/C system example. [OAR-2009-0472-7291, p.21]
By adopting these technologies, some of which were not listed in EPA's proposed menu, A/C
power consumption is reduced by about 50% when compared with the baseline A/C system.
EPA proposed that the maximum A/C credit of 5.7 g/mi be based on an equivalency to A/C
power reduction of 40%. As a result, each technology would be scaled by this 40% factor and
therefore, Toyota suggests a modified menu sheet as shown in Table 1 using the equation below:
Credit (g/mile) = Estimated reduction in A/C CO2 emission (%) / 40 (%) x 5.7 [OAR-2009-
0472-7291, p.21]
BMW of North America, LLC (BMW)
The EPA and NHTSA have succeeded in delivering a balanced approach that forces significant
change in vehicle designs while at the same time incentivizing innovation that can be credited to
any auto maker who can prove the benefits either during the test cycle or through their own
documented and verified test results. Beyond this, we support the consideration of credits for
improved air conditioning systems as an effective method for reducing greenhouse gas
emissions. [These comments were submitted as testimony at the New York public hearing. See
docket number EPA-HQ-OAR-2009-0472-4621, p. 136.]
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As noted in our previous submission, BMW supports credits for improved air conditioning
systems as an effective method for reducing GHG emissions and improving fuel economy. In
addition to the proposed A1C C02 idle test procedure and technology list, BMW recommends the
following changes: [OAR-2009-0472-11294.1, p. 1]
The proposed rule includes credit for reduced reheat externally-controlled and variable-
displacement compressors. Beyond these technologies, BMW suggests also approving electrical
driven compressors since equivalent or even better performance can be achieved. [OAR-2009-
0472-11294.1, p. 2]
Furthermore, BMW proposes to modify the definition of oil separator. The definition appears to
describe an oil separator outside of the compressor: 'Oil separator means a mechanism which
removes at least 50 percent of the oil entrained in the oil/refrigerant mixture exiting the
compressor and returns it to the compressor housing or compressor inlet.' Since it is also possible
to integrate an oil separator into the compressor, the definition should be modified in the
following way: 'Oil separator means a mechanism which removes at least 50 percent of the oil
entrained in the oil/refrigerant mixture exiting the compressor or exiting a similar compressor
without an external oil separator and returns it to the compressor housing or compressor inlet.'
[OAR-2009-0472-11294.1, p. 2]
Public Citizen and Safe Climate Campaign
EPA proposes to give credits for changing refrigerants and improving air conditioning
efficiency. The European Union is requiring automakers to switch air conditioning refrigerants,
so these credits will be a windfall for automakers. These credits could cause the second largest
reductions in the standard an automaker must meet. We urge that these credits be predicated on
"additionality." That is, EPA must safeguard against granting automakers valuable compliance
credits for improvements they were planning to make in absence of regulation. EPA and NHTSA
still receive product plan information from automakers, although this information is no longer
used as the principal basis on which the agencies set the level of the standards. The product plans
could be used by EPA to establish whether credits for refrigerant switching are additional.
[OAR-2009-0472-7050.1, p.8]
Motor and Equipment Manufacturers Association
Credits for A/C Systems Must Accurately Represent the Benefit of the Technology.
MEMA appreciates the efforts to quantify the true affect of air conditioning systems (A/C) on
vehicle fuel economy. Importantly, the credit system proposed can provide the incentive to
invest in the additional technologies/products needed to help reduce the fuel consumption by the
A/C system. To accomplish this, the credit system must accurately represent the benefits of the
significant energy saving technologies. [OAR-2009-0472-7121.1, p.7]
[See Docket OAR-2009-0472-7121.1, pp. 7-9 on detailed comments pertaining to Energy
Calculations and Credits, Revise the Single-Vehicle Test Protocol, and Summary of
Recommended Emission Credits. Also see OAR-2009-0472-7121.1, Appendix A for Summary
of 2000 Compressor Power Consumption Study]
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EPA Response to Comments
Clean Energy Fuels
Clean Energy would like to better understand the proposal for air conditioning credits based on
Table III.A.3-2, whereas projected FFV credits receive 6 credits in 2012 and 0 credits in 2016
and air condition efficiency credits receive 3.1 credits in 2012 and 10.6 credits in 2016. While
we support and courage federal efforts that verify that FFVs and dual-fueled alternative fuel
vehicles actually operate on alternative fuels beginning in 2016, we believe dual-fueled
alternative fuel vehicles powered by natural gas - due to their significant incremental costs - are
more likely to operate on natural gas due to cost savings associated with the fuel whereas the
cost savings are more questionable with ethanol. Specifically, the cost of aNGV conversion is
significantly greater than the conversion costs associated with Ethanol 85 vehicle. Failure to take
advantage of the cost savings associated natural gas as a transportation fuel defeats the very
economic reason for performing aNGV conversion. [OAR-2009-0472-7220.1, p.7]
With this understanding of dual-fueled alternative fuel vehicles powered by natural gas, it is
difficult to understand how improving the air conditioning efficiencies of a vehicle receives more
credits than dual-fueled alternative fuel vehicles, dual-fueled alternative fuel vehicles, that
demonstrate the use the alternative fuel, provide both GHG and foreign oil displacement
benefits. Air conditioning units, on the other hand, appear to only address GHG emissions and,
yet, they receive more credit. This seems counter-intuitive to the proposed National Program's
multiple goals as something that achieves half of the objectives should only receive half of the
credit. Clean Energy is further concerned that, by providing generous credits to air conditioning
efficiency improvements, this will provide yet another obstacle to the production of vehicles that
are more efficient, operate on low to ultra low carbon fuels, or combine both strategies. Clean
Energy opposes this generous issuance of credits as it clearly is intended to water down the
rulemaking. [OAR-2009-0472-7220.1, p.7]
[[Clean Energy also submitted these comments as testimony at the Detroit public hearing, See
docket number EPA-HQ-OAR-2009-0472-6185, pp. 136-137.]]
Honeywell International, Inc.
Recommendations to improve A/C efficiency credits proposal (indirect emissions)
Honeywell supports EPA's proposal to make available A/C Efficiency Credits for actions
manufacturers can take to improve air conditioning efficiency and reduce fuel consumption.
However, we argue that EPA can improve its proposed program so that availability of A/C
system credits are based upon verifiable data and the best available science. The Proposed Rule
provides credits for A/C system efficiency improvements based on a checklist style approach
that Honeywell feels is not warranted for efficiency credits for operating systems over wide
ranges of operating conditions. In lieu of this approach, we recommend components of A/C
system efficiency are tested individually where such testing is feasible. [OAR-2009-0472-
7206.1,p.6]
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For example, we concur with EPA's estimate of a 0.9 g/mi CO2 A/C efficiency potential credit
for Improved Blower and Fan Motor Control. However, instead of a pre-established credit, we
believe that the blower and fan pulse width modulation ('PWM'), credits may be quantified easily
and tested independently of A/C performance testing using a simple procedure based on the time
spent with blower and engine cooling fan 'on time' due to operation of the A/C and heater
controls. While a specific procedure currently does not exist, it is easy to visualize a simple time-
weighted test based on the typical usage parameters like those in the Green-MAC-LCCP and
outlined in SAE Standard 12766 - Life Cycle Analysis to Estimate the CO2 -Equivalent
Emissions from MAC Operation to develop the correct on/off times and associated energy
savings. An approach that implements some test certification, instead of the checklist strategy, is
critical to reflect real-life operating conditions because substantial variance that results from the
type of implementation of the fan, its blower PWM controls, and the strategy utilized to improve
the energy efficiency. The mere presence of a PWM control does not necessarily optimize the
use of the controller and thus save energy; as ,such a check-list credit will not reflect accurately
actual avoided GHG emissions. [OAR-2009-0472-7206.1, p.6]
EPA states that manufacturers seeking to generate A/C Efficiency Credits use specific
performance tests for model years 2014 and later. We believe that EPA should expedite the use
of specific performance tests to reflect real-world operating conditions and emission
displacement. We recommend the use of the SAE Standard 12765- Procedure of Measuring
System COP of a Mobile Air Conditioning System on a Test Bench provides the best
methodology of gaining energy-efficiency based credits. SAE Standard 12765, when coupled
with the Green-MAC-LCCP developed with support of EPA and outlined in SAE Standard
12766 - Life Cycle Analysis to Estimate the CO2 - Equivalent Emissions from MAC Operation,
can correctly weight the different operating modes found in the United States to determine an
overall country weighting of the vehicle miles traveled for the fleet. [OAR-2009-0472-7206.1,
p.7]
With respect to the individual efficiency-improving A/C Technologies and Credits proposed in
Table III C. 1-1 of the Preamble, we provide the following comments and suggestions: [OAR-
2009-0472-7206.1, p.7]
Honeywell disagrees with the calculation of reduced reheat using an externally-controlled,
variable-displacement compressor credit
Honeywell questions whether an external control delivers better energy efficiency of compressor
operation over internal controls based on conditions within the A/C system. This inference is not
founded fundamentally since the external effect directly impacts the internal controls, i.e. if the
cooling load is high with high temperature air flowing over an evaporator core. In this scenario,
the evaporation pressure in the evaporator is also high, as the thermostatic expansion valve
allows more refrigerant to flow through the evaporator to carry away heat through the pure fluid
pressure-temperature relationship (PT chart). If the cooling load is low, then the reduced
airstream temperature corresponds to a low evaporation pressure, which can be used as a control
to reduce the compressor displacement and save energy. Both internal controls and external
controls can give the desired efficiency improvements if implemented correctly. [OAR-2009-
0472-7206.1, p.7]
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EPA Response to Comments
In the DRIA, EPA suggests that reheat is a penalty on system efficiency. While this assessment
is correct for dry regions, reheat is a method to control the humidity in an operating system,
particularly in the eastern U.S. where humidity levels can be very high during the summer
months. Since both internal and external controls typically feed to the onboard computer for
system operation, both types of controls can manage system operation effectively. [OAR-2009-
0472-7206.1, p.7]
Internal, external, and compressor controls should be validated through a testing protocol such as
SAE Standard J2765 - Procedure of Measuring System COP of a Mobile Air Conditioning
System on a Test Bench. Honeywell suggests that the credits be applied for optimization of all
types of system controls relative to the total energy saved to a current production system. [OAR-
2009-0472-7206.1, pp.7-8]
Reduced reheat using an externally-controlled, fixed displacement or pneumatic variable-
displacement compressor credit
Honeywell's comments are the same as in section 2.1, above. [OAR-2009-0472-7206.1, p.8]
Defaulting to recirculated cabin air credit
EPA proposes to provide a credit for A/C systems that default to recirculated cabin air whenever
the outside ambient temperature is higher than 75 degrees Fahrenheit. While Honeywell agrees
that the use of recirculated air does reduce the energy required to operate the vehicle air
conditioning during times of high ambient temperature, we also believe that placing a default
position to recirculation may cause other problems specific to the automotive application.
Specifically, while the humidity can be managed through the use of a humidity sensor, the indoor
air quality or CO2 concentrations may exceed the ASHRAE 62 guideline value of 1,000 ppm for
normally occupied spaces. Note that due to occupant respiration the CO2 value may rise to a 2
percent saturation value and induce a state of drowsiness, or in the extreme, driving while
impaired ('DW1'). [OAR-2009-0472-7206.1, p.8]
Honeywell recommends that if a default recirculation door placement is to be specified by the
credit rule, then additional safety devices will be required for driver/occupant operational safety.
[OAR-2009-0472-7206.1, p.8]
Improved blower and fan motor controls credit
Honeywell concurs with EPA's estimate of a 0.9 g/mi CO2 A/C Efficiency Credit for Improved
Blower and Fan Motor Control. Instead of a pre-established credit, however, we believe that the
blower and fan PWM credits may be quantified easily and tested independently of A/C
performance testing using a simple procedure based on the time spent with blower and engine
cooling fan 'on time' due to operation of the A/C and heater controls. While a specific procedure
does not exist currently, it is easy to visualize a simple time weighted test based on the typical
usage parameters like those in the GreenMAC- LCCP and outlined in SAE Standard J2766 - Life
Cycle Analysis to Estimate the CO2 -Equivalent Emissions from MAC Operation to develop the
correct on/off times and associated energy savings. Once again, a testing procedure is preferable
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to a checklist strategy here because of the variable impacts of implementation of the fan, the
blower PWM controls, and the strategy utilized to improve the energy efficiency. In production,
these systems will be supplier dependent with some suppliers providing a superior strategy to
provide an energy saving system (controller and motor combination), while other suppliers may
only provide a basic PWM system that is not optimized and thus insufficient to save energy or
GHG equivalents. [OAR-2009-0472-7206.1, p.8]
Electronic expansion valve credit
Honeywell requests the EPA revise its assumptions related to the Electronic Expansion Valve
('EXV') and modify the available A/C Efficiency Credit accordingly. Unfortunately, the
description of the operation of a conventional thermostatic expansion valve (TXV) provided in
the DRIA is incorrect. EPA states that a TXV uses an internal temperature reference to assure a
constant temperature level for the expanded refrigerant gas typically a few degrees Celsius above
the freezing point of water. However, Honeywell suggests that a properly operating TXV does
not control the evaporator temperature to a constant value a few degrees Celsius above the
freezing point of water. In contrast, a correct TXV maintains a constant superheat of generally 2
to 5 degrees Celsius above the boiling point imposed by the evaporator loading. That is, a
properly sized TXV design is intelligent enough to sense when cooling is required based on the
cooling characteristic imposed by the operator. The TXV then adjusts to feed or restrict flow to
the evaporator based on the amount of refrigerant needed to balance the load. Proper TXV
selection also involves determination of a default size, where as the freezing point of water is
approached the flow of refrigerant is maintained such that the evaporator is not over-cooled,
wasting energy and causing core freeze up. The general operation of electronic expansion valve
is to take a measurement of the suction pressure and cooled air output temperature to determine
the proper algorithm for opening or closing the valve. [OAR-2009-0472-7206.1, p.9]
While the electronic expansion valve may offer some advantages when vehicle operation is on
the border of conventional TXV control bands, we question that the mere inclusion of an
electronic expansion valve is sufficient to determine the proper setting of the valve and control
algorithm. We advise that advancements with the electronic expansion valve over the TXV be
demonstrated by the vehicle or component manufacture over a base operation valve over a range
of operating conditions such as those found in SAE Standard J2765. [OAR-2009-0472-7206.1,
p.9]
Improved-efficiency evaporators and condensers credit
EPA proposes an Efficiency Credit for the use of improved evaporators and condensers.
Honeywell concurs with EPA that SAE Standard J2765 - Procedure of Measuring System
Coefficient of Performance of a Mobile Air Conditioning System on a Test Bench should be
used to show system improvements in energy efficiency and cooling capacity of systems. [OAR-
2009-0472-7206.1, p.9]
Oil separator credit
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EPA Response to Comments
EPA proposes an Efficiency Credit for manufacturers if oil is prevented from circulating
throughout the A/C System due to inefficiencies resulting from heat transfer effectiveness.
While large amounts of oil circulating in an operating system can impact the overall efficiency of
a system, Honeywell suggests that if the oil separator is not properly designed, the pressure drop
losses due to the flow of refrigerant through such a device may negatively impact the efficiency
of a system. EPA calculates the credit based upon the findings of the SAEIMAC team for a
standard credit of 0.6 g/mi CO2. Instead, we submit that the impact of oil separators be tested
identically to evaporators and condensers by using SAE Standard J2765- Procedure of
Measuring System COP of a Mobile Air Conditioning System on a Test Bench to determine the
overall efficacy and resulting credit of such an additional device. Using the SAE Standard J2765
will enable the accurate determination of the efficiency of such a technology. [OAR-2009-0472-
7206.1, pp.9-10]
European Automobile Manufacturers Association
Credits for improving efficiency
The EPA proposal combines credits for improved evaporators and condensers, and PWM fan and
PWM blower. ACEA proposes not to combine the credits for the components, because every
optimized component represents an improvement. Each improvement should achieve a credit. If
one of the optimized components will be used, a credit should be realized.
Default recirculation:
It is not always favorable to use recirculation at 75F, because there are a lot of different
parameter which influences the benefit: The benefit of recirculation depends on set point air
temperature and also on different external conditions like heat pick up from engine hood. So it
should be possible to get the credit if there is an intelligent air recirculation control, which takes
into account these different parameters. [OAR-2009-0472-7444.1, p.l]
Credits for reduced reheat: it is also possible to realize reduced reheat by an electrical
compressor, so we suggest to adjust the wording like that: "..Reduced reheat, with either
externally-controlled, variable-displacement compressor, or fixed / internally controlled
compressor with a control of the ON/OFF temperature threshold , or electrical compressor: 1.7
g/mi.; [OAR-2009-0472-7444.1, p.l]
Credits for improving efficiency (2)
Oil separator: the definition describes an oil separator outside the compressor: "Oil separator
means a mechanism which removes at least 50 percent of the oil entrained in the oil/refrigerant
mixture exiting the compressor and returns it to the compressor housing or compressor inlet".
[OAR-2009-0472-7444.1, p.2]
As it is possible to integrate an oil separator into the compressor the definition should be
independent. [OAR-2009-0472-7444.1, p.2]
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Credits for improving efficiency (3)
Improved evaporators and condensers : the definition references to a standard which is not
defined: "Improved evaporators and condensers means that the coefficient of performance (COP)
of air conditioning system using improved evaporator and condenser designs is 10 percent
higher, as determined using the bench test procedures described in SAE J2765 "Procedure for
Measuring System COP of a Mobile Air Conditioning System on a Test Bench," when compared
to a system using standard, or prior model year, component designs. SAE J2765 is incorporated
by reference; see §86.1." [OAR-2009-0472-7444.1, p.2]
The reference to prior model year means that OEM which uses already improved heat
exchangers in the prior model year, do not get any credit. So we suggest to make an absolute
definition like an heat exchanger efficiency. For evaporators / condensers we recommend
thresholds based on current technology, e.g.:
Improved evaporators (tube to tube spacing <14 mm) and condensers (tube to tube spacing <12
mm) [OAR-2009-0472-7444.1, p.2]
These are the same thresholds as in our recommendation on page 12 — The following
recommended thresholds represent high efficiency standards based on the current state of
technology: Condensers: Micro channel tubes with optimized flat tube-to-tube spacing < 12mm.
Evaporators: Optimized flat tube-to-tube spacing < 14 mm. [OAR-2009-0472-7444.1, p.2]
An internal heat exchanger should be added to the list of components/credits. [OAR-2009-0472-
7444.1, p.2]
Credits for improving efficiency (4)
Credits for improved glazing and shading: We suggest to integrate possible credits for improved
glazing and integrated shading in the GHG. [OAR-2009-0472-7444.1, p.2]
New York State Department of Environmental Conservation
Air Conditioning Efficiency Credits (Preamble Section III.C.I)
EPA is also proposing an engineering analysis based credit program for air conditioning
efficiency. Beginning with the 2014 Model Year a vehicle will have to meet a threshold test in
order to be eligible for the credits. This threshold is a maximum of 14.9 grams/minute higher
CO2 emissions at idle with the air conditioning on than with the air conditioning off. [OAR-
2009-0472-7454, p.2]
Testing by the Department suggests that many existing vehicles, particularly smaller cars, can
nearly meet the proposed threshold. However, a minivan exhibited emissions more than twice
the proposed threshold. This suggests that large interior volume vehicles may have no chance of
meeting the threshold for credits. In that case manufacturers have no incentive to invest design
and production resources into improving the efficiency of the air conditioning systems for these
vehicles. This deprives the environment of the benefits of improvements to the largest air
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EPA Response to Comments
conditioning systems. EPA should consider an alternate threshold that varies with interior
volume, at least until a certification emissions testing method for the incremental emissions due
to air conditioner operation can be developed. [OAR-2009-0472-7454, p.2]
EPA Response:
A/C Idle Test Threshold
Several commenters noted that the proposed 30% reduction in emissions on the A/C Idle Test to
qualify for efficiency credits was not desirable, as vehicles which came close to, but did not
exceed, the threshold would receive zero credit for any of the efficiency-improving technologies
on their vehicles. In addition, the New York State Department of Environmental Conservation
commented that small cars could easily meet the proposed threshold, whereas vehicles with
larger interior volumes would not. EPA examined the results of vehicles tested during
development of the A/C Idle Test and found little correlation between interior volume and the
incremental change in idle test results (A/C on vs off). Because there is environmental benefit
(reduced CO2) from the use of even some of these efficiency-improving technologies, EPA
believes it is appropriate to scale the A/C efficiency credits to account for these partial
improvements. We therefore are modifying our proposed approach on this issue by allowing
some credit to still be earned on those vehicles which do not meet or exceed the threshold, while
making a multiplicative credit adjustment factor to the eligible credits. This factor will be scaled
from 1.0 to 0, with vehicles demonstrating a 30% or better improvement (14.9 g/min or lower)
receiving 100% of the eligible credit (adj. factor = 1.0), and vehicles demonstrating a 0%
improvement - 21.3 g/min or higher result — receiving no credit (adj. factor = 0)). See 86.1866-
12 (c)(5) (iii) (B).
Elimination of EXV Technology from the Menu
Many comments were received stating that the EPA estimate for EXV efficiency was too high,
that no manufacturers were developing this technology within the timeframe of this rulemaking,
and that it should not be included on the list of efficiency-improving technologies. These
commenters noted that the SAE EVIAC report (from which we referenced the expected efficiency
improvement) utilized an EXV in conjunction with a more efficient compressor - and not as a
standalone technology. Given the uncertainty in the effectiveness of EXV technology, and that
no manufacturers seem to plan on utilizing it, we have removed this technology from the list of
efficiency-improving technologies and credits.
Inclusion of IHX Technology in the Menu
Many commenters requested that an internal heat exchanger, or MX, be added to the design
menu. EPA initially considered adding this technology, but in our initial review of studies on this
component, we had understood that the value of the technology is limited to systems using the
alternative refrigerant HFO-1234yf Some manufacturers, however, commented that an IHX can
also be used with systems using the current refrigerant HFC-134a to improve efficiency, and that
they plan on implementing this technology as part their strategy to improve A/C efficiency.
Based on these comments, and projections in a more recent SAE Technical Paper, we project
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that an IHX in a conventional HFC-134a system can improve system efficiency by 20%,
resulting in a credit of 1.1 g/mi.6
Control of Recirculated Cabin Air
In response to comments concerning the applicability and effectiveness of technologies that were
or were not included in our analysis, we have made several changes to the design-based menu.7
First, we have separated the credit available for 'recirculated air'8 technologies into those with
closed-loop control of the air supply and those with open-loop control. By "closed-loop" control,
we mean a system that uses feedback from a sensor, or sensors, (e.g., humidity, glass fogging,
CC>2, etc.) to actively control the interior air quality. For those systems that use "open-loop"
control of the air supply, we project that since this approach cannot precisely adjust to varying
ambient humidity or passenger respiration levels, the relative effectiveness will be less than that
for systems using closed-loop control. Consequently, such systems should not automatically
receive the same credit as an open-loop system. The final rule therefore provides that open-loop
control at different temperatures may receive credits on a case-by-case basis upon EPA approval
of an engineering analysis submitted by the manufacturer. See 86.1866-12 (c) (iii).
Improved Evaporators and Condensers
In response to comments, we have modified the definition of 'improved evaporators and
condensers' to recognize that improved versions of these heat exchangers may be used separately
or in conjunction with one another, and that an engineering analysis must indicate a COP
improvement of 10% or better when using either or both components (and not a 10% COP
improvement for each component). Furthermore, we have modified the text of the regulation
from proposal to clarify what are considered to be the 'baseline' components for this analysis.
See 86.1866-12 (c) (v). We consider the baseline component to be the version which a
manufacturer most recently had in production on the same vehicle design or in a similar or
related vehicle model. The dimensional characteristics (e.g. tube configuration/
thickness/spacing, and fin density) of the baseline components are then compared to the new
components, and an engineering analysis is required to demonstrate the COP improvement.
Efficiency Difference Between HFO1234yf and R-134a Refrigerants
In the proposal, EPA had requested comments on whether the efficiency credit for alternative
refrigerants should be adjusted. Although a few commenters noted that the efficiency of an
HFO1234yf system may differ from a current HFC-134a system,9 we believe that this difference
does not take into account any efficiency improvements that may be recovered or gained when
6 Mathur, Gursaran D., "Experimental Investigation with Cross Fluted Double-Pipe Suction Line Heat Exchanger to
Enhance A/C System Performance," SAE 2009-01-0970, 2009.
7
Commenters included the Alliance of Automobile Manufacturers, Jaguar Land Rover, Denso, and the Motor and
Equipment Manufacturers Association, among others.
8 Recirculated air is defined as air present in the passenger compartment of the vehicle (versus outside air) available
for the A/C system to cool or condition.
9 Ford noted that "the physical properties of the alternative refrigerant R1234yf could result in a reduction of
efficiency by 5 to 10 percent compared to R134a in use today with a similar refrigerant system and controls
technology."
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the overall system is specifically designed with consideration of the new refrigerant's properties
(as compared to only substituting the new refrigerant). In addition, Ford noted that the
environmental benefit of reducing the GWP from 1430 to 4 far outweighed any potential
decrease in system efficiency, and that they supported the maximum credit for use of an
alternative refrigerant, as provided by this rule. EPA agrees with these points. Moreover, the
agency believes that the idle test used from MY 2014 on as a precondition to obtaining efficiency
credits will help ensure that the alternative refrigerant systems will be properly calibrated for
efficiency (at least at idle) so as to minimize "backsliding". EPA is therefore not adjusting the
credits based on efficiency differences for this rule.
Modifications to the Design-Based Menu
Several commenters requested that adjustments be made to the design-based menu for certain
technologies, or that partial credits be granted for technologies which come close to, be do not
meet, the requirements set forth in this rule. EPA acknowledges that any design-based approach
is imperfect (in that it cannot capture every design nuance or technology advance that may occur
during the timeframe of the rule), but we feel that this approach is sufficient in that it encourages
the use of current state-of-the-art A/C technologies on vehicles. For technologies such as scroll
compressors, which operate more efficiently at high engine speeds than at idle speeds, we
believe that the A/C Idle Test is still a valid tool for quantifying the overall efficiency of an a
A/C system, as idle time is a significant portion of daily driving. It thus is reasonable to use an
idle test as a screening tool. Moreover, any vehicle with a compressor design, or A/C component,
which does work effectively at idle will likely exhibit poor cooling system performance under
this condition (i.e. when interior cooling is especially desired by consumers), and so is unlikely
to be used in high volumes by manufacturers.
5.7.1.3. Idle Test Procedure
OrganizationrFord Motor Company
Honda Motor Company
Association of International Automobile Manufacturers (AIAM)
Chrysler Group, LLC
Environmental Defense Fund
Alliance of Automobile Manufacturers (Alliance)
Toyota Motor North America
National Renewable Energy Laboratory
California Air Resources Board
Honeywell International, Inc.
European Automobile Manufacturers Association
New York State Department of Environmental Conservation
Yuli Chu
Comment:
Ford Motor Company
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Ford has concerns regarding vehicle testing such as the A/C idle Test as an accurate means to
measure the effect of A/C operation. Using the delta between two tests increases uncertainty and
is not a robust test approach. Ford performed a simple control parameter study, via Computer
Aided Engineering (CAE), that shows inherent variability in the proposed idle test. The results
are shown in Chart I: Compressor Power Variability below. [See OAR-2009-0472-7082.1, p. 7
for Chart I]
Ford has experience in running A/C on versus A/C off fuel consumption tests in climatic wind
tunnels. As shown in Table II [See OAR-2009-0472-7082.1, p. 7 for Table II] the data shows
inherent variability. Idle conditions are the most difficult to control. Facility correlation across
industry and government laboratories is also a concern.
In addition, A/C idle results for HEV are highly dependent on the state of charge (SOC) of the
vehicle prior to the test. Preconditioning of the vehicle does not define SOC starting
requirements for this test. A/C idle test cell ambient conditions will require all idle tests to be
conducted in environmental chambers which are already fully utilized for other required
certification tests. Ford validates ambient test cell environments at 68-86 °F and 50 ± 10 gr/lb.
The proposal is for 75±2°F and 50±5 gr/lb. While Ford has a set point of 75°F, the tight control
on temperature and humidity could only be achieved in an environmental chamber. This is
impractical from a facility standpoint. Ford recommends that the temperature not vary more than
± 5°F from the start of the test and that the humidity be expanded to 50±10 from ±5 gr/lb.
Inclusion of the SC03 test (air conditioning test procedure) into the 5-cycle FE requirement has
already taxed the fully utilized environmental chambers. Adding another SC03 cycle would
require significant incremental facility investments. The proposed SC03 test for A/C credits
would be conducted at environmental conditions different from FE tests meaning that additional
environmental chamber testing is required. In addition, the proposed test cycle includes phases
without A/C operation and at manual A/C operation points that are not included in the FE test
which also prevents optimizing facility usage. [OAR-2009-0472-7082.1, pp. 7-8]
Jaguar Land Rover
Jaguar Land Rover understands the intention of the proposed air con idle test, as a simple test
that could be carried out in existing emission facilities. However, we consider it would not be a
reliable indicator of overall air con efficiency. For instance, consider the case of a vehicle fitted
with a scroll compressor. Such compressors are among the most efficient at normal road speeds,
but do not perform well at low speed, including idle conditions. Vehicles equipped with scroll
compressors would therefore be unfairly penalized in this test. [OAR-2009-0472-7213, p.2]
Honda Motor Company
EPA proposes a new idle-test to determine whether or not a vehicle qualifies for the design-
based air conditioning credits. Honda has three concerns with this approach. First, the idle-test,
proposed by EPA, does not adequately represent a good metric to determine whether an A/C
system is improved or not. Second, EPA's idle-stop capable vehicles' exemptions from the idle
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test, and third, the idle test threshold is an "all or nothing" condition that results in unfair
treatment. [NHTSA-2009-0059-0095.1, p.8]
Idle Test
In general, the idle test that EPA describes, represents only one condition among many in typical
driving cycles. This test will potentially disadvantage technologies which are less effective at
idle yet more effective at a higher rpm ranges (e.g. scroll-type compressors). We support
AIAM's proposal for studying a better approach with a 3rd party, together with EPA and
industry. [NHTSA-2009-0059-0095.1, p.8]
Exemption from Idle Test
In the idle-test, EPA offers an exemption from the "threshold" if the vehicle's air conditioning
system is "solely powered by electricity" and can operate while the engine remains off for "at
least 2 minutes." [NHTSA-2009-0059-0095.1, p.8]
Honda believes that these criteria are unnecessarily restrictive. Honda's Civic Hybrid has an air
conditioning system that has two sources of power: electric and engine. During idle stop, this
system is able to operate electrically for limited periods of time, but it is not exclusively, nor
"solely" powered by electricity. Further, the 2 minute requirement is very restrictive. Honda's
own testing of typical driving scenarios in the U.S. (California), Europe (Spain) and Asia (Japan)
indicate that the vast majority (more than 90%) of idle events are less than 60 seconds in length
(see Attachment 4). Although Honda's idle stop duration is less than EPA's 2 minute
requirement, based on market research it provides significant value. Honda trusts that it was not
the intent of EPA to exclude technologies like the A/C system in the Civic Hybrid. [NHTSA-
2009-0059-0095.1, p.9] [[See NHTSA-2009-0059-0095.1, p. 17 for Attachment 4]]
Idle Test Threshold
EPA has established a performance threshold on the air conditioning idle test in order to qualify
for design-based A/C credits. This threshold creates an "all-or-nothing" condition, which is bad
policy, and bad regulation. These "step functions" unintentionally create winners and losers
based on potentially minute and insignificant differences in performance. For example, an A/C
system whose idle test score is slightly higher than the threshold would not be rewarded for its
improved efficiency. This is a big downside of this policy. In Attachment 5 we show examples of
vehicles that have improved air conditioner performance and just miss the threshold of 14.9
grams/minute. Honda does not propose to relax the 14.9 grams/minute threshold, rather, we
suggest that EPA create a linear function that seamlessly transitions from 0% of the A/C credits,
based upon some average grams/minute value, to 100% of the A/C credits, based upon the 14.9
grams/minute threshold. In this manner, EPA will eliminate the arbitrariness of a single value.
[NHTSA-2009-0059-0095.1, p.9] [[See NHTSA-2009-0059-0095.1, p. 18 for Attachment 5]]
Association of International Automobile Manufacturers (AIAM)
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Testing at idle is not reliably repeatable due to changes in the engine idle speed and especially
due to changes/variances in vehicle front-end airflow and temperature due to front-end
recirculation (engine heat recirculating to the front face of the condenser). Available field data
indicate that engine idling accounts for only 15 to 20% of vehicle use. Therefore, testing only at
one engine condition, an idle condition, would not be repeatable nor is it representative of the
widely varying conditions and therefore energy used by the MAC system. Relying on the idle
test would encourage the use of technology that reduces energy usage at idle in low to mid
ambient temperature conditions at the expense of energy efficiency at road speeds and other
conditions. Some of the most energy efficient technologies would not show any benefit at this
condition - Air Inlet Mixture control (which is capable of up to a 35% reduction in overall A/C
energy usage) would not likely show any savings in the proposed EPA test procedure. In
summary, the proposed test would not encourage the implementation of many of the most
promising technologies that have been developed or are under development. [OAR-2009-0472-
7123.1,p.l2]
We are also concerned about the impact that the Agency's idle test approach would have on
manufacturer and Agency resources. The Agency's proposed concept would establish a new test
that would have to be performed by manufacturers and the Agency on large numbers of vehicles
to provide data for greenhouse gas compliance purposes. [OAR-2009-0472-7123.1, p.12]
However, if EPA insists that the idle test approach must be included in the final rule, that test
should be considered as only one of the parameters that determines the air conditioning credit. In
addition, it is unclear why EPA has proposed to grant efficiency credits only if gains in
efficiency of at least 30 percent are achieved. See preamble at 49530. Under proposed section
86.1866-12(c)(5)(iii), only air conditioning systems that increase emissions by less than 14.9
grams per minute, as measured under the Agency's idle test, would qualify for credits. The
Agency should encourage all efficiency improvements, and lesser improvements should receive
proportionately smaller credits. [OAR-2009-0472-7123.1, p.13]
Hyundai Motor Company
For MY 2012-2013 MY, EPA proposes to use a technology menu approach for determining A/C
efficiency credits. Beginning in MY 2014, EPA proposes the use of an idle test for credit
determination and requires a minimum 30 percent system efficiency improvement. We support
the comments made by the Association of International Automobile Manufacturers (AIAM)
regarding the idle test, including:
• The idle test only represents one aspect of A/C system use.
• Testing at idle may not be reliably repeatable due to changes in the engine idle speed and front-
end recirculation (engine heat recirculation to the front face of the condenser).
• New A/C technologies with the potential to improve efficiency may not have efficiency
benefits realized during vehicle idle and thus may not be captured by an idle test.
• The idle test will impose a new test procedure and test burden on both industry and EPA.
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EPA Response to Comments
Like AIAM, Hyundai supports continuing the technology menu approach past MY 2013 and
recommends that EPA work with industry to develop an appropriate performance test for
potential application with MY 2017 and later GHG standards. [OAR-2009-0472-7231.1, p.6]
Chrysler Group, LLC
The A/C idle test's objective is to quantify GHG emissions related to A/C system operation at a
given test condition applicable to all vehicles. The GHG emissions associated with A/C-on
operation during the idle test are determined and compared against the GHG emissions
associated with the A/C system off. A value of 14.9 grams/minute CO2 is employed, regardless
of cabin volume or vehicle footprint, as a threshold below which the A/C system passes. Passing
the idle test allows the OEM to use the menu approach to validate A/C indirect credit. Concern
exits with the A/C idle test as currently conceived. [NHTSA-2009-0059-0124, p.23]
A concern is that the menu items offering credit will not always contribute to lowered GHG
emissions as measured by the A/C system idle test. The three most valuable indirect menu items
may not be effective and therefore not captured by idle test:
• Automatic recirculation at 75°F - Due to ambient temperature tolerances, the 75°F automatic
recirculation strategy may not be active.
• Variable Displacement Compressor or Fixed Displacement Compressor with reduced reheat
strategy - The manual idle test is performed at full cold where a reduced reheat strategy would
not be active or at diminished capacity.
• The PWM blower contribution is maximized at low to medium blower speeds not captured by
the idle test. The PWM cooling fan is not a major contributor since the fan duty cycle at 75°F
and idle engine speed is not considered high. [NHTSA-2009-0059-0124, p.23]
Automatic temperature control A/C systems greatly benefit during the A/C idle test by providing
lowered GHG emissions and also provide customer satisfaction benefits for occupant comfort.
While this is desirable for OEMs, not all vehicle segments support an automatic climate control
system over the standard manual system due to price point. [NHTSA-2009-0059-0124, p.23]
Vehicles with manual temperature control are at a distinct disadvantage relative to those with
automatic temperature control systems during the A/C system idle test procedure due to the test
boundary conditions. The test boundaries do not represent real world use conditions. [NHTSA-
2009-0059-0124, p.23]
Recommendation:
The A/C idle test was developed by testing many different vehicles representing different levels
of A/C control strategy sophistication and technology. As can be seen in the scatter of the A/C
idle test results, EPA has not correlated A/C idle test performance with vehicle or A/C system
parameters, preferring a 'one size fits all' approach of a 14.9 gram CO2/minute
threshold. [NHTSA-2009-0059-0124, p.23]
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Chrysler believes correlation could be achieved between A/C system parameters and GHG
emissions levels and supports investing resources as needed to develop a vehicle A/C test that
robustly captures GHG emissions reductions. Chrysler believes the current A/C idle test can be
improved by defining baseline sets of vehicle parameters such as compressor type, oil separator
type, automatic recirculation, etc., and evaluating the parameters and correlating the results that
show a trend. This could be used to fully validate the indirect technology menu in time for the
2017 model year. [NHTSA-2009-0059-0124, pp.23-24]
Environmental Defense Fund
The Proposed Air Conditioning Credits for Determining Compliance with the Clean Air Act
Standards Incentivize Reductions in Hydrofluorocarbon Refrigerants, Which Are Potent
Greenhouse Gases.
EPA proposes compliance credits for reducing the greenhouse gases associated with air
conditioning systems, a policy approach that provides a strong incentive for mitigating
hydrofluorocarbon refrigerants, which are powerful greenhouse gas pollutants, as well as the
greenhouse gas emissions due to the load associated with the air conditioning operation. 74 Fed.
Reg. at 49,482. [OAR-2009-0472-7285.1, pp. 24-25]
The environmental performance and economic flexibility inherent in the overarching systems
based approach under the federal Clean Air Act enable manufacturers to secure cost-effective
emissions reductions in non-CO2 greenhouse gases and to efficiently optimize CO2 emissions
reductions across the entire vehicle system including the air conditioning operations:
EPA is proposing an approach that allows manufacturers to generate credits by reducing GHG
emissions related to A/C systems. Specifically, EPA is proposing a test procedure and method to
calculate CO2 equivalent reductions for the full useful life on a grams/mile basis that can be used
as credits in meeting the fleet average CO2 standards. EPA's analysis indicates this approach
provides manufacturers with a highly cost effective way to achieve a portion of GHG emissions
reductions under the EPA program. 74 Fed. Reg. at 49,482. [OAR-2009-0472-7285.1, p. 25]
Under the CAFE program, these reductions are disallowed for passenger cars. 74 Fed. Reg. at
49,468. EDF strongly supports the proposed EPA standards that incentivize reductions in the
harmful greenhouse gases associated with air conditioning systems, an approach consonant with
the provisions of the Clean Air Act and sound public policy. [OAR-2009-0472-7285.1, p. 25]
Alliance of Automobile Manufacturers (Alliance)
If a test is to be used, designing the specific test procedure is very important. It would be
especially important that any tests include an evaluation of energy consumption at moderate
MAC loads. Not only are moderate loads the most commonly encountered conditions in the U.S.,
but the most attractive near term energy efficiency technologies, such as many of those
demonstrated in the IMAC program, tend to give their benefits under moderate loads. At high
loads, systems with variable compressors, sophisticated computer control strategies, and other
key IMAC technologies may be indistinguishable from older designs without these
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improvements. In order to provide the right incentives to fully utilize these technologies, the
credit program must identify them as beneficial and award credits accordingly. [OAR-2009-
0472-6952.1, p.26]
The modified SC03 and idle tests discussed by EPA are not representative of real world
conditions, since they are not performed over a range of temperatures and air conditioner
operating conditions. Some efficiency technologies work well at low loads and others at high
loads, and a good test would need to cover a variety of conditions like those encountered in the
real world. The SC03 cycle is not a good, representative test because it only includes high loads.
An SC03 cycle at more moderate temperatures, such as 75° F, would be more representative, but
still suffers from the limitations of any test done under a single climate condition. [O AR-2009-
0472-6952.1, p.26]
The proposed idle test would also be unrepresentative of actual driving conditions, and would
tend to overestimate air conditioner energy consumption. Idle speeds are reduced to absolute
minimum levels to improve fuel economy ratings. Idle speeds may therefore be increased in
actual driving conditions as accessory loads are added, which would tend to make A/C fuel usage
appear to be a higher percent of total fuel usage than under a more representative drive cycle.
Other factors also tend to make an idle test overestimate air conditioner energy consumption.
Engine heat and pavement heat tend to raise compressor loads during prolonged idle to a much
greater extent than occurs in normal driving. Hybrid vehicles or any vehicle with start-stop
technology might not adequately be assessed in this test because there would be no guarantee
that the engine would be running. [OAR-2009-0472-6952.1, p.26]
Finally, some specific requirements that might be applied, such as no recirculation unless
automatically controlled and max settings for all manual systems, are not representative of real
world conditions, and thus unfairly penalize certain designs. In any test performed under a single
set of climate conditions, a great deal will depend on the specific circumstances and whether or
not a vehicle's efficiency technologies start to operate and show their benefits under those
specific conditions (and not at a slightly lower or higher load). [OAR-2009-0472-6952.1, p.26]
Any laboratory test program inherently involves thorny problems of test variability, differences
among test facilities, test procedure definitions, etc. By creating incentives for applications of
known efficiency technologies, the proposed design-based menu approach would capture most of
the benefits in this area. Ultimately, the goal should be a more sophisticated system of
simulations, or other analytical procedures, that can evaluate system efficiency across the full
range of operating conditions. The EPA should utilize the "menu" approach (and eliminate the
A/C idle test or any other vehicle testing for the analysis of A/C efficiency) until a common
analytical approach for evaluating the efficiency of MAC systems is developed. [OAR-2009-
0472-6952.1, p.27]
Test Facilities Impact
The humidity control levels proposed by EPA are typically not met in normal fuel economy test
facilities during the summer (four to five months of the year), and more expensive SC03
facilities would be needed during those times. The cost associated with using the more expensive
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SC03 test facilities is an additional undesirable impact of the proposed test. [OAR-2009-0472-
6952.1, p.27]
In addition, in §86.165-12 New Air conditioning idle test procedure, EPA has proposed a new
idle CO2 test to determine the increase in CO2 emissions with AC operation on and off.
Concerns are:
• Maintaining the average ambient air temperature of "75 ± 2 °F" over the test duration may
require expensive climatic test chambers versus a normal emissions test site.
• §86.165-12 (d)(4), "cumulative flow rate" should be "cumulative mass rate"
• §86.165-12 (d)(5), not sure if it is possible to set a vehicle automatic air conditioning system
setting, on all vehicles, to "9 °F" below ambient temperatures. Should allow an alternative if not
possible. [OAR-2009-0472-6952.1, p.27]
MAC Test Groups
MAC systems typically use common components across all variants of a vehicle "platform."
Variants might include body styles, such as sedan, coupe, or wagon, as well as various
powertrain combinations. While hose lengths and joints may differ slightly in order to be routed
around the different engines, the overall variations in J2727 scores are usually very small. The
systems would all use the same refrigerant as well as the same efficiency technologies. Thus, the
EPA MAC program can effectively cover all vehicles using relatively few "tracking vehicles" or
test vehicles. This situation differs from tailpipe emissions or fuel economy testing, where many
more configurations would need to be tracked in order to gain a representative estimation of fleet
averages. [OAR-2009-0472-6952.1, p.27]
Due to these considerations, EPA should only require a single MAC certification for each
vehicle platform in order to earn MAC credits for all the vehicles built on that platform. This
tracking vehicle could be chosen based on an engineering assessment that identifies the "worst
case" MAC variant for the platform. If both single and dual evaporator systems are used on a
platform, there should be separate tracking of the single and dual systems. If some variants of a
platform use electric compressors, such as hybrid vehicles, the electric compressor variants
would also need to be tracked separately. [OAR-2009-0472-6952.1, p.27]
Toyota Motor North America
Beginning in 2014 MY, EPA is considering first testing MAC efficiency using an A/C CO2 Idle
Test and then allowing those vehicles that surpass fleet averages by a minimum threshold of 30%
on the test to then earn credits based on their use of technologies from the list. [OAR-2009-0472-
7291, p.21]
Toyota supports the structure and intent of the credit proposal. However, Toyota is concerned
that the A/C Idle CO2 Test is poor representation for evaluating A/C system efficiency because it
would tend to overestimate A/C energy consumption. As a result, systems forced to comply with
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this test requirement may lead to inappropriate design of A/C systems. Furthermore, hybrid
vehicles or any vehicle with start-stop technology might not adequately be assessed in this test
because there would be no guarantee that the engine would be running. [OAR-2009-0472-7291,
pp.21-22]
Toyota suggests the use of an alternative test procedure for evaluating the A/C efficiency and
assigning indirect A/C credit. Toyota proposes the methodology used on the California
Environmental Performance label, which incorporates the use of SC03 data. Specifically;
Although it can be argued that the load in the SC03 may be a bit higher, Toyota feels that the
absolute value of A/C SCO3 CO2 emission being higher better reflects the actual A/C
performance over that of the proposed A/C Idle CO2 test. Furthermore, this proposal
incorporates a scheme already in place in California and can address measurement concerns on
HV and PHEV technology vehicles. However, Toyota has concerns whether the test vehicle
selected for this type of testing (SC03+FTP) would be representative. If the selection of the A/C
system test vehicle is based solely on the emission data vehicle, it is conceivable that the A/C test
results might be compromised. To ensure representative testing and reduce testing burden, A/C
test groups can be established by system configuration. [OAR-2009-0472-7291, pp.22-23]
This proposed idea would be less burdensome because it incorporates existing data so a new test
would be unnecessary. Finally, using this approach would provide some incentive for
manufacturers to improve the A/C system efficiency performance at the higher load conditions.
[OAR-2009-0472-7291, p.23]
National Renewable Energy Laboratory
It is uncertain if A/C systems optimized for reduced A/C fuel use at idle (maximize GHG credit)
will have an A/C fuel use reduction during real world driving. Figure 2-4 in the DRIA is plots
data at idle. Is there corresponding data for A/C fuel use over the SCO3? In testing to support the
proposed regulation, EPA encountered a good example of this situation (in the text at the bottom
of page 2-34 of the DRIA). In this case, a manufacturer acknowledged that their A/C system has
low fuel use and low cooling capacity at idle, but off-idle performed very well. Care needs to be
exercised in developing this regulation to encourage A/C fuel use reduction during all phases of
driving and not just at idle. [OAR-2009-0472-4798.1, p.l]
The proposed A/C fuel use idle test does not incorporate a thermal soak period with solar lamps.
This provides no incentive for automobile manufacturers to reduce the thermal loads on the
passenger compartment and realize GHG emission reductions beyond improved efficiency A/C
equipment. A soak period with solar lamps is recommended. [OAR-2009-0472-4798.1, p.l]
One issue to consider is how to compare A/C systems with different cooldown rates. An
automobile manufacturer might choose to incorporate a large A/C system to cool occupants
quickly while another may choose a low power system that cools slowly. The fuel use during the
cooldown for the large system would be high but the duration would be short. In the idle test,
EPA is assuming 50% cooldown and 50% steady state A/C fuel use for vehicles with manual
A/C control. In the SCO3 test option, it is assumed the first cycle measures cooldown A/C fuel
use and the second cycle is steady state. Then the 2 results are averaged to obtain the A/C fuel
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use. Both of these approaches assume the cooldown is accomplished during the first cycle and
half of the A/C usage occurs during cooldown mode while the other half is steady state. It is
recommended EPA assess the 50/50 weighting assumption and provide supporting information.
An alternative is to calculate an average A/C fuel use by weighting the cooldown and steady
state components based on vehicle and A/C use characteristics. A small A/C system would have
a higher weighting for the cooldown since this mode of operation occurs more often than with a
large A/C system. [OAR-2009-0472-4798.1, p.l]
California Air Resources Board
CARB believes EPA should develop and utilize a performance test to quantify AC indirect credit
in the future. We support EPA's suggestion of a modified SC03 test procedure and not the idle
test. The proposed AC Idle Test will not capture real world driving conditions because it lacks
adequate engine load and speed variance. In the interim, a menu-driven option for assessing AC
indirect emission may buy some time for test development.
Honeywell International, Inc.
Whenever feasible, EPA should utilize the best available testing procedures to measure the
performance of A/C efficiency to quantify accurately the reduction of GHG emissions, and the
resulting Efficiency Credits. By adopting testing procedures that incorporate the most up-to-date
research and technical information underlying the performance of A/C Systems, the proposed
credit programs can help meet the President's greenhouse gas emissions targets and provide
integrity to the credit program. [OAR-2009-0472-7206.1, p. 10]
European Automobile Manufacturers Association
Air conditioning Idle test
ACEA promotes a worldwide harmonized testing approach. The test does not cover the average
condition. The set temperature of 66 (=75-9) °F is very low and seems not to be the average set
point of the customers. We propose 7PF. [OAR-2009-0472-7444.1, p.2]
New York State Department of Environmental Conservation
We also believe that EPA should consider the development of an air conditioner incremental
emissions certification test. EPA suggests modifying the SC03 test cycle from the Supplemental
Federal Test Procedure (SFTP) for this purpose. We concur with EPA's view that the extreme
test cell conditions of the current SC03 are inappropriate. We also believe that it is not necessary
to simulate solar radiation, as is done in the SFTP. Simulating solar radiation, while it may make
for a more 'real' load on the vehicle, would be a significant expense in an area where relatively
small improvements (a maximum credit of < 6 grams per mile) are expected . We believe that
this level of expense will result in an economic decision by manufacturers to not pursue these
credits. [OAR-2009-0472-7454, pp.2-3]
Chu, Yuli
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I support the collaboration effort between EPA, industry, the California Air Resources Board,
and other stakeholders to move toward increasingly robust performance tests for A/C and may
include such changes in this final rule. [OAR-2009-0472-7042.1, p.3]
EPA Response:
A/C Idle Test
Many commenters questioned the ability of the A/C Idle Test to measure the improved efficiency
of certain A/C technologies, noting that the test would overestimate fuel consumption, and in
general that the test was not representative of real-world driving conditions. However, although
EPA acknowledges that this test directly simulates a relatively limited range of technologies and
conditions, it accurately estimates A/C efficiency and performance under those conditions, and
we believe that it is sufficiently robust for the screening purpose of demonstrating that the
system design changes are indeed implemented properly and are resulting in improved efficiency
of a vehicle's A/C system, at idle as well as under a limited range of operating conditions. Since
idle is significant part of real world and FTP drive cycles (idle represents 18% of the FTP), EPA
believes that the focus in this rulemaking on A/C system efficiency under idle conditions, as a
screening measure, is justified. Moreover, we believe that a performance test is necessary to
assure that efficiency-improving technologies are implemented properly and that the vehicle's
A/C system operates in an efficient manner under idle conditions. The design of the A/C CC>2
Idle Test represents a balancing of the need for performance tests whenever possible to ensure
the most accurate quantification of efficiency improvements, with practical concerns for testing
burden and facility requirements. (Thus, EPA is not adopting the SCO3 test, which contains
more drive cycles, but imposes significantly greater testing burden.) EPA believes that the Idle
Test adds to the robust quantification of A/C credits that will result in real-world efficiency
improvements and reductions in A/C-related CC>2 emissions. Use of the Idle Test as a pre-
condition in order to generate A/C Efficiency Credits will not be required until MY 2014 to
allow sufficient time for manufacturers to make the necessary facilities improvements and to
gain experience with the test.
Adapting or Modifying Other Test Cycles to Measure Impact of A/C Loads
In the proposal, EPA invited comment on a more comprehensive testing approach to quantifying
A/C CO2 emissions - an approach that could be somewhat more technically robust, but would
require more test time and test facility improvements for many manufacturers. EPA also invited
comment on using an adapted version of the SCO3, test (an existing test procedure that is part of
the Supplemental Federal Test Procedure). There were many comments opposed to this proposal,
and very few supporters. Most of the comments opposing this approach echoed the concerns
made by in the NPRM. These included excessive testing burden, limited test facilities and the
cost of adding new ones, and the concern that the SC03 test may not be sufficiently
representative of in use A/C usage. Some commenters supported a derivative of the SCO3 test
or multiple runs of other urban cycles (such as the LA-4) for quantifying A/C system efficiency.
While EPA considers a test cycle that covers a broader range of vehicle speed and climatic
conditions to be ideal, developing such a representative A/C test would involve the work of
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many stakeholders, and would require a significant amount of time, exceeding the scope of this
rule.
Working to Develop an Improved A/C Test Procedure
EPA expects to continue working with industry, the California Air Resources Board, and other
stakeholders to move toward increasingly robust performance tests and methods for determining
the efficiency of mobile A/C systems and the related impact on vehicle CC>2 emissions, including
a potential adapted SC03 test.
5.7.2. Flex Fuel and Alternative Fuel Vehicle Credits
OrganizationrEnvironmental Defense Fund
Hyundai Motor Company
Toyota Motor North America
Public Citizen and Safe Climate Campaign
Union of Concerned Scientists
Natural Resources Defense Council
American Petroleum Institute
Sierra Club
United Auto Workers
California Air Resources Board
National Automobile Dealers Association (NADA)
State of New Jersey
Cummins Inc.
New York State Department of Environmental Conservation
Washington State Department of Commerce
Chew, Yuli
Comment:
Environmental Defense Fund
In terms of flexible fuel vehicles, I think it would be safe to say that we prefer the California
approach, which is you don't get any credit without demonstrating actual use, but, on the other
hand, we recognize that NHTSA is under its own rules and so on under some obligation to give
some kind of credit, so I think what EPA is proposing for its own program makes sense, at least
we're willing to support it, where there is some kind of a credit, but that credit will be phased out
and will be phased out entirely by 2016 absent an actual showing, and then you also ask a
question about, well, how could the manufacturers demonstrate use, and I think you identify the
two principal ways of doing it, one is a national calculation, the number of cars out there, the
total amount of ethanol or biofuels of some sort being used by vehicles and you sort of allocate
those across the board. Another is to use the onboard computer. I mean, and my understanding is
that the onboard computer in a flex fuel vehicle has to know which fuel is being burned when
because the engine may operate a little bit differently depending on which fuel, whether it's an
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ethanol or biofuel or gasoline, so it should be possible. And, again, there was testimony during
the Vermont Pavley trial about this to adjust that to store information about actual fuel use that
could be downloaded during inspection times or otherwise. [These comments were submitted as
testimony at the New York public hearing. See docket number EPA-HQ-OAR-2009-0472-4621,
pp. 120-121.]
Hyundai Motor Company
[Following comments are from LA Testimony, OAR-2009-0472-7283, pp.67-72]
[[These comments were submitted as testimony at the Detroit public hearing. See docket number
EPA-HQ-OAR-2009-0472-6185, p. 81.]
We also believe that the CAFE flexible fuel credit calculation overstates the current real-world
use of alternative fuels. However, we understand that this is a calculation prescribed by statute.
Toyota Motor North America
EPA proposes adopting a flexible fuel vehicle (FFV) credit mirroring NHTSA's FFV credit,
through 2015 model year. After 2015 model year, EPA proposes that FFV credits could be
earned to the extent manufacturers could demonstrate use of ethanol in FFVs. [OAR-2009-0472-
7291, p.23]
Toyota supports EPA's adoption of the FFV credit for producing flexible fuel vehicles (FFVs)
through 2015 model year. Because actions taken by manufacturers to comply with EPA's
regulation will, to a large extent, be the same as those taken to comply with NHTSA's CAFE
regulation, it is appropriate for EPA to consider flexibilities contained in the CAFE program that
clearly impact product plans and technology deployment plans already in place or nearly in
place. Adopting the FFV credit for a transitional period of time appears to recognize this reality,
while providing a pathway to eventually phase-out the flexibility. [OAR-2009-0472-7291, p.23]
For post-2015 model year, EPA proposes to continue to allow a manufacturer to earn the FFV
credit if the manufacturer can demonstrate use of ethanol in FFVs. Toyota does not oppose this
demonstration, but suggests that such credit should only be allowed with a demonstration of low
life-cycle carbon ethanol usage. As EPA's objective is reduction of GHGs, simply replacing
gasoline with ethanol of the same or similar GHG life-cycle impact does not further this
objective. Notwithstanding the above comments, Toyota is highly uncertain whether an
appropriate and robust demonstration of low life-cycle carbon fuel usage can be made for the
purposes of generating GHG credits. Substantial challenges are likely to be encountered due to
the uncertainty of fueling pattern for in-use vehicles, and the difficulty in retroactively adjusting
credits earned in a model year based on evidence of improper fuel use later in the lifetime of the
vehicle. Regrettably, Toyota is not sure these concerns can be adequately addressed by EPA or
any other entity at this time. [OAR-2009-0472-7291, p.23]
Public Citizen and Safe Climate Campaign
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The flex fuel vehicle (FFV) credit is an unjustifiable loophole that has allowed manufacturers to
evade up to 1.2 mpg of fuel economy obligation for building vehicles that are capable of running
on (but do not actually have to use) a blend of 85 percent ethanol (E85). EISA extended the FFV
credits through 2019, although the value of the credit phases out beginning in 2014. EPA
proposes to apply the FFV credit consistent with NHTSA's standards through 2015; after that
date, the credit would be based on actual use of E85. We acknowledge that the credit provided in
NHTSA's fuel economy program is a legislatively mandated extension of an existing program.
[OAR-2009-0472-7050.1, p.7]
The FFV credit, offered since the 1988 Alternative Motor Fuels Act (AMFA) was enacted, and
extended multiple times, has not worked. Its original intent was to encourage ethanol
infrastructure, but it did not. The 2002 NAS study on the fuel economy program estimated that
FFVs ran on ethanol less than one percent of the time, and recommended that the FFV credit
program be abolished. [OAR-2009-0472-7050.1, p.7]
A sharp uptick in availability of ethanol blended fuel and refueling infrastructure (which is still a
minimal fraction of the total refueling infrastructure) occurred only after the Energy Policy Act
of 2005 (EPAct 2005) mandated the production of a certain volume of ethanol. Then in 2004,
California and several other states switched from methyl tert-butyl ether (MTBE) to ethanol to
meet oxygenate requirements for summer blend gasoline, which increased demand for 10 percent
ethanol (E10). The mandated volume of ethanol was increased and expanded in EISA, to rise to
36 billion gallons by 2022. [OAR-2009-0472-7050.1, pp.7-8]
The AMFA credit is limited, which effectively caps the number of vehicles it can encourage each
manufacturer to build, limiting the usefulness of the credit. AMFA credits have not had a
meaningful impact on E85 consumption. Ethanol producers, unable to increase the market
penetration of ethanol without increasing the blending percentage of ethanol in gasoline for wide
consumption, have begun to press that policy. [OAR-2009-0472-7050.1, p.8]
EPA raises the option of capping the FFV credits based on vehicle size instead of using the
limitation contained in the CAFE program. We strongly urge EPA not adopt this basis for setting
the FFV credit. The credit has already been shown to have little value in increasing the market
penetration of ethanol, and setting the credit on an attribute basis for the greenhouse gas program
will do nothing to improve its effectiveness. [OAR-2009-0472-7050.1, p.8]
Public Citizen has long supported predicating the fuel economy credit for FFVs on actual
consumption of E85, something EPA proposes to do in model years 2015 and after. EPA's recent
proposal on its revised Renewable Fuel Standard (RFS2) illustrates the fact that it is difficult to
measure the greenhouse gas emissions from ethanol. The agency has not stated how it will
estimate the greenhouse gas emissions from ethanol in E85, or whether there will be different
values for different feedstocks and production methods of ethanol. We urge that EPA devise a
way to weight the greenhouse gas emissions from ethanol based on the values for different
feedstocks and production methods, consistent with what it has done for RFS2. [OAR-2009-
0472-7050.1, p.8]
Union of Concerned Scientists
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UCS has long opposed the industry's use of flex fuel vehicle (FFV) credits to lower fuel
economy obligations given the facts that the credits are overly generous and very few vehicles
outfitted with FFV technology are regularly operated on E85. We applaud EPA for their proposal
to phase this loophole out by model year 2016 and require that any post-model year 2015 credits
accrued under the program be based on actual E85 use rather than vehicle capability. The
loophole created by these credits has eroded oil savings and pollution reductions for more than a
decade and, while it is currently set to phase out by 2020 under EPCA, this is not guaranteed;
historically, FFV credits have seen multiple extensions beyond their originally prescribed
duration. If the FFV program were to continue in its current state, it would likely erode the 2016
fleet average between 0.5 and 0.8 mpg-equivalent, depending on the extent of the credit's use.
[OAR-2009-0472-7181.1, p.12]
UCS strongly urges that EPA follow through with its proposed handling of FFV credits for
model years 2016 and beyond, without modification. [OAR-2009-0472-7181.1, p.12]
[Following comments are from LA Testimony, OAR-2009-0472-7283, pp.103-113]
Finally, flex-fuel vehicle credits must be terminated. Currently EPA standards allow automakers
to use flex-fuel vehicle credits to achieve compliance in the early years of the program.
Historically automakers have used FFV credits to lower their fuel economy obligations despite
the fact that very few of the vehicles were ever run on these alternative fuels, such as E85.
Beginning in model year 2016, EPA proposes that any FFV credits accrued under its program
be based on actual E85 use as opposed to just vehicle capability. This change would close the
FFV loophole and finally make the federal program consistent with California's.
This loophole created by these credits has eroded oil savings and pollution reductions for
decades. It is critical that the EPA follow through with its modification of these credits, FFV
credits, in 2016. If the FFV program were to continue in its current state, it would erode the 2016
proposed fleet standard.
Natural Resources Defense Council
Credits generated through sales of flex fuel vehicles (FFVs) and the advanced technology
multiplier do not represent actual GHG reductions. Therefore, we recommend that manufactures
be barred from banking, transferring or trading these credits to ensure they do not undermine the
environmental and technology-forcing goals of the GHG standards. [OAR-2009-0472-7141.1, p.
10]
Flex-Fuel Vehicle Credits Should Be Phased Out No Later than 2015
NRDC strongly supports EPA's proposal to fully phase out flex-fuel vehicle (FFV) credits by
MY 2015. While EPCA authorized FFV credits under the CAFE program to promote alternative
fuel use, the government's own reports have concluded that FFVs are typically fueled by
petroleum, not an alternative fuel. Furthermore, the CAFE credit has allowed manufacturers to
sell vehicles that have lower fuel economy than would be required without the credit and
therefore increase petroleum consumption and increase greenhouse gas emissions. For these
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reasons, EPA should phase out current FFV credits as soon as possible and no later than MY
2015. [OAR-2009-0472-7141.1,p. 19]
NRDC agrees with EPA's proposal to only allow FFV credits beyond MY 2015 if it can be
demonstrated in an enforceable manner that the FFVs are consuming significant volumes of
alternative fuel beyond that existing in low-level blends of gasoline and diesel. The level of
eligible credits should be based on the amount of alternative fuel used and the full fuel cycle
emissions impacts of that fuel. For non-petroleum fuels, emissions during fuel production must
be included since their full fuel cycle carbon pollution change compared to petroleum fuels is
largely based on the emissions that occur during the alternative fuel production (e.g. the use of
cellulosic biofuels in internal combustion engine vehicles can result in lower carbon pollution
than petroleum due to carbon absorption during the feedstock growing process). [OAR-2009-
0472-7141.1, p. 19]
American Petroleum Institute
Flexible Fuel Vehicle Credits: In Section III (C)(2)(b), EPA proposes that emissions standards
for Flexible Fuel Vehicles (FFVs) be based on their actual carbon dioxide emissions in 2016 and
later. The manufacturer would also be required to demonstrate that the alternative fuels are
actually being used in the vehicles. EPA considers two methods for compliance, a top down
approach based on aggregate data from the Department of Energy's Energy Information
Administration, or a survey program based on data recorded in on-board systems and transmitted
back to the manufacturer. The NPRM does not dictate the details on the second option, but
requires that the program be based on sound statistical methodology. API supports the concept of
basing fuel emissions standards on actual emissions, but questions the delay until 2016. The
DOE EIA top down data approach to compliance does not necessitate any equipment changes
and can be implemented much sooner than 2016. Fuel economy credits for FFV production were
originally designed to stimulate ethanol production. The Renewable Fuel Standard requires 36
billion gallons of ethanol per year by 2022 and far exceeds any ethanol market stimulation
created by FFV manufacturing. The NPRM proposes to continue a program of FFV credits until
2016. This program should be eliminated within a much shorter time frame. [OAR-2009-0472-
Dedicated Alternative Fuel Vehicles: Fuel economy calculations for dedicated alternative fuel
vehicles should be based on a sound scientific approach, not a policy approach. API requests that
EPA remove the multiplier and establish a method of determining the actual GHG impact from
dedicated alternative fuel vehicles.[OAR-2009-0472-7143.1, p.12]
Sierra Club
We welcome EPA's decision to exclude FFV credits in 2016 - one of the transitional aspects of
this proposal. FFV credits under the CAFE system have long been recognized as flawed, leading
to increased oil consumption. While NHTSA is bound by EISA to phase out FFV credits by
2019, EPA's action is a much needed shift away from credits that, in reality, have undermined
the oil savings from the fuel economy program. [OAR-2009-0472-7278.1, p. 16]
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EPA proposes to shift to awarding FFV credits in 2016 and beyond to actual use of E-85. Recent
scientific reports have concluded that on a lifecycle basis, corn ethanol may in fact increase
greenhouse emissions. We would urge EPA to consider not giving credits for E-85 consumption.
Fuel volumes are mandated under RFS2 and the fuel is otherwise subsidized through other
policies. The cost to automakers to produce FFVs is nominal and need not be incentivized
through vehicle program with the potential cost of increased greenhouse gas emission. In
testimony at the Renewable Fuel Standard hearing on June 9th, 2009, Sierra Club urged the
administration to consider emissions from the transportation sector as a whole- getting standards
for vehicles and fuels right as well as reducing how much we drive. As the fuel mix in the US
diversifies with more biofuels and unfortunately more Canadian tar sands and other dirty fuels,
the impact of emissions from these non-conventional fuels on the transportation sector, on a
lifecycle basis, must be accounted for to ensure we do not erode the reductions promised from
these standards. We urge that EPA use a realistic greenhouse gas factor for E-85 in determining
the credits for use of the fuel. EPA should provide this factor for corn ethanol grandfathered
under EISA. [OAR-2009-0472-7278.1, p. 16]
EPA's Clean Air Act authority is consistent with a full lifecycle accounting of fuels and should
be used to ensure that a consistent and correct GHG metric is established that also avoids
unintended consequences. Given the controversy that has surrounded FFV credits, we urge EPA
to set clear guidelines for E-85 in the vehicle program context. [OAR-2009-0472-7278.1, p. 16]
United Auto Workers
The UAW also supports the agencies proposals on flex-fuel and alternative-fuel vehicle credits.
We believe that sufficient quantities of alternative fuels will be available and in use to make
these credits useful after 2015 in the EPA's program. The proposed rule also correctly applies the
statutory intent regarding the application of these credits under the CAFE regulations. [OAR-
2009-0472-7056.1, p.3]
California Air Resources Board
In addition to the non-zero grams/mile ZEV upstream factor discussed earlier, we have the
following comments on other aspects of the proposed crediting system. EPA has proposed credit
provisions designed to provide manufacturers with compliance flexibility, help ease the
transition into the national GHG program, and provide incentives for the development and
production of advanced GHG technologies. Consistent with the Low-Emission Vehicle and
Zero-Emission Vehicle programs for light-duty vehicles, CARB includes similar provisions in its
GHG program and is generally supportive of including such provisions in the national GHG
program. However, while we agree that including credit mechanisms in the national GHG
program is appropriate, we believe that such provisions should not undercut the primary
objective of the program, namely achieving significant reductions of GHG emissions from light-
duty vehicles.
EPA requested comment on its proposed FFV crediting. CARB recognizes that FFV credits
without a specific demonstration of alternative fuel usage are included in EPA's GHG program
for model years 2012-2015 in consideration of manufacturers' lead time requirements. While
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CARB does not believe that such credits are necessary, or even appropriate for a GHG program,
we are pleased that EPA will base these credits on verifiable alternative fuel usage beginning in
2016. We also agree with EPA that such credits should not be available in model years 2009-
2011. [OAR-2009-0472-7189.1, p.12]
[CARB also submitted these comments as testimony at the Los Angeles public hearing. See
docket number OAR-2009-0472-7283, pp. 21-27]
National Automobile Dealers Association (NADA)
Under EISA, flex fuel credits are available until MY 2019 for automakers using such technology.
EPA proposes to phase out this credit in MY 2015. To be "consistent and harmonized," EPA
should adopt the policy Congress has and not one CARB favors. [OAR-2009-0472-7182.1, p.8]
State of New Jersey
[State of New Jersey also submitted these comments as testimony at the New York public
hearing, See docket number EPA-HQ-OAR-2009-0472-4621, pp. 115-117.]
Flexible Fueled Vehicle (FFV) program and its associated credits: We support the proposal to
only allow FFV credits if they are based on a manufacturer's demonstration that the alternative
fuel is actually being used in the vehicles. This approach will ensure that these emission
reduction credits are based upon real and verifiable reductions. The Department also supports the
USEPA's statement that the ability to generate credits upon a demonstration of usage of the
alternative fuel will provide an actual incentive to see that such fuels are used. However, we
stress that the use of credits for FFVs should be allowed only if the credits are based on actual
CC>2 emission reductions (both fuel usage and emission rates). Therefore, in crafting the
requirements for that demonstration, we support following a method that is the same or similar to
the California Air Resources Board's method of verification through either: 1) scientific
sampling and survey; or 2) the service data when the vehicles are brought back for servicing at
their dealership. [OAR-2009-0472-7109.1, p.4]
Cummins Inc.
Cummins supports EPA's proposal to provide CO2 credits for Flexible Fueled Vehicles (FFV)
corresponding to the amount allowed by the amended Energy Policy and Conservation Act
(EPCA). However, EPA is proposing these credits only for 2012-2015 model years (MYs). To
keep as much consistency as possible with the CAFE program, we urge EPA to extend the FFV
credit availability until MY 2019 (same as CAFE). [OAR-2009-0472-7205.1, p.4]
Starting in MY 2016, EPA is proposing to remove the 0.15 "volumetric conversion factor" in
CO2 emissions calculations for FFVs and also require manufacturers to demonstrate that the
actual fuel is being used in their vehicles. As mentioned earlier, Cummins believes that EPA
should adopt a holistic view of life-cycle analysis to determine CO2 benefits of alternative fuels
like ethanol and bio-diesel. The life-cycle analysis could then be used to determine a 'credit'
based on CO2 reductions compared to a conventional (gasoline or diesel) vehicle, which a
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manufacturer would be able to claim based on the number of such vehicles produced and by
demonstrating the actual use of bio-fuel. Such 'credit' is necessary to recognize the true CC>2
benefits of such low carbon intensity bio-fuels and encourage their use by providing a level
playing field with other CO2-reducing technologies employed on the vehicles. [OAR-2009-0472-
7205.1,p.4]
New York State Department of Environmental Conservation
Flexible Fuel Vehicles (FFVs) and Alternative Fuel Vehicle Credits (Preamble Section III.C.2)
We support EPA's intention to eliminate the arbitrary, unscientific, and unsupportable, 0.15
emissions multiplier from the tailpipe greenhouse gas emissions calculation for FFVs and
alternative fueled vehicles beginning with the 2016 model year. We would prefer its immediate
elimination. We also support EPA's requirement that manufacturers demonstrate that alternative
fuel is actually used before including the alternative fuel CC>2 emissions in the calculation of the
FFVs overall certification emissions. Again we favor implementing this provision with the 2012
model year, rather than waiting until the 2016 model year. [OAR-2009-0472-7454, p.3]
Washington State Department of Commerce
[Following comments are from LA Testimony, OAR-2009-0472-7283, p. 126]
We support allowing for reasonable credits for flex-fuel vehicles only based on
demonstration that these vehicles are running on alternative fuel. We intend to submit separate
documentation with some ideas on how this demonstration could be achieved.
Chew, Yuli
After MY 2015,1 support EPA's proposal to allow FFV credits only based on a manufacturer's
demonstration that the alternative fuel is actually being used in the vehicles. I support following
CARB's method of verification either through: 1) scientific sampling and survey; or 2) through
the service data when the vehicles are brought back to service in their dealership. The alternative
fuel usage percentage data are captured as part of OBDII criteria. [OAR-2009-0472-7042.1, p.l]
I am concerned about too much "windfall" credits from the trucks. FFV credits can only be
obtained as what alternative fuels are being used in CARB's Regulation. I support the credits be
revised after 2016 based on the actual environmental impacts for the useful life of the
vehicles.[OAR-2009-0472-7042.1, p.3]
I welcome EPA develop a mechanism based on the same treatment of alternative fuel use by
CARB, either through scientific surveys or data recorded in the actual OBDII data. The credits
should be based on the actual usage and the amount of greenhouse gas saved on a lifetime well-
to-wheel analysis approach without the FFV credits. [OAR-2009-0472-7042.1, pp.3-4]
I welcome EPA's real-world reductions approach for alternative fuel vehicles. I would also
suggest to limit the percentage of credits from trucks that can be used to normalize the debits for
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the cars, or diminish the value of the credits from trucks that can be carryforward, e.g. decrease
20% of the worth over the next model year. [OAR-2009-0472-7042.1, p.4]
EPA Response:
For the GHG program, EPA is allowing FFV credits corresponding to the amounts allowed by
the amended EPCA but only during the period from MYs 2012 to 2015. EPA received
comments supporting and opposing its approach for MY2012-2015 FFV credits. Several
commenters, while not favoring EPA's approach for MY 2012-2015, focused their comments on
supporting EPA's approach for MY 2016 and later. EPA continues to believe that several
manufacturers have already taken the availability of FFV credits into account in their near-term
future planning for CAFE and this justified reliance indicates that these credits need to be
considered in assessing necessary lead time for the CC>2 standards. A number of manufacturers
in fact commented that EPA's credits programs are necessary in allowing them to transition to
the new standards. EPA thus believes that allowing these credits, in the near term, is needed to
provide adequate lead time for manufacturers to implement the new multi-year GHG standards,
but that for the longer term there is adequate lead time without the use of such credits.
As proposed, for MY 2016 and later manufacturers will need to consider actual vehicle
performance in assessing whether credits would be generated, and in doing so reliably estimate
the extent to which the alternative fuel is actually being used by vehicles in order to count the
alternative fuel use in the vehicle's CC>2 emissions level determination. Beginning in MY2016,
the FFV credits as described above for MY2012-2015 (including the 0.15 factor and the
assumption for 50% alternative fuel/50% gasoline used) will no longer be available for EPA's
GHG program. Rather, GHG compliance values will be based on actual emissions performance
of the FFV on conventional and alternative fuels, weighted by the actual use of these fuels in the
FFVs.
Starting with model year 2016, as proposed, EPA thus will no longer allow manufacturers to
base FFV emissions on the use of the 0.15 factor credit, and on the use of an assumed 50% usage
of alternative fuel. Instead, EPA believes the appropriate approach is to ensure that FFV
emissions are based on demonstrated emissions performance. This will promote the
environmental goals of the final program. EPA received several comments supporting its
proposal to use this approach for MY2016 and later instead of the EPCA approach. Under the
EPA program in MY2016 and later, manufacturers will be allowed to base an FFVs emissions
compliance value in part on the vehicle test values run on the alternative fuel, for that portion of
its fleet for which the manufacturer demonstrates utilized the alternative fuel in the field.
Without this demonstration, the default rule is to assume FFVs operate on 100% gasoline, and
the emissions value for the FFV vehicle will be based on the vehicle's tested value on gasoline.
However, if a manufacturer can demonstrate that a portion of its FFVs are using an alternative
fuel in use, then the FFV emissions compliance value can be calculated based on the vehicle's
tested value using the alternative fuel, prorated based on the percentage of the fleet using the
alternative fuel in the field. EPA believes this approach will provide an actual incentive to
ensure that such fuels are used. The incentive arises since actual use of the flexible fuel typically
results in lower tailpipe GHG emissions than use of gasoline and hence improves the vehicles'
performance, making it more likely that its performance will improve a manufacturers' average
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fleetwide performance. Based on existing certification data, E85 FFV CC>2 emissions are
typically on average about 5 percent lower on E85 than CC>2 emissions on 100 percent gasoline.
Moreover, currently there is little incentive to optimize CC>2 performance for vehicles when
running on E85. EPA believes the above approach provides such an incentive to manufacturers
and that E85 vehicles could be optimized through engine redesign and calibration to provide
additional CC>2 reductions.
This approach will promote greater use of alternative fuels, as compared to a situation where
there is no usage requirement. This is also consistent with EPA's overall commitment to the
expanded use of renewable fuels under the rules implementing section 211 of the Act.
Therefore, for these additional reasons, EPA is basing the FFV program for MYs 2016 and
thereafter on real-world reductions: i.e., actual vehicle CO2 emissions levels based on actual use
of the two fuels, without the 0.15 conversion factor specified under EISA.
EPA received a few comments that the credits based on the EPCA methodology should be
allowed through MY2019, as they are in the CAFE program. As noted above, EPA included
FFV credits based on the EPCA methodology for the early years of the program because some
manufacturers have already incorporated the credits into their near-term product plans and to not
allow them could be very disruptive. As part of providing needed lead time, EPA believes it is
appropriate not to undermine this legitimate reliance by manufacturers and so to allow FFV
credits based on the EPCA methodology for a limited, needed period. By MY 2016,
manufacturers will have sufficient time to plan to meet standards without generating further FFV
credits based on the EPCA methodology. EPA believes it is important to transition to a
methodology that bases FFV emissions values on the actual use of the fuel and the actual
emissions of the vehicle when operated on the fuel. Unlike EPCA, CAA section 202(a) (1) does
not mandate that EPA treat FFVs in a specific way. Instead EPA is required to exercise its own
judgment and determine an appropriate approach that best promotes the technology-based,
emission reduction goals of this CAA section. Under these circumstances, EPA will treat FFVs
for model years 2012-2015 the same as under EPCA, as part of providing sufficient lead time
given manufacturers' compliance strategies which rely on the existence of these EPCA statutory
credits, as explained above. Several commenters supported EPA's proposed approach for
MY2016 and later.
EPA received comments that EPA should restrict banking, transferring or trading MY2012-2015
credits because the credits do not represent actual GHG reductions. EPA did not propose or
request comment on such restrictions and has not adopted any credit restrictions for FFV credits.
EPA believes that retention of such banking, transferring and trading of credits is needed through
MY 2015 for the same reason that the credits themselves need to be retained. Manufacturers
have indicated reasonably that these strategies incorporating such credits are already part of their
compliance strategies, and that they cannot readily change course. Thus, in order to provide
needed lead time in the first program model years, EPA is not altering banking, trading, and
transferring of these credits.
Sierra Club submitted comments urging EPA to consider not giving credits for E-85
consumption for MY2016 and later. Sierra Club commented "fuel volumes are mandated under
RFS2 and the fuel is otherwise subsidized through other policies. The cost to automakers to
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produce FFVs is nominal and need not be incentivized through vehicle program with the
potential cost of increased greenhouse gas emission." As noted above, GHG compliance values
will be based on actual emissions performance of the FFV on conventional and alternative fuels,
weighted by the actual use of these fuels in the FFVs. The only "credit" available to
manufacturers is through their optimization of the FFVs emissions performance on the
alternative fuel and the real-world use of the fuel.
Comments regarding the use of life-cycle emissions in FFV credits calculations are addressed
below. Comments regarding FFV credits caps for MY2012-2015 are also addressed below.
Natural Gas Vehicle Comments
Organization :NGV America
Clean Energy Fuels
Comment:
NGVAm erica
NGVAmerica supports EPA's plan to provide CC>2 credits to manufacturers of alternative fueled
vehicles based on the credit mechanism currently provided for such vehicles under the fuel
economy regulations. The fuel economy regulations use a factor of 0.15 for alternative fuel
vehicles. Under EPA's proposal, this same factor would be used to reduce the greenhouse gas
emissions output of alternative fuel vehicles, thus enhancing the potential credits that such
vehicles could earn. The proposed GHG regulations would provide the enhanced credits for 2012
- 2015 after which time they would no longer be provided for flex-fueled or dual-fueled
alternative fuel vehicles. In fact, starting in 2016, EPA only take into account the emission
benefits of flex-fueled or dual-fueled alternative fuel vehicles if the manufacturer can verify or
appropriately estimate the level of alternative fuel utilization in its alternative fuel vehicles.
Dedicated alternative fueled vehicles, however, would be assumed to operate on alternative fuel
since they can only operate on one fuel. Thus, dedicated vehicles would continue to earn credits
based on their use of alternative fuel but they would no longer benefit from the enhanced credits
provided in years 2012-2015. [OAR-2009-0472-7236.1, p.9]
We support EPA's proposed enhanced credits for 2012 - 2015 but note that these credits do not
apply to the caps imposed on CH4 and N2O emissions. As we understand the current proposal,
the enhanced credits only apply with respect to CC>2 emissions. Thus, the cap on methane
emissions, unless changed, would still be a burden on manufacturers and potentially limit the
introduction of some NGVs. Assuming our concerns regarding the caps are addressed, we
believe the credit program and the added incentive provided for alternative fuel vehicles could
encourage manufacturers to increase their NGV offerings. If EPA adopts a CO2-equivalent
approach for all vehicles, the enhanced greenhouse gas emission credits for alternative fuel
vehicles should be based on the average of the three pollutants multiplied by 0.15. If EPA as an
alternative only provides a CCVequivalent approach for NGVs and other alternative fuel
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vehicles, we advocate that the factor of 0.15 be applied only against the CO2 emissions of NGVs
for purposes of the greenhouse gas credit program. [OAR-2009-0472-7236.1, p.9]
NGVAmerica also believes the proposal regarding alternative fuel vehicles should be expanded.
As proposed, the credit program would not provide enhanced incentives for manufacturers of
NGVs after 2015, and there are no early credits for such vehicles. EPA's proposal, however,
would provide incentives for electric vehicles and other advanced technology vehicles until
2016; it also would provide early credits for such vehicles beginning in 2009. In addition, the
credits for advanced technology vehicles are structured differently than those for alternative fuel
vehicles, potentially making them more valuable. The credits assume that electric vehicles
replace comparable gasoline powered vehicles and operate on electricity. The credit mechanism
magnifies the benefits of these vehicles by multiplying each produced vehicle by 1.2 - 2.0, so
that it appears that a manufacturer has produced a larger number of such vehicles for purposes of
averaging CO2 emissions. [OAR-2009-0472-7236.1, p. 10]
Providing the credits proposed for advanced technology vehicles while not also providing similar
credits for NGVs is inherently unfair since it is not at all clear that such vehicles will provide
real-world benefits that are superior to NGVs or even gasoline vehicles when full-fuel cycle
emissions are considered. As the NAS report indicates, it is not clear that electric and plug-in
electric vehicles will provide any benefits over higher fuel-efficiency gasoline vehicles. Given
these factors, we urge EPA to provide the following additional incentives for dedicated and dual-
fuel NGVs: 1) provide early credits for dedicated vehicles going back to MY 2009 as proposed
for other vehicles, and 2) extend the enhanced credits using the 0.15 conversion factor for two
additional model years (2016 - 2017) for manufacturers of dedicated and bi-fuel vehicles
capable of demonstrating that the vehicles operate a majority of the time on alternative fuel.
[OAR-2009-0472-7236.1, p. 10]
The current proposal provides enhanced credits for alternative fuel vehicles without any showing
that such vehicles operate on alternative fuels. These credits are available until 2015 after which
time enhanced credits are no longer provided and alternative fuel use is only taken into account if
the manufacturer can demonstrate the alternative fuel is used. We believe an added incentive for
dedicated vehicles and dual-fuel vehicles that actually use alternative fuel is warranted as a way
of encouraging manufacturers to increase their offerings of dedicated vehicles and in order that
they would take a stronger interest in ensuring that the vehicles they make actually operate on
alternative fuels. Under our proposal, manufacturers of all dedicated vehicles and dual-fuel
vehicles which are demonstrated to operate more than 50 percent of the time on alternative fuel
would continue to receive enhanced credits for such vehicles in model years 2016 and 2017.
[OAR-2009-0472-7236.1, pp. 10-11]
Clean Energy Fuels
Clean Energy supports EPA's plan to provide CO2 credits to manufacturers of alternative fueled
vehicles based on the credit mechanism currently provided for such vehicles under the fuel
economy regulations. The fuel economy regulations use a multiplier of 0.15 to factor the fuel
economy of alternative fuel vehicles. This same factor would be used to reduce the GHG
emissions output of alternative fuel vehicles, thus enhancing the potential credits that such
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vehicles could earn. The proposed GHG regulations would provide the enhanced credits for 2012
- 2015 after which time they would no longer be provided for FFVs or dual-fueled alternative
fuel vehicles. In fact, starting in 2016, EPA would no longer take into account the emission
benefits of FFVs or dual-fueled alternative fuel vehicles unless the manufacturer can verify or
appropriately estimate the level of alternative fuel utilization in its alternative fuel vehicles.
Dedicated alternative fueled vehicles, however, would be assumed to operate on alternative fuel
since they can only operate on one fuel. Thus, dedicated vehicles would continue to earn credits
based on their use of alternative fuel but they would no longer benefit from the enhanced credits
provided in years 2012 - 2015. [OAR-2009-0472-7220.1, p.8]
We support EPA's providing the proposed enhanced credits for 2012 - 2015 but note that these
credits do not apply to the caps imposed on CH4 and N2O emissions. As we understand the
current proposal, the enhanced credits only apply with respect to CC>2 emissions. Thus, the cap
on methane emissions, unless changed, would still be a burden on manufacturers and potentially
limit the introduction of some NGVs. Assuming our concerns regarding the caps are addressed,
we believe the credit program and the added incentive provide for alternative fuel vehicles could
encourage manufacturers to increase their NGV offerings. If EPA and NHTSA adopt a CC^e
approach for all vehicles, the enhanced GHG emission credits for alternative fuel vehicles should
be based on the average of the three pollutants multiplied by 0.15. If EPA and NHTSA as an
alternative only provides a CO2e approach for NGVs and other alternative fuel vehicles, we then
would advocate that the factor of 0.15 be applied only against the CC>2 emissions of NGVs for
purposes of the GHG credit program. [OAR-2009-0472-7220.1, p.8]
Clean Energy also believes the proposal regarding alternative fuel vehicles should be expanded.
As proposed, the credit program would not provide enhanced incentives for manufacturers of
NGVs after 2015, and there are no early credits for such vehicles. EPA's and NHTSA's proposal,
however, would provide incentives for electric vehicles and other advanced technology vehicles
until 2016; it also would provide early credits for such vehicles beginning in 2009. In addition,
the credits for advanced technology vehicles are structured differently than those for alternative
fuel vehicles, potentially making them more valuable. The credits assume that electric vehicles
replace comparable gasoline powered vehicles and operate on electricity. The credit mechanism
magnifies the benefits of these vehicles by multiplying each produced vehicle by 1.2 - 2.0, so
that it appears that a manufacturer has produced a larger number of such vehicles for purposes of
averaging CO2 emissions. [OAR-2009-0472-7220.1, pp.8-9]
Providing the credits proposed for advanced technology vehicles while not also providing similar
credits for NGVs is inherently unfair since it is not at all clear that such vehicles will provide
real-world benefits that are superior to NGVs or even gasoline vehicles when full-fuel cycle
emissions are considered. As the NAS report indicates, it is not clear that electric and plug-in
electric vehicles will provide any benefits over higher fuel-efficiency gasoline vehicles. Given
these factors, we urge EPA to provide the following additional incentives for dedicated and dual-
fuel NGVs: 1) provide early credits for dedicated vehicles going back to MY 2009 as proposed
for other vehicles, and 2) extend the enhanced credits using the 0.15 conversion factor for two
additional model years (2016 - 2017) for manufacturers of dedicated and bi-fuel vehicles capable
of demonstrating that the vehicles operate a majority of the time on alternative fuel. [OAR-2009-
0472-7220.1, p.9]
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The current proposal provides enhanced credits for alternative fuel vehicles without any showing
that such vehicles operate on alternative fuels. These credits are available until 2015 after which
time enhanced credits they are no longer provided and alternative fuel use in only taken into
account if the manufacturer can demonstrate the alternative fuel is used. We believe an added
incentive for dedicated vehicles and dual-fuel vehicles that actually use alternative fuel is
warranted as a way of encouraging manufacturers to increase their offerings of dedicated
vehicles and in order that they would take a stronger interest in ensuring that the vehicles they
make actually operate on alternative fuels. Under our proposal, manufacturers of all dedicated
vehicles and dual-fuel vehicles which are demonstrated to operate more than 50 percent of the
time on alternative fuel would continue to receive enhanced credits for such vehicles in model
years 2016 and 2017. [OAR-2009-0472-7220.1, p.9]
[[Clean Energy also submitted these comments as testimony at the Detroit public hearing, See
docket number EPA-HQ-OAR-2009-0472-6185, pp. 139-140.]]
EPA Response:
The commenters are requesting additional credits for natural gas vehicles, and suggest extending
the use of the 0.15 factor discussed above for MY2012-2015, to additional model years. EPA is
retaining the use of the 0.15 factor for FFVs, dual-fuel vehicles, and alternative fuel vehicles
through MY 2015 as proposed. Natural gas vehicles will be eligible for these credits. As
described above, EPA is not extending the use of the 0.15 factor beyond MY2015. EPA did not
expand the advanced technology vehicle credits to cover other technologies beyond PHEVs,
EVs, and fuel cell vehicles for reasons described in Section 5.7.3 of this RTC and Section III.C.3
of the preamble to the final rule. EPA also does not believe that it would be appropriate to create
a unique credit opportunity for natural gas vehicles by extending the use of the 0.15 factor for
natural gas vehicles beyond the MYs 2012-2016. Several commenters strongly supported EPA
moving away from using this factor as soon as possible because the factor is not based on actual
emissions reductions.
The commenter also raises an issue regarding the interplay between standards for N2O and CH4
and credit generating opportunities if compliance is measured on a CO2-equivalent basis. As
discussed in Section 5.5 and Section III.B.7. of the preamble to the final rule, EPA is allowing
manufacturers to comply with N2O and CH4 standards on a CC>2 equivalent basis. The
commenter states that "if EPA adopts a CCVequivalent approach for all vehicles, the enhanced
greenhouse gas emission credits for alternative fuel vehicles should be based on the average of
the three pollutants multiplied by 0.15." EPA believes the commenter meant the sum rather than
the average of the three pollutants. In response, manufacturers must apply the 0.15 factor to only
the CC>2 emissions value and not to the N2O and CH4 CCVequivalent values when summing the
emissions under the FFV credits provisions. Applying the 0.15 factor to CH4 and N2O emissions
under the CC>2 equivalent approach (thereby reducing the emissions values by 85 percent) would
provide the manufacturer with credits not envisioned in the proposal and not included in the
CAFE program, and would result in the loss of feasible, cost-effective emissions reductions.
Moreover, any credits under this rule for N20 or CH4 reductions are not justified, since the
standards themselves are no-backsliding caps, and credits should only be earned for performance
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which surpasses some benchmark representing good performance. See Section III.B.7 to the
preamble to the final rule. Although EPA is not extending the use of the 0.15 factor to model
years other than 2012-2016, natural gas vehicle manufacturers are eligible to earn early credits if
they meet the requirements of the early credits program being adopted.
Biofuels Life-cycle Emissions Comments
OrganizationrGeorgia-Pacific (GP)
American Forest and Paper Association (AF&PA)
Dinter, Bridget
Schade, Michael
Comment:
Georgia-Pacific (GP)
Tailpipe Emission Standards Should Exempt CC>2 from Combustion of Biomass derived Fuels.
If EPA nevertheless promulgates GHG tailpipe emission standards, those emission standards
should recognize that CC>2 emissions from the combustion of fuels derived from biomass
("biofuels"), because of the principle of carbon neutrality and best Carbon accounting practices,
do not contribute to climate change and should not be counted against the proposed grams per
mile emission standards. This would (1) make the GHG tailpipe emission standards consistent
with the endangerment that the standards are supposed to be mitigating and (2) encourage the
substitution of renewable fuels for fossil fuels, which EPA already is seeking to accomplish
through other provisions in the proposed Tailpipe Rule. In fact, since the carbon-neutral motor
vehicle emissions of CC>2 from biofuels do not contribute to the increase in atmospheric CC>2
concentrations which constitute the public endangerment in EPA's view, EPA lacks a statutory
basis for restricting motor vehicle CC>2 emissions to the extent that they result from use of
biofuels.
[See Docket Number OAR-2009-0472-7122.1, pp.6-9 for detailed comments pertaining to:
Biofuel Combustion Is Carbon-Neutral and EPA Must Account for the CO2-Neutrality of
Biofuels To Be Consistent With Its Endangerment Finding]
American Forest and Paper Association (AF&PA)
Tailpipe Emission Standards Should Exempt CC>2 from Combustion of Biomass-derived Fuels
If, despite the reasons set forth above, EPA nevertheless promulgates GHG tailpipe emission
standards, those emission standards should recognize that CO2 emissions from use of fuels
derived from biomass ("biofuels"), because of the principle of carbon neutrality and best carbon
accounting principles, do not contribute to climate change and should not be counted against the
proposed grams/mile emission standards. This would (1) make the GHG tailpipe emission
standards consistent with the endangerment that the standards are supposed to be mitigating and
(2) encourage the substitution of renewable fuels for fossil fuels, which EPA already is seeking
to accomplish through other provisions in the proposed GHG tailpipe standards. In fact, since the
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EPA Response to Comments
carbon-neutral motor vehicle emissions of CC>2 from biofuels do not contribute to the increase in
atmospheric CC>2 concentrations which EPA has proposed to find endangers public health and
welfare, EPA would lack a statutory basis for restricting motor vehicle CC>2 emissions to the
extent that they result from use of biofuels. [OAR-2009-0472-7126.1, p.5]
[See Docket Number OAR-2009-0472-7126.1, pp.6-9 for detailed comments pertaining to:
Biofuel Combustion Is Carbon-Neutral, EPA Must Account for the CCVNeutrality of Biofuels
To Be Consistent With Its Endangerment Finding, and The Proposed GHG Tailpipe Standards
Could Be Modified To Recognize Biofuel CO2-Neutrality]
Weber, David
There is no mention in the test procedure of a factor for bio-derived fuels. For example, there
needs to be some allowance for OEM's to make arrangements to sell B100 diesel trucks to fleets
and that the fuel economy number should count a B100 diesel truck as a zero CO2 g/mi vehicle.
This would need for the fleet owner to sign a written contract that he will only use the truck with
B100 fuel for the life of the vehicle.
If CO2 g/mi is a metric that is important, then the metric should actually be non-renewable (&
verifiable) CO2 g/mi. That is, B100 usage should count as zero CO2 g/mi. If energy dependency
is important, then biodiesel will be more home-grown, so the balance of trade will be improved.
[OAR-2009-0472-1410, pp. 2]
Dinter, Bridget
I support the overall goal of greenhouse gas reduction, but find that the alternative fuel credit
program proposed by the EPA has a serious flaw. This flaw is that the credit program only
considers the emissions of the vehicle without regard to the emissions created by production of
the fuel for the vehicle. [OAR-2009-0472-7250.1, p. 1]
The credit program designed by the EPA must be changed to include emissions involved in the
production of alternative fuels. The current program only considers emissions that come directly
from the vehicle as shown by the proposal's statement that, ".. .the CO2 emissions of FFV's 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" 74 Fed. Reg. at 49,780.
Calculating the carbon emissions in this manner is inaccurate because it does not take into
account the difference in carbon emissions in production of the fuels. Because of this inaccurate
calculation method, the credit program creates incentives to produce vehicles that will lead to an
overall increase in carbon emissions. [OAR-2009-0472-7250.1, p. 1]
The EPA must consider the emission of carbons in the production of alternate fuels when giving
alternative fuel credits or the overall emissions of carbon and other harmful pollutants may
increase. A popular alternative fuel is corn ethanol. Under the current EPA proposal
manufacturers of vehicles that run on corn ethanol will receive credits for emitting fewer
greenhouse gases, but corn ethanol actually is worse for the environment than gasoline. In the
article Total versus urban: Well-to-w heels assessment of criteria pollutant emissions from
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various vehicle/fuel systems, researchers studied the overall carbon emissions of alternative fuels
versus gasoline. Even though the researchers assumed future technological advancement in
ethanol production, the study found that using vehicles run on corn ethanol instead of vehicles
run on gasoline would result in significantly higher carbon emissions associated with use of
vehicles. In addition to emitting more carbon, corn ethanol fueled vehicles emit 17-23% more
volatile organic compounds, have up to 143% more emissions of PM 2.5, and have significantly
greater NOx emissions (Hong, 1800-1802). The researchers who published Climate change and
health costs of air emissions from biofuels and gasoline agree that corn ethanol would increase
carbon and other dangerous emissions. Comparing combined climate change and health costs
from emissions of gasoline run vehicles and those of corn ethanol run vehicles, these researchers
found that corn ethanol vehicles always incurred larger costs. The combined climate change and
health costs for gasoline run vehicles is $469 million while corn ethanol run vehicles have a
combined climate change and health cost ranging from $472 million to $952 million depending
on production methods. These studies make it very apparent that using corn ethanol as a fuel
alternative would cause an increase in carbon emissions and other harmful emissions. This is
why the EPA must rewrite the proposal to take into account the production emissions of fuels
when determining whether or not to award credits for flexible fuel vehicles. [OAR-2009-0472-
7250.1, pp. 1-2]
The EPA's current proposal for vehicle emission standards contains a credit program to reward
companies that invest in alternative fuel vehicles. This program is flawed because it does not
have measures to insure that the alternative fuels decrease carbon emissions when considering
production of fuels. If the EPA does not take measures to ensure that credits are only given to
alternative fuels that will not cause more harm than gasoline, these fuel emission standards will
only lead to greater environmental degradation. This is why the EPA must investigate alternative
fuels to ensure that these fuels will not worsen the environment before giving the automobile
manufacturers incentives to create vehicles that use them. [OAR-2009-0472-7250.1, p. 2]
Schade, Michael
The premise that the contained renewable ethanol is completely free of net carbon emissions is
part of the E85 example calculation. Has the heavy energy input to the crop production,
conversion to ethanol, and transportation of raw materials and ethanol been premised to be zero?
If yes, should a pragmatic estimate of those energy inputs and their carbon content be included as
a partial offset to the premised E85 net carbon benefit? [OAR-2009-0472-7261.1, pp. 5]
EPA Response:
Georgia-Pacific and the American Forest & Paper Association commented that EPA's emission
performance methodology should include lifecycle GHG emission reductions associated with
biofuel use. Furthermore, if vehicles are fueled with biofuels that do not contribute to climate
change, then they should not be counted against the gram/mile tailpipe emission standards.
Citizens Bridget Dinter and Michael Schaede commented that EPA should include the lifecycle
performance of biofuels in its final FFV credit program and consider the fact that that not all E85
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has the same lifecycle GHG performance, e.g., ethanol made from corn versus cellulosic
biomass.
EPA believes that tailpipe emissions from all vehicles including those fueled by biofuels must be
controlled under the standards established by this rule regardless of upstream emissions. After
considering these comments, EPA is not including the lifecycle GHG performance of biofuels
(e.g., E-85 and B100) in its tailpipe emission standards or its FFV credit program. EPA
recognizes that every motor vehicle fuel and fuel production process has unique upstream GHG
emissions impacts, but fuel life-cycle GHG emissions impacts are beyond the scope of this
rulemaking. EPA believes that tailpipe emissions from all vehicles including those fueled by
biofuels must be controlled under the standards established by this rule regardless of upstream
emissions. EPA has wide discretion under section 202(a)(l) and has chosen to first focus on
vehicle tailpipe GHG emissions, both because tailpipe emissions are the largest single source of
vehicle life-cycle GHG emissions, and because the EPA motor vehicle program has traditionally
focused on tailpipe emissions. In addition, the nation is already on track for increasing biofuel
use in response to the Energy Independence and Security Act of 2007 (EISA). EISA set
aggressive biofuel targets reaching 36 billion gallons of renewable fuel by 2022, 21 billion
gallons of which are advanced second-generation biofuels. The potential lifecycle GHG benefits
associated with increased biofuel usage are already captured under EPA's recently-finalized
RFS2 program and therefore should not be double-counted under today's Light-Duty Vehicle
GHG program. Not only will it be challenging enough for automakers to demonstrate FFV E85
usage, the fungible nature of the fuel distribution system will make it difficult to determine the
feedstocks used to make the biofuel portion of the fuel. And since the RFS2 rule already
requires refiners and importers to blend an increasing amount of advanced biofuels into their fuel
(e.g., cellulosic ethanol), the improved lifecycle performance of E85 is already captured under
that program.
EPA's authority to adopt emissions standards under section 202(a)(l) is not limited to motor
vehicles powered by fuels other than biofuels. Vehicles operating on biofuels do emit GHGs,
and as discussed in the preamble, from a lifecycle perspective biofuels such as ethanol are not
carbon neutral in the sense the commenter uses. EPA's recently promulgated Renewable Fuel
Standard Program shows that, when you take into account aggregate lifecycle emissions
including non-tailpipe GHG emissions (such as feedstock growth, transportation, fuel
production, and land use), ethanol from corn using advanced production technologies emits
about 20 percent less GHG than gasoline from oil.10
EPA considered the issue of upstream emissions and aggregate lifecycle GHG emissions of
vehicles in the context of compliance values to use for vehicles that operate in whole or in part
on electricity, as well as flex fuel vehicles (such as vehicles that operate on either gasoline or E-
85). See preamble section III.C.3. From this it is appropriate to include biofuel-powered
vehicles in the emissions standards, and to assign their measured tailpipe emissions of GHGs as
their compliance value for purposes of this rulemaking. They do emit GHGs as tailpipe
emissions, and their aggregate lifecycle emissions are not very different from the gasoline or
diesel they replace. The renewable fuel program already provides a mandate for increased use of
10 Regulation of Fuels and Fuel Additives: Changes to Renewable Fuel Standard Program (75 FR 14670, March 26,
2010)
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such biofuels, and a change in the emissions standards in this rulemaking is not needed to
provide an additional incentive. The FFV credit in place through MY2015 already provides an
incentive for manufacturers to produce vehicles capable of using a biofuel, and this rulemaking
is directed at automobile manufacturers and what they can do, not the operators of the vehicle
who actually choose whether to use the biofuel. Changing the emissions standards for vehicles
that use biofuels would not likely change how much biofuels are actually used. For example,
data show that, on average, FFVs operate on gasoline over 99 percent of the time, and on E85
fuel less than 1 percent of the time.11 This has occurred notwithstanding the CAFE credit for
FFVs.
This is also fully consistent with the endangerment and contribution findings. EPA included all
motor vehicles emissions in calculating emissions for purposes of the contribution finding, and
did not exclude emissions from vehicles operated by biofuels. In addition, the content or form of
the emissions control to follow under section 202(a)(l) was not relevant to the determination that
the air pollution of atmospheric concentrations of GHGs endanger public health and welfare.
Single Fleet-wide Cap Comments
OrganizationrHonda Motor Company
Association of International Automobile Manufacturers (AIAM)
Comment:
Honda Motor Company
In the preamble, EPA and NHTSA state the intention of this regulation ".. .is to set forth a
carefully coordinated and harmonized approach to implementing these two statutes." While
harmonization is good, clearly the intent is not to make the regulations identical. EPA has sought
to increase flexibility wherever possible, and this is often not the case where NHTSA is
constrained by statute. Flexible Fuel Vehicle ("FFV") credits is one such case. EPA
acknowledges that OEMs have relied in their planning on credits associated with FFVs, and is
therefore planning to allow FFV credits through 2015, and thereafter intending to allow FFV
credits only where fuel use can be proven. EPA's credit limits for FFVs (Table III.C.2-1)
continue NHTSA's statutory-requirement to limit FFV credits by Car and Truck fleets.
[NHTSA-2009-0059-0095.1, p.5]
Since EPA is not required to follow NHTSA's statutory limits and EPA is interested in
maximizing flexibility, Honda recommends that each OEM be allowed to maximize its FFV
credits on a fleet-wide basis. Each OEM could calculate its own car & truck fleet mix and apply
this to the limits described in the aforementioned table. In the case where an OEM has a 70%
mix of passenger cars and a 30% mix of light trucks in MY2012, an OEM could determine its
fleet-wide credit limits as follows:
11 EPA 2010, Renewable Fuel Standard Program (RFS2) Regulatory Impact Analysis, Section 1.7.4. EPA-420-R-
10-006. February 2010. Docket EPA-HQ-OAR-2009-0472-11332
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EPA Response to Comments
70% x 9.8 g/mile (car FFV credit limit in 2012) + 30% x 17.9 g/mile (truck FFV credit limit in
2012)
This approach enables Honda to offer E85 models that make the most sense for customers and
their interest in fuel use. For example, by focusing exclusively on E85 trucks, Honda can
maximize its E85 market and the potential for actual E85 fuel use. [NHTSA-2009-0059-0095.1,
p.5]
Association of International Automobile Manufacturers (AIAM)
Under the proposal, flexible fuel vehicle (FFV) credit caps are applied separately to each
manufacturer's car and truck fleet. In the case of the CAFE standards, this approach is required
by statute. The effect of the separate caps is to require manufacturers to market FFVs in both
fleets if they want to earn the maximum credit. However, the marketability of FFVs varies
depending on such factors as the local availability of refueling infrastructure and the type of
vehicle. AIAM urges EPA to establish a single cap for all FFVs and allow manufacturers to
allocate the credit between their car and truck fleet as they deem most appropriate. By
eliminating the separate caps, manufacturers would receive enhanced compliance flexibility
while reducing consumer cost impacts. We recognize that our recommendation would involve
reduced harmonization between the CAFE and greenhouse gas programs, but in this case the
flexibility benefits outweigh the loss in harmonization. We would support a legislative
amendment that would allow the same approach to be taken with regard to the CAFE program.
[OAR-2009-0472-7123.1, p.15]
EPA Response:
EPA understands the comments that allowing manufacturers to combine their car and truck fleets
into a single fleet for purposes of generating MY2012-2015 FFV standards would give them
more flexibility to target their FFVs to the market segments they believe are most likely to use E-
85. EPA also agrees that although this is not allowed under EPCA, the CAA would allow EPA
discretion to structure the program in this way. However, the lead time concerns that persuaded
EPA to replicate the EPCA FFV credits in the GHG rule through MY 2015 result from
manufacturers' reliance on the EPCA regime, which does not include these additional
flexibilities.
Additional Comments
Organization: Ford Motor Company
Chrysler Group LLC (Chrysler)
Comment:
Ford Motor Company
FFV Credits
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Ford supports the inclusion of FFV credits in the EPA program. The Energy Independence and
Security Act of 2007 (EISA) defines the credits allowed in the CAFE program. Ford agrees with
EPA that by calculating the FFV CC>2 credit limit based on the individual manufacturer standards
calculated from the footprint curves tracks more closely to the CAFE FFV credit limits. In order
to harmonize the EPA and NHTSA programs to the greatest extent possible, Ford does not
support the use of the proposed FFV CC>2 Standard Credit Limits for cars and trucks shown in
Table III.C.2-1 of the preamble. Rather, to ensure that the proper amount of credit is allocated to
a manufacturer, Ford recommends adoption of the calculated method for the FFV CC>2 credit
limit.
FFV Credits-Demonstration of Alternative Fuel Usage / Ratio of Operation
Ford urges the agencies to provide manufacturers with flexibility in demonstrating alternative
fuel use and ratio of operation, and agrees that the 'top-down' approach described in the preamble
of the proposed rule is reasonable and should be retained. This method, which uses national
alternative fuel use data coupled with a VMT analysis using the EPA Motor Vehicle Emission
Simulator model to determine the ratio of alternative fuel and base fuel for new vehicles being
sold, is the most cost-effective and least error-prone option. A cost-effective alternative is
essential to provide manufacturers with adequate incentives to continue producing FFVs (which
may have difficulties and/or additional cost in meeting certain requirements). Allowing the use
of national alternative fuel use data would eliminate the expense of adding an on-board data
collection system, as well as the difficulty of accessing such systems and the chance of errors in
gathering the data.
Of course, the addition of a fuel-use requirement only serves to penalize the automobile
manufacturers for the lack of an adequate E85 fueling infrastructure. The agencies should
institute additional programs to promote the availability of E85 at filling stations around the
country, so that consumers will be able to take full advantage of the flex-fuel capabilities of the
many FFVs on the road.
Ford also recommends that differences in refueling frequency of newer and older FFVs be
accounted for. Awareness of FFV capability (and therefore likelihood of refueling) is higher for
current models than older models, and will increase further as the alternative fuel becomes more
available. Therefore, these newer vehicles should be given appropriately larger portion of the
alternative fuel use credit. This portion or amount could be determined by EPA with surveys of
current and past FFV customers as well as other analysis. [OAR-2009-0472-7082.1, pp. 8-9]
Chrysler Group LLC (Chrysler)
Chrysler supports the inclusion of flexible fuel and alternative fuel vehicle incentives. These
incentives encourage manufacturers to continue production of vehicles capable of running on
alternative fuels as the production and distribution systems of such fuels are developed. The
lower carbon intensity of such fuels is an opportunity for further greenhouse gas reductions and
increased energy independence. The continuance of such incentives recognizes the important
potential of this technology to reduce GHGs. [NHTSA-2009-0059-0124, p.35]
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However, Chrysler is concerned that the proposed flexible fuel and alternative fuel vehicle
credits are not harmonized between the EPA and NHTSA programs. The EPA flexible fuel
vehicle greenhouse gas credits are capped in a manner inconsistent with NHTSA's CAFE
program. The caps result in more stringent greenhouse gas standards than CAFE standards.
[NHTSA-2009-0059-0124, p.35]
EPA Response:
Credit Limits
The FFV credit limits for CAFE are 1.2 mpg for model years 2012-2014 and 1.0 mpg for model
year 2015.12 In CC>2 terms, these declining FFV credit limits translate to declining CC>2 credit
limits over the four model years. As the CAFE standard increases numerically, the credit limit
becomes a smaller fraction of the standard. EPA proposed, but is not adopting, credit limits
based on the overall projected industry average CC>2 standards for cars and trucks. EPA also
requested comments on basing the calculated CC>2 credit limits on the individual manufacturer
fleet-average standards calculated from the footprint curves. Ford commented supporting this
approach and also in support of harmonizing with CAFE to the greatest extent possible. EPA
also received comments from Chrysler recommending that the credit limits for an individual
manufacturer be based instead on that manufacturer's fleet average performance. The
commenter noted that this approach is in line with how CAFE FFV credit limits are applied.
This is due to the fact that the GHG-equivalent of the CAFE 1.2 mpg cap will vary due to the
non-linear relationship between fuel economy and GHGs/fuel consumption. EPA agrees with
Chrysler's suggested approach since it best harmonizes how credit limits are determined in
CAFE and is needed to address issues of lead time, as explained above.. EPA intended and
continues to believe it is appropriate to provide essentially the same FFV credits under both
programs for MYs 2012-2015. Therefore, EPA is finalizing FFV credits limits for MY2012-
2015 based on a manufacturer's fleet-average performance. For example, if a manufacturer's
2012 car fleet average emissions performance was 260 g/mile (34.2 mpg), the credit limit in CC>2
terms would be 9.5 g/mile (34.2 mpg - 1.2 mpg = 33.0 mpg = 269.5 g/mile) and if it was 270
g/mile the FFV credit limit would be 10.2 g/mile.
Methodology for MY2016 and Later Demonstration of Actual Alternative Fuel Usage
In the proposal, EPA considered an option of establishing a rebuttable presumption using a "top-
down" approach based on national E-85 fuel use to assign credits to FFVs sold by manufacturers
under this program. For example, national E-85 volumes and national FFV sales could be used
to prorate E-85 use by manufacturer sales volumes and FFVs already in-use. EPA would
conduct an analysis of vehicle miles travelled (VMT) by year for all FFVs using its emissions
inventory MOVES model. Using the VMT ratios and the overall E-85 sales, E-85 usage could
be assigned to each vehicle. This method would account for the VMT of new FFVs and FFVs
already in the existing fleet using VMT data in the model. The model could then be used to
determine the ratio of E-85 and gasoline for new vehicles being sold. Fluctuations in E-85 sales
and FFV sales would be taken into account to adjust the credits annually.
12 49 U.S.C 32906 (a).
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Ford commented in support of this type of methodology and recommended "that differences in
refueling frequency of newer and older FFVs be accounted for. Awareness of FFV capability
(and therefore likelihood of refueling) is higher for current models than older models, and will
increase further as the alternative fuel becomes more available. Therefore, these newer vehicles
should be given appropriately larger portion of the alternative fuel use credit. This portion or
amount could be determined by EPA with surveys of current and past FFV customers as well as
other analysis." EPA is finalizing its intention to conduct a top-down analysis upon written
request. EPA will consider Ford's comments regarding vehicle refueling frequency in conducting
this analysis, with the understanding that VMT and refueling frequency are closely related.
EPA understands that Ford would like EPA to promote the availability of E-85 refueling stations.
However, these comments regarding refueling infrastructure are beyond the scope of this
rulemaking.
5.7.3 Advanced Technology Vehicle Incentives for Electric Vehicles, Plug-in Hybrids, and
Fuel Cells
In the proposal, EPA stated the following: "EPA is proposing additional credit opportunities to
encourage the early commercialization of advanced vehicle powertrains, including electric
vehicles (EVs), plug-in hybrid electric vehicles (PHEVs), and fuel cell vehicles (FCVs). These
technologies have the potential for more significant reductions of GHG emissions than any
technology currently in commercial use, and EPA believes that encouraging early introduction of
such technologies will help to enable their wider use in the future, promoting the technology-
based emission reduction goals of section 202(a)(l) of the Clean Air Act."
Specifically, EPA proposed two mechanisms by which advanced technology vehicles could earn
credits: 1) a zero grams/mile compliance value for EVs, FCVs, and PHEVs when operated on
grid electricity, and 2) a vehicle multiplier in the range of 1.2 to 2.0. EPA requested comment on
providing some type of incentive for advanced technology vehicles, the appropriateness of both
the zero grams/mile and vehicle multiplier incentive mechanisms, and on any alternative
approaches for addressing advanced technology vehicle incentives.
EPA received significant public comment on this issue. Most of the commenters responded
directly to EPA's request and focused their comments on the proposed zero grams/mile and
vehicle multiplier mechanisms. Accordingly, there is significant overlap among the comments
on this issue, and the structure of this section is to provide a comprehensive sampling of excerpts
of 49 of the most detailed public comments on this topic (in Section 5.7.3.1), in alphabetical
order, followed by an EPA response to the comments organized into 4 sections:
• Whether to provide an incentive for advanced technology vehicles (Section 5.7.3.1)
• The zero grams/mile compliance value for EVs, FCVs, and PHEVs when operated on
grid electricity (Section 5.7.3.2)
• The vehicle multiplier (Section 5.7.3.3)
• Miscellaneous issues related to the advanced technology vehicle incentive program
(Section 5.7.3.4)
5.7.3.1 Comments
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Organization:
Alliance of Automobile Manufacturers (Alliance)
American Council for an Energy Efficient Economy
BMW of North America, LLC (BMW)
BorgWarner
California Air Resources Board
Chew, Yuli
Chrysler Group LLC (Chrysler)
Clean Energy Fuels
Cummins Inc.
Ecology Center
Energy, Environmental & Public Utility Practice Group
Environment Michigan
Environment New Jersey
Environmental Defense Fund
eTec
Fisker Automotive, Inc.
Ford Motor Company
Glasser, Mark
Honda Motor Company
Honeywell Transportation Systems
Hyundai Motor Company
International Council on Clean Transportation
Investor Network on Climate Risk
Karplus, Valerie J.
Massachusetts Department of Environmental Protection
Mercedes-Benz (Daimler AG)
Mitsubishi Motors R & D of America (MRDA)
Motor and Equipment Manufacturers Association
National Association of Clean Air Agencies (NACAA)
National Automobile Dealers Association (NADA)
Natural Resources Defense Council
New York State Department of Environmental Conservation
New York University School of Law, Institute for Policy Integrity (IPI)
Nissan North America
Northeast States for Coordinated Air Use Management
Physicians for Social Responsibility, Los Angeles
Public Citizen and Safe Climate Campaign
SABIC Innovative Plastic
Sierra Club
South Coast Air Quality Management District
State of New Jersey
State of Washington Department of Ecology
Toyota Motor North America
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Union of Concerned Scientists
United Auto Workers
University of California, Santa Barbara, Bren Working Group on Vehicle Fuel Economy
University of Pennsylvania, Environmental Law Project
U.S. Coalition for Advanced Diesel Cars
Volkswagen Group of America (Volkswagen)
Comment:
Alliance of Automobile Manufacturers (Alliance)
Tailpipe CO2 from EVs and the Electric-Only Portion of PHEVs/EREVs
EPA proposes to include EVs in the fleet average calculation at a rate of zero g/mi. EPA likewise
proposes to include as zero g/mi of CO2 the electric portion of PHEVs, EREVs, and fuel cell
vehicles. 74 Fed. Reg. 49,533-4. The Alliance supports this approach since customers need to
receive a clear signal that they have made the right choice by preferring an EV, PHEV or EREV.
However, the Alliance recognizes the need for a comprehensive approach with shared
responsibility in order to achieve an overall carbon reduction. [OAR-2009-0472-6952.1, p. 29]
Advanced Technology Vehicle Credit Multiplier
EPA has taken into consideration the additional effort that manufacturers will take in introducing
Advanced Technology Vehicles (ATVs) to the public. 74 Fed. Reg. 49,533. It is also extremely
important that this multiplier be treated the same for all ATVs; the battery electric
vehicles, extended range electric vehicles, plug-in hybrid electric vehicles and fuel cell vehicles
EPA mentions in the NPRM. Moreover, the hydrogen internal combustion engine vehicle should
also be included as an advanced technology vehicle covered by the multiplier. This technology is
under development by some manufacturers today and has zero CO2 emissions. The H-ICE
vehicle needs to receive the same credit multiplier and advanced technology vehicle treatment to
prevent EPA from showing technology preferences or limiting possible technologies. [OAR-
2009-0472-6952.1, pp.29-30]
Considering all of the issues and challenges to introduce ATVs, the 2.0 multiplier is needed
longer than a single model year. Instead of decreasing the ATV multiplier by a factor of 0.2 each
year, with the multiplier completely phased out by the 2017 model year, EPA should maintain a
2.0 credit multiplier until ATVs make a 10% penetration into the vehicle market. Without this
penetration level, it will be impossible for the true environmental benefits of ATVs to be
realized. Extending the 2.0 multiplier will make ATV costs more reasonable and promote these
technologies. [OAR-2009-0472-6952.1, p.30]
While building ATVs is the responsibility of the automotive industry, it takes more than just
production for true emissions reductions from ATVs to be realized. It is necessary to have
fueling and service infrastructure to support these technologies. Customers will not purchase
ATVs if they can neither fuel them nor have them repaired. Developing and establishing this
infrastructure for the nation will take a long time — far more than a single year, or even the time
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frame outlined within this regulation. In fact, when examining all of these issues, a multiplier
even greater than 2.0 should be considered. [OAR-2009-0472-6952.1, p.30]
In encouraging these technologies, Congress has repeatedly provided consumers with tax credits
for their purchase of ATVs. The reason behind these tax credits are to offset the additional cost
of purchasing an ATV and the environmental benefit each ATV provides. The same reasoning
holds true to manufacturers: each ATV is very expensive, and manufacturers need the additional
credits to help offset the expense, especially given the infrastructure challenges, fluctuating fuel
prices and the resulting difficulty of predicting consumer demand. [OAR-2009-0472-6952.1,
p.30]
American Council for an Energy Efficient Economy
ACEEE does not support the use of Advanced Technology Vehicle (ATV) credits. ATV credits
would apply weights of greater than one to certain vehicles in calculating manufacturer average
emissions, in effect crediting those vehicles with greater reductions than they will actually
provide. Use of such credits would detract from the emissions reductions achieved by the
proposed standards. A reasonably stringent GHG emissions standards program provides an
incentive for the production of low-emitting vehicles simply by virtue of those vehicles' ability
to help manufacturers reach the required average emissions levels.
ACEEE actively supports government programs to accelerate the development and deployment
of advanced technology, high-efficiency vehicles, including for example existing tax credits for
hybrids and plug-in hybrids, as well as the $2.4 billion allocated by the 2009 American Recovery
and Reinvestment Act for battery manufacturing, electric drive programs and the deployment of
electric vehicles. A standards program is not, however, well-suited to incentivizing particular
technologies, because the result is to undermine the standards. Such incentives can also have
unintended, adverse consequences, as the dual fueled vehicle (AMFA) credit demonstrates. The
AMFA credit both reduces the fuel savings of the CAFE program and allows manufacturers to
lag in developing high-efficiency vehicles. The AMFA credit also illustrates how difficult it is to
eliminate a credit of this kind once it has been put in place, even when it is broadly
acknowledged that the program does not serve the intended purpose and in fact is
counterproductive.
By contrast, off-cycle technology credits should be considered if they can be plausibly shown to
deliver actual reductions that otherwise would go unrecognized under the rule. Further, EPA
should take into account the potential for emissions reductions from off-cycle technologies in
setting the level of standards beyond 2016. This will increase the emissions reductions that can
be achieved through the rule.
Recommendations: 1. Attribute to advanced technology vehicles only those emissions reductions
they are expected to achieve. If ATV credits must be created, minimize the multiplier used and
ensure that the program is not extended beyond 2016. 2. Consider permitting off-cycle credits for
vehicle technologies that can be shown to achieve quantifiable reductions in emissions; take into
account potential reductions from these technologies in setting standards beyond 2016. 3. For
purposes of the rule, define emissions of EVs as full fuel cycle emissions, adjusted as appropriate
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to account for upstream emissions from gasoline vehicles. 4. Calculate EV emissions to reflect i)
the efficiency of the vehicle (kwh per mile), and ii) emissions associated with electricity
generation in the power pool where the vehicle is purchased, using marginal emissions rates
based on reasonable assumptions about time-of-day charging patterns.
[ACEEE also submitted these comments as testimony at the New York public hearing, See
docket number EPA-HQ-OAR-2009-0472-4621, pp. 140-144.]
BMW of North America, LLC (BMW)
Advanced technology vehicles play a major role in attaining sustainable mobility in the long
term. Therefore, the right framework has to be established early on for less carbon-intensive
vehicles which are currently available but face uncertain market and customer expectations. The
regulatory framework also strongly determines how advanced technology vehicles are perceived
in the market. Consequently, BMW supports EPA's proposal regarding the greenhouse gas
emissions calculation for electric vehicles and multipliers for advanced technology vehicles.
[OAR-2009-0472-7145.1, p.5]
An increase in advanced technology vehicles will result in a mix of fuels and electric power used
in the transportation sector. The environmental impact of the latter strongly depends on the mix
of fossil and non-fossil power generation which is defined by national or the utilities' corporate
energy policies and beyond the control of vehicle manufacturers. By proposing to calculate the
emissions of an electric vehicle with Og/mi, EPA is properly endorsing the concept of shared
responsibility. BMW therefore would greatly appreciate the promulgation of a final regulation
that considers only tailpipe emissions and treats electric vehicles with Og/mi. This is a clear
signal for sustainable mobility and suggests to customers that they have made the right choice.
[OAR-2009-0472-7145.1, p.5]
The intention of EPA and NHTSA is to achieve the highest possible degree of harmonization in
both regulations. Therefore, BMW recommends treating electric vehicles in the GHG regulation
in the same way as in the CAFE regulation. For CAFE purposes, the electric energy consumption
is converted into a petroleum equivalent fuel economy "mpge"= 82,049[Wh/gall]/ Energy
Consumption [Wh/mi]. To be treated equally in both regulations for electric vehicles a much
higher mpg figure should be achieved by the conversion of electric energy consumption into
mpge, as there indeed is no gallon consumption. [OAR-2009-0472-7145.1, p.6]
In order to reflect a proper consideration of other advanced technology vehicles, i.e. range-
extender vehicles or plug-in hybrids, these vehicles should be evaluated in relation to electric
vehicles and their greenhouse gas impacts. [OAR-2009-0472-7145.1, p.6]
Beyond the regulatory framework directly and exclusively addressing the auto industry, and with
respect to overall greenhouse gas reduction and shared responsibilities, a comprehensive
approach should be considered which addresses the stakeholders involved. Instruments such as
cap-and-trade, carbon taxes, etc. which are currently under discussion should be evaluated to
implement a comprehensive approach for the de-carbonization of the transportation sector in the
most effective and cost-efficient manner. [OAR-2009-0472-7145.1, p.6]
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EPA Response to Comments
Multiplier for Advanced Technology Vehicles
In addition to the calculation of greenhouse gas emissions from advanced technology vehicles,
EPA is proposing to grant multipliers for a certain time period. In order to encourage the market
penetration of these vehicles, BMW believes a constant multiplier of 2 is appropriate. Beyond
this, BMW also recommends considering multipliers for clean diesel vehicles that meet
California's strict emissions requirements for criteria pollutants in order to increase their market
share and deliver a clear signal by regulators in support of this highly cost efficient and rapidly
available policy option. As clean diesel vehicles contribute significantly to reduced greenhouse
gas emissions at a reasonable price, a multiplier of up to 1.5 should be appropriate. [OAR-2009-
0472-7145.1, p.6]
With respect to this joint rulemaking and to achieve as much consistency between both the GHG
and CAFE standards as possible, BMW recommends adoption of multipliers for advanced
technology vehicles in the CAFE regulation as well. [OAR-2009-0472-7145.1, p.6]
As an incentive for performance improvement, we also strongly support the proposed credit
options available to all manufacturers, including availability of advanced technology credits in
the form of a multiplier to encourage commercialization of electric vehicles and off cycle
innovative credits for new CO2 emissions reductions technologies whose benefits are not
currently captured in the test procedures. [These comments were submitted as testimony at the
New York public hearing. See docket number EPA-HQ-OAR-2009-0472-4621, pp. 135-136.]
BorgWarner
Moreover, the joint proposal allows for varying credit options and multipliers for vehicles
operating on different fuels. Because these vehicles compete in the same market, it creates
market deformation. For example, the suggested allowance under the advanced technology
credits for plug-in electric or plug-in hybrid electric vehicles provides for a 0 (g/ml) CO2
measurement and counts the vehicle volumes as two times their actual value. This drives very
aggressive support for vehicle electrification and associated technologies. In today's atmosphere
of limited capital this could also impede the development and market introduction of more
conventional, cost-effective solutions that utilize existing infrastructure in large volumes
resulting in better real-world results. [OAR-2009-0472-7289, p.2]
California Air Resources Board
Second, EPA needs to assign a non-zero upstream greenhouse gas emission factor for zero-
emission vehicles (ZEVs). EPA has proposed to make additional credits available for advanced
technology vehicles such as electric vehicles (EVs), plug-in hybrids and fuel cells. However,
EPA is proposing to ignore the lifecycle greenhouse gas emissions of these vehicles by assigning
a value of zero grams per mile towards compliance with the national standard. Furthermore, the
NPRM proposes that a multiplier ranging from 1.2 to 2.0 be assigned for each vehicle. While the
intent is to encourage the early development and production of advanced vehicle powertrains - a
goal with which CARB agrees - the proposed credits for these technologies are excessive. In
light of some manufacturers' announcements for large scale production of EVs, the potential
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magnitude of these credits may delay the implementation of improved GHG technologies on
conventional vehicles, thereby reducing the effectiveness of the proposed program.
Accordingly, EPA should strike a balance between encouraging advanced vehicle development
and protecting greenhouse gas reductions by assigning lifecycle emissions to these vehicles.
Several studies suggest that a lifecycle emission value of 200 grams per mile would be
appropriate for EVs on the national grid. Assigning that or a similar supported value will provide
appropriate credit applying the 1.2-2.0 vehicle multiplier. Because significant numbers of
commercially available EVs and fuel cell vehicles will be needed in the 2020 timeframe to
achieve the greenhouse gas reductions required to meet the long term goal of reducing global
warming, such credits should be restricted to EVs and fuel cell vehicles only. [OAR-2009-0472-
7189.1, p.2]
[CARB also submitted these comments as testimony at the Los Angeles public hearing. See
docket number OAR-2009-0472-7283, pp. 21-27]
Chew, Yuli
However, in order to advance newer and efficient technologies, I believe that there still need to
have multipliers for Battery Electric Vehicles (BEV) over 100 miles range and Fuel Cell
Vehicles (FCV) to meet one of our energy goals: energy independence. [OAR-2009-0472-
7042.1,p.3]
I support the second issue by expressing credits based on vehicle lifetime mileage estimates. A
typical lifetime miles for cars is less than for trucks. A dirtier truck will have more
environmental impact when putting into service as compared to a Partial Zero Emission Vehicle
that has a warranty of 15 years or 150,000 miles. The environmental impact on a truck can be
tens of times over the introduction of a battery electric vehicle into the same marketplace. [OAR-
2009-0472-7042.1, p.3]
I support the use of "bonus" credits to encourage the earlier introduction of new technologies
vehicles. However, the approach should be similar to what CARB adopted in ZEV Regulation.
This can vary from giving a factor of 1.0 for utility EV with less than 50 miles range to 7.0 for
Type V FCV that can travel over 300 miles range and has a fast charge of less than 15 minutes.
The three technologies, EV, PHEV and FCV should not be given the same value. They are
preferred to phrase down over the same block of time range as CARB's ZEV Regulation, 2009 -
2011, 2012 - 2014, and 2015 and beyond. I would support "bonus" multiplier be allowed for
FCV beyond 2017 and BEV that can travel beyond 100 miles range BEV. [OAR-2009-0472-
7042.1,p.4]
Rather than treating EV having 0 g/mi of GHG, I would prefer that it the EV should just get the
benefits of what the grid offers. Similar to California's grid, EV is still considered to have an
upstream emission of 130 g/mi. Over time, it should be based on the weighted average of these
advance vehicles technologies are applied. [OAR-2009-0472-7042.1, p.4]
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For multiplier of EV after 2016, while awarding different multipliers based on different grids are
difficult to achieve, EPA should based the actual contribution to the greenhouse gas reduction
based on the distribution of the vehicles based on the weighting contribution of the grid at which
these vehicles are deployed. [OAR-2009-0472-7042.1, p.4]
Chrysler Group LLC (Chrysler)
Chrysler agrees with the EPA that incentives should be provided to 'encourage the early
commercialization of advanced vehicle powertrains.' [NHTSA-2009-0059-0124, p.26]
Advanced Technology Vehicle Volume Multiplier
Although great strides have been taken recently in the development and commercialization of
advanced technology vehicles, the incremental costs of these technologies remain high. Volume
multipliers effectively reduce the technology cost per ton of emissions reduced to a level more
equivalent to that of applying improvements to conventional technologies. As shown in the table
below, Chrysler estimates a volume multiplier of 3-6X for advanced technology vehicles is
necessary to achieve cost parity with the cost / benefit ratios assumed by EPA for conventional
technology improvements. As a marketplace develops increasing volumes, the incremental costs
of the technology drop, but the cost to emission benefit ratio continues to remain much higher.
[NHTSA-2009-0059-0124, p.26]
Recommendation
Chrysler recommends that a minimum volume multiplier of 3-6X be applied to advanced
technology vehicles as an incentive for early production of advanced technology vehicles.
[NHTSA-2009-0059-0124, p.26]
Phase Down of the Advanced Technology Vehicle Volume Multiplier
Advanced technology vehicle volume production is still in its infancy. Aside from a few small
volume manufacturers producing a handful of vehicles per year, no manufacturer has placed a
significant number of advanced technology vehicles in the hands of common customers. In the
near term, the ability to apply advanced technology powertrains to vehicles is limited by several
factors including the lack of a commercially viable and affordable battery, vehicle
redesign/refresh schedules and current economic conditions. [NHTSA-2009-0059-0124, p.27]
The historical market penetration of hybrid electric vehicles (HEV) suggests that significant
volumes of advanced technology vehicles will not occur within the time frame of this
rulemaking. The first modem mass market HEV (Honda Insight®) was introduced in 1999.5
Four years later (2003) the HEV market penetration was only 0.3%.6 The next five years saw a
market penetration growth of approximately 0.5% per year, reaching 2.6% in 2008. 7 To this
day, hybrid electric vehicles still have not become a common consumer choice in the
marketplace, almost ten years after their mass market introduction. Given that advanced
technology vehicles also require infrastructure changes for viability (such as home and public
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electrical charging stations) and higher price, these vehicles are likely to have similarly slow
market penetration rates. [NHTSA-2009-0059-0124, p.27]
Recommendation
Chrysler recommends that the volume multiplier not be phased down for the period considered
by this rulemaking. [NHTSA-2009-0059-0124, p.27]
Volume Multipliers for Different Advanced Technology Vehicle Types
At this early stage of advanced technology vehicle development there are no clear 'winners'.
Chrysler recommends that the vehicle multiplier should be the same for all advanced technology
vehicles. [NHTSA-2009-0059-0124, p.27]
Assignment of an Electric Vehicle Operation Emission Value of 0 g/mi
Chrysler supports the assigned value of 0 g/mi greenhouse gas emissions for the electric portion
of the operation of advanced technology vehicles. This approach is consistent with other federal
programs, by not forcing upstream emission accounting on downstream manufacturers. For
example, electric generation power plants do not account for emissions associated with
producing their energy feedstock. The approach is also consistent with existing light-duty vehicle
Tier 2 emission regulations in which vehicle manufacturers are responsible for emissions
produced by vehicles, but are not responsible for controlling emissions associated with the
production and transportation of conventional fuels. [NHTSA-2009-0059-0124, p.27]
Advanced technology vehicle credits will not result in a lack of innovation and application of
greenhouse gas reducing technologies on conventional internal combustion engine fleets.
Oral testimony at the Detroit, MI public hearing on this Proposed Rule indicated some concern
that manufacturers may be able to fore go significant improvements in conventional fleets based
on producing significant volumes of advanced technology vehicles. However, in the time frame
of this rulemaking, advanced technology vehicles are not expected to achieve significant market
penetration. Furthermore, to remain competitive, all manufacturers, regardless of advanced
technology vehicle production, will need to make similar gains in conventional vehicle
efficiency. [NHTSA-2009-0059-0124, p.28]
Clean Energy Fuels
[These comments were submitted as testimony at the Detroit public hearing. See docket number
EPA-HQ-OAR-2009-0472-6185, pp. 134-136.]
Tank to Wheels Undervalues Low to Ultra Low Carbon Fuels
and Potentially Overvalues Zero Emission Vehicle Strategies
Clean Energy believes it is potentially irresponsible, and possibly hazardous, to exclusively
regulate vehicles on a 'tank to wheels' basis, as such an analysis fails to evaluate the upstream
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emissions associated with the very strategies a rulemaking aims to promote. For example,
according to the lifecycle pathways provided by the California Air Resources Board for various
fuels, electric vehicles that draw on a California marginal electricity mix of natural gas and
renewable energy sources (which is the best case scenario) achieve a carbon intensity value of
38.78 g/MJ CO2eq whereas a CNG light-duty vehicle powered by bio-methane produced from a
California landfill can achieve 11.26 G/mj CO2eq target (or roughly a 71 percent advantage over
an electric vehicle). By not accounting for upstream emissions, the bio-methane advantage
would be erased and the new value for that CNG vehicle would be 68 g/MJ CO2 eq or a 43
percent disadvantage. That's a problem because it sends exactly the wrong message to the
market. Any rulemaking that places the lowest carbon fuel strategies at a disadvantage to poorer
strategies is counterproductive, and we encourage both EPA and NHTSA to revise the
rulemaking to prevent such an outcome. By evaluating zero emission vehicle strategies from a
'tank to wheel' only perspective, the rule fails to capture the actual greenhouse gas benefit, in
fact, it overestimates it, and it prevents superior strategies from entering the transportation
market. We highly discourage this practice.
Cummins Inc.
EPA is proposing credits for advanced technologies such as fuel cell vehicles, plug-in hybrid
electric vehicles, etc. to encourage their development. Cummins supports providing such credits
to manufacturers in the form of a volume multiplier and 0 g/mile CO2 emissions for electric
operation for MY 2012-2016. Cummins urges that, after MY 2016, EPA should take a holistic
view of CO2 emissions from such vehicles, including upstream emissions from electricity
generation. This would ensure a level playing field for all CO2-reducing technologies in the
light-duty vehicle market. [OAR-2009-0472-7205.1, p.4]
Ecology Center
The Ecology Center would like to comment on the Advanced Technology Vehicle Credits
provision in the proposed rule, aimed at incentivizing early commercialization of electric vehicle
technologies. While we are supportive of the general intent of the proposed credits, we are
concerned that the combination of both a multiplier and a zero grams/mile of CO2 value for
electric propulsion may be overly generous and could unfairly skew a manufacturer's compliance
obligations. We also understand that the intent is for use only in the 2012 - 2016 timeframe, but
are concerned that these credits could become increasingly part of a firm's compliance strategy
toward the end of the compliance period when the credits would be scheduled to end. It would
seem to make more sense to phase-down any credits allowed in a manner similar to the dual-fuel
vehicle credits. In general, however, we believe more work is needed to study both the potential
affect of this proposed provision on compliance and achieved emission levels, as well as the way
the credits are structured, including their timing. [OAR-2009-0472-4068, p.2]
Energy, Environmental & Public Utility Practice Group
How the Rule Could Encourage Public Charging Infrastructure
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The EPA and NHTSA have a unique opportunity finally to help solve this dilemma by making
PCI eligible for CO2 credits under the Rule, like advanced air conditioners credits and other
technologies. The importance of deploying vehicles and refueling infrastructure in a single
coherent system is a consistent theme in prior analyses of transition barriers to alternative fuels.
By classifying PCI as a technology eligible for CO2 credits EPA could help support a business
case for the deployment of PCI in advance of PEVs, thus helping to create the necessary market
conditions for electric technology to take root. Absent such support it seems unlikely that the
Rule will induce a significant level of vehicle electrification. The Agency readily admits that the
proposed standards can be met with existing enhancements to internal combustion engine
technology and with little to no penetration of diesel engines, hybrid electric vehicles (HEV),
plug-in hybrid electric vehicles (PHEV), or pure-battery electric vehicles (BEV). In other words,
by themselves, the CO2 standards will not necessarily induce investment in electric technology.
More will be needed. [OAR-2009-0472-7251.1, p.3]
By allocating CO2 credits to PCI under the Rule, EPA would align the benefits of PCI with
primary beneficiaries in the value chain, the vehicle OEMs, by monetizing the fuel economy
benefits of charging infrastructure. In turn, the Agency could help to solve the longstanding
'chicken or egg' problem of how to pay for alternative fuel infrastructure before significant
numbers of alternative fuel vehicles are on the road. At the same time EPA and NHTSA would
reduce the costs of compliance with the Rule by expanding the supply of credits available to
OEMs. [OAR-2009-0472-7251.1, p.3]
To create market conditions that will spur investment in public charging infrastructure, the
Agency should provide CO2 credits to public charging stations at a level approximating their
impact on fuel economy and market development. This approach is similar to the Agency's
proposal to provide air conditioning leakage credits of between 12.6 and 15.7 g/mi CO2e for
investments in improvements to A/C systems. [OAR-2009-0472-7251.1, p.3]
[See Docket Number OAR-2009-0472-7251.1, pp. 1-4 for detailed comments pertaining to: Why
Lack of Public Charging Infrastructure is a Barrier to PEV Market Penetration and How the Rule
Could Encourage Public Charging Infrastructure]
Why EPA Should Provide Credits for Public Charging Infrastructure
Sustained government policies will be crucial to the deployment of PCI, a key enabler of vehicle
electrification and enhanced petroleum and carbon reduction. Much like how fiber optic
infrastructure investment in the late 1990's fostered an explosion of information technology,
abundant PCI will be a critical factor in the electrification of vehicles. By crediting PCI under the
Rule, EPA could encourage deployment of PCI and thereby achieve greater petroleum and
carbon reduction. [OAR-2009-0472-7251.1, p.8]
See Docket Number OAR-2009-0472-7251.1, pp.4-23 for detailed comments pertaining to:
Background on PEV Charging and Why EPA Should Provide Credits for Public Charging
Infrastructure] \
Environment Michigan
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[These comments were submitted as testimony at the Detroit public hearing. See docket number
EPA-HQ-OAR-2009-0472-6185, pp. 68-69.]
Second, we're concerned that electric vehicles will be given lavish credits that will undercut the
actions automakers must take to reduce emissions from the rest of their fleet. The proposal
ignores the very real emissions that result when electric vehicles are charged with electricity that
is often generated from coal and natural gas.
Environment New Jersey
We also want to make sure that although Environment America and Environment New Jersey are
huge supporters of alternative technologies like electric cars, we do want to ensure that the
credits are not so much that they will undercut actions the automakers would do to reduce
emissions from the rest of their fleet. [EPA-HQ-OAR-2009-0472-4621, p.76]
Environmental Defense Fund
The Final Standards Should Be Designed to Account for the Real-World Greenhouse Gas
Emissions Associated with Electric Vehicles
EPA's proposed treatment of emissions from electric vehicles profoundly under counts the actual
global warming emissions that will occur. The Agency has proposed to include electric vehicles
("EVs") in each manufacturer's fleet-wide standard and to treat EVs as if they had emissions of
zero grams per mile of CO2. As EPA notes, "in reality, the total emissions off-set... is not zero,
as there is a corresponding increase in upstream CO2 emissions due to an increase in the
requirements for electric utility generation." [OAR-2009-0472-7285.1, p. 24]
While we appreciate the agency's interest in promoting advanced technologies such as EVs,
there are a host of policies to support the advancement of EVs and the zero grams per mile
standard is plainly unrepresentative of the environmental realities of using EVs. A recent
National Research Council study concluded that the health and non-climate related
environmental impacts of traditional pollutants associated with EVs are comparable to, and in
some cases higher than, those associated with conventional gasoline and diesel engines, on a
lifecycle basis. When considering greenhouse gas emissions of different types of vehicles, the
same report concluded that EVs caused lower CO2 emissions than conventionally-fueled
vehicles, but higher emissions than vehicles fueled by hydrogen or certain types of E85 fuel.
Furthermore, when the California Air Resources Board ("CARB") considered the same question,
CARB determined that EVs account for 130 grams per mile of upstream emissions. CARB built
flexibility into the analysis by allowing manufacturers to lower the 130 grams per mile number
by demonstrating, among other things, the percentage of electricity generated in California by
renewable sources. [OAR-2009-0472-7285.1, p. 24]
The greenhouse gas emissions profile of the nation's electricity generating portfolio varies
considerably from state-to-state and across regional electricity grids. Further, the greenhouse gas
burden of EVs will depend not only on the emissions profile of the grid but the volume and time
of use. While EOF supports commercialization of these advanced technologies, we also strongly
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request that Agencies ensure analytical rigor in their deployment. Accordingly, we ask that EPA,
with its considerable institutional expertise at the convergence of electricity and the environment,
develop a rigorously tailored emissions rate associated with upstream electricity generation that
is properly applied to EVs. [OAR-2009-0472-7285.1, p. 24]
You asked some questions about your proposals for electric vehicles and plug-in hybrid electric
vehicles. These are very exciting technologies and I think you're right to think about ways of
encouraging them, particularly in the early years. Some kind of an early commercialization credit
probably makes sense. Whether it should start off at two in an earlier year like 2011 or 2012 may
be fine. Scaling it down, in our view, we would recommend that you phase it out by 2016, the
same year in which you're phasing out the flex fuel vehicle credit absent actual showing. I think
you do propose phasing it out by 2017, but that, of course, is a future rulemaking. So it seems to
me there would be some — after all, that's still, you know, eight model years away or seven
model years away, I guess, six model years away, but that's what we would, you know, urge you
to do. [These comments were submitted as testimony at the New York public hearing. See
docket number OAR-2009-0472-4621, p. 122.]
eTec
I am aware that the commenting period is over for the CAFE standards, but I was hoping to
submit my suggestions nonetheless.
I have attached an article that is to be published in the next issue (January/February) of the
International Journal of Electric and Hybrid Vehicles (IJEHV) that discusses hybrid vehicle
nomenclature and fuel economy procedures for plug-in hybrids. I would be happy to discuss my
thoughts with the relevant EPA personnel, and I can be reached at this email address. [OAR-
2009-0472-7670, p. 1]
[Comment referenced above, Docket Number OAR-2009-0472-7670.1, is a copyrighted
document.]
Fisker Automotive, Inc.
In alignment with the goals to reduce fuel consumption and emissions, Fisker Automotive
encourages correlating credits and deficits to a metric that reflects this directly—fuel savings.
The proposed regulation currently reads,
"The amount of credit earned is determined by multiplying the number of tenths of a mpg by
which a manufacturer exceeds a standard for a particular category of automobiles by the total
volume of automobiles of that category manufactured by the manufacturer for a given model
year.' [OAR-2009-0472-8732.1, p.2]
MPG is the inverse of consumption: as consumption approaches zero, MPG approaches infinity.
This opens a window for automakers to game the regulation. Conceivably, an automaker could
sell a PHEV with a large electric range to achieve hundreds of MPG and earn thousands of
credits. This would then allow the automaker to offset hundreds of vehicles that fail to meet
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baseline requirements. This counters the regulation goals. Figure 1 below illustrates the problem.
We compare credits earned to fuel savings for a base requirement of 30.2 mpg (average
passenger car requirement in 2011). [OAR-2009-0472-8732.1, p.2] [See Docket Number OAR-
2009-0472-8732.1, pp.2-4 for more detailed discussion on this issue]
Ford Motor Company
Advanced Technology Vehicle Credit
To promote the research, development and manufacture of advanced technology vehicles, Ford
supports the use of a volume multiplier of 2.0 for all electric vehicles (EVs), plug-in electric
vehicles (PHEVs), and fuel cell vehicles for 2012 - 2016 model years. Also, putting EVs into the
CO2 calculation at 0 grams/mile is appropriate to support the introduction of new technology in
the marketplace. The proposed phase-down or discounting of the volume multiplier for this
rulemaking is not appropriate. Once consumers have accepted the advanced technology and there
is adequate volume in the market, minimum 10% volume, Ford believes it would then be
appropriate to differentiate between EVs and PHEVs for advanced technology credits. Both
types of technologies are capable of relatively wide ranges of petroleum or CO2 displacement
over the life of the vehicle. The different operating characteristics, including climate sensitivity,
and projected miles travelled would also be factors for differentiating and applying appropriate
credits. [OAR-2009-0472-7082.1, p. 8]
Glasser, Mark
[These comments were submitted as testimony at the Los Angeles public hearing. See docket
number EPA-HQ-OAR-2009-0472-7283 p.204-205]
And my major concern with these credits, these carbon credits, that these are not allowed to so
dilute the real meaning of what you're doing here and what we're doing here because electric cars
do —just like Lucas picked up, they have a carbon imprint, and that needs to be adjusted to, you
know, automakers that are coming out with wonderful electric vehicles. But to have them say
that there's no imprint, I think, is really going to dilute the power of the bill and — or the
legislation that you're doing.
And to me, the most important thing is that we don't let those credits really become a way to
easily avoid the intent of what you are trying to do and what we all need to be done
Honda Motor Company
EPA proposes to set the upstream portion of EVs, PHEVs and FCEVs to zero grams/mile. EPA
requests comments on this approach. Honda believes that EPA should separate incentives and
credits from the measurement of emissions. Honda believes that without accounting for the
upstream emissions of all fuels, inaccurate comparisons between technologies will take place.
Relying upon EPA's regulation, policy makers - in the U.S. and around the world - may make
unfavorable technology comparisons and set misdirected policies as a result. [NHTSA-2009-
0059-0095.1, p.2]
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A compelling example exists. According to DOE's GREET model, the upstream emissions of a
Toyota Prius are 46 grams/mile, and the tailpipe emissions are 198 grams/mile, for a total of 244
grams/mile. By contrast, the GREET model estimates the average upstream emissions of a
comparably sized Battery Electric Vehicle (BEV) are 256 grams/mile. Without commenting on
the merits of creating incentives for electric vehicles, it is clear that zero grams/mile for the BEV
would lead one to believe that BEVs have a clearly superior greenhouse gas profile compared to
similarly sized hybrid gasoline vehicles. [NHTSA-2009-0059-0095.1, pp.2-3]
EPA's regulations need to be comprehensive and transparent. By zeroing out the upstream
emissions, EPA is conflating incentives and credits with emission accounting. In discussions
with EPA staff, the question of "double counting" arose. This argument points out that electric
power generation is under its own regulations, and including the upstream emissions in this
regulation would result in "double counting." Honda observes that upstream emissions are
necessarily correlated with the intensity-based emissions regulation of light duty automobiles. In
the case of petroleum refineries, significant increases in fuel economy on the part of automobile
manufacturers could result in a "windfall" for the refineries' if their tonnage caps were not
adjusted accordingly. These two arguments suggest that not only the upstream emissions of
electricity but the upstream emissions of all fuels ought to be included in EPA's regulation.
[NHTSA-2009-0059-0095.1, p.3]
EPA could take two different approaches to the upstream issues: 1) All greenhouse gas targets
could be increased to reflect the upstream emissions of gasoline, or 2) set all greenhouse gas
standards based on gasoline-fueled vehicles and then adjust all other fuels to use a credit for the
comparable upstream gasoline-fuel. Honda recommends the latter approach, simply because of
the wide communication of the 2016 goals set by EPA of 250 grams/mile. According to the
GREET model, referenced above, the upstream emissions of the gasoline fuel are equivalent to
23% of the gasoline vehicle's tailpipe emissions. [NHTSA-2009-0059-0095.1, p.3]
Advanced Technology Vehicles Credits
In Section III, EPA requests comment on their proposed "multiplier" for EVs, PHEVs and
FCEVs. Comment is requested on three aspects of this incentive, including: a) the level of the
multiplier, b) on how the multiplier might differentiate various technologies, and c) on the timing
and rate of phasing out the multiplier. [NHTSA-2009-0059-0095.1, p.4]
Honda supports introduction of a multiplier. As we project much more stringent standards in the
not-too-distant future, it is beneficial, yet extraordinarily expensive, for OEMs to bring more
advanced technology to market. The early introduction of technology has the salient benefit of
helping to mature the technology in small volumes before it is required in large volumes to meet
future regulations. The forecasted stringency by some policy makers (not the least of which
includes California's Air Resources Board, "CARB") for the next ten to twenty years is
staggering. Considering this, incentives that strictly follow the greenhouse gas benefits miss a
larger point. Advanced Technologies are usually costly and uncertain; encouraging all
technologies, at this early stage is helpful. [NHTSA-2009-0059-0095.1, p.4]
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EPA Response to Comments
Honda recommends that the multiplier differentiates between more and less advanced
technology. For example, a BEV with a 50 mile range is significantly less advanced than a 100
mile range BEV. Honda proposes a formula for establishing the relative multiplier for PHEV,
BEV and FCEVs:
((EAER / 40) x Quick Refueling Multiplier) + 1
EAER is the all electric or equivalent all electric range of the PHEV, BEV or FCEVs
Quick Refueling Multiplier has two values: 1 for vehicles with no quick fueling capability
(defined as being capable of replacing 95% of the vehicles range in < 15 minutes, the same
definition used by CARB in its ZEV Regulation) and 2 for vehicles capable of quick fueling.
Examples:
A 40 mile EAER (or AER) PHEV 40/40 x 1 + 1 = 2.0
A 100 mile AER BEV 100/40 x 1 + 1 = 3.5
A 300 mile Range FCEV 300/40 x 2 + 1 = 16.0 [NHTSA-2009-0059-0095.1, p.4]
These values are greater than those initially envisioned by EPA (between 1.2 and 2.0), however,
the greater values are essential if EPA is determined to truly incentivize these costly, advanced
technologies. Further, Honda does not believe the multiplier should phase out before 2016. The
transition to advanced technologies will take many years, and OEMs do not expect the costs
associated with these vehicles to be reduced dramatically by 2016. [NHTSA-2009-0059-0095.1,
p.5]
[Following comments are from LA Testimony, OAR-2009-0472-7283, pp.96-103]
First, the zero-grams-per-mile CO2 for electric vehicles. EPA proposes to set the CO2 value for
the electric portion of plug-in electric vehicles and battery electric vehicles to zero, and EPA
further proposes to set the CO2 value for fuel cell electric vehicles to zero as well.
Honda believes that this policy is misguided and creates significant incorrect perceptions about
the relative merits of various vehicle technologies. Honda has worked on alternative fuel vehicle
technologies and their social benefits for more than two decades, but the social benefits of any
technology must be understood and measured on a well-to-wheel basis.
It is clear that there are no special virtues to be associated with zero tailpipe greenhouse gas
emissions if the well-to-tank portion is very high.
Additionally, without a comprehensive well-to-wheel assessment of greenhouse gases, EPA and
others who rely upon EPA's assessments will improperly favor or signal preferred
technologies. If the agencies want to promote electric vehicles, it can do so through Super
Credits as we discuss below.
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Super Credits. We understand and support EPA's effort to encourage the introduction of plug-in
hybrid electric vehicles, battery electric vehicles, and fuel cell electric vehicles. However, these
technologies do not necessarily warrant the same credit multiplier solely because they qualify as
one of these technologies.
There's a great deal of difference between a 50-mile battery electric vehicle and a 100-
mile battery electric vehicle for example. And fuel cell electric vehicles represent significantly
more challenging technology sets.
In order to achieve our long-term social goals, it is important to recognize and reward
more advanced and sophisticated technology. We are ready to work with EPA on developing an
appropriate performance-based metric that will more accurately differentiate advanced
technologies.
Honeywell Transportation Systems
EPA historically has developed regulations that establish hard emissions targets while providing
the industry the flexibility to develop new technologies to meet its compliance obligations,
without technology forcing. However, in its Proposed Rule EPA deviates from its traditional
method of regulation and seeks to favor certain technologies. EPA proposes additional credit
opportunities for certain technologies such as electric vehicles ('EV'), plug-in electric vehicles
('PHEV'), and fuel cell vehicles, including a multiplier in the range of 1.0 to 2.0 applied per
vehicle sold. Honeywell believes that it is in the interest of better regulation and good
governance not to force technology. While it supports EPA's proposal to phase out the multiplier
after 2016, Honeywell also suggests that EPA phase out the proposed EV credits after 2016. As
proposed, this credit program is inconsistent with EPA's historical practice of implementing
emission control requirements in a manner that allows for technological flexibility. [OAR-2009-
0472-7165.l,p.6]
Honeywell has two recommendations to ensure that the EV credit allocation adopted reflects the
real world operating conditions of PHEV s and results in actual reductions in CO2 emissions.
First, in order to meet EPA's GHG emission reduction goals, it is critical to account for the
emissions involved with generating the electricity used to charge the EVs. Applying upstream
emissions to EV or to the plug-in portion of PHEV will ensure actual GHG emissions targets are
met, as proposed by the California Air Resource Board ('CARB'). This will ensure that carbon
dioxide emission reductions are achieved, rather than merely being transferred from one source
to another excluded source. [OAR-2009-0472-7165.1, pp.6-7]
Next, Honeywell suggests that EPA establish a mechanism based on best available science to
verify that the plug-in capability of PHEV s is in fact utilized for those vehicles in order to earn
commensurate credits. Verification will minimize the over-allocation and exploitation of credits
by accurately determining the emissions associated with actual plug-in use. Preventing the over-
allocation of credits is critical for EPA to meet its GHG reduction goals, especially if the credits
are to be extended beyond 2016. [OAR-2009-0472-7165.1, p.7]
Hyundai Motor Company
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EPA proposes a credit multiplier of 2.0 for advanced technologies, like plug-in hybrid electric
vehicles (PHEV), electric vehicles (EV) and fuel cell vehicles (FCV). Hyundai supports the use
of the multiplier but believes that the various advanced technology types (i.e. EV, PHEV, and
FCV) should not receive an equally-valued credit multiplier. While we do not believe that the
application of the credit multiplier should be overly complex, like California's method for
applying ZEV credits by technology type with additional criteria such as battery power, range,
etc., we do support a reasonable, unique credit multiplier for each specific technology. [OAR-
2009-0472-7231.1, p.4]
International Council on Clean Transportation
EPA proposed to assign zero carbon emissions for electricity used by vehicles. The agency
acknowledges that in reality CO2 emissions would be higher due to emissions from electric
utility generation and that this is not an appropriate long-term approach. However, EPA sees a
value in using zero carbon emissions as an interim solution in order to promote electric vehicles
and asks for comments on this proposal.
ICCT recognizes that there is sound justification for providing a temporary incentive for electric
vehicles in order to help them overcome market and infrastructure barriers. However, we are
concerned that applying a zero carbon value for electric vehicles creates a loophole enabling
OEMs to comply with the standards primarily by producing and offering a relatively small
number of electric vehicles. This would allow manufacturers to either scale back the use of
efficiency technology on the majority of their vehicles or to use the technology to enhance
vehicle performance, putting manufacturers that did not offer electric vehicles at a competitive
disadvantage and continuing the horsepower wars.
ICCT was founded around the Bellagio Principles, which were set forth by principal regulators
around the world in 2001. This was a consensus document on preferred government policies for
shaping the future of motor vehicle technology and transportation fuels worldwide. The second
Bellagio principle states: "Base policies solely on performance compared to societal objectives,
and not give special consideration to specific fuels, technologies, or vehicle types." In keeping
with this principle, we recommend that the agencies include a realistic assessment of incremental
upstream emissions from passenger vehicles.
The multiplier used for electric vehicles and plug-in hybrids for 2012 through 2015 already
provides an incentive for electricity use. Funding and financial incentives offered by federal,
state, and other governments provide additional incentives for electric vehicles. Thus, there is no
need for an additional incentive, especially one that could distort the efficiency of the standards.
In the long run, it is important to address the issue of enormous regional differences in carbon
from electricity generating power plants. For example, based on current electricity generation,
electric cars would be a great idea for reducing CO2 emissions in France because of its heavy
reliance on nuclear energy, but would not be so good in Germany because of the high percentage
of coal use. Similar regional differences in carbon intensity exist from state to state in the US. It
is important for EPA to address these differences when developing a sustainable policy on
electricity use in vehicles. [OAR-2009-0472-7156.1, pp.12-14]
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[ICCT also submitted these comments as testimony at the Detroit public hearing, See docket
number EPA-HQ-OAR-2009-0472-6185, pp. 62-63.]
Investor Network on Climate Risk
I would like to raise one concern that could potentially undermine the effectiveness of the
National Program and that other [These comments were submitted as testimony at the New York
public hearing. See docket number EPA-HQ-OAR-2009-0472-4621, p. 152.] panelists have
addressed today as well. Specifically, the proposed advanced technology credits for electric
vehicles and plug-in hybrid electric vehicles. Unless such credits account for the greenhouse gas
emissions resulting from electricity generation, greenhouse gas emissions from such vehicles are
likely to be underestimated. [These comments were submitted as testimony at the New York
public hearing. See docket number EPA-HQ-OAR-2009-0472-4621, p. 153.]
Karplus, Valerie J.
I write to comment on the treatment of plug-in hybrid electric vehicles (PHEVs) and electric
vehicles (EVs) in the proposed per mile CO2 emissions rule for light-duty vehicles. As currently
written, the regulation has the potential to be both costly and ineffective, because it incorrectly
omits electricity-related emissions from PHEVs and EVs, and weights their contribution more
heavily towards meeting the regulatory target. These distortions could potentially lead to a
worsening of total CO2 emissions relative to the projected baseline over the 2012 to 2016
compliance period (see attached file for detailed supporting information and calculations). The
EPA should revise the rule to include the CO2 emissions from generating electric power used for
vehicle propulsion. Even with the most aggressive targets for investment in renewable electricity
sources, the emissions intensity of grid-supplied electricity will not fall substantially over the
next 10 to 15 years, the period used to assess impact of the new regulation. A reasonable
measure could be based on average (or the average marginal) national grid CO2 emissions per
kilowatt-hour, adjusted for modest expected grid efficiency improvements over a vehicle's
lifetime. Moreover, the time scales involved in any transition to low carbon vehicle and fuel
technologies at scale may call for a longer time horizon for compliance (for example, 2020 or
beyond), and perhaps also a more stringent target. In doing so, the EPA would allow time for
carefully considered investment in development and adoption of technologies that would most
cost-effectively lead to deep reductions in light-duty vehicle emissions. [OAR-2009-0472-7280,
p. 1] [See OAR-2009-0472-7280.1 for a detailed discussion of this issue.]
Massachusetts Department of Environmental Protection
Massachusetts agrees that all-electric vehicles and plug-in hybrids are an important part of the
strategy to reduce greenhouse gas emissions from the motor vehicle sector and that it is
appropriate to provide incentives for this purpose. However, we have two primary concerns
about EPA's proposal to give EVs a greenhouse gas (GHG) rating of zero emissions and to
provide a credit multiplier.
(a) Lifecycle greenhouse gas analyses conducted by EPA and by the California Air Resources
Board (CARB) have found that vehicles powered by electricity have substantially lower GHG
emissions per mile traveled than gasoline fueled vehicles. However, these emissions are not zero,
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and EPA should not count EVs as having zero emissions. Instead, EPA should use the best
available science to estimate the upstream emissions from generation of electricity, and combine
that with the greater efficiency of electric vehicles to obtain an appropriate value for those
vehicles in grams of carbon per mile driven.
(b) Utilizing a multiplier to increase the weighting of EVs within the overall fleetwide MPG
calculation for an automobile manufacturer should be done with great caution, and would
preferably be based on an analysis of the incentives needed to achieve a level of acceptance
where EVs can be sold in the market without incentives. The multiplier should be at the lower
end of the range that EPA and NHTSA are considering, such as 1.2, rather than at the high end of
1.8. Allowing the use of a higher multiplier could result in a manufacturer with significant sales
of EVs substantially increasing its fleetwide average GHG emissions and decreasing its miles per
gallon (MPG). With a multiplier of 1.8, the average could be allowed to drop by perhaps 10
miles per gallon or more and increase C02 emissions greatly, depending on the number of EVs
and the other characteristics of the fleet. This would be a disastrous result given the need to
greatly reduce GHG emissions to achieve our shared climate goals. In addition, as EPA has
discussed, any multiplier utilized should be designed to phase out over a few years, by around
2016, so that manufacturers do not develop a large stake in its continuance. [OAR-2009-0472-
7195.1,pp.l-2]
Mercedes-Benz (Daimler AG)
DAG strongly supports the provision of credits in the EPA program for advanced powertrains.
These credits supply needed public policy support for the commitment by DAG and others to
produce more fuel efficient and lower emitting vehicles. DAG not only will be introducing into
the United States market zero emission vehicles, such as the Mercedes Benz F-cell and a fully
battery operated smart car, but also will continue to increase its offerings of other forward
technologies, such as clean diesel vehicles and plug in hybrids. Public policy should favor not
only fuel cells and batteries, but also the bridging technologies that can significantly reduce CO2
emissions in the short term while the marketplace for zero emission mobility develops.
EPA proposes advanced powertrain credits at a multiplier between 1.2 and 2.0 for full electric,
plug in hybrid and fuel cell vehicles. EPA seeks comment on whether the multiplier should be
the same for all advanced technologies or should be scaled and whether it should be phased
down over time. DAG suggests that a multiplier be applicable to all advanced powertrain
technologies in accordance with the amount of CO2 reductions they provide as compared to
traditional gasoline internal combustion engines.
Specifically, DAG suggests a credit system as follows: (i) BEV and FCEV zero emission
vehicles would receive a multiplier of 2.0; (ii) plug-in hybrids, range extenders and hydrogen-
ICE vehicles would receive a multiplier of 1.8; (iii) electric hybrids with either diesel or gasoline
would receive a multiplier of 1.5; and natural gas, clean diesels and vehicles with stratified direct
injection gasoline would receive a multiplier of 1.2. This multiplier system both rewards
manufacturers for investing in zero emission and far-forward technologies and also encourages
manufacturers to increase the transformation of traditional products from pure gasoline-based
powertrains to hybrids and diesels.
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Pure zero emission vehicles should receive the maximum benefit and manufacturers should be
encouraged to bring to market the most advanced technologies. Battery and hydrogen vehicles
that are not zero emissions should receive the next most significant multiplier. The U.S.
government currently encourages the marketing of clean diesels and hybrids through federal tax
credits that expire in MY 2011. These vehicles continue to offer substantial benefits over
traditional gasoline vehicles. While diesels produce more CO2 per gallon than gasoline engines,
they produce less CO2 per mile than gasoline engines. The additional fuel economy of a diesel
engine overcompensates, from a CO2 emissions standpoint, for the higher per gallon emission of
CO2. Mercedes Benz diesel engines have up to an approximate 40% fuel economy advantage
and an emissions benefit of up to 22% compared to their gasoline counterparts. In addition, EPA
estimates an up to 26% CO2 reduction for light-duty diesels equipped with SCR. EPA should not
allow support in the near term for these technologies to undercut their introduction. Rather, EPA
should continue to encourage these technologies upon the expiration of the federal tax credits by
providing them a multiplier of 1.5. A final category for natural gas, lean burn diesel and stratified
direct injection gasoline vehicles would encourage their introduction, as the fuels for these
vehicles become more available in the United States.
Also significant is that the multipliers be available at the same levels throughout the model years
covered by this rulemaking. As EPA has stated, these model years constitute a transitional period
into a CO2 regulatory regime. The deployment of both advancing and advanced powertrains is
critical throughout this time frame. Scaling down credits previously available is more applicable
to credit programs that are phasing out reliance on a particular technology, such as flex fuel
vehicles, rather than those that are intended to encourage reliance and commercialization of the
technologies under consideration. [OAR-2009-0472-7193.2, p.17]
Similarly, we hope that every vehicle we introduce will be an instant success, but experience
shows that there are always inevitable growing pains. Our relative experience with clean diesels
in the U.S. demonstrate [These comments were submitted as testimony at the New York public
hearing. See docket number OAR-2009-0472-4621, pp. 50.] that customers need time and added
incentives to widely adopt new technology. Our company, like several others, plans to soon
introduce a limited quantity of battery electric vehicles and hydrogen fuel cell vehicles into the
U.S. market. The advanced vehicle technology credits are critical incentive for early introduction
of these vehicles by all manufacturers during this critical final proving stage. [These comments
were submitted as testimony at the New York public hearing. See docket number OAR-2009-
0472-4621, p. 51]
Mitsubishi Motors R & D of America (MKDA)
Mitsubishi Motors supports the advanced technology vehicle multiplier and zero gram/mile CO2
emission level for battery electric vehicles (BEVs). These important regulatory mechanisms
provide significant temporary support as Automakers begin to commercialize advanced
technology vehicles. [OAR-2009-0472-7125.1, p.2]
Mitsubishi Motors supports the availability of advanced technology vehicle (ATV) credits. The
proposed 2.0 multiplier and zero gram/mile CO2 emission level for battery electric vehicles
(BEVs) help justify the capital investment needed for this technology. These regulatory
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mechanisms will also promote ATV introduction into the market. These measures incentivize the
effort needed to build infrastructure for these vehicles - the infrastructure will create the
sustainable market. [OAR-2009-0472-7125.1, p.2]
Considering the challenges facing ATV introduction, it is apparent that the proposed 2.0
multiplier is needed beyond MY 2012. It would be more beneficial to maintain a 2.0 credit
multiplier until ATV sales reach 10% of the annual fleet sales volume. The true environmental
benefits of ATVs are unlikely to be measurable before this penetration level - this is an
investment in only near term technology that can provide significant long term GHG reductions.
If this approach is not palatable, another approach to encourage the production of ATVs would
be to allow each manufacturer to have their own 2.0 multiplier and associated phase-in period as
each manufacturer introduces ATVs. It maintains credits for OEMs, who are only able to
develop ATVs later and will need ATVs to be competitive in the future. [OAR-2009-0472-
7125.1, p.2]
By extending the 2.0 multiplier, it will make ATV costs more reasonable and further promote
these technologies. While building ATVs is the responsibility of the automotive industry, it takes
more than just ATV production for true emissions reductions from ATVs to be realized. It is
necessary to have fueling and service infrastructure to support and sustain these technologies. No
one would purchase ATVs if they can neither fuel them nor have them repaired. Developing and
establishing this infrastructure for the nation will take a lot of time, far more than a single year or
even the time frame outlined within this regulation. [OAR-2009-0472-7125.1, p.2]
Once ATVs are sustainably commercialized, we believe it is appropriate to differentiate highly
developed, efficient ATVs with an efficiency factor. This factor should be based on
demonstrated vehicle performance as measured on the FTP and highway test cycles. [OAR-
2009-0472-7125.1, p.3]
Some parties desire to assign electric power generation emissions to the vehicle - this is
unprecedented and introduces an artificial burden on this emerging technology. Historically, fuel
production ("well-to-tank") emissions were never assigned to the vehicle utilizing the fuel.
Vehicle emissions are currently measured and regulated by the amount of compounds directly
emitted by the vehicle. Obviously, BEVs do not emit CO2, therefore the proposed zero g/mile
emission level is appropriate. [OAR-2009-0472-7125.1, p.3]
Additionally, Congress has provided consumers with tax credits to encourage their purchase of
ATVs. The reason behind these tax credits are to offset the additional cost of purchasing an ATV
and are justified by the environmental benefit each ATV provides. The same reasoning holds
true for Automakers, since each ATV is very expensive and Automakers need the additional
credits to help offset the expense, especially given the ultimate size of the ATV market is
uncertain. [OAR-2009-0472-7125.1, p.3]
[Following comments are from LA Testimony, OAR-2009-0472-7283, pp.85-87]
Another opportunity for technological and environmental progress is the advanced
technology vehicle credits, both the zero grams per mile emissions rate and the multiplier. These
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measures will make the near-term advanced technology vehicles more cost-effective and
promote these technologies in the U.S. market.
Also, please remember advanced technology vehicles will only be successful with
the construction of their fueling infrastructure.
Motor and Equipment Manufacturers Association
Lastly, regarding EPA's request for comment on advanced technology vehicle credits for electric
vehicles, plug-in hybrids, and fuel cells, MEMA supports the additional credits proposed. Also,
we support the assignment of zero gm/mile CO2 emissions for electric vehicles and plug-in
hybrid vehicles when operating in the all electric mode, and fuel cell vehicles for early credits
and for the 2012-2016 timeframe. [OAR-2009-0472-7121.1, p.6]
[See Docket [OAR-2009-0472-7121.1, pp.5-6 for detailed comments on Hybrid and
Electrification/Accessory Technologies]
National Association of Clean Air Agencies (NACAA)
NACAA would also like to take this opportunity to offer comments on several other issues
related to this proposal. First, NACAA supports the concept of providing credits for the
production of advanced vehicles to incentivize full commercialization of electric drive
technologies, such as battery electric and fuel cell vehicles. We urge, however, that EPA assign a
national average upstream emissions factor to each advanced technology (taking into account the
lifecycle emissions of the vehicle system), rather than assuming zero grams per mile CO2 for all
electric-powered vehicles, which could significantly and inappropriately erode the actual GHG
emissions reductions to be achieved by the national program. We note that there are various
studies available - including ones conducted by the California Air Resources Board, MIT,
Argonne/GREET, the University of California-Davis and the U.S. Department of Energy - that
can be used to estimate national average upstream CO2 emissions for emerging electric drive and
fuel cell vehicles. [OAR-2009-0472-7071.1, p.3]
National Automobile Dealers Association (NADA)
ATV credits are a cornerstone to incentivizing the introduction of cutting edge and often very
expensive technologies. Such credits should be technology-neutral and should be set at a
multiplier level generous enough and be available long enough to serve as a successful incentive.
In all likelihood, this may mean making such credits available beyond MY 2016. This is
particularly critical given that ATVs do not involve a simple "if you build it they will come"
proposition. Their successful introduction will require huge investments in refueling and service
infrastructure. For dealerships, this will mean new service and repair tools, parts inventories,
technician training, service information, and possibly new on-site refueling infrastructure.
Extensive new customer point-of-sale education and support likely will require a focus on at
home or business refueling options. On this latter point, the National Program should include
credits for manufacturers who market through their dealers the advanced technology home or
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business refueling systems that may be needed for some of these vehicles. [OAR-2009-0472-
7182.1, p.8]
The proposal doesn't and shouldn't take into account upstream GHG emissions for electric
propulsion, just as it doesn't and shouldn't do so for other propulsion systems/fuels. If and when
Congress decides to regulate upstream GHG emissions, it will do so. [OAR-2009-0472-7182.1,
p.8]
Natural Resources Defense Council
Treating Advanced Technology Vehicles as "Zero" Emissions Undermines Pollution and
Technology Benefits of Program
NRDC believes the emission scoring for all vehicles should be based on their true full fuel cycle
emission impacts. EPA has proposed to assign electric-drive vehicles, such as plug-in hybrid
electric vehicles, battery electric vehicles and hydrogen fuel cell vehicles, an emissions rate of 0
gCO2/mi. However, in reality these vehicles have non-zero emissions rates due to the upstream
production and transmission of their fuel source, electricity or hydrogen. As discussed in more
detail below, EPA should specify an upstream emissions factor for these fuels to be used for
calculating their GHG emissions compliance value. The upstream emissions factor should be
multiplied by a vehicle's efficiency to determine its emissions per mile.
EPA's proposal that electric-drive vehicles be treated as "zero emissions" and given credit
multipliers of up to two-fold will undermine the emission benefits of the program and will have
the unintended consequence of slowing the deployment of conventional cleaner vehicle emission
reduction technologies into the fleet.
To illustrate our concerns, we estimate the impact of the EPA proposal on Nissan's compliance
strategy. Nissan has indicated that they could produce at least 100,000 Leaf electric cars annually
by MY 2016, which is about 10 percent of their expected overall car sales. If the EVs are
assigned a 0 g/mi emission rate and a 2.0 multiplier, we estimate that the Nissan's gasoline car
fleet would average about 8 mpg lower fuel economy than if Nissan did not produce any EVs,
about 31.5 vs. 39.5 mpg. That is, Nissan would have to do very little, if anything to improve the
performance of their gasoline-powered car fleet from today's levels.
An electric-drive vehicle's emissions compliance value (in gCO2/mile) should be calculated as
the product of that vehicle's individual efficiency (in kWh/mile) measured during compliance
testing and a national grid emissions factor (in gCO2e/kWh), which would be specified by EPA
for each model year. For plug-in hybrid electric vehicles, which use a combination of electricity
and gasoline fuel, the emission rate should be a weighted average of the electric miles emissions
rate and gasoline miles emissions rate using an electric-drive utility factor.
The grid-electricity greenhouse gas emissions factor (in gCO2e/kWh) should be based on the
marginal emissions of electricity generation and delivery to support vehicle charging.
The emissions factor should include both CO2 and non-CO2 GHGs from all steps in the
electricity production and delivery chain from primary fuel extraction to electricity transmission
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and vehicle charging for end users. To the extent practical, EPA should incorporate marginal
emissions into the MY 2012-2016 rule, using the best available public data on electricity
emissions. Future rulemakings should leverage a well developed, transparent analytical
framework for marginal emissions.
Using the framework, the EPA should provide near- and medium-term estimates of grid emission
factors in a way that both enables stakeholders to estimate the emissions impacts of fleets of
plug-in vehicles and provides automakers with a clear indication of how electric-drive vehicles
in future model years can contribute to standards compliance. If policies are adopted that will
change electricity emissions factors, then EPA should update the emissions factors after public
notice and review.
Once the annual electricity grid emission factors on a national or regional basis are determined,
EPA should calculate a grid emissions factor (again in gCO2e/kWh) that can be applied to
specific vehicle model years. A vehicle's emissions scoring will be the product of the grid
emissions factor assigned to that vehicle model year and the vehicle efficiency. The model year
values would be the average of the annual electricity grid emission factors (calculated above)
over the years that comprise the bulk of the operational years for the model years in question.
The averaging to calculate the model year grid factor should include weighting toward the in the
earlier years of a model year's operation due to typical scrappage and VMT degradation that will
reduce electricity use by that model year over time.
NRDC recommends setting the model year grid factor in five-model-year p. The five model-
year set value would then be the compliance grid emission factor for all the vehicles within those
five model years. The specification of a grid emissions factor for a set of model years is preferred
over an individual factor for each model year because it will discourage manufacturers from
delaying the introduction of an advanced vehicle by a year or two to take advantage of a lower
grid emissions factor under a situation where the grid is cleaning up rapidly.
Below is an illustrative example of how the emission scoring would be calculated for a vehicle
once the grid emissions factor for the model year has been determined. The calculation results in
a scoring of 147 gCO2/mi for an electric vehicle such as the Nissan Leaf. While not zero, the
vehicle's emissions rate is 67 grams lower than the MY 2016 value for a vehicle of similar
footprint, which could continue to provide a significant incentive for automakers to build the
vehicle.
Example of Electric Drive Vehicle Emissions Scoring (Note: all values are for illustrative
purposes only)
The equation that describes the overall calculation is:
Emission Rate (gCO2/mi) = Model Year Grid Emissions Factor (gCO2e/kWh) *
Adjusted Vehicle Efficiency (kWh/mi) - Upstream Gasoline Emissions Adjustment
Three major steps are necessary to determine the values for the equation:
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1. Model Year Grid Emissions Factor is set for all vehicles in a five-model-year block.
Calculating the grid emissions factor for the model years involves a series of analyses as
described previously in this section. For simplicity, we assume a value for the set of model-years
based on the marginal electricity generation for charging those vehicles that is 50 percent from
coal plants and 50 percent from natural gas plants. Under this assumption, the Model Year Grid
Emissions Factor is 790 gCO2e/kWh.
2. Adjusted Vehicle Efficiency is determined by first stating with the efficiency rating over the
same 2-cycle Federal Test Procedure (FTP) used to test conventional vehicles. For our
illustrative calculation, we use 0.224 kWh/mi to approximate the Nissan Leaf expected
performance. The FTP value is then corrected upward to account for electricity losses that occur
from converting the AC wall outlet electricity to DC for charging the vehicle battery. We assume
88 percent conversion efficiency to get a vehicle and charging efficiency of 0.254 kWh/mi.
Multiplying by the grid emissions factor of Step 1 results in 201 gCO2/mi.
3. To enable a fair comparison to gasoline vehicles, a final adjustment is necessary to remove the
equivalent of the upstream gasoline emissions that are not included in the compliance calculation
for the National Program standards. Upstream emissions are estimated by EPA to be 19,102
gCO2e/Mbtu of gasoline. Using the energy content of gasoline and the fuel economy of a
gasoline vehicle with a similar footprint to the Leaf, about 41.4 in MY 2016, we calculate the
upstream adjustment to be 54 gCO2e/mi. The final vehicle efficiency value is the difference
from Step 2 above and 54 gCO2e/mi, or 147 gCO2/mi.
Example EV = 790 gCO2e/kWh * 0.254 kWh/mi - 54 gCO2e/mi = 147 gCO2/mi
For comparison, a conventional MY 2016 gasoline vehicle of the same footprint would have a
compliance standard of 214 gCO2/mi, 46 percent higher than the example EV.
For hydrogen fuel cell and hydrogen internal combustion engine vehicles, EPA should supply a
fuel production emissions value, in gCO2e/kgH2, following a methodology analogous to that of
electricity. To determine the vehicle compliance emissions rate (in gCO2/mi), the hydrogen
production emissions factor would be multiplied by the vehicle propulsion efficiency measured
in kgH2/mi.
Advanced Vehicle Technology Multiplier Should Be No Higher than 1.2 to Prevent Slowing
Adoption of GHG Reduction Technologies in Conventional Vehicles
To avoid an on-going unintended consequence of slowing conventional technology
advancements in this rule and future rules, NRDC recommends multiplier values for advanced
technology vehicles of 1.2. The agency should gradually phase-out the multiplier prior to MY
2017. Phasing-out the multiplier should not pose a challenge for automakers since as EPA's
technical assessment demonstrates, compliance to the fleet average standards can be achieved
using conventional technologies.
In the Notice of Proposed Rulemaking (NPRM), EPA expresses a desire to encourage the
introduction of electric-drive vehicles through the use of multiplier credits. Multiplier credits,
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however, should not undermine needed advancements in conventional vehicles that serve the
vast majority of the market. If set too large, the multiplier could actually result in fewer GHG
reductions than are projected from the National Program met solely by conventional vehicle
technology because the credits earned by a small number of advanced technology vehicles could
meet a large portion of a manufacturer's GHG reduction obligation and void the need for
emissions reduction technology across a manufacturer's broader fleet. [OAR-2009-0472-7141.1,
p. 13-18; footnotes deleted]
[[These comments were submitted as testimony at the Detroit public hearing. See docket number
EPA-HQ-OAR-2009-0472-6185, p. 23.]]
NRDC believes that the emissions scoring for all vehicles should be based on their true full fuel
cycle emissions impact. Electric vehicles such as plug-in hybrid electric vehicles, battery
electric vehicles, and hydrogen fuel cell vehicles have in reality non-zero emissions rate due to
the upstream production and transmission of their fuel source electricity or hydrogen.
For electric, we would recommend that the emissions scoring should be based on the vehicle's
specific efficiency test results in kilowatt hours per mile multiplied by a national grid emissions
factor in grams of CO2 per kilowatt.
For plug-in hybrid electric vehicles which use a combination of electricity and gasoline fuel, the
emissions rate should be a weighted average of the electric miles emissions rate and the gasoline
miles emissions rate using an electric drive utility factor.
A similar approach should be applied to hydrogen fuel cell vehicles and hydrogen internal
combustion engine vehicles with a grams of CO2 per kilogram hydrogen factor applied to the
propulsion efficiency.
New York State Department of Environmental Conservation
Electric Vehicles
EPA proposes to give credit to electric vehicles, plug-in hybrids, and fuel cell vehicles through
several mechanisms. First, through 2016, these vehicles would be counted as two vehicles (but
their emissions would be only counted once). Second, EPA proposes to assume that electric
operation emissions are 0 grams/mile. [OAR-2009-0472-7454, p.3]
We recognize the desire and need to create incentives to support deployment of advanced
technology vehicles, and accept that crediting mechanisms such as those proposed are one means
to do so. We are concerned, however, that if left unconstrained, this mechanism could permit less
development of low-emitting vehicles in other portions of the fleet as electric vehicles become
more widespread. It is therefore important that EPA revisit the crediting mechanism as advanced
vehicle technologies mature. [OAR-2009-0472-7454, p.3]
EPA's use of the multiplier and the decision to assume that electric vehicles have zero GHG
emissions are policy decisions made by EPA in order to facilitate the development of electric
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vehicles. Given the current make-up of the nation's electric grid, the use of electric vehicles will
result in upstream emissions from power plants that the federal government should address
through other means, such as a national cap-and-trade program for carbon emissions. In the long
term, the federal government should seek to implement policies that reduce the power sector's
reliance on fossil fuels and enable the full emission reduction potential of electric vehicles to be
realized. As this program evolves, EPA should strive to utilize the best science and data
available, including calculations of upstream emissions from production of electricity and
hydrogen (or other advanced fuels) and realistic energy storage and utilization rates. [OAR-
2009-0472-7454, p.3]
New York University School of Law, Institute for Policy Integrity (IPI)
Electric Vehicles
EPA proposes providing incentives for automobile manufacturers to produce more electric
vehicles. The structure of this incentive is to assign those vehicles zero carbon emissions and
also to multiply their weight (counting them as 1.2 to 2.0 cars) during fleet averaging. EPA
should reconsider this approach. First, EPA itself recognizes that these electric vehicles do not
have a zero carbon emissions value: electric vehicles run on energy from an electric grid, and
producing this electricity emits carbon. EPA's proposal does not account for these emissions. In
contrast, California's standards assign electric vehicles a carbon emissions value of 130 g/mi—
the average amount of GHGs emitted by the California grid to charge the battery and to construct
the car. EPA should pursue a similar policy—either by assigning all electric vehicles the average
amount of GHGs emitted by use of electricity across the country's grid, or by requiring
manufacturers to report the specific average amount of GHGs emitted for each electric vehicle
model. [OAR-2009-0472-7232.3, p. 17]
Second, by counting each electric vehicle as up to two vehicles when averaging, EPA's proposal
actually increases the amount of GHG emissions emitted from motor vehicles. For example,
suppose a manufacturer's 2016 fleet is comprised of 100 electric cars that emit 130 g/mi of
carbon and 200 standard cars that emit 300g/mi of carbon (more than the 2016 carbon grams per
mile standard). After accounting for electric cars as zero and doubling them, the manufacturer's
average would be 150 g/mi, well under EPA's standard of 205 g/mi of carbon. However, that
fleet is actually emitting closer to 243 g/mi of carbon—which is over EPA's standards and
allows for much more GHG emission. Under the credit and trading system, however, the
manufacturer will be granted credits. It can then sell these credits to another manufacturer with a
fleet with GHG emissions above the limit—therefore allowing for increased GHG emissions not
only from the first manufacturer's fleet but also from the second manufacture's fleet. [OAR-
2009-0472-7232.3, pp. 17-18]
Moreover, through this system, as more manufacturers produce electric cars, the total amount of
GHG emissions from motor vehicles will increase. The more electric cars produced (and counted
as zero emissions and doubled in weight during averaging), the more GHG emissions will be
allowed from other cars, fleets, and manufacturers. In essence, EPA's program allows for a triple
undercounting of GHG emissions—once by not accounting for emissions from electric cars,
twice by counting electric cars more than once when averaging, and finally by allowing the
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credits to be traded to other manufacturers—and allowing for increases in GHG emissions at
every step. [OAR-2009-0472-7232.3, p. 18]
Finally, this proposal inexplicably subsidizes one form of GHG reducing technology (electric
cars) over others. As explained, this form of subsidization actually allows for more GHGs to be
emitted as more electric cars are produced. Any form of subsidization of new technology should
be neutral with respect to GHG emissions—and it should definitely not contribute to their
increase. Although it may be a valid policy goal to incentivize new technology, EPA should
achieve this goal by providing grants and subsidies to manufacturers and scientists exploring all
promising GHG reducing technologies. By giving inflated regulatory incentives to a certain type
of technology rather than allowing manufacturers to find the most efficient and effective
solution, EPA will disincentivize other forms of technology that may be more cost-effective at
reducing GHG emissions. Moreover, by attempting to subsidize technology through use of the
averaging and trading system, EPA undervalues the real GHG emissions of manufacturers' fleets
and distorts interferes with the GHG reduction benefits of the rule. [OAR-2009-0472-7232.3, p.
18]
Nissan North America
Nissan strongly endorses EPA's proposal to measure the carbon emissions value of the electric
portion of vehicles at zero grams per mile for the model years covered by this rulemaking.
Not only is EPA's proposal the best policy decision to promote EV deployment, it is also legally
required. EPA and NHTSA have chosen to utilize the current federal test procedure for
measuring fuel economy in vehicles. Significantly, those procedures were designed to measure
the tailpipe emissions from internal combustion engines and provide for electric vehicles to be
assigned a measure according to a petroleum equivalency factor. The testing and calculation
procedures to be used in the CAFE and GHG programs do not account for upstream emissions in
the production, refining, or delivery of petroleum to vehicles operating on petroleum.
There is no rational basis for EPA to discriminate in the regulatory program based on the form of
fuel used, especially when doing so would detract from the very public policy EPA has endorsed.
Were EPA to account for upstream CO2 emissions for electric vehicles and not do so for
vehicles using other forms of propulsion, EPA would be discriminating between regulated
products and would also be discriminating between regulated parties by virtue of the
technologies and strategies they have chosen to comply with the regulatory requirements.
EPA has properly, from both a policy and a legal perspective, proposed to treat all vehicles
equally by accounting for CO2 tailpipe emissions alone. [OAR-2009-0472-6798.1, pp. 3-4]
Finally, as noted above, Nissan endorses the policy of promoting advanced vehicles based on
battery and fuel cell technologies. Consistent with focusing on tailpipe emissions and
encouraging the most advanced technologies to eliminate tailpipe CO2 emissions, Nissan
suggests that the advanced technology vehicle credits be structured to recognize zero emission
vehicles from those that have some tailpipe emissions. Accordingly, Nissan suggests that full
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battery electric and fuel cell vehicles be provided a maximum multiplier with plug-in hybrid
vehicles provided a significant but lower multiplier. [OAR-2009-0472-6798.1, p.6]
Northeast States for Coordinated Air Use Management
EPA has proposed to allow manufacturers to receive additional credits for the placement of
advanced technology vehicles, including pure electric vehicles, fuel cell vehicles, and plug-in
hybrid electric vehicles. NESCAUM is concerned that the preferential crediting proposed by
EPA may be too generous by assuming a zero (0) grams per mile CO2 equivalent for vehicles
powered by electricity. While we strongly support incentives for the introduction of advanced
technology vehicles, we are concerned that the magnitude of credits being offered for these
vehicles may unnecessarily weaken the overall effectiveness of the proposed standards. We
encourage EPA to re-evaluate its advanced technology vehicle credits to ensure an appropriate
level of credit is provided by considering the whole vehicle, e.g., vehicle technology and fuel
system. A number of studies are available to assist the agency in developing assumptions for the
CO2 resulting from electricity generation as are models (such as GREET) to estimate upstream
emissions.
With regard to the multiplier EPA has proposed for advanced technology vehicles, NESCAUM
urges the agencies to establish a multiplier at the lower end of the range proposed in this
rulemaking. A multiplier of 2.0 could result in erosion of the GHG standards and fleet average
GHG emissions significantly greater than 250 grams per mile. A multiplier on the low end of
what EPA has proposed and ramping down to 1 by 2016 could provide incentives for
manufacturers to place electric vehicles but would pose less of a risk of eroding the overall
standards than will the higher multiplier. [OAR-2009-0472-7235.1, p.5]
Physicians for Social Responsibility, Los Angeles
[Following comments are from LA Testimony, OAR-2009-0472-7283, pp.79-85]
Additionally, EPA should reconsider its credit multiplier of two proposed for these vehicles as
proposed. A manufacturer could accrue significant credits with electric vehicles but then do little
to improve the rest of its fleet. This is not adequate to protect public health.
Public Citizen and Safe Climate Campaign
EPA's proposed credits for advanced technology vehicles such as plug-in hybrid electric vehicles
(PHEVs) and battery electric vehicles (EVs) must reflect real environmental benefits, must not
be overly generous, and should be worth no more than the real world greenhouse gas reductions.
EPA proposes to give credits for these vehicles by applying a multiplier which could range
between 1.2 and 2, while valuing the EVs as having 0 gCO2/mi, and assigning PHEVs 0
gCO2/mi, for the "electric portion" of operation. Part of EPA's motivation in offering this credit
is to encourage manufacturers to produce these vehicles. But efforts to encourage production
should not undermine the fundamental goal of reducing greenhouse gas emissions. There are
other, better incentives for automakers to build these vehicles, and many of the major automakers
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have already announced plans to offer PHEVs and EVs. Some analysts project that more models
will be offered that plug-in than hybrid electric vehicles in 2011. [OAR-2009-0472-7050.1, p.5]
Based on publicly-announced plans for introducing EVs and PHEVs into the vehicle fleet, the 0
gCO2/mi valuation of electric operation, combined with a multiplier of 2 could offset a
manufacturers' compliance burden by as much as half, in the case of Nissan's Leaf EV, to a third
for GM's Volt PHEV. EPA acknowledges that the real greenhouse gas impact of EVs is not zero,
and therefore, providing such a large volume of credits could actually result in greater
greenhouse gas emissions from gasoline vehicles than if these vehicles were not introduced into
the fleet. EPA should not establish a regime in which efforts to encourage production of EVs and
PHEVs undermine the overarching goals of improving fuel economy and reducing greenhouse
gas emissions. [OAR-2009-0472-7050.1, p.5]
If EPA applies a multiplier for these vehicles, we suggest that it should not be higher than 1.2
times the greenhouse gas emissions associated with a vehicle, and that it should phase out over
the course of the program. A multiplier that phases out by 2016 retains the incentive to introduce
EVs and PHEVs with less diminution of compliance with the standards. Phasing out the
multiplier sends a signal to the industry that these credits will not continue into the standards for
model year 2017 and beyond. This is appropriate given that these vehicles, while considered
"advanced" today, would not be considered advanced a few years from now, when the next
round of standards is being considered. To the extent that these credits entice manufacturers to
build these vehicles sooner, phasing out the credits would also encourage manufacturers to build
more of these vehicles earlier in the program to capture the greatest value of credits. [OAR-2009-
0472-7050.1, p.5]
EPA should include in its final rule some more detailed discussion of its intent to update its fuel
economy labeling program to include estimates of mpg equivalents for EVs and PHEVs. While
we [OAR-2009-0472-7050.1, p.5] appreciate that EPA is currently working on this proposal, we
urge that the agency make some mention of its thought process in this matter. The automakers
have already made public claims about expected mpg equivalents for EVs and PHEVs. If EPA is
silent on this matter, then the public message is that the claims made by the industry are correct.
[OAR-2009-0472-7050.1, p.6]
We urge that EPA develop a means for estimating full fuel cycle emissions, including upstream
emissions from electricity production for EVs and PHEVs. Emissions for electric vehicles for
compliance accounting should be measured by multiplying vehicle efficiency (kWh/mi) by a grid
emission factor (gCO2/kWh), yielding emissions in gCO2/mi. The grid emissions factor should
be applied on a state or regional basis to vehicles in the states in which they are first sold. This
would account for differences in greenhouse gas intensity of electric power generation in
different parts of the country. It would also encourage deployment of these vehicles in the
regions where they will provide the biggest decrease in greenhouse gas emissions. EPA should
publish state or regional greenhouse gas emission factors for multiple model years, and the
agency should provide an opportunity for public comment on the emission factors. This will
permit automakers to plan for compliance taking into account the emissions of EVs and PHEVs.
[OAR-2009-0472-7050.1, p.6]
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The EPA should develop a similar methodology for estimating the upstream fuel emissions
component for hydrogen fuel cell and hydrogen combustion vehicles. A fuel emission factor
must be estimated in gCO2/kgH2. The hydrogen emission factor should take a weighted average
for different production methods of hydrogen. Emissions from hydrogen fuel cell or combustion
vehicles would be estimated by multiplying the vehicle efficiency in kgH2/mi by the emission
factor. [OAR-2009-0472-7050.1, p.6]
SABIC Innovative Plastic
SABIC-IP strongly endorses the multipliers proposed for electric, plug-in hybrid and fuel cell
vehicles. By encouraging the deployment of these vehicle types during the time frame covered
by the rule, the multiplier also furthers the redirection of the vehicle fleet towards one
fundamentally designed for lower emissions and better fuel economy. [OAR-2009-0472-7080.1,
p.3]
Sierra Club
Electric Vehicle Compliance Value
Although battery electric vehicles do not emit greenhouse gases through a tailpipe when driving,
electricity generated to power these vehicles does result in increased emissions. EPA
acknowledges these upstream emissions in the proposed rule, stating: [OAR-2009-0472-7278.1,
p.ll]
"In reality the total emissions off-set relative to the typical gasoline or diesel powered vehicle is
not zero, as there is a corresponding increase in upstream CO2 emissions due to an increase in
the requirements for electric utility generation." [OAR-2009-0472-7278.1, p.ll]
Instead of attempting to account for upstream emissions, EPA simply ignores them. As electric
vehicle production and use are expanded, and in future rounds of standards, it is critical that EPA
and NHTSA treat electric vehicles in an accurate manner and in away that does not undermine
the integrity of the program. [OAR-2009-0472-7278.1, p.ll]
In this rulemaking, EPA should derive a national grid emissions factor (in gCO2e/kWh) for each
model year and combine that value with vehicle efficiency (in kWh/mile) to obtain a more
accurate measure of each electric vehicle's performance. The national grid emissions factor
should account for upstream emissions from the marginal electricity that is generated and
delivered for vehicle charging. Additionally, EPA could use a regional approach for emissions
from electricity generation; creating a system that will encourage electric vehicle sales in regions
that have the cleanest grid and will have the greatest greenhouse gas reductions. While we are
not proposing a certain value for grid emissions, we do believe that electric vehicles emit less
pollution than average vehicles currently on the road. A recent report by American Solar Energy
Society, sponsored by Sierra Club, estimated that on average, electric vehicles emit 42% less
greenhouse gases per mile than conventional vehicles, but emit more than a Toyota Prius. The
emissions factor for electric vehicles cannot ignore emissions from generating electricity. This
factor can be reduced over time as renewable electricity increases. If EPA finalizes a zero
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emissions factor for EVs it will very difficult to set a different value for standards that apply in
2017 and beyond. [OAR-2009-0472-7278.1, p. 11]
We are concerned that when combined with a compliance value of 0 grams/mile, advanced
technology vehicle credits could allow automakers that produce a moderate number of electric
vehicles to meet a significant portion of their compliance obligation in 2016 with advanced
technology vehicle credits or accrue a significant amount of credits they can carry forward into
the next round of standards. Several manufacturers, most notably Nissan, have announced plans
to build and sell significant numbers of electric vehicles in the years covered by these proposed
standards. These credits could enable manufacturers to produce less efficient (and more
polluting) models in their fleets and slow the deployment of conventional technologies that can
boost fuel economy and lower emissions now, when emissions reductions are most needed. EPA
must ensure that all credits amount to real reductions - magnifying an unreal 0 emission value
could undermine the program. [OAR-2009-0472-7278.1, p. 12]
Further, advanced technology credits should not be available prior to 2012. Vehicles sold
through 2011 were planned well before these proposed standards, and credits awarded prior to
2012 would be windfall credits. If EPA includes these credits in the final rule, we urge that
advanced technology credits not be available for banking, carrying forward or carrying back. In a
program designed to reduce greenhouse gas emissions, these credits do not represent actual
emission reductions. Carrying forward advanced technology credits could slow technology
adoption in the future, countering the intent of the credit. In sum, we oppose the use of an
advanced technology vehicle multiplier. However, if EPA proposes a multiplier in the final rule,
we urge that it start no higher than 1.2 in model year 2012, ramp down annually and phase out by
2016. EPA should be very clear that this multiplier will ramp down and not be continued in the
next round of standards. [OAR-2009-0472-7278.1, p. 12] [Sierra Club also submitted these
comments as testimony at the Detroit public hearing, See docket number EPA-HQ-OAR-2009-
0472-6185, pp. 28-29.]
We strongly urge EPA to address both the emission factor and multiplier in the final rule. We
believe that EVs can be a critical part of a clean vehicle future, but we are concerned that the
credits EPA proposes will taint these vehicles as automakers use credits to offset improvements
in their gasoline vehicle fleets or sold to another automaker. Each EV will be associated with
increased gasoline consumption or greenhouse gas emissions. These credits could be viewed
much like credits under the CAFE program for flexible fuel vehicles (FFVs). Automakers apply
FFV credits (up to 1.2 mpg) toward meeting CAFE standards and the program has been
associated with increasing oil consumption. Finally, consumers will understand that electricity
has emissions - a zero value will mislead consumers. Fixing these problems now will give EPA
greater flexibility in setting standards for EVs in future years. [OAR-2009-0472-7278.1, p. 12]
[The following comments were submitted as testimony at the Detroit public hearing. See docket
number EPA-HQ-OAR-2009-0472-6185, pp. 27-28]
The emissions associated with plug-in electric vehicles cannot be ignored. Although electric
vehicles emit no global warming pollution while driving, producing the electricity to power them
certainly does. Battery electric and plug- hybrid electric vehicles can provide significant
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reductions in emissions with a cleaner electrical grid and we should be encouraging the
development and deployment of battery technologies. However, we should consider whether
there are better ways to incentivize electric vehicles than ignoring the upstream emissions from
electricity generation in a program designed to reduce greenhouse gas emissions. As electric
vehicle production and use are expanded, and in future rounds of standards, it is critical that EPA
and NHTSA treat electric vehicles in an accurate manner.
South Coast Air Quality Management District
Second, the South Coast AQMD staff view the EPA credits for electric vehicles as overly
permissive. Under ARB's strict accounting of electric vehicle credits for its greenhouse gas
standards, electric vehicles are credited with greenhouse gas emissions of 130 grams per mile
calculated based on the average upstream emissions of the California grid.
The California grid is heavily dominated by natural gas and renewable power sources. On a
per capita basis, the California grid is 50 percent lower in greenhouse gas emissions than the
national grid.
Even with these life-cycle emission advantages for electric vehicles used in California, ARB
insists that the upstream emissions be fully reflected in the well-to-wheel carbon accounting.
In stark contrast, the EPA credits national electric vehicles with zero greenhouse gas
emissions per mile thereby ignoring the upstream emissions entirely. This assumption risks
damaging the credibility of the overall EPA greenhouse gas emissions standards program as it
employs inappropriate carbon accounting practices.
In addition, EPA is proposing a multiplier of up to two to one, which amplifies the impact of this
lax EV credit criterion. As a result, 13 gasoline cars could effectively be exempted for every
single electric vehicle credited under the EPA program.
This dilution in program effectiveness should be minimized as much as possible. At a minimum,
the AQMD staff recommend that EPA put a limit on the number of vehicles which would qualify
for the zero gram EV credit and that any credits be aligned ultimately with ARB's life-cycle
credit methodology which suggests a credit value closer to 200 grams nationally rather than zero.
[Comments are from LA Testimony, OAR-2009-0472-7283, pp.59-67.]
State of New Jersey
General advanced technology vehicle credit comments: The Department supports the promotion
of alternative fuel vehicles, which includes electric vehicles, and advocates a diversified vehicle
fleet as the only way the State can meet its statewide greenhouse gas reduction limits. In
addition, the Department agrees with the USEPA that it is important to ensure that deployment of
new vehicle technologies or fuels does not result in increases in emissions of greenhouse gases.
Overall, we strongly support the use of appropriately valued 'bonus' credits to encourage the
earlier introduction of new advanced vehicle power trains, including electric vehicles (EVs),
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PHEVs and fuel cell vehicles (FCVs). The Department supports the USEPA's statement that
these technologies have the potential for more significant reductions of greenhouse gas emissions
than any technology currently in commercial use and that encouraging early introduction of these
technologies will help to enable their wider use in the future.
In administering these 'bonus' credits, the Department feels strongly that the three primary
vehicle technologies (EVs, PHEVs and FCVs) should not be given the same value. Instead, the
Department supports differentiating between EVs and PHEVs for advanced technology credits.
As described by USEPA on page 49533 of the proposal, PHEVs should be provided a lesser
multiplier compared to EVs. The PHEV multiplier should be prorated based on the equivalent
electric range of the vehicle in order to incentivize battery technology development. In addition,
the Department recommends a credit approach that provides different credit levels to even
further differentiate between vehicle types, similar to the approach adopted by California in its
Zero Emission Vehicle (ZEV) regulations. California's approach allows these credits to vary
from a factor of 1.0 for utility EVs with less than a 50 mile range to 7.0 for Type V FCVs that
can travel over 300 miles and have a fast charge time of less than 15 minutes, thereby providing
increased credit for the most efficient technologies. Another possible method for determining
credits would be to base the multipliers on the projected greenhouse gas contributions of the
vehicles, including the contribution of the grid supplying power to the location where the
vehicles are recharged. While we understand that this last method would be difficult to
implement, the Department encourages the USEPA to reexamine the possibility of using a
broader, lifecycle approach to determining these credits.
Finally, the Department agrees with a phasing down of the credits over time as vehicle
development and production costs decline due to economies of scale and other factors. However,
New Jersey, instead of completely eliminating the 'bonus' credits, supports the continuation of
some level of'bonus' credit for FCV and longer range battery electric vehicles (BEVs). [OAR-
2009-0472-7109. l,p.3]
Zero Emission Vehicle credits: The Department is concerned that the proposal's assumption of
zero grams per mile CO2 equivalent for vehicles powered by electricity does not include the full
life cycle emissions of ZEVs. While we agree that this approach is appropriate in the initial years
to serve as an incentive for the production of these vehicles, it does not represent the full well-to-
wheel emissions from these vehicles, and so should not be continued indefinitely. While we
strongly support incentives for the introduction of advanced technology vehicles, we are
concerned that the magnitude of credits being offered for these vehicles may, in the long term,
unnecessarily weaken the overall effectiveness of the proposed standards. The Department
encourages the USEPA to re-evaluate its advanced technology vehicle credits to ensure that an
appropriate level of credit is provided by considering the entire life cycle of each vehicle, e.g.,
vehicle technology and fuel, to provide a balance between encouraging advanced vehicle
technologies while protecting the greenhouse gas emission reductions. [OAR-2009-0472-7109.1,
p.4]
[State of New Jersey also submitted these comments as testimony at the New York public
hearing, See docket number EPA-HQ-OAR-2009-0472-4621, pp. 115-117.]
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State of Washington Department of Ecology
Ecology also takes this opportunity to comment on several other issues related to this proposal.
First, we support EPA's proposal of additional credit to encourage the early commercialization of
advanced vehicle power trains including electric vehicles, plug-in hybrid vehicles and fuel cell
vehicles. As for the proposed credit multiplier approach, Ecology encourages EPA to assign a
national average upstream emission factor to each advanced technology, rather than using the
proposed zero gram per mile CO2, for use in calculating the credit. [OAR-2009-0472-7299, p.2]
EPA acknowledges that for each EV sold, in reality the total emissions is not zero, since there is
a corresponding increase in upstream CO2 emissions due to an increase in the requirements for
electric utility generation. As such, EPA's proposal to assign zero grams per mile CO2 could
result in credits that are large enough that they could substantially reduce, the actual greenhouse
gas reductions provided by the national program. [OAR-2009-0472-7299, p.2]
Toyota Motor North America
EPA proposes to allow early advanced technology vehicle (ATV) credits for sales of EVs,
PHEVs, and fuel cell vehicles. First, EPA proposes to assign a 'zero' GHG value for the electric
operation portion for such vehicles, in essence providing a second incentive for such
technologies. Second, EPA's proposal includes a sales multiplier in the range of 1.2 to 2.0 for all
eligible vehicles. EPA is considering a phase down in sales the multiplier by model year 2016.
[OAR-2009-0472-7291, p.24]
Toyota agrees with the concept of providing early credits for these advanced technology vehicles
in terms of the 'zero' assigned GHG value for the electric operation portion. While non-zero
upstream fuel production emissions will exist for these technologies, recognizing the 'zero' tank-
to-wheel emissions of the vehicle itself should provide a marginal incentive for OEM's to
consider these technologies. [OAR-2009-0472-7291, p.24]
Toyota is concerned with EPA's proposal to offer a range of sales multipliers. The 'zero' assigned
GHG level for these vehicles would provide an incentive, and is more directly tied to a
performance criterion (electric operating range) than a sales multiplier. It is unclear why EPA
proposes, in essence, a double credit for these technologies. [OAR-2009-0472-7291, p.24]
Of course, compliance incentives alone are not sufficient to promote wide-scale deployment of
these technologies, nor do such incentives provide any clear benefit in compelling consumers to
actually purchase advanced technology vehicles. In order to truly promote commercialization of
advanced technology vehicles such as plug-in hybrids, electric vehicles and fuel cells, Toyota
urges EPA and NHTSA to continue to work with OEMs, states, energy providers, NGOs and
others to lower the barriers to widespread commercialization of these promising technologies,
especially adequate refueling infrastructure and the codes and standards necessary to support it.
[OAR-2009-0472-7291, p.24]
Union of Concerned Scientists
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EPA has requested comment on proposed credit flexibilities that "encourage the early
commercialization of advanced vehicle powertrains, including electric vehicles (EVs), plug-in
hybrid electric vehicles (PHEVs), and fuel cell vehicles." We break these flexibilities up into two
categories. [OAR-2009-0472-7181.1, p.7]
First, is the proposed use of advanced technology vehicle credits for EVs, PHEVs, and FCVs in
which a multiplier is applied to the number of vehicles sold, thus counting as more than one
vehicle in the manufacturer's fleet average. These credits would be an additional incentive above
and beyond existing, and substantial, vehicle R&D tax incentives, loans, grants, and joint
development programs for such technologies. EPA proposes a multiplier in the range of 1.2 - 2.0
and solicits comment on both its magnitude and whether it should be held constant or ramp down
overtime. [OAR-2009-0472-7181.1, p.7]
UCS recognizes the rationale for such credits, but we are concerned about the magnitude of the
multiplier and its effect on eroding actual emissions savings offered by the rule. At least one
manufacturer - Nissan - has already announced plans to produce up to 150,000 EVs annually
beginning as early as 2012. Given Nissan's stated intentions, one questions whether advanced
technology vehicle credits will encourage early adoption of EV technology, or whether they will
merely provide windfall surplus credits to a company whose advanced technology development
efforts are already underway. [OAR-2009-0472-7181.1, p.7]
The same is especially true for model year 2009-2011 EVs, for which EPA also proposes
providing credits. Given EPCA's requirement of finalizing rules 18 months before the model
[OAR-2009-0472-7181.1, p.7] year, such vehicles already have fully developed marketing plans
that will not be affected by the MY2012-MY2016 rule. Providing credits for these model years
simply provides the manufacturers with windfall credits, an approach fundamentally inconsistent
with the stated objective of the policy. [OAR-2009-0472-7181.1, p. 8]
Second, EPA proposes use of an emission factor of zero g/mi in the assessment of EVs,
(the electric portion of) PHEVs, and FCVs. While EPA acknowledges that "in reality the
total emissions.. .is not zero," it rationalizes the use of such a factor because it "is also interested
in promoting very advanced technologies such as EVs which offer the future promise of
significant reductions in GHG emissions." [OAR-2009-0472-7181.1, p.8]
UCS strongly objects to this approach, as it lacks technical justification, erodes savings of the
program, and even stands in stark contrast to recent assessments performed by the agency itself.
According to the joint EPA-DOE website fuel economy.gov, a recent (2003) pure electric
vehicle is responsible for nearly half as much heat-trapping emissions as its gasoline-powered
counter part. The 2003 RAV4 EV has a stated annual carbon footprint of 3.9 tons of CO2, while
the gasoline (2-wheel drive, automatic transmission) version has an annual carbon footprint
of 8.0 tons. [OAR-2009-0472-7181.1, p.8]
Credit Consequences
As demonstrated below, the consequences of offering either of these advanced technology
incentives - individually or together - at volumes in line with Nissan's stated production are not
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EPA Response to Comments
trivial. According to Automotive News, Nissan expects to have 20,000 Leafs pre-sold by the
third quarter of 2010, and intends to produce 150,000 units annually starting in late 2012. For the
purpose of examining the upper bound impacts, let us assume Nissan's 2012 car sales reside at
958,696 units (including electric vehicles) with a conventional passenger car fleet average
stringency of 263 g/mi. The inclusion of 0 g/mi for 150,000 passenger car electric vehicles
would provide Nissan with approximately 7.5 million megagrams of credit, with no multiplier in
effect. If an advanced technology vehicle credit multiplier were used, the credit amount would
increase further, to between 8.8 million megagrams and 13.0 million megagrams (corresponding
to a multiplier of 1.2 and 2.0, respectively). By contrast, the use of an emission factor that
acknowledges the upstream environmental impact of electric drive vehicles would dampen the
quantity of surplus credits that could be accrued, resulting in credits more reflective of actual
tons saved. Assuming no multiplier, the use of a 130 g/mi emission factor (the value assigned to
EVs in the California Pavley program) would yield credits of 3.8 million megagrams. Multiplier
use would increase credit amounts to between 4.4 million and 6.6 million megagrams (again,
corresponding to a multiplier of 1.2 and 2.0, respectively). As summarized in Table 1, the effect
of choosing a 0 g/mi factor over an alternative EV factor such as 130 g/mi yields the generation
of between 3.7 and 6.4 million additional megagrams of credit. Similarly, as shown in Table 1,
use of a 2.0 sales multiplier dramatically boosts manufacturer credits an additional 2.8 million to
5.5 million megagrams. [OAR-2009-0472-7181.1, p.8]
[See docket OAR-2009-0472-7181.1, p.9 for Table 1. Possible Credit Accrual Resulting from
Sale of 150,000 Nissan Leaf EVs megagrams]
Putting this into a comparative context, even assuming the more modest multiplier of 1.2,
adoption of a 130 g/mi factor for 150,000 Leaf EVs would weaken the compliance stringency for
Nissan's remaining passenger car fleet from 263 g/mi to 293 g/mi. Use of a 0 g/mi factor would
weaken the compliance stringency from 263 g/mi to a troubling 322 g/mi (an erosion of an
astounding 6.2 mpg-equivalent from Nissan's passenger car fleet). These values are higher than
those of the average Model Year 2008 car and fleet. [OAR-2009-0472-7181.1, p.9]
While UCS supports policies that encourage advanced technology development, we see no
reasonable justification to provide windfall credits of this sort. Given the numerous incentives
already in place to promote advanced technology development (R&D tax incentives, loans,
grants, joint development programs, etc.), UCS strongly recommends that (a) no credits be
offered before model year 2012 or after model year 2016 (by when commercialization decisions
will have been made); (b) the use of a 0 g/mi emission factor be abandoned; (c) an emission
factor reflective of actual in-use emissions, consistent with current research, be adopted; and (d)
a multiplier no higher than 1.2 be used, with a rampdown of 0.05 per year (i.e. 1.20 in 2012; 1.15
in 2013; declining to 1.0 in 2016). This rampdown would provide a smooth transition for
manufacturers while rewarding the earliest actors, as well as ensure that credits see a proper
unset. Alternatively, a more aggressive rampdown could be employed that is triggered once a
manufacturer reaches a specific cumulative sales level, such as the first 200,000 units. [OAR-
2009-0472-7181.1, p.9]
Further, it was unclear from our reading of the proposed rule whether the agency plans to allow
trading, banking, or borrowing of advanced technology vehicle credits. UCS believes that any
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credits accrued for advanced technologies should not be available for trading, banking, or
borrowing. The proposed advanced vehicle credits do not represent actual emission reductions
and thus should not be available to manufacturers for the purpose of balancing emission deficits,
or for trading to other manufacturers. Moreover, banking of credits would slow future
technology adoption, undermining the concept behind the credit. [OAR-2009-0472-7181.1, p.9]
Should the agency decide to employ advanced technology credits, we urge the agency to
consider that manufacturers have a history of becoming dependent on credits, opting to choose
them over actual improvements when more cost effective. As such, it is critical that any
advanced technology credits be limited in availability (quantity and duration), and that they be
designed to truly accelerate technology as well as to minimize the loss of near term emission
reductions that will occur. [OAR-2009-0472-7181.1, p.9]
Lastly, on a related note, UCS questions the underlying methodology used for computing
advanced technology vehicle credits. The calculations assume approximately 191,000 miles
of [OAR-2009-0472-7181.1, p.9] lifetime travel for passenger cars, and more than 220,000 miles
of lifetime travel for light trucks. We believe it is unreasonable to assume that the first round of
advanced technologies such as EVs, FCVs and PHEVs would see lifetime VMT as high as their
conventional counterparts, and that use of the higher VMT artificially inflates the savings that
those vehicles could provide the environment. Technology limitations as well as infrastructure
limitations (causing, for example, limits to EV driving range) each play into advanced vehicle
VMT levels, and should be accounted for when assessing the value of credits accrued by such
technologies. As such, UCS recommends the agencies modify VMT assessments for advanced
technology vehicles in the calculation of credits. [OAR-2009-0472-7181.1, p. 10]
[Following comments are from LA Testimony, OAR-2009-0472-7283, pp. 103-113 (p. 108)]
Second, compliance credits should be based on real-world performance. UCS is concerned
that the NPRM includes credits for advanced vehicles that could erode the benefits of the
program and give automakers credit for actions undertaken to meet California's Zero Emission
Vehicle program.
California's ZEV program requires automakers to manufacture and sell zero emission vehicles.
By 2014, the current California program could result in close to 60,000 plug-in hybrid electric
vehicles as well as 7,500 pure battery electric or fuel-cell vehicles on the road.
The proposed federal program would allow manufacturers to accrue credits for vehicles
that incorporate advanced zero emission technologies. This credit would provide automakers
with a credit multiplier in the range as proposed of 1.2 to 2.0 for advanced vehicles. In essence,
this allows advanced vehicles such as plug-ins, electric, and fuel-cell vehicles to count as more
than one vehicle in a manufacturer's fleet average.
Compounding this is EPA's proposal to use an emissions factor of zero grams per mile
for electric vehicles and the electric portion of plug-ins.
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EPA Response to Comments
While UCS supports flexibility in compliance mechanisms, credits should be based on real and
verifiable emissions reductions. This means that credits for electric drive should be based upon
average life-cycle emissions from electricity, including upstream emissions from power
generation.
The assumption that all electric vehicles have zero emissions will erode the benefits of
the federal program and could delay widespread adoption of cost-effective technologies available
today to reduce emissions.
Plus, automakers already producing ZEVs to meet California's ZEV mandate will also get
credit under a federal program, credit that might far exceed their actual life-cycle emissions.
Therefore, UCS recommends that in this rule no advanced vehicle credits be offered before
model year 2012 or after model year 2016 and that the use of a zero-grams-per-mile emission
factor be abandoned and that an emission factor reflective of actual in-use emissions consistent
with current research be adopted.
And we recommend a multiplier of no higher than 1.2 be used; to abandon the 2.0, start with 1.2,
and then decline to .05 per year, going to just the 1.0 in 2016 for these advanced vehicles.
And the credits should expire once a manufacturer surpasses a certain volume threshold, such
as 200,000 advanced vehicles sold.
[Union of Concerned Scientists also submitted these comments as testimony at the New
York public hearing, See docket number EPA-HQ-OAR-2009-0472-4621, pp. 99-101.]
United Auto Workers
We are also supportive of EPA's proposal to provide compliance flexibility through a multiplier
for electric-drive technologies and for so-called off-cycle technology credits. We believe
strongly that these proposals will provide a desirable incentive to bring into production advanced
fuel-saving technologies that have the potential to radically reduce the greenhouse gas emissions
from motor vehicles. Although we recognize that this will cause a slight near-term reduction in
the total amount of greenhouse gas emissions avoided, it will hasten the day when these
technologies can be produced in large volumes. This will ultimately result in greater emissions
reductions in the medium and long term because of the cost reductions expected with increased
volumes of these advanced technologies. [OAR-2009-0472-7056.1, p.3]
University of California, Santa Barbara, Bren Working Group on Vehicle Fuel Economy
Credits for Electric Vehicles
The EPA proposes using a multiplier (ranging from 1.2-2.0) for electric vehicles (EVs), plug-in
hybrid electric vehicles (PHEVs), and fuel cell vehicles produced from MY 2012 through MY
2016. As a result of a multiplier, advanced technology vehicles can be counted as up to two
vehicles when annual fleet fuel efficiency averages are calculated. [OAR-2009-0472-7188.1, p.
5]
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Although we acknowledge that the use of a multiplier would be effectively promote utilization of
cleaner technologies, we contend that the multiplier should be set at the lower end of the range
(1.2) to avoid eroding the benefits of this proposed ruling. A multiplier in the higher range would
not be conducive to curbing greenhouse gas pollution and would not be commensurate with the
environmental benefit. Additionally, we urge the EPA to phase down the multiplier by 0.05 per
year, so that it starts at 1.2 in 2012, and declines to 1.0 in 2016. [OAR-2009-0472-7188.1, p. 5]
In addition to the abovementioned credits, the EPA proposes using an emissions factor of 0 g/mi
for EVs and PHEVs. As the EPA acknowledges in the NPRM, battery-powered vehicles do not
produce emissions at the tailpipe. However, these are not zero-emissions vehicles. Emissions are
produced where the power is generated, and electricity production is greenhouse gas intensive. In
fact, according to the DOE, 44.7% of the electricity generated in the U.S. is produced from coal-
fired power plants. [OAR-2009-0472-7188.1, p. 6]
On average, in the United States, the generation of each kWh produces 1.36 pounds, or 617
grams, of CO2. By comparison, combustion of a gallon of gasoline emits approximately 8,900
grams of CO2. Therefore, one gallon of gasoline produces similar greenhouse gas emissions as
nearly 15 kWh of electric power. For example, if the Tesla Roadster uses 21.7 kWh to travel 100
miles, then the CO2 emissions from generating its power will be 13,389 grams (617 g x
21.7kWh), or the equivalent of 1.5 gallons of gasoline. [OAR-2009-0472-7188.1, p. 6]
Another consideration is that emissions change dramatically by region due to variations in the
electricity mix. In states where nearly 80% of electric power comes from fossil fuels (such as
Kansas and Missouri), each kWh produces 1.87 pounds or 849 grams of CO2. As a result, in
those states the same vehicle would emit 18,423 grams of CO2 or the equivalent of 2.07 gallons
of gasoline to travel 100 miles. This analysis shows that ignoring electric power production
emissions provides incomplete and misleading information. The agency must account for high
emission energy sources and rechargeable electric cars should not be given a zero emissions
rating. [OAR-2009-0472-7188.1, p. 6]
As noted in the proposed rulemaking, electricity generation represents the largest source of
greenhouse gas emissions in the U.S. (p. 49508), while transportation sources are second. Giving
excessively generous credits to vehicles that rely on grid electricity translates into simply shifting
the burden from a tailpipe to a smokestack, without achieving significant improvements. [OAR-
2009-0472-7188.1, p. 6]
University of Pennsylvania, Environmental Law Project
Assignment of Zero Emissions to Advanced Technologies
Currently, the proposed rule evaluates advanced technology vehicles like plug-in electrics as if
they were responsible for no greenhouse gas emissions whatsoever. Yet these vehicles run on
energy sources like electricity, which do generate significant greenhouse gasses in their
production. Although these vehicles are certainly very efficient, their operation still contributes
greenhouse gases to the atmosphere, and there is little policy justification for benefiting these
advanced technologies so significantly over alternatives like gas hybrids. Furthermore, the sale
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of a relatively small number of these vehicles might allow a manufacturer to significantly reduce
the extent to which it must make efficiency improvements in the rest of its fleet. [OAR-2009-
0472-7286.1, p. 18]
U.S. Coalition for Advanced Diesel Cars
The Coalition applauds EPA and NHTSA for championing reality-based solutions to our national
petroleum end GHG reduction objectives. In each of the credit mechanisms described above, the
agencies demonstrate the importance of controlling off-cycle emissions through a holistic
approach that is not chained exclusively to a pair of 40-year old test procedures. Each of these
reality based compliance features demonstrates recognition of a simple truth: the success of the
proposed regulations will be based on the daily reductions in petroleum barrels and well-to-
wheel GHG tons, not on a "fleet average" compliance certificate for the regulated parties. And to
achieve those daily reductions, vehicles employing technologies must appeal to U.S. consumers
and must sell in high annual volumes.
The universe of possible fuels for light duty vehicles contains relatively few that have a higher
energy density than gasoline. Diesel is one of those fuels. A gallon of diesel has 11 percent more
energy than a gallon gasoline (and a gallon of BIO has 12 percent more energy than a gallon of
E10). Because of this energy density, the transportation and distribution of diesel fuel to users
around the country produces less GHG per usable unit of energy. Additionally, the refining of
diesel fuel requires less energy and produces fewer GHG emissions compared to a gasoline
baseline. Taken together, these reduced off-cycle emissions contribute additional benefits to
society when high density diesel is substituted for lower density gasoline. Unlike its treatment of
FFVs and other credit mechanisms proposed, however, EPA is not proposing to count these real
diesel GHG offsets. According to recent EPA research, the up-stream GHG emissions associated
with refining, transporting, distributing and storing transportation fuels are [that for] every gallon
of diesel fuel substituted for a gallon of gasoline, an off cycle benefit of 280 GHG grams occurs.
Returning to the pickup truck example shown on page 12, in which a 24 mpg diesel engine is
sold in place of the standard 18 mpg engine, the 3,700 lifetime gallons of fuel saved would also
generate an off-cycle GHG benefit of 1 metric ton. Over 221,199 lifetime miles traveled, this is
the equivalent of an off cycle credit of 4.7 grams per mile. This value is on the order of the
maximum MAC efficiency credit of 5.7 g/mile that EPA proposes under its offcycle credit
mechanism.
Clearly, the offcycle benefits of diesel fuel should be comprehended in EPA's historic GHG
rulemaking process as these benefits are already documented in the agency's technical research.
Since EPA proposes off-cycle credit mechanisms to incentivize such solutions as roof-top solar
panels, surely the Administrator recognizes a parallel disincentive exists for proven technologies
that are deliberately excluded from the off-cycle credit mechanism. We urge EPA to adopt rules
that comprehend the holistic, full-cycle GHG performance recognizing that vehicles and fuels
work as a system in our national efforts to reduce the C02 inventory and petroleum consumption.
[OAR-2009-0472-7496, p. 13-14]
Volkswagen Group of America (Volkswagen)
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With regards to additional credit flexibilities, Volkswagen also supports the EPA's proposal.
Credit for GHG reductions from air conditioning, advanced technology vehicles, C02
performance credit and flexible fuel vehicles have the potential to offer significant GHG
reductions and we believe it is appropriate for the EPA to recognize these reductions and provide
an avenue for manufacturers to utilize credit for these vehicles and technologies. [OAR-2009-
0472-7210. l,pp.3-4]
With regards to advanced technology vehicles, Volkswagen supports credit for these vehicles to
the maximum extent possible. To that end Volkswagen believes the maximum credit proposed
by EPA (2 credits per vehicle for fuel cell, battery electric and grid connected hybrids) Is
appropriate over the full length of this proposed regulation. We also support the EPA proposal to
set zero emission tailpipe performance for the electric portion of operation of a vehicle with zero
emission capability to zero grams per mile over the length of the proposed regulatory period.
Volkswagen believes that incentives are necessary to help the commercialization of these types
of vehicles and the credit as proposed will provide some benefit for these vehicles as they are
introduced to the market through the 2016 MY. The credit level and the handling of the CO2
performance of these vehicles can be re-addressed during the regulatory process for a National
program for 2017 and beyond. If anything, Volkswagen believes that during the 20122016
timeframe additional credit could be allowed for these vehicles. We do not believe that volumes
for these vehicles during this timeframe will be significant enough to result in excessive credits
for automakers. [OAR-2009-0472-7210.1, p.4]
Volkswagen also supports the flexibility provided in the regulation to allow credit for real world
GHG reductions that are not captured on the relevant test cycles. We believe that these GHG
reductions can be significant and can also offer significant benefit to consumers. We urge the
EPA to maintain a viable pathway and mechanism for evaluating these types of technologies.
Volkswagen also notes that some technologies may offer benefits on the relevant test cycles
while also offering either significant or greater benefits to customers in real world usage. We
propose that EPA accommodate this type of technology that may have benefit both on and off-
cycle. An example of this could be various forms of stop/start systems. It is possible that certain
designs or strategies for stop/start systems will yield varied results over the fuel economy test
cycles versus off-cycle modes. For example, Volkswagen believes some stop/start systems may
yield a 1-2 percent improvement over the fuel economy test cycles but yield an 8 percent benefit
in real world driving for the customer. Volkswagen plans to discuss this type of technology in
more detail with EPA staff in the future, but for the purposes of this rulemaking it is important to
establish that CO2 performance credit is possible and that a fair process is in place to evaluate
and grant the correct credit for a given technology. In addition, Volkswagen recommends that
credits from CO2 performance technology under real world driving conditions should be In
effect over the full time period of this regulation. Volkswagen also notes that measurable and
documented real world GHG reductions due to technology related improvements to vehicles
should not be strictly related to new or innovative technical measures - it is possible that simple,
known technology could yield significant real world GHG reductions. [OAR-2009-0472-7210.1,
p.4]
Volkswagen also supports the EPA's efforts to harmonize the GHG regulation with the current
NHTSA regulation by offering GHG credits for FFV vehicles at the same level as the CAFE:
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credit available in the NHTSA CAFE: regulation through the 2012 - 2015 MY. For 2016 MY
and beyond the application of a factor based on FFV use is appropriate. We support EPA's
efforts to allow flexibility through two pathways (EPA factor or manufacturer factor) after the
2015 MY. [OAR-2009-0472-7210.1, p.4]
EPA Response:
5.7.3.2 Comments on Whether to Provide an Incentive for Advanced Technology Vehicles
Comments on whether EPA should provide any kind of incentive to promote advanced
technology vehicles during the MY2012-2016 timeframe covered in this rulemaking fell into
three general categories. While this section summarizes the overall comments with respect to the
general concept of incentives, the following two sections provide summaries of more targeted
comments on the zero gram/mile compliance value and the vehicle multiplier.
The first group of commenters explicitly endorsed both the concept of providing some kind of
incentive for advanced technology vehicles as well as at least one of the two proposed incentives
(the zero gram/mile compliance value and the vehicle multiplier). This group included every
automaker that commented on this topic: BMW, Chrysler, Ford, Honda, Hyundai, Mercedes-
Benz/Daimler AG, Mitsubishi, Nissan, Toyota, and Volkswagen. In addition to individual
automakers, several other auto industry companies and associations were represented in this
group of commenters as well, including the Alliance of Automobile Manufacturers, Cummins,
the Motor and Equipment Manufacturers Association, the National Automotive Dealers
Association, SAB 1C Innovative Plastic, and the United Auto Workers. The State of New Jersey
and the Washington Department of Ecology also submitted comments supporting a temporary
incentive. Many of these comments recognized the market barriers facing advanced technology
vehicles, and that an incentive program could promote technologies that could yield much larger
GHG emissions benefits in the future.
A second group of commenters expressed general support for some kind of temporary incentive
for advanced technology vehicle incentives, but argued that EPA's proposed incentive program,
in its entirety, was too generous, and stated explicit opposition to one or both of EPA's incentive
mechanisms. These commenters included the California Air Resources Board, the Ecology
Center, the Environmental Defense Fund, Honeywell Transportation Systems, the International
Council on Clean Transportation, the Massachusetts Department of Environmental Protection,
the National Association of Clean Air Agencies, the Natural Resources Defense Council, the
New York State Department of Environmental Conservation, the Northeast States for
Coordinated Air Use Management, the South Coast Air Quality Management District, and
citizen Yuli Chew. These commenters generally suggested that EPA re-evaluate the overall
incentive program to seek a better balance between promoting advanced technology vehicles and
minimizing the loss of GHG emissions benefits of the overall program.
A third group of commenters explicitly or implicitly opposed the concept of any incentives for
advanced technology vehicles (note that an advanced technology vehicle could, of course, still
earn an emissions credit based on superior emissions performance). This group included the
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American Council for an Energy Efficient Economy, the New York University School of
Law/Institute for Policy Integrity, Public Citizen/Safe Climate Campaign, Sierra Club, and the
Union of Concerned Scientists. Although some of these groups discussed vehicle multipliers of
1.2, phasing out to zero over the MY2012-2016 timeframe, it seems most likely that most or all
of these groups cited the 1.2 vehicle multiplier only to emphasize their support for the lowest
possible multiplier. That is, the general tone of their comments suggested that they might have
well supported no multiplier had that been within the range of the EPA proposal. The thrust of
these comments is that compliance values should be based on full fuel-cycle environmental
performance and that there is no need for special regulatory incentives for advanced technology
vehicles.
After considering the public comments, EPA agrees with the first two groups of commenters that
it is appropriate to provide a temporary regulatory incentive to promote early commercialization
of technologies that have the potential to produce very large GHG emissions reductions in the
future, but which face major market challenges. EPA believes that EVs, PHEVs, and FCVs are
potential GHG "game changers" if major cost and consumer barriers can be overcome and if
there is a nationwide transformation to low-GHG electricity (or hydrogen, in the case of FCVs).
EPA has adopted the concept of advanced technology incentives in several of its most recent and
important rulemakings under Title II of the Clean Air Act.13 EPA further agrees with the second
group of commenters that the proposed incentive program was excessive, and is finalizing a
restructured incentive program that EPA believes strikes a more reasoned balance between near-
term environmental performance and long-term environmental goals. Although EPA disagrees
with the third group of commenters, who argued for no incentive program whatsoever, EPA is
structuring the rule to cap the number of vehicles eligible for the incentive program and has
projected the potential loss in GHG emissions benefits that could result from the restructured
incentive program. As discussed in the preamble and RIA, EPA projects that the restructured
incentive program could reduce the GHG emissions benefits of the program by approximately 25
million metric tons, or less than 3 percent of the projected GHG emissions benefits of the overall
program.14 EPA believes this is a reasonable balance given these technologies' potential for
GHG reductions in a regime where upstream GHG emissions are separately controlled. Finally,
in response to concerns expressed by many commenters, EPA emphasizes that the restructured
incentive program only applies to the MY2012-2016 timeframe covered by this final rule, and
that EPA will reassess the issue of whether to have any incentives for advanced technology
vehicles for model years 2017 and beyond based on the status of advanced technology vehicle
commercialization and other relevant factors.
5.7.3.3 Comments on the Zero Grams/Mile Compliance Value for EVs, FCVs, and PHEVs
When Operated on Grid Electricity
EPA proposed a zero grams/mile compliance value for EVs and PHEVs when operated on grid
electricity (and for FCVs, though EPA received few comments on FCVs, presumably because of
the expectation of low sales in MY2012-2016). The zero grams/mile compliance value is an
incentive in that, while it accurately accounts for tailpipe GHG emissions, it does not reflect the
13 For example, the Tier 2 Light-Duty Vehicle, 2007 Heavy-Duty Highway, and Tier 4 Nonroad Diesel rulemakings.
14 See Regulatory Impact Analysis, Appendix 5.B.
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increase in upstream GHG emissions associated with the electricity used by EVs relative to the
upstream GHG emissions associated with the gasoline or diesel fuel used by conventional
vehicles. For example, based on GHG emissions from today's national average electricity
generation (including GHG emissions associated with feedstock extraction, processing, and
transportation) and other key assumptions related to vehicle electricity consumption, vehicle
charging losses, and grid transmission losses, a midsize EV might have an upstream GHG
emissions of about 180 grams/mile, compared to the upstream GHG emissions of a typical
midsize gasoline car of about 60 grams/mile. Thus, the EV would cause a net upstream GHG
emissions increase of about 120 grams/mile (in general, the net upstream GHG increase would
be less for a smaller EV and more for a larger EV). The zero grams/mile compliance value
provides an incentive because it is less than the 120 grams/mile value that would fully account
for the net increase in GHG emissions, counting upstream emissions. The net upstream GHG
impact could change over time, of course, based on changes in electricity generation or gasoline
production. EPA received more comments on the proposed zero grams/mile compliance value
for EVs (and PHEVs operated on grid electricity) than any other issue associated with advanced
technology vehicle incentives.
A majority of commenters were opposed to the proposed zero grams/mile compliance value for
EVs and PHEVs operated on grid electricity: American Council for an Energy Efficient
Economy, the California Air Resources Board, citizen Yuli Chew, Clean Energy Fuels,
Environment Michigan, Environment New Jersey, Environmental Defense Fund, citizen Mark
Glasser, Honda, Honeywell Transportation Systems, the International Council on Clean
Transportation, citizen Valerie Karplus, the Massachusetts Department of Environmental
Protection, National Association of Clean Air Agencies, Natural Resources Defense Council, the
New York State Department of Environmental Conservation, the New York University School
of Law/Institute for Policy Integrity, Public Citizen/Safe Climate Campaign, Sierra Club, the
South Coast Air Quality Management District, the Washington Department of Ecology, Union of
Concerned Scientists, the University of California/Santa Barbara Bren Working Group on
Vehicle Fuel Economy, and the University of Pennsylvania/Environmental Law Project. The
core of these comments was that while tailpipe GHG emissions of vehicles operated on grid
electricity is zero, the net full fuel-cycle GHG emissions are not zero, due to the upstream GHG
emissions associated with electricity generation, and ignoring these emissions could
"undermine" the overall GHG benefits of the program. The Natural Resources Defense Council
provided a specific methodology for calculating full fuel-cycle GHG emissions for EVs. While
opposed to the zero grams/mile compliance value, the South Coast Air Quality Management
District suggested that, if EPA were to maintain the incentive, EPA should consider limiting the
number of vehicles which would qualify for the incentive.
Several automobile companies and others supported the proposed zero grams/mile compliance
value: the Alliance of Automobile Manufacturers, BMW, Chrysler, Cummins, Ford, Mercedes-
Benz/Daimler AG, Mitsubishi, the Motor and Equipment Manufacturers Association, the
National Automobile Dealers Association, Nissan, the State of New Jersey, Toyota, and
Volkswagen. Several of these commenters pointed out that previous motor vehicle regulations
have focused on tailpipe emissions only, and Nissan stated that excluding upstream GHG
emissions is "legally required" under Clean Air Act section 202(a)(l). The National Automotive
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Dealers Association stated that Congress will decide whether to regulate upstream GHG
emissions from electric utilities.
EPA's final incentive program retains the zero grams/mile compliance value for EVs and FCVs,
and for PHEVs when operated on grid electricity, a position supported by most automakers and a
few other commenters. But, EPA disagrees with Nissan that excluding upstream GHGs is
legally required under section 202(a)(l). In this rulemaking, EPA is adopting standards under
section 202(a)(l), which provides EPA with broad discretion in setting emissions standards.
This includes authority to structure the emissions standards in a way that provides an incentive to
promote advances in emissions control technology. This discretion includes the adjustments to
compliance values adopted in the final rule, the multipliers we proposed, and other kinds of
incentives. In response to the comment of Nissan, EPA recognizes that we have not previously
made adjustments to a compliance value to account for upstream emissions in a section 202(a)
vehicle emissions standard, but that does not mean we do not have authority to do so in this case.
In addition, EPA is not directly regulating upstream GHG emissions from stationary sources, but
instead is deciding how much value to assign to a motor vehicle for purposes of compliance
calculations with the motor vehicle standard. Although the logical place to start is the emissions
level measured under the applicable test procedure, section 202(a)(l) does not require that EPA
limit itself to only that level. For vehicles above the cumulative vehicle production volume caps
described below, EPA will adjust the measured value to a level that reflects the net difference in
upstream GHG emissions compared to a comparable conventional vehicle. This will account for
the actual GHG emissions increase associated with the use of the EV. As shown above, upstream
GHG emissions attributable to increased electricity production to operate EVs or PHEVs
currently exceed the upstream GHG emissions attributable to gasoline vehicles. There is a
rational basis for EPA to account for this net difference, as that best reflects the real world effect
on the air pollution problem which the rule addresses. For vehicles above the cumulative vehicle
production volume caps, EPA is reasonably and fairly accounting for the incremental increase in
upstream GHG emissions from both the electric vehicles and the conventional vehicles.
Consequently, EPA is not, as Nissan suggested, arbitrarily counting upstream emissions for
electric vehicles but not for conventional fuel vehicles. EPA also agrees with the National
Automotive Dealers Association that Congress will consider whether to regulate GHG emissions
from utilities, and that will be one factor that EPA will consider in future deliberations about
how to treat vehicles that operate on grid electricity.
In response to the general concerns of many commenters about the potential of the zero
grams/mile compliance value to possibly "undermine" the entire program, and the
recommendation from the South Coast Air Quality Management District that EPA consider
limiting the number of vehicles qualified to receive the incentive, EPA is adding a cumulative
cap on the total production of EVs, PHEVs, and FCVs for which an individual manufacturer can
claim the zero grams/mile compliance value during MY2012-2016. The cumulative vehicle
production volume cap will be 200,000 vehicles, except those manufacturers that sell at least
25,000 EVs, PHEVs, and FCVs in MY2012 will have a cap of 300,000 vehicles for MY2012-
2016. This higher cap option is an additional incentive for those manufacturers that take an early
leadership role in aggressively and successfully marketing advanced technology vehicles. These
caps are one way to limit the potential GHG benefit losses associated with the incentive program
and therefore are another response to the concerns that the proposed incentives were excessive
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and could significantly undermine the program's GHG benefits. If, for example, 500,000 EVs
were produced in MY2012-2016 that qualified for the zero grams/mile compliance value, the
loss in GHG benefits due to this program would be about 25 million metric tons, or less than 3
percent of the total projected GHG benefits of this program.15 EPA believes this modest
potential for reduction in near-term GHG emissions control is more than offset by the potential
for very large future GHG emissions reductions that commercialization of these technologies
could promote. The rationale for these caps is that an incentive is most critical when individual
automakers are beginning to introduce advanced technologies in the market, and less critical
once individual automakers have successfully achieved a reasonable market share and
technology costs decline due to greater production volumes and experience. EPA believes that
cap levels of 200,000-300,000 vehicles over a five model year period are reasonable, as
production greater than this would indicate that the manufacturer has overcome at least some of
the initial market barriers to these advanced technologies. Further, EPA believes that it is
unlikely that many manufacturers will approach these cap levels in the MY2012-2016
timeframe.
Production beyond the cumulative vehicle production cap for a given manufacturer in MY2012-
2016 will have its compliance values calculated according to a methodology that accounts in full
for the net increase in upstream GHG emissions. For an EV, for example, this would involve: 1)
measuring the vehicle electricity consumption in watt-hours/mile over the 2-cycle test (for
example, a midsize EV might have a 2-cycle test electricity consumption of 230 watt-
hours/mile), 2) adjusting this watt-hours/mile value upward to account for electricity losses
during transmission and vehicle charging (dividing 230 watt-hours/mile by 0.93 to account for
grid/transmission losses and by 0.90 to reflect losses during vehicle charging yields a value of
275 watt-hours/mile), 3) multiplying the adjusted watt-hours/mile value by a nationwide average
electricity upstream GHG emissions rate of 0.642 grams/watt-hour at the powerplant16 (275
watt-hours/mile multiplied by 0.642 grams GHG/watt-hour yields 177 grams/mile), and 4)
subtracting the upstream GHG emissions of a comparable midsize gasoline vehicle of 56
grams/mile to reflect a true net increase in upstream GHG emissions (177 grams/mile for the EV
minus 56 grams/mile for the gasoline vehicle yields a net increase and EV compliance value of
121 grams/mile).17 18 This methodology is similar to that advocated by the Natural Resources
15 See Regulatory Impact Analysis, Appendix 5.B.
16 The nationwide average electricity upstream GHG emissions rate of 0.642 grams GHG/watt-hour was calculated
from 2005 nationwide powerplant data for CO2, CH4, and N2O emissions from eGRID2007
(http://www.epa.gov/cleanenergy/energy-resources/egrid/index.html), converting to CO2 -e using Global Warming
Potentials of 25 for CH4 and 298 for N2O, and multiplying by a factor of 1.06 to account for GHG emissions
associated with feedstock extraction, transportation, and processing (based on Argonne National Laboratory's The
Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation (GREET) Model, Version l.Sc.O,
available at http://www.transportation.anl.gov/modeling_simulation/GREET/). EPA recognizes that there are many
issues involved with projecting the electricity upstream GHG emissions associated with future EV and PHEV use
including, but not limited to, average vs marginal, daytime vs nighttime vehicle charging, geographical differences,
and changes in future electricity feedstocks. EPA chose to use the 2005 national average value because it is known
and documentable. Values appropriate for future vehicle use may be higher or lower than this value. EPA will
reevaluate this value in future rulemakings.
17 A midsize gasoline vehicle with a footprint of 45 square feet would have a MY2016 GHG target of about 225
grams/mile; dividing 8887 grams CO2/gallon of gasoline by 225 grams/mile yields an equivalent fuel economy level
of 39.5 mpg; and dividing 2208 grams upstream GHG/gallon of gasoline by 39.5 mpg yields a midsize gasoline
vehicle upstream GHG value of 56 grams/mile. The 2208 grams upstream GHG/gallon of gasoline is calculated
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Defense Council, with the one meaningful difference being the use of a national average
electricity upstream GHG emissions rate, rather than a marginal rate, an issue addressed in
Section 5.7.3.4 below.
The full accounting methodology for the portion of PHEV operation on grid electricity would
use this same approach. PHEV compliance values will be determined by combining zero
grams/mile for grid electricity operation with the GHG emissions from the 2-cycle test results
during operation on liquid fuel, and weighting these values by the percentage of miles traveled
that EPA believes will be performed on grid electricity and on liquid fuel, which will vary for
different PHEVs. EPA is currently considering different approaches for determining the
weighting factor to be used in calculating PHEV GHG emissions compliance values. EPA will
consider the work of the Society of Automotive Engineers Hybrid Technical Standards
Committee, as well as other relevant factors. EPA will issue a final rule on this methodology by
the fall of 2010, when EPA expects some PHEVs to initially enter the market.
5.7.3.4 Comments on Vehicle Multiplier
EPA proposed a vehicle multiplier for EVs, PHEVs, and FCVs in the range of 1.2 to 2.0 and
sought comments on the level of the multiplier and various ways it might best be structured. The
proposed vehicle multiplier would also have been an incentive as it would have allowed an EV,
PHEV, or FCV to count as more than one vehicle in an individual manufacturer's fleet average
compliance calculations. For example, a vehicle multiplier of 2.0 would have effectively
doubled the effective credit associated with an EV, PHEV, or FCV.
Nearly every automaker and industry-related group strongly supported a vehicle multiplier,
including the Alliance of Automobile Manufacturers, BMW, Chrysler, Cummins, Ford, Honda,
Hyundai, Mercedes-Benz/Daimler AG, Mitsubishi, the Motor and Equipment Manufacturers
Association, the National Automobile Dealers Association, Nissan, SABIC Innovative Plastic,
United Auto Workers, and Volkswagen. Some automakers supported vehicle multipliers in
excess of the proposed range of 1.2 to 2.0, for example, Chrysler supported vehicle multipliers as
high as 6.0 and Honda supported levels as high as 16.0 (for a FCV with a 300-mile range).
About half of these organizations supported universal vehicle multipliers, and about half
supported differential multipliers. Some of these commenters, such as the Alliance for
Automobile Manufacturers, Ford, and Mitsubishi, also supported the concept of maintaining
incentives until a certain market threshold was achieved. Also supporting a vehicle multiplier
were the California Air Resources Board, citizen Yuli Chew, the State of New Jersey, and the
Washington Department of Ecology.
A second group of commenters supported, or at least appeared willing to accept, a vehicle
multiplier of 1.2, at the low end of the proposed range. These commmenters also generally
advocated that the vehicle multiplier be phased out by MY2016. These commenters included the
Massachusetts Department of Environmental Protection, Natural Resources Defense Council,
from 19,200 grams upstream GHG/mmBtu (Renewable Fuel Standard Program, Regulatory Impact Analysis,
Section2.5.8, February 2010) and multiplying by 0.115 mmBtu/gallon of gasoline.
18 Manufacturers can utilize alternate calculation methodologies if shown to yield equivalent or superior results and
if approved in advance by the Administrator.
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Northeast States for Coordinated Air Use Management, Public Citizen/Safe Climate Campaign,
Sierra Club, Union of Concerned Scientists, and the University of California/Santa Barbara Bren
Working Group on Vehicle Fuel Economy. As mentioned previously, the tone of some of these
comments suggests that some of these commenters might have supported no multiplier had that
been within the range of the EPA proposal.
There were a few commenters that explicitly rejected any vehicle multipliers, including the
American Council for an Energy Efficient Economy, the New York University School of
Law/Institute for Policy Integrity, and Toyota. The first two commenters rejected the need for
any kind of incentive, while Toyota argued that a "double credit" was unnecessary and that the
zero grams/mile compliance value is more directly tied to the vehicle technologies that EPA is
incentivizing.
EPA's final advanced technology vehicle incentive program will not include any vehicle
multipliers. In general, EPA agrees with the overall thrust of the majority of commenters that the
proposed incentive program was too generous, and in particular we agree with Toyota that the
zero grams/mile compliance value is more directly targeted to EVs, PHEVs, and FCVs than a
vehicle multiplier, which could also apply to a wide number of other technologies. EPA agrees
with those commenters that suggested some type of market threshold above which any incentives
would be phased out, and we believe that the cumulative vehicle production volume caps
discussed above reasonably implement this idea, providing a proper incentive for initial
commercialization but limiting the potential loss in GHG emissions reductions associated with
that incentive.
5.7.3.5 Comments on Miscellaneous Issues Related to the Advanced Technology Vehicle
Incentive Program
A few commenters raised the issue of whether EPA should expand the specific technologies that
are eligible for the advanced technology vehicle incentives. For example, the Alliance of
Automobile Manufacturers suggested that hydrogen-fueled internal combustion engines be
added, BMW advocated that clean diesel vehicles be included, and Mercedes-Benz/Daimler AG
argued that both diesel vehicles and natural gas vehicles be incentivized. While not explicitly
recommending that diesel vehicles be included in the advanced technology vehicle incentive
program, the U.S. Coalition for Advanced Diesel Cars recommended that EPA recognize the
full-fuel cycle GHG benefits based on diesel's higher energy density (leading to less GHG
emissions from fuel distribution) and lower energy losses during refining. EPA is not expanding
the list of eligible advanced vehicle technologies primarily because all of these technologies
utilize internal combustion engines, which have dominated the personal vehicle market in this
country for the last 100 years and do not present the same level of market challenges to
automakers as EVs, PHEVs, and FCVs. EPA agrees that these other technologies face market
barriers (e.g., hydrogen fuel availability, and natural gas on-board storage), but EPA believes the
barriers are far less than those faced by EVs, PHEVs, and FCVs.
With respect to the arguments about diesel's full fuel-cycle GHG emissions benefits, EPA
reiterates that the final GHG emissions standards are tailpipe standards, and EPA is not taking
into account fuel upstream GHG emissions issues at this time, with the single exception of
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electricity. While the tailpipe standards are fuel neutral, EPA recognizes that every motor
vehicle fuel and fuel production process has unique upstream GHG emissions impacts. EPA has
discretion in this rulemaking under section 202(a) (1) on whether to account for differences in
net upstream GHG emissions relative to gasoline produced from oil, and intends to only consider
upstream GHG emissions for those fuels that have significantly higher or lower GHG emissions
impacts. At this time, EPA is only making such a determination for electricity, given that
electricity upstream GHG emissions are about three times higher than gasoline upstream GHG
emissions. The difference in upstream GHG emissions for both diesel fuel (the U.S. Coalition
for Advanced Diesel Cars cites a value of 11% lower for diesel fuel, based on EPA data) and
compressed natural gas are much lower, on a relative basis.
Related to the discussion above in Section 5.7.3.3 on the zero grams/mile compliance value,
several commenters raised issues regarding the appropriate electricity upstream GHG emissions
rate to use. Although EPA did not ask for comments on this issue, these comments are relevant
in that, though EPA is retaining the zero grams/mile compliance value, vehicles produced in
excess of the cumulative vehicle production volume caps discussed above will have their
compliance values generated, in part, by an assumed electricity upstream GHG emissions rate.
EPA has chosen to use the 2005 national average electricity upstream GHG emissions rate, and
although several commenters supported this approach, others did not. Several commenters,
including the American Council for an Energy Efficient Economy, Natural Resources Defense
Council, and Sierra Club, recommended that EPA use a "marginal" electricity upstream GHG
emissions rate, to account for the fact that vehicle use of grid electricity will be an additional
demand that would likely be met by a different mix of electricity feedstocks than the national
average. Given that many of the lowest-GHG electricity sources, such as nuclear and
hydropower, are base sources and operated 24/7 except when forced down for maintenance or by
extraordinary conditions, marginal electricity sources are often fueled with coal or natural gas,
with higher GHG emissions than the typical base load. Other commenters, including the
International Council on Clean Transportation and Public Citizen/Safe Climate Campaign,
suggested that EPA consider differential electricity upstream GHG emissions rates reflecting the
fact that there are significant differences in how electricity is generated in different regions and
states. Accordingly, an EV sold in a state where coal is the dominant electricity feedstock would
have a higher electricity upstream GHG emissions rate than an EV sold in a state where little
coal is used. EPA recognizes that these are both legitimate issues, and that there are other
relevant issues as well such as daytime vs nighttime vehicle charging, changes in future
electricity feedstocks, etc. EPA has chosen to use the 2005 national average electricity upstream
GHG emissions rate discussed above in part because it is known and documentable. Values
appropriate for future vehicle use may be higher or lower than this value, and EPA commits to
reevaluating these complex issues in any future rulemakings.
Finally, Honeywell Transportation Systems suggested that EPA establish a mechanism to verify
the percentage of PHEV vehicle miles traveled on electricity and gasoline. The vehicle miles
traveled weighting between electricity and gasoline will be a primary determinant of the overall
GHG emissions compliance value for a PHEV. EPA agrees with Honeywell that this is an
important issue as the weighting factor will be a critical element in determining PHEV GHG
emissions compliance values, as discussed above. EPA is not proposing a specific approach for
determining or verifying the weighting factor at this time, but EPA does commit to monitor
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independent work in this area (for example, the work of Society of Automotive Engineers
Committee J1711) and to issue a final decision on a methodology for determining this weighting
factor by the fall of 2010.
5.7.4. Off-cycle Technology Credits
OrganizationrFord Motor Company
Honda Motor Company
Mercedes-Benz (Daimler AG)
Association of International Automobile Manufacturers (AIAM)
Chrysler Group LLC (Chrysler)
Alliance of Automobile Manufacturers (Alliance)
Hyundai Motor Company
Toyota Motor North America
BMW of North America, LLC (BMW)
Public Citizen and Safe Climate Campaign
Union of Concerned Scientists
Natural Resources Defense Council
Sierra Club
United Auto Workers
State of New Jersey
INRIX
Chew, Yuli
Volkswagen
Comment:
Ford Motor Company
Off-Cycle Credits
Ford agrees with EPA's approach to allow provisions that would provide additional flexibility
through introduction of advanced technologies that achieve real-world GHG emission
reductions. Ford is willing to work with EPA and other OEMs to facilitate consumer focus
groups, develop education training programs and develop simulation methods to verify other
advanced technologies that demonstrate real-world GHG emission reductions. Ford agrees with
the Alliance that this is best handled via manufacturer guidance letters, as these technologies
emerge and are developed. [OAR-2009-0472-7082.1, p. 8]
Honda Motor Company
EPA proposes optional credit opportunities for "innovative technologies that reduce vehicle CO2
emissions but the benefits are not captured in the 2 cycle test procedures. This proposal is
welcomed by Honda, however, to assure fairness and transparency, Honda recommends that
EPA publish information about each proposed technology credit as well as a brief description of
the technology and allow a sufficient time for public comment. After considering the input from
the public, EPA could establish a final rule after which the credit would become effective one
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year later. This would create a level playing field and assure a thorough discussion of the
proposed technologies and their credits. [NHTSA-2009-0059-0095.1, p. 10]
Additionally, EPA proposes that the off-cycle technology "must not be significantly measurable
over the Federal Test Procedure and the Highway Fuel Economy Test." Honda believes this is
unfortunate, since a technology that has significant off-cycle benefits may also have some
measurable benefits on the 2 cycle test (FTP and HFET). EPA should not deny such technologies
that demonstrate some benefit on FTP and HFET. [NHTSA-2009-0059-0095.1, p. 10]
EPA proposes that an OEM repeat the 5 cycle testing both with and without the proposed off-
cycle technology. EPA's testing proposal works well if the technology cannot demonstrate any
benefit on the FTP and HFET tests. On the other hand, if EPA agrees with Honda that it is
reasonable to allow some benefit on the FTP and HFET tests, then a different comparison test is
required, to avoid double-counting. [NHTSA-2009-0059-0095.1, p. 10]
Honda proposes that only the US06, SC03 and Cold LA-4 be repeated with and without the
proposed technology activated in order to accurately count off-cycle credits, (see Attachment 6
for examples). [NHTSA-2009-0059-0095.1, p. 10] [[See NHTSA-2009-0059-0095.1, p. 19 for
Attachment 6]]
Mercedes-Benz (Daimler AG)
DAG also strongly supports the proposed credits for off-cycle technologies that are able to
achieve substantial CO2 reductions which, like A/C improvements, are not reflected in the federal
test procedures. These credits acknowledge that technology improvements can reduce emissions
and improve fuel efficiency in ways that are not measured strictly through tailpipe testing. The
European Union has already begun a similar program recognizing these benefits. The current
proposal will further develop and expand new technologies in this area.
DAG is committed to working with EPA to implement the proposed credit system. DAG concurs
that the 5 cycle test is an appropriate starting point for measuring the emission reduction values
of off-cycle technologies and that alternative pathways should also be available. In determining
whether a particular technology is in widespread use, it will be important to take into account the
vehicle segment. Only in that way can EPA ensure the widespread deployment of off-cycle
technologies throughout the light duty fleet.
[OAR-2009-0472-7193.2, p. 18]
First, the proposed rule includes incentives for early introduction of vehicle innovations that do
not show up on the dyno test, but all of us know can have a significant effect on greenhouse gas
emissions. For example, air conditioning refrigerants and eco-innovation such as solar panels
result in a more significant environmental benefit than the effect it may have on the customer
experience. The proposed rule encourages companies like ours to adopt these innovations
regardless of the corresponding value that our customers might assign to these innovations.
[These comments were submitted as testimony at the New York public hearing. See docket
number OAR-2009-0472-4621, pp. 50.]
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Association of International Automobile Manufacturers (AIAM)
As for the off-cycle credits, EPA should facilitate transparent and fair evaluation of both the off-
cycle credits for technologies and of the technologies themselves, so that all companies would
have a fair opportunity to avail themselves of the credits. EPA should publish proposed off-cycle
approaches in the Federal Register as they are requested by a manufacturer, allow a reasonable
amount of time for comment on the proposed approach, and then, if the request is granted, make
the credits available one year after the final decision by the Agency. These comments on the off-
cycle credits apply not only to the early credits but also to those that would be used in the 2012-
2016 period. [OAR-2009-0472-7123.1, p.14]
Chrysler Group LLC (Chrysler)
The methodology for calculating off-cycle technology credits should not be defined for this
rulemaking.
At the time of this Proposed Rule, there is no clear understanding of what off-cycle technologies
currently exist or will be invented in the future. Setting specific test requirements to prove the
value of such technologies is therefore premature. Regulations promulgated by this rulemaking
should simply allow for the generation of off-cycle credits without setting a specific test
procedure. As manufacturers wish to generate these credits, methodologies could be developed
through future guidance. [NHTSA-2009-0059-0124, p.28]
Off-cycle Technology Credits should not be limited to only 'new or innovative' technologies.
The restriction of off-cycle technology credits to 'new or innovative' technologies is problematic.
The initial application of any technology by a manufacturer involves some level of learning,
regardless of whether the technology is completely new to the industry or innovative in its
application. In addition, both terms would appear to restrict such credits to the initial application
of the technology within a manufacturer's fleet; once implemented other vehicle applications and
later model years may not receive credit for the technology. [NHTSA-2009-0059-0124, p.28]
Just as improvements to air conditioning systems will receive credit, improvements which are
not otherwise captured by standard testing should also be given credit, regardless of how
commonplace a certain technology becomes. [NHTSA-2009-0059-0124, p.28]
Off-cycle technology credits should be provided for the California 'Cool Car' program.
In June 2009, the California Air Resources Board approved new GHG standards for California
vehicles that will impose increasingly stringent limits on the total transmission of solar energy
(Tts) on glass used in light-duty vehicles and light-duty trucks. Those requirements, like the
CO2 standards proposed for the National Program, will take effect in MY 2012 and become
increasingly stringent through MY 2016. Also, like the National Program, the new California
standards, called the 'Cool Cars' regulation, are intended to reduce GHG emissions (and thus
increase fuel economy) through the use of smaller, more efficient air conditioners. [NHTSA-
2009-0059-0124, pp.28-29]
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If California's final Cool Cars rule can not be met through compliance with the National
Program, EPA and NHTSA should provide off-cycle technology credits for the efforts that
manufacturers will have to undertake to meet the requirements of the Cool Cars rule. That
recognition is appropriate from an environmental perspective, and will mitigate, to some extent.
[NHTSA-2009-0059-0124, p.29]
Alliance of Automobile Manufacturers (Alliance)
Off-Cycle Credits
EPA has proposed allowing manufacturer the opportunity to earn off-cycle credits for new and
innovative technologies that reduce CC>2. This Alliance supports the concept of providing credits
as a way to further incentivize technology development in this area. However as proposed, the
Alliance is concerned that the current proposal does not offer manufacturers enough certainty
with regards to credit application and testing in order to take advantage of these credits.
Furthermore, EPA's proposal does not offer a level playing field to all manufacturers in terms of
possible credit availability. [OAR-2009-0472-6952.1, p. 53]
Recommendation:
Rather than attempting to quantify CC>2 reductions with a prescribed test procedure on unknown
technologies at this time, EPA should handle credit application and testing guidelines via future
guidance letters, as these technologies emerge and are developed. [OAR-2009-0472-6952.1, p.
53]
Hyundai Motor Company
We support off-cycle technology credits for technologies that provide a GHG benefit in the real
world but that are not captured during the fuel economy test cycles. Off-cycle technology credits
will incentivize innovative GHG reduction technologies.
Hyundai is concerned that it will be difficult to determine the real world use and/or benefits of
the off-cycle credits. While EPA suggests that credits could be calculated using the 5-cycle fuel
economy test cycle, this cycle will not demonstrate the benefits of many innovative fuel
efficiency technologies, like green- or eco-driving guides, predictive cruise control, or
econavigation routing. An example of the benefits of predictive cruise control is the ability to
maximize fuel economy during hill climbs by reducing acceleration on the incline in anticipation
of an oncoming decline. Preliminary studies of these technologies show a substantial fuel
economy benefit, up to 12 percent, but such benefits would not be measurable on any
dynamometer test cycle. Thus, in cases where the 5-cycle fuel economy test cannot provide
meaningful measurement, EPA should allow a simple calculation of benefits based on good
engineering judgment. We believe that off-cycle credits will be important for spurring
technology and obtaining real world benefits; a simplified process to assess benefits will
expedite implementation.
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EPA also noted that the off-cycle technology credits are only available for innovative
technologies that have not been widely adopted (74 Federal Register (FR) 49534). Hyundai
believes that it may be appropriate to provide an off-cycle credit even once widespread adoption
of an innovative technology has occurred. One example is the reflective glazing which California
will require on vehicles beginning in MY 2012. California believes that there is a GHG reduction
from the application of reflective glazing materials in motor vehicles; the glazing blocks solar
heat absorption into a parked vehicle, resulting in a cooler vehicle interior and reduced air
conditioner (A/C) use. The extension of off-cycle credits for technologies like reflective glazing
would provide manufacturers with an incentive to adopt the technology not just in California but
nationwide. The off-cycle credit should be used to encourage continued application of beneficial
off-cycle technology, whether innovative or not. [OAR-2009-0472-7231.1, p.4]
Toyota Motor North America
EPA proposes the opportunity to earn off cycle credits for technologies that reduce CO2, but
where CO2 reduction benefits are not captured over the 2-cycle test procedure used for fleet
average standard compliance (e.g. off cycle). EPA plans to approve only technologies that are
innovative, or novel approaches to reducing GHG emissions. EPA proposes a two-tiered process
for demonstrating the CO2 reductions not captured by the FTP and HFET test procedures.
Manufacturers could determine benefit of the technology via the 5-cycle test methods used for
fuel economy label values. Or, if existing test cycles are not adequate, EPA will advise
manufacturers in developing test procedures to estimate the effectiveness of the technology.
[OAR-2009-0472-7291, p.24]
Toyota agrees with the concept of providing credit for CO2 reductions that can be reflected from
off cycle contributions. In doing so, EPA is providing incentives to promote technology
developments in this area. However, to fully take advantage of these credits, manufacturers
require more certainty in determining credit application and testing requirements before making
commitments to use these technologies. Toyota is concerned that the lack of specificity in the
current proposal could result in inconsistent application of credits among manufacturers who are
using the same technology. As a result, Toyota requests that EPA refrain from offering off cycle
credit until the method to measure off cycle performance has been fairly established. [OAR-
2009-0472-7291, pp.24-25]
BMW of North America, LLC (BMW)
Off-cycle technologies can deliver a viable contribution to reduce greenhouse gas emissions and
to improve fuel economy. Therefore, BMW greatly appreciates that EPA has proposed off-cycle
technologies for compliance flexibility in this rulemaking. To bring off-cycle technologies to the
market, an efficient approval process based on already existing or adopted procedures should be
implemented. Further, BMW strongly supports EPA's proposed approach for evaluating credits
from off-cycle technologies. [OAR-2009-0472-7145.1, p.6]
Public Citizen and Safe Climate Campaign
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EPA proposes to give automakers credits for certain advanced technologies that may reduce
greenhouse gas emissions from motor vehicles, but for which the reductions cannot be measured
by EPA's current five-cycle emissions test. Examples of such technologies are active
aerodynamics, adaptive cruise control and solar panels on hybrids. The EPA does not provide
details on how it proposes to estimate the value of these credits or the greenhouse gas emission
reductions related to any given technology. Presumably, the credits would vary for each specific
technology and specific vehicle on which it is installed. [OAR-2009-0472-7050.1, p.6]
The agency cites creating a market incentive for these technologies as motivation for providing
them. While we acknowledge that it is possible that such credits may encourage manufacturers to
install these technologies, we are skeptical that the credits would be sufficient to significantly
increase technology penetration. Moreover, the setting of a strong, mandatory standard alone
would provide ample incentive for manufacturers to pursue cost-effective technologies that
reduce greenhouse gas emissions. In addition, manufacturers are likely to market vehicles with
these technologies for reasons other than their environmental impact. For example, active
aerodynamics can reduce road noise, something which may resonate strongly with consumers.
Automakers have already begun to market adaptive cruise control as a safety technology, not an
efficiency technology. There is especially little reason to give credits for technologies that
automakers intend to install anyway. [OAR-2009-0472-7050.1, p.6]
EPA cites no quantitative estimate of the greenhouse gas emission reductions associated with
these technologies, presumably because no sufficiently rigorous estimates are available. The
agency has not developed tests to estimate the actual greenhouse gas emissions reductions from
these technologies in a real world context. The proposal does not even suggest that EPA has
contemplated how it would estimate real world emission reductions from these technologies.
Without its own framework, the agency would then be dependent on each automaker to provide
estimates of emissions reductions from off-cycle technologies, and then there is no guarantee of
consistency in the test procedure used to develop the [OAR-2009-0472-7050.1, p.6] estimate. If
the automakers conduct the tests, then there would likewise be no public participation in
developing the tests. [OAR-2009-0472-7050.1, p.7]
EPA should not grant credits for off-cycle emissions, unless it also proposes test procedures for
estimating the emissions reductions, comparing them to measured on-road reductions and
ensuring that the industry will not be granted credits for technologies that amount to marketing
gimmicks. Still, these credits, like those for advanced technology vehicles, may or may not
provide an incentive for automakers to incorporate these technologies. These technologies in
particular, since their impact cannot currently be measured on EPA's emissions test, seem
unlikely to be motivated by regulation, but rather by consumer demand and other market forces.
EPA must not grant the automakers credits for actions automakers would take in absence of the
regulation. [OAR-2009-0472-7050.1, p.7]
Union of Concerned Scientists
UCS is supportive of credits generated by "off-cycle" technologies, as long as the off-cycle
credits being given correspond to actual greenhouse gas emissions reductions yielded by the
technology in a real-world environment. We support the notion of measuring the credits under
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the 5-cycle test. However, the alternative option laid out in the proposed rulemaking, the case-
by-case approach to assessing off-cycle credits, raises some concerns. While we wholeheartedly
agree with EPA's position that "the [alternative option's] demonstration program should be
robust, verifiable, and capable of demonstrating the real-world emissions benefit of the
technology with strong statistical significance," the proposal does not appear to include any
opportunity for public comment on the approach taken to quantify credits prior to the agency's
acceptance of the approach. Given the broad number of stakeholders with experience in the
issues pertaining to these technologies, we believe it would be prudent to add an additional step
soliciting and heeding public comment on any "alternative" approach to assessing off-cycle
credits before any credits are granted to manufacturers. [OAR-2009-0472-7181.1, p. 11]
Natural Resources Defense Council
Off-Cycle Technology Credits Should Only Be Awarded for Real and Verifiable GHG
Reductions
While NRDC appreciates EPA's efforts to evaluate GHG reduction technologies that are not
identified under current compliance tests and to encourage continued innovation this area, EPA
should not provide credits until such technologies can be verified as providing real and
enforceable GHG reductions. As GHG reductions are identified and evaluated, EPA should
consider the widespread adoption of these technologies when setting future standards. [OAR-
2009-0472-7141.1, p. 18]
For MY 2012-2016, EPA should only award off-cycle credits to vehicles after the agency has
verified actual GHG reductions through certification testing. The certification process should be
initiated by an automaker petitioning for off-cycle credit consideration. Upon receipt of the
petition, EPA should propose a test procedure for public review and only allow its use for credit
generation after consideration of stakeholder comments. The magnitude of the credits offered per
vehicle should account for any degradation in the off-cycle technology over the life of the
vehicle and not base the credits solely on performance during the test. Additionally, test
procedures should be subjected to period review to keep up with the latest technology
advancements both in the off-cycle technologies and the other vehicle characteristics as each
may impact the level of GHG reductions that should be attributed to the off-cycle technology.
Finally, EPA should ensure that the benefits of the technology can be verified and enforced in
use. [OAR-2009-0472-7141.1, pp.18-19]
Sierra Club
We support limited "off-cycle" technology credits, as long as they represent accurate, verifiable
emissions reductions. It is critical that EPA establish an effective certification process that is
open for public comment. We note that some have proposed that technologies such as traffic
alerts that could redirect drivers away from traffic jams and other "eco" driving technologies be
eligible for CAFE credits. When determining the eligibility of technologies, EPA should be clear
that only those which relate to the vehicle, and not behavior-changing technologies, should be
eligible. Further, technologies that receive off-cycle credits should be periodically reassessed to
ensure the continued accuracy of emissions reductions. [OAR-2009-0472-7278.1, p.15]
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State of New Jersey
In addition, the Department supports the option to allow manufacturers to generate credits
through 'off-cycle' technologies that have been verified by the USEPA or the CARB. [OAR-
2009-0472-7109. l,p.8]
Chew, Yuli
I support "off-cycle" technologies that have been accepted by SAE or CARB. CARB's study
indicated that air-conditioning may use as much as 5.5% of the total light-duty vehicle fuel use.
As such, I support giving GHG credits for innovative measures such as Cool Car Standard
proposal in CARB http://www.arb.ca.gov/regact/2009/coolcars09/coolcars09.htm Manufacturers
can claim credits up to verifiable hot soak performance tests on the GHG emission reductions
achieved. [OAR-2009-0472-7042.1, p.2]
Volkswagen
Volkswagen also supports the flexibility provided in the regulation to allow credit for real world
GHG reductions that are not captured on the relevant test cycles. We believe that these GHG
reductions can be significant and can also offer significant benefit to consumers. We urge the
EPA to maintain a viable pathway and mechanism for evaluating these types of technologies.
Volkswagen also notes that some technologies may offer benefits on the relevant test cycles
while also offering either significant or greater benefits to customers in real world usage. We
propose that EPA accommodate this type of technology that may have benefit both on and off-
cycle. An example of this could be various forms of stop/start systems. It is possible that certain
designs or strategies for stop/start systems will yield varied results over the fuel economy test
cycles versus off-cycle modes. For example, Volkswagen believes some stop/start systems may
yield a 1-2 percent improvement over the fuel economy test cycles but yield an 8 percent benefit
in real world driving for the customer. Volkswagen plans to discuss this type of technology in
more detail with EPA staff in the future, but for the purposes of this rulemaking it is important to
establish that CC>2 performance credit is possible and that a fair process is in place to evaluate
and grant the correct credit for a given technology. In addition, Volkswagen recommends that
credits from CC>2 performance technology under real world driving conditions should be in effect
over the full time period of this regulation. Volkswagen also notes that measurable and
documented real world GHG reductions due to technology related improvements to vehicles
should not be strictly related to new or innovative technical measures - it is possible that simple,
known technology could yield significant real world GHG reductions.
EPA Response:
Public Citizen and Safe Climate Campaign commented that "while we acknowledge that it is
possible that such credits may encourage manufacturers to install these technologies, we are
skeptical that the credits would be sufficient to significantly increase technology penetration.
Moreover, the setting of a strong, mandatory standard alone would provide ample incentive for
manufacturers to pursue cost-effective technologies that reduce greenhouse gas emissions. In
addition, manufacturers are likely to market vehicles with these technologies for reasons other
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than their environmental impact. For example, active aerodynamics can reduce road noise,
something which may resonate strongly with consumers. Automakers have already begun to
market adaptive cruise control as a safety technology, not an efficiency technology. There is
especially little reason to give credits for technologies that automakers intend to install anyway."
In response, EPA disagrees that setting a strong mandatory standard alone would provide ample
incentive for technologies that reduce emissions where those emissions reductions not captured
by the certification test procedures. Indeed, there is some potential for the opposite result, since
manufacturers are less likely to develop technologies which bring them no benefit in complying
with the standards. Also, EPA has taken a rigorous approach in determining the type of
technologies that are eligible for credits in order to provide manufacturers with an incentive to
develop these new technologies. One of the primary criteria is that the technologies be new and
not in widespread use. EPA does not believe it would be practical to also try to predict that the
application of the new technology would occur at the same rate or not at all without the
opportunity to generate credits. Nor does EPA believe that in determining eligibility that it
should matter if candidate technologies offer additional benefits to consumers in addition to
emissions reductions, only that the technology is new and innovative and does not provide
significant emissions reductions on the 2-cycle test.
The same commenter stated that "the proposal does not even suggest that EPA has contemplated
how it would estimate real world emission reductions from these technologies." The final rule in
fact provides that if the 5-cycle option is utilized, the manufacturer must determine CC>2
emissions both with and without the technology installed and operating. Section 86.1866-12 (d)
(2) (i) goes on to detail precisely how this comparison is to be effectuated. Manufacturers using
an EPA-approved alternative methodology must make the same demonstration. Section
86.1866-12 (d) (2) (ii) (B) and (C). In addition, the technology must be demonstrated over the
vehicle's useful life, the manufacturer must account for deterioration, and the technology must
improve CC>2 emissions beyond the driving conditions of the 2-cycle (FTP and HFET) test
procedures. Section 86.1866-12 (d) (1) (ii) and (iii).
EPA is finalizing off-cycle credit provisions for eligible innovative technologies, defined as
technologies that are relatively newly introduced in one or more vehicle models, but that are not
yet implemented in widespread use in the light-duty fleet. EPA will not approve credits for
technologies that are not innovative or do not provide novel approaches to reducing greenhouse
gas emissions. Manufacturers must obtain EPA approval for new and innovative technologies at
the time of vehicle certification in order to earn credits for these technologies at the end of the
model year. This approval must include the testing methodology to be used for quantifying
credits. Further, any credits for these off-cycle technologies must be based on real-world GHG
reductions not significantly captured on the current 2-cycle tests and verifiable test methods, and
represent average U.S. driving conditions.
EPA is finalizing a two-tiered process for demonstrating the CC>2 reductions of an innovative and
novel technology with benefits not significantly captured by the FTP and HFET test procedures.
First, a manufacturer must determine whether the benefit of the technology could be captured
using the 5-cycle methodology currently used to determine fuel economy label values. EPA
established the 5-cycle test methods pursuant to section 206 (h) of the Act to better represent
real-world factors impacting fuel economy (among other things), including higher speeds and
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more aggressive driving, colder temperature operation, and the use of air conditioning. If this
determination is affirmative, the manufacturer must follow the procedures described below (as
codified in today's rules). If the manufacturer finds that the technology is such that the benefit is
not adequately captured using the 5-cycle approach, then the manufacturer would have to
develop a robust methodology, subject to EPA approval, to demonstrate the benefit and
determine the appropriate CC>2 gram per mile credit. As discussed below, EPA is also providing
opportunity for public comment as part of the approval process for such non-5-cycle credits.
EPA received a few comments regarding the 5-cycle approach. Some commenters were
supportive of the 5-cycle approach. Although not commenting directly on the 5-cycle testing
methodology, the Alliance and some manufacturers raised general concerns that the proposed
approach did not offer manufacturers enough certainty with regard to credit applications and
testing in order to take advantage of the credits. The Alliance further commented that the
proposal did not provide a level playing field to all manufacturers in terms of possible credit
availability. The Alliance recommended that rather than attempting to quantify CC>2 reductions
with a prescribed test procedure on unknown technologies, EPA should handle credit
applications and testing guidelines via future guidance letters, as technologies emerge and are
developed.
EPA believes that the 5-cycle testing methodology is one clear and objective way to demonstrate
certain off-cycle emissions control technologies, as discussed above. It provides certainty with
regard to testing, and is available for all manufacturers. As discussed below, there are also other
options for manufactures where the 5-cycle test is not appropriate. EPA is retaining this as a
primary methodology for determining off-cycle credits. For technologies not able to be
demonstrated on the 5-cycle test, EPA is finalizing an approach that will include a public
comment opportunity which we believe addresses commenter concerns regarding maintaining a
level playing field.
EPA received several comments recommending that the approval process include an opportunity
for public comment. As noted above, some manufacturers are concerned that there be a level
playing field in terms of all manufacturers having a reasonable opportunity to earn credits under
an approved approach. Commenters also want an opportunity for input in the methodology to
ensure the accuracy of credit determinations for these technologies. Commenters point out that
there are a broad number of stakeholders with experience in the issues pertaining to the
technologies that could add value in determining the most appropriate method to assess these
technologies' performance. The Alliance, Ford, Chrysler, and Toyota commented that the
procedures should be established via future guidance documents but did not mention needing a
public opportunity for comments. EPA agrees with comments supporting a public process, and
is including an opportunity for public comment as part of the approval process. If and when
EPA receives an application for off-cycle credits using an alternative non 5-cycle methodology,
EPA will publish a notice of availability in the Federal Register with instructions on how to
comment on draft off-cycle credit methodology. The public information available for review
will focus on the methodology for determining credits but the public review obviously is limited
to non-confidential business information. The timing for final approval will depend on the
comments received. EPA also believes that a public review will encourage manufacturers to be
thorough in their preparation prior to submitting their application for credits to EPA for approval.
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EPA will take comments into consideration, and where appropriate, work with the manufacturer
to modify their approach prior to taking final action regarding any off-cycle credits methodology.
EPA will give final notice of its determination to the general public as well as to the applicant.
Off-cycle credits would be available in the model year following the final approval. Thus, it will
be imperative for a manufacturer pursuing this option to begin the process as early as possible.
Ensuring Real-world Emissions Reductions
EPA received comments that credits should be real and verifiable and should take into account
deterioration. The final rule requires exactly this: credits can be generated "by implementing
innovative technologies that have a measurable, demonstrable, and verifiable real-world CC>2
reduction." Section 86.1266 (d). Credits thus must be based on real additional reductions of
CC>2 emissions and must be quantifiable and verifiable with a repeatable methodology.
Moreover, as proposed, manufacturers must quantify CC>2 reductions associated with the use of
the innovative off-cycle technologies such that the credits could be applied on a g/mile
equivalent basis, as is the case with A/C system improvements. Again as proposed, the
technologies upon which the credits are based would be subject to full useful life compliance
provisions, as with other emissions controls. Unless the manufacturer can demonstrate that the
technology would not be subject to in-use deterioration over the useful life of the vehicle, the
manufacturer must account for deterioration in the estimation of the credits in order to ensure
that the credits are based on real in-use emissions reductions over the life of the vehicle. We
believe including an opportunity for public comments as part of the approval process also helps
address commenters' concerns regarding ensuring that credits are real and verifiable because
interested parties will have an opportunity to evaluate these aspects of the credits.
Test Procedures
EPA also received comments that the off-cycle credits provision highlights the inadequacy of
current test procedures, and that there is a clear need for updated certification test procedures.
As discussed in preamble section III. B., EPA believes the current test procedures are adequate
(and indeed, essential as a practical matter, and legally mandated for the CAFE standards) for
implementing the standards finalized today. However, EPA is interested in improving test
procedures in the future and believes that the off-cycle credits program has the potential to
provide useful data and insights both for the 5-cycle test procedures and also for other test
procedures that capture off-cycle emissions.
New and Innovative Criteria
Some commenters also raised concerns regarding the possibility of giving off-cycle credits for
technologies that manufacturers are already using, and would therefore have serious concerns
about an approach that did not include the eligibility requirements for new and innovative
technologies. EPA agrees, and is thus finalizing the "new and innovative" criteria as proposed.
That is, the potential to earn off-cycle credits will be limited to those technologies that are new
and innovative, are introduced in only a limited number of vehicle models (i.e., not in
widespread use), and are not significantly captured on the current 2-cycle tests. This approach
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will encourage future innovation, which may lead to the opportunity for future emissions
reductions.
EPA received comments from a few manufacturers that the "new and innovative" criteria should
be broadened. The commenters pointed out that there are technologies already in the
marketplace that would provide emissions reductions off-cycle and that the rule should provide
further incentives for their use. Volkswagen and Honda commented that some technologies that
provide reductions on the 2-cycle test should be eligible for off-cycle credits. Volkswagen
suggested that, for example, off-cycle credits should be given for start-stop technologies. EPA's
modeling projects that start-stop technology will be widely used by manufacturers in meeting the
CC>2 standards. Start-stop technology already achieves a significant CC>2 benefit on the current 2-
cycle tests, which is why many manufacturers have announced plans to adopt it across large
segments of the fleet. EPA recognizes there may be additional benefits to start-stop technology
beyond the 2-cycle tests (e.g., heavy idle use), and that this is likely the case for other
technologies on which manufacturers will rely to meet the MY2012-2016 standards. EPA plans
to continue to assess the off-cycle potential for these technologies in the future. However, EPA
does not believe that off-cycle credits should be granted for technologies which we expect
manufacturers to utilize widely throughout the fleet in meeting the CC>2 standards. Such credits
could lead to double counting, as there is already some CC>2 benefit over the 2-cycle tests. EPA
expects that most if not all technologies that significantly reduce CC>2 emission on the 2-cycle
test will also reduce CC>2 emissions during the wide variety of in-use operation that is not directly
captured in the 2-cycle test. This is no different than what occurs from the control technology on
vehicles for criteria pollutants. Thus, the catalytic converter and other emission control
technology operate to reduce emissions throughout in-use driving, and not just when the vehicle
is tested on the specified test procedure. The aim for this off-cycle credit provisions is to provide
an incentive for technologies that achieve real-world CC>2 emission reductions but which
normally would not be chosen as a GHG control strategy because their GHG benefits are not
significantly measured on the specified 2-cycle test. It is not designed to provide credits for
technology that does provide significant GHG benefits on the 2-cycle test and, as expected, will
also typically provide GHG benefits in other kinds of operation.
Some commenters raised the "Cool Car" initiative in California as a potential source of off-cycle
technology credits. The commenters note that window glazing technology provides off-cycle
emissions reductions by reducing the demand on A/C systems. EPA did not propose and is not
finalizing credits specifically for this technology, as it did for A/C system credits. EPA also is
not including a final determination regarding the eligibility of any particular off-cycle
technologies in this rulemaking, as these are case-by-case determinations made according to the
procedures set out in 86.1866-12 (d). Manufacturers must apply for off-cycle credits, which
includes making the case for why the technology is eligible for credits according to EPA's
criteria, and their proposed methodology for determining the amount of credits, as described
above.
Additional Comments on Specific Technologies
Organization: INRIX
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Herzlich Consulting, Inc.
PurigeN98
Comment:
INRIX
INRIX wishes to draw the agencies' attention to the emergence of deeply 'connected vehicles'
and their potential impact on GHG emissions and fuel economy. INRIX supplies traffic and
routing information to SYNC2-equipped vehicles, Ford Motor Company's groundbreaking in-
vehicle information system as part of the Traffic, Directions and Information service available on
Ford MY 2010 and beyond equipped vehicles. Since initial launch in May 2009, tens of
thousands of Ford vehicles have activated services that allow their vehicles to get to their
destination more directly via turn-by-turn navigation, and more quickly and safely, by alerting
drivers to and routing drivers around traffic congestion, incidents, construction and other events
that lengthen the time a specific trip takes. Early indications are that a significant percentage of
trips are being re-routed to avoid trouble spots, impacting the distance traveled and time spent
traveling and idling. [NHTSA-2009-0059-0079.1, pp. 1-2]
SYNC is a strategic element of Ford's North American automobile business with over 80% of
vehicles Ford sells now equipped with SYNC. Standard with SYNC is three years of the Traffic,
Directions and Information service built-in the purchase price. The ground-breaking technology
and business model is creating a groundswell of activity across the auto industry to respond and
get new vehicles as deeply connected as SYNC. As a result, during the time period of this
rulemaking, millions of vehicles sold will be 'connected' with the expressed purpose of
increasing trip efficiencies, directly impacting fuel use/efficiency and GHG emissions for
specific trips. Connected vehicles are more efficient than non-connected vehicles and clearly fit
the policy framework of reducing GHG emissions and fuel consumption per unit of economic
activity. [NHTSA-2009-0059-0079.1, p.2]
As air conditioners and flex fuel vehicles are presently identified in the NPRM as candidates for
credits, we strongly urge the EPA and NHTSA to coordinate closely with the USDOT's
Research and Technology Administration's ITS Joint Program Office to research the impacts of
connected vehicles on GHG emissions and MPGs and to establish the appropriate CAFE and/or
CC>2 credit regime at the earliest possible date. With our increasing pool of trip data, INRIX is
ready to assist the agencies in this effort. [NHTSA-2009-0059-0079.1, p.2]
Connected vehicles are smarter, more efficient vehicles. Public policy should promote their
adoption as benefits will accrue to the broader nation, not just the individuals making better trips.
[NHTSA-2009-0059-0079. l,p.2]
Herzlich Consulting, Inc.
Please include my previous August 6, 2009 comments (below) sent to Docket Management in
response to NHTSA's call for public input into TREAD ACT tire reliability considerations. High
purity nitrogen inflation of tires is also directly applicable to your call for technologies eligible
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for 'Off-cycle Innovative Technology Credits'. Even though this letter describes tire reliability
advantages gained by high purity nitrogen inflation, better inflation pressure retention resulting
from nitrogen's molecular structure offers improved fuel economy (lower rolling resistance) for
the billion tires travelling about 3 trillion miles per year on our roads. Tire science and peer
reviewed rubber oxidation and diffusion chemistry already establishes that the benefits of high
purity nitrogen inflation are real and offer an easy win-win consumer/EPA conservation
technology that is 'shovel ready' to contribute to meeting EPA's off-cycle technology carbon
footprint goals. [OAR-2009-0472-4567, p. 1]
Attached is a current CV that quantifies the training and experience that I base my opinions
on. Upon review of the NPRM, I would like to offer certain observations and recommendations
relevant to additional opportunities to enhance tire reliability and your TREAD ACT mission.
Inflation maintenance is an accepted requirement for satisfactory tire reliability. It is a
demonstrated scientific fact that nitrogen inflation offers longer term pressure retention than air.
It is a proven reality which also offers other potential tire performance improvements related to
the accepted chemical principles describing the oxidative weakening of the tire's structure. The
reduced heat and strain generation associated with proper inflation will in itself slow the
degradation chemistry. However the improved pressure retention offered by nitrogen will offer
additional value if the purity of nitrogen in the tire reduces the oxygen content to less than 5%.
This is a scientifically proven in papers by Baldwin of Ford. The Michelin high oxygen
durability test (which I support) demonstrates the oxidative weakening effect even with a
superior undamaged innerliner under short term test conditions. Tokita (Uniroyal) and Waddell
(ExxonMobil) are just a few of the studies proving the advantage for high purity nitrogen
inflation. Industry compounders (tire chemists) competently recognize this effect and address it
with complex, difficult and costly antioxidant systems. However, it is realized that these systems
are subject to fugacity as well as other longer term potency reductions. Until recently, nitrogen
enrichment equipment reliability and a lack of infrastructure was a legitimate reason for the
passive approach the industry took toward a more strongly worded high purity nitrogen inflation
recommendation. A nitrogen inflation infrastructure is now commercially in place. The
marketing segment (dealers) of the industry and State regulators are already moving forward (ie:
CA and PA). More knowledgeable new car dealers are making it part of the prep process. I
would estimate many tens of millions of tire miles are already benefitting from this simple tire
enhancement technology. Higher pressure tires (lower rolling resistance) and smaller air chamber
designs will magnify and make the advantages of high purity nitrogen pressure retention even
more valuable to the objectives of the TREAD ACT as well as the environment. NHTSA and the
industry should now update it's current passive, non-objecting position and take a more proactive
role recognizing high purity nitrogen as the inflation method of choice for best tire performance.
Despite improvements in innerliner permeability technology, the value of high purity nitrogen
inflation will continue to be of important value when addressing real world causes of oxidative
intra-carcass pressurization that results when the innerliner function is compromised by impacts,
mounting bead damage, punctures, improper repairs and structural deficiencies. [OAR-2009-
0472-4567, pp. 1-2]
Conclusions: Reliable high purity nitrogen enrichment technology is now commercially and
economically available. The service infrastructure is rapidly developing or already in place,
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making past technical and market related objections no longer valid. [OAR-2009-0472-4567, p.
2]
PurigeN98
1. Reference
Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules Docket ID
No. EPA-HQ-OAR-2009-0472 and/or NHTSA-2009-0059 Off-cycle technology credits, on
page 49534 of the Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009. [OAR-
2009-0472-7201, p. 1]
Off-Cycle Innovative Technology Credits - EPA is proposing a credit opportunity intended to
apply to new and innovative technologies that reduce vehicle CO2 emissions, but for which the
CO2 reduction benefits are not captured over the 2-cycle test procedure used to determine
compliance with the fleet average standards (i.e., "off-cycle"). Eligible innovative technologies
would be those that are relatively newly introduced in one or more vehicle models, but that are
not yet implemented in widespread use in the light-duty fleet. Further, any credits for these off-
cycle technologies must be based on real-world greenhouse gas emission reductions not captured
on the current 2-cycle tests and verifiable test methods, and represent average U.S. driving
conditions. [OAR-2009-0472-7201, p.l]
2. Suggested program
"Inflation of vehicle tires with Nitrogen at automotive manufacturing plants and at automotive
service providers" [OAR-2009-0472-7201, p.l]
a. Why should EPA consider this as part of the Off-Cycle Innovative Technology Credits
program?
Vehicle tire under-inflation is a rampant problem in our country. While it has sometimes been
dismissed as a minor issue, it had become a campaign issue when Candidate Barack Obama had
stated that if all Americans inflated their tires properly , they could save as much oil as
new offshore drilling would produce. Time magazine had acknowledged it is as "the cheapest,
cleanest, quickest and easiest way to ease our addiction to oil, reduce our pain at the pump and
address global warming. [OAR-2009-0472-7201, p.2]
Benefits of inflating tires with nitrogen are not apparent in the current CAFE standard test
methods because use over time and consumer behavior are not fully accounted for. In short term
tests, tires perform very similarly when filled with either clean dry air or pure nitrogen. However,
benefits of pure nitrogen become noticeable over time as tires filled with nitrogen retain pressure
for longer time, combined with the stark reality that consumers "DO NOT" check tire pressure
properly and do not top off tires regularly. Filling tires with nitrogen will significantly reduce the
impact and severity of tire under-inflation and reduce vehicle fuel consumption, increase tire life
and reduce CO2 emissions. [OAR-2009-0472-7201, p.2]
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b. What is the problem that Nitrogen tire inflation program addresses?
i. Filling tires with nitrogen will partially address the rampant tire under-inflation problem in our
country as is well documented by the following information.
1. The U.S. DOE estimated that under-inflated tires wasted a total of 1.2 billion gallons of fuel
used in cars and LTs in 2005.
2. 'A motorist survey this year by the RMA found that 85% of American drivers do not properly
check tire inflation pressure. This is an alarming statistic since tires are the only part of a vehicle
in contact with the road and a critical vehicle safety component,' said James MacMaster,
chairman of the RMA Board of Directors.
3. EPA's Emission Facts (EPA420-F-00-013) indicates that a 1% decrease in CC>2 emissions for
every 1% decrease in fuel consumption. Using emission data provided in the EPA fact sheet, the
1.2 billion gallons of wasted fuel translates to 12 million tons/yr of extra CC>2 emissions resulting
from under-inflated tires.
4. The National Highway Traffic Safety Administration (NHTSA) estimates that under-inflated
tires are a factor in 660 fatalities and 33,000 crash injuries each year. Additional research shows
that 27 percent of passenger cars on U.S. roadways are driven with one or more substantially
under-inflated tire, according to a NHTSA survey. [OAR-2009-0472-7201, p.2]
5. 'Drivers across the U.S. can battle rising gas prices by simply maintaining proper tire
inflation,' said Takao Oishi, Yokohama's CEO and president. 'Current statistics indicate that 82
million vehicles have under-inflated tires, which means more rubber is hitting the road and,
accordingly, miles-per-gallon is lessened. In fact, tire experts speculate that 2.8 billion gallons of
gas is wasted by U.S. drivers each year simply because they're driving on under-inflated tires.'
6. The National Highway Traffic Safety Administration estimates that proper tire inflation could
help save about 49-79 lives and prevent 6,585 to 10,635 injuries per year. (Source: National
Highway Traffic Safety Administration Study on Under-Inflated Tires, August 2001).
7. The Rubber Manufacturer's Association estimates that 250,000 car crashes a year result from
improperly inflated tires. [OAR-2009-0472-7201, p.3] [[See Docket Number OAR-2009-0472-
7201, pp.3-7 for a detailed discussion on the following topics; What are the benefits of Nitrogen
tire inflation, what are the potential costs, is there a cost benefit analysis to show the total
benefits and costs of NTI on a national basis, are there technical studies conducted to prove NTI
is superior, where is NTI used correctly, what are the future trends in tire manufacturing and
what will be the impact of nitrogen.]]
EPA Response:
EPA appreciates the comments and understands that the technologies described by these
commenters have the potential to result in emissions reductions under certain circumstances as
well as other benefits for consumers. EPA is not establishing a specific credit for these
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technologies in this rulemaking, as it is for A/C systems. A specific credit for "connected
vehicles" or nitrogen tire inflation was not considered in the proposal. For off-cycle credits, it
will be the responsibility of the manufacturers to apply for credits, if they so choose, and to show
why the technology is eligible under the new and innovative technology criteria. Also,
manufacturers not using the 5-cycle test procedure, as would likely be the case for the
technology described by the commenters, must quantify emissions reductions, as discussed
above. EPA is not making eligibility determinations on specific technologies as part of this
rulemaking. However, we note that if the technology is in widespread use it may be difficult for
the manufacturer to make the case that it is a new and innovative technology. With regard to
nitrogen tire inflation, EPA believes manufacturers in determining credits would also need to
address concerns regarding the fact that tires do not last the life of the vehicle and there would be
some need to refill tires. There is no guarantee that consumers would use nitrogen during these
tire-refilling events.
Diesel Fuel Upstream Emissions
Organization: U.S. Coalition for Advanced Diesel Cars
Comment:
For more than 20 years, EPA has been concerned with 'off-cycle' emissions that occur in the real-
world but are not measured on the FTP or FIFET drive cycles that control vehicle design,
technology selection and calibration. In its 2006 label rulemaking, EPA made this point clear:
'EPA had become concerned that the FTP omitted many critical driving modes and conditions
that existed in actual use, and that emissions could be substantially higher during these driving
modes compared to the FTP. Manufacturers frequently designed their vehicles' emission control
systems to meet the specified FTP test conditions, often neglecting emissions control over other
driving conditions, resulting in higher real-world emissions.' [OAR-2009-0472-7496, p. 12]
Congress called for action under sections 206(h) and 202(j) of the Clean Air Act Amendments of
1990, leading EPA to develop new 'supplemental' test procedures that were designed to reflect
the real-world driving conditions where fuel is consumed and emissions are created. By 2006,
these supplemental test procedures became part of the 5-cycle methodology used by EPA to
reflect real-world city, highway and combined fuel economy for light duty vehicles. As above,
however, the basis for fleet average performance under CAFE and the proposed GHG rules has
not been updated. [OAR-2009-0472-7496, p. 12]
In the current joint NPRM, EPA and NHTSA continue to state the importance of linking
automotive technology development, production and implementation to reality-based accounting
procedures designed to assure maximum real-world reductions in fuel consumption and GHG
emissions. In addition to the 'zero g/mile' treatment for electricity that EPA states may be
appropriate on an interim basis but not long-term, there are several other off-cycle credit
mechanisms proposed:
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-Credits for more energy efficient mobile air conditioners (MAC). Because the MAC is not
turned on during the FTP or HFET tests, these MAC, efficiency credits would be available to
manufacturers only if they can be demonstrated to measurably reduce GHG emissions in real-
world, off-cycle conditions.
-Credits for MAC systems designed to reduce the probability of refrigerant leaks. In the event of
a leak, chemical refrigerants contribute GHGs to the atmospheric inventory.
-Credits for advanced, low global warming potential (GWP) MAC refrigerants that minimize the
GHG inventory impact even in the event of a real-world leak.
-Flex Fuel Vehicle (FFV) credits for vehicle which, for example, can operate on either E85 or
E10 gasoline in the future. Through 2016 and beyond, EPA will recognize the holistic, well-to-
wheel performance of the renewable fuel content by zeroing out the GHG emissions produced.
under EPA vehicle test procedures that are attributable to the bio component of that fuel. In other
words, the up-stream, 'well-to-tank' GHG benefits of the renewable component are counted as an
offset to the 'tank-to-wheels' GHG emissions EPA measures in its laboratory vehicle certification
calculations.
-Other off-cycle credits for technologies such as solar roof panels, active cruise control and
active aerodynamics. These credits are proposed to be exclusively available for 'new and novel'
technologies but only after robust demonstration of off cycle, real-world GHG reductions not
captured on the 2-cycle tests. [OAR-2009-0472-7496, pp. 12-13]
The Coalition applauds EPA and NHTSA for championing reality-based solutions to our national
petroleum end GHG reduction objectives. In each of the credit mechanisms described above, the
agencies demonstrate the importance of controlling off-cycle emissions through a holistic
approach that is not chained exclusively to a pair of 40-year old test procedures. Each of these
reality based compliance features demonstrates recognition of a simple truth: the success of the
proposed regulations will be based on the daily reductions in petroleum barrels and well-to-
wheel GHG tons, not on a 'fleet average' compliance certificate for the regulated parties. And to
achieve those daily reductions, vehicles employing technologies must appeal to U.S. consumers
and must sell in high annual volumes. [OAR-2009-0472-7496, p. 13]
The universe of possible fuels for light duty vehicles contains relatively few that have a higher
energy density than gasoline. Diesel is one of those fuels. A gallon of diesel has 11 percent more
energy than a gallon gasoline (and a gallon of BIO has 12 percent more energy than a gallon of
E10). Because of this energy density, the transportation and distribution of diesel fuel to users
around the country produces less GHG per usable unit of energy . Additionally, the refining of
diesel fuel requires less energy and produces fewer GHG emissions compared to a gasoline
baseline. Taken together, these reduced off-cycle emissions contribute additional benefits to
society when high density diesel is substituted for lower density gasoline. Unlike its treatment of
FFVs and other credit mechanisms proposed, however, EPA is not proposing to count these real
diesel GHG offsets. According to recent EPA research, the up-stream GHG emissions associated
with refining, transporting, distributing and storing transportation fuels. [OAR-2009-0472-7496,
p.13]
For every gallon of diesel fuel substituted for a gallon of gasoline, an off cycle benefit of 280
GHG grams occurs. Returning to the pickup truck example shown on page 12, in which a 24
mpg diesel engine is sold in place of the standard 18 mpg engine, the 3,700 lifetime gallons of
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EPA Response to Comments
fuel saved would also generate an off-cycle GHG benefit of 1 metric ton. Over 221,199 lifetime
miles traveled, this is the equivalent of an off cycle credit of 4.7 grams per mile. This value is
on the order of the maximum MAC efficiency credit of 5.7 g/mile that EPA proposes under its
off-cycle credit mechanism. [OAR-2009-0472-7496, pp. 13-14]
Clearly, the off cycle benefits of diesel fuel should be comprehended in EPA's historic GHG
rulemaking process as these benefits are already documented in the agency's technical research.
Since EPA proposes off-cycle credit mechanisms to incentivize such solutions as roof-top solar
panels, surely the Administrator recognizes a parallel disincentive exists for proven technologies
that are deliberately excluded from the off-cycle credit mechanism. We urge EPA to adopt rules
that comprehend the holistic, full-cycle GHG performance recognizing that vehicles and fuels
work as a system in our national efforts to reduce the CC>2 inventory and petroleum consumption.
[OAR-2009-0472-7496, p. 14]
EPA Response:
The commenter is recommending broadening the off-cycle credits concept, which is focused on
the off-cycle benefits of new and innovative vehicle technologies, to include potential upstream
emissions reductions associated with fuels. The commenter notes that diesel fuel has higher
energy density than gasoline and comments "[b]ecause of this energy density, the transportation
and distribution of diesel fuel to users around the country produces less GHG per usable unit of
energy. Additionally, the refining of diesel fuel requires less energy and produces fewer GHG
emissions compared to a gasoline baseline. Taken together, these reduced off-cycle emissions
contribute additional benefits to society when high density diesel is substituted for lower density
gasoline." Including these types of potential upstream benefits is beyond the scope of the
proposal, as EPA did not propose or seek comments on such a concept. EPA focused its off-
cycle credits proposal on vehicle improvements and does not believe it is appropriate to include
life-cycle fuels emissions in determining off-cycle credits. Please see Section 5.7.3, Incentives
for Advanced Technology Vehicles, for a discussion of how EPA is addressing upstream
emissions of electric vehicles and why EPA is not applying an upstream emissions approach to
other fuel types. Please also see Section 3.4 regarding additional comments concerning upstream
emissions attributable to fuels.
Additional Comments
Organization: United Auto Workers
Comment:
We are also supportive of EPA's proposal to provide compliance flexibility through a multiplier
for electric-drive technologies and for so-called off-cycle technology credits. We believe
strongly that these proposals will provide a desirable incentive to bring into production advanced
fuel-saving technologies that have the potential to radically reduce the greenhouse gas emissions
from motor vehicles. Although we recognize that this will cause a slight near-term reduction in
the total amount of greenhouse gas emissions avoided, it will hasten the day when these
technologies can be produced in large volumes. This will ultimately result in greater emissions
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reductions in the medium and long term because of the cost reductions expected with increased
volumes of these advanced technologies. [OAR-2009-0472-7056.1, p.3]
EPA Response:
EPA appreciates the supportive comments. EPA believes the comments regarding a slight near-
term reduction in the total greenhouse gas emissions avoided was in reference to proposed
advanced technology vehicle credits. Comments on this topic are addressed in Section 5.7.3.
EPA is taking several steps, discussed above, to ensure that off-cycle credits are based on actual
emissions reductions and therefore EPA does not believe off-cycle credits will result in a loss of
emissions benefits.
5.7.5. Early Credit Options
5.7.5.1. Credits Based on Early COi Reductions
Organization: Ford Motor Company
Association of International Automobile Manufacturers (AIAM)
Chrysler Group LLC (Chrysler)
Alliance of Automobile Manufacturers (Alliance)
Volkswagen Group of America (Volkswagen)
Toyota Motor North America
Public Citizen and Safe Climate Campaign
Union of Concerned Scientists
Natural Resources Defense Council
Sierra Club
California Air Resources Board
National Automobile Dealers Association (NADA)
State of New Jersey
New York State Department of Environmental Conservation
Mass Comment Campaign (2,332) (unknown organization)
South Coast Air Quality Management District
Environment Michigan
Chew, Yuli
Seal, Kathy
Comment:
Ford Motor Company
Early Credit Flexibility and Pathways
The agencies' proposal to provide for the use of early credits in the 2009 -2011 model years is a
reasonable approach. The early credit pathways provide flexibility and lead-time in order to
bridge the stair-step increase in stringency between the 2011 MY CAFE standards and the
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EPA Response to Comments
aggressive GHG reduction targets in the 2012-2016 timeframe. The EPA proposal recognizes the
GHG reduction technology being incorporated into the current fleet and rewards manufacturers
for over-complying with the standards. The GHG reduction technology being implemented on
the current fleet provides the nation with the ability to track real GHG reductions immediately.
[OAR-2009-0472-7082.1, p. 5]
Association of International Automobile Manufacturers (AIAM)
AIAM supports EPA's proposed "four pathways" approach for earning early "fleet average"
credits as well as the early air conditioning, advanced technology, and off-cycle credits. All of
the proposed credits are designed to appropriately reward manufacturers that achieve levels of
efficiency that exceed expected levels.
EPA invited comment on whether the proposed early credits provide a "windfall" and whether
the credits reward "real world" emission reductions. EPA does not explain what is meant by
"windfall" credits. In our view, the CAFE program and the California greenhouse gas program
provide a general benchmark for appropriate levels of vehicle efficiency for the 2009-2011
period. Early credits would reward companies that exceed this benchmark. In order to qualify for
credits under EPA's proposal, manufacturers would have to offer vehicles that achieve efficiency
levels that exceed typical current levels. Any resulting credits would truly be earned, not a
windfall, and would result in real world fuel savings and lower greenhouse gas emissions. [OAR-
2009-0472-7123.1, pp. 13-14]
In the public hearings on the proposed standards, several parties expressed concerns regarding
the appropriateness of the early credits that were proposed by EPA, arguing that the credits are
too "generous." In our view, the proposed early credits are essential to assure the feasibility of
the proposed standards. Manufacturers' needs for such credits should be evaluated in the context
of the historic nature of the proposed standards (in terms of the dramatic changes the standards
will necessitate in vehicle design) and the economic environment in which manufacturers are
being called upon to implement these changes. The early credits provide an essential safety valve
for the transition to the aggressive new standards program. [OAR-2009-0472-7123.1, p. 14]
Early fleet average credits under pathways 1, 2, and 3 are based on credits and debits earned in
the California program. These provisions are necessary to counter CARS's proposal to require
manufacturers with net debits in California at the end of the 2011 model year to use and retire
federal credits to make up for the California debits. To the extent that California will require that
debits be carried over from the California to the federal program, it is only fair that credits be
carried over as well. AIAM has opposed California's claim to authority to cancel Federal credits.
We urge NHTSA and EPA to support our concerns on that point. California has no direct
regulatory authority over the Federal program, and AIAM therefore does not believe that CARB
has the power to require a forfeiture of Federal credits. Moreover, in the 2012 model year and
thereafter, a manufacturer will have the option under the California program of continuing to
comply separately with the California program or transitioning fully to the federal program, in
which case compliance with the federal program will be "deemed" to be compliance with the
California program. Should a manufacturer transition to the federal program, the intent of the
commitment letters signed by the parties to the national standards agreement is that it will no
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longer have any compliance obligations with regard to California after that date. We urge
NHTSA and EPA to address our concerns on this point. [OAR-2009-0472-7123.1, p. 14]
Chrysler Group LLC (Chrysler)
Chrysler recommends that all of the proposed early fleet average greenhouse gas reduction
'pathways' be included in the final rule.
EPA notes that certain proposed pathways 'could be eliminated to simplify the program'.
However, Chrysler disagrees that elimination of a potential early credit option would not
diminish its overall flexibility. Given that EPA proposes to allow manufacturers to select the
early fleet average pathway taken at the end of the 2011 model year, but proposes to disallow
using multiple pathways for the 2009-2011 early credit program, it makes sense to provide the
maximum number of options for evaluating potential credit scenarios. [NHTSA-2009-0059-
0124, p.29]
For early fleet average greenhouse gas reduction credits based on California regulations
(Pathways 1 and 2), the 2.0 g/mile adjustment to the California greenhouse gas standards is not
appropriate if the measurement metric is carbon-related exhaust emissions.
EPA proposes four 'pathways' through which early fleet average greenhouse gas reductions can
receive credit in the 2009-2011 model years. Two of these pathways (Pathway 1 and Pathway 2)
are based on California greenhouse gas regulation standards. EPA proposes to set the baseline
standards for these pathways by lowering the California standards by 2.0 g/mile. This adjustment
is based on the premise that N2O and CFLt 'are included in the California GHG standards, but not
included in the credits program.' [NHTSA-2009-0059-0124, pp.29-30]
Although it is true that N2O is not included in the carbon-related emission ('CREE') metric
proposed by EPA, CREE does include CH4 (as part of the total hydrocarbon ('THC' term) plus
the addition of CO. It seems as though the 2 g/mi adjustment was made based on a belief that the
metric, which would be compared to the standard, only would include the CC>2 term. Chrysler
emission test data suggests that the THC and CO components of the CREE metric will add
approximately 0.8 (on a small car) to 3.0 (on a large truck) g/mi combined city/highway. These
values equate to a 1.7 g/mi contribution based on a 60/40 car/truck fleet mix. [NHTSA-2009-
0059-0124, p.30]
Chrysler recommends that no adjustment to the California standards be made for evaluating the
early fleet average greenhouse gas reduction by Pathways 1 and 2 if CREE is used as the metric.
[NHTSA-2009-0059-0124, p.30]
Chrysler supports EPA's inclusion of air conditioning credits in the assessment of California and
Clean Air Act Section 177 state fleet averages, and the availability of air conditioning credits
outside of these states.
EPA's proposed methodology ensures that air conditioning credits are not double counted in
states where a greenhouse gas regulation program is in affect for the 2009 through 2011 model
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years while recognizing the surplus nature of greenhouse gas reductions which occur outside of
these states. [NHTSA-2009-0059-0124, p.30]
Alliance of Automobile Manufacturers (Alliance)
The Alliance applauds the efforts of the EPA NPRM to provide as much flexibility as possible
and we support the EPA's efforts to provide automakers with legitimate opportunities to bank
early fleet average credit based on real greenhouse gas (GHG) reductions from products
designed to meet current regulations. This proposed fleet average credit provides much needed
flexibility to the regulations and provides manufacturers with additional lead time to implement
some of the technologies that are needed in the later years of the proposal. Nonetheless, the
proposed regulation is stringent: it would not allow banked early fleet average credit to last into
the later years, nor would it provide easy windfall credit that would slow the implementation of
new technology. Even with this flexibility, all automakers will be challenged to meet this
proposed regulation. [OAR-2009-0472-6952.1, p.7]
The Alliance supports EPA's proposal in the NPRM to allow early fleet average CO2 credit. 74
Fed. Reg. 49,536. The Alliance also supports EPA's proposal to provide flexibility by allowing
automakers to use four different pathways to earn early fleet average credit. The EPA correctly
observes that a wide range of automakers are currently selling vehicles in the U.S. market with
different fleet mixes and sales volumes. The four pathways proposed provide reasonable options
to such a diverse group of manufacturers. Also, the proposed early fleet average credit offers
real-world CC>2 reductions, rewarding automakers for providing fleet performance that exceeds
the California and Federal standards. [OAR-2009-0472-6952.1, p.7]
The credit and the pathways proposed by the EPA would not result in a "windfall." Regarding
the credit proposed under the California programs (Pathways 1, 2 and 3), since EPA has granted
the waiver request for California's GHG regulations, credits earned under these regulations are
appropriate. California's GHG regulations have been approved by the state of California since
2004, and at least some automakers, anticipating possible waiver approval, prepared for the
implementation of the California GHG regulations beginning as early as MY 2009. In addition,
CARB appears to have anticipated that lead time was necessary to implement GHG reduction
technologies and concluded that, considering needed lead time, the MY 2009 - 2011 standards
are appropriately stringent. CARB anticipated the banking of credit during the early years of the
California GHG regulations in anticipation of the stringent requirements in later model years.
[OAR-2009-0472-6952.1, pp.7-8]
It is this new technology that allows manufacturers to earn the credit. Therefore, the credit does
not provide a "windfall" that will prevent the implementation of new technologies, but rather it
encourages and rewards such actions. [OAR-2009-0472-6952.1, p.8]
The EPA would also protect from excessive use of early credit with the five year carry forward
restriction on such credit. This means the any credit earned in MY 2009, considered the best year
for opportunity for auto manufacturers to earn credit, is not useful past MY 2013. This proposed
additional safeguard would appropriately restrict the trading of early fleet average credit. [OAR-
2009-0472-6952.1, p.8]
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The early fleet average credit pathways are also appropriate to balance the traditional credit
allowed under the NHTSA fuel economy regulations. The EPA GHG regulation and the NHTSA
CAFE program should mirror each other as much as possible and the early credit fleet average
program is an important component of that harmonization. [OAR-2009-0472-6952.1, p. 8]
Volkswagen Group of America (Volkswagen)
Regarding the credit flexibilities in the NPRM relative to the EPA GHG proposed regulation,
Volkswagen supports the credit flexibilities outlined by the EPA. In particular, Volkswagen
supports the early fleet credit program that provides manufacturers with the ability to outperform
the existing NHTSA and California GHG regulation in the 2009 through 2011 timeframe to earn
credit during these years. This provides auto manufacturers with the flexibility needed to plan
their product strategy and the introduction of GHG reduction technologies over the course of this
regulation. Volkswagen supports the EPA proposal to provide four different early fleet credit
pathways, as the EPA correctly recognizes that the auto companies have very diverse sales
volumes and fleet mixes and that various pathways are necessary to provide flexibility to all
automakers. [OAR-2009-0472-7210.1, pp.2-3]
In addition, providing early fleet credit flexibility is consistent with the type of carry
forward/carry back provision allowed under the current NHTSA CAFE system. Manufacturers
are currently allowed to bank and use CAFE credit and will fully implement this ability in the
2009 through 2011 period in anticipation of the new NHTSA regulation beginning on 2012
model year. In an effort to harmonize the EPA GHG and the NHTSA CAFE programs for 2012 -
2016 as much as possible, it is entirely appropriate for the EPA to utilize early fleet credits
during the 2009 - 2011 time period. This will allow manufacturers to utilize a similar fleet
approach to both regulations. We do not believe early fleet credit results in windfall credit, as
manufacturers have planned and prepared for compliance in the 2009 -2011 time period and
deserve credit if they can exceed the applicable standards for that time window. [OAR-2009-
0472-7210.1, p.3]
Toyota Motor North America
Toyota supports EPA's proposal to provide credits for achieving early GHG emission reductions
by over complying with the existing NHTSA CAFE standards or GHG standards adopted by the
State of California (and subsequently adopted by numerous other states) during 2009 through
2011 model years. To the extent that over compliance with these programs - and thus the
emission benefits - are real, the overall objectives of EPA's program can be achieved while
providing manufacturers with needed flexibility to deploy technology in a manner consistent
with product cycles, market uncertainties, and other factors. Further, EPA has routinely provided
early credit opportunities when adopting its regulations, including situations in which California
regulations have preceded EPA's regulations, as is the case with the subject proposal. [OAR-
2009-0472-7291, p. 19]
Public Citizen and Safe Climate Campaign
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EPA proposes four opportunities for automakers to bank early windfall greenhouse gas emission
credits for model years 2009-2011: (1) averaging credits, (2) air conditioning credits, (3)
advanced technology vehicle credits, and (4) off-cycle credits. The averaging credits are divided
into four pathways from which EPA proposes manufacturers may choose a pathway for earning
early credits. Manufacturers must choose one pathway only, but they can wait until 2011 to
choose it. [OAR-2009-0472-7050.1, p.4]
The four pathways for averaging credits are based on over-compliance for fleets of vehicles
either (1) nationwide, (2) in California and the other states which have adopted California's
standards under Section 177 of the CAA ("177 states"), (3) states outside California and the 177
states, or (4) to forego all California-based credits and earn CAFE credits in states outside
California and the 177 states. Pathways 1 and 2 allow manufacturers to earn credits for over-
compliance with the California standards either nationwide or in California and the 177 states.
Pathways 3 and 4 would allow manufacturers to apply credits for over-compliance with CAFE
standards in states outside California and the 177 states. Early credits would be permitted to be
traded and transferred without limitation. The only limitations on early credits are automakers
would have to clear any deficit for model years 2009-2011 before it could apply credits to model
year 2012 and beyond, and credits would be subject to the five-year carry-forward limit. [OAR-
2009-0472-7050.1, p.4]
We object to granting any credits for exceeding standards in California and the 177 states in
2009-2011. Manufacturers exceeding these requirements need not be rewarded in the National
Program, which does not take effect until 2012. We recommend that if EPA grants any early
action credits that it [OAR-2009-0472-7050.1, p.4] use a hybrid of Pathways 2 and 3, where
manufacturers would earn credits for exceeding compliance with the California baseline, but
only for the fleet of vehicles sold outside California and the 177 states. [OAR-2009-0472-7050.1,
p.5]
No CAFE-based credits should be granted for model years before 2011. The EISA clearly
prohibits the trading and transfer of credits earned in these model years, and we believe this
could function as a backdoor means by which automakers could trade credits that would
otherwise be nontransferable. If CAFE-based credits are granted for any of the alternatives, we
urge that EPA bar these credits from transfer or trading. [OAR-2009-0472-7050.1, p.5]
Union of Concerned Scientists
EPA proposes an opportunity for manufacturers to accrue "early credits" in model years 2009-
2011 by over-compliance with a baseline standard. According to EPA, [OAR-2009-0472-7181.1,
p.10]
The baseline standard would be set to be equivalent, on a national level, to the California
standards. Potentially, credits could be generated by over-compliance with this baseline in one of
two ways - over-compliance by the fleet of vehicles sold in California and the CAA section 177
states (i.e., those states adopting the California program), or over-compliance with the fleet of
vehicles sold in the 50 states. EPA is also proposing early credits based on over-compliance with
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CAFE, but only for vehicles sold in states outside of California and the CAA section 177
states. [OAR-2009-0472-7181.1, p. 10]
UCS is concerned that the approach as stated will erode the rule's energy and emissions benefits
because the credits offered will not reflect real, surplus emissions. In order to ensure that the
credits accrued are based on actual emissions reductions, it is essential that the baseline for each
model year not be defined as equivalent to the California standards, but rather as the more
stringent of CAFE or the California standard. Because model years 2009 and 2010 will see
California standards less stringent than CAFE standards, the rule as proposed would supply
manufacturers with credits simply for complying with the law. Further, it also appears that based
on the proposed rule, manufacturers may be able to acquire credits simply by shuffling cleaner
vehicles into California or CAA Section 177 states. While we are generally supportive of
flexibility mechanisms, we recommend that the agency modify its proposal to close these early
credit loopholes. [OAR-2009-0472-7181.1, p. 10]
[Following comments are from LA Testimony, OAR-2009-0472-7283, pp.103-113]
Third, early credits for overcompliance must reflect real surplus emissions. EPA proposes an
opportunity for manufacturers to accrue early credits in model years 2009 through 2011
by overcompliance with a given baseline standard.
However, since CAFE is actually more stringent than California standards in 2009 and 2010,
automakers merely minimally complying with federal fuel economy standards can
accumulate credits, extra credits, for emission standards.
To ensure that the credits accrued are based on actual surplus, surplus emissions reductions, it is
essential that the baseline for each model year not be defined as merely equivalent to California
standards for those early years but, rather, as the more stringent - in any given year, the more
stringent of CAFE or the California standard for that year.
Further, it also appears that, based on the proposed rule, manufacturers may be able to
acquire credits simply by shuffling cleaner vehicles into California or other Section 177 states.
Natural Resources Defense Council
Early Credits Should Only Be Awarded for Real and Surplus Emissions Reductions, Eliminating
Windfalls that Undermine Pollution and Oil Savings Benefits
NRDC concurs with EPA's overall objective to ensure that early credit programs result in "real-
world" emission reductions that are "actual" and "surplus." Unfortunately, it is clear that
Pathways 1 and 2 do not meet the intent of the Agency. The reason is that in model year 2009
(and likely model year 2010) the CAFE standards result in a lower emission rate than the
California program's GHG standards. As shown in the Table 1 below [See OAR-2009-0472-
7141.1, p. 12 for Table 1], the design of Pathways 1 and 2 allow automakers to accrue credits
simply by complying with the CAFE program. [OAR-2009-0472-7141.1, p. 12]
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EPA Response to Comments
To eliminate this "windfall" credit opportunity, NRDC recommends that the national baseline for
MY 2009 (and possibly MY 2010) be set at the GHG level which results from complying with
the applicable national standards, which for that year are the CAFE standards. EPA proposes to
prohibit the trading of early credits from MY 2009 between firms, to exclude FF V credits from
the early credit program and to allow early credits to remain eligible for carry-forward for no
more than five years. These limitations mitigate the problem, but they do not fully eliminate
windfall credit generation. [OAR-2009-0472-7141.1, p. 13]
[[NRDC also submitted these comments as testimony at the Detroit public hearing, See docket
number EPA-HQ-OAR-2009-0472-6185, pp. 23-24.]]
Sierra Club
We object to proposed early action credits. These credits for vehicles sold between model years
2009-2011 will be awarded to vehicles that were designed prior to the proposed standards. If
early credits are to be allowed, automakers should be required to declare which pathway they
will use before accruing credits, not at the end of 2011. Further, early credits should be based on
the most stringent standard that applies. In several years, California's Pavley standards are lower
than federal CAFE standards, thereby giving automakers the opportunity to receive windfall
credits simply by opting to comply with a weaker standard. [OAR-2009-0472-7278.1, p.15]
[[Sierra Club also submitted these comments as testimony at the Detroit public hearing, See
docket number OAR-2009-0472-6185, pp. 29-30]
California Air Resources Board
CARB does not support the proposed provisions for early credits prior to implementation of the
national GHG program unless such credits are accrued by exceeding California's requirements in
California and those states that have adopted California's program. Of the four pathways
proposed, Pathway 2 more closely matches this criterion. Nonetheless, should EPA chose to
retain all four pathways in the final rule, we strongly support incorporating in the final rule the
provisions proposed by EPA to prohibit trading between manufacturers of credits earned in
model year 2009, require the use of credits earned in 2009 to offset debits accrued in 2010-2011,
and prohibit trading between manufacturers of credits earned in model year 2009. These are
reasonable proposals designed to assure that credits earned in the early years do not provide a
windfall for vehicle manufacturers and that the emission reductions envisioned for the national
GHG program are realized. [OAR-2009-0472-7189.1, p.3]
[CARB also submitted these comments as testimony at the Los Angeles public hearing. See
docket number OAR-2009-0472-7283, pp. 21-27]
National Automobile Dealers Association (NADA)
EPA should mirror the CAFE program's time-honored early fleet average credits as they are
essential to compliance with the National Program's ambitious targets. As proposed, the early
fleet average credit scheme is too complex, especially given that CARB's 2004 standards need
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not be considered and, in any event, in no way trump the MY 2009-2011 CAFE standards.
[OAR-2009-0472-7182.1, p.7]
State of New Jersey
The Department supports the USEPA's real-world reductions approach for alternative fuel
vehicles, as well as its efforts to prevent unrealistic excess credits from trucks, risking a delay of
the introduction of advanced vehicle technologies across the industry from the 2012 and later
USEPA greenhouse gas emission standards. However, we suggest that in addition the Agencies
limit the fraction of credits from trucks and only allow trading of credits among same vehicle
categories. These additional precautions will ensure that the credits from trucks cannot be used to
normalize the debits from passenger cars, or diminish the value of the credits from trucks that
can be carry-forward.
The Department supports the prohibition of trading proposed model year 2009 generated early
credits between firms under the proposed Pathways 1, 2 or 3 due to the anomalous nature of
model year 2009. If trading were allowed for the 2009 model year, there is a potential for the
generation and trading of a large amount of credits which are in fact not excess.
The Department seeks clarification from the USEPA on how the proposed credit Pathways
would interface with California's and the section 177 states' (including New Jersey's)
enforcement of the California greenhouse gas standards during the 2009 to 2011 model years.
Finally, the Department prefers limiting the Early Fleet Average CC>2 credits to Path 1
(California-based Credits for National Fleet) and Path 2 (California-based Credits sold in
California plus CAA 177 States) and opposes the addition of Pathways 3 and 4. Pathways 3 and
4 could result in the generation of CAFE credits which are in fact not excess credits. [OAR-
2009-0472-7109.1, p.8]
New York State Department of Environmental Conservation
EPA proposes to allow early credits to be generated for the 2009-2011 model years, and notes
that some manufacturers will likely generate large numbers of 2009 model year credits. To
minimize the potential 'windfall' for manufacturers, we suggest that the 5 model year lifespan of
these early credits should start immediately, even though there will be no deficits to offset until
at least the 2012 model year. Thus 2009 model year credits would expire at the end of the 2014
model year. [OAR-2009-0472-7454, p.2]
Mass Comment Campaign (2,332) (unknown organization)
Likewise, manufacturers must not be permitted to rack up windfall credits for exceeding the
standard in advance of the 2011 model year. For passenger cars the existing standard has been in
effect since 1985, and for light trucks, it has been only nominally increased in the past 20 years.
Any credits earned for early compliance must not be available for trading among manufacturers.
[OAR-2009-0472-5747, p.l]
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EPA Response to Comments
South Coast Air Quality Management District
First, early credits under the federal program for 2012 to 2016 vehicles may be used in such a
way as to possibly reduce the stringency of the ARB program. This would be a
negative unintended consequence which should be avoided wherever possible.
EPA should consider establishing a cap on the number of early credits to ensure that California's
greenhouse gas standards are not undermined. At a minimum, the South Coast MD staff
recommend that there be a full public accounting of these early compliance earned and traded
credits to ensure the greatest transparency in public disclosure.
Such disclosure may itself serve as a constraint on excessive credit reliance given the possible
negative publicity associated with compliance via imported credit use.
[Comments are from LA Testimony, OAR-2009-0472-7283, pp.59-67.]
[[These comments were submitted as testimony at the Detroit public hearing. See docket number
OAR-2009-0472-6185, p. 68.]]
Environment Michigan
Specifically, we're concerned that the proposed standards allow automakers to rack up credits for
new vehicles sold from 2009-2011 that exceed existing standards. These are vehicles that had
been planned years before these new standards were announced. Automakers should not be given
windfall credits for cars that were already in the pipeline.
Chew, Yuli
I support this EPA's position in preventing unreal excess credits from trucks and prohibiting the
trading of model year 2009 generated early credits between firms, risking a delay of additional
technology across the industry from 2012 and later EPA CC>2 standards. I would like to suggest
that trading be limited to credits among same vehicle categories, not using credits from trucks to
equalize the debits from the cars. [OAR-2009-0472-7042.1, p.4]
For the four fleet average-based CC>2 early credit pathways EPA is proposing, I would welcome
just limit the Early Fleet Average CC>2 credits to Path 1 (California-based Credits for National
Fleet) & Path 2 (California-based Credits sold in California plus CAA 177 States). CAFE-based
credits shouldn't be added to these Greenhouse Gas credits. The credits from trucks should be
limited for use to equalize the debits from trucks only. [OAR-2009-0472-7042.1, p.4]
Seal, Kathy
Second of all, please minimize the credits that automakers are allowed to receive for
vehicles that were sold before new standards take effect in 2012. Please don't give them these
windfall credits that have been talked about.
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EPA Response:
EPA received comments from manufacturers in support of the proposed early credits program as
a necessary compliance flexibility. The Alliance commented that the early credits reward
manufacturers for providing fleet performance that exceeds California and Federal standards and
do not result in a windfall since manufacturers have added new technology in anticipation of the
grant of California's waiver request and in reliance on the credit generating and banking
provisions available under the California program. AIAM commented that early credits are
essential to assure the feasibility of the proposed standards and the need for such credits must be
evaluated in the context of the dramatic changes the standards will necessitate in vehicle design
and the current economic environment in which manufacturers are called upon to make the
changes. Manufacturers also supported retaining all four of the proposed pathways, commenting
that eliminating pathways would diminish the flexibility of the program.
EPA also received comments from many environmental organizations and states that the
program would provide manufacturers with windfall credits because manufacturers will not have
to take any steps to earn credits beyond those that are already planned and in some cases
implemented. These commenters were particularly concerned that the California truck standards
in MY 2009 are not as stringent as MY 2009 CAFE, so overcompliance with the California
standards will automatically result in a windfall in MY 2009, and possibly even MY2010 (the
truck standard in California is less stringent than that of CAFE in MY2010, but the California
passenger car standard is more stringent than that of CAFE). These commenters supported an
early credits program based on overcompliance with the more stringent of either the CAFE or
California standards in any given year. CARB commented: "should EPA choose to retain all
four pathways in the final rule, we strongly support incorporating in the final rule the provisions
proposed by EPA to prohibit trading between manufacturers of credits earned in model year
2009, require the use of credits earned in 2009 to offset debits accrued in 2010-2011, and
prohibit trading between manufacturers of credits earned in model year 2009. These are
reasonable proposals designed to assure that credits earned in the early years do not provide a
windfall for vehicle manufacturers and that the emission reductions envisioned for the national
GHG program are realized."
EPA is retaining the early credits program because EPA judges that they are not windfall credits,
and (as documented in the comments above) manufacturers in some cases have reasonably relied
on the availability of these credits, and have based early model year compliance strategies on
their availability so that the credits are needed to provide adequate lead time for the initial years
of the program. See, e.g. Comments of the Alliance. The same reasoning holds for authorizing
early credits for exceeding CAFE standards in non-California states. However, as discussed
below, EPA is restricting credit trading for MY2009 credits earned under the California-based
pathways. Also, under the California-based Pathways 1 and 2, EPA is requiring manufacturers
to cover any deficits incurred against the baseline levels established by EPA during the three
year period 2009-2011 before credits can be carried forward into the 2012 model year. For
example, a deficit in 2011 would have to be subtracted from the sum of credits earned in 2009
and 2010 before any credits could be applied to 2012 (or later) model year fleets. EPA is
including this provision to help ensure that the early credits generated under this program are
consistent with the credits available under the California program during these model years. In
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EPA Response to Comments
its comments, CARB supported these restrictions as a way to prevent credits from being
unearned windfalls, and EPA agrees with this comment.
Credit Restrictions
EPA received comments that the proposed approach under the California-based pathways will
provide windfall credits to manufacturers because the MY2009 California light truck standards
are less stringent than the corresponding CAFE standards, so that credits are necessarily
generated for merely complying with the MY 2009 CAFE standard, which manufacturers will
likely do in any case.. Although these credits could be considered windfalls if looked at for this
one isolated model year, they are not when the program is viewed in proper perspective. Credits
are not based solely on performance in MY 2009. They are based on performance over a three
model year period, MYs 2009-2011. As noted in the proposal, EPA expects that the requirement
to over comply over the entire three model years should mean that the credits that are generated
are real and are in excess of what would have otherwise occurred. However, because of the
circumstances involving the 2009 model year, in particular for companies with significant truck
sales, there is some concern that under Pathways 1, 2, and 3, there is a potential for a large
number of credits generated in 2009 against the California standard, in particular for a number of
companies who have significantly over-achieved on CAFE in recent model years. Some
commenters were very concerned about this issue and commented in support of restricting
intercompany trading of MY2009 credits under the California-based pathways as a means of
properly cabining generation and utilization of these credits. EPA requested comments on this
approach and is finalizing this credit trading restriction based on continued concerns regarding
the issue of windfall credits for MY 2009 under the California-based program. EPA wants to
avoid a situation where, contrary to expectation, some part of the early credits generated by a
manufacturer are in fact not excess, where companies could trade such credits to other
manufacturers, risking a delay in the addition of new technology across the industry from the
2012 and later EPA CC>2 standards. Therefore, manufacturers selecting Pathways 1, 2, or 3 will
not be allowed to trade any MY 2009 credits that they may generate. See section 86.1867-12 (a)
(1) (vi), (a) (2) (ii), and (a) (2) (vii).
UCS commented that it appears that based on the proposed rule, manufacturers may be able to
acquire credits simply by shuffling cleaner vehicles into California or CAA Section 177 states.
In response, EPA does not believe there will be a strong incentive for manufacturers to shuffle
cleaner vehicles into California and 177 states due to the early credits program. EPA is adopting
credit trading restrictions for MY 2009 California-based credits and requiring manufacturers to
use the same pathway over the three-year period and make up deficits during any of those three
years, as discussed above. These provisions would deter manufacturers from using this strategy
in MY2009 when the California standard is less stringent than CAFE. Manufacturers have the
option of earning early credits for its cleaner vehicles both inside and outside of California and
177 states, so there would not be much incentive to shuffle cleaner vehicles. Also, significantly
shuffling vehicles would present challenges for the manufacturer that would likely outweigh any
possible marginal benefit.
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EPA received a variety of additional comment regarding early credit restrictions. Public Citizen
and Safe Climate Campaign commented "No CAFE-based credits should be granted for model
years before 2011. The EISA clearly prohibits the trading and transfer of credits earned in these
model years, and we believe this could function as a backdoor means by which automakers could
trade credits that would otherwise be nontransferable. If CAFE-based credits are granted for any
of the alternatives, we urge that EPA bar these credits from transfer or trading." The State of
New Jersey and others commented that EPA should restrict the transfer of early credits between
vehicle classes, and were especially concerned about truck credits being used for passenger cars.
SCAQMD commented that EPA should consider establishing a cap on the number of early
credits to ensure that California's greenhouse gas standards are not undermined. In response,
EPA is not finalizing restrictions on transferring or trading credits beyond the restrictions
discussed above for MY2009 credits under the California-based pathways. EPA understands
that EISA does not allow credit transfers or trading until MY2011. However, EPA does not
believe that the early credits are windfall credits because they are based on manufacturers
achieving emissions reductions beyond those required. Therefore, EPA does not believe
additional credit restrictions limiting how manufacturers use the credits are appropriate in
implementing the independent authority of section 202 (a)(l). EPA does not believe the program
will result in a "backdoor" way for manufacturers to transfer or trade credits in a manner
forbidden under EISA since the EISA restrictions remain in place for CAFE. Also, because EPA
does not believe that the early credits are windfall credits, EPA is not placing a cap on the
amount of early credits a manufacturer may generate. The early credits are an important part of
the flexibility provided to manufacturers to transition to the new standards and hence a proper
means of providing needed lead time to meet the new standards.
New York State Department of Environmental Conservation commented that the 5-year credit
life should start in the year the credits are generated. For example, 2009 model year credits
would expire at the end of the 2014 model year. The Alliance also commented on this topic,
noting that EPA would protect from excessive use of early credit with the proposed five year
carry forward restriction on early credit. (Note that the Alliance commented that MY2009
credits would not be useful after MY2013. However, credits may be carried forward for five
years after the model year in which they are earned and therefore MY2009 credits would be able
to be used in MY2014, after which they would expire.) The recommendation is consistent with
EPA's proposed program and EPA is adopting this approach for the credit life of early credits in
the final rule. (See §86.1867-12(a).) Additional comments regarding credit carry-forward are
addressed in Section 5.3.
Early Credit Pathways
The Alliance, AIAM, and several manufacturers commented in support of retaining the four
Early Credits Pathways in order for manufacturers to retain the flexibility provides by the four
different pathway choices.
Public Citizen and Safe Climate Campaign commented "We object to granting any credits for
exceeding standards in California and the 177 states in 2009-2011. Manufacturers exceeding
these requirements need not be rewarded in the National Program, which does not take effect
until 2012. We recommend that if EPA grants any early action credits that it use a hybrid of
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EPA Response to Comments
Pathways 2 and 3, where manufacturers would earn credits for exceeding compliance with the
California baseline, but only for the fleet of vehicles sold outside California and the 177 states."
In response, the rationale for the comment is unclear. EPA does not agree that California-based
credits should only be allowed outside of California and the section!77 states. Manufacturers
that achieve emissions reductions beyond those required by the California standards should be
eligible for credits in California and the section 177 states. EPA is requiring manufacturers to
offset any credit deficits in any of the MYs 2009-2011 in order to carry California-based credits
forward into the 2012 and later model years. Also, these credits will not be double-counted with
California credits since California is not implementing their standards for 2012 and later model
years.
CARB commented that it does not support the proposed provisions for early credits prior to
implementation of the national GHG program unless such credits are accrued by exceeding
California's requirements in California and those states that have adopted California's program.
Of the four pathways proposed, Pathway 2 more closely matches this criterion, in their view.
The State of New Jersey and others provided similar comments. In response, EPA is retaining
all of the proposed credit pathways, including early credits based on the CAFE standards for
vehicles sold outside of the California and the section 177 states. EPA is restricting the trading
of MY 2009 credits earned under the California-based pathways and also requiring
manufacturers to offset all deficits accrued against the California-based program baseline for
MYs 2009-2011. CARB commented in support of these provisions as a way to address windfall
credits issues.
Sierra Club commented that if early credits are to be allowed, automakers should be required to
declare which pathway they will use before accruing credits, not at the end of MY 2011. The
reasoning for the comment is unclear and EPA does not believe that this type of early election is
necessary. EPA notes that it is requiring manufacturers to use the same pathway for the entirety
of the early credits program, and therefore manufacturers cannot switch back-and-forth among
options from year-to-year in order to maximize credits. Proper accounting of early credits is
required at the end of the early credits program, and EPA must approve the early credits report
documenting that accounting.. See section 86.1867-12 (e), (a).
NADA commented that the early credits proposal was too complex and that EPA should allow
credits based on CAFE standards nationwide. In response, the proposed approach of four credit
pathways was supported by manufacturers and EPA does not believe the provisions will be too
complex. EPA is not providing an option for CAFE-based credits nationwide because the
California program is in effect for MYs 2009-2011 and EPA believes it is appropriate to base
early credits on achieving GHG emissions reductions beyond those required by California and
the section 177 states.
Transparency
EPA received comments that there be a full public accounting of early compliance earned and
traded credits to ensure the greatest transparency in public disclosure. EPA plans to make this
type of information available to the public. Please see Section 5.10.1 for EPA's full response to
comments regarding data transparency and availability. See also section 86-1867-12 (e) setting
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forth the reporting requirements for early credit reporting. Such reports, among other things,
must document both the manufacturer's elected pathway but provide detailed documentation of
credit calculation for each averaging set (i.e. vehicle type) for which credits are claimed to be
generated.
Baseline for California-based Pathways
In establishing the baselines for California-based credits pathways, EPA proposed to adjust the
California standards by 2.0 g/mile to account for the exclusion of N2O and CH/t, which are
included in the California GHG standards, but not included in the federal GHG credits program.
Chrysler commented that "Although it is true that N20 is not included in the carbon-related
emission ('CREE') metric proposed by EPA, CREE does include CH4 (as part of the total
hydrocarbon ('THC' term) plus the addition of CO. It seems as though the 2 g/mi adjustment was
made based on a belief that the metric, which would be compared to the standard, only would
include the CC>2 term. Chrysler emission test data suggests that the THC and CO components of
the CREE metric will add approximately 0.8 (on a small car) to 3.0 (on a large truck) g/mi
combined city/highway. These values equate to a 1.7 g/mi contribution based on a 60/40
car/truck fleet mix." Chrysler recommended that no adjustment to the California standards be
made for evaluating the early fleet average greenhouse gas reduction by Pathways 1 and 2 if
CREE is used as the metric.
In response, the commenter is correct, and therefore the final levels shown in the table below are
2.0 g/mile higher than proposed. EPA is adopting the CREE metric which already accounts for
CH4, and EPA agrees that the THC and CO components of CREE offset the 2.0 g/mile EPA
proposed to add to the California standards.
California Equivalent Baselines CO2 Emissions Levels for Early Credit Generation
Model Year
2009
2010
Passenger Cars and Light
Trucks with an LVW of 0-
3,750 Ibs
323
301
Light Trucks with a LVW of 3,75 1 or
more and a GVWR of up to 8,500 Ibs
plus Medium-duty Passenger Vehicles
439
420
California Program Debits
AIAM commented "AIAM has opposed California's claim to authority to cancel Federal credits.
We urge NHTSA and EPA to support our concerns on that point. California has no direct
regulatory authority over the Federal program, and AIAM therefore does not believe that CARB
has the power to require a forfeiture of Federal credits. Moreover, in the 2012 model year and
thereafter, a manufacturer will have the option under the California program of continuing to
comply separately with the California program or transitioning fully to the federal program, in
which case compliance with the federal program will be "deemed" to be compliance with the
California program. Should a manufacturer transition to the federal program, the intent of the
commitment letters signed by the parties to the national standards agreement is that it will no
longer have any compliance obligations with regard to California after that date. We urge
NHTSA and EPA to address our concerns on this point."
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In response, the EPA and CARB programs will operate independently of one another. If a
manufacturer has a deficit in California and has the option under the California program of
offsetting that deficit with EPA surplus credits, the manufacturer would have the option of
notifying EPA to remove a number of credits as determined by the manufacturer from their EPA
credits bank. EPA would then confirm that the credits have been removed. This would be the
extent of EPA's involvement. There are no requirements in EPA's regulations to compel and
manufacturer to use their EPA credits to offset a deficit in California. However, EPA does not
believe it should prevent a manufacturer from opting to use their surplus EPA credits in this way,
if that is a provision of the California program.
Enforcement
The State of New Jersey commented that "The Department seeks clarification from the USEPA
on how the proposed credit Pathways would interface with California's and the section 177
states' (including New Jersey's) enforcement of the California greenhouse gas standards during
the 2009 to 2011 model years." EPA is adopting early credits provisions that, although based on
the standards adopted by California, are completely independent of the California program from
an implementation standpoint. In other words, EPA has established the baseline against which
credits will be earned based on the California standards. However, EPA will implement its early
credits program independently according to EPA final regulations.
Organization: Hyundai Motor Company
Kia Motors
Comment:
Hyundai Motor Company
Hyundai supports that EPA will allow manufacturers to obtain credits for MY 2009 through
2011 based on over-compliance with applicable California GHG and/or NHTSA CAFE
regulations.
Moreover, we believe that the calculation of early credits for over-compliance with the GHG
standards should reflect the standards to which each manufacturer was actually subject during
MY 2009 through 2011. For instance, companies that were exempt from California regulations
should not be subject to the California baseline standard when calculating early credits from
California and Clean Air Act Section 177 states. More specifically, we request that EPA add an
additional early credit option based on over-compliance with CAFE standards in 50-states for
manufacturers that were classified as IVM under the California regulations. On principle,
manufacturers should receive credits for exceeding applicable requirements. [OAR-2009-0472-
7231.1,p.4]
Kia Motors
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[These comments were submitted as testimony at the Los Angeles public hearing. See docket
number EPA-HQ-OAR-2009-0472-7283, p. 172]
However, we do believe that early credit generation should be based on the standards to
which each manufacturer was subject under the California regulations. An additional early credit
option based on overcompliance with CAFE standards in 50 states should be considered.
EPA Response:
EPA understands that some manufacturers are not subject to the California standards in MYs
2009-2011. This does not mean that it is appropriate for such manufacturers to earn credits
against some other baseline. EPA continues to believe that the California baseline remains the
most appropriate to use as a measure for generating early credits. Most obviously, it is the only
GHG standard available for comparison, and also, as discussed in section III.D.l of the preamble
to the final rule, a good starting measure for evaluating technical feasibility of light duty vehicle
GHG control capability. There are no other standards that meet these criteria. Indeed, earning
credits against standards less rigorous than California's would raise legitimate concerns about
windfall credits since credits could be earned for non-optimized performance. Thus, EPA is
retaining the four early credits pathways as proposed and is not adding a fifth pathway for 50-
state CAFE-based credits. A manufacturer not being subject to the California standards of course
does not prevent it from earning early credits using the California-based pathways. Such
manufacturers may still earn early credits under the California-based pathways if they are able to
demonstrate emissions reductions per the requirements of the early credits program - i.e.
overcomplying with the levels established by those standards.
5.7.5.2. Other Early Credits
Organization: Alliance of Automobile Manufacturers (Alliance)
Hyundai Motor Company
Comment:
Alliance of Automobile Manufacturers (Alliance)
The EPA's proposed implementation of the early fleet average credit is also appropriate.
Regarding early A/C credit, the Alliance agrees with the proposal to measure early A/C credit
per the procedures outlined in Section IILC.S.b. Applying any additional early credit such as
FFV credit and applying vehicle definitions per the existing California regulations is practical for
the proposed California pathways and also ensures that there are not windfall credits. [OAR-
2009-0472-6952.1, p.8]
Hyundai Motor Company
We also support EPA's early credits for air conditioner system improvements, advanced
technology and off-cycle technology. We believe these credits provide program flexibility and
optimize cost effectiveness, as well as rewarding early adopters. [OAR-2009-0472-7231.1, p.4]
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EPA Response:
EPA is promulgating early credits options for A/C credits as proposed. With regard to FFVs, as
proposed, EPA is also allowing manufacturers to include alternative compliance credits earned
per the California alternative compliance program. These alternative compliance credits are
based on the demonstrated use of alternative fuels in flex fuel vehicles. As with the California
program, the credits are available beginning in MY 2010. Therefore, these early alternative
compliance credits are available under EPA's program for the 2010 and 2011 model years.
FFVs are otherwise included in the early credit fleet average based on their emissions on the
conventional fuel. EPA will also use the California vehicle definitions for the California-based
pathways as proposed.
EPA is finalizing early incentives for advanced technology vehicles with the changes described
in Section 5.7.3. Manufacturers may use the 0 g/mile value for vehicles sold in MY2009-2011
consistent with the approach being finalized for MY 2012-2016. Any vehicles sold prior to MY
2012 under these provisions must be counted against the cumulative sales cap of 200,000 (or
300,000, if applicable) vehicles.
5.8 Feasibility of the CO2 Standards
5.8.1. EPA Reference Vehicle Fleet for Evaluating Further CO2 Reductions
Organization: Environmental Defense Fund
Comment:
[Following comments are from LA Testimony, OAR-2009-0472-7283, pp.72-79]
Fleet mix assumptions. The reductions to be realized by these proposed standards are highly
dependent on assumptions about fleet composition in model years 2012 through 2016. We urge
federal policy makers to find smart ways to ensure the assumptions about fleet mix reflect the
fleet composition in the real world.
EPA Response:
The commenter is correct that predictions of future fleet composition are of critical importance in
establishing the standards, and EPA's projections are based on the best information and
methodology of which it is aware. As set out in detail in section II.B of the preamble to the final
rule, and chapter one of the joint TSD, EPA (and NHTSA) based the projection of total car and
total light truck sales for MYs 2011-2016 on projections made by the Department of Energy's
Energy Information Administration (EIA). EIA publishes a mid-term projection of national
energy use called the Annual Energy Outlook (AEO), specifically the AEO 2010 Early Release.
To further account for changes between car and truck designs, EPA purchased (and shared with
NHTSA) forecasts from two well-known industry analysts, CSM Worldwide (CSM), and J.D.
Powers. Determining which traditionally-defined trucks will be defined as cars for purposes of
this final rule using the revised definition established by NHTSA for MYs 2011 and beyond
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requires more detailed information about each vehicle model. This is described in greater detail
in Chapter 1 of the joint TSD. The forecasts obtained from CSM provided estimates of car and
truck sales by segment and by manufacturer, but not by manufacturer for each market segment.
Therefore, NHTSA and EPA needed other information on which to base these more detailed
projected market splits. For this task, the agencies used as a starting point each manufacturer's
sales by market segment from model year 2008, which is the baseline fleet. Because of the
larger number of segments in the truck market, the agencies used slightly different
methodologies for cars and trucks, as described in section II.B.3 of the preamble to the final rule
and chapter 1 of the joint TSD.
EPA notes further that the use of publically available information to project reference fleets is a
far more transparent process than used in previous fuel economy rulemakings, and allows the
public to fully participate and evaluate the agencies' projections. Most commenter's agreed.
5.8.2. Effectiveness and Costs of CO2-reducing Technologies
Organization: Environmental Defense Fund
Comment:
III. THE PROPOSED STANDARDS CAN BE ACHIEVED THROUGH COST EFFECTIVE,
AVAILABLE TECHNOLOGIES THAT WILL PRESERVE CONSUMER CHOICE AND
SAVE CONSUMERS MONEY.
Light-duty vehicle manufacturers can achieve the proposed standards through a variety of cost
effective and readily-available technologies. EPA's staff produced a report for the National
Research Council identifying over two dozen technologies in production or impending that can
be deployed to cut greenhouse gases and improve fuel economy. These include, among others,
technological innovations in engine manufacture like engine friction reduction and cylinder
deactivation, transmission advances, hybrid drive train utilization, mitigation of air conditioning
emissions, aerodynamic improvements, and low-rolling resistance tires. Individually, each one of
these technologies can reduce CO2 emissions by as much as 15 percent from a baseline vehicle's
emissions. EPA's staff concluded that the synergistic impacts of including multiple GHG
reduction technologies in a single vehicle are often less than the sum total of each technology's
individual impact. [OAR-2009-0472-7285.1, pp. 17-18]
The attached table [See OAR-2009-0472-7285.1, p. 18-22 for the Summary Table] summarizes
some of these available technologies. Source: EPA Staff Technical Report: Cost and
Effectiveness Estimates of Technologies Used to Reduce Light-duty Vehicle Carbon Dioxide
Emissions, EPA420-R-08-008, March 2008 "EPA technical staff concludes there are a large
number of technologies which can be applied to cars and trucks that are capable of achieving
significant reductions in greenhouse gas emissions, and improve vehicle fuel economy, at
reasonable costs." ES -1. [OAR-2009-0472-7285.1, p. 18]
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EPA Response to Comments
Incremental costs are negligible for many technologies like low-friction lubricants and still
modest for more comprehensive technologies like hybrid drive trains. Furthermore, EPA predicts
many technology cost will benefit from the learning curve phenomenon, a decrease in unit cost
as cumulative production increases. On average, EPA and NHTSA estimate that these new
technologies will increase the cost of model year 2016 vehicle by less than 1,100 dollars but, as a
result of fuel savings, the average consumer will save 3,000 dollars over the life of the vehicle.
Moreover, consumers who finance their new-car purchase with a loan will save $12- $14 per
month throughout the duration of the loan. These statistics underscore EPA technical staffs'
conclusion that "there a large number of technologies which can be applied to cars and trucks
that are capable of achieving significant reductions in greenhouse gas emissions, and improve
vehicle fuel economy, at reasonable costs." [OAR-2009-0472-7285.1, pp. 22-23]
Manufacturers can also incorporate new, light-weight materials into vehicle design as a means of
producing more fuel-efficient, safe vehicles. The proposed rule also contains compliance
flexibilities like fleet averaging and other measures to provide cost savings, broad consumer
choice and flexibility in meeting compliance obligations. As examined below, compliance
flexibilities must be rigorous and well-designed to achieve light-duty emissions requirements.
[OAR-2009-0472-7285.1, p. 23]
V. THE TIME TESTED HISTORY OF THE NATION'S CLEAN AIR LAWS SHOWS THAT
EPA CAN DRAMATICALLY AND COST-EFFECTIVELY REDUCE EMISSIONS FROM
MOTOR VEHICLES TO PROTECT HUMAN HEALTH AND THE ENVIRONMENT. The
EPA has a long history of successfully securing protective, cost-effective emission reductions
from the nation's passenger vehicles, often confronted with claims from the regulated
community that the mandated reductions were impracticable. As documented in the table below
[See OAR-2009-0472-7285.1, p. 26 for the table.], EPA achieved substantial nationwide
reductions in lead, carbon monoxide, and nitrogen oxides while vehicle miles traveled has risen
substantially. [OAR-2009-0472-7285.1, p. 25]
Some will invariably make similar claims that reductions in heat-trapping greenhouse gas
emissions are beyond the nation's reach. But the time tested history of Clean Air Act regulation
and American innovation suggests that these claims are likewise misplaced. [OAR-2009-0472-
7285.1, p. 25]
EPA Response:
EPA appreciates these comments, which generally affirm our estimates made in support of the
NPRM. EPA has continued to evaluate both the cost and effectiveness of the technologies
available to reduce GHG emissions and has updated several of these estimates. The reader is
referred to Chapter 3 of the Joint TSD for these updated estimates.
5.8.3. Technology "Packages" and their Cost and Effectiveness
Organization: Shaw, Donald F.
Comment:
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The auto industry does not presently have the technology to achieve these fuel standards with
vehicles that meet the needs of the American public. Why punish the citizens with such
requirements before the technology is ready especially considering the small claimed benefits.
Let's give the techno logy more time to develop. Large families will need to drive two cars to get
to participate in family activities including vacations. Where is the benefit? [OAR-2009-0472-
7270.1, p. 1]
EPA Response:
The technologies which NHTSA and EPA project are available for manufacturers to apply in the
MY 2012-16 timeframe are described in detail in Chapter 3 of the Joint TSD. Essentially every
technology included in our projections of technical feasibility are already being used
commercially somewhere in the world on light-duty vehicles. As explained in section HID of
the preamble to the final rule, the expanded use of these technologies is primarily a function of
lead time needed to develop vehicle designs which incorporate these technologies. It is also a
function of manufacturers' ability to modify or build production facilities to produce the
components required by these technologies and the cost of doing so.
EPA and NHTSA have developed their projections of the cost and effectiveness of these
technologies so that vehicle utility is not affected. This means that the agencies accounted for
the costs of preserving vehicle utility in their cost estimates. In addition, the baseline vehicle
fleet which EPA and NHTSA use to project compliance consists of 2008 model year vehicles.
This fleet reflects the wide variety of vehicles currently preferred by U.S. car purchasers. This
includes vehicles with sufficient passenger capacity for large families. NHTSA and EPA
presume that these vehicles will continue to be preferred by many purchasers in the future. In
fact, both the GHG and fuel economy standards account for the inherently higher fuel
consumption of larger vehicles by basing the standards on vehicle size ('footprint', the product
of vehicles' track width and wheel base). Therefore, EPA disagrees with Mr. Shaw that the
proposed and final GHG and fuel economy standards are not feasible for a wide range of vehicle
types and will limit the types of vehicles which will be produced by manufacturers and made
available to customers
5.8.4. Manufacturer's Application of Technology
Organization: American Petroleum Institute
Comment:
Fuel Specification Changes: The proposed rule and Draft Technical Support Document outline
several options available to automakers in achieving fuel economy improvements. One of the
options is Gasoline Direct Injection (GDI) with lean burn technology. EPA and NHTSA state
that sulfur specification below 15 parts per million (ppm) is a key technical requirement to
enable lean burn GDI. The Alliance of Automobile Manufacturers is currently advocating a
maximum allowable sulfur concentration of 10 parts per million to enable Lean Burn GDI.
However, EPA and NHTSA analyses did not consider lean burn GDI technology for the 2012-
2016 timeframe of this rulemaking because of the cost and short compliance timeframe.
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EPA Response to Comments
Likewise, EPA should ensure that fuel specification changes should not be considered in this
rulemaking without adequate consideration for the associated impacts on the refining industry.
Since lean burn GDI technology is not necessary or even expected to be developed in order to
comply with this rulemaking, a sulfur specification change is unnecessary. [OAR-2009-0472-
7143.1,p.lO]
EPA Response:
Consistent with the proposal, EPA is not considering the use of lean-burn gasoline direct
injection technology in projecting means by which manufacturers would comply with the final
GHG standards. Therefore, there is no associated need for ultra low sulfur gasoline to enable
compliance in the MY 2012-2016 timeframe. However, EPA may consider the benefit of this
engine technology when evaluating GHG standards beyond the 2016 model year. If that is the
case, EPA will also consider the feasibility and cost of gasoline sulfur reduction to enable lean-
burn technology.
Organization: Mr. Richter - Environmental Capital Partners
Comment:
The first, and most importantly, is the competitiveness of our auto industry relies on it, it relies
on innovation. In the global economy, only those companies that continue to improve their
technologies maintain market share, and these examples are Apple and Microsoft in the IT
sector. The money and effort spent by the U.S. auto industry to maintain low mileage standards
has torpedoed our own car industry and left us less competitive and innovative at a time of rising
oil prices, of course, and increasing demand for more efficient, less polluting cars. As a result,
today's average new vehicle sold in the U.S. has virtually the same fuel economy as a new
vehicle sold 20 years ago. [Comment submitted as testimony at the New York public hearing
[EPA-HQ-OAR-2009-0472-4621, pp. 161 -162]]
EPA Response:
EPA appreciates the implication of Mr. Richter's comment that the proposed GHG standards will
help the U.S. auto industry innovate in the area of fuel efficiency and GHG emission control and
help maintain its competitiveness both in the U.S. and globally. EPA did not attempt to
monetize the value of this benefit. Such benefits are difficult to quantify, but direct!onally
support the need for this final rule.
Organization: Ford Motor Company
Comment:
Transparency
Ford is generally supportive of the approach that the agencies are proposing for using third-party
sources to forecast future industry sales volumes across the different vehicle segments. We
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utilize some of the same sources (e.g. J.D. Power). However, predicting various technology
penetration rates, benefits, and overall costs is more complex and is predominately a function of
manufacturers' confidential business and product plans. To the extent that the agencies will use
other sources for this type of information, Ford is concerned about how robust that information
will be in determining the stringency and feasibility of the standards. As discussed earlier, the
methodology used to establish the truck piecewise linear lower limit is an example of this
concern.
Ford is applying new technologies and making considerable investments in future innovations.
Our confidential submission in response to the Request for Product Plan Information and other
agency inquiries reflects these actions and quantifies their impact on our ability to improve fuel
economy and reduce GHG emissions. Inherent in these plans are risks including customer
acceptance, timing, technology interaction, attribute trade-offs and competing resource priorities.
Ford recommends that the EPA only release current engine, transmission and fuel economy
information, in a manner consistent with the practice for the current (2009 MY) EPA Fuel
Economy Guide. There should be no disclosure to the public of any confidential business
information or trade secrets, including information relating to cost and financial expenditures,
warranty, model-specific product plan projections (including vehicle and volumes), powertrain
and vehicle hardware detail, and associated fuel economy. Disclosures of this kind would result
in significant competitive damage and would discourage innovation and competition among
manufacturers generally. The Freedom of Information Act, and EPA's own regulations, provide
for the protection of confidential business information from public disclosure. See 5 U.S.C. §
552(b)(4) and 40 CFR Part 2, Subpart B. See also Section 208(c) of the CAA related to the
protection of trade secrets. The proposed rule here would not, and should not seek to, alter any of
these protections for confidential business information or trade secrets. Accordingly, any
disclosures in the Compliance Report or the Fuel Economy Trends report should not include
proprietary information. Moreover, EPA should follow the procedures outlined in 40 CFR Part 2,
Subpart B, to resolve any issues regarding the proposed disclosure of information for which a
manufacturer has asserted a claim of confidentiality. [OAR-2009-0472-7082.1, pp. 25-26]
EPA Response:
EPA appreciates these comments and assures Ford and all agency stakeholders that confidential
business information will always be treated as such, and any potential disclosures of information
will be handled according to the Code of Federal Regulations. Importantly, EPA has not relied
on such future product planning in setting the GHG standards. Instead, EPA has used publicly
available information to build a baseline and reference case fleet, and has then relied on the
OMEGA model to apply technology packages using EPA (and NHTSA) generated cost and
effectiveness information for individual technologies. In the end, the fleet makeup is generated
by the OMEGA model and not by using manufacturer product plans. For that reason,
manufacturers need not worry that the technology penetrations predicted by the OMEGA model
reflect product plan information provided confidentially to EPA.
5.8.5. EPA Projections for How Manufacturers Would Decide Between Options to Improve
CO2 Performance to Meet a Fleet Average Standard
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Organization: International Council on Clean Transportation
Comment:
ICCT agrees with the concept of manufacturer learning and supports the use of learning curves
to adjust costs. This empirical observation was described for the first time by aircraft pioneer
Wright in 1927 and has been found to be true for many technologies and industry sectors in
general. Therefore, it is reasonable to expect direct costs for fuel economy measures to decrease
as market introduction of the technologies applied proceeds, as suggested by both agencies.
Determination of appropriate learning curves and how they should be adjusted over time and
production volumes is not easy. However, the adjustments have a major impact on costs
assessments. ICCT believes this area should be developed further for future rulemakings.
Following are some specific suggestions for areas of improvement.
According to learning curve theory, the observed decrease of production costs is ascribed to
three effects: (1) "Learning by searching": Optimization of product properties caused by
scientific research (e.g. reducing the amount of a catalyst needed for an exhaust after-treatment
device). (2) "Learning by doing": Optimization of production processes caused by experience
gained during ongoing production (e.g. reduction of mounting times for an existing assembly
line manufacturing process). (3) "Economies of scale": Reduction of production costs caused by
advantages from transition from prototype manufacturing of small quantities to mass production
(e.g. lower purchase prices for pre-products and raw materials due to increased market power).
Except for "learning by searching" the cost reducing effects are caused by increased production
volumes rather than time passing. For most of the technologies assessed in the proposal it is
reasonable to assume that most of the time-dependent research would have been completed by
2012, which is the first year of learning curves are applied in the proposal. Given generally
accepted elements of the concept of learning curves, a production volume-based assessment of
future costs is more appropriate than a time-based approach.
The learning curve rate describes the rate of cost reductions for each doubling of production
volume. For example, a volume-based learning curve rate of 10% would mean that initial costs
would be reduced by 10% as cumulative production volume doubles. An important feature of the
concept is that doubling of cumulative production volume happens at a relatively fast rate during
early implementation of a new technology but more slowly later on. Consequently, cost
reduction slows down as application of the technology becomes more widespread.
The agencies handle these differences by classifying technologies into groups for which none,
volume or time based learning curve effects are assumed (Table 3-4 on page 3-10 of the TSD).
ICCT agrees it is appropriate to apply a lower rate of learning to some of the technologies
assessed. However, the agencies applied a flat rate of 20% for all technologies to which learning
was applied, and did not apply any volume based learning to other technologies. A better
approach would be to vary the learning curve rate while retaining a volume-based approach for
all technologies. A differentiation of learning curve factors by type of technology would likely
improve the accuracy of the proposal.
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As a technology becomes more mature and production volumes grow, the cost reduction process
tends to slow down. The learning curve concept includes this effect, as the doubling of
cumulative production volumes occurs at a faster rate during implementation process and at a
slower rate later on. The agencies end the learning curve process and assume a 3% time-based
decrease of production costs after completion of two 20% volume-based (NHTSA) or time based
(EPA) learning curve steps. While this recognizes that the learning process slows down, the
change is abrupt and somewhat arbitrary. ICCT believes it would be advantageous to use a
model that is able to dynamically take into account cumulative production volume over time.
This would apply a continuous learning curve rate over the entire lifetime for each technology,
without having to assess threshold values for changing learning curve rates and floor cost values.
NHTSA assumes production costs to decrease by 20% as soon as a cumulative production
volume of 300,000 units has been reached. This implies that the technology incremental cost
estimates given in tables 3-20 to 3-22 of the draft TSD should be interpreted as costs for a
cumulative production volume of 150,000 units. It would be helpful to clarify the correctness of
this interpretation, in order to be able to compare the costs with other technology cost data.
ICCT does not agree that volume-based learning is over for the 'power-split hybrid electric
vehicle' and only time-based learning curve is to be applied. While power-split hybrids have
been on the market long enough to achieve high production volumes, the production ramp up has
been very slow and the initial costs were very high. In addition, virtually all power-split hybrid
vehicles have been equipped with NiMH batteries. Future vehicles will make use of Li-Ion
battery technology, bringing about changes to the entire vehicle technology design.
[OAR-2009-0472-7156.1, pp. 17-20]
EPA Response:
EPA agrees that varying the learning curve rate by type of technology would likely improve the
accuracy of the cost estimates. However, EPA currently does not have sufficient information
upon which to base such variation. The Agency welcomes information from ICCT or other
sources that could shed light on how learning curve factors should be varied by technology type.
Short of such information, EPA believes that the 20 percent factor used provides the best and
appropriately conservative estimate of learning rates in the automotive sector.
EPA also agrees with ICCT that using a model that is able to dynamically take into account
cumulative production volume over time would improve the cost estimates on a year-over-year
basis, although EPA does not believe it would have any meaningful impact on the outcome of
the analysis. That is, EPA does not believe it would provide any meaningful differences in the
level of standard that could be supported or the overall cost of the Agency's rules. By
comparison, NHTSA does take into account cumulative production volume over time although it
still relies on threshold volume estimates made using good engineering judgment to determine
where learning effects occur. In both cases - the EPA approach and the NHTSA approach -
EPA believes that the cost estimates for 2016 MY vehicles are as good as can be predicted today.
That is, EPA believes that the appropriate level of learning has been applied to the 2016 cost
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estimates regardless of when the learning steps actually occured - 100,000 units; 500,00 units;
year 2013; year 2015 - is not as important as having arrived at the best estimate for 2016.
As regards Tables 3-20 to 3-22 of the draft joint TSD, the costs presented there were the draft
cost estimates used by NHTSA applicable in the 2012 MY. This should have been made more
clear in the table headings.
As regards the comment on volume-based learning and power-split hybrids, EPA agrees with
ICCT on this point. In fact, EPA actually applied volume-based learning in the proposal and
have clarified that in chapter 3 of the final joint TSD (see Joint TSD Table 3-4).
5.9. Reserved
5.10. EPA Certification, Compliance, and Enforcement
5.10.1. Compliance with Fleet-Average CO2 Standards
Organization: General Motors
Ford Motor Company
Ferrari S.p.a
Association of International Automobile Manufacturers (AIAM)
Chrysler Group LLC (Chrysler)
Environmental Defense Fund
Alliance of Automobile Manufacturers (Alliance)
Toyota Motor North America
BMW of North America, LLC (BMW)
Public Citizen and Safe Climate Campaign
Union of Concerned Scientists
Natural Resources Defense Council
Sierra Club
University of California, Santa Barbara, Bren Working Group on Vehicle Fuel
Economy
People's Republic of China
New York State Department of Environmental Conservation
Automotive Aftermarket Industry Association (AAIA)
Chew, Yuli
Comment:
General Motors:
Among the highlights of the proposal is the recognition of the need for mechanisms to provide
for compliance flexibility in the face of great uncertainty over future technology, developments
and costs, customer acceptance of these technologies, and the price of fuels that consumers may
see in the market place. All of these factors make it critical that automakers have some ability to
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cope with changes or unexpected outcomes, and we believe the proposed rule provides such
flexibility. (OAR-2009-0472-6185, p. 11)
One area of difference between the NHTSA and EPA programs is the treatment of
emergency/law enforcement vehicles within the CAFE/GHG programs. The CAFE law provides
a manufacturer with the opportunity to exclude emergency vehicles from its CAFE fleet by
providing written notice to NHTSA and EPA (49 USC 32902(e)). The EPA GHG regulatory
program has not included such an exclusion opportunity for emergency/law enforcement
vehicles. [OAR-2009-0472-6953.1, p.31]
This exclusion is very sensible and practical because these special purpose vehicles are specially
outfitted in ways that adversely impact vehicle fuel economy/CO2 emissions so they can
effectively serve as the front line for law enforcement agencies throughout the United States. As
such, they are engineered and equipped for extremely demanding performance in real-world
emergencies — situations rarely involved in normal civilian use. [OAR-2009-0472-6953.1, p.31]
EPA should provide a manufacturer with the same opportunity to exclude emergency vehicles
from the GHG standards it adopts in this rulemaking. This is first of all important to further
maximizing the consistency between the EPA and NHTSA regulations. Without this consistency,
a manufacturer may find itself challenged to continue providing the performance needs of the
federal, state and local governmental purchasers of emergency vehicles. If production of these
vehicles becomes relevant in the overall compliance of a company with the EPA vehicle GHG
program, a manufacturer must decide whether to degrade the performance of the vehicles or
restrict their sales of this type of vehicle. Both are unnecessary and unfortunate outcomes for the
constituencies that need these emergency vehicles. [OAR-2009-0472-6953.1, p.31]
GM recommends that EPA revise its rule to provide this important opportunity by (1) adding a
definition of "emergency vehicles" to 86.1803-01 that mirrors or cross-references 49 USC
32902(e); and (2) amending 86.1818-12 to provide that for any vehicle for which a manufacturer
provides notice to NHTSA and EPA of its exclusion from CAFE, the vehicle is also excluded
from EPA's greenhouse gas standards. [OAR-2009-0472-6953.1, p.31]
Ford Motor Company:
Greenhouse Gas Emissions Testing and Data Generation Protocols
Ford strongly supports the proposal to use the current CAFE testing protocol to measure and
report CO2 values. This enables the common use of vehicles, testing resources, databases and
submittal/reporting to accomplish both GHG and CAFE requirements. Ford agrees with EPA's
proposal to use common data substitution and analytically derived fuel economy (ADFE)
provisions.
Consistent Fleets for the CAFE and GHG programs
One area of difference between the NHTSA and EPA programs is the fleets within the
CAFE/GHG programs. The fleets differ by the treatment of emergency/law enforcement vehicles
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and by the geographic areas included in CAFE and emissions programs. Both of these
differences go against the agencies' stated intentions of harmonization, transparency, and parallel
calculations and reporting. The following sections suggest small regulatory adjustments that
could bring the fleets into alignment.
1. Emergency / Law Enforcement Vehicles
The CAFE law provides a manufacturer with the opportunity to exclude emergency vehicles
from its CAFE fleet by providing written notice to NHTSA and EPA (49 USC 32902(e)). EPA's
proposed GHG regulatory program should include a similar provision excluding emergency
vehicles from the GHG fleet averaging requirement.
This exclusion is sensible and practical because special purpose vehicles such as the Crown
Victoria Police Interceptor are specially outfitted in ways that give law enforcement officials the
performance and features they need in a vehicle that serves a critical role in their police work.
The vehicles are engineered and equipped to help the police respond to real-world emergencies —
situations that demand a lot of the vehicle, and that are rarely encountered in normal civilian use.
On the whole, the addition of these features tends to reduce the fuel economy and increase the
GHG emissions relative to the base vehicle. Below [See Table V at OAR-2009-0472-7082.1, p.
28] are some examples of features in Ford's law enforcement vehicles that negatively affect fuel
economy.
EPA should provide a manufacturer with an opportunity to exclude emergency vehicles from the
GHG standards it adopts in this rulemaking. This is important to maintaining consistency
between the EPA and NHTSA regulations. Without this consistency, a manufacturer may find
itself challenged to continue providing the performance needs of the federal, state and local
governmental purchasers of emergency vehicles. If these vehicles cannot be excluded, and the
production of these vehicles becomes a key variable in the ability of a manufacturer to comply
with within the GHG program, that manufacturer may be forced to choose between 1) deciding
whether to degrade the performance of the emergency vehicles, 2) deciding to restrict the sales of
its emergency vehicles, potentially even exiting the market altogether, or 3) facing non-
compliance with the federal GHG standards. Any of these outcomes would be both unfortunate
and unnecessary. It is clear that, like the CAFE program, the GHG program should protect the
law enforcement constituencies that need these emergency vehicles and depend on their
performance.
Section 202(a) of the CAA allows EPA to prescribe standards "applicable to the emission of any
air pollutant from any class or classes of new motor vehicles... " The language "class or classes"
indicates that EPA may apply its standards to particular types or categories of vehicles, and
likewise make exclude particular types or categories of vehicles when there is reason to do so.
This language gives EPA the authority to incorporate regulatory provisions excluding emergency
vehicles from the fleet average requirement.
Ford recommends that EPA revise its rule to provide this important opportunity by (1) adding a
definition of'emergency vehicles' to 86.1803-01 that mirrors or cross-references 49 USC
32902(e); and (2) amending 86.1818-12 to provide that for any vehicle for which a manufacturer
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provides notice to NHTSA and EPA of its exclusion from CAFE, the vehicle is also excluded
from EPAs greenhouse gas standards. [OAR-2009-0472-7082.1, pp. 28-29]
2. Geographic Location of GHG Fleet Vehicles
The CAFE law defines the vehicles that are to be included in EPCA. Effectively, this means the
50 states, the District of Columbia and Puerto Rico. Under Section 302(d) of the CAA, the term
'State' is defined to include the District of Columbia, Puerto Rico, the Virgin Islands, Guam,
American Samoa, and the Commonwealth of Northern Mariana Islands. As such, manufacturers
are required to send U.S.-certified vehicles to these districts and territories as well as the 50
states.
In Ford's case, the additional territories under the CAA definition amounts to a difference of only
about 1,000 vehicles in a model year. While this is a relatively small volume in comparison to
Ford's overall U.S. sales, the addition of these vehicles to the GHG fleet average would create an
administrative burden for Ford. These 'additional' vehicles are not easily identified on a model
type, base level, configuration, or subconfiguration level. Furthermore, maintaining both a
'CAFE fleet' and a 'GHG fleet' is likely to cause confusion, and would add to the already difficult
situation of credit tracking. The administrative burden in adding these vehicles to the fleet is
greater than any environmental benefit one would hope to obtain. Moreover, having a difference
in the fleet definitions would conflict with EPA's and NHTSA's intention of promoting
consistency and allowing manufacturers to submit one data set in satisfaction of both CAFE and
GHG requirements.
Since the CAFE fleet is defined by EPCA, it does not appear that NHTSA has the authority to
broaden the list of territories to which the EPCA fleet definition applies. On the other hand, we
believe that EPA has the discretion to align its GHG fleet with the CAFE fleet for administrative
purposes. It is clear that all of the territories listed under the CAA must receive vehicles certified
to U.S. emissions standards, and we are not suggesting otherwise. However, the vehicles
delivered to such territories do not have to be counted under EPA regulations designed to
determine fleet average GHG emissions. Ford therefore recommends that EPA amend the
definitions in 86.1803-01 to clarify that, for purposes of emissions compliance reporting and
fleet averaging only, the fleet is composed of vehicles for the 50 states, the District of Columbia
and Puerto Rico. Alignment in this way will not cause any adverse emissions either overall or for
the territories not mentioned in EPCA. Those territories will receive the same vehicles they
would receive otherwise. By making the discretionary decision to exclude this small volume of
vehicles from the fleet average determination, EPA will help align the fleets that manufacturers
must manage and that the agencies will evaluate. [OAR-2009-0472-7082.1, pp. 29-30]
Ferrari S.p.a:
We believe that the Tier 2 test group can adequately represent CC>2 emissions for certification
purposes. We agree with EPA that 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 CC>2 emissions.
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However, as a condition of the certificate, this surrogate CC>2 emissions value would generally be
replaced with actual, model-level CC>2 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. This approach gives more flexibility to vehicle manufacturers to plan fuel economy
tests for the various vehicle models in the same test group. [OAR-2009-0472-7214.1, p.4]
Association of International Automobile Manufacturers (AIAM):
EPA proposes to release to the public GHG compliance information. See preamble page 49559.
Any such release should not include proprietary confidential business information that was
provided by the manufacturer to EPA. For example, public dissemination of information
regarding manufacturer plans to earn future credits could release information about future
product plans that would otherwise be confidential. EPA regulations regarding exemptions from
the release of agency information to the public are based on the Freedom of Information Act, 5
USC 552(b). Those regulations exempt from public release "trade secrets and commercial or
financial information obtained from a person and privileged or confidential." See 40 CFR Part 2,
section 2.105(a)(4). Future credit plans should fall in this category. AIAM recommends that
EPA's final rule clarify how confidential business information will be protected. [OAR-2009-
0472-7123.1,p.l7]
Chrysler Group LLC (Chrysler):
NHTSA's CAFE program allows manufacturer to exclude emergency vehicles from its CAFE
fleet by providing written notice to NHTSA and EPA (49 USC 32902(e)). The EPA GHG
regulatory program has not included this exclusion. [NHTSA-2009-0059-0124, p.36]
This exclusion is practical because these special purpose vehicles are outfitted in ways that
adversely impact vehicle fuel economy/greenhouse gas emissions so they can effectively
perform their duties throughout the United States. [NHTSA-2009-0059-0124, p.36]
Recommendation:
Chrysler recommends that EPA revise its rule by adding a definition of'emergency vehicles' to
86.1803-01 that mirrors or cross-references 49 USC 32902(e); and amending 86.1818-12 to
provide that for any vehicle for which a manufacturer provides notice to NHTSA and EPA of its
exclusion from CAFE, the vehicle would also be excluded from EPA's greenhouse gas standards.
[NHTSA-2009-0059-0124, p.36]
Environmental Defense Fund:
EDF recognizes the complex, calibrated policy-making involved in designing a program to
achieve the outcomes in greenhouse gas reductions and fuel efficiency improvements provided
for under the proposal while providing the flexibility for a smooth, cost-effective transition. In
finalizing this proposal, we ask that the agencies examine the collective implications of
multilayered flexibilities and the potential to erode the program's performance. While the
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comments below examine these issues in more detail, we respectfully offer two overarching
recommendations. [OAR-2009-0472-7285.1, p. 2]
Transparency and Accountability through Annual Compliance Reports. The Obama
Administration and EPA Administrator Lisa Jackson have provided vital leadership in
reclaiming transparency and accountability in government policy-making. The dual public policy
import and complexity of this program warrant bringing to bear the rigorous transparency that is
the hallmark of government accountability. Pursuant to 5 U.S.C. §553(e), EDF formally and
respectfully petitions the U.S. Environmental Protection Agency and the U.S. Department of
Transportation to finalize as part of this proposed rulemaking a commitment to provide an annual
public compliance report examining the program's performance. The report should be publicly
announced and accessible March of each year following the completion of the preceding
calendar year. The compliance report should include any recommended adjustments to the
program, enforcement actions, or prospective policy action to ensure the policy objectives are
achieved. [OAR-2009-0472-7285.1, p. 2]
Enhanced Resources for Program Accountability. Under the Administrations of Presidents
William Clinton, George W. Bush and Barack Obama, the U.S. Environmental Protection
Agency has provided leadership in crafting policies to reduce a suite of airborne contaminants
from the transportation sector. These initiatives, addressing a number of major source categories
and a variety of pollutants, provide for considerable human health and environmental benefits.
We respectfully ask that the Agency seek expansive compliance and enforcement resources to
ensure that these initiatives are durable in achieving the emission reductions that will provide
healthier air and a safer environment for millions of Americans. [OAR-2009-0472-7285.1, p. 2]
Alliance of Automobile Manufacturers (Alliance):
Fleet Average CO2 Reporting Requirements (Proposed regulations in 40 C.F.R. 600.514-12)
EPA is proposing that manufacturers submit pre-model year and supplementary fleet-average
CO2 reports. [OAR-2009-0472-6952.1, p.51]
Confidential Business Information versus Transparency in Reporting
In the Joint Notice, U.S. EPA requests comment of potential changes in its annual Compliance
and Trends reports and related publications in light of the GHG standards, as follows:
EPA periodically provides mobile source emissions and fuel economy information to the public,
for example through the annual Compliance Report and Fuel Economy Trends Report. 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. 74 Fed. Reg. at 49,559 (footnotes omitted). [OAR-2009-0472-6952.1,
p.67]
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The Joint Notice does not illuminate how U.S. EPA intends on expanding the annual Compliance
and Fuel Economy Trends reports. Nor does it indicate whether U.S. EPA plans to expand any
publications other than these reports. However, it is important to observe that much of the new
information required in the proposed GHG regulations, like much of the certification-related
information reported to U.S. EPA by individual manufacturers under other regulations currently
in force, is confidential and competitively sensitive — a fact recognized in one of the annual
reports cited in the Joint Notice. Moreover, the Joint Notice proposes no changes in U.S. EPA's
regulations governing the treatment of confidential business information in Part 2 of the
Agency's regulations. See 40 C.F.R. §§ 2.201 et seq. [OAR-2009-0472-6952.1, p.67]
Therefore, the only reasonable interpretation of U.S. EPA's proposal is that the Agency's
"expansion" of these reports is limited to considering (i) the release of additional aggregated
data, rather than manufacturer-specific data or other information whose release would
compromise a manufacturer's competitive position, (ii) certification data, and (iii) past model
year information on GHG technologies that would be apparent to the public from inspection of a
given vehicle. The Alliance members do not oppose the publication of aggregated, industry-wide
data that, as has been the case historically, protects the confidential status of individual
manufacturer's information submissions to U.S. EPA. The Alliance also does not oppose release
of GHG emissions certification data nor the publication of technological information otherwise
available to the public by alternate sources. [OAR-2009-0472-6952.1, p.67]
Two statutes structure and limit U.S. EPA's authority to expand the coverage and scope of its
annual reports. Section 208(c) of the Clean Air Act requires U.S. EPA to avoid disclosures not
consistent with the Trade Secrets Act, codified at 18 U.S.C. § 1905. See 42 U.S.C. § 7542(c)
(requiring U.S. EPA to comply with "the purposes of §1905 of Title 18."). Section 1905 does not
merely and narrowly protect 'trade secrets,' etc., but instead, any 'information which concerns or
relates to the trade secrets.' 18 U.S.C. § 1905; see Wright et al., 26 Fed. Prac. & Proc. Evid. §
5644 (Trade Secrets Act is a 'good example' of an 'expansive' federal statute 'that include[s]
much more than what is generally understood by the phrase 'trade secret."). The clause 'concerns
or relates to' in §1905 establishes that Congress intended a broad interpretation be imparted to
§1905 standing alone, in addition to Clean Air Act section 208(c)'s expansive reference to the
'purposes of section 1905.' U.S. EPA in the Joint Notice has suggested no basis to depart from its
longstanding practice of disclosing solely information that would not compromise the
competitive position of any manufacturer. Cf. Qwest Communications Intern. Inc. v. FCC, 229
F.3d 1172 (D.C. Cir. 2000) (where an agency departs from established precedent concerning
disclosures without a reasoned explanation, its decision will be vacated as arbitrary and
capricious); accord MCI Worldcom, Inc. v. General Services Admin., 163 F. Supp. 2d 28
(D.D.C. 2001), citing Pontchartrain Broadcasting Co., Inc. v. FCC., 15 F.3d 183, 185 (D.C. Cir.
1994), and Graphic Communications Intern. Union, Local 554 v. Salem-Gravure Div. of World
Color Press, Inc., 843 F.2d 1490, 1493 (D.C. Cir. 1988). [OAR-2009-0472-6952.1, p.68]
In addition, U.S. EPA must respect the limits on its disclosure authority under the Freedom of
Information Act, and in particular Exemption 4 therein that protects confidential business
information of a competitively sensitive nature from public release. See 5 U.S.C. 552(b)(4); and
see generally Public Citizen Health Research Group v. FDA, 704 F.2d 1280, 1290-1291
(D.C.Cir. 1983). Exemption 4 bars the release of company-specific sales and market share
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information upon a showing that the disclosure of such information would impose competitive
harm. See, e.g., Sharkey v. FDA, 250 Fed. Appx. 284, 287-292 (llth Cir. 2007: Continental Oil
Co. v. Federal Power Com'n, 519 F.2d 31, 35-36 (Fifth Cir. 1975). The settled case law under
Exemption 4 thus requires U.S. EPA to maintain the types of limits on disclosure of information
in annual reports that it has traditionally maintained. Provided U.S. EPA's expanded reports
respect those limits, and as such are expanded only insofar as the Agency's regulatory program
will now cover GHG emissions in addition to other regulated emissions, the Alliance and its
members do not object to the apparent intent of this provision of the Joint Notice. [OAR-2009-
0472-6952.1, p.68]
Toyota Motor North America:
EPA proposes to determine compliance with the fleet average CC>2 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 year and on model level emissions data collected through testing over the
course of the model year. EPA would then require manufacturers to provide this information to
EPA via an end-of-year report. Final determination of compliance with fleet average CC>2
standards may not occur until several years after the close of the model year due to flexibilities
of carry forward and carry back credits and the remediation of deficits. Any failure to meet the
fleet average standard after credit opportunities have been exhausted would result in penalties, as
prescribed under the CAA. [OAR-2009-0472-7291, pp.27-28]
Setting aside the issue of penalties for noncompliance with the proposed fleet average standard
(discussed later in this Attachment), Toyota supports the concept of a fleet-wide average
compliance calculation determined at the end of the model year. Such an approach is consistent
with the approach used in the NHTSA CAFE program and would directionally support
harmonization between the programs. [OAR-2009-0472-7291, p.28]
BMW of North America, LLC (BMW):
BMW believes the flexible compliance options provided in this proposed rule are a prerequisite
and appropriate for auto manufacturers to achieve these aggressive technology forcing standards.
This is especially true for manufacturers like BMW offering a 'feature-dense' product portfolio
but having a low share of light trucks in their fleets. Such manufacturers face more stringent fleet
standards requiring additional efforts to comply. Therefore, the proposed compliance options
provide the needed lead time for the development and introduction of fuel saving technologies
into their vehicle fleets. [OAR-2009-0472-7145.1, p.2]
Public Citizen and Safe Climate Campaign:
The agencies should improve compliance transparency by providing end-of-year compliance
data for each model year. Manufacturers who are out of compliance but intend to return to
compliance in a future model year should be identified in this report. Knowing where each
manufacturer stands at the end of each model year will assist the public and the agencies in
establishing the technologically feasible and economically practicable level of standards for
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subsequent model years. This will also help agencies and the public evaluate whether the
standards that have been promulgated years in advance have kept pace with the advancement and
adoption of technology. Knowing whether automakers have fallen short or exceeded standards
will help establish the technologically feasible level of standards for model years after 2017.
[OAR-2009-0472-7050.1, p.4]
Union of Concerned Scientists:
We believe the agencies could further improve transparency by having a clear public accounting
of credits and program compliance. Over the years, it has been exceedingly difficult to
independently verify whether manufacturers are complaint with their CAFE obligations, and we
have concerns that the same will hold true with manufacturers' vehicle greenhouse gas
obligations. Given the numerous compliance flexibility mechanisms being proposed by the
agency - as well as significant opportunity for trading, transferring, banking, and borrowing of
credits - we feel it is critical that manufacturers' compliance ledgers be documented, publicly
available, and sufficiently granular to assess by which measures companies are complying with
the regulations. [OAR-2009-0472-7181.1, p.12]
For example, for each model year, this would include, but not be limited to, each manufacturer's:
actual car average greenhouse gas emissions performance; actual light truck average greenhouse
gas emissions performance; amount of credits (on at least a fleet average basis) accrued or used
through advanced technology vehicle credits, early credits, A/C credits, off-cycle technology
credits, flex fuel vehicle credits, and use of temporary lead-time allowance alternative standards;
amount of total banks/debits accrued in each year; and a running balance of banks/debits. We
[OAR-2009-0472-7181.1, p.12] urge the agency to undertake an effort to provide clear public
accounting of credits and program compliance. [OAR-2009-0472-7181.1, p.13]
Natural Resources Defense Council:
Credit Transactions and Automakers' Credit or Debit Status Should be Transparently Reported
Annually to Allow for Public Evaluation of Program Effectiveness
Effective public support for the National Program is dependent on transparency on that the
program is working effectively. To enable the public to evaluate the effectiveness of the
program, EPA should publish an annual public report that includes at minimum the following
quantitative information on credits (in megagrams or metric tons) for each manufacturer's car
and light truck fleets:
-the amount of cumulative credits or deficits;
-the amount of credit transfers made by a manufacturer between its car and light truck fleets (if
any);
-the amount of credits traded between manufacturers including which manufacturers were
involved and the car/truck credit origination and destination;
-the amount of credits generated, for each manufacturer's car and truck fleet, from the additional
credit opportunities including: air conditioning related credits, Flex Fuel Vehicle and Alternative
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Fuel Vehicle credits, Advanced Technology Vehicle Credits for electric vehicles, plug-in
hybrids, and fuel cells, off-cycle technology credits, early credit options
For each of the five additional credit opportunities above, EPA should specify the basis for
calculating the credits and indicate how many credits were awarded for each mechanism. For
example, EPA should indicate how many plug-in hybrid electric vehicles earned advanced
technology multiplier credits for a manufacturer's car fleet and how EPA calculated the credit
per vehicle type. For off-cycle technology credits, EPA should specify what technologies earned
the credit. For each manufacturer using the early credit pathways, EPA should describe for which
pathway the credits were awarded. [OAR-2009-0472-7141.1, pp. 10-11]
Sierra Club:
Strengthen transparency measures regarding the status and impacts of credit accrual and use.
We strongly support the proposal to make all information regarding credits, including status of
credit balances and attained versus projected fleet average emission levels, publicly available.
The proposal allows credits to be traded over a 9 year time frame; we strongly urge EPA to limit
this timeframe and to publish data regarding credit balances and use on an annual basis,
including sales of credits between companies. [OAR-2009-0472-7278.1, p. 17]
University of California, Santa Barbara, Bren Working Group on Vehicle Fuel Economy:
Finally, we strongly encourage all test results to be made publicly available and easily accessible
for both research and consumer awareness purposes. [OAR-2009-0472-7188.1, p. 10]
[University of California, Santa Barbara, Bren Working Group on Vehicle Fuel Economy also
submitted these comments as testimony at the Los Angeles public hearing. See docket number
OAR-2009-0472-7283, pp. 119-121]
People's Republic of China:
We suggest the United States regularly publishing the monitoring information about the
greenhouse gas emissions and corporate average fuel economy of domestic and import
vehicles. [OAR-2009-0472-11269, p.3]
New York State Department of Environmental Conservation:
Compliance and Enforcement (Preamble Section III.E)
We agree with EPA that an effective compliance program is essential to achieving the benefits of
the standards. We are particularly pleased to see that EPA has not adopted the 'pay-to-pollute'
philosophy of the CAFE program, where comparatively minor fines substitute for compliance.
[OAR-2009-0472-7454, p.4]
EPA proposes to determine compliance after the model year ends, in a manner similar to the Tier
2 light duty vehicle emissions program. Manufacturers would produce a preliminary compliance
plan including planned production, expected emissions values, and expected credit activity, etc,
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with limited emissions testing data. Certificates of Conformity would be conditioned on ultimate
satisfaction of the greenhouse gas average standard requirements. Complete CO2 test values
would be submitted over the course of the model year, as is currently done with CAFE. Since
deficits can be carried for three subsequent years, final compliance determination may not occur
for several years. We Agree with EPA that this approach best accommodates credit banking and
trading, and provides the most efficient use of manufacturer certification testing resources.
[OAR-2009-0472-7454, p.4]
Yuli Chew, (private citizen)
I am very concerned that importers will be continuing to import large quantities of heavy duty
trucks that will not meet the GHG fleet average on it own is they are included as part of a larger
family. For example, GM might have been able to sell small quantities of Hummer H2 and yet
meet the CAFE standard. At this moment, Hummer Brand has been sold to Sichuan Tengzhong
of China. With attribute-based system, the impact of penalties is diluted. The importers may
continue to import substantial quantities of these GHG unfriendly vehicles as just minor
increased cost basis and do not participate in efforts to reduce GHG. I suggest that if the
quantities of the importers exceed 4,500 vehicles per year, they should follow the same rule as
for local large manufacturers or actions be curtailed. [OAR-2009-0472-7042.1, p.2]
I support a web-based transparent database reporting system to EPA assess validity of credits,
especially those obtained from third-party credit brokers. [OAR-2009-0472-7042.1, p.3]
EPA Response:
In general, there was widespread support for the use of current CAFE testing protocol to measure
and report CC>2 values, to provide a preliminary compliance plan to EPA, and to calculate a fleet-
wide average greenhouse gas emission compliance level for each manufacturer at the end of the
model year.
Transparency
EPA received considerable comment about the need for transparency in its implementation of the
greenhouse gas program and specifically about the need for public access to information about
Agency compliance determinations. Many comments emphasized the importance of making
greenhouse gas compliance information publicly available to ensure such transparency. EPA also
received comment from industry about the need to protect confidential business information.
Both transparency and protection of confidential information are longstanding EPA practices,
and both will remain priorities in EPA's implementation of the greenhouse gas program. EPA
periodically provides mobile source emissions and fuel economy information to the public, for
example through the annual Compliance Report19 and Fuel Economy Trends Report.20 As
proposed, EPA plans to expand these reports to include GHG performance and compliance
19 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
20 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
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trends information, such as annual status of credit balances or debits, use of various credit
programs, attained fleet average emission levels compared with standards, and final compliance
status for a model year after credit reconciliation occurs. EPA intends to regularly disseminate
non-confidential, model-level and fleet information for each manufacturer after the close of the
model year. EPA will reassess data release needs and opportunities once the program is
underway.
Other sources of public information that EPA may expand to include GHG compliance
information include:
• Green Vehicle Guide - typically published in May, July, September, October and every
three months until the end of the model year; (see www.epa.gov/greenvehicles):
• Certification test data summary - contains certification test data21 - typically published in
October; (see www.epa.gov/otaq/crttst.htm);
• Fuel economy test car list- contains city and highway test data22 - typically published in
October; (see www.epa.gov/otaq/tcldata.htm); and
• EPA Document Index System (DIS) - updated quarterly - contains applications for
certification, copies of certificates, etc; (see http://iaspub.epa.gov/otaqpub/)
In addition, EPA and DOE publish the Fuel Economy Guide information on the web at
www.fueleconomy.gov which contains a summary of all the Fuel Economy Labels (window
stickers) on new cars and trucks. The FE Labels contain model type city, highway and combined
fuel economy values (weighted 55% city and 45% highway) which have been adjusted to reflect
real world conditions. Unadjusted city, highway and combined mpg values for each model type
are also available at this site. Currently, the FE Guide is published in May, July, September,
October, and then every 2-3 months until the end of the model year.
EPA will work with interested parties to release an appropriately detailed level of greenhouse gas
compliance information and test data that satisfies the need for public review without
compromising the CBI needs of industry. We do not intend to publish prospective manufacturer
compliance plans, or future projected production volumes. Initially EPA intends to release actual
end-of-year production volumes and GHG emissions information at the model type level. We
anticipate publishing manufacturer and model type GHG information including:
• manufacturer's annual compliance level (credit/debit status for each applicable passenger
car or truck category);
• the number and type of credits and debits accumulated each year;
• the number and type of early credits earned and reported with manufacturer's 2011 model
year report;
• credit transfers for a manufacturer between car and truck categories; and
• credit trades between manufacturers.
21 Currently does not contain CO2 data.
22 Currently contains total HC, CO and CO2 emission data (but not CH4 or N2O data).
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Concerns That Manufacturers Will Shift Light Truck Product into Heavy-Duty Truck
Products
Comments from Mr. Yuli Chew expressed concern that automobile manufacturers would shift
light truck product into heavy-duty truck product (which are unregulated for CAFE and GHG
emissions).
On October 20, 1999, the International Center for Technology Assessment (ICTA) and 18 other
environmental and renewable energy industry organizations filed with EPA a "Petition for
Rulemaking and Collateral Relief Seeking the Regulation of Greenhouse Gas Emissions from
New Motor Vehicles under Section 202 of the Clean Air Act." As discussed in the proposal (74
FR 49507, September 28, 2009), on April 2, 2007, the U.S. Supreme Court held in
Massachusetts v. EPA that greenhouse gases were within the definition of air pollutant under the
Clean Air Act and remanded the case to the U.S. Court of Appeals for the District of Columbia
Circuit for further action. Heavy-duty vehicles are among the vehicle classes addressed by the
petition and it is likely that EPA will respond to the petition as part of a future rulemaking.
Excluding Emergency and Law Enforcement Vehicles
Currently, emergency and law enforcement vehicles are excluded from CAFE requirements, ref.
49 USC 32902(e). Comments from Chrysler, Ford Motor Company and General Motors
recommend that EPA provide the manufacturer "with the same opportunity to exclude
emergency vehicles from the GHG standards" (as provided by CAFE requirements). Both
manufacturers recommend such changes for consistency with CAFE requirements and to prevent
problems supplying emergency vehicles and law enforcement vehicles (including vehicles with
special performance needs) to federal, state and local governments.
These manufacturers believe this provision is necessary because law enforcement vehicles (e.g.,
police cars) must be designed with special performance and features necessary for police work —
but which tend to raise GHG emissions and reduce fuel economy relative to the base vehicle.
These commenters provided several examples of features unique to these special purpose
vehicles that negatively impact GHG emissions, such as heavy-duty suspensions, unique engine
and transmission calibrations, and heavy-duty components (e.g., batteries, stabilizer bars, engine
cooling). These manufacturers believe consistency in addressing these vehicles between the EPA
and NHTSA programs is critical, as a manufacturer may be challenged to continue providing the
performance needs of the federal, state, and local government purchasers of emergency vehicles.
EPA is not finalizing such an emergency vehicle provision in this rule, since we believe that it is
feasible for manufacturers to apply the same types of technologies to the base emergency vehicle
as they would to other vehicles in their fleet, and given the relatively small impact the limited
number of emergency and law enforcement vehicles would have on a manufacturer's overall
fleet average. However, EPA also recognizes that, because of the unique "performance
upgrading" needed to convert a base vehicle into one that meets the performance demands of the
law enforcement community - which tend to increase GHGs relative to the base vehicles - there
could be situations where a manufacturer is more challenged in meeting the GHG standards than
the CAFE standards, simply due to inclusion of these higher-emitting vehicles in the GHG
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program fleet. Although EPA does not believe that the limited information in front of it at this
time supports finalizing such an exclusion for emergency vehicles today, we do believe it is
important to continue to assess this issue in the future. EPA plans to continue to assess the
characteristics of these emergency vehicles and to continue to assess whether special provisions
for addressing them are warranted, as requested by the manufacturers. EPA plans to undertake
this evaluation as part of a follow-up rulemaking in the next 18 months (this rulemaking is
discussed in the context of small volume manufacturers in Preamble Section III.B.6.).
Follow-Up Reports Documenting the Effectiveness of the Program
Comments from the Environmental Defense Fund recommended that EPA and NHTSA provide
an annual public compliance report examining the program's effectiveness, including any
recommended adjustments to the program, enforcement actions or prospective policy action to
ensure the policy objectives are achieved.
As discussed in the Transparency section above, EPA periodically provides mobile source
emissions and fuel economy information to the public, for example through the annual
Compliance Report and the Fuel Economy Trends Report. 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 fleet average emission levels
compared with standards, and final compliance status for a model year after credit reconciliation
occurs.
Geographical Location of Greenhouse Gas Fleet Vehicles
One manufacturer commented that the CAFE sales area location defined by Department of
Transportation regulations is different than the EPA sales area location defined by the CAA.
DOT regulations require CAFE compliance23 in the 50 states, the District of Columbia, and
Puerto Rico. However, current EPA emission certification regulations require emission
compliance24 in the 50 states, the District of Columbia, the Puerto Rico, the Virgin Islands,
Guam, American Samoa and the Commonwealth of the Northern Mariana Islands.
The commenter stated that EPA has the discretion under the CAA to align the sales area location
of production vehicles for the greenhouse gas fleet with the sales area location for the CAFE
fleet and recommended that EPA amend the definitions in 40 CFR 86.1803 accordingly. Such an
23 DOT regulations at 49 CFR 525.4(a)(5) read "The term customs territory of the United States is used as defined in
19 U.S.C. 1202." Section 19 U.S.C. 1202 has been replaced by the Harmonized Tariff Schedule of the United
States. The Harmonized Tariff Schedule reads in part that "The term 'customs territory of the United
States'...includes only the States, the District of Columbia, and Puerto Rico."
24 Section 216 of the Clean Air Act defines the term commerce to mean "(A) commerce between any place in any
State and any place outside thereof; and (B) commerce wholly within the District of Columbia."
Section 302(d) of the Clean Air Act reads "The term'' State" means a State, the District of Columbia, the
Commonwealth of Puerto Rico, the Virgin Islands, Guam, and American Samoa and includes the Commonwealth of
the Northern Mariana Islands." In addition, 40 CFR 85.1502 (14) regarding the importation of motor vehicles and
motor vehicle engines defines the United States to include "the States, the District of Columbia, the Commonwealth
of Puerto Rico, the Commonwealth of the Northern Mariana Islands, Guam, American Samoa, and the U.S. Virgin
Islands."
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approach would exclude from greenhouse gas requirements production vehicles that are
introduced into commerce in the Virgin Islands, Guam, American Samoa, and the
Commonwealth of the Northern Mariana.
EPA believes that the approach suggested in the comments would introduce an undesirable level
of complexity into the certification process and result in confusion due to vehicles intended for
commerce in separate geographical locations being covered under a single certificate. In
addition, the vehicles sold into these additional areas will have the same options for technology
upgrade as vehicles sold in the areas coved by the CAFE program, and there is no technological
basis to treat them differently. For these reasons, EPA will retain the proposed greenhouse gas
production vehicle sales area location.
5.10.2. Vehicle Certification
Organization: Ford Motor Company
Mercedes-Benz (Daimler AG)
Association of International Automobile Manufacturers (AIAM)
Alliance of Automobile Manufacturers (Alliance)
Toyota Motor North America
National Association of Clean Air Agencies (NAC AA)
Sierra Club
Motor and Equipment Manufacturers Association
Honeywell Transportation Systems
Cummins Inc.
New York State Department of Environmental Conservation
U.S. Coalition for Advanced Diesel Cars
Hyde, James
Comment:
Ford Motor Company
Ford supports use of the 3% confirmatory retest criteria for the GHG program. This is consistent
with current fuel economy label and CAFE retest criteria. There is not any technical justification
for different values. In addition, Ford supports an engineering evaluation in lieu of testing at
altitude. Any deviation in emissions control practices could be described in the auxiliary
emission control device descriptions submitted by manufacturers at certification. [OAR-2009-
0472-7082.1, p. 10]
Test Cycle Requirements
Five-cycle testing is not appropriate for the GHG program. It is not consistent with the program
goal of GHG compliance at the fleet level while mirroring the current CAFE program protocol
that utilizes the FTP (city) and Highway tests (HFET). It would also increase the manufacturer
burden, complexity, and prototype requirements without corresponding benefits.
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In addition, Ford supports the current FTP 55/45 city/highway weighting split. Although a lot has
changed since the 55/45 city/highway split was developed over 20 years ago, it should not be
assumed that drivers commuting on the road today would get from point A to point B at a higher
average speed. One must also consider that more time is spent on the road today during the trip
(Le. congestion impact). The current 55/45 aligns more closely with the average consumers drive
patterns, taking into account modern-day congestion. [OAR-2009-0472-7082.1, p. 10]
Carbon-Related Exhaust Emissions Data
Ford does not support the agencies' request to provide fleet-average carbon-related exhaust
emissions data (e.g. CWF* +1,571 *CO+C02). We understand that depending on the type of fuel
other constituents would also require reporting; however, Ford sees no value in providing the
agency fleet-average carbon related emissions values. Both carbon monoxide (CO) and non-
methane hydrocarbon are currently regulated constituents, and with this rule CO2 will also be
regulated. Additional reporting requirements should not be adopted. [OAR-2009-0472-7082.1, p.
11]
Submittal of Compliance Plans
Ford recommends that EPA approve the proposed CO2 compliance plan that it is requiring
manufacturers submit before the model year and before the certification of any test group. EPA's
vision of the compliance plan, as described in the NPRM, is as follows:
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)... 74 FR at 49560.
EPA seeks comment on the proposal to require manufacturers to submit compliance plans, and
also on the criteria the agency should use to evaluate the sufficiency of such plans.
In general, Ford has no objection to a requirement for manufacturers to submit a plan to EPA
showing how the manufacturer intends to comply with fleet average GHG standards. One plan
covering both the car and truck fleets should suffice. As we envision it, the plan would be
submitted at the cert preview stage and would include: projected volumes for the car and truck
fleet in aggregate and projected GHG fleet averages for the model year; projected fleet average
air conditioning credits, information showing how the manufacturer plans to avail itself of any
other flexible mechanisms; the manufacturer's plan for addressing any deficits that may have
been accrued in past model years; and the manufacturer's overall projected credit/debit status at
the end of the model year in question. The more specific model type information would not be
provided at the certification preview meeting, but instead when available at the end of model
year timing.
The fact that the manufacturer has submitted a compliance plan for EPA's review should not
simply be forgotten once the model year is underway. Compliance with fleet average GHG
standards depends not only on what the manufacturer does (producing X volume of vehicles with
Y fuel economy), but it also depends how on consumers react to those vehicles, which in turn
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depends fluctuations in fuel prices, and a host of other economic, demographic, and cultural
trends that may affect consumer behavior. To the extent that manufacturers have difficulty
achieving compliance with fleet average GHG standards, there is a good chance that such
problems may be based on marked increases or decreases in fuel prices, economic instability,
market shifts, Acts of God (e.g., weather events that force a plant to shut down for some period
of time), strikes, or other developments outside a manufacturer's control. In the event of eventual
noncompliance, the compliance plan submitted by the manufacturer should be considered in any
potential enforcement action. If a manufacturer followed its plan but failed to achieve
compliance due to changed external circumstances, the imposition of penalties may not be
appropriate. [OAR-2009-0472-7082.1, pp. 12-13]
Reporting Requirements
EPA reporting requirements in Part 600.512-12 (Model Year Report)
Ford recommends that Part 600.512-12 include a statement that 'submission of data to the agency
that is provided in sufficient detail such that the relevant fleet averages can be confirmed fulfills
that portion of this regulation'. This will provide manufacturers with flexibility to work with
agency staff to provide the required data in the most efficient manner. In the proposed regulation,
EPA is very specific about what data is required to be submitted. Ford generally agrees with the
regulation, except for the carbon-related exhaust emissions data as discussed earlier. Ford
supports the agency's efforts to collect data in sufficient detail so as to confirm a manufacturer's
calculations. However, much of the data required in 600.512-12 for the model year report is
actually required to be submitted during the certification and fuel economy labeling processes. In
fact, EPA staff has been working collaboratively with industry for a few years to use a new EPA
VERIFY database. In designing VERIFY, EPA staff recognized that much of the final fuel
economy data has previously been submitted. Consequently, data files sent to VERIFY actually
reference 'index' or use identification numbers instead of resubmitting the same data time and
time again.
Ford also recognizes that some of the data required in 600.512-12 is not included in submissions
for other processes, such as the listing of both domestically and non-domestically produced car
lines and corporate officer attestation. For this, manufacturers should have the option to submit a
separate report for the model year that would contain just the additional information. [OAR-2009-
0472-7082.1, pp. 13-14]
EPA reporting requirements in Part 600.514-12
Ford recommends that EPA include a statement in Parts 600.512-12,600.514-12 and 537.7 that
'submission of data to either agency that is provided in sufficient detail such that the relevant
fleet averages can be confirmed fulfills the portion of this regulation.' Merely copying the CAFE
pre-model year reporting requirements doesn't address long-standing issues with that reporting
nor does it minimize a manufacturer's burden.
Part 600.514-12 includes requirements for duplicitous and outdated information such as interior
volume index, which is already supplied by manufacturers as part of the carline submission at
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certification and is used for fuel economy labeling classification, and also SAE net rated power
in kilowatts and the number of carburetor barrels. In 2005, the Alliance commented upon this in
comments for the rulemaking for the Average Fuel Economy Standards of Light Trucks, Model
Years 2008-2011. The response from NHTSA was The NPRM did not propose to revise the data
reporting requirements aside from requiring the footprint related data and elimination of data
currently required to be reported is outside the scope of this rulemaking. Moreover, consideration
of such revisions would require coordination with the EPA to ensure consistency between the
two agencies' regulatory programs, given the joint responsibilities under the Energy Policy and
Conservation Act (EPCA). However, the agency will work to evaluate the necessity of the data
currently required to be reported and will consider potential revisions in future rulemakings.' 74
FR at 17654. For the final rule, the agencies should work together to streamline the reporting
process and eliminate duplicative requirements. [OAR-2009-0472-7082.1, p. 14]
Mercedes-Benz (Daimler AG):
EPA requests comment with regard to whether the 3% value currently used during CAFE
confirmatory testing is also appropriate for use in the CC>2 program to determine whether a re-
test is required. See 74 Fed. Reg. 49454, 49562 (Sept. 28, 2009). DAG agrees that the traditional
3% CAFE variance factor is appropriate for determining whether a re-test is necessary. However,
DAG believes it is critical for the confirmatory calculation procedure used for CAFE to be
modified in the case of CC>2 compliance determinations.
Confirmatory testing that is within 3% of the manufacturer's original test results are within the
parameters of normal testing variation and do not represent a disparity under 40 CFR Part
600.008-08 and 40 CFR Part 86.1835-01. The 3% factor is not the critical issue for CO2
compliance. The critical issue is how EPA treats confirmatory test values that are also within the
3% variance factor.
Under the current CAFE testing regime, which EPA proposes to continue for CO2, if a
confirmatory test result is below the recognized 3% variance factor, the confirmatory test result
is used as the compliance value. See 40 CFR Part 86.1835-01 (iii). See also Dear Manufacturer
Letter, VPCD-99-06 ( LDV, LOT, SVM) April 22, 1999. Thus, under CAFE certification, if a
confirmatory test value is within the recognized standard variation, EPA replaces the
manufacturer's value. This represents the potential that each test configuration could have its
manufacturer's CO2 value reduced by up to 2.9% through the confirmatory test process. Such a
variation is not large for any one model but can be significant if multiplied across a fleet of
vehicles. In addition, such a variation is not as critical under a CAFE compliance program where
the worst case scenario is a potential penalty payment. Under the CAA, however, EPA has noted
that even small variations above the fleet standard can have significant consequences since the
penalty option is not available.
In view of the need for manufacturers to be secure and precise in their CO2 compliance planning,
DAG recommends that these sections be amended to allow the manufacturer to continue to use
the manufacturer's original test result that demonstrates a less then 3% variation in confirmatory
testing, rather than the results of the confirmatory testing, as the official GHG and fuel economy
test results. This would be similar to the system in Europe where the manufacturer's original test
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result is deemed the official result if the confirmatory test is within 4% of the original testing.
This system recognizes that testing discrepancies within the 3% are within normal testing
variation and is consistent with not requiring yet further re-testing. This is true regardless of the
number of confirmatory tests conducted.
This change is essential to allow manufacturers the appropriate certainty for planning purposes.
Using the results of the confirmatory tests unduly endangers planning certainty because
unanticipated discrepancies might reduce a projected compliance margin. As a result of the more
draconian GHG enforcement program, manufacturers require more certainty that their original
testing will match their final GHG results as long as those values remain within the normal
testing variation parameter of 3%. [OAR-2009-0472-7193.2, pp. 18-21]
Association of International Automobile Manufacturers (AIAM):
It is also not clear what the significance of a failure to meet the in-use standard would be. We
presume that there would be enforcement consequences only if the fleet average standard is not
met, so only a widespread deterioration problem would affect fleet average compliance. There
should be no enforcement consequences directed at a single model, without evidence of fleet
average noncompliance. In any case, EPA should clarify in the final rule what procedure it
would follow in enforcing a noncompliance with in-use standards, and what would constitute
such a noncompliance. [OAR-2009-0472-7123.1, p.7]
EPA proposes to require manufacturers to submit a pre-model year compliance plan and conduct
a pre-model year conference with Agency staff. See preamble at 49560. The EPA plan would be
similar to the CAFE pre-model year report but would also contain information on anticipated
credits. The preamble does not identify a clear purpose for the review of the plans, criteria for
evaluating the plans, or consequences if EPA finds the plans to be unacceptable. [OAR-2009-
0472-7123.1,p.l6]
Alliance of Automobile Manufacturers (Alliance):
CREE
• CO is already a regulated constituent; therefore, there is no need to include it as an additional
requirement in CREE.
• EPA is proposing that CH4 be a regulated constituent. Since NMHC is already a regulated
constituent, there would be no need for HC to be included in CREE.
• The CREE equations in several sections of 40 C.F.R. 600-113-08 [i.e., (h)(2), (i)(2), (j)(2),
(k)(2) &(1)(2)], appear to put constituents in a CO2-equivalent value. The HC components,
however, do not follow this convention and instead use carbon weight fraction (CWF). Also, it is
unclear how the CH4 factor of 10.916 in (k)(2) was determined. [OAR-2009-0472-6952.1, p.43]
• The "double jeopardy" issue associated with including previously regulated constituents into
the CREE calculation will be avoided. [OAR-2009-0472-6952.1, p.44]
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Given the above issues and the fact that CH4, N2O and all the non-CO2 CREE constituents are
marginal contributors to GHG, the Alliance proposes a simplification: regulate only CO2
emissions with the addition of a factor to account for the contribution of CH4 and N2O. This
would mean that anywhere the currently proposed regulation requires the use of CREE, CREE
would be replaced with the measured CO2 value plus an added factor to account for N2O and
CH4. [OAR-2009-0472-6952.1, p.44]
In the preamble, EPA proposes that manufacturers submit a compliance plan prior to the
beginning of the model year and prior to the certification of any test group. This contradicts the
regulatory language in 600.514-12(a)(2)(i) which states "The pre-model year report required by
this section for each model year must be submitted during the month of December (e.g., the
premodel year report for the 2012 model year must be submitted during December, 2011)."
[OAR-2009-0472-6952.1, p.51]
EPA also needs to clarify what information is required in the pre-model year and supplementary
reports. [OAR-2009-0472-6952.1, p.51]
Recommendation:
Assuming that EPA wants the GHG pre-model year report before the certification of any test
group, the report would have to be due in December of the model year minus two years (e.g.,
MY 2012 report would be due in December 2010) and EPA should correct the regulatory
language accordingly. [OAR-2009-0472-6952.1, p.51]
Manufacturers use various methods for projecting their fleet average CO2 compliance so details
such as model type CO2 values may not be available at the time the certification preview
meeting as suggested in the preamble. Therefore, the Alliance suggests that the only items
needed for the GHG pre-model year report are the projected total production volume, projected
fleet average CO2 values, projected fleet average CO2 standards and projected fleet average
CO2 credit status. The additional detail could be made available in the same timeframe as the
pre-model year CAFE reports that are required by NHTSA. [OAR-2009-0472-6952.1, p.51]
There is no need for EPA to spell out the detail regarding what would be required in a
"supplementary" report. The regulation should simply be that the supplementary report should
contain sufficient detail to allow proper analysis of the situation. The Alliance supports EPA's
proposed mobile sources GHG reporting requirements for CO2 measuring and reporting of new
vehicles in accordance with the current emissions certification procedures. EPA has also
expressed an interest in collecting additional in-use data as a means for continually updating and
improving inventory assessments from total mobile source fleet emissions. [OAR-2009-0472-
6952.1, p.51]
Confirmatory Testing Process (Proposed regulations in 40 C.F.R. 86.1835-01 and 600.008-08)
EPA has proposed to add a "within 3%" requirement for CO2 when determining whether
additional confirmatory testing needs to be performed. In addition, EPA has proposed that a
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manufacturer needs to accept the highest CO2 value if they are accepting the lowest FE value
during the confirmatory test process. [OAR-2009-0472-6952.1, p.52]
The proposed addition of a 3% CO2 requirement creates an additional pathway that could lead to
additional manufacturer and EPA confirmatory testing burden. The additional testing could
potentially delay certification schedules and vehicle launch. The Alliance fails to see how this
duplicative judgment criterion can be justified in terms of overall GHG benefit. [OAR-2009-
0472-6952. 1, p.52]
Recommendation:
Because of the close relationship between CO2 and FE, the addition of the CO2 requirements
only serve to make the decision-making process more complicated without any real benefit. The
manufacturers propose the removal of the new CO2 criteria and to continue to allow the
decisions to be made based on the FE criteria. [OAR-2009-0472-6952.1, p.52]
Running Change Data Requirements (Proposed regulations in 40 C.F.R. 600.507-12)
EPA has proposed additional criteria for EV, HEV, PHEV, fuel cell and advanced technology
vehicles. The proposed criteria states that additional data is required if calibration changes are
made that result in a 4% decrease in FE. [OAR-2009-0472-6952.1, p.52]
Recommendation:
The real purpose of the running change data requirements is to provide the method for the
possible recalculation and updating of fuel economy label values. Therefore, these criteria should
be deleted from the regulation and readdressed in future advanced technology FE label
rulemakings. [OAR-2009-0472-6952.1, p.53]
Toyota Motor North America:
In addition to CO2, EPA proposes that the emissions measured from each test vehicle shall
include hydrocarbons (HC) and carbon monoxide (CO), for purposes of compliance with the
fleet average and in-use standards. All three of these measured exhaust constituents are used to
determine the amount of fuel burned over a given test cycle via the 'carbon balance equation' and
are an integral part of the current fuel economy test and calculation. To account for the carbon-
related combustion products, HC emissions are adjusted by a coefficient that reflects the carbon-
weighted fraction (CWT) of the fuel being burned and CO emissions are adjusted by a
coefficient that Page 4 of 31 reflects the CWF of the CO molecule. EPA proposes that the carbon
related exhaust emissions of each vehicle be calculated according to the following formula,
where HC, CO2 and CO2 are in units of grams per mile:
CREE g/mi = CWF*HC + 1 .571 *CO + CO2 [OAR-2009-0472-7291, pp.7-8]
Toyota has concerns with EPA's CREE proposal for several reasons.
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-The CREE calculation does not lend itself well to a fleet average standard. A better metric
would be using COZ to determine compliance with fleet average standards .
-HC and CO are already regulated constituents, so there is no need to again include these
emission measurements into another standard, as proposed.
-The contribution of HC and CO in the CREE formula is approximately 1% of the overall CO2
equivalent value. [OAR-2009-0472-7291, p.8]
Thus, there appears to be little technical basis to support the proposed CREE calculation. [OAR-
2009-0472-7291, p. 8]
EPA proposes to keep the current Tier 2 structure for cars and trucks in the certification
requirements for CO2. At certification, manufacturers would use the CO2 emission level from
the Tier 2 Emission Data Vehicle (EDV) as a surrogate to represent all of the models in the test
group. Following further certification testing would generally be required to demonstrate
compliance with the fleet average CO2 standard. EPA's issuance of a certificate would be
conditioned upon the manufacturer's subsequent model level testing and attainment of the actual
fleet average. EPA proposes to require a single EDV that would represent the test group for both
Tier 2 and CO2 certification. The manufacturer would be allowed to initially apply the EDV's
CO2 emissions value to all models in the test group. 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 and would be used to determine
compliance with the fleet average. [OAR-2009-0472-7291, p.28]
Toyota clearly supports the establishment of a fleet average CO2 standard. However, Toyota has
concerns with the practical aspect of EPA's proposal. These standards will not be established
until completion of all model level testing at the end of the model year. Thus, a manufacturer
could be producing 'noncomplying vehicles' during the model year and would not know it until
after the model year fleet average calculations were completed. Depending on the interpretation
of the regulations, a manufacturer could be deemed to have produced uncertified configurations.
Toyota does not support conditional certificates as EPA proposes. [OAR-2009-0472-7291, p.28]
3% CO2 Criteria
As part of the current CAFE and Tier 2 compliance programs, EPA selects a subset of vehicles
for confirmatory testing with the goal of validating the manufacturers test results. EPA proposes
that CO2, N2O, and CH4 would be added to the emissions measured as part of the Tier 2 and
CAFE confirmatory testing. These emission values measured at the EPA laboratory would
continue to stand as official as is current practice under the existing regulatory programs. [OAR-
2009-0472-7291, p.29]
EPA's proposal would follow the current practice of fuel economy testing in that, during EPA's
confirmatory testing the EPA CO2 value differs from the manufacturers value by more than 3%,
manufacturers could request a re-test. The results of the re-test would then stand as official
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regardless of manufacturers previous value. In the NPRM, EPA proposes to allow the re-test
request based on 3% or greater disparity since a manufacturers fleet average emissions level
would be established on the basis of model level testing only. EPA requests comment on whether
the 3% value currently used during the CAFE confirmatory testing is appropriate and should be
retained under the proposed GHG program. [OAR-2009-0472-7291, pp.29-30]
Toyota believes that EPA's proposed 3% threshold on CO2 is unnecessary. Vehicle fuel
economy, which is closely correlated to tailpipe CO2, has been reported by the industry since the
advent of CAFE program in 1975. The current 3% criteria on fuel economy under the CAFE
confirmatory program has been an effective means for making confirmatory judgments on
manufacturers fuel economy results. As a result, assigning another 3% criteria on CO2, as EPA
proposes, seems like an unnecessary certification requirement when the 3% fuel economy
threshold can accomplish the same confirmatory objective. Additionally, Toyota is concerned
that introducing an additional 3% criteria for CO2 adds no value to the confirmatory process
while imposing the risk of causing delays in certification and vehicle start of production. [OAR-
2009-0472-7291, p.30]
National Association of Clean Air Agencies (NACAA):
Fourth, EPA indicates that it will continue to use the same test methods and test fuels to certify
vehicles affected by this proposal. NACAA recommends, however, that EPA begin using real-
world fuels. Similarly, NHTSA should also use real-world fuels for testing purposes. The
association also recommends that EPA determine GHG emissions from new vehicles based on a
calculation that incorporates lifecycle costs. [OAR-2009-0472-7071.1, p.3]
Sierra Club:
The proposed greenhouse gas and fuel economy standards represent a tremendous step forwards
in terms of reducing pollution and improving vehicle efficiency. However, the tests used to
measure fuel economy and vehicle emissions compliance remain mired in the 1970s. EPA is
proposing to use the two tests that currently determine compliance with CAFE standards, the
Federal Testing Procedure (FTP), or "city" test, and the Highway Fuel Economy Test (HFET), or
"highway" test. Rife with arcane assumptions that do not represent real-world driving conditions
or behaviors, these two tests result in fuel economy values that are significantly higher than those
achieved in real-world driving - the new greenhouse gas standards correspond to CAFE values
and will similarly differ from real world emissions. [OAR-2009-0472-7278.1, p. 17]
Designed when the national speed limit was 55 miles per hour, drivers are assumed to average 48
miles per hour and reach a maximum of 60 mph on the highway and to never turn on accessories
such as air conditioners or heaters. Today, 99 percent of cars are sold with air conditioners and
the EPA has found that more than 28% of driving occurs at speeds greater than 60 mph.
Acceleration and deceleration rates used in the [OAR-2009-0472-7278.1, p. 17] tests also do not
represent real-world behavior. Dynamometers available in 1974 could not simulate real-world
acceleration rates; therefore, the city and highway tests prescribed acceleration rates of 3.3 and
3.2, respectively. Today the same acceleration rates are being used to measure fuel economy,
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even though on-road driving studies have found maximum acceleration rates of roughly 11-12
mph/second. [OAR-2009-0472-7278.1, p.18]
It is clear that new testing procedures are needed. We are encouraged by language in the
proposed rule that "both agencies recognize that these test procedures are not fully representative
of real world driving conditions," and that "both EPA and NHTSA are interested in developing
programs that employ test procedures that are more representative of real world driving
conditions, to the extent authorized under their respective statutes." We recognize that NHTSA is
somewhat constrained by EPCA in its ability to develop new test procedures for cars, but has
more latitude when testing light trucks. Similarly, we recognize that EPA has wide authority
under the Clean Air Act to design new, more accurate testing procedures. Going forward, we
strongly support the development of test procedures that reflect real-world driving conditions and
behaviors and for MY 2017 and beyond and that standards be set at these real world levels so
that labels and program compliance are using the same values. [OAR-2009-0472-7278.1, p.18]
Motor and Equipment Manufacturers Association:
Test Cycle Split for Driving Condition Calculations Must Be Revised to Reflect Real World
MEMA supports regulations aimed at improving real-world fuel economy and reducing
emissions and we applaud the NHTSA and the EPA for their effort to harmonize these
regulations. Today, in the 21st century, as growth in America has expanded far beyond our
metropolitan centers, more and more driving miles are accrued on the highway. The driving
profile of Americans has changed; hence the conclusion of a 2006 EPA study that found today's
average driver accumulates about 57 percent of their miles on the highway. Yet the proposed rule
relies on a 1970s-era driving calculation (a split of 55 percent city and 45 percent highway) that
places more emphasis on city driving, thus promoting the development of technologies geared
toward city driving. [OAR-2009-0472-7121.1, p.3]
The calculations in the rule, as proposed, will discourage the American auto industry from
producing solutions that meet consumer demand for efficiency in highway driving. The industry
will make cost-benefit decisions on technologies to maximize the fuel economy numbers with a
55-city/45-highway split and will make long-term technology and capital decisions without an
assurance that those decisions will produce real-world results for the consumer and the country.
The industry should not be put in a position to wait until 2017 when the EPA proposes to update
its driving data (as discussed in the NPRM); having to wait gives rise to uncertainty, which, in
the automotive industry, holds up decision-making and product planning. In an industry that
relies heavily on long-term planning, design, and production cycles, this is not acceptable. The
2006 data provides much more current and accurate data on the driving profile, which will
significantly reduce uncertainly. This rulemaking is the opportunity to make the change. The
industry should be provided with firm direction now so that solutions chosen at present will not
only be more realistic and meet today's consumer demands, but also will provide more industry
certainty through 2017 and beyond. [OAR-2009-0472-7121.1, p.4]
In order to improve and achieve the goals of the National Program to represent driving
conditions in the real world, NHTSA and EPA must consider revising the test result calculations
to more accurately reflect the nation's driving behavior as illustrated in the 2006 study. MEMA
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believes that America needs a broad portfolio of technologies that maximize our ability to
achieve fuel efficiency and reduce emissions. A rule that ignores today's real world driving
habits will limit choice while forcing consumers to base automotive purchases on outdated fuel
efficiency information. Therefore, MEMA urges NHTSA and EPA to change the calculations in
the final rule to reflect a 43 percent city/57 percent highway split. MEMA believes that real-
world benefits can only be achieved with real-world measures. This simple approach - a minor
change with big consequences - could have profound effects on deployment of research funds
and capital investment, on the choices of vehicle technologies, and on the real-world results for
the consumer, emissions reduction, and fuel efficiency. [OAR-2009-0472-7121.1, p.4]
Honeywell Transportation Systems:
Consistent with Honeywell's support for meeting EPA and NHTSA's fuel economy and GHG
goals, we believe that the calculation procedures should be revised to reflect accurately actual in-
use driving style. With respect to the proposed calculation of GHG emissions and CAFE, the city
to highway weighting must be adjusted to more accurately match the national vehicle mile
traveled ratio based on data that best reflect actual driving conditions. Using a more accurate
ratio will promote the technologies that maximize efficiency for the lowest cost. [OAR-2009-
0472-7165.1, p.7]
It is our understanding that EPA is aware of this discrepancy in test cycles as exemplified by the
changes implemented for vehicle fuel economy labeling. Adjusting the weighting of test cycles
will result in more robust control of CO2 emissions and petroleum consumption. This does not
require new testing; rather EPA should adjust the VMT ratio based on a more realistic driving
mix for calculating CAFE and carbon dioxide emissions. [OAR-2009-0472-7165.1, p.7]
Cummins Inc.:
The FTP and HFET 2-cycle test were established by EPA over 30 years ago to measure
emissions and to calculate fuel economy for CAFE purposes. The two cycles are weighted 55%
for city driving and 45% for highway driving. EPA previously determined that not only does the
2-cycle test not reflect real-world driving patterns, but also the 55/45 weighting does not reflect
the typical driving experience. In 2006, EPA established a 5-cycle procedure to more accurately
reflect what consumers achieve in the real world and used that to calculate fuel economy values
for labeling purposes. Using the 5-cycle test, vehicle sticker miles-per-gallon (mpg) values for
both city and highway generally decreased between 8% and 30%. However, EPA is still using
the outdated 2-cycle test procedure. [OAR-2009-0472-7205.1, p.2]
In a rulemaking where EPA established the 5-cycle test procedure for fuel economy labeling, the
Agency concluded that the national light-duty fleet's breakdown for vehicle miles traveled
(VMT) is 43% city and 57% highway driving. EPA used this 43/57 cycle weighting to determine
the city, highway and combined fleet fuel efficiency in its "Light- Duty Automotive and Fuel
Economy Trends" annual reports which provide the Agency's estimate of the fuel consumption
and CO2 emissions for a fleet over its useful life. However, EPA still continues to use the old
55/45 city/highway weighting for CAFE and now the proposed GHG standard program. We urge
EPA and NHTSA to revisit this issue and revise the weighting factors to better reflect real-world
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driving patterns such that the new GHG and CAFE standards drive vehicle designs which
maximize the societal benefits. [OAR-2009-0472-7205.1, p.3]
New York State Department of Environmental Conservation:
Certification Test Fuel
New York has historically commented in applicable rulemakings that in-use fuels should be used
for certification. The same holds true for this proposal. We believe that there [OAR-2009-0472-
7454, p.3] exists some opportunity for manufacturers to reduce the effective stringency of the
greenhouse gas standards by adjusting the composition of certification fuels within the overly
broad ranges allowed by EPA. In particular, aromatics have approximately twenty percent
greater CO2 emissions per unit of combustion energy than paraffins. Low aromatic content
formulations that could not be produced across the gasoline or diesel fuel pool could easily be
produced in certification fuel volumes. It appears that for gasoline a reduction in CO2 emissions
of six to seven percent could be gained, with no corresponding emissions reduction in the field.
Certification gasoline and diesel fuel specifications should be amended to require minimum
aromatics content consistent with the norm for commercial gasoline and diesel fuel. [OAR-2009-
0472-7454, p.4]
U.S. Coalition for Advanced Diesel Cars:
According to a 2006 EPA study, today's average driver accumulates approximately 57% of their
miles on the highway. Yet the proposed rule relies on a 1970's-era driving calculation that places
more emphasis on city driving, thus promoting the development of technologies geared toward
'stop and go' driving. The Coalition believes that America needs a broad portfolio of technologies
that maximize our ability to achieve fuel efficiency and reduce GHG emissions. A rule that
ignores today's driving habits will limit choice because it will discourage automakers from
developing solutions that reflect the reality of modem consumer driving habits and needs. [OAR-
2009-0472-7496, p.3]
The Coalition recommends a change to the proposed rule to reflect a 43% city/57% highway
cycle weighting when calculating a vehicle's fuel economy and CO2 emissions. This simple
update does not require any changes to the test procedures which we feel should not be changed
in this ruling. This calculation change more accurately represents today's driving behavior based
on the EPA's own assessments and data. The rule should capture a technology neutral approach
that empowers consumers to choose a solution that is right for them. No specific vehicle
technology will meet all of America's driving needs. All options must be available in order to
achieve our administrative, legislative and societal objectives of improving fuel economy,
reducing GHG emissions and advancing energy independence. [OAR-2009-0472-7496, p.3]
The Coalition maintains that Congress has made its intentions abundantly clear: EPA must
provide the automotive industry with reality-based calculation procedures on which to compare
the effectiveness of technology choices to regulated parties under rapidly changing limits.
Specifically, the Coalition urges EPA and NHTSA to reconsider the following aspects of the
proposed rule: [OAR-2009-0472-7496, p.3]
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EPA Response to Comments
Use accurate data
EPA should not employ test cycle weighting factors that do not reflect current, real-world
driving patterns where American fuel is consumed and GHG emissions are created. EPA should
apply the findings of its exhaustive 2006 study of current American driving patterns that prove
average consumers accumulate 43 percent of all miles at speeds akin to city driving and 57
percent at speeds akin to highway driving (43/57) This real-world definition of driving patterns is
markedly different than historic, 1976-cycle weightings used for compliance under Corporate
Average Fuel Economy (CAFE) regulations (55% city and 45% highway) that EPA and NHTSA
propose to retain under the new GHG regulations. EPA should not launch 21st century
regulations with a compliance mechanism driving technology selection and vehicle calibration
that is rooted in a 1970s mileage mix that the agency has already declared obsolete in earlier
rulemaking.[OAR-2009-0472-7496, p.3]
Be consistent
EPA employs the 43 percent city/57 percent highway cycle weighting for purposes of measuring
the private and public results to be generated by the new rules in real-world driving, while
proposing to retain the obsolete 55/45 cycle weighting for purposes of measuring the GHG
saving potential of vehicles produced under the new rules. We urge EPA to universally use the
most accurate calculation procedures for purposes of measuring both vehicle compliance and
regulatory benefits. [OAR-2009-0472-7496, p.4]
Consider the consumer
By recognizing the adverse consequences of an outdated drivecycle weighting, we urge the
Administration to promote broad consumer choice, not limit it. [OAR-2009-0472-7496, p.4]
The Coalition applauds EPA and NHTSA for maintaining the 'diesel equivalency factor' of 1.0
under the new rules. This long-established factor appropriately treats one gallon of diesel fuel to
be equivalent to one gallon of pure gasoline in the calculation the agency utilizes to convert the
results of its gram-per-mile tailpipe tests into mpg equivalents. These mpg equivalents are
utilized by NHTSA in administering the CAFE program and by EPA for label fuel economy
reporting to the American public. By withdrawing discussion of a change in the diesel
equivalency factor - that would treat a diesel vehicle as if it were running on gasoline - the EPA
has recognized that fuels have different characteristics as they generate motive power and are
consumed in the American economy, including biofuels like E85 and B20. [OAR-2009-0472-
7496, p. 11]
The coalition urges the EPA to align its vehicle certification test procedures with fuels that are
commercially available to the American public. Vehicles should be certified with fuels that
American consumers can actually buy in the real world. [OAR-2009-0472-7496, p. 12]
Mr. James Hyde (private citizen):
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Certification Gasoline: Current certification gasoline specifications do not address fuel properties
which impact the measured C02 emissions and fuel economy of vehicles. There are no
specifications for the energy content of the fuel or for the carbon:hydrogen ratio. The loose
specifications of aromatics at 0-35 vol% and olefms at 0-10 vol% leave much room for
variations in both C02 emissions and fuel economy. The components of gasoline vary
substantially in energy content and carbon weight fraction. Therefore, the measured emissions
and fuel economy can vary (or be varied) depending on choices about the composition of the
gasoline. [OAR-2009-0472-7258.1, pp. 1-2]
Fortunately, there are no methods for simultaneously increasing fuel economy and reducing C02
emissions by gasoline compositional changes. To the extent, however, that the C02 regulation
and the CAFE regulation impact individual vehicle manufacturers, some gasoline compositional
changes could enhance meeting one of the standards. [OAR-2009-0472-7258.1, p. 2]
C02 emissions depend only on the carbon content of the fuel, while fuel economy is impacted by
all elements in the fuel which are capable of combining with oxygen and giving off heat.
Principal among these is hydrogen. For most hydrocarbons found in gasoline, hydrogen
constitutes from 7 to 17 weight % of the compound. Benzene is particularly hydrogen poor and
therefore carbon rich. The properties of some typical gasoline components are shown in Table
1. [OAR-2009-0472-7258.1, p.2] [See OAR-2009-0472-7258.1, p. 2 for Table 1]
As can be seen in Table 1, toluene produces considerably more CO2 per unit of heat than do
most other gasoline components. In fact, all aromatics will cause higher C02 emissions per
gallon of gasoline than does whole gasoline. [OAR-2009-0472-7258.1, p.2]
The figure below (which uses actual data from EPA report No. EPA-450/4-80-036) shows the
impact of aromatics content on g C02/gallon for commercial fuels. [OAR-2009-0472-7258.1,
p.2] [See OAR-2009-0472-7258.1, p. 3 for the figure]
A manufacturer with sufficient CAFE credits (or willing to pay the monetary penalties), but
having trouble meeting the CO2 standards could decrease the aromatics content of the gasoline
used for certification to decrease C02 emissions. Current regulations do not address this
issue. [OAR-2009-0472-7258.1, p.3]
Fuel Property Corrections to Fuel Economy Calculations: In 1984 General Motors petitioned
EPA to have its CAFE numbers adjusted because the properties of the gasoline used to make the
measurements had changed from that in 1975 when the program began. EPA chose to use an
equation that 'would compensate for fuel property changes and yield a calculated fuel economy
value equal to that which the current equation [then 40CFR600.113-78] would yield if 1975 test
fuel had been used.' [50FR27188, July 1, 1985] The new equation [40CFR600.113-87] uses the
carbon weight fraction (CWF), specific gravity (sg) and net heating value (NHV) of the actual
gasoline and corrects the mpg to values for these parameters which were assumed to be current
in 1975. The assumptions used here have not been verified for current technology vehicles or
fuels. [OAR-2009-0472-7258.1, p. 3]
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Substantially Similar: With the addition ofC02 as a certification emission EPA must consider a
reinterpretation of the substantially similar interpretation for gasoline. Gasoline properties which
impact C02 emissions will be an additional criterion for determining if a commercial gasoline is
substantially similar to certification gasoline. This leads to the issue that certification gasoline
does not contain any oxygenates, while commercial gasoline is essentially required to contain an
elevated level of oxygenates. On a C02 per unit energy basis, ethanol is about 4% higher than
certification gasoline. Blends of 10 vol% ethanol with certification gasoline would then produce
about 0.4% more C02/mi (assuming that mileage is directly related to fuel energy content).
[OAR-2009-0472-7258.1, p. 4]
The Basic Relationship Between CO2 Emissions and Fuel Economy: A basic premise of the
combined GHG/CAFE rulemaking is that there is a definite and predictable relationship between
CO2 emissions and fuel economy. In general this relationship exists when the CO2 emissions
and fuel economy are measured with the same vehicle, fuel and test cycle/conditions. For
certification gasoline EPA has essentially defined this relationship as 8887 grams CO2 equals 1
gallon. [OAR-2009-0472-7258.1, p. 5]
EPA, however, allows manufacturers to calculate fuel economy instead of measuring it. This is
the procedure called 'analytically derived fuel economy' or ADFE. In the ADFE process, a
manufacturer used fuel economy related properties of an untested vehicle to calculate what its
fuel economy would be expected to be based on the fuel economy of a similar vehicle. There is,
however, no procedure to calculate the expected CO2 emissions of the untested vehicle. In the
past EPA has allowed the C02 emissions of the tested vehicle to be entered into its database. This
practice distorts the C02 to mpg relationship and does not provide a correct value for CO2
emissions. Additionally, since the use of ADFE is highly variable among manufacturers, its
impact is not uniform. The current rulemaking do not appear to address this concern. [OAR-
2009-0472-7258.1, p. 6]
The magnitude of this effect is shown in the figure below which shows the percentage deviation
from the nominal value of 8887 for MY2009 and Fuel 61 (the standard EPA certification
gasoline). [OAR-2009-0472-7258.1] [See OAR-2009-0472-7258.1, p. 6 for the figure]
The data points outside the central cluster show the combined impacts of ADFE and fuel
property corrections. The deviations from zero are much too large for the proposed programs.
[OAR-2009-0472-7258.1, p. 6]
EPA Response:
Test Procedures
See section 5.1.2 for EPA's response to comments regarding the weighting of city and highway
fuel economy and greenhouse gas emission test results.25 See Section III.B. 1 of the preamble to
25 Comments from the Alliance did not directly address the city/highway test procedure, but did indirectly support
the use of the current city and highway test procedures. For example, Alliance comments indicated that "The
Alliance supports the joint rulemaking, including the proposed coordinated framework and structure. Further, the
Alliance supports the proposal that both NHTSA and EPA use an attribute-based approach." AIAM comments
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the final rule for more detailed information on CC>2 test procedures, Section III.C. 1 on Air
Conditioning Emissions, and Section III.B.7 for N2O and CIHLt test procedures.
EPA will 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. EPA will continue
to accept use of substituted data in the GHG program, but only when the substituted data are 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 actual fuel economy testing in certain situations.26 Analytically derived
data are generated mathematically using expressions determined by EPA and are allowed on a
limited basis when a manufacturer has not tested a specific vehicle configuration. This has been
done as a way 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 derived data and that specifies the conditions when analytically derived fuel
economy may be used. EPA will apply the same guidance to the GHG program and will allow
any analytically derived data used for CAFE to also satisfy the GHG data reporting
requirements. EPA will revise the terms in the current equations for analytically derived fuel
economy to specify them in terms of CC>2. Analytically derived CC>2 data will 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 CC>2
levels.
EPA is also retaining the definitions needed to determine CC>2 levels of each model type (such as
"subconfiguration," "configuration," "base level," etc.) as they are currently defined in EPA's
fuel economy regulations.
Note that additional Response to Comments information about test procedures are contained in
section 5.1.2 of this document.
Retest Criteria
Under current practice, if during EPA's confirmatory fuel economy testing, the EPA fuel
economy value differs from the manufacturer's value by more than 3%, manufacturers can
request a re-test. Results of the re-test stand as official, even if they differ from the
manufacturer value by more than 3%. EPA proposed extending this practice to CO2 results, but
manufacturers commented that this could lead to duplicative testing and increased test burden.
EPA agrees that the close relationship between CC>2 and fuel economy precludes the need to
(outlined in section 5.1.2. of this Response to Comments document) indicate that "AIAM does not support
fundamentally changing the fuel economy/greenhouse test procedures at this time. Our reluctance to support such
changes is due to the impact that such changes could have on the effective stringency of the standards."
26 40 CFR 600.006-08(e)
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conduct additional confirmatory tests for both fuel economy and CO2 to resolve potential
discrepancies. Therefore EPA will continue to allow a re-test request based on a 3% or greater
disparity in manufacturer and EPA confirmatory fuel economy test values, 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).
Carbon-Related Exhaust Emissions (CREE) Data
EPA received comments from the Alliance, Ford and Toyota questioning the appropriateness of
using CREE emissions instead of simply CO2 emissions or CO2 plus weighted CH4 and
weighted N2O emissions. Toyota comments, for example, state that "The CREE calculation
does not lend itself well to a fleet average standard. A better metric would be using CO2 to
determine compliance with fleet average standards. HC and CO are already regulated
constituents, so there is no need to again include these emission measurements into another
standard, as proposed."
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 constituents is an integral part of
current fuel economy testing. As explained in Section III.B of the preamble to the final rule, 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; and any
other carbon-containing exhaust components such as aldehyde emissions from alcohol-fueled
vehicles. 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 compounds being accounted for). Thus, EPA will calculate the carbon-
related exhaust emissions, also known as "CREE," of each test vehicle 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
where: CWF = the carbon weight fraction of the test fuel
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 rule, EPA will add CO2, N2O, and CH4 to the emissions measured in the course of
Tier 2 and CAFE confirmatory testing. The N2O and methane measurement requirements will
begin for model year 2015, when requirements for manufacturer measurement to comply with
the standard also take effect. The emission values measured at the EPA laboratory will continue
to stand as official, as under existing regulatory programs.
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Test Fuel
The National Association of Clean Air Agencies (NACAA) and the U.S. Coalition for Advanced
Diesel Cars commented that EPA and NHTSA should use test fuels that are commercially
available to the American public and can be purchased in the real world. New York State and
Mr. James Hyde commented that the current test fuel specifications for aromatics (currently 0-
35% by volume) and olefins (currently 0-10% by volume) leave much room for variations in
both CO2 and fuel economy;" and recommended that EPA should take a fresh look at these and
other test fuel properties to determine if changes are necessary.
EPA is also concerned about the representativeness of current test fuel, but considers major
revisions to test fuel(s) to be outside the scope of this GHG rule. Changes such as those
suggested in comment would have ramifications for the stringency of EPA emission standards
(for criteria pollutants and CO2 emissions); fuel economy labeling requirements, CAFE
requirements and gas guzzler requirements. In addition, for CAFE testing EPA is required by
statute to "use the same procedures for passenger automobiles the Administrator used for model
year 1975 (weighted 55 percent urban cycle and 45 percent highway cycle), or procedures that
give comparable results;" ref. 49 USC 32904(c) and 40 CFR 600.510-08.
EPA will take these comments under advisement if we initiate any future rules related to test fuel
specifications used for emissions and fuel economy testing.
Conditional Certificates
There was general support among most commenters to harmonize GHG test procedures with
CAFE test procedures, including the concept of issuing certificates based on the CC>2
certification level of the emission-data vehicle until additional fleet average data can be
generated to demonstrate compliance with the fleet average CO2 standard. However Toyota
expressed concerns with the practical aspect of issuing conditional certificates based on
compliance with the fleet average CO2 standard at the end of the model year. Toyota is
concerned that a manufacturer "could be producing 'noncomplying vehicles' during the model
year and would not know it until after the model year fleet average calculations were
completed." For that reason, Toyota did not support the concept of issuing conditional
certificates.
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.27 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
27 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.
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levels, identified in the Tier 2 rule, and this bin level becomes the in-use emissions standard for
28
that test group.
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 with the fleet average 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 fleet-wide 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. The condition will be applied similarly under
the greenhouse gas program.
Thus, EPA believes it is appropriate to, and will finalize the conditional certificate concept as
proposed for several reasons, as follows:
• to reduce manufacturers' test burden;
• to be consistent with the Tier 2 fleet average NOx compliance requirements (which has
experienced very few problems); and
• to harmonize the GHG process as much as possible with the current fuel economy and
CAFE process,
Diesel Equivalency Factor
The U.S. Coalition for Advanced Diesel Cars supported EPA and NHTSA's proposal to maintain
the current 'diesel equivalency factor' of 1.0 under the new rules, stating that this "long
established factor appropriately treats on gallon of diesel fuel to be equivalent to one gallon of
pure gasoline."
EPA received no other comments on this issue, and is finalizing as proposed the 1.0 diesel
equivalency factor for purposes of measuring fuel economy values used in calculating
manufacturers' CAFE levels.
28 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.
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Running Changes
EPA proposed revisions to paragraph §600.507-12, regarding running change requirements for
advanced technology vehicles (including electric vehicles, fuel cell vehicles, hybrid electric
vehicles and plug-in hybrid electric vehicles). The proposed regulation changes would require
manufacturers in some cases, to re-label and submit additional CAFE/GHG data for running
changes which are expected to result in less fuel efficient (or optionally result in more fuel
efficient) vehicle operation as compared to the original fuel economy/GHG emission data. The
proposed revision to paragraph §600.507-12 is highlighted in the bold text, below:
§600.507-12 Running change data requirements.
(a) Except as specified in paragraph (d) of this section, the
manufacturer shall submit additional running change fuel economy and
carbon-related exhaust emissions data as specified in paragraph (b) of this
section for any running change approved or implemented under §§86.079-32,
86.079-33, or 86.082-34 or 86.1842-01 as applicable, which:
(1) Creates a new base level or,
(2) Affects an existing base level by:
(i) Adding an axle ratio which is at least 10 percent larger (or,
optionally, 10 percent smaller) than the largest axle ratio tested.
(ii) Increasing (or, optionally, decreasing) the road-load horsepower
for a subconfiguration by 10 percent or more for the individual running
change or, when considered cumulatively, since original certification (for
each cumulative 10 percent increase using the originally certified road-load
horsepower as a base).
(iii) Adding a new subconfiguration by increasing (or, optionally,
decreasing) the equivalent test weight for any previously tested
subconfiguration in the base level.
(iv) Revising the calibration of an electric vehicle, fuel cell electric
vehicle, hybrid electric vehicle, plug-in hybrid electric vehicle or other
advanced technology vehicle in such a way that the city or highway fuel
economy of the vehicle (or the energy consumption of the vehicle, as may
be applicable) is expected to become less fuel efficient (or optionally,
more fuel efficient) by 4.0 percent or more as compared to the original
fuel economy label values for fuel economy and/or energy consumption,
as applicable.
Comments submitted by the Alliance recommended that "The real purpose of the running change
data requirements is to provide the method for the possible recalculation and updating of fuel
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economy label values. Therefore, these criteria should be deleted from the regulation and
readdressed in future advanced technology FE label rulemakings."
EPA proposed these regulation changes for several reasons. First, EPA doesn't agree with the
Alliance comment that "The real purpose of the running change data requirements is to provide
the method for the possible recalculation and updating of fuel economy label values." Although
the provisions of 40 CFR 600.314-08(b) require the manufacturer to recalculate and re-label
vehicles in cases where the fuel economy decreases by 1.0 mpg or more (and may optionally re-
label vehicles in cases where the fuel economy increases by 1.0 mpg or more) the proposed
running change requirements also apply to CAFE and GHG requirements. Since these
requirements are applicable to GHG and CAFE testing requirements, EPA believes that it is
appropriate to include these changes in the current GHG/CAFE rule.
Second, the provisions of §600.507-12 were last updated in 1984 (49 FR 13832, April 6, 1984).
At that time, EPA did not consider the fuel economy/GHG ramifications related to today's
advanced technology vehicles.
Third, EPA is concerned that technically, the fuel economy of advanced technology vehicles can
be influenced by a plethora of design parameters that are outside the normal design parameters of
conventional vehicles. For example, fuel economy and GHG emissions of conventional
vehicles are affected by changes in axle ratio, vehicle weight, and vehicle drag (or road-load
horsepower), as currently addressed in the provisions of §600.507-12. However, the fuel
economy and GHG emissions of advanced technology vehicles can be influenced by many other
calibration parameters, including battery regeneration strategy, the percent of useable battery
(deep cycle) energy used, the percent of electrical (verses engine) operation, the speed ranges
during electrical operation, optimized internal combustion engine operation (e.g. calibrated to
operate closest to best brake-specific fuel consumption), etc. These parameters for advanced
technology vehicles are not addressed in the current provisions of §600.507-12. In some cases,
the effect of calibration changes for these parameters may have considerably more impact on fuel
economy/GHG emissions than changes in axle ratio, vehicle weight, and vehicle drag. EPA is
concerned that without the proposed regulations, running changes could be made to production
vehicles that may adversely affect the GHG emissions of the vehicle but that would not be
required to be supported by test data. Such untested running changes could adversely affect and
bias the fleet average GHG and CAFE calculations.
Fourth, EPA believes that it is appropriate to require relabeling when running changes to
advanced technology vehicles result in fuel economy changes. This provides a safeguard to EPA
that manufacturers won't take advantage of the labeling/running change process, e.g., by
developing fuel economy labels on "best case" fuel economy pre-production fuel economy
calibrations and then make running changes that improve driveability but decrease fuel economy
in production vehicles. In addition, these regulation changes provide manufacturers with
increased flexibility to re-label that demonstrate improved fuel economy. Without these
regulation changes, manufacturers would be prohibited by the provisions of §600.314-08 from
revising the fuel economy label values of vehicles with improved fuel economy until the next
model year. Although the Alliance comments did not address this increased flexibility (to
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optionally re-label vehicles when running changes improve fuel economy) EPA believes that the
Alliance and other automobile manufacturers would not oppose this option.
Fifth, the regulation changes are not expected to increase manufacturer burden substantially. For
example, in the 2010 model year, manufacturers re-labeled 8 out of 1135 total model types (as of
February 1, 2010) due to running change reasons outlined in §600.314-08 and §600.507-12. Of
the eight re-labeled vehicles, five resulted in increased fuel economy label values and three
resulted in decreased in fuel economy label values. Thus, EPA believes that the regulations will
have a relatively minor effect on manufacturer testing burden.
In summary, EPA does not believe that there is anything to be gained by delaying these running
change requirements and re-proposing them in the ongoing fuel economy labeling rule (as
recommended by the Alliance). Thus, for the reasons outlined above, EPA believes it is
appropriate to finalize the revisions to 40 CFR 600.507-12 as proposed.
Content of Pre-Model Year Report
Several commenters raised concerns about EPA's proposal for requiring manufacturers to submit
GHG compliance plans. AIAM stated that EPA did not identify a clear purpose for the review of
the plans, criteria for evaluating the plans, or consequences if EPA found the plans to be
unacceptable. AIAM also expressed concern over the appropriateness of requiring
manufacturers to prepare regulatory compliance plans in advance, since vicissitudes of the
market and other factors beyond a manufacturer's direct control may change over the course of
the year and affect the model year outcome. Finally, AIAM commented that EPA should not
attempt to take any enforcement action based on an asserted inadequacy of a plan. They felt that
compliance should be determined only after the end of a model year and the subsequent credit
earning period. The Alliance commented that there was an inconsistency between the proposed
preamble language and the regulatory language in 600.514-12(a)(2)(i). The preamble language
indicated that the compliance report should be submitted prior to the beginning of the model year
and prior to the certification of any test group, while the regulatory language stated that the pre-
model year report must be submitted during the month of December. The Alliance pointed out
that if EPA wanted GHG compliance plan information before the certification of any test groups,
the regulatory language would need to be corrected.
EPA understands that a manufacturer's plan may change over the course of a model year and that
compliance information manufacturers present prior to the beginning of a new model year may
not represent their final compliance outcome. Rather, EPA views the compliance plan as a
manufacturer's good-faith projection of strategy for achieving compliance with the greenhouse
gas standard. EPA understands that compliance with the GHG program will be determined at the
end of the model year after all appropriate credits have been taken into consideration.
As stated earlier, a requirement to include GHG compliance information in the new model year
compliance preview meetings is consistent with long standing EPA policy. The information will
provide EPA with an early overview of the manufacturer's GHG compliance plan and allow
EPA to make an early assessment as to possible issues, questions, or concerns with the program
in order to expedite the certification process and help manufacturers better understand overall
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compliance provisions of the GHG program. Therefore, EPA is finalizing revisions to 40 CFR
600.514-12 which will require manufacturers to submit a compliance plan to EPA prior to the
beginning of the model year and prior to the certification of any test group. The compliance plan
must, at a minimum, include a manufacturer's projected footprint profile, projected total and
model-level production volumes, projected fleet average and model-level CC>2 emission values,
projected fleet average CC>2 standards and projected fleet average CC>2 credit status. In addition,
EPA will expect the compliance plan to explain the various credit, transfer and trading options
that will be used to comply with the standard, including the amount of credit the manufacturer
intends to generate for air conditioning leakage, air conditioning efficiency, off-cycle
technology, and various early credit programs. The compliance plan should also indicate how
and when any deficits will be paid off through accrual of future credits.
EPA has also corrected the inconsistency between the proposed preamble and regulatory
language with respect to when the compliance report must be submitted and what level of
information detail it must contain. EPA is finalizing revisions to 40 CFR 600.514-12 which
require the compliance plan to be submitted to EPA prior to the beginning of the model year and
prior to the certification of any test group.
5.10.3. Useful Life Compliance and In-use Compliance Standard
Organization: Ford Motor Company
Honda Motor Company
Ferrari S.p.a
Association of International Automobile Manufacturers (AIAM)
Chrysler Group LLC (Chrysler)
Alliance of Automobile Manufacturers (Alliance)
Mitsubishi Motors R & D of America (MRDA)
Hyundai Motor Company
Volkswagen Group of America (Volkswagen)
Toyota Motor North America
NGV America
State of New Jersey
University of California, Santa Barbara, Bren Working Group on Vehicle Fuel
Economy
People's Republic of China
Chew, Yuli
Comment:
Ford Motor Company:
The benefit of expanding the existing criteria pollutant emissions durability requirements to
include these greenhouse gases is negligible, relative to other potential measures that could have
a much more significant impact on actual in-use greenhouse gas emissions. Such measures
would go beyond the vehicle's design. For example, significant additional greenhouse gas
emissions reductions could be achieved by reducing the carbon intensity of the nation's overall
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fuel supply (through the introduction of alternative, low-carbon fuels). In addition, further
reductions could also be achieved through more efficient transportation control measures
designed to manage increased travel demand. These could include congestion mitigation
initiatives, eco-driving education and awareness programs, and other incentives to encourage
consumers to drive more efficiently. [OAR-2009-0472-7082.1, Cover letter p. 2]
Durability Deterioration Requirements
The existing durability procedures are designed around the expectation that criteria pollutants
will increase over time because of decreasing effectiveness of the catalytic converters and other
key emission control devices. However, the function of a catalyst is to convert criteria pollutants
to water vapor and CO2. To the extent that catalyst function does degrade, CO2 emissions will
decrease with reduced control capability. Since there are no after-treatment devices currently
able to control CO2 emissions, performance degradation of such devices over time is a non-
issue. [OAR-2009-0472-7082.1, p. 11]
Greenhouse Gas Compliance Program
In-use GHG Measurement and Reporting Requirements
Ford believes that in-use GHG measurement and reporting requirements would be an
unnecessary waste of resources for a CO2 program. For criteria pollutants, in-use testing is used
to identify in-use problems, validate the accuracy of the certification program, verify the
manufacturers' durability processes, and support emissions modeling efforts. Criteria pollutant
emissions can increase over the useful life of a vehicle due to a loss in effectiveness of after-
treatment systems; therefore in-use testing is a critical component of a comprehensive
compliance program for such pollutants. However, as acknowledged by EPA, unlike traditional
criteria pollutants, vehicle CO2 emission levels depend primarily on fundamental vehicle design
characteristics and do not change significantly over time (see Section 11 I.E.4 of the preamble).
In-use CO2 results will be substantially similar to the results observed during model-level
certification testing. Therefore in-use GHG requirements would increase testing costs without
providing additional environmental or public health benefits. For that reason, we propose that in-
use GHG measurement and reporting requirements for manufacturers be dropped.
CO2 emissions are inversely correlated with the fuel economy of the vehicle. To evaluate the in-
use CO2 emissions performance of our vehicles, Ford conducted an analysis of City FE results
from customer vehicles procured and tested in accordance with IUVP requirements. These
results are presented in Chart 1 above. [See OAR-2009-0472-7082.1, p. 15 for Chart 1]
The data evaluated consisted of City FE test results from over 850,2001 thru 2006 model year
(MY) in-use customer vehicles. The results from each vehicle were compared to the most
applicable City CAFE program value based on its configuration (i.e., equivalent test weight,
transmission type, chassis type, etc.). The percent difference of the IUVP and CAFE City test
results were calculated and plotted on the above histogram shown in Chart 1. Over 75% (i.e.,
647/857) of the IUVP vehicles sampled achieved City FE test results equal to or better than their
associated City CAFE test results. In light of data showing that emissions of the constituent
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typically improve over time, a requirement for an in-use testing program aimed at CO2 would
force the expenditure of resources for no real purpose.
Certainly, the CAA does not require in-use testing covering all vehicles and all pollutants.
Section 206(b) authorizes EPA to conduct such tests, but leaves it to EPA's discretion to decide
what specific testing is necessary and appropriate. However, it is clear under the Act that the
purpose of any such testing must be 'to determine whether new motor vehicles...do in fact
conform with the regulations with respect to which the certificate of conformity was issued... ' In
other words, any testing that EPA does require should be justifiable on the grounds that it is has a
reasonable chance of detecting non-conformities in the vehicles as certified by the manufacturer.
In-use testing for CO2 emissions is not a reasonable way of looking for non-conformities in
vehicles as certified. First, as noted above, the data shows that for the vast majority of vehicles
CO2 emissions actually improve in-use. Therefore, there should not be any significant concern
that CO2 emissions from vehicles as a whole will degrade as the vehicle population ages.
Second, to the extent that the CO2 emissions of individual vehicles may increase over time, the
cause of this phenomenon is likely to either be 1) unknown, or 2) attributable to factors outside
of the manufacturer's control. Such factors could include failure of the customer to maintain the
vehicle properly, alterations to the vehicle by the customer, or accidents/abuses in the vehicle's
history. Unlike criteria pollutants, where a failure to meet emissions standards can usually be
traced to one or two specific possible causes, there are a whole host of potential causes of
degraded fuel economy and increased GHG emissions. To the extent that a recall was ever
conducted for failure to meet in-use testing criteria for CO2, it is not clear that there would be
any 'defect' for a manufacturer to remedy, or any specific action the manufacturer could take to
fix the issue. For these reasons, Ford recommends that EPA drop its proposed in-use testing
program for CO2.
If, in spite of the comments above, EPA does require an in-use compliance program, Ford
believes that three elements must be put in place to minimize the burden of the program. First,
Ford supports the idea of an EPA assigned deterioration factor of zero (additive) or one
(multiplicative) for CO2 useful life compliance but requests that manufacturers also be allowed
to conduct whole-vehicle mileage accumulation to generate improvement factors for CO2 useful
life compliance.
As noted above, historical durability data confirms that CO2 control is stable and on average
improves slightly with vehicle use or over time. In light of the above data, EPA should allow for
the use of an improvement factor (i.e., negative deterioration factor) for CO2 useful life
compliance. For example, the data shown in Table 1 above [See OAR-2009-0472-7082.1, p. 16
for Table 1] indicates that rather than the deterioration factors suggested by the EPA;
improvement factors of as much as 2.0% could be warranted. When appropriate, manufacturers
should be allowed to apply an improvement factor to their CO2 certification test data to reflect
that CO2 performance improves over time.
Second, if EPA requires in-use testing, Ford also supports the creation of a separate in-use CO2
standard with an adjustment factor of at least 10%. To address issues of variability, separate in-
use standards must provide manufacturers with an appropriate compliance margin. In-use FE
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differences of 20% were observed in an evaluation of 2001 through 2006 MY fuel economy (FE)
data from the IUVP program (see Chart 1). Of the 857 test points evaluated, over 99% of the
results would comply with in-use standards set with a 10% adjustment factor.
Third, If EPA requires in-use CO2 testing, the HFET CO2 emissions result measured during
CAFE testing should be used in combination with the in-use Federal Test Procedure (FTP) CO2
emissions measured over the FTP cycle. To be consistent with CAFE, EPA proposes to combine
the CO2 emission results from the FTP and HFET test cycles using the same calculation used to
determine FE for CAFE purposes. Since the proposed CO2 standard would reflect a composite
value of FTP and FIFET results, EPA asserts that it is necessary to include the FIFET emissions
tests in IUVP to enable EPA to compare an in-use CO2 level with a vehicle's in-use standard.
However, since CO2 emissions have already been demonstrated to be stable throughout the
useful life of vehicles, in-use HFET testing provides no benefit and unnecessarily burdens
manufacturers.
[OAR-2009-0472-7082.1,pp. 14-17]
N2O and CH4
Ford believes that N2O and CH4 reporting requirements are most appropriately handled through
attestation or an annual unregulated emissions report, rather than integrating it as part of all
testing and requiring facility upgrades as well as the increased on-going per test costs. EPA
acknowledges thatN2O and CH4 emission levels from modern vehicle designs are extremely
low and represent only about 1% of total light-duty vehicle GHG emissions (see Section Ill.S.a).
It is anticipated that current vehicle designs will meet the proposed N2O and CH4 requirements.
For that reason, and to avoid the additional cost of upgrading in-use testing facilities to enable
N2O and CH4 measurement and reporting, we believe in-use N2O and CH4 compliance should
be handled through an attestation or an annual unregulated emissions report. [OAR-2009-0472-
7082.1, p. 17]
In-Use Testing GHG Exclusions
Ford supports EPA's recommendation for the exclusion of CO2 , N2O, and CH4 from the In-Use
Compliance Program (IUCP) thresholds. The IUCP is recall type testing used to identify in-use
compliance concerns. For traditional criteria pollutants, IUCP testing provides an opportunity to
remedy in-use compliance concerns. Unlike traditional criteria pollutants, CO2 performance is a
function of vehicle design and can not be remedied in the field with the addition of emissions
control devices. For that reason, CO2 performance should be excluded from IUCP thresholds.
[OAR-2009-0472-7082.1,p. 17]
Honda Motor Company:
EPA proposes setting a compliance factor threshold for IUVP testing. And yet, no enforcement is
planned for IUVP vehicles exceeding the threshold. In discussions with staff, for example, we
were unable to determine the practical plan for addressing IUVP cases where the tested vehicle
exceeds the threshold. How many test cases are required to determine that the threshold for the
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subconfiguration (or vehicle configuration or base model or model type) has been exceeded? If
the margin for a specific vehicle is 22 grams (e.g. a vehicle with an original value of 220 grams
and a margin of 10%) and the IUVP test exceeds the original value by 23 grams, is the failure
equivalent to 1 gram or 23 grams? In light of a threshold and no enforcement plan, Honda
suggests that the threshold be eliminated, even while requiring the data from the IUVP. After
sufficient experience with the data, EPA can make a more informed decision regarding
appropriate thresholds and enforcement actions related to the IUVP. Of course, none of this
prevents EPA from asking OEMs for additional information cases where IUVP data interests
EPA. [NHTSA-2009-0059-0095.1, p.7]
If EPA rejects the aforementioned proposal to eliminate the IUVP threshold, Honda would like
to address EPA's proposal for a "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." Honda notes that
model-type emissions are the result of a process that accumulates subconfiguration,
configuration and base-level data into a single model-type profile. There can be considerable
variation within a single model type, yet EPA's proposal only allows for variation for production
and test-to-test. [NHTSA-2009-0059-0095.1, p.7]
When OEMs submit data to EPA, the model-type profile is constructed from numerous
subconfigurations, both with and without emissions data (see Attachment 2). Honda proposes
that where data exists at the subconfiguration level, OEMs in-use testing should be based upon
10% variability from the subconfiguration data. In the cases where subconfiguration data does
not exist, EPA needs to allow for additional variability. The current CAFE rules allow for
considerable variability between Model-Type MPG and subconfigurations. Although Honda
does not have a specific recommendation, Honda encourages EPA to set appropriate, additional
variability from the Model-Type emissions profile to the un-tested subconfiguration level.
[NHTSA-2009-0059-0095.1, pp.7-8] [[See NHTSA-2009-0059-0095.1, p.15 for Attachment 2]]
Honda also proposes a slight change to the 10% variability proposed by EPA. If variability is
based strictly as a percentage of the certification level, in absolute terms, the dirtiest cars will
have the greatest margin, while the cleanest cars will have the least margin. Honda suggests that
the variability margin be partially based on the certification level of the car and partially based
on the projected fleet-wide emissions compliance levels (TABLE ID.2-4). In the example
shown in Attachment 3, Honda recommends a hybrid approach to setting the in use variability.
Rather than the 10% of the certified level, Honda proposes using 5% of the projected fleet
average for the year and 5% of the tested value. The result of this approach is to slightly reduce
the margin for the dirtiest vehicles and provide a slightly larger margin for the cleaner, more
challenging vehicles. [NHTSA-2009-0059-0095.1, p.8] [[See NHTSA-2009-0059-0095.1, p. 16
for Attachment 3]]
Ferrari S.p.a:
EPA proposes in-use CO2 standards that would apply throughout a vehicle's useful life, with the
standard determined by adding a 10 percent adjustment factor to the model-level emission
results. This proposal is made notwithstanding EPA's statement that there is no current basis for
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believing that the emissions of carbon dioxide or fuel economy deteriorate in-use. [OAR-2009-
0472-7214.1, p.4]
Finally, we note a discrepancy between the fleet-based CO2 standards and a single model or
version in-use compliance standards. As for methane and nitrous oxide standards, the in-use test
program proposed by EPA is intended to address a theoretical problem. If EPA is concerned
about possible deterioration of vehicle characteristics and devices that could affect the in-use
CO2 emissions (contrary to present data and evaluation by EPA), we suggest a research program
to demonstrate the need to monitor these emissions for the vehicle useful life. Then, the in-use
higher standards may be defined. Docket No. EPA-HQ-OAR-2009-0472 and NHTSA-2009-
0059 -NPRM GHG-CAFE MYs 2012-16 - Ferrari Comments. Accordingly, we deem necessary
not to adopt in-use standards. EPA proposes a zero (additive) or one (multiplicative)
deterioration factor for carbon dioxide, because it is recognized that vehicle carbon dioxide
emissions generally do not deteriorate in-use. But EPA also states that such deterioration factor
could be modified later. This is an important change that should be addressed carefully, because
it could further increase the stringency of the CO2 standards. Moreover, it will affect the
harmonization with CAFE regulation. [OAR-2009-0472-7214.1, pp.4-5]
Association of International Automobile Manufacturers (AIAM):
EPA also proposes in-use carbon dioxide standards that would apply throughout a vehicle's
useful life, with the standard determined by adding a 10 percent adjustment factor to the model
level emission results. This proposal is made notwithstanding EPA's statement that there is no
current basis for believing that the emissions of carbon dioxide or fuel economy deteriorate in
use. [OAR-2009-0472-7123.1, p.6]
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. See preamble at 49562. [OAR-2009-0472-7123.1, p.6]
Under EPA's in-use verification program (IUVP), manufacturers would be required to add a
highway fuel economy test (FIFET) for each in-use test vehicle. See preamble at 49563, proposed
section 86.1845-04. [OAR-2009-0472-7123.1, p.6]
There is no requirement in the Clean Air Act that mandates in-use testing. Although the Clean
Air Act provides that emissions standards are to be applicable for the "useful life" of the
vehicle, no particular level of testing to assure compliance over the useful life is mandated by the
statute, and EPA has the discretion to craft a compliance testing program that does not include
in-use testing. See 42 USC 7521(a)(l). [OAR-2009-0472-7123.1, pp.6-7]
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EPA Response to Comments
In addition to the lack of any demonstrated need for an in-use test program, there are other
practical problems as well. The model type emission level that serves as the proposed basis for
the in-use standard is an average value, not a test result across all the models in a particular test
group. Not all vehicle configurations or subconfigurations in the test group are tested. If a
vehicle selected for in-use testing were from a higher emitting configuration due to its basic
characteristics, the test vehicle would be expected to have higher emissions than the model type
average. In addition, certification vehicles must represent mean production tolerances, so by
definition half of production vehicles would be expected to have higher emissions than the
certification vehicle. EPA's proposed approach only deals with the test-to-test variability and
does not address these other problems. [OAR-2009-0472-7123.1, p.7]
A fundamental complication associated with an in-use standard for carbon dioxide is that, unlike
the current program for criteria pollutants, there is no opportunity for a manufacturer to "over
comply" by creating additional compliance headroom to reduce the impact of the previously
noted problems. Under the current program for criteria pollutants, manufacturers usually certify
to emissions levels well below applicable standards to provide for the possibility of production
variability, among other things.
As with the methane and nitrous oxide standards, the in-use test program proposed by EPA is
intended to address a theoretical, speculative problem. We do not suggest that it is inappropriate
for EPA to be concerned about in-use deterioration of carbon dioxide emissions, but requiring
significant amounts of additional testing by manufacturers at this stage is not justified. A more
appropriate approach would be a research program to evaluate whether there is a deterioration
problem, particularly with new technology. This program could be similar to AIAM's
recommendation above with respect to methane and nitrous oxide standards. [OAR-2009-0472-
7123.1,p.7]
If EPA decides to pursue an in-use testing program for compliance purposes, notwithstanding the
current lack of an indication of an in-use deterioration problem, it should at least adopt a
different approach. One improvement would be to apply the 10 percent factor to the test result of
the most similar configuration that was tested for certification, rather than the model type
average. This would make the in-use standard more representative of the test vehicle. [OAR-
2009-0472-7123.1, p.7]
The current EPA regulations governing the in-use vehicle program (IUVP) provide for EPA
approval of a reduction in test burden, based on a manufacturer's demonstration of consistent
compliance with in-use standards. See section 86.1852-01. Despite recent discussions with auto
manufacturers on reducing IUVP test burden, such reductions have not yet materialized,
and EPA is now proposing increasing IUVP test burdens by adding the highway test. AIAM
requests the Agency consider the overall IUVP test burden on manufacturers and continue to
work with manufacturers to identify ways to reduce overall IUVP test burden while satisfying
the need for additional testing for greenhouse gas purposes. [OAR-2009-0472-7123.1, pp.7-8]
EPA proposes a zero (additive) or one (multiplicative) deterioration factor for carbon dioxide,
because it is recognized that vehicle carbon dioxide emissions generally do not deteriorate in use.
EPA also raises the possibility of changes in deterioration factors which could be ordered by
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Agency staff in compliance plan discussions with the manufacturer (see preamble at 49562). A
change in the deterioration factor would be equivalent to a change in the stringency of the
standard. A change of this sort would eliminate the harmonization achieved between CAFE and
greenhouse gas standards. Because of the significant consequences of a change in a deterioration
factor, such a change should only be implemented after notice and opportunity for comment.
AIAM agrees with EPA that a change in a deterioration factor would require adequate lead-time
to enable the manufacturer to comply. See proposed section 86.1823-08(m)(l)(ii). [OAR-2009-
0472-7123.l,p.8]
In the case of a manufacturer that is in clear compliance jeopardy, a pre-model year compliance
meeting to discuss future compliance assurance may be appropriate on an ad-hoc basis.
However, we question the value of preparing regulatory compliance plans in advance as a
general matter. Such plans are likely to change, since they are subject to the vicissitudes of the
market. Developing and evaluating these plans will take time and effort, but by the time the plans
are evaluated by EPA, the manufacturer's compliance strategy may well have changed. [OAR-
2009-0472-7123.1,p.l6]
The Agency should not attempt to take any enforcement action based on an asserted inadequacy
of a plan. Compliance should be determined only after the end of a model year and the
subsequent credit earning period. This characterization of the pre-model year plan should be in
the final rule. [OAR-2009-0472-7123.1, p.16]
Chrysler Group LLC (Chrysler):
[[These comments were submitted as testimony at the Detroit public hearing. See docket number
OAR-2009-0472-6185, p. 49]]
In addition, the proposed rule would apply in-use testing requirements to these standards. We
would propose that EPA gather data on specific test plans and we're willing to work with EPA on
those matters.
Alliance of Automobile Manufacturers (Alliance):
In addition to CO2, CREE includes the following constituents depending on the type of fuel that
is used; total hydrocarbons (HC), carbon monoxide (CO), methane (CH4), nonmethane
hydrocarbons (NMHC), methanol (CH3OH), formaldehyde (HCHO), ethanol (C2H5OH) and
acetaldehyde (C2H4O). The proposed regulations require that deteriorated values are used in the
calculation of CREE. While some of these constituents currently have useful life standards and
already have DFs, some do not. Therefore, manufacturers may be required to rerun all forms of
durability vehicle testing in order to establish DFs for these constituents.
Model Type CREE Standard (Proposed regulations in 40 C.F.R. 86.1865-12)
EPA has proposed that there be a model type CREE standard set equal to the model type CREE
value that is obtained during the fleet-average CREE calculation. [OAR-2009-0472-6952.1,
p.48]
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The establishment of a model type CREE standard has some inherent flaws. First, the model-type
CREE value is an average of test data. Since it is an average, some of the official data that went
into the calculation of the standard will automatically fail the standard. Second, these standards
will not be established until all testing is completed after the end of a model year. This means a
manufacturer could be producing "failing" data during the model year and would not know this
until after the model year fleet average calculations have been completed. Depending on the
interpretation of the regulations, a manufacturer could be deemed to have produced uncertified
configurations. [OAR-2009-0472-6952.1, p.48]
Recommendation:
Fleet-average CO2 standards are sufficient for manufacturers to prove compliance to the GHG
emission regulations and there is no need for model type CREE standards. Additionally, as noted
above, CREE is not as useful a metric as is CO2, which should be the only measured GHG
emission value. [OAR-2009-0472-6952.1, p.48]
In-Use Requirements (Proposed regulations in 40 C.F.R. 86.1818-12, 86.1845-04 and 86.1846-
01)
EPA has proposed that the model type CREE standard be multiplied by 1.1 to establish an in-use
model type CREE standard. In addition, since the proposed model type CREE standard is a
combination of FTP and FIFET tests, in-use highway testing would also be required to be able to
compare in-use data to the model type CREE standard. [OAR-2009-0472-6952.1, p.49]
Recommendation:
It is premature to establish in-use CO2 standards. Unless and until one CO2 standard can be
established for a particular category of vehicles, the concept of an in-use CO2 standard will be an
unachievable goal. The concept of establishing fleet-average CO2 standards by footprint and
allowing vehicles with a particular footprint to exceed the footprint standard as long as they are
offset by other vehicles that achieve better than their footprint standard is in essence an
admission that the establishment of a CO2 "emission standard" for a particular category of
vehicles is a difficult if not impossible task. [OAR-2009-0472-6952.1, p.49]
The establishment of fleet-average CO2 emission standards and the associated procedures for
demonstrating certification compliance to those standards is a sufficient method for establishing
in-use compliance to the CO2 emission standard. Additional in-use testing will provide little
benefit and does not warrant the additional cost and burden. There is no need for additional in-
use testing (either by manufacturers or by EPA) at this time. [OAR-2009-0472-6952.1, p.49]
The need for in-use data to capture any possible deterioration in CO2 levels from advanced
technology vehicles (hybrids, PHEVs) is not technically supportable at this time. EPA can better
achieve its goal of increased knowledge about deterioration of CO2 on advanced technology
vehicles through a focused research program to study a relatively small sample of vehicles rather
than through comprehensive reporting for all vehicles. [OAR-2009-0472-6952.1, p.49]
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Finally, even though EPA is not going to require in-use compliance programs based on N2O and
CH4 results, the concept of N2O and CH4 standards with no certification margin is inconsistent
for IUVP since IUVP serves as a surveillance program and not a certification program. (Note
that this issue could be avoided if EPA accepts the recommendation to drop the N2O and CH4
standards as stated previously.) [OAR-2009-0472-6952.1, p.49]
The Alliance views in-use reporting as unnecessary because CO2 emissions do not significantly
change over a vehicle's lifetime. CO2 emissions are unlike traditional criteria pollutants, which
may have a propensity to increase over time, because CO2 is not controlled through specific
emission control devices or after-treatment systems which may be susceptible to degradation
over time. This phenomenon is well understood as the automotive industry has provided data to
EPA during previous GHG discussions and EPA has confirmed that their in-use compliance test
program data also shows that CO2 emissions has not increased with age. [OAR-2009-0472-
6952.1, p.51]
In-Use Testing and Remedies
EPA must also recognize the fundamental differences between compliance with currently
regulated emissions and GHG emissions in other portions of its proposed enforcement program.
Congress made a decision in 1975 when it adopted EPCA to create a program to regulate fuel
economy outside the Clean Air Act, and to assign responsibility for that program to NHTSA, not
EPA. EPCA did not include an in-use performance requirement for a number of
reasons, including the fact that the fuel economy performance of vehicles in good repair does not
deteriorate with age or mileage. In the GHG reporting rulemaking, the Alliance provided test
data confirming that CO2 emissions remain stable from such vehicles. [OAR-2009-0472-6952.1,
pp.56-57]
EPA proposes, however, to treat GHG standards — which are largely dependent on a
manufacturer's application of fuel economy technologies to reduce carbon dioxide emissions —
on the same footing as standards for other regulated emissions. It is critical to recognize that
under the Clean Air Act, EPA's in-use recall enforcement authority is limited to situations in
which a nonconformity determination is based on the performance of "properly maintained and
used" vehicles, and can be remedied by repair. 42 U.S.C. § 7541(c)(l); see Center for Auto
Safety v. Ruckelshaus, 747 F.2d 1 (D.C. Cir. 1984) (EPA lacks authority to require
manufacturers to remedy a nonconformity by means other than repair). Vehicles that have been
properly maintained and used will exhibit the stable to slightly-improved CO2 control levels
confirmed in the data that the Alliance submitted in the GHG reporting rulemaking. In that
respect, in-use testing for compliance with the GHG standards is unnecessary and cannot as a
practical matter support a recall-and-repair order. Such testing is certainly not mandated by the
Clean Air Act. And, in addition to being impractical and unproductive, the presumptive goal of
such testing (to obtain a recall, when the test data warrant) would be inconsistent with EPCA -
and inconsistency with EPCA must be avoided in all parts of EPA's program. See
Massachusetts, supra. [OAR-2009-0472-6952.1, p.57]
In addition, there are several implementation concerns that need to be considered and which are
outlined in Section VII as it applies to GHG emissions. [OAR-2009-0472-6952.1, p.57]
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Mitsubishi Motors R & D of America (MRDA):
There are significant challenges in the increased stringency between the 2011 and 2012 model
years. The rate of this increase will likely result in excessive costs and burdens as many vehicles
are quickly reconfigured to comply with these new standards. [OAR-2009-0472-7125.1, p. 1]
Hyundai Motor Company:
EPA proposes an in-use standard at ten percent above the model-level CO2 certification data. As
noted in EPA's preamble, there is no headroom built into the CO2 certification levels (74 FR
49564) so EPA will provide a ten percent margin above the certified vehicle results to allow for
test-to-test variability and/or production variability. EPA notes that the EPA's fuel economy
labeling and CAFE confirmatory test results were evaluated for test-to-test variability and EPA's
current in-use compliance program for age-related CO2 impacts (74 FR 49562, 49564). It is not
clear to us how these assessments were conducted , because the data is not available in the draft
Regulatory Impact Analysis. We believe that EPA should include the analysis for the ten percent
increase for in-use standards in the Regulatory Impact Analysis.
We also recommend that EPA analyze the any voluntarily submitted-C02 data from FTP testing
for the In-Use Verification Program (IUVP) and compare that data with CAFE model-level FTP
test data. This analysis would provide EPA with additional information on the variation between
certification and in-use FTP test data and validation of the ten percent value.
However, there is a fundamental issue with using model-level CO2 data for the in-use standards.
Model-level data is the result of sales-weighted average emission and fuel economy test data for
multiple vehicle configurations and sub-configurations. As a result, the model-level data cannot
be directly compared to the CO2 performance of a particular in-use vehicle. EPA should revisit
the appropriate test data for evaluating in-use vehicle CO2 as compared to the certification
value. [OAR-2009-0472-7231.1,p.6]
Volkswagen Group of America (Volkswagen)
Volkswagen also has concerns regarding in-use test burden, compliance issues and certification
issues associated with this proposed notice. We believe in-use testing for GHG compliance is not
necessary for conventional vehicles, where we believe there is ample evidence that CO2 GHG
emissions do not degrade over time. If EPA remains concerned that there are future vehicles such
as hybrids that may have CP2 GHG performance that deteriorates over time, Volkswagen
believes a test program between the industry and the agencies is a more appropriate way to
understand the potential problems or issues related to situations where a vehicle's GHG
emissions would increase in-use. Volkswagen pledges support for any program that would study
in-use GHG emissions. [OAR-2009-0472-7210.1, p.7]
Toyota Motor North America
In-Use Standards
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For each model type, EPA proposed in-use CO2 standards set at a level 10% higher than the
model-specific levels used in calculating the fleet average. EPA proposes 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. The in-use standard would apply for the same useful life period as
in Tier 2 and, similarly, EPA proposes to allow several options for predicting in-use
deterioration, including full vehicle testing, bench aging, and the application of a deterioration
factor based on engineering judgment. [OAR-2009-0472-7291, pp.28-29]
Toyota is concerned whether certification test data is representative of in-use results.
Certification data may vary among the vehicles in the test group and variability is inherent
among correlation with laboratories. This must be taken into consideration when comparing
certification data and in-use data. For CO2, there would be no margin for development because
the value established in certification would be directly applied to the in-use standard. The in-use
test result provided under IUVP will be inconsistent with the certification vehicle because the
certification vehicle specifications will likely differ from the actual configuration of the IUVP
selection vehicle. Thus, Toyota believes that it is premature to introduce a CO2 in use standard at
this time. Toyota suggests that EPA allow time to generate sufficient in-use CO2 data, which
would occur under the IUVP program, before making judgments on an in-use standard for CO2.
[OAR-2009-0472-7291, p.29]
In addition, Toyota is concerned with the lack of data to assess the compliance factor that EPA
proposes in the regulation. Without adequate data, Toyota is concerned that assigning a 10%
factor may lead to a margin that would compromise HEV and PHEV technology vehicles.
Therefore, EPA should not establish an in-use standard or a compliance factor until sufficient in-
use data has been collected through the In-Use Verification Program (IUVP) as discussed later in
these comments. [OAR-2009-0472-7291, p.29]
Finally, it is not clear what remedial action a manufacturer would take in case of noncompliance
with the in-use standard . Without a clearly malfunctioning or deteriorated part causing
noncompliance, the technical options to improve the fuel economy (and thus lower CO2) of an
in-use vehicle are unclear at best. Further, even in the scenario where an in-use noncompliance is
found, the overall fleet average standard might still be achieved if other models have better in-
use performance when compared to their certification levels. [OAR-2009-0472-7291, p.29]
Useful Life Testing (IUVP and IUCP)
EPA regulations under the CAA require a vehicle to comply with emission standards over its
useful life and require manufacturers to conduct in-use testing as a condition of certification.
Toyota would like to respond to specific aspects of the In-Use Verification Program (IUVP) and
the In-Use Compliance Program (IUCP). [OAR-2009-0472-7291, p.30]
IUVP
Manufacturers must procure and test private vehicles and report the results to EPA under the
auspices of the In-Use Verification Program (IUVP). Currently manufacturers test low mileage
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EPA Response to Comments
and high mileage vehicles over the FTP and US06 cycles, provide evaporative emissions data,
and on-board diagnostics information. EPA uses IUVP data to identify in-use problems, validate
certification process, verify manufacturer's durability programs and support emission modeling
efforts. EPA proposes that for IUVP testing, a manufacturer will provide emission data for CO2
and also for N20 and CH4. EPA also proposes 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, EPA's rationale for inclusion of the highway test is to enable EPA to compare
an in-use CO2 level with a vehicle's in-use standard. [OAR-2009-0472-7291, p.30]
Toyota supports EPA's intent to include CO2 as part of the IUVP data as a necessary means to
validate the certification process. Furthermore, Toyota accepts the additional requirement to
conduct highway testing under IUVP in order to enable the necessary comparison of a vehicle's
in use standard to the measured in-use CO2 level. However, Toyota does not agree with the need
to include N2O as part of the IUVP measurement and reporting criteria. N2O is not a significant
factor of transportation emissions. N2O is not currently measured and proven N2O emission
measurement techniques and instrumentation equipment have not been established. To fill the
need for emission inventory purposes, EPA should consider using default values or other
analytical techniques that can provide robust GHG data representation in the interim. If EPA
does move forward with N2O measurement and reporting, validation and lead time for facility
upgrades must be addressed. [OAR-2009-0472-7291, pp.30-31]
IUCP
In-Use Confirmatory Program (IUCP) is a manufacturer conducted recall quality test program
that is used by EPA for the basis of a recall order. To be subjected to an IUCP audit, a threshold
of 1.30 times the certification standard and an additional requirement that at least 50% of the test
vehicles for that test group fail for the same pollutant. Citing a lack of data with which to make a
determination on appropriate thresholds, EPA proposes to exclude IUVP data for CO2, N2O, and
CH4 emissions from IUCP thresholds. EPA requests comments on their proposal to exclude
CO2, N2O, and CH4 from the IUCP threshold. EPA proposes to add CO2, N2O, and CH4 to the
emissions measurements it collects during surveillance testing. And EPA proposes a separate
rulemaking to establish IUCP CO2, N2O, and CH4 threshold criteria when more data form
EPA's internal surveillance program has been obtained. [OAR-2009-0472-7291, p.31]
Toyota agrees with EPA's proposal to exclude CO2, N2O, and CH4 from the IUCP program
threshold criteria. However, rather than rely on collecting data from EPA's internal surveillance
program in order to assess this threshold issue in the future, EPA should consider a joint test
program with industry as a cost effective means to learn more about these emissions and
respective measurement techniques. [OAR-2009-0472-7291, p.31]
NGVAmerica
We also urge EPA to provide in the final rule that manufacturers of NGVs may continue to use
existing protocols allowed for aging catalysts with respect to criteria pollutants when
demonstrating useful life emissions of methane. As proposed, it appears that NGV
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manufacturers would have to develop new protocols. Further, we submit that any changes that
EPA may require to catalyst aging protocols for determining CH4 useful life emissions would
result in a prohibitive cost increase. Therefore, we request that currently used catalyst aging
protocols be considered acceptable for measuring all useful life tailpipe emissions, including
CH4 andN2O. [OAR-2009-0472-11310, p. 3]
State of New Jersey:
The Department supports the USEPA's position that once sufficient data have been obtained, In-
Use Confirmatory Program threshold criteria for CO2, N2O, and CH4, and also HFCs, should be
included through a subsequent rulemaking.[OAR-2009-0472-7109.1, p.9]
University of California, Santa Barbara, Bren Working Group on Vehicle Fuel Economy:
We recognize the EPA's efforts to determine real world fuel economy of vehicles before they
enter the market. However, we recommend that the EPA further monitor vehicles after they have
been released off the line to ensure they are continuing io perform within a reasonable margin of
the CAFE and GHG standards. The Federal Register recognizes that 'testing requirements may
continue post-certification.' We would like to see this suggestion applied across all vehicle
categories. It would not be difficult to stipulate procedures for manufacturers to follow to assure
continued vehicle performance. One possibility is adapting the Tn Use Vehicle Program'
currently in place to help measure real world vehicle emissions and fuel efficiency. The addition
of equipment that measures these factors could be added to all, or a select sample, of vehicles.
Additionally, the technology for measuring in-use fuel economy and vehicle emissions currently
exists and would be relatively inexpensive to implement. [OAR-2009-0472-7188.1, p. 9]
Testing conducted after vehicles have been driven under real world conditions provides critical
feedback. If vehicles are not maintaining consumption levels after initial time of testing, then it is
possible that implemented technologies may not be continuing to perform as they age. We urge
the EPA and NHTSA to continue to monitor on-road performance over a vehicles' lifespan. The
EPA could conduct this testing, but they may also require manufacturers to provide verification
that the fuel efficiency and GHG emissions of their fleet of vehicles has not declined beyond an
acceptable margin over time. If the burden of proof is on the manufacturers, they may have the
option of performing testing themselves or employing a third party to conduct sufficient
assessments of the manufacturers' in-use vehicles. Based on existing data, an expected decrease
in performance over a given time span should be allowed. However if fleets fail to meet the
expected performance levels over time, action should be taken by the EPA. For example, if on
road monitoring determines that the efficiency of a vehicle declines more than 10 percent within
its first 3 years of use, the manufacturers should be required to pay the same penalty that would
have been incurred if the original fleet standards had not been met. [OAR-2009-0472-7188.1, p.
10]
Continued monitoring of vehicle performance also creates the ability to better determine if
current testing procedures are accurate and adequate. If there is a trend in vehicles failing to
reflect EPA estimated fuel economy under real world driving scenarios, this could suggest flaws
in the testing methodology that should be rectified. The EPA should not only collect, but also
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utilize the database generated by continual testing in order to develop a robust testing model
based on real world data. For example, vehicle emissions and fuel economy ascertained by the
above method after one year of on-road use should closely reflect figures determined by the EPA
at the time of initial testing. [OAR-2009-0472-7188.1, p. 10]
[University of California, Santa Barbara, Bren Working Group on Vehicle Fuel Economy also
submitted these comments as testimony at the Los Angeles public hearing. See docket number
OAR-2009-0472-7283, pp. 119-121]
People's Republic of China:
In order to reflect the principle of fairness and justice, we suggest that vehicles sampled by the
United States for test should be affirmed on the vehicle state by the vehicle manufacturer, no
matter in the pre-production authentication, in-use verification program (IUVP), in-use
confirmatory test program (IUCP), or other experiment programs demonstrating the conformity
of the vehicle. [OAR-2009-0472-11269, p.3]
Yuli Chew (private citizen)
I support EPA's position that once sufficient data have been obtained, In-Use Verification
Program (IUVP) threshold criteria for CO2, N2O, CH4 and even HFC should be included in
later rulemaking and forms part of the determination of in-use criteria pollutants when they are in
their first and third year of service. [OAR-2009-0472-7042.1, p.5]
EPA Response:
In-Use Standards
EPA received comments from the Alliance, AIAM, Ferrari, Ford, Honda, Hyundai, Mitsubishi,
Toyota and Volkswagen. Some comments recommended changes to EPA's proposed in-use
standards. Many comments recommended that EPA should not adopt in-use standards and
should instead conduct an in-use "research" test program. AIAM, for example, recommended
that "A more appropriate approach would be a research program to evaluate whether there is a
deterioration problem, particularly with new technology."
For Tier 2, the in-use standard and the standard used for fleet average calculation 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, it would be inappropriate to
compare an individual vehicle to the fleet average, since that vehicle could have been certified to
an emission level that is different than the fleet average level.
This will also be true for the CC>2 fleet average standard. Therefore, to ensure that an individual
vehicle complies with the CCh standards in-use, it is necessary to compare the vehicle's in-use
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CC>2 emission result with the appropriate model-level certification CC>2 level used in determining
the manufacturer's fleet average result.
There is a fundamental difference between the CO2 standards and Tier 2 standards. For Tier 2,
the standard level used for the fleet average calculation is one of eight different emission levels,
or "bins," whereas for the CC>2 fleet average standard, the standard level used for the fleet
average calculation is the model-level certification CC>2 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.29 In contrast, the CC>2 fleet average standard will be calculated using
the actual vehicle model-level CO2 values from the certification test vehicles. With a specified
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 CO2 standards, the emission
level used to calculate the fleet average 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 CC>2 fleet average. This is the method used for compliance with the
CAFE fleet average, and EPA is using the same approach here to be consistent with the CAFE
approach. If the manufacturer attempted to design the vehicle to achieve a lower CC>2 value,
similar to Tier 2 for in-use purposes, the new lower CC>2 value would simply become the new
value used for calculating the fleet average.
The CC>2 fleet average standard is based on the performance of pre-production technology that is
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 CC>2 to account for these variabilities. EPA proposed an in-use standard that was
10% higher than the appropriate model-level certification CC>2 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 certification standards, for example to account for deterioration in the
emissions control system, production variability, testing variability, and other factors. 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
levels used to calculate the fleet average. 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.
29 In a similar fashion, the fleet average for heavy-duty engines is calculated using a Family Emission Level,
determined by the manufacturer, which is different from the emission level of the test engine.
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EPA Response to Comments
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 a reasonable cushion for in-use variability
that is not accounted for in the test level used to determine compliance with the fleet average.
EPA proposed a factor of 10% that would serve this function. The factor would only be
applicable to CC>2 emissions, and would be applied to the model-level test results that would be
used to establish the model-level in-use standard
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%.30 However, there are some fundamental differences
between CC>2 emissions and other criteria pollutants in the magnitude of the pollutants. Tier 2
NMOG and NOx emission standards are hundredths of a gram per mile (e.g., 0.07 g/mi NOx &
0.09 g/mi NMOG), whereas the CC>2 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 GHG emissions control is expected in-use. The
adjustment factor addresses only one element of what is usually built into a compliance margin.
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 CC>2 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 an additional rationale for requiring FTP and
HFET IUVP data for CC>2 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 calculation of the fleet average, EPA will discuss the matter with
the manufacturer and consider possible resolutions such as changes to ensure that the emissions
test data more accurately reflect the emissions level of vehicles at the time of production,
increased EPA confirmatory testing, and other similar measures.
Commenters generally did not comment on whether 10% was the appropriate level for the
adjustment factor. Honda did support use of the proposed 10% adjustment factor for the in-use
standard. But Honda also recommended that the 10% adjustment factor be applied to
subconfiguration data rather than the model-level data unless there was no subconfiguration data
available. Honda also expressed some concern over the inequity a 10% value would provide
between high- and low-emitting vehicles. They suggested that rather than using a straight 10%
multiplicative adjustment factor applied to the model-level CC>2 value for all vehicles, it would
30 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/420r0801 l.pdf
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be more equitable to take the sum of a 5% multiplicative factor applied to the model-level CC>2
value and a 5% factor applied to the manufacturer's fleet CC>2 target.
EPA understands that use of a multiplicative adjustment factor would result in a higher absolute
in-use value for a vehicle that has higher CC>2 than for a vehicle with a lower CC>2. However,
this difference is not relevant to the purpose of the adjustment factor, which is to provide some
cushion for test and production variability. EPA does not believe the difference would be great
enough to confer the higher-emitting vehicles with an unfair advantage with respect to emissions
variability.
Given that the purpose of the in-use standard is to enable a fair comparison between certification
and in-use emission levels, EPA agrees that it is appropriate to apply the 10% adjustment factor
to actual emission test results rather than to model-type emission levels which are production
weighted. Therefore, EPA is finalizing an in-use standard that applies a multiplicative 10%
adjustment factor to the subconfiguration emissions values, if such are available. If no emissions
data exist at the subconfiguration level the adjustment will be applied to the model-type value as
originally proposed. If the in-use emission result for a vehicle exceeds the emissions level, as
applicable, adjusted as just described by 10%, then the vehicle will have exceeded the in-use
emission standard. The in-use standard will apply to all in-use compliance testing including
IUVP, selective enforcement audits, and EPA's internal test program.
In-Use Testing Requirements (Including IUVP, IUCP, CH4 and N2O Measurements)
EPA received comments from the Alliance, AIAM, Chrysler, Ford, the Peoples Republic of
China, Toyota and the University of California, Santa Barbara regarding manufacturer's in-use
testing requirements. Most comments from automobile manufacturers recommended that in-use
testing was not needed. Ford, for example, commented that "in-use GHG measurement and
reporting requirements for manufacturers be dropped." Regarding EPA's proposed in-use
requirement to perform highway tests, Ford commented that "in-use HFET testing provides no
benefit and unnecessarily burdens manufacturers." Toyota, on the other hand, commented that
"Toyota supports EPA's intent to include CO2 as part of the IUVP data as a necessary means to
validate the certification process. Furthermore, Toyota accepts the additional requirement to
conduct highway testing under IUVP in order to enable the necessary comparison of a vehicle's
in-use standard to the measured in-use CO2 level." The University of California, Santa Barbara
commented that "We urge the EPA and NHTSA to continue to monitor on-road performance
over a vehicles' lifespan."
Sections 202 (a) (1) and 202 (d) of the CAA require a vehicle to comply with emission standards
over its regulatory useful life and affords EPA broad authority for the implementation of this
requirement. The response to noncompliance can range from adjusting a manufacturer's credit
balance to the voluntary or mandatory recall of noncompliant vehicles. These potential remedies
provide 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
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in-use levels of criteria pollutants when they are in their first and fourth years of service. This
testing is referred to as the In-Use Verification Program (IUVP) testing, which was first
implemented as part of EPA's CAP 2000 certification program.31 The emissions data collected
from IUVP serve several purposes. IUVP results provide 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, onboard refueling vapory recovery (ORVR) emissions and on-
board diagnostics (OBD) data.
Manufacturers are required to provide data for all regulated criteria pollutants. Some
manufacturers have voluntarily submitted CC>2 data as part of IUVP. EPA proposed that
manufacturers provide CC>2, N2O, and CH4 data as part of the IUVP. EPA also proposed that in
order to adequately analyze and assess in-use CC>2 results, which are based on the combination of
FTP and highway cycle test results, the highway fuel economy test would also need to be part of
IUVP. The University of California, Santa Barbara expressed support for including N2O and
CH4 emissions as part of the IUVP. Manufacturer comments were almost unanimously opposed
to including any GHG standards as part of the IUVP. Specifically, industry commented that CC>2
emissions do not deteriorate over time and in some cases actually improve. Ford provided data
for several 2004 through 2007 model year vehicles that indicate CC>2 emissions actually
improved an average of 1.42% when vehicles were tested over 5,000 miles. Since CC>2 emissions
do not deteriorate over time, manufacturers commented that including CC>2 emissions and the
highway test cycle as part of the IUVP would provide no benefit and would unnecessarily burden
manufacturers. Manufacturers also commented that N2O and CH4 emissions are very low and by
EPA's own account only represent about 1% of total light-duty vehicle GHG emissions. They
also expressed concern over the cost and burden of measuring N2O for IUVP, since many
manufacturers use contractor laboratories to assist in their IUVP testing and many of these
facilities do not have the necessary equipment to measure N2O. They stated that since it was
unnecessary to include CC>2 emissions as part of IUVP and since N2O and CH4 were such small
contributors to GHG emissions, it did not make sense to include N2O and CH4 as part of the
IUVP either. They felt that N2O and CH4 could be more appropriately handled through
attestation or an annual unregulated emissions report.
As discussed above, although EPA shares the view expressed in manufacturer comments that
historical data demonstrate little CC>2 deterioration, in-use emissions can increase for a number of
reasons other than deterioration over time. For example, production or design errors can result in
increased GHG emissions. Components that aren't built as they were designed or vehicles
inadvertently assembled improperly or with the wrong parts or with parts improperly designed
can result in GHG emissions greater than those demonstrated to EPA during the certification
process and used in calculating the manufacturers fleet average. The "stacking" of component
design and production tolerances can also result in in-use emissions that are greater than those
used in calculating a manufacturer's fleet average.
31 64 FR 23906, May 4, 1999.
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EPA believes IUVP testing is also important to monitor in-use versus certification emission
levels. Because the emphasis of the GHG program is on a manufacturer's fleet average standard,
it is difficult for EPA to make an assessment as to whether manufacturer's vehicles are actually
producing the GHG levels claimed in their fleet average without some in-use data for
comparison. For example, EPA has expressed concern that with the in-use standard based on a
10% adjustment factor, there would be an incentive for manufacturers to develop their fleet
average utilizing the full range of the 10% in-use standard. The only way for EPA to assess
whether manufacturers are designing and producing vehicles that meet their respective fleet
average standards is for EPA to be able to review in-use GHG emissions from the IUVP.
Finally, EPA does have some concern about potential CC>2 emissions deterioration in advanced
technologies for which we currently have no in-use experience or data. Since the CAFE program
has never had an in-use requirement and today's final regulations are the first ever GHG
standards, there has been no need to focus on GHG emissions in use as there will be with the
new GHG standards. Many of the advanced technologies that EPA expects manufacturers to use
to meet the GHG standards have been introduced in production vehicles, but until now not for
the purpose of controlling greenhouse gas emissions. For example, advanced dual-clutch or
seven-speed automatic transmissions, and start-stop technologies have not been broadly tested in
the field for their long-term CC>2 performance. In-use GHG performance information for vehicles
using these technologies is needed for many reasons, including evaluation of whether allowing
use of assigned deterioration factors for CC>2 in lieu of actual deterioration factors will continue
to be appropriate.
Therefore, EPA is finalizing the requirement that all manufacturers must provide IUVP emission
data for CC>2. EPA will also require manufacturers to perform the highway test cycle as part of
IUVP. Since the CC>2 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 CC>2
level with a vehicle's in-use standard. EPA understands that requiring manufacturers to also
measure N2O and CH4 will be initially challenging, since many manufacturer facilities do not
currently have the proper analytical equipment. To be consistent with timing of the N2O and
CH4 emissions standards for this rule, N2O and CH4 will not be required for IUVP until the 2015
model year.
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 for vehicles tested in the IUVP 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 proposed to exclude IUVP data for CO2, N2O, and CH4 emissions from the IUCP
thresholds EPA felt that there was not sufficient data to determine if the existing IUCP
thresholds were appropriate or even applicable to those emissions. The University of California,
Santa Barbara disagreed with EPA's concerns and recommended that CC>2, N2O, and CH4
emissions all be subject to the IUVP threshold criteria. Manufacturers commented that since
CC>2 performance is a function of vehicle design and cannot be remedied in the field with the
addition or replacement of emissions control devices like traditional criteria pollutants, it would
not be appropriate or necessary to include IUCP threshold criteria for GHG emissions.
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EPA continues to believe that the IUCP is an important part of EPA's in-use compliance
program and it will continue to be so for traditional criteria pollutants. For GHG emissions, EPA
believes the IUCP will also be a valuable future tool for achieving compliance, but believes that
there is insufficient data today to determine whether the current IUCP threshold criteria are
appropriate for GHG 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. Therefore, for today's final
action, EPA will exclude IUVP data for CO2, N2O, and CH4 emissions from the IUCP
thresholds.
Remedies for Noncompliance with In-Use Standards
EPA received significant comment from industry expressing concern with the in-use standard.
The comments focused on concerns about manufacturer liability for in-use CO2 performance and
for the most part did not address the proposed 10% adjustment level or even the need for an
adjustment to account for variability. Some comments suggested that an in-use standard is not
necessary because in-use testing is not mandated in the CAA. Others stated that since there is no
evidence that CO2 emission levels increase over time, there is no need for an in-use standard.
Finally, there was a general concern that failure to meet the in-use standard would result in recall
liability and that recall can only be used in cases where it can be demonstrated that a "repair" can
remedy the nonconformity.
The concern over recall liability in cases where there is no effective repair remedy has some
legitimate basis. For example, EPA agrees there would be a concern if a number of vehicles for
a particular model were to have in-use emissions that exceed the in-use standard, with no
effective repair available to remedy the noncompliance. However, EPA does not anticipate a
scenario involving exceedance of the in-use standard that would cause the Agency to pursue a
mandatory recall unless there is a repairable cause of the exceedance. At the same time, failures
to emission-related components, systems, software, and calibrations do occur that could result in
a failure of the in-use CO2 standard. For example, a defective oxygen sensor that could cause a
vehicle to burn excessive fuel would result in higher CO2 levels that could exceed the in-use
standard. While it is likely that such a problem would also affect other emissions as well, there
would still be a demonstratable problem that can be repaired and a recall may be valid.
Therefore, EPA believes that a CO2 in-use standard is statutorily required and can serve as a
useful tool for determining compliance with the GHG program.
Deterioration Factors
In general, there was widespread support for the proposed use of an assigned DF of 1.0
multiplicative deterioration factor (or a zero additive deterioration factor) for CO2 emissions.
Ford supported this concept, but also commented that EPA's durability process "should allow for
the use of an improvement factor (i.e. negative deterioration factor) for CO2 useful life
compliance." AIAM commented that any possible changes in deterioration factors in the
compliance plan discussions with the manufacturer would be equivalent to a change in the
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stringency of the standard" and "should only be implemented after notice and opportunity for
comment" due to lead-time reasons.
EPA believes that the useful life period established for criteria pollutants under Tier 2 is also
appropriate for CC>2. Data from EPA's current in-use compliance test program indicate that CC>2
emissions from current technology vehicles increase very little with age and in some cases may
actually improve slightly. The stable CC>2 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 CC>2 emission levels depend primarily on fundamental vehicle
design characteristics that do not change over time. Therefore, vehicles designed for a given CC>2
emissions level will be expected to sustain the same emissions profile over their full useful life.
As noted, sections 202 (a) 91) and 202 (d) of the CAA require 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 CC>2, EPA does not currently anticipate notable deterioration and has
therefore determined that an assigned deterioration factor be applied at the time of certification.
At this time EPA will use an additive assigned deterioration factor of zero, or a multiplicative
factor of one. EPA anticipates that the deterioration factor will be updated from time to time, as
new data regarding emissions deterioration for CC>2 are obtained and analyzed. Additionally,
EPA may consider technology-specific deterioration factors, should data indicate that certain
CC>2 control technologies deteriorate differently than others.
In response to Ford's comments, EPA agrees with industry comments that there is little evidence
to indicate that CC>2 emission levels from current-technology vehicles increase over time,
however EPA also believes that the evidence is inconclusive at this time to indicate that CC>2
emission levels from current technology vehicles decrease over the full useful life of the vehicle.
Thus, EPA also believes that data are inconclusive with respect to an "improved" deterioration
effect of CC>2 emissions (integrated over the useful life of the vehicle). For this reason, EPA is
not adopting durability requirements which would allow for an "improvement factor" (i.e.
negative deterioration factor) or for an option to generate data leading to use of an improvement
factor for CO2 useful life compliance. Further, EPA is treating CO2 consistently with the
longstanding treatment of other emissions, in that the regulations require any deterioration factor
that is determined to be less than 1 to be set equal to 1. EPA will, however, continue to work
with manufacturers to collect and analyze data that could improve overall understanding of in-
use CC>2 emissions.
In response to AIAM's comments, during compliance plan discussions prior to the beginning of
the certification process, EPA will explore with each manufacturer any new technologies that
could warrant use of a different deterioration factor. For any vehicle model determined likely to
experience increases in CC>2 emissions over the vehicle's useful life, EPA continues to believe
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that manufacturers should not be allowed to use the assigned deterioration factor but rather
should be required to establish an appropriate deterioration factor. If such an instance were to
occur, EPA would allow manufacturers to use, for example, the whole-vehicle mileage
accumulation method currently offered in EPA's regulations.32
5.10.4. Credit Program Implementation
Organization: Ford Motor Company
Chew, Yuli (private citizen)
Comment:
Ford Motor Company:
Ford supports EPA and NHTSA's proposed approach to the GHG/CAFE credit structure. In
some cases, clarifying language should be added to meet the goals of a harmonized program.
[OAR-2009-0472-7082.1, p. 2]
Ford supports the proposed reporting requirements, provided that confidential business
information is protected under existing laws and regulations. [OAR-2009-0472-7082.1, p. 2]
Advanced Technology Definitions
In general, Ford supports the definitions of advanced technology vehicles, but offers the
following recommendations and clarifications. Ford recommends that the electric vehicle, fuel
cell and plug-in hybrid definitions be modified as follows:
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 §86.1811.
(3) EVs can not have an onboard combustion/generator system as a means of providing electrical
energy.
Fuel cell means an electrochemical cell that produces electricity via the non-combustion reaction
of a consumable fuel, typically hydrogen.
32 40 CFR 86.1823-08
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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. It is possible to produce
a PHEV with a very small battery, that would provide some increased FE but very limited range,
and these vehicles should not be forced into a charge-sustaining calculation or test method due to
a limited range.
Ford also recommends that the EPA provide the definition and method of determining the
'equivalent all-electric range'. The standard test for determining the equivalent all electric range
could be based on the EPA UDDS cycle, under the test conditions specified in SAE J1711, or
equivalent test method specified by EPA. Ford is willing to work with EPA and industry to
develop an appropriate test methodology. [OAR-2009-0472-7082.1, pp. 23-24]
Chew, Yuli (private citizen):
I believe a credit lifespan of 5 years is appropriate. This Regulation should harmonize with
CARS's Regulation of having a useful life of five years to avoid confusion and allows
Intermediate Volume Manufacturers to orderly place their strategies in the transition. If this is
proposed, however, I believe that the usefulness of the credits from trucks should be curtailed,
with 20% reduction annually or more in their ability to balance out the deficit in the cars. [OAR-
2009-0472-7042.1, p.3]
EPA Response:
Advanced Technology Definitions
EPA proposed specific definitions for the vehicle technologies eligible for these provisions. One
manufacturer suggested the following changes in their comments:
• Insert an additional criterion for electric vehicles that specifically states that an electric
vehicle may not have an onboard combustion engine/generator system.
• A minor deletion of text from the definition for "Fuel cell."
• The deletion of the requirement that a PHEV have an equivalent all-electric range of
more than 10 miles.
EPA agrees with the first comment. As written in the proposal, a vehicle with an onboard
combustion engine that serves as a generator would not have been excluded from the definition
of electric vehicle. However, EPA believes it should be. Although such a vehicle might be
propelled by an electric motor directly, if the indirect source of electricity is an onboard
combustion engine then the vehicle is fundamentally not an electric vehicle. EPA is also
adopting the commenter's proposed rephrasing of the definition for "Fuel cell," which is simpler
and clearer. Finally, in the context of the advanced technology incentive provisions in this final
rule, EPA concurs with the commenter that the requirement that a PHEV have an equivalent all-
electric range of at least ten miles is unnecessary. In the context of the proposed credit multiplier
EPA was concerned that some vehicles could install a charging system on a limited battery and
gain credit beyond what the limited technology would deserve simply by virtue of being defined
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as a PHEV. However, because EPA is not finalizing the proposed multiplier provisions (see
Section III.C.3) and is instead using as the sole incentive the zero emission tailpipe level as the
compliance value for a manufacturer's fleetwide average, this concern is no longer valid. Since
EPA is not promulgating multipliers, the concern expressed at proposal no longer applies, and
each PHEV will get a benefit from electricity commensurate with its measured use of grid
electricity, thus EPA is no longer concerned about the multiplier effect. Thus, EPA is finalizing
the following definitions in the regulations:
• 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:
o Recharge energy must be drawn from a source off the vehicle, such as residential
electric service;
o The vehicle must be certified to the emission standards of Bin #1 of Table S04-1
in paragraph (c)(6) of §86.1811; and
o The vehicle does not have an onboard combustion engine/generator system as a
means of providing electrical energy.
• 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 non-combustion
reaction of a consumable fuel, typically hydrogen.
• Plug-in hybrid vehicle (PHEV) means a hybrid electric vehicle that 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.
5-Year Lifespan of Credits
Mr. Yuli Chew supported EPA's proposed 5-year lifespan of credits. We note that the final rule
adopted the 5-year lifespan for credits as proposed.
Credit Transfer Process
Mr. Yuli Chew recommended that credits transferred from the truck compliance program to the
passenger car program should be devalued by 20% annually or more. There was no technical
justification provided with the comment. EPA is not aware of a rationale for devaluing truck
compliance credits and therefore did not consider this suggestion.
5.10.5. Enforcement
Organization: Ford Motor Company
Association of International Automobile Manufacturers (AIAM)
Alliance of Automobile Manufacturers (Alliance)
Volvo Car Corporation
Mitsubishi Motors R & D of America (MRDA)
Hyundai Motor Company
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Toyota Motor North America
Natural Resources Defense Council
California Air Resources Board
Honeywell Transportation Systems
National Automobile Dealers Association (NADA)
Fisker Automotive, Inc.
People's Republic of China
Comment:
Ford Motor Company:
Compliance Penalties
The NPRM states that if a manufacturer fails to comply with GHG standards, EPA determines
how many high-emitter vehicles need to be removed from the fleet to achieve compliance. This
number of vehicles would be deemed 'nonconforming' and not covered by a certificate.
Manufacturers would be subject to penalties of up to $37,500 per vehicle and injunctive relief,
which would presumably include the authority to require recall under CAA 207.
The CAA gives EPA a variety of powerful enforcement tools, which may be appropriate in cases
where after treatment systems fail and vehicles with high criteria pollutant emissions need to be
taken off the road. However, such enforcement authorities are excessive in the case of a GHG
fleet average, which is comparable to a fuel economy standard. The maximum CAFE penalty
ever paid has been approximately $30 million. Under the EPA regime, the potential penalty for
10,000 'nonconforming' vehicles (a relatively small number for a large manufacturer) would be
$375 million. That plus the threat of injunction/recall provides EPA with excessive leverage in
an enforcement context, especially when the primary cause of non-compliance may be market
shifts, economic disruptions, or other factors outside of the manufacturer's control.
Injunction/recall is unlikely to ever be appropriate, since there is probably no nonconformance
(or remedy) as to individual vehicles. Rather than employing its enforcement leverage/discretion
on a case-by-case basis, EPA should establish a separate regulation or policy on GHG
enforcement that provides for lower maximum penalties and limits injunctive relief to egregious
violations. In the case of noncompliance with fleet average GHG standards, the policy should
provide for maximum penalties comparable to those under the CAFE program. The violations
are comparable, and EPCA indicate Congress's intent as to an appropriate level of penalties for a
noncompliance of this kind. [OAR-2009-0472-7082.1, p. 24]
Association of International Automobile Manufacturers (AIAM):
As recognized in the proposal, recall is not an appropriate enforcement mechanism for fleet-
average regulations.
Unlike the National Traffic and Motor Vehicle Safety Act, EPCA does not provide for recall and
remedy in the event of a noncompliance. The presence of recall and remedy provisions in the
Safety Act and their absence in EPCA is believed to arise from the difference in the application
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of the safety standards and CAFE standards. A safety standard applies to individual vehicles; that
is, each vehicle must possess the requisite equipment or feature that must provide the requisite
type and level of performance. If a vehicle does not, it is noncompliant. ...
In contrast, a CAFE standard applies to a manufacturer's entire fleet for a model year. It does not
require that a particular individual vehicle be equipped with any particular equipment or feature
or meet a particular level of fuel economy. It does require that the manufacturer's fleet, as a
whole, comply. ... Thus, under EPCA, there is no such thing as a noncompliant vehicle, only a
noncompliant fleet. No particular vehicle in a noncompliant fleet is any more, or less,
noncompliant than any other vehicle in the fleet. See 74 FR at 49464. [OAR-2009-0472-7123.1,
p.15]
The same rationale that counsels against adopting recall as an enforcement mechanism for CAFE
standards would apply with just as much force to corporate average GHG emissions standards.
To the extent that a manufacturer fails to meet the corporate average GHG emissions standard
for a given year, it will most likely be because it failed to balance its fleet and sell the proper mix
of vehicles, and not because of a failure of an emissions control device. Indeed, given the fact
that the technologies that reduce GHG emissions relate principally to the efficiency with which
the vehicle converts fuel to energy—such as, for example, hybrid or plug-in engines, advanced
transmissions, and mass reduction—these technologies are not likely to "fail" in the sense that
they are not functioning properly to reduce emissions. Rather, a fleet of perfectly functioning
vehicles may nonetheless fail to meet the GHG emissions standard if the anticipated mix is not
sold. Under these circumstances, recall would be an entirely inappropriate remedy. The Clean
Air Act gives EPA the discretion to forego ordering a recall where the failure to meet an
emission standard is the result of fleet imbalance. Section 207(c)(l) of the Clean Air Act
provides that where "a substantial number of any class or category of vehicles or engines" fail to
meet an emissions standard, then the manufacturer is to "submit a plan for remedying the
nonconformity of the vehicles or engines," and that plan is to provide that the nonconformity
"will be remedied at the expense of the manufacturer." 42 USC § 754 l(c). Where the
nonconformity is the result of a fleet imbalance, then the manufacturer can "remedy" the
nonconformity in ways that do not include recalling its fleet. [OAR-2009-0472-7123.1, p.16]
For the above reasons we urge EPA to specify those limited circumstances under which recall
would be appropriate for noncompliance with its greenhouse gas emissions requirements. [OAR-
2009-0472-7123.1, p.16]
Alliance of Automobile Manufacturers (Alliance):
In-Use Testing: Enforcement of Fleet Average Requirements
EPA proposes to require in-use testing of a vehicle's CO2 emissions with the emissions
compared to the model-level certification CO2 level used in calculating the manufacturer's fleet
average. EPA would apply a 10 percent 'compliance factor adjustment' to the certification CO2
level to account for production and test variability. Under EPA's proposal, one response to a
failure to comply with the fleet average standards after all credits have been applied would be to
calculate the number of vehicles not meeting the fleet average standards and treat those vehicles
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as not covered by emissions certifications, in effect deeming the certifications as "void ab initio."
See 74 Fed. Reg. at 49,762. The Joint Notice suggests that such an approach to enforcement is
consistent with EPA's enforcement regulations for other fleet average requirements that apply to
non-GHG emissions. Id. at 49573. [OAR-2009-0472-6952.1,p.55]
Fleet average emissions requirements for GHG emissions are fundamentally different from such
requirements for other emissions. As NHTSA and the federal courts reviewing fuel economy
standards have long recognized, a manufacturer's ability to meet fleet average fuel economy
levels can be dependent on fuel prices and other economic factors, which are conditions beyond
the control of vehicle manufacturers. This is one reason why NHTSA must consider "economic
practicability" in setting CAFE standards. 49 U.S.C. § 32902(f); see e.g. Public Citizen v.
NHTSA, 848 F.2d 256, 265 (D.C. Cir. 1988); The dependence of EPA's proposed fleet average
GHG standards on a manufacturer's fleet-wide fuel economy makes compliance with the
proposed EPA standards subject to the same factors beyond a manufacturer's control. Imposition
of severe sanctions when a manufacturer does not comply with the GHG fleet average
requirement would be inconsistent with the CAFE program, which by law imposes a
comprehensive enforcement program.. The inconsistency would have two dimensions: the CAFE
law does not make manufacturers liable for penalties if compliance with the fuel economy
standards was beyond a manufacturer's control (49 USC 32913) and EPCA prescribes specific
civil penalties that are not contained in the proposed EPA enforcement rule (49 USC 32912).
[OAR-2009-0472-6952.1, p.55]
Similarly, it was long ago settled under the Clean Air Act that "unless the cause of the
[emissions] nonconformity is within the manufacturer's control, an imposition of liability would
be an unwarranted financial burden on the manufacturers, unrelated to the strategy of forcing
technological progress." Chrysler Corp. v. EPA, 631 F.2d 865, 888 (D.C. Cir. 1980). When the
limits on EPA's enforcement powers recognized in Chrysler were identified in EPA's "Tier
One" rulemaking in 1991, EPA was careful to limit the circumstances under which it would use
a void-ab-initio sanction:
While the existence of a violation will depend solely on whether the manufacturer achieves the
applicable [fleet average] phase-in percentage, the Agency reserves the right to exercise
enforcement discretion in the assessment of civil penalties for that violation. The EPA recognizes
that a manufacturer, notwithstanding its best efforts, may fail to achieve the required phase-in
percentage due to circumstances beyond its control .... Thus, in seeking civil penalties for a
violation, EPA will exercise its enforcement discretion according to the circumstances
surrounding a violation. In practice, EPA does not intend to bring an enforcement action against
a manufacturer if both of the following circumstances exist: the shortfall in actual sales from the
required percentage is less than or equal to ten percent of the required phase-in percentage, and
there is no indication that the shortfall resulted from bad faith on the part of the manufacturer.
[OAR-2009-0472-6952.1, p.56]
56 Fed. Reg. 25,724, 25,729 (June 5, 1991) (emphasis added). The Alliance recommends that if
EPA decides to proceed with void ab initio enforcement of the fleet average GHG requirement,
EPA should add the "bad faith" element to the text of the rule, to ensure that the regulation
reflects the statutory limits on EPA's enforcement powers. This is necessary not only based on
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the limitations on those powers under the Clean Air Act recognized in Chrysler, but also to
ensure consistency between the EPA and NHTSA regulatory programs. See Massachusetts,
supra. [OAR-2009-0472-6952.1, p.56]
NHTSA and EPA Enforcement and Penalty Assessment for Non-Compliance
In the Preamble to the NPRM, EPA states it 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." In addition, EPA states that, with
this proposal, the Agency is providing the regulated community with "numerous flexibilities to
help achieve compliance." 74 Fed. Reg. at 49,559. 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. [OAR-2009-0472-6952.1, p.57]
The Alliance agrees with EPA's proposal 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. We also agree that submitting one data set
in satisfaction of both CAFE and GHG requirements is preferred and therefore would not impose
unreasonable burdens on automobile manufacturers beyond what is required under the CAFE
program. [OAR-2009-0472-6952.1, pp.57-58]
However, the Alliance has serious concerns about EPA's approach to the assessment of penalties
and other relief for non-compliance under the proposed Greenhouse Gas Standards for vehicles
in Model Years 2012-2016. We recognize that EPA has authority under Section 207(c) of the
Clean Air Act 12 (CAA) to require manufacturers to recall and repair vehicles if the Agency
determines there are a substantial number of vehicles that, although properly maintained and
used, do not conform to emissions standards. EPA also has authority under Section 205 to assess
civil penalties of up to $37,500 per vehicle for the introduction and sale of uncertified vehicles.
[OAR-2009-0472-6952.1, p.58]
Yet, there are critical differences that the EPA has overlooked in its proposal. The CAA recall
provision was intended to discourage, and provides remedies for, situations in which
manufacturers produce nonconforming vehicles that emit pollution in excess of established
standards. In the case of criteria pollutants, this could be due to the installation of defective or
substandard after-treatment components such as catalysts or NOx traps. In the case of fleet
average GHG standards, after-treatment components are not an issue. [OAR-2009-0472-6952.1,
p.58]
GHG emissions are primarily a function of fuel economy, which in turn is a function of vehicle
size, vehicle design, and overall fleet mix. Compliance with fleet average GHG standards
depends on many factors; in particular, whether or not the market responds to products in
accordance with a manufacturer's expectations. The market, in turn, reacts to a host offerees
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including economic conditions, fuel prices, style trends, and other factors. [OAR-2009-0472-
6952.1, p.58]
Both NHTSA and EPA acknowledge that these standards will be a significant challenge for auto
manufacturers and their suppliers since they will have ".. .to devote considerable engineering and
development resources before 2012 laying the critical foundation for the widespread deployment
of upgraded technology across a high percentage of the 2012- 2016 fleet...," particularly in the
current economic climate. 74 Fed. Reg. at 49,466. [OAR-2009-0472-6952.1, p.58]
As EPA and NHTSA are well aware, the Alliance and its members are firmly committed to
meeting the GHG and CAFE Standards proposed for MY 2012-16. The Alliance agrees that both
NHTSA and EPA must assess the feasibility and practicability of their standards as they impact:
emissions reductions; oil conservation; fuel savings by consumers; the auto industry; and, safety
concerns. [OAR-2009-0472-6952.1, p.58]
In its proposal, EPA states that".. .penalties under the CAA are typically determined on a
vehicle-specific basis by determining the number of a manufacturer's highest emitting vehicles
that caused the fleet average standard violation." 74 Fed. Reg. at 49,483. Consistent with such an
approach, the following scenario would be a real possibility if and when any manufacturer failed
to meet EPA's GHG Standards. [OAR-2009-0472-6952.1, pp.58-59]
Once the manufacturer failed to comply with fleet average GHG standards, EPA would
determine how many high-emitter vehicles need to be removed from the fleet to achieve
compliance. This number of vehicles would be deemed 'nonconforming' (subject to recall) AND
not covered by a certificate (subject to civil penalty). Manufacturers would be subject to both the
expense of a recall and penalties of up to $37,500 per vehicle and possibly also injunctive relief.
The potential penalty for 10,000 nonconforming vehicles (a relatively small number for a large
manufacturer) would be more than $375 million. Yet this penalty scenario might result from
factors outside of a manufacturer's control, such as the market disruptions associated with a
major recession and unforeseen changes in consumer demand and fuel prices. While EPA has
considerable discretion in the assessment of penalties, it is unclear how or when they would
choose to use it. Moreover, it is not clear how EPA could order a recall pursuant to CAA Section
207(c) when there might be no repair remedy to correct nonconformity with a GHG standard.
[OAR-2009-0472-6952.1, p.59]
Subjecting manufacturers to liability for recalls and debilitating fines over fleet average GHG
emissions does not square with the intent of Congress when it created the EPCA civil penalty
provisions for violations of CAFE. The CAFE penalty for non-compliance is $5.50 for each tenth
of a mpg that a manufacturer's average fuel economy falls short of the standard for a given
model year, multiplied by the total volume of those vehicles in the affected fleet, manufactured
for that model year. 49 USC §32919(b). While the civil penalties assessed under EPCA certainly
can be very significant, they are at least an order of magnitude less onerous than the potential
CAA penalties for a similar noncompliance situation. Moreover, EPCA does not provide for
vehicle recalls due to noncompliance with fuel economy standards, likely because Congress
recognized the futility of such a remedy as applied to vehicle fuel economy. [OAR-2009-0472-
6952.1, p.59]
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EPA Response to Comments
To ensure that penalty assessment and enforcement authority are properly applied, EPA should
establish a separate penalty policy that specifically addresses non-compliance with the GHG
standards being proposed. At a minimum, the policy should provide for lower maximum
penalties for noncompliance with fleet average GHG standards, in line with the penalties
assessed under the CAFE program and it should also limit recall relief to egregious violations
where a vehicle-specific remedy can be identified. [OAR-2009-0472-6952.1, p.59]
EPA's proposed methodology for determining the number of vehicles not in compliance is also
problematic. EPA proposes to determine this value on the basis of the amount of non-offset
debits and the fleet average greenhouse gas standard for the year in which the deficit failed to be
offset. As noted in Section III.E.6 of the NPRM, this is a departure from "the Tier 2 approach of
penalizing vehicles from the year in which the deficit was generated." The Alliance also notes
that this is inconsistent with the approach taken by California's fleet average greenhouse gas
regulation (13 CCR §1961.1 (b)(3)(A)). [OAR-2009-0472-6952.1, p.59]
For example, if a manufacturer has a debit situation in the 2012 model year that is not covered by
carry back credits from either fleet in the 2013, 2014, or 2015 model years, the 2012 model year
standard should be used to determine the number of nonconforming vehicles. [OAR-2009-0472-
6952.1, p.59]
Penalizing vehicles produced in the model year in which an earlier model year's debit failed to
be offset is not appropriate. The conditional nature of the certificate is for a specific test group in
a specific model year; any non-conformance with a particular certificate should be assessed
against that particular model year, not against a future model year's certificate in which vehicles
conform to the fleet average greenhouse gas standard. [OAR-2009-0472-6952.1, p.60]
Assessing penalties against a later model year fleet's vehicles by deeming them not covered by a
certificate of conformity also causes issues in the determination of that fleet's level of
conformance. Removal of any vehicles from the fleet in the year in which a deficit failed to be
offset will result in a modification of both that fleet's standard and average emission level. This
effect is compounded by EPA's proposal to "designate as nonconforming those vehicles with the
highest emission values first." Due to the attribute-based standard, the removed vehicles are
likely to be larger vehicles with less stringent standards, but not necessarily those with the
highest difference between their performance and their individual target standard. In fact, the
highest emission value vehicles may have emission levels below their target standard. Removal
of these vehicles will result in a lowering of the fleet standard (fewer large vehicles) and a
lessening of the fleet's performance to the standard (fewer vehicles below their individual target
standard). [OAR-2009-0472-6952.1, p.60]
For the reasons outlined above, the Alliance recommends that the number of non-conforming
vehicles be based on the number of debits not offset and the fleet standard from the year in which
the debit was incurred. The vehicles that are furthest from their specific GHG targets should be
designated as the ones not in conformance, for purposes of assessing any penalties. [OAR-2009-
0472-6952.1, p.60]
Volvo Car Corporation:
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The NPRM states that if a manufacturer fails to comply with GHG standards, EPA determines
how many high-emitter vehicles need to be removed from the fleet to achieve compliance. This
number of vehicles would be deemed 'nonconforming' and not covered by a certificate.
Manufacturers would be subject to penalties of up to $37,500 per vehicle and injunctive relief,
which would presumably include the authority to require recall under the Clean Air Act (CAA
207).
The CAA gives EPA a variety of powerful enforcement tools, which may be appropriate in cases
where after treatment systems fail vehicles with high criteria pollutant emissions need to be taken
off the road. However, such enforcement authorities are excessive in the case of a GHG fleet
average, which is comparable to a fuel economy standard. The maximum CAFE penalty ever
paid has been approximately $30 million. Under the EPA regime, the potential penalty for
10,000 nonconforming vehicles (a relatively small number for a large manufacturer) would be
$375 million. That plus the threat of injunction/recall provides EPA with excessive leverage in
an enforcement context, especially when the most likely cause of non-compliance would be
market shifts or economic disruptions. Injunction/recall is unlikely to ever be appropriate, since
there is probably no nonconformance (or remedy) as to individual vehicles. Rather than
employing its enforcement leverage/discretion on a case-by-case basis, EPA should establish a
separate regulation or policy on GHG enforcement that provides for lower maximum penalties
and limits injunctive relief to egregious violations. In the case of noncompliance with fleet
average GHG standards, the policy should provide for penalties comparable to those under the
CAFE program. The violations are comparable, and EPCA indicates Congress's intent as to an
appropriate level of penalties for a noncompliance of this kind. [OAR-2009-0472-7168.1 p.6]
Mitsubishi Motors R & D of America (MKDA):
Mitsubishi Motors is concerned that the extremely strict EPA noncompliance penalties are not
harmonized with the NHTSA CAFE noncompliance penalties. [OAR-2009-0472-7125.1, p.2]
Both EPA and NHTSA have noncompliance penalties within their respective standards.
However, there is a significant difference between the two penalty structures. NHTSA's
noncompliance penalty is $5.50 for each tenth of a mpg that a manufacturer's average fuel
economy falls short of the standard for a given model year, multiplied by the total volume of
those vehicles in the affected fleet, manufactured for that model year. EPA's GHG
noncompliance penalties are based on vehicles exceeding criteria pollutant standards, which can
be corrected through the replacement of defective or substandard parts. However, a GHG fleet
average is highly dependent on vehicle size, weight, and overall fleet mix - none of which can be
remedied with the replacement of parts. Market fluctuations could easily force a manufacturer
into noncompliance and subject them to the maximum fine of $37,500 per vehicle, which is
higher than the market price of most vehicles. These fines could bankrupt a smaller company,
such as Mitsubishi Motors, for circumstances beyond their control and are not in the spirit of a
harmonized National Program. [OAR-2009-0472-7125.1, p.4]
Hyundai Motor Company:
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EPA Response to Comments
EPA discusses that potential remedies may be necessary in the event of failure to comply with
the fleet average. Hyundai would like to suggest two potential options for addressing remedies
First, it is possible that an in-use failure will be directly tied to the malfunction of a part or
component. In many cases, we expect that the part malfunction will also have an impact on other
criteria pollutants, and any remedial action would be based on the emissions impact of the part
malfunction. Under this scenario, enforcement action should follow the existing processes for
criteria pollutants.
Second, EPA proposes to set an in-use standard at ten percent above the model-level CO2
certification emission level, which would apply to all in-use testing, including the In-Use
Verification Program, selective enforcement audits and EPA internal testing. EPA notes that
exceeding the in-use standard will be deemed a failure (74 FR 49483). Hyundai would like to
suggest that in the event that an in-use failure is confirmed, EPA should provide the
manufacturer with the option to readjust the fleet average of the failing model year. This
readjustment would necessitate recalculating compliance with the GHG program from that year
forward and possibly utilizing and recalculating existing credits. [OAR-2009-0472-7231.1, p.7]
Toyota Motor North America:
As proposed, each Certificate of Conformity (certificate) would be conditional upon the
manufacturer achieving CO2 fleet average standards. Failure to meet the standard, subject to
application of appropriate credits, would require EPA to make a determination as to which
vehicles within the test group caused the fleet average standard to be exceeded. Toyota has the
following concerns:
-First, the proposal could extend the conditional certificate period well beyond the end of the
certification model year. In the unlikely event of noncompliance, a manufacturer would be
subject to penalties and injunctive orders on an individual basis for sale of vehicles that are not
covered by the certificate (up to $37,500 per vehicle).
-Second, as NHTSA would also assess CAFE fines for the same noncompliance scenario, a
manufacturer could face fines and penalties from two agencies concerning essentially the same
noncompliance. [OAR-2009-0472-7291, p.32]
In the event that EPA moves forward with penalties, then at a minimum, it should establish a
penalty policy that articulates requisite procedures and appropriate fines for non-compliance in
advance of program implementation. Such a transparent process would avoid potential inequities
that could result if manufacturers are forced to enter into closed-door and confidential penalty
negotiations with EPA. [OAR-2009-0472-7291, p.33]
Natural Resources Defense Council:
Compliance through Voluntary Fees Should Not Be Permitted
EPA should not permit voluntary payments or fees in lieu of achieving actual GHG reductions to
satisfy compliance with the GHG standards. Manufacturers found in noncompliance should be
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subject to enforcement actions that include a combination of vehicle sales restrictions and
financial penalties that are strong enough to encourage the aggressive pursuit and
implementation of GHG reduction technologies to meet the standards. EPA should not adopt a
civil penalty structure for compliance similar to that used for CAFE by NHTSA because it does
not adequately force technology innovation across the industry. Throughout the existence of the
CAFE program, several manufacturers have chosen to pay fines as a less expensive alternative to
implementing the technologies necessary to meet fuel economy standards. As a result, the
industry average fuel economy is lower than that expected from CAFE standards and oil savings
are therefore reduced.[OAR-2009-0472-7141.1, p. 20]
EPA has developed multiple mechanisms to ensure that manufacturers have sufficient lead time
to deploy the necessary GHG reduction technologies to be in full compliance by MY 2016. EPA
has proposed to phase out many of the mechanisms because they are meant to only be necessary
for an industry transition to GHG standards structured under requirements of the CAA. We
believe these mechanisms are more than adequate for attaining compliance. The key mechanisms
include the Temporary Lead-time Allowance Alternative Standard, trading of credits coupled
with a generous early credit proposal, inclusion of FFV credits for MY 2012-2015, transferring
credits between car and truck fleets, and 3-year carry forward of deficits. EPA specifically
included these mechanisms so that all manufacturers would have a pathway to comply without
fees by the 2016 model year. Allowing a voluntary fee structure would certainly stall the
deployment of pollution-reduction technologies. [OAR-2009-0472-7141.1, p. 20]
California Air Resources Board:
We disagree with the Alliance comment (in Document ID EPA-HQ-OAR- 2009-0472-6952.1)
concerning penalties proposed by EPA under its Clean Air Act authority and believe EPA took a
reasonable and proper approach. By moving ahead at a technology application level toward the
2020 MY more ambitious than what a straight-line projection under ESIA/EPCA would require,
EPA is arguably fulfilling its duty to address the separate public health and welfare goals not
present in EISA/EPCA but required by the Clean Air Act, as discussed in Massachusetts et. al. v.
EPA, Central Valley, and Green Mountain. However, to ensure that those greater greenhouse
gas emission reductions come to fruition, EPA rightly eschewed simply aligning its penalty and
enforcement policies with those under the current CAFE structure. [OAR-2009-0472-
7189.1, pp.13-4]
[CARB also submitted these comments as testimony at the Los Angeles public hearing. See
docket number OAR-2009-0472-7283, pp. 21-27]
Honeywell Transportation Systems:
The Clean Air Act authorizes EPA and NHTSA to collect fines and other penalties for failure to
comply with the fleet average GHG and fuel economy standards. Honeywell believes that any
fines imposed and collected under the CAFE & GHG standards should be appropriated to the
development of vehicle technologies that continue to improve fuel economy in the future. The
direct application of the penalties collected will support the underlying legislative policy and
drive innovation. [OAR-2009-0472-7165.1, p.6]
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EPA Response to Comments
National Automobile Dealers Association (NADA):
The National Program should incorporate NHTSA's traditional CAFE enforcement tools,
including its civil penalty policy, it makes no sense to apply EPA's traditional vehicle-based
compliance tools to a fleet average program of this sort. Noncompliance scenarios such as those
resulting from a sudden drops in fuel prices are no place for EPA's recall, de-certification (void
ab initio),/ and severe per vehicle penalty tools. An attempt to shoehorn EPA's mobile source
enforcement strategies into the National Program would only serve to prove NADA's contention
that the best National Program would be one where EPA effectively adopted NHTSA's CAFE
standards by reference, without attempting to establish duplicative tailpipe GHG standards.
[OAR-2009-0472-7182.1, p.9]
Fisker Automotive, Inc.:
Fisker Automotive recommends higher penalties overall. We recommend a $10 penalty per
annual gallon of gasoline consumed beyond the baseline. For a 15 year life, that represents a
$0.67 penalty per excess gallon consumed. [OAR-2009-0472-8732.1, p.4]
The regulation currently reads,
"The penalty, as adjusted for inflation by law, is $5.50 for each tenth of a mpg that a
manufacturer's average fuel economy falls short of the standard for a given model year
multiplied by the total volume of those vehicles in the affected fleet (i.e., import or domestic
passenger car, or light truck), manufactured for that model year.' [OAR-2009-0472-8732.1, pp.4-
5]
Per this initial proposed regulation, the most consuming new vehicle sold today (a supercar)
would only have a penalty of about $1,100. For the regulation to support real progress, penalties
must be much larger—on the order of the costs to improve fuel economy (through electrification,
light-weighting, etc.). [OAR-2009-0472-8732.1, p.5]
This penalty model represents the maximum penalty an automaker can incur for failure to meet
fleet fuel economy requirements. Unless individual automakers and the US light duty vehicle
fleet as a whole both consistently fail to meet fuel economy targets, no automaker will need to
pay these maximum penalties. Automakers will submit carry back plans if they miss the mark,
allowing "the following three model years to earn enough credits to make up for the deficit."
Furthermore, automakers will practice the averaging, banking, and trading methods allowed to
reduce their overall costs. As the US LDV fleet as a whole increases its fuel economy, the
market will allow individual automaker penalties to fall in step—that is, supply of credits will
increase and demand will decrease. This aligns well with regulatory goals. [OAR-2009-0472-
8732.1, p.5]
People's Republic of China:
We note that, it is the responsibility for EPA to protect public health and benefit, which is totally
independent of the responsibility of NHTSA improving the energy efficiency. Given that the fuel
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consumption of vehicle is calculated directly from the emission of CO2, as to the behavior that
violates the emission standard of the greenhouse gas (GHG) and Corporate Average Fuel
Economy (CAFE) standard at the same time, we think it is unreasonable that EPA and NHTSA
impose punishment respectively. Such kind of behavior is suggested to be punished only once by
one authority of the United States. [OAR-2009-0472-11269, p.3]
EPA Response:
Fleet Average Penalties
Manufacturer comments expressed concern about potential enforcement action for violations of
the greenhouse gas standards, and the circumstances under which EPA would impose penalties.
Manufacturers also suggested that EPA should adopt a penalty structure similar to the one in
place under CAFE. The California Air Resources Board (CARB) disagreed with the automobile
manufacturer comments and expressed their belief that "EPA took a reasonable and proper
approach."
The CAA specifies different civil penalty provisions for noncompliance than EPCA does,
providing for a range of potential penalties that are based on taking the relevant circumstances
and factors into consideration, as compared to the specified penalty amount under CAFE. This
structure has worked well in the past, without predefined penalties under the CAA, and EPA
expects it will also work well here. Manufacturers raised concern over noncompliance driven by
short-term market fluctuations, but the ability of manufacturers to generate credits or to rely on
future credit generation means short term market fluctuations can be addressed without leading
to noncompliance. In addition, EPA recognizes that it may be appropriate, should a
manufacturer fail to comply with the NHTSA fuel economy standards as well as the CC>2
standard 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 CC>2 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.33. The underlying principle of this penalty
factor is to operate as a safety mechanism when necessary to prevent injustice.34
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 31 l(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
33 In re Spang & Co.. 6 E.A.D. 226, 249 (EAB 1995)
34 B.J. Carney Industries. 7 E.A.D. 171, 232, n. 82 (EAB 1997).
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EPA Response to Comments
violator of penalties previously assessed for the same violation" when assessing penalties for
certain violations of Title I of the Act.
Method of Determining Non-Complying Vehicles
EPA received comments from the Alliance, regarding the method of determining non-complying
vehicles. The Alliance indicated that "EPA's proposed methodology for determining the number
of vehicles not in compliance is also problematic" and "inconsistent with the approach taken by
California's fleet average greenhouse gas regulation."
EPA proposed that manufacturers will report to EPA their fleet average and 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., and whether they were in
compliance with the fleet average standard under the terms of the regulations. EPA will review
the annual reports, figures, and calculations submitted by the manufacturer to determine any
nonconformance.
Each certificate, required prior to introduction into commerce, will be conditioned upon the
manufacturer attaining the CC>2 fleet average standard. If a manufacturer fails to meet this
condition and has not generated or purchased enough credits to cover the fleet average
exceedance following the three year deficit carry-forward, then EPA will review the
manufacturer's production for the model year in which the deficit originated and designate which
vehicles caused the fleet average standard to be exceeded.
EPA proposed that the vehicles that would be identified as nonconforming would come from the
most recent model year, and some comments pointed out that this was inconsistent with how the
NLEV and Tier 2 programs were structured. EPA agrees with these comments and is finalizing
an enforcement structure that is essentially identical to that for existing programs. 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. 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 produced 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.
EPA does not agree that it is more appropriate, as Ford suggests, to designate the vehicles not in
conformance as those that are furthest from their specific GHG target values. The methodology
EPA proposed has a very specific purpose: to penalize a sufficient number of vehicles such that
the GHG deficit is "offset" by vehicles subject to enforcement action. For example, if the deficit
subject to enforcement action is 10,000 grams/mile of CC>2 in model year 2016, and the
manufacturer's fleet average standard in that year was 250 grams/mile, the number of vehicles to
be penalized would be 10,000 +• 250, or 40 vehicles. Since the highest emitters from that model
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year will, by definition, be above the average of 250 grams/mile, then penalizing those will
guarantee that at least 10,000 grams/mile will be addressed by the penalty. (E.g., if those highest
emitters emit 300 grams/mile, then penalizing 40 of them will "offset" 40 x 300, or 12,000
grams/mile.) Using Ford's suggested method will not guarantee that the appropriate excess
emissions will be addressed by the penalty. For example, it is possible that those vehicles that
are farthest from their target values are still relatively low-emission vehicles. If EPA chose to
use Ford's methodology, then it's possible that vehicles that emit 240 grams/mile could be the
farthest from their target value and thus selected to be penalized, but if EPA penalized 40 of
those vehicles only 9600 grams/mile (40 x 240) of the deficit would be offset. This would be a
failure of the fundamental intent of the methodology to remove certificates such that the deficit is
fully accounted for, and thus EPA rejects Ford's suggestion.
Recall
The Association of International Automobile Manufacturers (AIAM) recommended that EPA
should not adopt recall as an enforcement mechanism for failure to meet both the in-use (model
type) GHG emission standard and the corporate average GHG emission standard. Regarding
noncompliance with the corporate average GHG standard, AIAM believes that the Clean Air Act
gives EPA the discretion to forgo ordering a recall where the failure to meet an emission
standard is the result of fleet imbalance and remedy the nonconformity in ways that do not
include recalling its fleet. Fleet imbalance could occur due to factors which may be outside of a
manufacturer's control, e.g. where the manufacturer sells more vehicles with CO2 levels above
the footprint target than they sell vehicles with CO2 levels below the footprint target for the
respective models). AIAM, thus urged "EPA to specify those limited circumstances under which
recall would be appropriate for noncompliance with its greenhouse gas emissions requirements."
Hyundai Motor Company commented that if an in-use failure can be directly tied to the
malfunction of a part or component, that enforcement action should follow the existing processes
for criteria pollutants (e.g. the recall process). Hyundai also suggested that "in the event that an
in-use failure is confirmed, EPA should provide the manufacturer with the option to readjust the
fleet average of the failing model year" (i.e. to adjust the credit or debit balance accordingly to
account for the failing in-use vehicles).
EPA agrees with AIAM that recall is not a good mechanism for dealing with noncompliance of
the corporate average standard. However, recall can be an effective tool for enforcement of the
in-use standards. There are a number of problems that can occur to a specific vehicle model that
could cause noncompliance with the appropriate in-use standard and that could be repaired, such
as a defect in a part or component, a misbuild, or an improperly functioning new technology.
Since these types of problems are within a manufacturer's control, unlike a fleet imbalance due
to unanticipated sales fluctuations, a recall would be an appropriate and effective mechanism for
addressing noncompliance with the in-use standard. EPA agrees with Hyundai's comment that if
an in-use failure can be directly tied to the malfunction of a part or component, the appropriate
enforcement action should be a recall following the recall process for criteria pollutants. EPA
would also argue that recall would be an appropriate enforcement tool for misbuild situations
where an incorrect part, component. Software, or calibration was installed in a vehicle resulting
in a failure of the in-use standard.
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EPA Response to Comments
Finally, EPA disagrees with Hyundai's suggestion that manufacturers be given the option to
readjust their fleet average to account for failing the vehicle model in lieu of a recall action. This
would be inconsistent with EPA's other rules. For example, in the Tier 2 program, if a
manufacturer had a test group that were to fail the Bin 5 emission standard, it would be required
to recall the vehicles and fix the problem that caused the noncompliance. They would not be
allowed to retroactively reassign the vehicle to a higher bin and recalculate their fleet average
(which is fundamentally what Hyundai is suggesting). The purpose of a recall is to fix a problem
with a vehicle that causes an emission noncompliance. This means a defective part or an
incorrect part or calibration, not a fleet imbalance due to unanticipated sales fluctuations.
Allowing a vehicle model that exceeded the in-use standard as a result of a fixable problem to
continue to operate in the field would contradict the purpose of the in-use standard. Therefore,
the suggestion of readjusting the fleet average in lieu of recall is not an appropriate option and
was not considered by EPA.
5.10.6 Prohibited Acts in the CAA
Organization: No comments received
5.10.7. Other Certification Issues
Organization: Ford Motor Company
Honda Motor Company
Ferrari S.p.a
Association of International Automobile Manufacturers (AIAM)
Alliance of Automobile Manufacturers (Alliance)
NGV America
State of New Jersey
Automotive Aftermarket Industry Association (AAIA); et.al
New York State Department of Environmental Conservation
Comment:
Ford Motor Company:
In addition, Ford agrees that additional GHG on-board diagnostic (OBD) monitoring is not
appropriate at this time. OBD was envisioned as a means of monitoring devices affecting criteria
pollutants that are principally controlled through engine controls and after-treatment devices.
CO2 performance, on the other hand, is influenced by a wide variety of parameters. Malfunctions
that impact engine efficiency, such as virtually all faults that affect fuel system control, EGR
control, variable valve timing control, engine cooling system operation, cylinder misfire, etc. are
already monitored by OBD. [OAR-2009-0472-7082.1, p. 17]
Honda Motor Company:
In an existing regulation EPA requires PHEVs to be equipped with a "useful life indicator for the
battery" when the range deteriorates to less than 75 percent of its initial range. On the other hand,
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in the NPRM, EPA states: "EPA does not plan to require CC>2 emissions as one of the applicable
standards required for the OBD monitoring threshold." We agree that more research should be
done regarding the need and feasibility of OBD monitoring, yet the PHEV useful life indicator
seems to be a kind of OBD monitoring. As such, Honda believes that EPA should take this
opportunity to clarify its intent with respect to the PHEV useful life indicator. [NHTSA-2009-
0059-0095.1, p.10-11]
Ferrari S.p.a:
We support the proposal that at this time EPA does not require CO2 emissions as one of the
applicable standards required for the OBD monitoring threshold. It is necessary to gain
knowledge regarding the deterioration, if any, of the systems and devices that affect the fuel
economy and the CO2 emissions to define, if strictly necessary, specific requirements for the
OBD system, working closely with CARB. No additional and unnecessary burdens should be
adopted for the on-board diagnostic system. [OAR-2009-0472-7214.1 p.5]
We agree with EPA that 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, and therefore the compliance is assured also in these
conditions. [OAR-2009-0472-7214.1 p.5]
Association of International Automobile Manufacturers (AIAM):
It would be premature for EPA to adopt a requirement for monitoring carbon dioxide emissions
at this time. As EPA observes, it is not clear yet whether such monitoring is feasible. See
preamble at 49574. [OAR-2009-0472-7123.1, p.ll]
Alliance of Automobile Manufacturers (Alliance):
OBD for CO2, N2O and CH4 (Proposed regulations in 40 C.F.R. 86.1806-05)
EPA has proposed to eliminate CO2 as a consideration for OBD monitoring. [OAR-2009-0472-
6952.1, p.52]
Recommendation:
We agree with EPA's decision to eliminate CO2 as a consideration for OBD monitoring. We
encourage EPA to consider eliminating CH4 and N2O from OBD monitoring as well. Adding
testing for CH4 and N2O would significantly increase the OBD development burden, without
significant benefit, since any malfunctions that increase CH4 and N2O emissions will more than
likely be caught by current OBD systems. (This issue could also be resolved by EPA deciding to
eliminate the CH4 and N2O standards as mentioned above in issue 1 Emission Standards.) [OAR-
2009-0472-6952.1, p.52]
NGVAmerica:
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According to EPA's proposal, the new regulations, including the proposed methane cap, would
not cover small businesses that produce aftermarket alternative fuel systems. However, the
regulations would cover large businesses that produce aftermarket systems. We believe that all
aftermarket conversion system manufacturers should be exempt. As currently proposed, the
regulations could actually discourage some large businesses from continuing to offer aftermarket
conversion systems with the result that only small businesses will continue to do so. [OAR-2009-
0472-11310, p. 3]
State of New Jersey:
The USEPA indicates in the proposal that it plans to evaluate on-board diagnostic (OBD)
monitoring technology with regard to monitoring greenhouse gas related emissions systems and
components, and use that evaluation to make a determination as to whether or not to include
greenhouse gas related emissions components as part of the OBD requirements in a future
regulatory action. The Department supports the inclusion of greenhouse gas emissions-related
components as part of the OBD requirements. [OAR-2009-0472-7109.1, p. 10]
Automotive Aftermarket Industry Association (AAIA):
We are also particularly concerned that since the Agency is proposing not to expand the systems
monitored by the OBD computer, it will be uncertain to the car companies and the repair
industry whether information needed to repair and maintain the technologies needed to meet this
proposal will be shared with the independent aftermarket. If past history is any indication, the
vehicle manufacturers, for competitive and other reasons, will be very reluctant to share this
information absent government guidelines. [OAR-2009-0472-7057.1, p.3]
We are concerned that the current service information rule may be limited to parts and systems
covered by the OBD system. If EPA does not require monitoring of these additional systems
which affect greenhouse gas emissions by the OBD system, this rule might be the only
proceeding that will consider access to service information for these systems. Therefore, the
aftermarket strongly urges that the Agency include in this rulemaking provisions so that
"emissions-related information" which may be accessed for service and repair would include
information for systems on vehicles that impact global warming emissions whether or not they
are monitored by the OBD computer. [OAR-2009-0472-7057.1, pp.3-4]
New York State Department of Environmental Conservation:
On Board Diagnostics
We support EPA's decision to not require OBD systems to monitor for CO2 emissions. As EPA
notes, there should be relatively little deterioration. Additionally, failures that would lead to
major CO2 emission increases would most likely be accompanied by operating problems that
would require repair. Increased fuel costs would also encourage repair. Conditions which trigger
the Malfunction Indicator Lamp (MIL) too easily could reduce the influence of the MIL light on
consumer behavior, eroding the real emissions reductions currently attained when repairs are
made based on OBD warnings. [OAR-2009-0472-7454, p.4]
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Automotive Aftermarket Industry Association (AAIA)
While not mentioned in this proposal, vehicle maintenance is extremely important to improving
fuel economy and reducing greenhouse gas emissions for the nation's vehicle fleet. This
importance is supported by information available on the Department of Energy website,
www.fueleconomy.gov. [OAR-2009-0472-7057.1, p.l]
According to the DOE website:
Fixing a car that is noticeably out of tune or has failed an emissions test can improve its gas
mileage by an average of 4 percent, though results vary based on the kind of repair and how well
it is done. Fixing a serious maintenance problem, such as a faulty oxygen sensor, can improve
your mileage by as much as 40 percent. [OAR-2009-0472-7057.1, p.l]
The site further states that keeping tires inflated to proper pressure can improve gas mileage by
around 3.3 percent and using the proper oil for a vehicle can provide a fuel economy benefit of
1-2 percent. [OAR-2009-0472-7057.1, p.l]
Based on these numbers, we estimate (see attachment) that if all car owners regularly took the
above actions to maintain their vehicle, the nation would save 12 billion gallons of gasoline per
year. The reductions in petroleum use would translate into a savings to car owners at the pump of
$30 billion per year and a reduction of 116 million tons of CO2 equivalent every year. [OAR-
2009-0472-7057.1, p.2]
The estimate for potential greenhouse gas emission reductions from proper maintenance
compares favorably with EPA estimates that this proposal will result in approximately 950
million metric tons of ton of carbon dioxide equivalent emissions reductions over the life time of
vehicles sold in model years 2012 through 2016. In fact, absent good maintenance, it is very
unlikely that EPA will realize the global warming emissions reduction goals of this proposal.
[OAR-2009-0472-7057.1, p.2]
Please be assured that the independent vehicle repair industry is committed to working with EPA
and the Department of Transportation to ensure that car owners have access to the repair services
necessary to ensure that their vehicles operate at their peak efficiency, thus reducing global
warming emissions and depletion of our energy resources. However, unless action is taken by
EPA as part of this rulemaking, the aftermarket is concerned that our industry will not have
access to the information, tools and software needed to work on the technology that will be
utilized by the manufacturers to meet the standards developed in this proposal. [OAR-2009-
0472-7057.1, p.2]
There is little doubt that the changes to vehicle technology that will be required by the September
28, 2009 proposed rule will be extensive. While it is impossible to predict the extent of
technology changes that will occur as a direct result of this rule, it is likely that air conditioning
systems, braking, lubricants, turbochargers, and fuel injection systems will all be affected. These
changes will mean that the information needed to ensure that these systems are maintained
properly also will need to be available to technicians that will maintain them. Of course, many of
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the systems that impact fuel economy such as the oxygen sensor and catalytic converter are
already covered by EPA's service information availability rules. However, many changes such as
those impacting braking and air conditioning likely are not covered. [OAR-2009-0472-7057.1,
p.3]
In addition, tire pressure sensors while required by the National Highway Traffic Administration
(NHTSA) for safety reasons, also play an important role in ensuring that vehicles are operating at
peak fuel efficiently. As our comments indicated at the outset, an improperly inflated tire can
mean a fuel efficiency loss of 3.3 percent. Yet, there is no requirement for car companies to
make available to the independent service industry any information necessary to ensure that the
tire pressure sensor is working properly after a tire is changed or repaired. [OAR-2009-0472-
7057.1, p.3]
If the Agency is planning to revise the definition of emissions to include greenhouse gas
emissions, we believe that EPA is also obligated to ensure that the service information rule
covers all vehicle systems that impact emissions of greenhouse gases. In developing this rule,
EPA must look not only at new technologies that will be utilized on internal combustion engines,
but also at hybrid systems where items such as regenerative braking might not have been
included under the current service information rule, but are essential to ensuring that the hybrid
vehicles operate properly. [OAR-2009-0472-7057.1, p.3]
EPA Response:
Onboard Diagnostic (OBD) Requirements
The light-duty on-board diagnostics (OBD) regulations require manufacturers to detect and
identify malfunctions in all monitored emission-related powertrain systems or components.35
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, NOX, and PM. EPA did not propose that CO2 emissions
would become one of the applicable standards required to be monitored by the OBD system.
EPA did not propose CO2 become an applicable standard for OBD because it was 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 did not
have data on the feasibility or effectiveness of monitoring various emission systems and
components for CO2 emissions and did not believe that it would be prudent to include CO2
emissions without such information.
EPA did not address whether N2O or CH4 emissions should become applicable standards for
OBD monitoring in the proposal. Several manufacturers felt that EPA's silence on this issue
35
40 CFR 86.1806-04
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implied that EPA was proposing that N2O and CH4 emissions become applicable OBD standards.
They commented that EPA should not include them as part of OBD. They felt that adding N2O
and CH4 would significantly increase OBD development burden, without significant benefit,
since any malfunctions that increase N2O and CH4 would likely be caught by current OBD
system designs. EPA agrees with the manufacturer's comments on including N2O and CH4 as
applicable standards. Therefore, at this time, EPA is not requiring CO2, N2O, and CH4 emissions
as one of the applicable standards required for the OBD monitoring threshold. EPA plans to
evaluate OBD monitoring technology, with regard to monitoring these GHG emissions-related
systems and components, and may choose to propose to include CO2, N2O, and CH4 emissions as
part of the OBD requirements in a future regulatory action.
Plug-in Hybrid Useful Life Indicator for the Battery
Honda commented that existing EPA regulations (40 CFR 86.1806-05(b)(8)(ii)) "require plug-in
hybrid vehicles (PHEVs) to be equipped with a "useful life indicator for the battery" when the
range deteriorates to less than 75 percent of its initial range. On the other hand, in the NPRM,
EPA states: "EPA does not plan to require CO2 emissions as one of the applicable standards
required for the OBD monitoring threshold." Honda recommended that "EPA should take this
opportunity to clarify its intent with respect to the PHEV useful life indicator."
EPA believes that it is too early in the development of PHEVs to address this issue at this time.
We agree to work with the Industry and interested stakeholders (including the California Air
Resources Board) to assess the need for this requirement. Should the need for such a device
change, regulation changes may be warranted.
Service Information Availability
The GHG rule does not change EPA's service information regulations requiring manufacturers to
make available any and all emissions-related information. EPA will continue to monitor the
emissions-related service information that manufacturers make available to meet existing
regulations. As part of EPA's continuing monitoring, the agency would consider whether any
additional service information requirements are necessary as an indirect consequence of the
promulgation of GHG standards
5.10.8. Miscellaneous Revisions to Existing Regulations
Organization: Alliance of Automobile Manufacturers (Alliance)
Comment:
Alliance of Automobile Manufacturers (Alliance):
Fuel Economy (FE) Data (Proposed regulations in 40 C.F.R. 600.113-08)
EPA has proposed to calculate FE based on deteriorated emission data. This proposal creates
several issues:
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EPA Response to Comments
• This is a fundamental change to the way FE has been calculated. All prior FE calculations and
standards (gas guzzler, CAFE) have been based on emission data that has not been deteriorated.
• FE calculations include the following constituents depending on the type of fuel that is used;
total hydrocarbons (HC), carbon monoxide (CO), methane (CH4), non-methane hydrocarbons
(NMHC), methanol (CH3OH), formaldehyde (HCHO), ethanol (C2H5OH) and acetaldehyde
(C2H4O). While some of these constituents currently have useful life standards and already have
deterioration factors, some do not. Therefore, manufacturers may be required to rerun all forms
of durability vehicle testing in order to establish DFs for these additional constituents.
• The use of deteriorated emission data contradicts the requirement to downward adjust FE
values for test vehicles whose system miles have exceeded 6200 miles.
• This change will require significant changes to existing computer programs that were designed
to calculate FE via the traditional method. [OAR-2009-0472-6952.1, pp.49-50]
Recommendation:
Because the current emission durability programs were designed to predict traditional emission
deterioration and not the effects that vehicle aging may have on FE, the use of deteriorated
emission data in the FE calculation can lead to false and/or inconsistent results based on the
manufacturer's choice of durability program. Requiring the use of deteriorated data will penalize
those manufacturers who choose to utilize a durability program that develops DFs versus "aged
component" testing. When testing with aged components, the only components that are being
aged are those that affect the current criteria pollutants. The dynamometer load on the vehicle
does not change whether the vehicle is being tested with 4K or 120K aged components;
therefore, the amount of fuel consumed during the test, theoretically, will not change. Because
the same amount of fuel is being consumed, the increase in HC and CO emissions due to the use
of deteriorated emission components is offset by a reduction in the emissions of CO2. So, with
aged component testing the FE result will be the same as the result that is achieved on a low
mileage test. On the other hand, if a manufacturer utilizes DFs, the HC and CO values will be
deteriorated without a corresponding decrease in CO2, thereby penalizing the FE result. [OAR-
2009-0472-6952.1, p.50]
Furthermore, EPA is on record stating that there is no reason to believe that CO2 emissions will
show an increase as the vehicle ages as would be expected with criteria pollutants. Therefore,
requiring manufacturers to measure and report in-use CO2 emissions that can be predicted from
measurements made at vehicle certification would add unnecessary burden that offered little or
no additional value. [OAR-2009-0472-6952.1, p.50]
In order to avoid these issues, the Alliance recommends that EPA remove the requirement to use
deteriorated emission data in the carbon balance equations and retain the current method for
calculating FE. [OAR-2009-0472-6952.1, p.50]
EPA Response:
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Use of Deterioration Factors in Fuel Economy Calculations
EPA proposed to calculate CREE emissions based on deteriorated emissions data for the
manufacturer's end-of-year CREE emission level and also to determine the in-use CREE
emission standard which is applicable to each manufacturer's specific models. EPA did not
intend to propose to calculate fuel economy based on deteriorated emissions data, however EPA
proposed regulations (74 FR 49772, September 28, 2009) suggested otherwise, as follows:
(g) Calculate separate FTP, highway, US06, SC03 and Cold
temperature FTP fuel economy from the grams/mile values for total HC, CO,
CO2 and, where applicable, CH3OH, C2H5OH, C2H4O, HCHO, NMHC and
CH4, and the test fuel's specific gravity, carbon weight fraction, net heating
value, and additionally for natural gas, the test fuel's composition.
(1) If the emission values (obtained per paragraph (a) through (e) of
this section, as applicable) were obtained from testing with aged exhaust
emission control components as allowed under 86.1823-01, then these test
values shall be used in the calculations of this section.
(2) If the emission values (obtained per paragraph (a) through (e) of
this section, as applicable) were not obtained from testing with aged exhaust
emission control components as allowed under 86.1823-01, then these test
values shall be adjusted by the appropriate deterioration factor determined
according to 86.1823-01 before being used in the calculations of this section.
[Emphasis added]
The Alliance recommended that "EPA remove the requirement to use deteriorated emission data
in the carbon balance equations and retain the current method for calculating FE."
EPA has corrected this oversight in the final rule.
5.10.9. Warranty, Defect Reporting, and Other Emission-related Components Provisions
Organization: Alliance of Automobile Manufacturers (Alliance)
Toyota Motor North America
State of New Jersey
Hyde, James (citizen)
Comment:
Alliance of Automobile Manufacturers:
Warranty Requirements
Emission warranty requirements are not appropriate for mobile air conditioners under the
proposed rule, since in-use performance of the MAC system at levels comparable to a new
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EPA Response to Comments
vehicle is not needed to achieve the emission levels targeted by EPA. [OAR-2009-0472-6952.1,
p.28]
Warranty requirements were established for tailpipe pollutants, such as CO and NOx, because
emissions of those pollutants would rise significantly if the pollution control devices, such as
catalytic converters, fail. This would typically not be the case for MAC components. First,
consider the case of indirect emissions from fuel consumed to power the MAC. In the vast
majority of MAC failure modes, the system stops cooling and ceases operation — either because
the critical moving parts stop moving or because the system is switched off— thereby actually
reducing the indirect CO2 emissions. [OAR-2009-0472-6952.1, p.28]
Emission warranties should not be required in relation to the indirect MAC emissions. The most
significant item in EPA's proposed warranty coverage, the compressor, can cost over $1,000 to
replace. It seems paradoxical and disproportionate to impose such high costs in an emissions
recall scenario to replace this component, and thereby actually increase indirect emissions.
Although manufacturer warranties may typically already be longer than the two-year period
proposed by EPA in this NPRM, in principle there is no sound basis for emission warranty
coverage to safeguard indirect emission levels, since indirect emissions go down when the
system fails. Finally, it is worth noting that proper functioning of these parts is not actually
required to achieve the emissions levels set by EPA. [OAR-2009-0472-6952.1, p.28]
Regarding direct emissions of refrigerant, there is only a negligible environmental impact if
refrigerants below a GWP of 150 are released from the system, even if the entire charge,
typically between 1-2 pounds, is released. Therefore, emission warranty coverage of joints,
hoses, seals, etc. is certainly not needed to protect the environmental gains from application of
low-GWP refrigerants. While the ultimate costs of the new low-GWP refrigerants are not known
with certainty, they are expected to be at a level that would severely discourage motorists from
repeatedly recharging a system with significant unrepaired leaks (e.g., any cost of over $30 per
pound). Therefore, there is no emission-based reason to mandate warranty coverage to prevent
leaks on low-GWP systems, and the potential costs of an emission recall would be
disproportionate to any environmental impact of leakage of these refrigerants. [OAR-2009-0472-
6952.1, p.28]
Any emission warranty requirements should specifically exclude emission warranty coverage for
systems using a refrigerant with a GWP below 150. This is consistent with EPA's position that
no emissions warranty is required for zero emissions vehicles. [OAR-2009-0472-6952.1, p.28]
The sole remaining MAC environmental impact would be from refrigerant leakage in the current
R-134a systems. Given the prospect for fairly rapid adoption of the low-GWP refrigerants in new
vehicles during the time frame of this regulation, this would appear to be a very small basis on
which to create an entirely new area of emissions warranty coverage and all the associated
elements of an in-use program for air conditioners. EPA should not create a program of warranty
coverage for MAC components in pursuit of such a small and temporary emissions impact.
[OAR-2009-0472-6952.1, p.28]
Toyota:
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Air Conditioning systems and related components have not previously been covered under the
CAA emission warranty provisions. In recognition that the proposed A/C related CO2 emission
standards are dependent upon the proper functioning of components on the A/C system, EPA
proposes that the components of these systems be included under the CAA emission warranty
provisions, with a warranty of 2 years / 24,000 miles. [OAR-2009-0472-7291, p.31]
Overall, Toyota believes that emission warranty requirements are not appropriate for mobile air
conditioners under the proposed rule. Emission warranty requirements were established for
tailpipe pollutants because emissions of those pollutants would rise significantly if the pollution
control devices, such as catalytic converters would fail. This is not the case for MAC systems
since in-use performance of the MAC system at levels comparable to that of a new vehicle is not
needed to achieve the emission levels targeted by EPA. Additionally, Emission warranty for A/C
systems is unnecessary because manufacturer warranties typically already are longer than the
two-year period proposed by EPA in this NPRM. [OAR-2009-0472-7291, p.31]
With regards to direct emissions resulting from system leakage, there is only a negligible
environmental impact if refrigerants below a GWP of 150 are released from the system.
Therefore, emission warranty coverage of joints, hoses, seals, etc. would be unnecessary to
protect the environmental gains from application of low-GWP refrigerants. Consequently, there
would be no emission-based reason to mandate warranty coverage to prevent leaks on low-GWP
systems, and the potential costs of an emission recall would be disproportionate. [OAR-2009-
0472-7291, p.32]
State of New Jersey:
The Department supports the USEPA proposal to include components on the motor vehicle air
conditioning system, such as rings, fittings, compressors, and hoses, under the Clean Air Act's
section 207(a) emission warranty provisions. [OAR-2009-0472-7109.1, p.9]
Mr. James Hyde (citizen):
Warrantee Issues: CAA §207 addressed 'compliance of vehicles and engines in actual use'; and
includes warranty provisions. Section 207(a) includes warrantee protection for vehicle owners
against defects in 'parts, devices, or components designed for emission control. Section 207 (b)
includes warrantee protection for vehicle owners against 'any penalty or other sanction' resulting
from failing a emissions test due to a §207(a) warranted item. In the Preamble [po 243] EP A
states that it is proposing to 'a number of components of theAlC system, such as rings, fittings,
compressors, and hoses' be included under §207(a). Language to effect this, however, does not
appear in the proposed regulatory changes. EPA also requests 'comment as to whether any other
parts or components should be designates as 'emission related parts' subject to warranty and
defect reporting provisions under this proposal.' [Preamble p. 244] [OAR-2009-0472-7258.1, pp.
3-4]
EPA Response:
Background Information
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EPA Response to Comments
As outlined in the proposal, Section 207(a)(l) of the Clean Air Act (CAA) requires
manufacturers to provide a design/defect warranty that warrants a vehicle is designed to comply
with emission standards at the time of sale and will be free from defects that may cause
noncompliance over the specified warranty period which is 2 years/24,000 miles (whichever is
first) or, for major emission control components, 8 years/ 80,000 miles. The warranty covers
parts of the emissions control system. The proposal explained that under the greenhouse gas rule,
this coverage would include compliance with the proposed CC>2, CH4, and N2O standards. The
proposal did not discuss the CAA Section 207(b) performance warranty.
EPA proposed to include air conditioning system components under the CAA section 207(a)
emission warranty in cases where manufacturers use air conditioning leakage and efficiency
credits to comply with the proposed fleet average CC>2 standards. The warranty period of 2 years/
24,000 miles would apply. EPA requested comments as to whether any other parts or
components should be designated as "emission related parts" and thus subject to warranty and
defect reporting provisions under this proposal.
The Alliance of Automobile Manufacturers (Alliance), Toyota and the State of New Jersey
provided comments. The State of New Jersey supported EPA's proposal to include motor
vehicle air conditioning system components under the emission warranty provisions. Both the
Alliance and Toyota commented that emission warranty requirements are not appropriate for
mobile air conditioners because 1) in-use performance of the air conditioning system at levels
comparable to a new vehicle is not needed to achieve the emission levels targeted by EPA and 2)
manufacturer general warranties already cover air conditioning systems and are typically longer
than the two-year/24,000 mile proposed emissions warranty period.
Regarding direct emissions (refrigerant leakage), the Alliance and Toyota commented that
warranty requirements are unnecessary for refrigerants with a global warming potential (GWP)
below 150 because the environmental impact is negligible even if refrigerants are released from
the system. Regarding indirect emissions (fuel consumed to power the air conditioning system),
the Alliance commented that EPA should not require warranty coverage of the air conditioning
system because in the vast majority of air conditioning failure modes, the system stops cooling
and ceases operation — either because the critical moving parts stop moving or because the
system is switched off— thereby actually reducing the indirect CO2 emissions.
EPA received no comments regarding 1) other parts or components which should be designated
as "emission related parts" subject to warranty requirements, 2) defect reporting requirements,
or 3) other requirements associated with warranty and defect reporting requirements (e.g.,
voluntary emission-related recall reporting requirements, performance warranty requirements,
voluntary aftermarket parts certification requirements or tampering requirements.
Defect Warranty
The defect warranty requirements are provided in Section 207 of the Act. There are currently no
defect warranty regulations. Congress provided under Section 207(a) of the CAA that emission-
related components shall be covered under the 207(a) defect warranty for the warranty period
outlined in section 207(i) of the CAA. For example, section 207(a) reads in part:
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"... .the manufacturer of each new motor vehicle and new motor vehicle engine shall
warrant to the ultimate purchaser and each subsequent purchaser that such vehicle or
engine is (A) designed, built and equipped so as to conform at the time of sale with
applicable regulations under section 202, and (B) free from defects in materials and
workmanship which cause such vehicle or engine to fail to conform with applicable
regulations for its useful life (as determined under sec. 202(d)). In the case of vehicles
and engines manufactured in the model year 1995 and thereafter such warranty shall
require that the vehicle or engine is free from any such defects for the warranty period
provided under subsection (i)."
Section 207 (i) reads in part:
"(i) Warranty Period.—
(1) In General.—For purposes of subsection (a)(l) and subsection (b), the
warranty period, effective with respect to new light-duty trucks and new light-
duty vehicles and engines, manufactured in model year 1995 and thereafter,
shall be the first 2 years or 24,000 miles of use (whichever first occurs), except
as provided in paragraph (2). For the purposes of subsection (a)(l) and
subsection (b), for other vehicles and engines the warranty period shall be the
period established by the Administrator by regulation (promulgated prior to the
enactment of the Clean Air Act Amendments of 1990) for such purposes
unless the Administrator subsequently modifies such regulation.
(2) In the case of a specified major emission control component, the warranty
period for new light-duty trucks and new light-duty vehicles manufactured in
the model year 1995 and thereafter for purposes of subsection (a)(l) and
subsection (b) shall be 8 years or 80,000 miles of use (whichever first occurs).
As used in this paragraph, the term 'specified major emission control
component' means only a catalytic converter, an electronic emissions control
unit, and an onboard emissions diagnostic device, except that the
Administrator may designate any other pollution control device or component
as a specified major emission control component if—
(A) the device or component was not in general use on vehicles and engines
manufactured prior to the model year 1990; and (B) the Administrator
determines that the retail cost (exclusive of installation costs) of such device or
component exceeds $200 (in 1989 dollars, adjusted for inflation or deflation as
calculated by the Administrator at the time of such determination "
Thus, the CAA provides the basis of the warranty requirements contained in today's final rule,
which will cover "emission related parts" necessary to provide compliance with CC>2, CH4, and
N2O standards. Emission related parts would include those parts, systems, components and
software installed for the specific purpose of controlling emissions or those components,
systems, or elements of design which must function properly to assure continued vehicle
emission compliance, including compliance with CC>2, CH4, and N2O standards; (similar to the
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EPA Response to Comments
current definition of "emission related parts" provided in 40 CFR 85.2102(14) for performance
warranty requirements). For example, today's action will extend defect warranty requirements to
emission-related components on advanced technology vehicles such as cylinder deactivation
components or batteries used in hybrid-electric vehicles.
Under today's rule, EPA will extend the defect warranty requirement to emission-related
components necessary to meet CC>2, CH4, and N2O standards, including emission-related
components which are used to obtain optional credits for 1) certification of advanced technology
vehicles, 2) credits for reduction of air conditioning refrigerant leakage, 3) credits for improving
air conditioning system efficiency, 4) credits for off-cycle CC>2 reducing technologies, and 5)
optional early credits for 2009-2011 model year vehicles outlined in the provisions of 40 CFR
86.1867-12 (which are required to be reported to EPA after the 2011 model year).
Regarding the comments received by the Alliance and Toyota, that warranty coverage is not
needed for air conditioning components, EPA believes that the Clean Air Act requires warranty
coverage on components used to demonstrate compliance with the emission standards, including
components used in the optional credit programs for reduction of air conditioning refrigerant
leakage and air conditioning efficiency improvements. EPA does not have the discretion to
forgo warranty requirements by regulation in today's final rule. Thus, the Agency is adopting
defect warranty requirements for air conditioning components as proposed. At the same time, if a
defect in materials or workmanship does not cause an increase in emissions, then there would not
appear to be a breach of the warranty.
Effective date of warranty for components used to obtain Early Credits
Regarding the defect warranty for emission-related components used to obtain optional early
credits for 2009-2011 vehicles, the defect warranty should provide coverage for these
components at the time the early credits report is submitted to EPA (e.g., no later than 90 days
after the end of the 2011 model year). For example, the defect warranty for early credit
components does not have to apply retroactively (before the manufacturer declares the credits to
EPA). The Agency believes this approach is reasonable, because 1) manufacturer's early credit
plans may not be finalized until after vehicles have been produced; 2) manufacturers will be
provided satisfactory lead time to provide warranty requirements to customers; and 3) the
manufacturer's basic (bumper-to-bumper) warranty for air conditioning and other early credit
components are typically longer than the two-year/24,000 mile proposed warranty period which
will be applicable to most early credit components.).
Performance Warranty
EPA did not propose any changes to the current performance warranty requirements, because the
performance warranty preconditions outlined in section 207(b) of the CAA have not been
satisfied. For example, section 207(b) of the CAA comes into play if EPA issues performance
warranty short test regulations and determines that there are inspection facilities available in the
field to determine when vehicles do not comply with greenhouse gas emission standards. Once
EPA issues performance warranty short test regulations, then the CAA performance warranty
provisions require the manufacturer to pay for emission-related repairs if a vehicle is properly
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maintained and used, and fails the short test and is required to repair the vehicle. Currently the
provisions of 85.2207 and 85.2222 provide performance warranty short test (commonly called an
inspection and maintenance or I/M test). The provisions of 85.2207 and 85.2222 provide an I/M
test procedure and failure criteria based on an inspection of the onboard diagnostic (OBD)
system of the vehicle. The OBD inspection procedure in 85.2222 is currently used in most areas
of the country where I/M tests are required. For example, a vehicle fails the OBD test procedure
outlined in 85.2222 if the vehicle's MIL is commanded to be "on" during the I/M test procedure.
Although most areas of the country which require I/M testing use the OBD test procedures
outlined in 40 CFR 85.2207 and 85.2222, the NPRM did not propose that the OBD system
would be required to monitor CO2, CFL; or N2O emission performance, ref. 74 FR 49574 and 74
FR 49755. Therefore, the performance warranty preconditions in section 201(b) of the CAA are
not currently in effect for greenhouse gas CO2 emissions. The performance warranty continues
to apply for criteria pollutants but does not apply for greenhouse emissions.
Defect Reporting and Voluntary Emission-related Recall Reporting Requirements
EPA did not propose any changes to the current defect reporting and voluntary emission-related
recall reporting requirements outlined in the provisions of 40 CFR 85.1901-1909. Although
EPA requested comments, we did not receive any comments on defect reporting and voluntary
emission-related recall reporting requirements. Current regulations require manufacturers to
submit a defect report to EPA whenever an emission-related defect exists in 25 or more in-use
vehicles or engines of the same model year. The defect report is required to be submitted to EPA
within 15 working days of the time the manufacturer become aware of that a defect affects 25 or
more vehicles. Current regulations require manufacturers to submit to EPA voluntary emission-
related recall reports within 15 working days of the date when owner notification begins.
Similar to the design/defect warranty requirements outlined above, the Agency believes that as
proposed, defect reporting and voluntary emission-related recall reporting requirements would
apply to emission-related components necessary to meet CO2, CH4, and N2O standards for the
useful life of the vehicle, including emission-related components which are used to obtain
optional credits for 1) certification of advanced technology vehicles, 2) credits for reduction of
air conditioning refrigerant leakage, 3) credits for improving air conditioning system efficiency,
and 4) credits for off-cycle CO2 reducing technologies, and 5) optional early credits for 2009-
2011 model year vehicles outlined in the provisions of 40 CFR 86.1867-12 (which are required
to be reported to EPA after the 2011 model year). For early credit components, defect reporting
requirements and voluntary emission-related recall reporting requirements become effective at
the time the early credits report is submitted to EPA (e.g., no later than 90 days after the end of
the 2011 model year).
The final rule includes a minor clarification to the provisions of 40 CFR 85.1902 (b) and (d) to
clarify that beginning with the 2012 model year, manufacturers are required to report emission-
related defects and voluntary emission recalls to EPA, including emission-related defects and
voluntary emission recalls related to greenhouse gas emissions (CH4, N2O and CO2).
5.10.10. Light Vehicles and Fuel Economy Labeling
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Organization: General Motors
Ford Motor Company
Honda Motor Company
Association of International Automobile Manufacturers (AIAM)
Alliance of Automobile Manufacturers (Alliance)
Toyota Motor North America
Natural Resources Defense Council
International Council on Clean Transportation
National Automobile Dealers Association (NADA)
State of New Jersey
New York State Department of Environmental Conservation
Automotive Aftermarket Industry Association (AAIA); et.al
Fisker Automotive, Inc.
Chew, Yuli
Comments:
General Motors:
GM supports the use of individual fleet utility factors (per SAE J1711 draft procedures) for
calculating the fuel economy label for advanced technology vehicles. In addition, GM supports
inclusion of metric(s) on the Monroney label that are easily understandable and meaningful to
the average consumer. In this regard, GM recently shared consumer clinic research with EPA
staff that included the feedback on such consumption metrics as "gallons/100 miles" and "$/100
miles". The use of accurate metrics is imperative - thus a metric like "mpge" where electricity is
converted into an equivalent amount of gasoline, could lead to false expectations. We look
forward to further discussion and plan detailed comments through the separate labeling
rulemaking when it is proposed in the near future. [OAR-2009-0472-6953.1, p.30]
Ford Motor Company:
Advanced Technology Fuel Economy Labeling
Ford supports the development of new, fair, and consistent fuel economy labels for advanced
technology vehicles, particularly for plug-in hybrids and electric vehicles. NHTSA requested
comments on appropriate metrics for presenting fuel economy-related information on labels and
whether a CO2e grams per mile metric should be considered to facilitate comparisons between
conventional vehicles and alternative fuel vehicles. The fundamental purpose of these labels is to
provide consumers a mechanism to compare the efficiency of vehicles and powertrains on a
consistent basis that is understandable. There are many open issues to resolve in the process of
developing a consumer-accepted label. Fuel consumption versus fuel economy has been studied
through consumer focus groups at Ford and current indications are consumers are not ready or
willing to consider fuel consumption as a metric at this time. However, the focus group results
indicate that there is a significant value to providing energy information (both petroleum fuel and
electrical energy) as separate metrics over standard operating conditions (energy consumed over
a fixed distance, e.g., energy per mile, energy per 100 miles) because such metrics are linear.
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Total cost to the consumer for both electrical and fuel energy on an annual basis, with standard
mileage assumptions, and energy costs is also appropriate. For electric vehicles and plug-in
hybrids, we support inclusion of the time and amount of kilowatt hours needed to recharge the
battery system to a full state, based on standard household circuit systems (11 Ov/15amp).
Options should be provided to include shorter charging times if the vehicle provides the
capability.
Ford does not believe that EPA and NHTSA are constrained in providing customers the most
informative labels because 'mpg information is currently required by law,' 49 USC § 32908(b)(l)
mandates that 'a manufacturer of automobiles shall attach a label. .. containing ... '(A) the fuel
economy of the automobile.' According to 49 USC § 32901, 'fuel economy' means the average
number of miles traveled by an automobile for each gallon of gasoline (or equivalent amount of
other fuel used, as determined by the Administrator under section 32904 (c) of this title'
(emphasis added). 'Fuel' is defined in that same section as 'gasoline,' 'diesel oil,' or 'other liquid
or gaseous fuel.' The definition of'fuel' does not include electricity. 'Electricity' is, however,
otherwise specifically included as one of the energy sources listed in the definition of an
'alternative fuel.' 49 U.S.C. § 32901 (a)(l )(J).
Therefore, a manufacturer must provide a label containing the fuel economy value for the
vehicle, expressed as miles driven per gallon of'fuel,' meaning per gallon of gasoline or an
equivalent amount of diesel or other liquid or gaseous fuel. 49 U.S.C. 32901 (a)(l 0). Since
electricity is not a 'fuel' but rather an alternative fuel, no energy efficiency rating is required for
electricity under § 32908(b)(l)(A). Further, special energy efficiency labeling and information
requirements apply for 'dedicated automobiles' and 'dual fuel automobiles' under § 32908(b)(3);
however, even in these cases there is no mandate for an equivalent petroleum-based fuel
economy (MPGe) metric. Hence, no specific statutory labeling requirement is driving the need
for a MPGe value.
At the same time, the Administrator has authority to 'require or authorize' labeling of'other
information' 'related to the information required by clauses [32908(b)(l )](A)-(D) of this
paragraph.' 49 U.S.C. § 32908(b)(l )(F). Therefore, EPA could implement either an electric
consumption or electric economy metric.
Thus, Ford does not support the use of MPGe to describe the energy use of an electrically
powered automobile or a plug-in hybrid electric vehicle and disagrees that EPCA, mandates a
gasoline-equivalent MPGe fuel economy label value. In real-world application, MPGe does not
translate into a metric that is understood by most consumers and therefore may be misleading by
FTC standards and counterproductive to the acceptance of EV and PHEV technology.
If EPA nevertheless decides to pursue labeling that includes MPGe values, we suggest that EPA
develop a plan to eventually sunset the MPGe value altogether. An example of an effective
approach can be found in the 2007-2008 transition from 2-cycle to 5-cycle fuel economy values
wherein labels contained both new and old values during a transition period, giving greater
prominence to the new value. In this situation, we recommend that MPGe be shown in smaller
print, as a reference point for the new metrics. Then, as the new metrics become accepted EPA
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should plan to remove MPGe altogether. We expect that this transition of consumer acceptance
will be quick given the limitations of MPGe to describe the performance of electric vehicles.
PHEVs present significant fuel economy labeling challenges because of their bimodal fuel
economy nature. In other words, consumers are likely to experience very different fuel and
electrical economy depending on how far they drive their vehicle before recharging and under
given driving conditions. In addition, PHEV fuel consumption will likely change significantly
once the electrical battery system has been depleted. Thus, at a minimum the electrical economy
and the fuel economy of the vehicle should be included under its optimal driving state, typically
referred to in standardized tests as charge depleting mode; and when the battery system has been
depleted, typically referred in standardized tests as charge sustaining mode. PHEV label formats
will be more complex by nature. This complexity can be described in three basic categories and
labels can be modularly formatted to address three types: electric only, hybrid electric-fuel, and
fuel only.
EVs will also present challenges because of their range and efficiency sensitivity to driving
styles and climate conditions. Current range testing procedures used by CARB and EPA are in
need of revision because they are conducted until the vehicle cannot operate properly, Le., until
the vehicle can no longer maintain the driving schedule. Such an extreme end condition is not
representative of actual vehicle usage because customers will not typically drive until '0' energy
remains in the battery system nor until the vehicle can no longer function properly. More
typically, vehicles will be driven to a fraction of the full range and recharged, and therefore a
more reasonable and representative process is in order. Ford is willing to work with the agencies
and industry to update and harmonize these procedures.
In the context of standardized testing, the effects of cold temperature (20F) and heater use are
currently being studied by industry as a primary sensitivity factor in an electric vehicles energy
efficiency performance, followed by NC load. A hot test temperature (95F) is not expected to
have significant effect on battery system and vehicle performance.
In the coming years of EV use, consumer information and performance data needs to be
captured, perhaps from early manufacturer and government fleet use, to help in determining
appropriate label content for these vehicles. Work is underway within SAE to study these
sensitivities and develop standard vehicle testing practices. Ford supports this work and
encourages the EPA and other agencies to participate in studies as well help harmonize the
potential requirements.
In addition, prior to the final label proposals, we recommend EPA work jointly with PHEV and
EV manufacturers to test draft label concepts through focus groups and verify consumer
preferences.
Utility Factors
For CAFE purposes, Ford supports a standardized fleet utility factor, one based on SAE J2841.
EPA requested comment on how the utility factor is calculated and which data should be used to
establish it. The fleet utility factor approach is reasonable when applied to a CAFE requirement,
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since it represents a fleet-average driving approach. However, individual customers will see large
variations in the performance of their vehicle's efficiency based on how much time they are in
either charge-depleting or charge-sustaining mode. This could lead to customer dissatisfaction
with a utility-factor derived label, as customers have no way of applying it to their own personal
driving patterns. Due to these reasons, it is important to highlight the bimodal nature of PHEVs
by showing charge-depleting information separate from charge sustaining on the label and not to
focus on one type of average label value at this time.
For CAFE purposes, Ford supports a standardized utility factor, one based on SAE J2841. The
agreed-upon utility factor should be limited in with respect to update frequency in order to
provide adequate stability and lead time to facilitate cycle planning for manufacturers. For
example, utility factors should be published by the EPA for applicable model years at least 1 to 2
model years in advance. Any further updates to the utility factor curves should be made only in
future model years, not retro-active to current or previous model years. Since the fleet utility
factor represents a national driving distribution, it should be relatively slow to change (barring
any significant technology, energy, or infrastructure cost). Frequent updates to the utility factor
will not be necessary. [OAR-2009-0472-7082.1, pp. 20-23]
Honda Motor Company:
Generally, Honda proposes that EPA and NHTSA apply the same procedures and logic as SAE
standards and CARB regulations to avoid discrepancies. Also, Honda understands that EPA and
NHTSA need to define some areas where SAE and ARB are silent - primarily Label issues,
CAFE issues and GHG issues. [NHTSA-2009-0059-0095.1, p. 12]
Utility Factor Weighting Methods
Honda proposes that Fleet Utility Factors in existing SAE J2841 should be used to combine
Charge-Depleting and Charge-Sustaining modes for GHG and CAFE purposes. On the other
hand, Honda also proposes that Individual Utility Factor in the upcoming SAE J2841 revision
should be used to combine Charge-Depleting and Charge-Sustaining modes for Fuel Economy
Labeling purposes. [NHTSA-2009-0059-0095.1, p.12]
The PHEV FEMpo Formula Clarification
The PHEV FEMpo formula in the preamble needs to be revised to more accurately describe the
fuel economy from Charge Depleting and Charge Sustaining modes. We propose substituting
FEcoi for FE;. Similarly, it is also clear that FEgasoiine denotes the fuel economy during the Charge
Sustaining mode, and hence FECs will clearly describe this to prevent potential confusion on
gasoline consumption between Charge Depleting (in a blended PHEV) and Charge Sustaining
modes. We propose substituting FECS for FEgasoiine. [NHTSA-2009-0059-0095.1, p. 13]
Association of International Automobile Manufacturers (AIAM)
The proposed regulations seek comment on the potential use of metrics other than miles per
gallon in consumer information regarding fuel efficiency. See preamble at 49576. Consumers
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perceive in-use fuel economy performance, measured in "miles per gallon," to vary greatly for
higher efficiency vehicles, although the actual variation in fuel consumption is not as significant.
This perception issue can result in customer dissatisfaction. In addition, consumers need
more significant and appropriate information for new technologies, such as plug-in hybrid
(PHEV) and battery electric vehicles. In particular, PHEV fuel economy performance varies
greatly depending on how the vehicle is used, potentially leading to customer misunderstanding.
Therefore, a new consumer information label concept should be developed. AIAM would be
pleased to work with EPA and NHTSA to develop consumer information requirements that
include all appropriate information, are consumer friendly, and address greenhouse gas
emissions as well as fuel efficiency matters. [OAR-2009-0472-7123.1, pp.18-19]
Alliance of Automobile Manufacturers (Alliance):
Fuel Economy Labeling of Advanced Technology Vehicles
Based on manufacturers' announcements, advanced technology vehicles such as plug-in electric
hybrid vehicles and electric vehicles will be on the market very soon. Public acceptance and
understanding is key to the success of these new technologies. It is imperative that manufacturers
and EPA work together to appropriately promote the benefits that these vehicles can provide. To
that end, the Alliance fully supports the agencies goals that for these advanced technology
vehicles the "labels reflect sound science, treat technologies equitably and provide appropriate
information to consumers." [OAR-2009-0472-6952.1, p.53]
To this end, the Alliance and its member companies have been working for over a year with EPA
and the Society of Automotive Engineers to develop test procedures, calculation methodologies,
metrics and formats. We are committed to continuing to work with the agency to produce the
necessary frameworks for these various vehicles. [OAR-2009-0472-6952.1, p.53]
In this GHG/CAFE proposal, EPA seeks comments on issues surrounding consumer vehicle
labeling in general, and labeling of advanced technology vehicles in particular. EPA further
states that it will "initiate a separate rulemaking to explore in detail the information displayed on
the fuel economy label and the methodology for deriving that information." [OAR-2009-0472-
6952.1, p.53]
The Alliance supports the use of utility factors in creating the approach for calculating the label
for these advanced technology vehicles (specifically individual fleet utility factors for the label
per the recent SAE J1711 draft procedures). Further, the Alliance supports a metric on the
Monroney label that is simple and understandable to the consumer. An esoteric metric that
consumers have very little frame of reference for understanding will only slow - and may even
harm — the acceptance of advanced technologies. [OAR-2009-0472-6952.1, p.54]
Recommendation:
Unfortunately, this separate label rulemaking will not be complete before many products are
ready for the market place. Important in this interim period will be the case-by-case approach
that EPA will need to undertake to determine the label values for various vehicles. In this
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process, EPA must be cognizant of maintaining a level playing field for all advanced
technologies as well as providing consumers a way to compare to current conventional vehicles.
[OAR-2009-0472-6952.1, p.54]
Toyota Motor North America:
Although EPA intends to initiate a separate rulemaking to explore in detail the information
displayed on the fuel economy label of advanced technology vehicles, and the methodology to be
used for deriving the information, EPA requests comment on these issues as part of the subject
proposal. [OAR-2009-0472-7291, p.33]
With the increasing numbers of advanced technology vehicles beginning to be sold, Toyota
supports EPA's continued efforts to address potential issues associated with these technologies,
including how best to provide relevant consumer information about their environmental impact,
energy consumption, and cost. Toyota believes that providing accurate information is necessary
to promote customer acceptance and satisfaction of these advanced technology vehicles. Toyota
is concerned that unrealistic or difficult to understand ratings could set up unrealistic
expectations that could sour the market introduction of these advanced technology vehicles.
[OAR-2009-0472-7291, pp.33-34]
One way to encourage consumers to take a more proactive approach to reducing greenhouse
gases and oil consumption is to provide clear information about consumption, rather than
efficiency, as part of EPA's new labeling rule initiative. For liquid fueled vehicles, the fuel
consumption metric would communicate to the consumer a direct measure of the amount of
fuel/energy used and thus directly relates to costs that consumers incur when filling up. Toyota
recognizes EPA's previous reluctance to change to a more accurate fuel consumption metric
because of the consumer's unfamiliarity with such a metric. However, the current MPG measure
continues to be misleading and a fuel consumption metric could be more meaningful to
consumers, once the consumers have been familiarized with the different metric. To help educate
the consumer, Toyota proposes that EPA consider using both for the short term either on the
website or in the fuel economy guide. [OAR-2009-0472-7291, p.34]
Another approach would provide more detailed information on the label specific to operation on
gasoline and to operation on electricity. As an example, a hybrid vehicle label would contain
gasoline consumption, the plug-in hybrid vehicle label would contain both gasoline consumption
and energy consumption (miles per kilowatt-hour), and the electric vehicle would only show
electricity consumption. To avoid confusion to the customer, the electric and fuel consumption
values could be displayed separately. [OAR-2009-0472-7291, p.34]
Toyota supports the concept of using a utility factor approach as an appropriate methodology to
predict/account for the total distance driven in each of the two PHEV modes (i .e. charge
depleting and charge sustaining) and calculate fuel economy, including the use of 'fleet' utility
factors as currently specified in the most recent SAE J2841 procedure/document. We plan to
continue working with EPA and the Society of Automotive Engineers on these test procedures,
calculation methodologies, metrics and format issues as one possible approach. [OAR-2009-
0472-7291, p.34]
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Toyota is currently evaluating all these options. Regardless of the approach ultimately taken by
EPA, the label should balance the need for information specific to a given technology with the
need for information that can be compared against other vehicles in the marketplace, and at the
same time can be understood by consumers. [OAR-2009-0472-7291, p.34]
Natural Resources Defense Council:
Vehicle Labels Should Emphasize GHG Emissions Performance, Fuel Consumption and
Operational Costs to Enable Easy Comparisons across Vehicle Classes and Technologies: EPA
should update, through a public process, the environmental performance and fuel economy labels
on new vehicles. Changes to the labels and associated calculation methodologies should also be
reflected in other public education and consumer purchase guides such as the EPA Green
Vehicle Guide (www.epa.gov/greenvehicles) and the EPA/DOE Fuel Economy Guide
(www.fueleconomy.gov). In the NPRM, EPA states that it "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." NRDC supports such an initiative and urges
EPA to act expeditiously to complete the process in advance of MY 2012. [OAR-2009-0472-
7141.1, p. 21]
The scope of today's new vehicle labels should be expanded to include GHG emissions.
Consumer awareness of global warming pollution and its implications for climate change have
grown dramatically in recent years and the GHG emissions should be displayed prominently on
the vehicle in terms of GHG emissions per mile of real-world driving. Since EPA plans to
continue to use the 2-cycle FTP for vehicle compliance measurements for MY 2012-2016, the
EPA label value should be the compliance value adjusted to reflect typical driving conditions
(so-called "5-cycle test"), as is currently done for fuel economy labeling. [OAR-2009-0472-
7141.1, p. 21] [See OAR-2009-0472-7141.1, pp. 21-23 for further discussion of this issue.]
In sum, NRDC believes a trio of metrics including GHG emissions (in gCO2 per mile), fuel
consumption (in gallons or kWh per 100 miles) and costs (in $ per mile or $ per year) should be
displayed with prominence on new vehicle labels. [OAR-2009-0472-7141.1, p. 23]
International Council on Clean Transportation:
The agencies asked for comments on how to present efficiency information for electric vehicles.
The current metric, miles per gallon (mpg), does not apply to electricity use for battery-electric
vehicles and plug-in vehicles. Thus, the electricity use must be converted into an equivalent
number of gallons or a different metric must be used.
ICCT believes this is an opportunity to start supplementing the use of mpg with a better metric.
Not only does mpg not work for electricity consumption, but it is also not appropriate for
conventional vehicles as it is a non-linear metric. The linear metric is gallons per mile. MPG is
the inverse and distorts the relationship between the rating and the amount of fuel used. The
higher the mpg rating, the greater the distortion.
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Any linear metric would work better, such as gallons per 100 miles, liters per 100 km, BTU (or
kWh) per mile, grams CO2 per mile, or $ per mile. The latter three suggestions would also solve
the problem with comparing electricity use to gasoline use. Grams CO2 per mile has the
additional benefit of treating vehicles and fuels together on a consistent basis.
Canada's experience could provide a valuable guide in how to change the labeling system.
Canada added liters per 100 km to their fuel consumption guide, in addition to mpg, many years
ago. Such a dual labeling system would be an excellent way to supplement the use of mpg with a
better metric and would allow electric vehicles to be compared using the alternative metric.
[OAR-2009-0472-7156.1, p.14]
[ICCT also submitted these comments as testimony at the Detroit public hearing, See docket
number EPA-HQ-OAR-2009-0472-6185, pp. 62-63.]
National Automobile Dealers Association (NADA):
Dealers have significant point-of-sale purchasing decision expertise and NADA often has
provided suggestions on appropriate strategies and language for fuel economy and other vehicle
labels. The National Program should clarify that prospective changes to the existing, Monroney
based fuel economy label will be made pursuant to a separate well thought out rulemaking. Note
that the motoring public only recently became accustomed to extensive changes to the fuel
economy label and its values, and to extensive changes to NHTSA's safety label. With NHTSA
soon to begin implementing further changes to its safety label, prospective changes to the fuel
economy label should be carefully coordinated so as to avoid undue confusion for consumers.
[OAR-2009-0472-7182.1, p. 8]
State of New Jersey:
The Department supports the Agencies' efforts to supply additional information to the consumer
regarding environmental impacts, energy consumption, cost, range per charge, time to charge,
etc. so that consumer can make informed decision before purchasing a vehicle. The label should
include a numerical rating and graph-type comparison for each vehicle's environmental impact in
relation to other vehicles in the same class and include ratings for both criteria pollutants. [OAR-
2009-0472-7109.1, p.9]
Automotive Aftermarket Industry Association (AAIA); et.al:
The aftermarket also strongly urges the agency to include a public education component not only
for car owners to make good choices on vehicles, but also to provide information so that once
they own these vehicles that they can maintain them. The aftermarket groups listed below would
be more than willing to work with the agency to develop such an education program. In fact,
much of this information is already on our Be Car Care Aware site www.carcare.org which is
widely accessed by car owners. [OAR-2009-0472-7057.1, p.4]
New York State Department of Environmental Conservation:
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CAFE and Greenhouse Gas Emission Labels
Much of what is currently included on a vehicle's fuel economy label is mandated by statute. We
believe that replacing 'miles per gallon' with a metric similar to Europe's liters per 100 kilometers
(or gallons per 100 miles) would be desirable in the long run; but it may require statutory
changes. [OAR-2009-0472-7454, p.6]
Specifically for greenhouse gas emissions labeling, we recommend that the following should be
supplied in grams per mile:
- The standard the vehicle -is certified to (for example is an all-wheel-drive sedan a passenger car
or light truck?),
- The footprint based target emissions rate for the vehicle,
- The actual measured emissions rate for the vehicle,
- The greenhouse gas emission rates used in manufacturers' compliance reporting,
- Any credits (air conditioning, alternative fuel, FFV, etc) applicable to the vehicle. [OAR-2009-
0472-7454, p.6]
The CAFE rating, in miles per gallon, used in. manufacturers' compliance reporting should also
be presented on the label. [OAR-2009-0472-7454, p.6]
Fisker Automotive, Inc.:
Fisker Automotive recommends a technology-neutral fuel economy label, as shown below. We
also propose an interim label solution for ease of transition. See the attached presentation, Fuel
Economy Labeling, 2011 & Beyond for more. [OAR-2009-0472-8732.1, p.6] [[See Docket
Number OAR-2009-0472-8732.1, pp.8-41 for the attached presentation]]
Yuli Chew (private citizen):
I support EPA's efforts to supply additional information to the consumer about their
environmental impact, energy consumption, cost, range per charge, time to charge, etc. so that
consumer can make informed decision before purchasing a vehicle. Hopefully, this can build on
CARB's Environmental Performance Label Regulation. [OAR-2009-0472-7042.1, p.5]
EPA Response:
EPA received considerable public input in response to the request for comment in the proposal.
Since the greenhouse gas rule was proposed in September, 2009, EPA has initiated a separate
rulemaking to explore in detail the information displayed on the fuel economy label and the
methodology for deriving that information. The purpose of the vehicle labeling rulemaking is 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.
EPA will consider all vehicle labeling comments received in response to the greenhouse gas
proposal in its development of the new labeling rule in coming months. We encourage the
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interested public to stay engaged and continue to provide input on this issue in the context of the
vehicle labeling rulemaking.
5.11. EPA Estimates of GHG Emissions Reductions and Their Associated Effects
5.11.1 Impact on GHG Emissions
No substantive comments were received concerning the methodology used for calculating the
greenhouse gas impacts of the program.
5.11.2 Climate Change Impacts from GHG Emissions
Organization: Environment New Jersey
Comment:
A commenter indicates light-duty vehicles account for about 40 percent of all U.S. oil
consumption and when taken with the impacts of global warming which Steve Flint of the
Mobile Sources and Fuels Committee of the National Association of Clean Air Agencies
(NACAA)] mentioned, and the groundbreaking study from the IPCC in 2007, it's important to
emphasize that not only is the science on effects of climate change becoming more dire, but
implications for this country over the course of the next few decades and ultimately leading into
the later part of the next century if we do not take action, or if we remain on the status quo.
[EPA-HQ-OAR-2009-0472-4621, p.71]
The commenter indicates there is a lot of reason to be optimistic because of the solutions that are
happening right now in this country. The commenter indicates the actions in the U.S. Congress
with the U.S. House and now the U.S. Senate on the American Clean Energy and Security Act
really are moving us forward, talking about clean energy solutions, finally putting a cap on
global warming pollution, that is where the rest of the world has been moving to, it is where
America must move to. [EPA-HQ-OAR-2009-0472-4621, p.74]
EPA Response:
EPA agrees with the commenter's assertion that 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 to grow. As provided in Section
III.F. 1 of the preamble to the final rule, U.S. GHGs are estimated to make up roughly 17 percent
of total worldwide emissions in 2010, and the contribution of direct emissions from cars and
light-trucks to this U.S. share is growing over time, reaching an estimated 19 percent of U.S.
emissions by 2030 in the absence of control. 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.
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Policy options for reducing GHGs (e.g., cap and trade) are not within the scope of this
rulemaking nor does EPA propose any reduction strategies other than those associated with this
rule pursuant to Section 202(a) of the Clean Air Act.
Organization: New York State Department of Environmental Conservation
Comment:
A commenter indicates that New York State hospitalization and mortality rates due to respiratory
illnesses currently exceed the national average and this will only get worse as the planet
continues to warm. The comment further notes New York's agricultural industry is likely to be
affected by shorter growing systems for cold weather crops and eventually a different crop mix
and thus affect New York's tourism and maple syrup industries. The commenter notes global
warming also poses a significant threat to critical water sources in New York and the
combination of higher temperatures and more erratic landfill will lower water levels and will
adversely affect drinking water supplies, power generation, commerce, and recreational
activities. New York State hospitalization and mortality rates due to respiratory illnesses
currently exceed the national average and this will only get worse as the planet continues to
warm. [These comments were submitted as testimony at the New York public hearing. EPA-HQ-
OAR-2009-0472-4621, pp. 12-13]
EPA Response:
EPA finds the comments provided on impacts to human health and public welfare are generally
consistent with those provided in preamble Section III.F.2, Climate Change Impacts from GHGs,
to this final rule. Section III.F.2 discusses the projected impacts associated with climate change
and warming temperatures as synthesized from the major scientific assessment reports. As
indicated in Section III.F.2, "Increases in regional ozone pollution relative to ozone levels
without climate change are expected due to higher temperatures and weaker circulation in the
United States and other world cities relative to air quality levels without climate change. Climate
change is expected to increase regional ozone pollution, with associated risks in respiratory
illnesses and premature death. In addition to human health effects, tropospheric ozone has
significant adverse effects on crop yields, pasture and forest growth, and species composition.
The directional effect of climate change on ambient paniculate matter levels remains uncertain."
Please see preamble Section III.F.2 of the rule for a synthesis of key findings regarding observed
and projected changes in GHG emissions and associated climate change impacts. The key
findings synthesized in Section III.F.2 are primarily drawn from the major scientific assessment
reports of the Intergovernmental Panel on Climate Change (IPCC), the U.S. Climate Change
Science Program (CCSP), the U.S. Global Change Research Program (USGCRP), and the
National Research Council (NRC).
Organization: State of New Jersey
Comment:
A commenter indicates that as we are well aware, there is broad scientific consensus that human-
caused greenhouse gas emissions are impacting the earth's climate, and that increasing
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atmospheric concentrations of greenhouse gases will result in a very significant adverse global,
regional and local environmental impacts. The commenter notes the northeastern states are
particularly vulnerable to the impacts of climate change with potentially devastating ecological,
economic and public health impacts to New Jersey. The commenter states "Not only does
climate change threaten New Jersey's shoreline and ecology, but the socioeconomic impacts of
climate change stand to be profound and costly." The commenter asserts that because of New
Jersey's unique diverse terrain, nearly all of the impacts of climate change, such as rising
temperature in our urban areas, sea level rise jeopardizing our coastal ecosystems and threats to
our unique agricultural industries will be experienced throughout the state. The commenter
asserts it is critical that the world, the nation, the region and New Jersey take immediate and
aggressive action to stabilize and then reduce atmospheric greenhouse gas concentrations in
order to avoid the most catastrophic impacts of climate change. The commenter states, "The
successful reduction of ozone depleting substances throughout the nation and the world
demonstrates that it can be done." [These comments were submitted as testimony at the New
York public hearing. See docket number EPA-HQ-OAR-2009-0472-4621]
EPA Response:
EPA agrees with the commenter's assertion that there is broad scientific consensus that human-
caused GHG emissions are impacting the Earth's climate. In addition, EPA notes the comments
regarding climate change impacts to the Northeast are generally consistent with those provided
in Section III.F.2 of the preamble to this final rule. Section III.F.2 provides a summary of
observed and projected changes in GHG emissions and associated climate change impacts based
on the key findings of Technical Support Document (TSD)36 for EPA's Endangerment and
Cause or Contribute Findings for Greenhouse Gases Under Section 202(a) the Clean Air Act.37
The key findings synthesized here and the information throughout the TSD source document are
primarily drawn from the broad scientific community in the form of assessment reports of the
Intergovernmental Panel on Climate Change (IPCC), the U.S. Climate Change Science Program
(CCSP), the U.S. Global Change Research Program (USGCRP), and the National Research
Council (NRC).
In particular, the USGCRP provides present and future impacts of climate change on the
different regions of the United States in a recent national assessment report entitled Global
Climate Change Impacts in the United States^ This report is a key source document for the
TSD associated with EPA's Endangerment and Cause or Contribute Findings for Greenhouse
Gases Under Section 202(a) of the Clean Air Act and is referenced in Section III.F.2 of the
preamble to this rule. In regard to the Northeast Karl et al (2009) reports: "The densely
populated coasts of the Northeast are particularly vulnerable to sea level rise, which is projected
to rise more than the global average and increase the frequency and severity of damaging storm
surges, coastal flooding, and related impacts like erosion, property damage, and loss of wetlands.
36 "Technical Support Document for Endangerment and Cause or Contribute Findings for Greenhouse Gases Under
Section 202(a) of the Clean Air Act" Docket: EPA-HQ-OAR-2009-0472-11292
37 See 74 FR 66496 (Dec. 15, 2009)
38 Karl, T., J. Melillo, and T. Peterson (Eds.) (2009) Global Climate Change Impacts in the United States.
Cambridge University Press, Cambridge, United Kingdom.
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New York State alone has more than $2.3 trillion in insured coastal property, but some major
insurance companies are beginning to withdraw coverage in coastal areas of the Northeast,
including New York City. A coastal flood in New York City currently considered a once-in-a-
century event (also known as a 100-year flood) is projected to occur every 10 to 22 years on
average by late this century, depending on a higher or lower emissions scenario." EPA
acknowledges that the Northeast has diverse terrain and climatic conditions and thus the
projected effects from climate change are likely to be varied. As noted in Section III.F.2, climate
change impacts will vary in nature and magnitude across different regions of the United States.
5.11.3. Changes in Global Mean Temperature and Sea-level Rise Associated with the GHG
Emissions Reductions
Organization: Institute for Energy Research
Comment:
A commenter indicates it is quite possible that EPA's estimate of the reduction in temperature
and sea level rise is an overestimate. The estimate is predicated on a climate sensitivity in the
range of 2°C to 4.5°C in accord with the Intergovernmental Panel on Climate Change's (IPCC)
Fourth Assessment Report (AR4) 2007. However, actual temperature trends after the release of
that report and more recent science provide some reasons to believe that a climate sensitivity of
2°C to 4.5°C may be overly sensitive. [OAR-2009-0472-7225.1, p.6]
EPA Response:
EPA acknowledges the large uncertainty range associated with equilibrium climate sensitivity.
EPA notes that support of the current consensus range or likely range (2-4.5°C) comes from
many different lines of evidence, the ranges of which are consistent within the uncertainties,
relatively robust towards methodological assumptions and similar for different types and
generations of models39. In addition, the IPCC40'41 indicates the levels of understanding and
confidence in quantitative estimates of equilibrium climate sensitivity have increased
substantially and there is increased confidence of key processes that are important to climate
sensitivity due to improved comparisons of models to one another and to observations. Thus,
39 Knutti, R. and G. Hegerl (2008). "The equilibrium sensitivity of the Earth's temperature to radiation changes."
Nature Geoscience 1: 735-743.
40 Solomon, S., D. Qin, M. Manning, R.B. Alley, T. Berntsen, N.L. Bindoff, Z. Chen, A. Chidthaisong, J.M.
Gregory, G.C. Hegerl, M. Heimann, B. Hewitson, BJ. Hoskins, F. Joos, J. Jouzel, V. Kattsov, U. Lohmann, T.
Matsuno, M. Molina, N. Nicholls, J. Overpeck, G. Raga, V. Ramaswamy, J. Ren, M. Rusticucci, R. Somerville, T.F.
Stacker, P. Whetton, R.A. Wood and D. Wratt (2007) Technical Summary. In: 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.
41 Meehl, G.A. et al. (2007) Global Climate Projections. In: 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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EPA concludes that the use of the climate sensitivity range for the climate analysis for this rule is
appropriate and supported by the scientific literature from the major assessment reports.
In order to capture some of the uncertainty in the climate system, the changes in projected
temperatures and sea level for this rule were estimated across the most current IPCC range of
climate sensitivities, 1.5°C to 6.0°C. For each climate indicator analyzed the direction of change
was the same across the range of climate sensitivities. EPA disagrees with the commenter that
recent temperature trends after IPCC's AR4 2007 report provide adequate reason to believe that
the climate sensitivity range of 2°C to 4.5°C is overly sensitive. Three years of additional
temperature data are not likely to be sufficient to materially change estimates of climate
sensitivity based on the instrumental record and has no impact on estimates of climate sensitivity
based on paleoclimate analysis or other methods. Further, we note the commenter does not
provide any references or material from the recent scientific literature to support this claim.
Organization: Shaw, Donald F.
Comment:
A commenter asserts that the claimed benefit (reduction) of 0.007 to 0.016 degrees Celsius (°C)
in global mean temperature over 90 years is minuscule when compared to the inaccuracies of
temperature measurement and uncertainties involved in climate science. The commenter
continues to indicate that such small temperature numbers are immeasurable and meaningless as
none of the equipment used to measure the temperatures can attain accuracy even within an order
of magnitude of the claimed benefit. The commenter further notes the temperature records
derived from thermometers and tree rings used by those who support global warming claims are
nowhere near that accurate. In addition, the commenter asserts this same issue applies for the
proposed reduction in sea level rise which is 0.06-0.15 centimeters (less than 1/16th of an
inch). [OAR-2009-0472-7270.1, p. 1]
EPA Response:
EPA notes the projected reductions in global mean temperature and sea level from the rule are
based on climate modeling analysis using a global emission reference scenario (no climate
policy) and emissions reductions scenario which were subtracted from the reference scenario for
the years 2000-2100 based on implementation of the rule as provided in Section III.F.l. This
approach attempts to evaluate the impact of the rule's emissions reductions in the context of
global GHG emissions. The results of the analysis should not be interpreted as detectable
changes such as from the instrumental or observational records but discernible as quantifiable
estimates calculated from the two emissions scenarios across a range of climate sensitivities.
The observational record for global mean temperature (and sea level rise) is likely not sensitive
enough to detect the direct response from any single mitigation action — particularly a subset of
emissions from a source category — for several reasons (e.g., the inertia in the climate system
due to the exchange of heat and energy between the atmosphere and the ocean, longevity (several
decades) of perturbation from GHG emissions, global nature of the emissions problem where no
single source dominates). Further, the instrumental record is not designed to detect such isolated
signals. Although the commenter is correct that these relatively small changes in climate
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EPA Response to Comments
variables would not be measurable with instrumentation or with observational evidence (e.g.,
tree-ring data), it does not preclude them from being valid in terms of demonstrating the
directional changes resulting from the reduction in GHG emissions,
Organization: Institute for Energy Research
Shaw, Donald F.
Spurgeon, C. M.
Devon Energy Corporation
Wood, John S.
Stanton, Neil
Mass Comment Campaign
Comment:
A commenter indicates the proposed rule to regulate greenhouse gas emissions from light-duty
vehicles, as well as EPA's proposed Endangerment and Cause or Contribute Findings for
Greenhouse Gases Under Section 202(a) of the Clean Air Act, and Massachusetts v. EPA, 549
U.S. 497, 525 (2007) are all predicated on the assumption that regulating greenhouse gas
emissions from light-duty vehicles will reduce the impacts of climate change. The commenter
asserts that according to this proposed rule the climatic benefits from reducing greenhouse gas
emissions from light-duty vehicles are very small and therefore will not affect climate change in
any meaningful way.
Another commenter indicates that considering the minuscule benefit over a 90 year period, the
benefit of prematurely invoking the miles per gallon (mpg) standards is even less significant.
The commenter asks, "What is the net loss over 90 years if the regulation is postponed 10 years
past the 2016 date?" The commenter asserts that it is clear that the objective is not science but
giving an appearance of doing something. The commenter further indicates that these minuscule
benefits will be offset many times by the massive increase in CO2 emissions by China and India
and unilateral action is futile.
Another commenter indicates that EPA is proposing to increase the price of automobiles by
$1,100 per car (74 Fed. Reg. 49460) in exchange for a projected global temperature decrease of
16 thousandths of a degree Celsius in 90 years. The commenter continues to indicate that
according to EPA, sea level is projected to change by at most 1.5 millimeters. The commenter
asserts these tiny amounts are so inconsequential that they will not affect global climate at all nor
will they affect "public health and welfare."
EPA Response:
Climate change is a global phenomenon and EPA recognizes that this one national action alone
will not prevent it. Importantly, EPA quantitatively analyzes the potential climate benefits of
this rule which has the potential to substantially reduce GHGs emissions from the transportation
sector, specifically light duty vehicles. The changes in climate effects that the rule is projected to
produce - average of 2.9 ppm of CC>2, a few hundredths of a degree Celsius difference in global
mean temperature, and 1 to 2 millimeters of sea-level rise, a small increase in ocean pH - are
small. However, EPA notes this would be true for any given GHG mitigation action when taken
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alone. Although the magnitude of the avoided climate change projected here is small, it shows a
clear directional signal across all climate sensitivities evaluated. The benefits of GHG emissions
reductions can be characterized both qualitatively and quantitatively, some of which can be
monetized (see Chapter 7.5 of the final RIA).
EPA disagrees with the commenter's assertion that there is little consequence of waiting 10 years
after 2016 to enact regulations given the small magnitude of climate benefits estimated for the
rule. EPA notes a common misunderstanding is that the risks from climate change can be
quickly addressed by emission reductions and thereby counter negative effects within a few
years or decades. However, because of the longevity of atmospheric GHG gases warming
effects persist over long timescales and continued and future emissions would imply further
long-term climate-related effects on the planet42. As a substantial portion of CC>2 emitted into the
atmosphere is not removed by natural processes for millennia, each unit of CC>2 not emitted into
the atmosphere avoids essentially permanent climate change on centennial time scales. The
value of EPA's analysis is not intended to diminish the effectiveness of the rule's effect on
global climate conditions but to estimate the benefits of this particular action in reducing GHG
emissions and global warming impacts by quantifying these potential reductions using the best
available science.
EPA does not agree with the view that since other countries (e.g., China and India) have higher
growth rates of greenhouse gas emissions that the EPA should not act now. Further, EPA does
not agree with the commenter that reducing greenhouse gases in the U.S. will have no effect on
global GHG emissions. As indicated in Section III.F of the rule, the U.S. transportation sector is
the second largest contributor to this nation's greenhouse gas emissions behind only the
electricity sector. Transportation sources under Section 202(a)43 of the Clean Air Act (passenger
cars, light duty trucks, other trucks and buses, motorcycles, and passenger cooling) represent
23% of total U.S. GHG emissions in 2007 and 4.3% of total global GHG emissions. Moreover,
section 202(a) GHG emissions are a significantly larger share of global transport GHG emissions
(28.0%) than the corresponding share of all U.S. GHG emissions to the global total (18.4%),
reflecting the relative size of the transport sector in the United States compared to the global
average. As the Supreme Court noted, "[j]udged by any standard, U.S. motor-vehicle emissions
make a meaningful contribution to greenhouse gas concentrations and hence, * * * to global
warming." Massachusetts v. EPA. 549 U.S. 497, 525 (2007).
EPA's rule takes many factors into consideration, and is not premised on the view that the
reductions from this rule will themselves have significant impacts on the global climate. As
discussed above, no one action will have that effect. The factors EPA takes into account include
its legal obligation to set emissions standards applicable to vehicular GHG emissions, given the
endangerment and cause or contribute findings made by EPA, its analysis of available
technology, the cost of the technology, the fuel savings that will result from the standard, the
42 Solomon, S., G.-K. Plattner, et al. (2009). "Irreversible climate change due to carbon dioxide emissions."
Proceedings of the National Academy of Sciences 106: 1704-1709.
43 Source categories under Section 202(a) of the Clean Air Act are a subset of source categories considered in the
transportation sector and do not include emissions from non-highway sources such as boats, rail, aircraft,
agricultural equipment, construction/mining equipment, and other off-road equipment.
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EPA Response to Comments
greenhouse gas reductions, implications for vehicle safety, consideration of the rule's costs in
relation to benefits, and other impacts. EPA has considered a wide variety of factors in
determining that its GHG emissions standards are a reasonable exercise of its authority under
section 202(a) (1). The impact of these reductions on climate change is but one of the factors
EPA considered.
Organization: Eadie, R. Frank
Comment:
A commenter indicates there are new scientific procedures that actually allow scientists to track
both the CO2 levels and climate indicators such as sea levels going back millions of years instead
of hundreds of thousands of years. The commenter indicates that it is known that sea level is
rising and will likely accelerate based on projections. New studies that have been done with the
models indicate that the standards that IPCC used in their projections in 2006 are actually
beyond the level of the worst case scenario that the IPCC had projected. The commenter
indicates that instead of 2 °C change between now and the end of the century it may be 4 °C
change by the end of the century. The commenter indicates that all the scientists agree that a
warming of four degrees centigrade is simply unacceptable and civilization as we know it will
not exist under those conditions. [EPA-HQ-OAR-2009-0472-4621, p. 172-175]
EPA Response:
EPA acknowledges that the risks and impacts of climate change are occurring now and will
continue to increase over this century and that sea level is projected to rise when compared to the
previous century. As summarized in the Technical Support Document44 of EPA's Endangerment
and Cause or Contribute Findings for Greenhouse Gases Under Section 202(a) of the Clean Air
Act,45 the IPCC reports that by the end of the century (2090-2099), sea level is projected to rise
by 18 and 59 cm relative to the base period (1980-1999). The IPCC projections contain the
lowest and highest projections of the 5 to 95% ranges for all Special Report on Emission
Scenarios (SRES) reference emission scenarios and include neither uncertainty in carbon cycle
feedbacks nor rapid dynamical changes in ice sheet flow. The projections represent a 'likely
range' which inherently allows for the possibility that the actual rise may be higher or lower.
Recent observations and studies from the scientific assessment literature suggest that sea level
rise is likely to be near or above the high end of the IPCC estimates. For example, according to
the Climate Change Science Programs46 studies have suggested that a global sea level rise of 1 m
(and up to 1.4 m) is plausible within this century if increased melting of ice sheets in Greenland
44 "Technical Support Document for Endangerment and Cause or Contribute Findings for Greenhouse Gases Under
Section 202(a) of the Clean Air Act" Docket: EPA-HQ-OAR-2009-0472-11292
45 See 74 FR 66496 (Dec. 15, 2009)
46 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.
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and Antarctica is added to the factors included in the IPCC estimates. The IPCC47 notes
"dynamic processes related to ice flow not included in current models but suggested by recent
observations could increase the vulnerability of the ice sheets to warming, increasing future sea
level rise." In addition, the Climate Change Science Program (CCSP)48, finds that the Greenland
and West Antarctic ice sheets show acceleration of flow and thinning, and that inclusion of these
processes in models will likely lead to sea level projections for the end of the 21st century that
substantially exceed the projections presented in the IPCC Fourth Assessment Report (2007).
Importantly, EPA notes that the underlying scientific literature does not include predictions of
conditions where civilization cannot exist but rather, will likely face challenges from climate
change and sea level rise. In addition, these are global projections and climate change impacts
will vary in nature and magnitude across different regions of the United States.
Organization: Environment New Jersey
New York State Department of Environmental Conservation
Comment:
Environment New Jersey
A commenter indicates that predictions of a two to four foot sea level rise in New Jersey are
incredibly dire. The commenter notes that in New Jersey the Meadowlands, which include such
landmarks as New Jersey Turnpike, the Newark Airport and Giants Stadium, all are within
floodplain mapping zones for storm surges. The commenter further notes that several New York
financial firms in Hudson County are on the line of the submerging and storm surge lines. The
commenter indicates that the 27 miles of coast of New Jersey is the lion's share of our tourism
industry, a $38 billion industry for the state, as well as home to casinos and Atlantic City. The
commenter indicates that most of New Jersey's shore would suffer from storm surge on an
unprecedented level and the estimates on real estate damage and loss are astronomical. [These
comments were submitted as testimony at the New York public hearing. See docket number
EPA-HQ-OAR-2009-0472-4621, p.73]
New York State Department of Environmental Conservation
Another commenter indicates that sea level rise along New York State's coastal areas will erode
beaches, damage sensitive ecosystems and cause billions of dollars in flood damage to vital
infrastructure. [These comments were submitted as testimony at the New York public hearing.
See docket number EPA-HQ-OAR-2009-0472-4621, p. 12]
47 Meehl, G.A. et al. (2007) Global Climate Projections. In: 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.
48 Clark, P.U., A.J. Weaver, E. Brook, E.R. Cook, T.L. Delworth, and K. Steffen (2008) Executive Summary. In:
Abrupt Climate Change. A Report by the U.S. Climate Change Science Program and the Subcommittee on Global
Change Research. U.S. Geological Survey, Reston, VA, pp. 7-18.
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EPA Response:
EPA acknowledges the commenters' concerns regarding sea-level rise for the States of New
Jersey and New York and note they are generally consistent with the overview of climate change
impacts provided in this rule (preamble Section III.F.2). Section III.F of the preamble to the
vehicle rule summarizes climate change science and impacts from the major scientific
assessment reports (e.g., IPCC, USGCRP, NRC) on climate science. As indicated in Section
III.F.2, sea level rise is one of the potential regional impacts to affect the Northeast. Sea level
rise is expected to increase storm surge height and strength, flooding, erosion, and wetland loss
along the coasts, particularly in the Northeast, Southeast, and islands. Further, Section III.F.2
notes that "Coastal communities and habitats will be increasingly stressed by climate change
impacts interacting with development and pollution. Sea level is rising along much of the U.S.
coast, and the rate of change will very likely increase in the future, exacerbating the impacts of
progressive inundation, storm-surge flooding, and shoreline erosion. Storm impacts are likely to
be more severe, especially along the Gulf and Atlantic coasts." EPA notes however, that
localized climate change impact assessments for the specific areas of New York and New Jersey
are not estimated as part of this national vehicle rule.
Organization: State of New Jersey
Comment:
A commenter indicates the EPA relied on the MAGICC model to determine the overall impact of
its rule on climate change. These modeling results showed small, but quantifiable, reductions in
the global atmospheric CC>2 concentration, as well as a reduction in projected global mean
surface temperature and sea level rise, from implementation of the proposal, across all climate
sensitivities. The commenter agrees with the proposal's assessment of the emission reduction
benefits of the proposal and its impacts on climate change and encourages the Agencies to move
forward with the joint rule. [OAR-2009-0472-7109.1, p.10]
EPA Response:
Similar to the commenter's assertion, based on EPA's modeling approach, EPA notes the
emission reductions resulting from this rule directionally represent a reduction in the adverse
risks associated with climate change.. This modeling approach attempts to evaluate the impact
of the rule's emissions reductions in the context of global GHG emissions. EPA's analysis
estimates the benefits of this particular action in reducing GHG emissions and global warming
impacts by quantifying these potential reductions using the best available science.
As mentioned previously, EPA's rule takes a wide variety of factors into consideration in
determining that its GHG emissions standards are a reasonable exercise of authority under
section 202(a).
Organization: Adcock, James
Comment:
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The impact on climate change must be analyzed as part of an assumed national and international
program to reduce GHG. To attempt to analyze CAFE in isolation is to assume the failure in
human efforts to control global warming. When you assume a priori the failure in such efforts to
control global warming, then the impacts of CAFE towards global warming can indeed be
assumed trivial and be discounted away. Again, a priori, in methods of accounting and analysis,
NHTSA is assuming the failure of world-wide efforts to control GHG. Such an assumption is
inconsistent with the positions of the current President.
EPA Response:
We agree that addressing climate change will require global action, and will rely on both
international and domestic programs. However, for the purpose of this rulemaking, it is
necessary to quantify the impacts and understand the benefits of this particular action — which is
a part of the greater whole in responding to this challenge.
5.12. EPA Estimated Impact on Non-GHG Emissions and Their Associated Effect
Organization: Missouri Department of Natural Resources, Air Pollution Control Program
Comment:
The commenter [EPA-HQ-OAR-2009-0472-7480, p. 1] is concerned that the vehicle standards in
the proposed rule may lead to increases in criteria pollutant and air toxic emissions from mobile
sources. In addition to providing comments on the proposed rule, the commenter also included a
variety of comments that pertain to NHTSA's DEIS ("Criteria Pollutant Emissions" pp. 2-3,
"Toxics Pollutant Emissions" pp. 3-4, "Localized Calculation of Emissions Reductions" pp. 4-5,
and "Summary of Comments" p. 5 ). The commenter [OAR-2009-0472-7480, pp. 4-5] expresses
concern that the results of NHTSA's DEIS project that some urban areas may have an increased
level of criteria and toxic emissions resulting from the rebound effect. These results for
nonattainment and maintenance areas are of particular concern because of the air quality status of
the two largest urban areas in Missouri. St. Louis is currently designated as nonattainment for
ozone and PM. Kansas City is designated as a maintenance area for ozone.
NHTSA and EPA only examined the emission reductions of benzene, 1,3-butadiene,
formaldehyde, acetaldehyde, and acrolein, but should also have included other air toxics such as
ethylbenzene, toluene, and the xylene isomers. It appears NHTSA and EPA's examination was
incomplete, thus, raising questions on the results of the examination presented in this Federal
Register notice. To address these concerns, the agencies should examine the emission reductions
of all of the air toxics associated with the extraction, production, distribution, as well as the
combustion, of fuel. In Table III.G-2 Annual Air Toxic Emission Impacts of Program (short-
tons) on page 49593, NHTSA and EPA presented their estimation of the influence of the actions
of their proposed National Program on the emissions of the aforementioned air toxics. According
to the data in 2030 the proposed National Program would increase the emissions of 1,3-
butadiene, acetaldehyde, and acrolein, and would decrease the emissions of benzene and
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formaldehyde. The increased emissions equaled 100 short tons and the decreased emissions
equaled 93 short tons for a net increase of 7 short tons of air toxic emissions. These increased
emissions were due to downstream impacts reflecting the effects of the previously mentioned
VMT rebound effect rather than upstream impacts reflecting the extraction, production, and
distribution of motor gasoline. The data presented in Table III.G-2 therefore showed that the
proposed actions of the National Program would increase the emissions of the aforementioned
air toxics due to the increased total amount of gasoline undergoing combustion.
Yet the two agencies seemed to ignore the data presented in Table III.G-2. The agencies state on
page 49709 that, Tor most of these pollutants, the reduction in upstream emissions resulting
from lower fuel production and distribution will outweigh the increase in emissions from vehicle
use, resulting in a net decline in their total emissions.' The data presented in Table III.G-2
contradicts this statement and neither agency presented data anywhere else in this notice that
supported this statement. To correct this contradiction, NHTSA and EPA should present
evidence that demonstrates the actions of the proposed National Program will not increase air
toxics emissions from mobile sources. [OAR-2009-0472-7480, pp.2-3]
EPA Response:
EPA understands the commenter's concern that the GHG vehicle standards may lead to
increased emissions of some pollutants from mobile sources. However, emissions changes alone
are not a good indication of local or regional air quality impacts. The atmospheric chemistry
related to ambient concentrations of PM2.5, ozone and air toxics is very complex, and making
predictions based solely on emissions changes is extremely difficult. Full-scale photochemical
modeling is necessary to provide the needed spatial and temporal detail to more completely and
accurately estimate the changes in ambient levels of these pollutants. The length of time needed
to prepare the necessary emissions inventories, in addition to the processing time associated with
the modeling itself, precluded EPA from conducting a full-scale photochemical air quality
modeling analysis in time for the NPRM. For the final rule, however, EPA performed a
national-scale air quality modeling analysis to analyze the impacts of the standards on PM2.5,
ozone, and selected air toxics (i.e., benzene, formaldehyde, acetaldehyde, acrolein and 1,3-
butadiene).
As discussed in Section 7.2 of the RIA, EPA's air quality modeling projects that final standards
have relatively little impact on ambient concentrations of modeled PM2.5, ozone, and air toxics.
For annual and 24-hour PM2.5, our air quality modeling projects design value changes of ±0.05
|ig/m3 for all Missouri counties, with the exception of one county near St. Louis which is
projected to see decreases in annual and 24-hour PM2.5 design values between -0.05 and -0.15
|ig/m3 (Section 7.2.2.1 of the RIA). Ozone design value changes as a result of the GHG
standards finalized in this rule are ±0.1 ppb for all counties in Missouri. EPA notes that the
commenter's concerns pertaining to NHTSA's DEIS are addressed in NHTSA's DEIS Comment
Response document, available in NHTSA's docket for this rulemaking: NHTSA-2009-0059.
Although a large number of compounds which are considered air toxics could be impacted by the
GHG vehicle standards, EPA focused on those which were identified as national and regional-
scale cancer and noncancer risk drivers in past NATA assessments and were also likely to be
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significantly impacted by the standards. These compounds include benzene, 1,3-butadiene,
formaldehyde, acetaldehyde, and acrolein. In addition to developing emission inventories for
these explicit model species in our photochemical model, EPA also developed inventories for a
large number of precursor compounds, including aromatics such as ethylbenzene, toluene, and
xylene isomers, through application of speciation profiles in SMOKE (see also Section 7.2.1.2 of
the RIA). Thus, EPA does account for changes in the both upstream and downstream emissions
of numerous air toxics beyond the five species for which we present air quality modeling results.
In addition, EPA is projecting overall decreases in most criteria and air toxic pollutant emissions
due to the GHG standards (see Tables III.G-1 and III.G-2 in the preamble to the final rule). In
most cases the net impacts are less than 1% of the projected 2030 inventory. As seen in the
tables, EPA projects that the net impact of the program is a slight decrease in the majority of
modeled emissions, and a slight increase in the remainder. The calculation of these impacts is
documented in RIA Chapter 5 (substantially similar to the analysis presented in the record to the
proposed rule). As discussed above, changes in emission inventories alone are not a good
indication of local or regional air quality impacts. Overall, EPA's photochemical air quality
modeling indicates that the final standards have relatively little impact on national average
ambient concentrations of the modeled air toxics. Regional increases in formaldehyde, 1,3-
butadiene, acrolein, and ethanol are not due to the standards finalized in this rule, but are related
to our assumptions about the volume of ethanol that will be blended into gasoline. The ethanol
volumes will be occurring as a result of the recent Renewable Fuel Standards (RFS2) rule and
were accounted for by EPA in assessing the impacts of that rule.49 For additional detail on air
toxics results, please see Section 7.2.2.3 of the RIA.
Organization: Texas Commission on Environmental Quality
Comment:
The commenter [EPA-HQ-OAR-2009-0472-7180] argues that the rule proposal states that the
new GHG emission standards will increase vehicle efficiency and, thereby, lower fuel
consumption. However, the proposal acknowledges that the new GHG emission standards will
also likely increase light-duty vehicle use as a result of the 'rebound effect' associated with higher
fuel economy, resulting in increased criteria pollutant emissions. The 'rebound effect' is defined
in the proposal as 'the tendency of drivers to drive their vehicles more as the cost of doing so
goes down, as when fuel economy improves.' The proposal claims that the anticipated increase in
criteria pollutants associated with the rebound effect would be offset by reduced emissions from
reductions in domestic fuel refining and distribution brought about by lowering fuel
consumption. [OAR-2009-0472-7180.1, p.2]
The commenter [EPA-HQ-OAR-2009-0472-7180, p. 2] is concerned that new GHG emissions
standards for light-duty vehicles would result in increases in criteria pollutant emissions that are
of critical importance for compliance with the NAAQS for ozone, primarily emissions of VOC
and NOx. Specifically, the commenter is concerned that "in areas with little or no fuel refining
49 EPA 2010, Renewable Fuel Standard Program (RFS2) Regulatory Impact Analysis. EPA-420-R-10-006.
February 2010. Docket EPA-HQ-OAR-2009-0472-11332
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industry, such as the Dallas-Fort Worth ozone nonattainment area, the rebound effect would
result in an increase in criteria pollutant emissions." The commenter is also expressed concern
about the "anticipated increases in acetaldehyde and 1,3-butadiene."
The TCEQ has implemented a number of regulatory air quality control strategies in its ozone
nonattainment areas to reduce VOC and NOX emissions and is concerned that the adoption of the
proposed rules for new GHG emissions standards for light-duty vehicles will have a negative
impact on the efforts Texas has made to meet its current and future air quality goals, especially
as EPA looks to tighten the ozone standard again. Additionally, the EPA is encouraged to align
the mobile source control strategies with ozone reduction needs. Texas has made great strides in
reducing ozone and ozone precursors from federally preempted mobile sources by incentivizing
mobile fleet turnover through our Texas Emissions Reduction Plan and the Drive a Clean
Machine program, and placing stringent controls on stationary sources. Because mobile source
emissions now comprise the majority of NOX emissions in Texas metropolitan areas, EPA should
not let its GHG rulemaking initiatives interfere with the ability of states to attain and maintain
increasingly stringent National Ambient Air Quality Standards. Unlike GHG emissions,
increases in criteria pollutant emissions may have direct health impacts on the citizens of Texas.
[OAR-2009-0472-7180.1, p.2]
EPA Response:
The non-GHG inventories and associated air quality modeling presented by EPA include the
impacts of both the upstream and downstream emission consequences of the rule, including the
impact of a rebound effect. This is described more fully in RIA Chapters 5 and 7.
EPA understands the commenter's concern about increases in criteria pollutant emissions that are
important to attainment of the ozone NAAQS. EPA does not believe this rule will interfere with
attainment of the ozone NAAQS. As discussed in Section 7.2 of the RIA, EPA's photochemical
air quality modeling projects that the final standards have relatively little impact on ambient
concentrations of ozone. Ozone design value changes as a result of the GHG standards finalized
in this rule are ±0.1 ppb for all Texas counties, with the exception of four counties in the greater
Houston area which see ozone design value decreases between -0.1 and -0.2 ppb due to projected
upstream emissions decreases in NOx and VOCs from reduced gasoline production. For annual
and 24-hour PM2.5, our air quality modeling projects design value changes of ±0.05 |ig/m3 for the
majority of the counties in Texas. Some Houston-area counties are projected to see decreases in
annual and 24-hour PM2.5 design values between -0.05 and -0.25 |ig/m3 (Section 7.2.2.2 of the
RIA).
Our modeling analysis of air toxics, described in Section 7.2.2.3 of the RIA, projects that
ambient concentrations of acetaldehyde and 1,3-butadiene will decrease in Texas. EPA notes
that we will be analyzing air quality impacts of increased renewable fuel use as required by the
"anti-backsliding" provisions of Clean Air Act section 21 l(v), which also requires EPA to
promulgate mitigation measures as appropriate, following that study.
Organization: South Coast Air Quality Management District
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Comment:
The proposed emission standards and companion fuel economy standards will result in a
significant reduction in greenhouse gas emissions as well as provide crucially important co-
benefits in reducing criteria emissions in support of attainment of federal and state air quality
standards for ozone and fine particulates. [Comments are from LA Testimony, OAR-2009-0472-
7283, pp.59-67]
EPA Response:
As discussed in the RIA Chapter 7.2, EPA's air quality modeling projects relatively little impact
on ambient concentrations of criteria pollutants and toxics, but there are net benefits associated
with reductions in PM2.5.
Organization: New York State Department of Environmental Conservation
Comment:
EPA's analysis projects criteria pollutant emission reductions as a result of implementation of
these standards. In particular, emissions reductions are expected from fuel production and
distribution industries. These reductions are background information, and provide some
assurance that criteria pollutant emissions increases are unlikely. These reductions, and their
geographic distribution, are not sufficiently certain to justify viewing them as offsets for
emissions increases from other programs such as the Renewable Fuel Standard. [OAR-2009-
0472-7454, p.5]
EPA Response:
EPA does not view any emissions reductions from this rule as "providing offsets" for emissions
increases from other rules. EPA has an obligation under the "anti-backsliding" provisions of
Clean Air Act section 21 l(v) to analyze the air quality impacts of increased renewable fuel use
and promulgate mitigation measures as appropriate.
Organization: Yuli Chew, Private Citizen
Comment:
For the rebound effect, in the CARS's Regulations to Control Greenhouse Gas Emissions from
Motor Vehicles, Final Statements of Reasons, August 4, 2006, ARB staff estimates that the
rebound and fleet turnover impacts are essentially offset by the benefits from reduced fuel cycle
emissions. [OAR-2009-0472-7042.1, p.5]
I also believe that the rebound and fleet turnover impacts are essentially offset by the benefits
from reduced fuel cycle emissions.[OAR-2009-0472-7042.1, p.6]
EPA Response:
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The commenter states that the reduction in upstream emissions decreases is roughly equivalent to
the rebound emissions, and references a California Air Resources Board report
(http://www.arb.ca.gov/regact/grnhsgas/fsor.pdf). As shown in Preamble Section III.G, for
volatile organic compounds (VOC), nitrogen oxides (NOx), and particulate matter (PM2.5),
upstream reductions are slightly larger than the emissions increases attributed to the rebound
effect when a 10% rebound effect estimate is used. There are both upstream and downstream
decreases of SOx emissions. EPA provides a full discussion of the impacts of rebound and
upstream emissions in Section III.G of the preamble to the final rule and in Chapter 5 of the RIA.
5.12.1 Upstream Impacts of Program
Relevant comments have been included in Section 5.12.
5.12.2 Downstream Impacts of Program
Relevant comments have been included in Section 5.12.
5.12.3. Health Effects of Non-GHG Pollutants
Organization: American Lung Association of California
Physicians for Social Responsibility, Los Angeles
California State Senate
Environment New Jersey
South Coast Air Quality Management District
Comment:
American Lung Association of California
California's unique air quality problems demand the strongest possible action to fight global
warming. Our state is home to some of the worst air quality in the nation, largely due to motor
vehicles, and this air pollution crisis has created a public health crisis. The American Lung
Association's 2009 national State of the Air report continued to demonstrate that California
dominates the lists of worst polluted cities in the country. The report found that California has 6
out of the top 10 worst ozone polluted cities in the country and again listed the Los Angeles
region as home to the worst ozone pollution in America.
Higher levels of death and illness from pollution exposures is experienced by vulnerable
individuals, including those with asthma or other respiratory and cardiac illnesses, the elderly,
infants, children, teenagers, low income communities, communities of color, and people living
near pollution hot spots including heavily travelled roads. There are millions of individuals that
are particularly vulnerable to pollution in our region.
Just as the transportation sector is the primary source of criteria pollution in California, it is also
the primary source of greenhouse gases, and global warming is expected to worsen ozone
pollution and its health effects. California and the rest of the country depend on this proposed
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regulation as a key step to reduce this major source of global warming emissions. Without strong
action, rising temperatures from global warming will likely lead to even more illness and
suffering from increases in air pollution and pollen production, longer and more intense heat
waves, and devastating wildfires and related smoke exposure. Recent research conducted by UC
Berkeley estimates that the public health costs to California from global warming will add an
additional cost of $3 billion to $24 billion annually depending on our success in reducing
greenhouse gases. Scientists predict that here in Los Angeles, global warming will cause the
number of heat wave days to rise dramatically, which could lead to a 75-85% increase in the
number of days with unhealthy air quality.
[OAR-2009-0472-7216.1, Docket Number OAR-2009-0472-7216/7216.1 These comments are
from testimony presented at the LA public hearing.]
Physicians for Social Responsibility, Los Angeles
Also when we focus on the health impacts of these tailpipe emissions and air pollution, for many
years we have spoken, and rightly so, on the issues of asthma and respiratory disease. We must
remember that air pollution poses a significant threat to the health of women who live in high-
traffic areas.
Over the last decade, a large number of studies have investigated the possible adverse effects of
ambient air pollution on birth outcomes. A number of key studies have been done in Los
Angeles. The work of Dr. Beate Ritz, the doctor who worked with Dr. Tracy Woodruff, have
shown that — and both published in Environmental Health Perspectives — have shown that there
is a significant implication of air pollution in adverse birth outcomes, low birth weight, changes
to the health of damaged heart valve development.
[These comments are from LA Testimony, OAR-2009-0472-7283, pages 79-85]
California State Senate
There is a compelling link between global warming and air pollution. Warmer temperatures
increase our ozone and smog forming pollutants. We have alarming and growing respiratory
illness, asthma and cancer rates occurring among our youth and the elderly. Several intense heat
waves over weeks at a time have caused illness and deaths. Lower income neighborhoods that
often lack air conditioning are particularly at risk during heat episodes. Agricultural losses,
increases in vector borne diseases, and a dramatic increase in loss of property and air pollution
from costly wildfires have become the new normal.
California is not the only state that is impacted by air pollution. From Denver, to Chicago, to
Albuquerque New Mexico, air pollution is a serious health problem. Two years ago, I testified in
Santa Fe, New Mexico as they were having a hearing on adopting California's Clean Car
standards. Several doctors and pediatricians, on their own initiative, came to support the policy
because of their concerns of their patients' health. For many, they said it was the first time they
had ever testified at a government hearing.
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[OAR-2009-0472-7275.1, alsoEPA-HQ-OAR-2009-0472-7283, pp. 13-20]
Environment New Jersey
Something that's clear to residents, especially from north Jersey, is the impacts of light-duty
vehicles, cars and trucks, on our air pollution. In New Jersey, the majority of our counties still
remain out of compliance with U.S. EPA health standards, to the extent that the asthma levels are
certainly higher in New Jersey than other areas. They're especially high in urban areas that are
closest to some of the largest highways in the state. These are again the externalities that were
touched upon in the National Academy of Sciences report and these literally mean thousands of
asthma attacks per year as well as increased levels of cancer and heart disease. [EPA-HQ-OAR-
2009-0472-4621, pp. 77-78]
South Coast Air Quality Management District
[The following comments are from LA public hearing testimony OAR-2009-0472-7283, pp. 59-
67.]
Over 25 percent of the nation's exposure to the eight-hour ozone standard occurs here in the
South Coast Air Basin, while over 50 percent of the nation's 24-hour PM2.5 standard exposure
occurs here.
There are over ten million registered light-duty vehicles in the South Coast Air Basin.
Reductions in fuel use associated with the standards proposed will therefore have a direct and
tangible benefit in terms of public health and welfare in our region.
The Air Resources Board has shown its sensitivity in addressing this issue while carefully
balancing social and industry needs to minimize cost and maximize consumer choice while
maximizing overall benefits.
Central to this determination is the imperative to improve public health. We are especially
pleased, therefore, that the ARB's program is fashioned around the value that there can be no
tradeoff between greenhouse gas emissions and criteria emissions.
EPA Response:
EPA agrees that there is a link between climate change and air pollution. For instance, as
summarized in the Technical Support Document of EPA's Endangerment and Cause or
Contribute Findings for Greenhouse Gases under Section 202(a) of the Clean Air Act, according
to the Intergovernmental Panel on Climate Change, climate change is expected to lead to
increases in regional ozone pollution in the United States.50'51
50 "Technical Support Document for Endangerment and Cause or Contribute Findings for Greenhouse Gases Under
Section 202(a) of the Clean Air Act" Docket: EPA-HQ-OAR-2009-0472-11292
51 See 74 FR 66496 (Dec. 15, 2009)-8
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In addition, emissions from light-duty vehicles contribute to ambient air pollution that poses
significant health concerns. Section 7.1 of the RIA for this rule details the health effects
associated with PM2.5, ozone, CO, NOx, SOx and several air toxics. EPA agrees that air pollution
in high-traffic areas is a significant issue; Section 7.1.1.6 of the RIA discusses exposure and
health effects associated with traffic specifically. In addition, see Section III.G and III.H of the
preamble to the final rule and Chapter 7 of the RIA for a discussion of the air quality and
monetized health benefits of this rule.
5.12.4 Environmental Effects of Non-GHG Pollutants
No comments were received on the environmental effects of non-GHG pollutants. The Center
for Biological Diversity's comments on the Endangered Species Act are addressed in Section 4.7
of this document.
5.12.5. Air Quality Impacts of Non-GHG Pollutants
Relevant comments have been included in Section 5.12.
5.13 EPA Estimated Cost, Economic, and Other Impacts
5.13.1 Conceptual Framework for Evaluating Consumer Impacts
"Energy Paradox"
Organization: American Council for an Energy Efficient Economy
Consumer Federation of America
International Council on Clean Transportation
University of Michigan Transportation Research Institute (UMTRI)
Consumer Federation of America
Union of Concerned Scientists
James Adcock
New York University School of Law, Institute for Policy Integrity (IPI)
Comment:
American Council for an Energy Efficient Economy
In terms of consumer welfare, from this perspective, the discussion of consumer welfare impacts
of the proposed rule is troubling. The agencies' finding that raising fuel economy will increase
consumer welfare despite the modest share of vehicles purchased today that are highly efficient
is not a conundrum, but rather a manifestation of extensively studied failures in the market for
energy for energy efficiency. The vehicles that will enable manufacturers to meet the new
standards by and large are not available today. The standards have been designed to allow
vehicles in each market segment to attain the required fuel economy and emissions levels
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without changes to other vehicle properties. [These comments were submitted as testimony at the
New York public hearing. See docket number EPA-HQ-OAR-2009-0472-4621, pp. 146-147.]
Consumer Federation of America
The very large potential efficiency gains estimated by the engineering/economic analysis
conducted by NHTSA/EPA, which can be most easily summarized by nothing that, even at the
highest and most expensive level, the cost of saved energy is about one-third of the price to
consume energy, are at the core of a decades long debate over fuel economy standards. In a
capitalist economy, when problems are serious, like rising energy prices and imports, and a
solution is inexpensive and potentially widely available, one would expect people to seize it. The
existence of the "efficiency gap" immediately raises the question: "Why don't people buy more
of it?'
The efficiency gap is not new, nor is it confined to the transportation sector. A similar efficiency
gap is found in building sector energy consumption. As Exhibit 1-1 shows, the magnitude of the
problem is similar across sectors. In the past few months, four major national research
institutions have released reports that document the huge potential for investments in energy
efficiency to lower consumers' bills and greenhouse gas emissions, creating a win-win for
consumers and the environment. The National Research Council of the National Academy of
Sciences has estimated the potential reduction in electricity, natural gas and gasoline at
approximately 30 percent, similar to the estimates of NHTSA/EPA. McKinsey and Company and
the American Council for Energy Efficient Economy have reached a similar conclusion on
electricity and natural gas. Across these three sectors, saving energy costs about one third of the
price of consuming it. See [OAR-2009-0472-7272.1, pp. 15-22] for extensive analysis
[The following comments were submitted as testimony at the Detroit public hearing. See docket
number EPA-HQ-OAR-2009-0472-6185, pp. 108-111]
Our research shows that the market failure is on the supply side as well as the demand side.
Survey research shows there is a huge mismatch between consumer demand and the vehicles
offered in the marketplace for efficiency. Analysis shows that consumers began shifting their
consumption patterns five years ago, but the automakers were unwilling or unable to respond,
and they were left with a growing number of vehicles that they could not sell.
But the most ironic fact is the following: The behavioral economics literature that the agencies
cited in their notice conclude that consumers are deficient in motivation, perception, and
calculation, and that that is a basis on which to conclude there is a market failure. But at the
same time those models incorrectly assume that producers are perfect, have perfect information,
perfect foresight, and perfect analytic capability.
It turns out, as the headline of the Detroit Free Press says today, 'Producers are people, too.'
They suffer the same deficiencies of motivation, perception, and calculation, and it turns out they
also have perverse incentives to exploit information asymmetries and abuse market power to
increase profit.
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So these two sets of far-from-perfect actors come together in a set of market institutions that
compound and magnify their deficiencies. The result is a 30-percent market failure, one of the
grossest inefficiencies in our whole economy. We consume 30 percent more energy than we
should if we're behaving efficiently. That shortfall costs consumers, reduces consumer welfare,
and fuel economy standards are the way to address it.
So EPA and NHTSA have an opportunity in the current rulemaking to establish a platform on
which a dynamic, innovative automobile sector can be built in America, one which meets the
needs for transportation in our continental economy in a manner that saves consumers money,
enhances national security through reduced oil imports, and ensures the transportation sector
makes its fair contribution to meeting the challenge of global warming.
To build that platform it is critically important to recognize the vital role that fuel economy
standards play in correcting market failures and set standards at a level that captures the full
measure of the value of the increased efficiency. In so doing, they will create an environment in
which a new automobile industry can thrive. We look forward to working with the agency to
build that platform.
International Council on Clean Transportation
The impact of the proposed standards on consumer welfare is the subject of much debate in the
proposal, reflecting the lack of clarity and understanding of this issue in general. The debate
revolves around the so-called Energy Paradox. Assuming full information and perfect foresight,
standard economic theory says that consumers will make optimal tradeoffs between the purchase
price and subsequent operating costs. In short, the problem is that consumers appear not to
purchase products that are in their economic self-interest.
Both agencies chose to exclude estimates of consumer welfare loss due to changes in vehicle
choice. Although this was done primarily because of methodological concerns, ICCT supports
this decision and does not believe there is significant consumer welfare loss in this case.
Consumers do undervalue fuel savings because of uncertainty and loss-aversion and generally
understand that standards do not reduce their welfare, as explained below.
There is substantial circumstantial evidence that most consumers in the U.S. place a low value on
fuel economy. For example, Turrentine and Kurani, 1 conducted an in depth survey of the car-
buying histories of 57 California households. None of these 57 households made any kind of
quantitative assessment of the value of fuel savings and only 9 stated they compared the fuel
economy of vehicles in making their choice. The selected consumers were largely unaware of
their annual fuel cost, in contrast to general knowledge of the daily price fluctuations of a gallon
of gasoline. Turrentine and Kurani concluded that: "When consumers buy a vehicle, they have
neither the tools nor the motivation nor the basic building blocks of knowledge to make a
calculated decision about fuel costs."
Turrentine and Kurani's findings were not based upon a representative sample, but they are
generally supported by the results of a 2007 national random survey of 1,030 households
(Opinion Research, 2007). When asked about their last vehicle purchase, 39 percent of
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respondents indicated they did not consider fuel economy at all and, of those who did, only 14
percent mentioned taking fuel costs or gasoline prices into consideration.
The question that has been debated for decades is simply - why? This is an extremely important
question, as most of the calculation of consumer welfare is based on the answer. If consumers are
already receiving their optimum level of fuel economy, then efficiency standards will decrease
their welfare. However, if there are valid reasons why consumers are not making optimal
tradeoffs at the time of vehicle purchase, or if the entire question is not being framed properly,
then efficiency standards could increase consumer welfare.
NHTSA, EPA, and the U.S. Office of Management and Budget (OMB) all recognize the
importance of the Energy Paradox, but state that it is not currently possible to fully account for
all effects on consumer welfare. While they all estimate the benefits of the GHG rule would
outweigh eventual losses of associated private welfare, they suggest further analyzing the subject
of consumer welfare for future rule making:
EPA said they are not able to estimate the consumer welfare loss that may accompany the actual
fuel savings from the proposal and asked for comments "on how to assess these difficult
questions in the future". NHTSA invites comments "on the state of the art of consumer vehicle
choice modeling, as well as on the prospects for these models to yield reliable estimates of
changes in consumer welfare from requiring higher fuel economy." OMB provided a 17 page
document containing suggested revisions for sections III.H and IV.G of the preamble. While
their suggestions were not incorporated into the text in the proposed rule, their document
indicates OMB's concern about consumer welfare and their desire to settle the long-standing
issues. Compared to the language in the preamble, the OMB language is more precise and clear
and the text is more structured. For example, they would have rewritten EPA's request for
comments to say, "EPA is not in a position to produce empirical estimates of the magnitude of
these losses. We lay out a framework for how EPA will make progress on this issue for future
rulemakings."
NHTSA and EPA accurately discussed the uncertainty-loss aversion theory in the proposal.
However, it was presented as one of an array of possible explanations. Not only is uncertainty-
loss aversion sufficient to explain consumer behavior by itself, but the other forms of market
failure can also be viewed simply as factors increasing the uncertainty of the future fuel cost
savings.
Does this mean that customers only value 3 years of fuel savings and that their consumer welfare
will decrease if standards force them to save money on fuel from technologies that achieve a
fuel-savings based payback in more than 3 years? Not necessarily. There are two important
issues that affect the conclusion: (1) Standards change the status quo by removing the option to
buy a vehicle without the additional efficiency technology - it is not presented to the customer at
all. (2) Standards require everyone to purchase higher levels of efficiency technology, not just
individual customers, leading to indirect consumer welfare benefits.
The concept of consumer welfare under standard economic theory is based upon individual
choices. However, efficiency standards affect everyone, not just individual customers. This
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changes the calculation of consumer welfare. The individual's welfare is now the sum of the
direct impact on the individual and the indirect benefit to the individual of forcing other
customers to buy more efficient vehicles.
There is also a potential issue with the consumer welfare of second and subsequent owners. In
reality, the original purchaser likely does not assess the full useful life fuel savings, including
uncertainty, when making purchase decisions. Rather, the original purchaser likely assesses the
fuel savings for his/her ownership period plus the additional amount the second owner will pay
for the higher fuel economy, both including uncertainty. Because of uncertainty, the original
owner severely discounts what the second owner would be willing to pay for the higher fuel
economy. If this discounted value is smaller than the value the subsequent owner would place on
the fuel savings, including uncertainty, this creates a loss of welfare for the second owner.
University of Michigan Transportation Research Institute (UMTRI)
This section responds to interagency comments received prior to the publishing of the NPRM in
the Federal Register. These interagency comments are contained in Document ID: EPA-HQ-
OAR-2009-0472-0317.2: "Corporate Average Fuel Economy/Green House Gas (CAFE/GHG)
Notice of Proposed Rule Making (NPRM) Summary of Interagency Comments under E. 0.
(Executive Order) 12866". The interagency comments are in the form of a suggested rewrite of
Section III.H of the "Proposed Rulemaking to Establish Light-Duty Vehicle Greenhouse Gas
Emission Standards and Corporate Average Fuel Economy Standards". [OAR-2009-0472-
3651.1,p.5]
The key paragraph contains the conceptual rationale for the suggested approach.
"The changes in welfare, holding constant vehicle purchases, turn on assumptions about
consumers' private discount rate. Assuming perfectly competitive markets and perfect consumer
foresight, standard economic theory suggests that in the absence of regulation, consumers
currently make optimal trade-offs between the cost of purchasing a new vehicle and its
subsequent operating costs (i.e., fuel expenditures, time spent refueling, and the benefits of
additional driving). The assumption of perfect consumer foresight has of course run into serious
theoretical and empirical objections in recent years, especially from behavioral economics. But it
is important to see that on the stated assumption, no net private benefits accrue from the rule,
since the regulation will change the purchase price of new cars and the stream of operating costs.
The essence of this view is that in the absence of the regulation, consumers fully understand their
current and future financial positions and optimally balance the trade-off between upfront costs
and future operating costs. For this reason, CAFE or any other regulation that alters this trade-off
must harm their private well being. This intuition behind this conclusion is best captured by the
recognition that automobile companies currently sell vehicles that already comply with the
standards set forth in this rule — yet many consumers choose not to purchase these
vehicles." [OAR-2009-0472-3651.1, p.6]
In evaluating proposed regulations, the benefits and costs of the regulation must be measured
against a baseline. The above paragraph suggests that the baseline should be "perfectly
competitive markets and perfect consumer foresight". However, according to the OMB's
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guidelines for economic analysis of regulations, the baseline should be the "best assessment of
the way the world would look absent the proposed regulation". Perfectly competitive markets
and perfect consumer foresight do not describe the way the world looks today and are highly
unlikely to describe the way the world would look in the future—with or without the proposed
GHG emission standards. [OAR-2009-0472-3651.1, p.6]
Market failure can arise from externalities, market power, and inadequate or asymmetric
information. The "market" for clean, fuel-efficient motor vehicles has all the necessary
conditions for market failure. The most significant are inadequate information about the future
and limitations in human rationality. Neither consumers nor automakers possess perfect foresight
and rationality in making decisions. Calculations of welfare loss based on subjective consumer
valuation are always problematic—they are difficult to estimate and difficult to justify. Using the
perfect market populated by perfect producers and perfect consumers as the baseline against
which gains and losses are assessed assumes that the status quo is the perfect market. [OAR-
2009-0472-3651.1, p.6]
The OMB guidelines have it right—the baseline should be the way the real world would look
absent the regulation. Adopting the approach in the suggested rewrite of section III.H would get
it wrong. [OAR-2009-0472-3651.1, p.6]
In standard economic theory, a perfectly competitive market populated by consumers and firms
with perfect foresight is, by definition, a world in which private welfare is maximized. Thus, any
regulated change of product attributes or mix of products reduces private welfare. Setting the
baseline as the perfectly competitive market populated by consumers and firms with perfect
foresight, and then "concluding" that GHG emission regulations result in private welfare loss is
an example of a rhetorical tautology. The conclusion is already present in the assumption. [OAR-
2009-0472-3651.1, p.7]
The last sentence in the quoted paragraph reads, "This intuition behind this conclusion is best
captured by the recognition that automobile companies currently sell vehicles that already
comply with the standards set forth in this rule - yet many consumers choose not to purchase
these vehicles." The statement is misleading. Targets are set vehicle-by-vehicle based on
footprint, however the standard must be met by each company. Thus, it is wrong to say that some
vehicles already comply with the standards. [OAR-2009-0472-3651.1, p.7]
Let's assume that what was meant by the statement is that automobile companies currently sell
some vehicles that are very fuel-efficient and clean, and that some consumers choose not to
purchase these clean fuel-efficient vehicles. This is a true statement. However, the observed
diversity in consumer purchases does not imply that CAFE necessarily harms private well-being.
Since that conclusion is tautologically true if one assumes a perfectly competitive market with
consumers and producers with perfect foresight, the observed diversity in consumer purchases is
irrelevant. [OAR-2009-0472-3651.1, p.7]
[UMTRI also submitted these comments as testimony at the Detroit public hearing, See docket
number EPA-HQ-OAR-2009-0472-6185, pp. 40-42.]
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Consumer Federation of America
[Following is from [OAR-2009-0472-7272.1, p.42]
As discussed in Section II, the Notice barely scratches the surface of the debate over the
"efficiency gap" and the policies to deal with it. The terminology applied to describe the failure
of energy markets to achieve the level of energy efficiency one would expect from a theoretically
efficient market has proliferated as concern over this problem has grown. The existence of this
"efficiency gap" is explained with terms like barriers, obstacles, challenges, imperfections, and
failures. These terms are often applied differently by different authors. When all is said and done,
however, there is substantial consensus on the challenges energy efficiency faces.
To establish a framework for explaining the existence and magnitude of the market failure, as
well as why fuel economy standards are an effective solution to the problem, this section reviews
several literatures.
First, we review the discussion of the issue in the Notice of Proposed Rulemaking and its
supporting documents. The agencies have invited comment on this issue.
Second, we briefly establish the basis for market failure analysis in the general economic
literature. We start from traditional economic discussions and then move to more recent
challenges to the traditional model in transaction cost and behavioral economics.
Third, we review the general "efficiency gap" literature. This literature was cited in the Notice
and supporting documents.
Fourth, we review the "efficiency gap" literature as it relates directly to fuel economy and the
importance of supply-side causes of market failure. This literature was also cited in the Notice
and supporting documents.
Union of Concerned Scientists
Consumers also have not had perfect substitutes available in the market. The assertion that "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" indicates a lack of
knowledge about the actual vehicle offerings. For example, in minivans available for Model
Year 2010, consumer fuel economy choices range from 18-20 mpg. To achieve higher fuel
economy a consumer has one choice, a 23 mpg model that is smaller and less powerful than the
others on the market. While a consumer choosing the 20 mpg model instead of the 23 mpg model
does indicate that they place more value on the available size and performance than on the
benefit of a 3 mpg increase, it does not imply that they would experience a welfare loss if they
were given a 23 mpg vehicle with the same size and performance as the 20 mpg model. With the
technology available to automakers, consumers will be able to purchase 2016 models with the
same size and performance, and likely even better safety, than they have today while also saving
money on fuel. [OAR-2009-0472-7181.1, pp.15-16]
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Finally, the argument that consumers have an intuition that allows them to act as if they were
operating in a perfect market is belied by the shifts in sales away from large SUVs that occurred
as gas prices shot up in 2007 and 2008. Consumers, and manufacturers, were clearly unprepared
for these changes and lacked the foresight and substitutes to maintain their welfare. If this
intuition exists, it must be based on some unknown ability, as recent work by Kurani and
Turentine indicates that consumers "do not have the basic building blocks of knowledge to make
an economically rational decision." [OAR-2009-0472-7181.1, p. 16]
James Adcock
The "Energy Paradox" Explained: Traditionally more expensive vehicles consume more fuel
which corresponds to a generally marketing pattern of "conspicuous consumption" by more
wealthy consumers - where consumers display their personal wealth and power through their
display of overall consumption. High MPG vehicles such as a Prius turn this standard marketing
paradigm on its head: now the wealthier consumer is paying to display their NON-consumption.
Hollywood for example "Living with Ed" has been trying to sell the "less is cool" message for
many years now. But then small high-MPG vehicles like the Prius conflict with the general
marketing message of a Mfg which is "More is Better." This problem with mixed marketing
messages coming from a Mfg was best represented by GMC having to decide whether to
produce the EV 1 or the Hummer - GMC couldn't do both because of the oxymoron corporate
marketing message involved. Likewise Toyota today falls under consumer pressure to stop
manufacturing large trucks and become a "Purely Green" company.
We believe NHTSA continues to misunderstand the oil shock 1973 : It was high gas prices, NOT
CAFE which lead consumers to downsize their choice of vehicles . Higher CAFE standards
allow the consumer to be able to afford to buy a larger more safe vehicle than in the absence of
CAFE. Consumer preference in vehicles HAS changed as indicated by Mfgs advertising MPG
NOT HP in their TV ads . That offered MPG is not what consumers desire can be implied by the
universal Mfg practice of touting HWY MPG NOT "Combined" MPG in their TV ads. The
NHTSA discussion of consumer implied discounting rates cannot explain the success of the
Prius . NHTSA needs to be able to explain this "anomaly" and also be able to explain the
extremely high consumer satisfaction indices associated with Prius purchases. Recent refusals of
consumers to buy large low MPG trucks would imply that it is NHTSA and the Mfgs who are
not valuing MPG correctly - not consumers! NHTSA complains that consumers do not correctly
value gas savings while allowing Mfgs to widely misrepresent the fuel efficiency of their
vehicles, for example by broadcasting televisions ads which display HWY MPG as-if it were
Combined MPG. The fact that Mfgs feel the need to misrepresent the MPG they are achieving
demonstrates that consumers want higher fuel economy than Mfgs are providing. In the face of
this CAFE can be seen as fulfilling an important consumer protection role against the misleading
Mfgs Advertising.
"If. . . consumers have reliable information to estimate . . . future fuel savings." But consumers
DO NOT have such "reliable information!" What consumers get is Mfg unreliable information in
the way of TV ads that tout unrealistically high MPG while the unreadable fine print on the
bottom of the screen says we are quoting HWY MPG not the more realistic COMBINED MPG."
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So consumers believe they are buying higher MPG than they are actually getting because Mfgs
are misrepresenting MPG in TV ads.
"Compromising Performance" is only a compromise to the extent that consumers WANT their
"performance" measured on a "0 to 60" basis. To the extent consumers want their "performance"
measured on an "MPG" basis then downsizing engines cost the Mfgs "Less than Nothing" - thus
NHTSA standards based on an assumed "no change in performance" [meaning no change in "0
to 60"] are in fact being set too low - because at least some consumers measure "performance"
on an MPG basis, not on a "0 to 60" basis.
New York University School of Law, Institute for Policy Integrity (IPI)
All other things equal, fully informed and perfectly rational consumers should be indifferent
between a $1 increase in vehicle purchase price and a $1 savings in net present value of fuel
costs. Yet a growing body of evidence suggests that consumers under-weigh costs that are less
salient or accrue in the future, such as shipping and handles charges, management fees, sales tax,
electricity, and fuel. One very recent study using a novel design and conservative assumptions
found a significant average undervaluation of vehicle operating costs: consumers were willing to
pay only 25 cents extra to reduce the net present value of expected gas costs by $1. [OAR-2009-
0472-7232.3, p. 5]
This discrepancy—called the Energy Efficiency Paradox—can be depicted graphically [See
OAR-2009-0472-7232.3, p. 5 for the graph.]. At a car's market price, some consumers will not
buy, and others would actually be willing to pay more. [OAR-2009-0472-7232.3, p. 5]
The area between the demand curve and the market price—the "consumer surplus"—defines the
value consumers attach to a good above its market price. Consumers will buy a car up the point
where the purchase price plus the perceived operating costs equals their willingness to pay.
However, if actual operating costs are much higher than perceived operating costs, consumers
will buy more of this particular car model than they rationally should. Moreover, economic
studies that look only at consumers' choices would overestimate consumer surplus and would
therefore overestimate the lost consumer welfare from restricting the consumers' ability to select
that particular model. [OAR-2009-0472-7232.3, p. 6]
Explanations for the Energy Efficiency Paradox will inform the appropriate regulatory response.
NHTSA raises the possibility that no paradox exists: rather, consumers might be making a
rational choice given uncertainty about future fuel prices and their vehicle's expected lifetime
and usage. Consumers might compare the known, irreversible, upfront purchase price against an
unknowable future stream of fuel savings, and choose to minimize the former. Regulations
restricting such a choice would reduce consumer welfare. The current empirical evidence for
such an explanation seems mixed at best: NHTSA should consider whether the evidence is
sufficient to warrant adjusting its estimate of the Energy Efficiency Paradox, but overall support
does not seem to justify a conclusion that no paradox exists. [OAR-2009-0472-7232.3, p. 6]
Another possible explanation is that consumers lack the necessary information to make a rational
choice, do not fully appreciate the information presented, or are unable to translate information
on fuel efficiency into expected fuel savings. This almost certainly is part of the problem, and the
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EPA Response to Comments
agencies should continue efforts in the proposed rulemaking to improve the labeling and
information available to consumers, especially in light of recent research demonstrating how
mere differences in the presentation of numbers can alter consumer valuations. [OAR-2009-
0472-7232.3, p. 6]
But even if consumers had full information, the Energy Efficiency Paradox might persist if
consumers apply a high discount rate to operating costs or are especially averse to short term
loss. In such a case, there is a legitimate role for government regulation to encourage consumers
to consider the long-term costs of car ownership. And, as explored more fully in the next section,
government regulation may be necessary to correct market failures that lead consumers to make
sub-optimal choices about fuel efficiency. [OAR-2009-0472-7232.3, p. 6]
EPA Response:
For this 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 an economic conundrum. On the one hand, consumers are
expected to gain significantly from the rules, as the increased cost of fuel efficient cars appears
to be far smaller than the fuel savings. Yet these technologies are readily available; financially
savvy consumers could have sought vehicles with improved fuel efficiency, and auto makers
seeking those customers could have offered them. Assuming full information, perfect foresight,
perfect competition, and financially rational consumers and producers, standard economic theory
suggests that normal market operations would have provided the private net gains to consumers,
and the only benefits of the rule would be due to external benefits. Assuming those conditions, if
our analysis projects that there are net private benefits that consumers have not realized in this
perfectly functioning market, then increased fuel economy should be accompanied by a
corresponding loss in consumer welfare. This calculation assumes that consumers accurately
predict and act on all the benefits they will get from a new vehicle, and that producers market
products providing those benefits. The existence of large private net benefits from this rule,
then, suggests either that the assumptions noted above do not hold, or that EPA's analysis has
missed some factor(s) tied to improved fuel economy that reduce(s) consumer welfare. With
respect to the latter, EPA believes the costs of the technologies developed for this rule take into
account the cost needed to ensure that all vehicle qualities (including performance, reliability,
and size) stay constant, except for fuel economy and vehicle price. As a result, there would need
to be some other changed qualities that would reduce the benefits consumers receive from their
vehicles. Changing circumstances (e.g., increased demand for horsepower in response to a drop
in fuel prices), and any changes in vehicle attributes that manufacturers elect to make may result
in additional private impacts to vehicle buyers from requiring increased fuel economy.
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EPA Vehicle Program, Feasibility, and Estimated Impacts
The central conundrum has been referred to as the Energy Paradox in this setting (and in several
52
others). 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.53
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 the higher prices of 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; or, in the case of vehicle fuel efficiency, consumers may have relatively few choices to
purchase vehicles with greater fuel economy once other characteristics, such as vehicle class, are
chosen. A great deal of work in behavioral economics identifies factors of this sort, which help
account for the Energy Paradox.54 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.55
Considerable research suggests that the Energy Paradox is real and significant due in part 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. Consumers face difficulty in predicting the fuel
savings that they are likely to get from a vehicle, for a number of reasons. For instance, the
calculation of fuel savings is complex, and consumers may not make it correctly.56 Larrick and
Soil (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).57 In
addition, future fuel price (a major component of fuel savings) is highly uncertain. Consumer
fuel savings also vary across individuals, who travel different amounts and have different driving
styles. Studies regularly show that fuel economy plays a role in consumers' vehicle purchases,
but modeling that role may still be in development.58
52
Jaffe, A. B., and Stavins, R. N. (1994). The Energy Paradox and the Diffusion of Conservation Technology.
Resource and Energy Economics, 16(2), 91-122. Docket EPA-HQ-OAR-2009-0472-11415.
For an overview, see id.
54
Jaffe, A. B., and Stavins, R. N. (1994). The Energy Paradox and the Diffusion of Conservation Technology.
Resource and Energy Economics, 16(2), 91-122. Docket EPA-HQ-OAR-2009-0472-11415.
For example, it might be maintained that, at the time of purchase, consumers take full account of the time spent
refueling 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.
56 Turrentine, T. and K. Kurani (2007). "Car Buyers and Fuel Economy?" Energy Policy 35: 1213-1223 (Docket
EPA-HQ-OAR-2009-0472); Larrick, R. P., and J.B. Soil (2008). "The MPG illusion" Science 320: 1593-1594
(Docket EPA-HQ-OAR-2009-0472-0041).
Sanstad, A., and R. Howarth (1994). "'Normal' Markets, Market Imperfections, and Energy Efficiency." Energy
Policy 22(10): 811-818 (Docket EPA-HQ-OAR-2009-0472-11415); Larrick, R. P., and J.B. Soil (2008). "The MPG
illusion" Science 320: 1593-1594 (Docket EPA-HQ-OAR-2009-0472-0043).
CO
Busse, Meghan R., Christopher R. Knittel, and Florian Zettelmeyer (2009). "Pain at the Pump: How Gasoline
Prices Affect Automobile Purchasing in New and Used Markets," Working paper (accessed 6/30/09), available at
http://www.econ.ucdavis.edu/faculty/knittel/papers/gaspaperjatest.pdf (Docket EPA-HQ-OAR-2009-0472-0044).
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EPA Response to Comments
If there is a difference between fuel savings and consumers' willingness to pay for fuel savings,
the next question is, which is the appropriate measure of consumer benefit? Fuel savings
measure the actual monetary value that consumers will receive after purchasing a vehicle; the
willingness to pay for fuel economy measures the value that, before a purchase, consumers place
on additional fuel economy. As noted, there are a number of reasons that consumers may
incorrectly estimate the benefits that they get from improved fuel economy, including risk or loss
aversion, and poor ability to estimate savings. In addition, fuel economy may not be as salient as
other vehicle characteristics when a consumer is considering vehicles. If these arguments are
valid, then there will be significant gains to consumers of the government mandating additional
fuel economy. The RIA, Chapter 8.1.2, includes further discussion of these phenomena.
EPA disagrees with the IPI's characterization of the Energy Efficiency Paradox. In the paradox,
as discussed in EPA Preamble III.H. 1 and RIA 8.1.2, consumers buy less fuel economy than the
cost-effective level. As a result, there are consumer benefits that are left unrealized. Some
economic models of the fuel economy market assume away the paradox, by adjusting the models
to incorporate additional, undefined costs that lead to marginal benefits equaling marginal costs.
In those models, any required increase in fuel economy must make consumers worse off, because
they are already buying the cost-effective amount. If, however, the savings from improved fuel
economy exceed the costs of the technology to provide it, then consumers can gain from fuel
economy standards.
That said, EPA agrees that consumers may not make fuel economy decisions in ways that
minimize their costs, and that "there is a legitimate role for government regulation" in this
context.
Discount Rate for Fuel Savings
Organization: Natural Resources Defense Council
Comment:
Fuel Savings Should Be Valued Using a 3 Percent Discount Rate
When evaluating the private benefits of fuel savings to consumers, we support the EPA and
NHTSA use of a 3 percent discount rate as a reasonable approach since it is consistent with
OMB guidance and current DOE practice when evaluating benefits of energy savings from
residential appliance standards. While we appreciate the richness of the agencies' discussions
regarding the "energy paradox", the existence of high implicit or revealed consumer discount
rates simply points to the need for strong standards to ensure consumers have access to
investments in highly cost-effective fuel savings technologies. The appropriateness of
government standards to help overcome market barriers to energy efficiency investments and
necessary to meet national energy savings and environmental goals has been well established
with decades of state and federal efficiency standards for appliances, buildings and vehicles.
[OAR-2009-0472-7141.1, p. 23]
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The use of a 3 percent to evaluate the consumer welfare benefits of fuel savings is fully
consistent with guidance from OMB (Circular A-4) for evaluating net benefits in a regulatory
analysis. The 3-percent rate is the average real rate of return on long-term government debt over
the last 30 years. OMB Circular A-4 also permits the use of a 7 percent discount rate which is an
estimate of the average before-tax rate of return to private capital in the U.S. economy. NRDC
believes the lower end of the range is the most appropriate to use and has consistently argued for
a discount rate of 3 percent or even lower when valuing the benefits of fuel savings. [OAR-2009-
0472-7141.1, p. 24]
The use of the 3 and 7 percent discount rates is also the standard DOE practice for evaluating the
electricity cost savings for residential appliances. The most recent example is the final rule
adopted April 8, 2009 for dishwashers, dehumidifiers, microwave ovens, electric and gas kitchen
ranges and ovens. In this final rule, DOE estimated the benefits and costs of the standards in the
following manner:
The benefits and costs of today's final rule to the Nation can also be expressed in terms of
annualized [2006$] values over the forecast period (2012 through 2042). Using a 7-percent
discount rate for the annualized cost analysis, the cost of the standards established in today's
final rule is $17 million per year in increased product and installation costs, while the annualized
benefits are $37 million per year in reduced product operating costs. Using a 3-percent discount
rate, the cost of the standards established in today's final rule is $28 million per year and the
benefits are $85 million per year. [OAR-2009-0472-7141.1, p. 24]
The use of an "implicit" or "revealed" consumer discount rate is entirely inappropriate when
evaluating policies that specifically address the very market barriers that create the high implicit
discount rates. NRDC strongly disagrees with interagency comment number 34 that recommends
evaluating consumer discount rates of 20 percent, 35 percent, and 50 percent. Such discount rates
are inappropriate and inconsistent with previous rulemakings on consumer energy efficiency
appliance standards by DOE and fuel economy standards by NHTSA. The 20 percent and higher
discount rates represent an 'implicit' consumer discount rate that is a result of a number of
market barriers to fuel efficiency, exactly which the proposed GHG and CAFE standards are
well suited to overcoming. [OAR-2009-0472-7141.1, p. 24]
EPA Response:
EPA has used the standard 3% and 7% discount rates for its calculation of the benefits from fuel
savings in Preamble Section III.H.4. EPA believes that whether consumers use high discount
rates when they are buying a vehicle is a separate issue from the fuel savings that they will
receive, and the discount rates associated with the money from the fuel savings.
Discount Rate Applied to Future Benefits
Organization: New York State Department of Transportation (NYSDOT)
Comment:
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EPA Response to Comments
It is not clear if the same discount rate that is applied to future benefits is applied to future costs
in the proposal. For example, several tables (e.g. Tables IV.G.4-10 through IV.G.4-14) present
various cost and benefit values. The titles of these tables imply that a discount rate is applied
equally to costs and benefits. However, the NPRM defines the discount rate as follows:
The Reference Case uses a discount rate of 3 percent to discount future benefits.' Although the
sensitivity analyses in the DEIS and NPRM indicate that the only economic factors of
importance are industry compliance costs, the cost of fuel, and the magnitude of the rebound
effect, the DEIS and NPRM should more clearly define how discount rates are applied to both
costs and benefits. As noted in our comments to NHTSA dated September 8, 2008, discount rates
should be applied to both benefits and costs. [OAR-2009-0472-7531.1, pp.2-3]
EPA Response:
For the final rule, EPA and NHTSA have used both a 3 percent and 7 percent discount rate to
estimate the present value of costs, benefits and net benefits associated with the final rule. We
have made it clear, both in the text and in the tables, which results are associated with a 3 percent
discount rate and which are associated with a 7 percent discount rate.
Role of Benefit-Cost Analysis
Organization: University of Michigan Transportation Research Institute (UMTRI)
New York State Department of Transportation (NYSDOT)
Comment:
University of Michigan Transportation Research Institute (UMTRI)
Assuming perfectly competitive markets populated by consumers and producers with perfect
foresight does allow economists to produce estimates of intangible, subjective costs and benefits
that appear to be precise. Given the unrealistic assumptions required, the estimates are
questionable. EPA should avoid treating estimates of intangible, subjective gains and losses as if
they were tangible and objective. [OAR-2009-0472-3651.1, p.7]
Neoclassical welfare economic analysis is what is recommended in EPA-HQ-OAR-2009- 0472-
0317.2: "Corporate Average Fuel Economy/Green House Gas (CAFE/GHG) Notice of Proposed
Rule Making (NPRM) Summary of Interagency Comments under E. 0. (Executive Order)
12866". The foundations of neoclassical welfare economics consist of (1) the theory of the
consumer as a rational utility maximizing agent, (2) the theory of the firm as a profit maximizing
agent, (3) perfect foresight by both sets of agents, and (4) a perfectly competitive market. In
recent years, empirical and conceptual contributions in consumer behavior and the theory of the
firm have undermined these foundations. If the foundations give way, then the apparatus of
neoclassical welfare economic analysis collapses. Benefit cost analysis (BCA) is then a dubious
tool for policy judgments. [OAR-2009-0472-3651.1, p.7]
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What should EPA and NHTSA use to replace benefit cost analysis (BCA)? An alternative tool
derived from ecological economics is multi-criteria decision aide (MCDA). This approach to
policy analysis takes a wide variety of relevant information into account, and is consistent with
the multiple criteria that Congress has directed that EPA and NHTSA address in their
rulemaking. The merits of MDCA compared to BCA are detailed in a 2005 paper by Gowdy and
Erickson. [OAR-2009-0472-3651.1, pp.7-8] [[See Docket Number OAR-2009-0472-3651.1, p.8
for a table that outlines their comparison.]]
[[UMTRI also submitted these comments as testimony at the Detroit public hearing, See docket
number EPA-HQ-OAR-2009-0472-6185, pp. 40-42.]
New York State Department of Transportation (NYSDOT)
The proposal does not appear to give due consideration to the economic benefits of improved
fuel economy at the consumer level. It is not reasonable to assume that the only effect of fuel-
costs savings will be a rebound effect. The only economic benefit that appears to be considered
in the impact analysis is a $0.17/gallon benefit from reducing oil imports. Unfortunately, this
anticipated benefit is difficult to comprehend since the DEIS indicates that fuel consumption will
increase significantly in the future whether or not the proposed CAFE standards are
implemented. [OAR-2009-0472-7531.1, p.3]
EPA Response:
EPA disagrees that benefit-cost analysis is "a dubious tool" in this framework. Benefit-cost
analysis can be (and has been) used in situations where not all of the assumptions listed above
hold: for instance, it can be used to measure the effects of imperfect competition. EPA's
assessment of the benefits and costs is in Preamble Section III.H. Because we believe that
benefit-cost analysis is an appropriate evaluation tool, we have chosen not to use multi-criteria
decision aid for this rule.
EPA considers a wide range of economic impacts associated with the final rule. For reference,
Chapter 8.4 of EPA's RIA and Section III.H. 10 of the preamble present a summary of costs,
benefits, and net benefits of the rule. The net benefits of EPA's final program consist of the
effects of the program on:
• the vehicle program costs (costs of complying with the vehicle CC>2 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, and
other flexibilities built into the final program),
• fuel savings associated with reduced fuel usage resulting from the program,
• greenhouse gas emissions,
• noise, congestion, accidents,
• other pollutants,
• energy security impacts,
• reduced refueling events, and
• increased driving due to the "rebound" effect.
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Imperfect Competition
Organization: James Adcock
In general consumers with differing projections of the "true" future cost of SCC and fuel prices
will make differing estimates of the utility of the purchase of a particular vehicle. Analysis that
assumes one particular "US-wide" value of SCC or fuel costs will thus reach erroneous
conclusions about vehicles Mfgs should be offering consumers - consumers hold a wide variety
of beliefs on these subjects and thus Mfgs should, if "free market" forces are at work [which they
aren't, due to huge barriers to entry into the Auto Industry — due in part to NHTSA regulations]
provide a wide variety of fuel efficiency vehicles to consumers. But the market doesn't actually
work that way. For example Toyotas' great success with the Prius makes it LESS likely not more
that other Mfgs will attempt to compete in that segment of the market.
NHTSA assumes that citizen do not understand the cost benefits of higher fuel efficiency but
ignores the fact that the vehicle market is not a "perfect market" and Mfgs may not be offering
the fuel efficiency vehicles that consumers want. Further, NHTSA regulations and "Grey
Market" import restrictions work to make the market even less perfect, since many high fuel
efficiency vehicles available overseas are not available to the US citizen.
Contrary to NHTSA statements the US does not in practice represent a "competitive free market"
environment compared to the EC market say Great Britain where the consumer has several times
as many model choices to choose from. On a stringency adjusted basis EU and Japan fuel
economy standards still remains approx . 2X as strict as the US . NHTSA needs to clearly
explain why the US is not competitive in being able to offer similar environmental benefits here .
"Consumer perfect knowledge leads to informed choice" - this cannot happen if the Mfgs do not
in fact provide the option of cars with MPG equal to what consumers want. Consumers cannot
buy the car they want in part because NHTSA "Grey Market Laws" prevent importation of most
high fuel efficient vehicles built worldwide. In a "perfect market" such barriers do not exist,
rather the choice is left to the consumer . Further, the US Auto Market has huge barriers to entry
for new competitors due in part to the differences between world EC regulations vs . US specific
DOT regulations, and the huge cost of crash testing.
EPA Response:
As discussed in RIA Section 8.1, it is possible that market imperfections on the part of the auto
makers may contribute to the existence of the "energy gap."
Policies influencing consumer purchasing attitudes
Organization:
Michael T. Schade
James Adcock
Comment:
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Michael T. Schade
The Energy Paradox presented and discussed several times in the rule is likely among the most
important issues in achieving the national fuel consumption and CO2 emission reduction targets.
Especially of concern to me is how to encourage a greater public desire for more highly fuel
efficient and lower CO2 emitting vehicles. I'm not talking about someone buying a more fuel
efficient SUV that will be enabled by this rule but encouraging them to consider trading down to
a model that is smaller and even more fuel efficient. Several episodes of oil shortages and oil
driven price swings during the 1970's and the price spike 2 years ago demonstrate the transitory
nature of purchase decision that place a high value on fuel efficiency. The European experience
of continually very high fuel taxes forcing high motor fuel prices and leading to a high priority
given to fuel economy in vehicle purchase decisions is demonstrated every day in the nature of
the European vehicle fleet composition. Sales estimate premises are now much more transparent
than using confidential manufacturer input. But their accuracy is still vulnerable to major
dislocations due to customer buying preferences that may abruptly (either on a temporary basis
or more permanently) change with fuel price spikes and troughs. This may be the weakest link
in the whole current approach in reducing motor fuel consumption by forcing incremental
vehicle improvements. The absolute minimum backstop concept partially deals with this risk but
only for the domestic automobile fleet and not for imported cars nor for trucks in total. My only
recommendation is a predictable and well understood ramping up of motor fuel taxes to a level
that will change consumer behavior and create pull through demand for much more efficient
vehicles. Preferably, these tax increases would be offset by equivalent tax cuts in other areas.
But I understand that much higher gasoline/diesel federal taxes are not now politically
achievable so I'd recommend including in this rule a transparent and honest discussion of the
risk of not adopting policy targeted towards influencing desired consumer purchasing
attitudes. [OAR-2009-0472-7261.1, pp.3-4]
James Adcock:
Lowering the size and weight of vehicles doesn't cause the consumer to buy these smaller
vehicles . Rather, the consumer buys smaller vehicles to optimize the total cost of ownership to
their financial situation given higher gas prices . We do not believe either tiny vehicles such as
Smart or giant vehicles such as Escalade are in the broader public interest of safety nor
reasonable fuel economy tradeoffs . CAFE and crash test standards should be developed in a way
that makes clear that such extreme size "outliers" are not good consumer choices.
We believe it can be a rational choice on the part of the consumer in terms of morality to risk
personal safety by buying a smaller car which is less destructive to the planet and the human
race, even while climate change deniers - aggressive drivers - buy aggressive design "Monster
Trucks."
We believe it is morally unacceptable in modern society, that a consumer be allowed to buy, and
a Mfg be allowed to make, a vehicle KNOWN to have low MPG AND which represents a high
fatality risk to the occupants of other vehicles - aka "Aggressive Design ." That NHTSA
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EPA Response to Comments
continues to allow this represents a failure to rationally regulate the market for either safety or
for fuel economy.
EPA Response:
Consumers have different tastes, and choose different combinations of vehicle characteristics.
EPA seeks to reduce GHG emissions vehicles while maintaining the quality and variety of
vehicles. Consumers have many factors in mind when they choose the vehicles that they buy;
switching to a smaller and even more fuel efficient vehicle may not be possible for everyone.
EPA agrees that vehicle sales estimates are not precise due to factors such as those that the
commenter mentions. A gasoline/diesel fuel tax is outside the scope of this rule.
EPA's analysis of this rule includes discussion of its impacts in a number of areas, including
among others consumer welfare, energy security, climate, other air pollutants, accidents, noise,
congestion. Because the baseline is our estimate of the world without the rule, then the effects of
not adopting this policy are the negative of the effects of the rule, reported in the rulemaking
documents.
5.13.2. Costs Associated with the Vehicle Program
Organization: California Air Resources Board
Comment:
We agree with NHTSA that the incremental increases in average new vehicle costs can be
mostly or wholly passed through to consumers, and for this reason also agree with EPA's related
assumption that cost increases of this magnitude will not create a fleet turnover issue. Due to the
concurrent improvements in fuel efficiency (and lower emissions), the higher vehicle purchase
price can be offset by the fuel savings within the typical ownership period of the first owner.
Reduced operating costs could make these new vehicles more attractive to consumers who
expect fuel prices to remain high or continue to rise. For this reason and based on previous
CARB analyses for the Pavley GHG rulemaking, we do not believe that the increased vehicle
prices will significantly deter consumers from making new vehicle purchases. In fact, our
analysis showed that in early years, new sales would increase slightly as a result of the
regulation. Thus, like EPA and NHTSA we believe delayed scrappage or fleet turnover issues
should not be a serious concern at the cost levels currently anticipated. [OAR-2009-0472-7189.1,
p.9]
[CARB also submitted these comments as testimony at the Los Angeles public hearing. See
docket number OAR-2009-0472-7283, pp. 21-27]
EPA Response:
We agree with the comment submitted by CARB that the new GHG standards should not create
a fleet turnover or delayed scrappage issue. We also agree that the increased cost of compliant
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vehicles can and will be quickly offset by the savings from reduced fuel consumption. We
present our "impact on vehicle sales" discussion and our "payback analysis" in section III.H of
the preamble and in Chapter 8 of the RIA.
Organization: University of Michigan Transportation Research Institute (UMTRI)
Comment:
Section III.H.2 of the "Proposed Rulemaking to Establish Light-Duty Vehicle Greenhouse Gas
Emission Standards and Corporate Average Fuel Economy Standards" is concerned with "Costs
Associated with the Vehicle Program." My comments are in support of the indirect cost
multipliers (ICM) used by EPA to account for indirect costs. As a subcontractor to RTI, I
assisted EPA in developing the methodology used to estimate indirect cost multipliers and retail
price equivalent multipliers (RPE). [OAR-2009-0472-3651.1, p.4]
The costs to automakers of complying with the proposed regulations should be defined to include
only those costs that change due to the regulations. When compliance necessitates adding
equipment to the vehicle, the compliance costs include direct manufacturing costs associated
with new technology (materials and direct production labor) plus the change in those indirect
cost items that are affected (e.g., engineering development cost). [OAR-2009-0472-3651.1, p.4]
In most cases, direct costs can be estimated without difficulty or controversy. However, indirect
costs are more difficult to estimate and have been the subject of considerable controversy. The
methodology guides EPA analysts in identifying indirect costs that are likely to be affected by
regulations. The methodology is supported by estimates of RPE and ICM for several automakers
that we derived from recent annual financial reports and other public data. [OAR-2009-0472-
3651.1, p.4]
The EPA uses a range of indirect cost multipliers (ICM), depending on the timing of the
application of the regulation and the complexity of the technology that is anticipated to be
necessary. The multipliers range from 1.11 to 1.64 in the short term and from 1.07 to 1.39 in the
long term. In the ICM, the numerator is direct plus indirect cost and the denominator is direct
cost. The ICM covers direct and indirect costs only; no provision for profits is made. However,
the RPE adds profit to the numerator, so the RPE is greater than the ICM. It has been argued that
regulatory agencies should use an RPE that is greater than 2.0, which would imply an ICM of
1.90 or higher (assuming a 5 percent profit computed on sales—2.00 X .05 = .10; 2.00 - .10 =
1.90). [OAR-2009-0472-3651.1, p.4]
How reasonable is an RPE of 2.00 or higher? To answer this question, consider GMs financial
results for 2004-08, shown in Table 1. [OAR-2009-0472-3651.1, p.4]
GM is an easy case to study, because it provides information in its annual reports on contribution
costs in addition to the standard GAAP information on cost of sales. Contribution costs are closer
to direct costs than are cost of sales. [OAR-2009-0472-3651.1, p.4]
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EPA Response to Comments
In its annual reports, GM says it considers contribution cost to be costs that vary directly with
production. They consist of material cost, freight, and policy and warranty expenses. There are
two differences between GM's contribution costs and the EPA's definition of direct costs. GM
explicitly excludes direct production labor from contribution costs, whereas the EPA's definition
of direct costs includes direct production labor. GM includes freight and warranty in contribution
costs, which the EPA treats as indirect costs. GM does not report its direct production labor
costs, but we estimate them to be about $9 per year. GM reported warranty and freight costs of
$9.7 billion in 2007. Thus, these two expense categories roughly offset each other, meaning that,
for GM, direct costs are roughly the same as contribution costs. [OAR-2009-0472-3651.1, pp.4-
5]
Since GM had losses in each of these years, we also computed hypothetical RPE multipliers that
would result if GM had the same cost structure but earned a 5 percent profit. These hypothetical
RPE multipliers are 1.50 to 1.58. In either the actual or the hypothetical case, the RPE multipliers
are substantially lower than 2.00. [OAR-2009-0472-3651.1, p.5]
The indirect cost multipliers that EPA uses in the preliminary rule give sensible and fact-based
guidance on how indirect costs ought to be estimated. [OAR-2009-0472-3651.1, p.5]
[[UMTRI also submitted these comments as testimony at the Detroit public hearing, See docket
number EPA-HQ-OAR-2009-0472-6185, pp. 37-40.]
EPA Response:
The Agency appreciates these comments and agrees with them.
Organization: Chew, Yuli
Comment:
I support the assumption of 4% for the cost and effectiveness estimates for the diesel engine and
after treatment system; however, I think a higher improvement rate may be attainable
considering the fact that the proportion of diesel will jump to 4% and 10% of the cars and trucks
respectively. In Model Year 2011, diesel technologies for truck technology classes were allowed
to be applied at a 4 percent combined (for DSLT and DSLC) phase-in cap for MY 2011 to
account for the higher application rates observed in the submitted product plans and diesel's
favorable characteristics in truck applications. [OAR-2009-0472-7042.1, p.2]
As to whether EPA should use a 4% or 6% per year increase in standards, I feel that a 6.0% is
closer to what is specified in the CARB Regulation. This will helps to achieve a fleet average of
36.9 mpg or 241 g/mi of CO2 equivalent in 2016. This is more closely related to CARB's target
of achieving 43.4 mpg for cars and 26.8 mpg for trucks, or 205 g/mi for cars and 332 g/mi of
trucks in 2016. [OAR-2009-0472-7042.1, p.2]
EPA Response:
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EPA believes that diesel technology has a role in the future light-duty fleet. Although the
modeling we have done using the OMEGA model has not shown a move from gasoline
technology to diesel technology, that does not mean that EPA is prohibiting such an outcome.
The rule allows manufacturers to comply with their respective fleet average standards using any
technology they choose to utilize. EPA continues to believe that the cost estimates and
effectiveness estimates used in the proposal are appropriate for the final rule.
Regarding the 4% or 6% per year increases in standards, the commenter states a belief that the
6% per year alternative would be more representative of the CARB regulation (i.e., Pavley I
levels). As EPA's analysis shows (see Chapter 3 of the RIA), the national GHG standard results
in vehicle sales in California of federally compliant vehicles that have fleet average GHG
emissions equal to the fleet average that would be achieved under the California program In
their comments on the proposal, the California Air Resources Board agreed that the standards
presented in this rulemaking align with California's Pavley greenhouse gas emissions standards,
and ultimately arrive at the same stringency as California's standards in MY 2016.
Organization: Chew, Yuli; State of New Jersey
Comment:
For the cost estimates for the various hybrid systems, NHTSA use a figure of $320 per KW-hr
for 2012-2016 as compared to $600 per Kw-hr for 2011 Model Year. I feel that a lower figure of
about $260 per KW-hr should be more reasonable. See page 47 of Report of the ARB
Independent Expert Panel 2007 prepared for State of California Air Resources Board.
http://www.arb.ca.gov/msprog/zevprog/zevreview/zev_panel_report.pdf Similar to the price of
solar panels, the price dropped drastically if they are mass produced. [OAR-2009-0472-7042.1,
p.2; OAR-2009-0472-7109.1, p.9]
EPA Response:
We disagree that a $260 per kW-hr is a more appropriate cost than the $320 figure used given the
timeframe of analysis. Our $320 figure is based on current (2012 timeframe) best estimates of
around $500 per kW-hr and application of manufacturer learning to arrive at an estimated $320
figure in the 2015/2016 timeframe. Note that the Report of the ARB Independent Expert Panel
2007 showed $/kW-hr ranges of $340-420/kW-hr for an annual production of 20,000 batteries
per year to $240-280/kW-hr for 100,000 batteries per year. No timeframe is provided for these
ranges. It is not known currently what level of electric vehicle sales (and, hence, what level of
battery production) will occur within the regulatory timeframe. The agencies do know that the
new standards will not force introduction of electric vehicles. Hence, the $500/kW-hr in 2012
and $320/kW-hr in 2015 estimates used are not inconsistent with the estimates of the ARB
Expert Panel. Therefore, we continue to believe that the estimates we used in the proposal are
acceptable for the final rule, especially in light of the very low penetration of technologies
dependent on electrification of motive power (i.e., hybrids, electric vehicles, plug-ins).
Organization: Devon Energy Corporation; Donald F. Shaw; C. M. Spurgeon; Neil Stanton
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EPA Response to Comments
Comment:
The proposed regulations will harm our economy. A few years ago, the National Highway Safety
Administration (NHTSA) estimated that increasing fuel economy standards to 35 miles per
gallon by 2020 would cost the car companies $114 billion. (See Detroit News, "Fuel Plan Would
Cost Big Three" (March 1, 2007). Inexplicably, today NHTSA claims that achieving the 35
miles per gallon fleetwide standard by 2016, four years earlier, would cost only $60 billion. (75
Fed. Reg. 49479). This change from NHTSA is not credible. The cost of technology-forcing
regulations do not decrease by half as a result of companies only having half the time to comply
with the regulations. [OAR-2009-0472-10450, p.l; OAR-2009-0472-7270.1, p. 3; OAR-2009-
0472-7270.1, p. 3; OAR-2009-0472-10169, p.2]
EPA and NHTSA's plan will increase costs for car companies and further reduce auto company
jobs. Higher priced cars and trucks will make life more difficult for American families who need
affordable transportation options. [OAR-2009-0472-10450, p.l; OAR-2009-0472-7270.1, p. 3;
OAR-2009-0472-7270.1, p. 3; OAR-2009-0472-10169, p.2]
EPA Response:
We disagree that the regulations will harm our economy. In fact, we believe that the new
standards will help our economy by saving consumers and businesses money currently spent on
fuel which can then be spent on other items or invested in ways that boost our economy. The
standards will also benefit the economy by increasing our energy security and reducing our
reliance on foreign oil. As for cost estimates and the changes between the 2011 rule and this
rule, it is difficult to address this comment given that the commenter does not question specific
cost estimates. That being said, it is important to note the difficulty associated with cost
estimation and the ongoing effort made by both EPA and NHTSA to use the best available cost
information at any given time. Since publication of the 2011 final rule, both agencies have
sought to continually improve cost estimates - more thorough consideration given to future
product planning when adding technology in intermediate years, better cost estimation through
FEV tear down studies like those conducted by FEV under EPA contract, application of learning
curve effects to more closely estimate cost reductions over time — which have resulted in many
cost estimates being lowered. NHTSA and EPA would be remiss not to revise cost estimates in
light of newer, better information, whether that information increases or decreases those
estimates. Note also that the auto makers did not challenge the newer cost estimates to any
significant degree.
Regarding reducing auto company jobs and making life more difficult for American families,
again both agencies disagree. Instead, we believe that the new standards provide American
families with more affordable transportation options since the fuel savings associated with the
new standards quickly offset increased new vehicle costs (within the first month for a vehicle
purchased via a typical 5 year loan - see sections III.H.5 and IV of the preamble for more detail).
These savings are expected to increase vehicle sales relative to sales without the new standards
(again see sections III.H.5 and IV of the preamble for more detail) which, in turn, would be
expected to increase rather than decrease auto maker jobs.
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Organization: Dillard, Joyce
Comment:
In the end, the greenhouse gas emission changes are about a financial system. It affects the daily
lives of citizens and impacts their income and economic capabilities. [OAR-2009-0472-7226.1,
p. 2]
In Los Angeles, California we have Port of Los Angeles truck drivers feeling the pinch of the
new monopoly over the greenhouse gas reductions. The free market has been diminished for
more bureaucracy and finite control without the proper regulatory process. [OAR-2009-0472-
7226.1, p. 2]
EPA Response:
EPA agrees that the daily lives of citizens are impacted by greenhouse gas emissions, and that
the joint rulemaking for a national program to control greenhouse gases and fuel economy from
light-duty vehicles will impact citizens. A closer look at the comments submitted by the
commenter suggests that the commenter appears to be commenting on two topics: public
availability of information on greenhouse gas impacts ("What is needed is a Clearinghouse for
the Depository of Scientific and Factual Data as a springboard for industry, individuals, students,
parents and children to buy into their future. Access to correct information is a key factor for
future results to any environmental issue. Peer-reviewed information is necessary." (see page 1));
and cap and trade proposals ("In California, the State Legislature has passed AB 32 California
Global Warming Solutions Act of 2006 for the reduction of greenhouse gases and the
implementation of Cap and Trade, a tax. The State of California Natural Resources Agency is
processing the CEQA Rulemaking for SB 97 Greenhouse Gas Emissions, a related bill, which
will implement the CEQA California Environmental Quality Act for this process. The Cap and
Trade tax is under the purview of a regional entity-Western Climate Initiative WCI, an unelected
body, in a non-transparent process. We have no benefit of financial forecasting, at this point, and
no basis for financial responsibility." (see page 1)).
As regards the former issue, the agencies have made every effort to be as transparent as possible
in developing the standards being put into place. That information is, primarily, supportive of
the standards being set rather than being scientific information surrounding the impact of
greenhouse gases on climate change. The agencies have been tasked with creating a national
program to address greenhouse gas emissions and fuel eonomy, not to determine the impact of
greenhouse gases on climate change.
As regards the latter comment — regarding cap and trade proposals — the issue is not germaine to
the joint rulemakings as cap and trade is not part of either EPA's or NHTSA's programs.
Organization: Brooks, Dawn
Comment:
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EPA Response to Comments
I am concerned the costs of the new technology required to produce lower emissions are
inaccurate and will be passed onto me, the consumer. According to the report, Proposed
Rulemaking to Establish Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate
Average Fuel Economy Standards (2009), the average incremental cost of the program is
$1,409.00, and is even higher for light trucks at $1,641.00 (p.253). The increased cost is a result
of the new emission standards forcing "manufacturers to apply considerable additional
technology" (Proposed Rulemaking To Establish Light-Duty Vehicle Greenhouse Gas Emission
Standards and Corporate Average Fuel Economy Standards, 2009, p. 253). This plan merely
guesses on how manufactures are going to implement the proposed policy as the report also
states, "NHTSA cannot predict how manufacturers will respond to the proposed standards"
(Proposed Rulemaking To Establish Light-Duty Vehicle Greenhouse Gas Emission Standards
and Corporate Average Fuel Economy Standards, 2009, p. 253). If the agencies involved do not
understand what procedures and technology the automobile manufacturers will use to implement
the requirements of the program, how can the agencies assess an accurate dollar amount for
incremental costs?
Furthermore, the projected costs do not include higher sales taxes, insurance increases, and other
incidental fees resulting from more expensive vehicles. Maintenance costs will increase adding
even more burdens to the consumer as the technology will be more complicated and time
consuming for mechanics to repair. Consequently, incremental projected increased costs do not
simply include the new technology added by the automobile manufacturers as stated in the
report.
The costs of this program, along with the associated costs added to a higher priced, more
environmentally friendly vehicle will substantially increase consumer expenses for
transportation.
I respectfully request the agency take a more thorough look at projected costs of this proposed
program. I understand the benefits; now make me understand the true costs. Do not pass
proposed rule EPA-HQ-OAR-2009-0472 until the automobile manufacturers present their added
costs to the redesigned vehicles to fulfill the 2016 lower emissions and increased fuel efficiency
standards. Manufacturer figures will give the agency a more comprehensive understanding of
costs to the consumer as a result of these new regulations. [EPA-HQ-OAR-2009-0472-3851, pp
1-2]
EPA Response:
EPA cannot predict what level of costs will be passed on to consumers through increased vehicle
prices. EPA does not doubt that some and perhaps all of the costs will in fact be passed on.
However, EPA doubts that price increases will occur equally on all vehicles as auto makers will
determine which vehicles can best absorb increased prices and which cannot. Importantly, the
costs mentioned by the commenter are not the actual cost estimates associated with the proposal.
Those mentioned are from sensitivity analyses conducted by NHTSA looking at the costs
associated with a 5%/year increase in fuel economy. The proposal actually called for a 4%/year
increase in fuel economy and, therefore, estimated lower costs ($1,020 and $1,127 for trucks and
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cars, respectively) than the 5%/year increase. Further, the estimates for the final rule are lower
than those for the proposal.
Regarding the agencies' abilities to estimate costs given a "lack of understanding" over what
auto manufacturers will use to comply with the regulations, EPA disagrees with this comment.
In fact, the agency understands very well the technologies at manufacturer's disposal to meet the
regulations. However, there are so many different technologies that can be used ranging from
engine friction reductions to improved valve train designs to turbocharging with engine
downsizing to more efficient fuel systems to new transmissions to hybridization, etc., that it is
impossible to know for sure what will be done short of mandating what will be done. Neither
EPA nor NHTSA wish to mandate a solution to improving fuel efficiency. Instead, auto
manufacturers will consider all the options and how best to satisfy their customers in making
their own determination. That said, both agencies have made use of rigorous engineering
analysis to estimate future technology mixes in making our best estimates of future technology
costs.
Regarding higher sales taxes and insurance costs on new vehicles, the comment is accurate that
such costs have not been considered in the formal cost estimates (they have been considered in
our estimates of consumer payback). We have included costs associated with higher warranty
expenditures through our indirect cost multipliers but have not included costs associated with
increased maintenance. Importantly, we do not know that net maintenance costs for consumers
will increase or decrease. With respect to the A/C program, we believe that maintenance costs
will decrease since leakage should be largely eliminated.
Regarding the rule resulting in increased expenses for transportation, again EPA disagrees.
Please refer to our payback analysis which shows that fuel savings will outweigh up front costs
within three years for people purchasing new vehicles with cash. For those purchasing new
vehicles with a typical five-year car note, the fuel savings will outweigh increased costs in the
first month of ownership.
Regarding the request that EPA wait until auto manufacturers have presented their cost
estimates, the Agency has given the auto makers an opportunity to respond to its cost estimates
and, while some auto makers submitted comments on some aspects of the cost estimates, the
auto makers have not challenged them in any meaningful way. Therefore, EPA believes that the
cost estimates for the final rule are the best available estimates at this time.
Organization: American Council for an Energy Efficient Economy
Comment:
The agencies also worry that their technology cost estimates may be too low (TSD 4-2).
Accuracy of cost estimates is a legitimate concern in a wide array of rulemakings but is best
handled through a sensitivity analysis. It should not be used to impugn the validity of the
proposed standards.
EPA Response:
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EPA Response to Comments
As noted in the previous response, EPA has given the auto makers an opportunity to respond to
its cost estimates and, while some auto makers submitted comments on some aspects of the cost
estimates, the auto makers have not challenged them in any meaningful way. Therefore, EPA
believes that the cost estimates for the final rule are the best available estimates at this time.
5.13.4. Reduction in Fuel Consumption and its Impacts
Organization: Competitive Enterprise Institute
Comment:
II. The proposed standards will increase the risk of death and injury related to auto accidents.
GHG standards are fuel economy standards. The proposed GHG standard is just a fuel economy
standard by another name. EPA comes very close to acknowledging as much, explaining that the
rule aims to reduce emissions by increasing fuel economy: [[commenter quotes EPA on OAR-
2009-0472-7281.1 p.3]] The only difference between EPA's proposed rule and a 100% "pure"
fuel economy standard is that the rule seeks to reduce leakage of air conditioning-refrigerant
GHGs. However, the rule also seeks to reduce "the consumption of fuel to provide power to the
A/C system." So even with respect to vehicular air conditioning systems, EPA's proposal targets
fuel economy. As the rule states, 95% of all GHGs emitted by light duty vehicle are CO2
emissions, and "the only way at present to reduce tailpipe emissions of CO2 is by reducing fuel
consumption. [OAR-2009-0472-7281.1, p.2]
EPA Response:
We disagree that the standards will increase the risk of death and injury related to auto
accidents. Please refer to the preamble section II.G and EPA's RIA section 7.6 for more detail
on this issue.
There are two aspects to the A/C program: reduced refrigerant loss through improved system
design (direct GHG reductions); and reduced power consumption to operate the A/C system
(indirect GHG reductions). The latter of these results in reduced CO2 emissions since less fuel is
consumed to power the A/C system. The former - reduced refrigerant loss - results in
reductions in far more potent greenhouse gases. EPA does not disagree that the new GHG
tailpipe standards are, in effect, new fuel economy standards given that the only way at present to
reduce tailpipe emissions of CO2 is by reducing fuel consumption. That does not alter the fact
the greenhouse gases are pollutants under the CAA, and that, having made the findings that
emissions of these pollutants may endanger public health and welfare and that emissions of these
pollutants from new motor vehicles causes or contributes to that endangerment, EPA has a
mandatory legal duty to promulgate emission standards for those vehicles under section 202
(a)(l). State of Massachusetts v. EPA, 549 U.S. at 533. For the same reason, it is legally
irrelevant that CAFE standards directly regulate vehicular fuel economy. Id. at 53 l-32._The
agencies have chosen to discharge their respective responsibilities in this joint rulemaking so that
a National Program can be established to the benefit of all stakeholders. See id. at 532 ("But that
DOT sets mileage standards in no way licenses EPA to shirk its environmental responsibilities
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... The two obligations may overlap, but there is no reason to think the two agencies cannot both
administer their obligations and yet avoid inconsistency").
Organization: Consumer Federation of America
Comment:
[[These comments were submitted as testimony at the Detroit public hearing. See docket number
OAR-2009-0472-6185, pp. 106-107.]]
In particular, EPA and NHTSA should balance the three goals in the underlying statutes of
technical feasibility, economic practicability, and the need to conserve energy, and the statutes
really are in agreement here, by setting the standard at the mid point of the range between
maximum economic benefit and maximum practicable environmental benefit.
In addition, they should recognize the higher resale value of more fuel efficient vehicles. They
should properly value fuel savings by removing the rebound effect from the consumer private
welfare analysis and setting it at a lower level in the societal analysis. Rebound has no business
in the private valuation.
They should recognize consumer willingness to change their demand for vehicle attributes. The
American consumer has shown they are willing to change.
They should assign significant national security value to reducing oil consumption.
EPA Response:
Our rulemaking recognizes consumer willingness to change their demand for vehicle attributes.
Should enough consumers demand any given attribute, then presumably a manufacturer(s) will
step forward to provide it. The rules, however, do not mandate vehicle attributes from the
supply-side. Manufacturers may achieve their respective standards by any means they choose.
We have made every effort to ensure that consumers will continue to find the attributes they
currently demand within the future fleet all while consuming less fuel. EPA did this by building
technology packages for each vehicle type (refer to Chapter 1 of EPA's RIA) that maintained in
the judgment of staff engineers the key performance characteristic (zero to 60 mph acceleration).
Each subsequent package generally costs more, provides greater fuel efficiency, and maintains
performance relative to the package before it and, hence, the baseline or current vehicle. Should
consumers demand more from manufacturers — that is, vehicles that consume even less fuel at
the expense of some vehicle attributes — then some manufacturers may well deliver those
vehicles. This would be a demand-side driven outcome.
We have assigned considerable national security value to reducing oil consumption. Please refer
to our analysis as presented in section III.H of the preamble and Chapter 8 of the RIA.
Lastly, EPA disagrees with the comment that rebound mileage should be set lower or even
removed from the fuel savings analysis. Many historical studies have shown a correlation
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between changes in total VMT and changes in fuel economy, even when other factors such as
gasoline prices are taken into account. As we described in section II of the joint preamble and
Chapter 4 of the joint TSD, recent literature suggests that the rebound effect is 10% or lower,
whereas the larger body of historical studies suggests a higher rebound effect. Therefore, we
believe a rebound effect of 10% is appropriate for this rulemaking.
Organization: National Automobile Dealers Association (NADA)
Comment:
In the National Program proposal, NHTSA may have inappropriately shifted from its historically
justified 15-30 percent rebound effect range to a proposed 10 percent. While some justification
may be found to support moving toward the lower end of the historical range, 10 percent does
not appear to be adequately justified. [OAR-2009-0472-7182.1, p. 11]
EPA Response:
EPA and NHTSA disagree with the commenter that we did not justify our rationale for shifting
our quantified estimate of a rebound effect to 10 percent. As described in detail in the Joint TSD
Chapter 4, a summary of the existing literature indicates that a majority of the studies estimated
that the historical value for the rebound effect is between 10 and 30 percent. Furthermore, newer
research using more recent data suggest that the rebound effect is declining over time and will
continue to decline in the future, particularly when future projections of income, gasoline prices,
and urbanization are taken into account. Based on this body of evidence, we believe there is
adequate justification to support reducing the rebound effect to 10 percent for this rulemaking.
Organization: National Automobile Dealers Association (NADA)
Comment:
The National Program proposal is being developed during one of the most significant economic
turndowns in the history of the auto industry. Manufacturers and dealers alike are continuing to
experience dire and volatile economic impacts. Where just two years ago new vehicles were
being sold in the U.S. at an annualized rate of over 16 million units, today that rate has fallen to
an estimated 10.2 million. In that same short time frame, thousands of new car dealers have gone
out of business and overall dealership employment has dropped by some 100,000 and 200,000.
Two large domestic automakers and their dealers owe their very existence to massive federal
government intervention. New competition is expected soon from China, from India, and even
from new domestic startups. Competition is good and dealers look forward to selling those
vehicles. However, NHTSA and EPA must recognize and fully account for these economic and
competitive realities when finalizing the National Program to ensure that, to the greatest extent
possible, dealership employment and viability is protected. [OAR-2009-0472-7182.1, p.4]
Regarding vehicle affordability, the critical importance of fuel price and availability cannot be
overstated. New vehicle purchasers typically aren't early adaptors of high priced new
technologies, nor are they so well off as to ignore fuel efficiency even when fuel prices are high.
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Instead, the vast majority of new vehicle purchasers are payment buyers with multi-year loans
who only become keenly interested in fuel economy when fuel prices skyrocket. Clearly, it is
very difficult to forecast fuel prices in a free market. By relying on conservative fuel price
forecast assumptions, the National Program will at worse achieve better fuel economy and GHG
benefits should prices prove to be higher than forecast. On the other hand, should fuel prices
prove to be lower than forecast, the result could be a scenario of high priced new vehicles sitting
unwanted and unaffordable on dealers lots, with unacceptable negative consequences. [OAR-
2009-0472-7182.1, p.4]
[National Automobile Dealers Association also submitted these comments as testimony at the
New York public hearing, See docket number EPA-HQ-OAR-2009-0472-4621, pp. 85-88.]
EPA Response:
The agencies reasonably believe that the new standards will result in increased vehicle sales (see
sections III.H.5 and IV.G.7 of the preamble, and chapter 8 of EPA's RIA for more detail) and, as
such, should ensure that dealership employment will not decrease as a result of this rule.
Further, our analyses are based on the best available predictions of future fuel prices (AEO 2010
Early Release) which range from $2.61/gallon in 2012 to $3.07/gallon in 2016 (expressed in
2007 dollars and including taxes). While such prices are not low by traditional U.S. standards,
they are by no means high.
5.13.5 Impacts on U.S. Vehicle Sales and Payback Period
Organization:
BMW of North America, LLC (BMW)
State of New Jersey
Mr. Richter - Environmental Capital Partners
Shaw, Donald F.
Chew, Yuli
US Steel Corporation
University of Pennsylvania, Environmental Law Project
National Automobile Dealers Association
Comment:
BMW of North America, LLC (BMW)
Now, as EPA and NHTSA have noted in the proposal, it's important that consumers retain a full
range of vehicle choices and you've designed the calculation methods to preserve vehicle [These
comments were submitted as testimony at the New York public hearing. See docket number
EPA-HQ-OAR-2009-0472-4621, pp. 132.] choice, which is very good. For auto manufacturers
to meet the aggressive greenhouse gas and CAFE standards proposed in this rulemaking,
compliance flexibility and accommodation for different size vehicles must be provided. [These
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comments were submitted as testimony at the New York public hearing. See docket number
EPA-HQ-OAR-2009-0472-4621, p. 133.]
State of New Jersey
The Agencies requested commenter input on a number of related topics regarding how the
proposal balances the needs of consumers with the need to reduce greenhouse gas emissions
from one of the nation's most significant greenhouse gas emission sources. The Department feels
that USEPA and NHTSA have crafted the proposal in a way that will ensure that consumers will
continue to have the variety and choice in vehicle models they have come to expect. The
standards provide manufacturers with significant flexibility in meeting the proposed greenhouse
gas reductions, and New Jersey is confident that the technologies to reduce vehicle greenhouse
gas emissions exist in the market today. The phase-in of the standards between 2012 and 2016
allows manufacturers seven years to incorporate these technologies into greater numbers of
vehicles. [OAR-2009-0472-7109.1, pp.5-6]
Mr. Richter - Environmental Capital Partners
And I think as I mentioned as a member of an investment firm that specifically targets the
environmental [EPA-HQ-OAR-2009-0472-4621, p. 160] I mean, we feel like this will be the
dominant asset in the years to come. I really want to underscore the economic argument as has
been used in the past against increasing mileage standards and it may be the single most
important reason for increasing CAFE standards, and I would say there are two real reasons for
this. [EPA-HQ-OAR-2009-0472-4621, p. 161]
Al Gore famously pointed out that our fleet would be unable to be sold in China. I think it's
pretty clear that we need to learn from the past and not make that mistake again. You know, I'm
not going to sit here and predict what kind of cars will be sold in the future, but I think all of us
in the room will be pretty certain on which ones won't be sold, and that's the ones that are relying
on decades old technology, we will be moving forward, and high standards that we can put in
with the CAFE standards will increase competitiveness and this is particularly true as it relates to
resource efficiency. This resource efficiency pushes innovation, innovation creates economic
opportunity here at home. Last week, GM announced [EPA-HQ-OAR-2009-0472-4621, p. 162]
plans to invest $230 million in four Michigan plants to build the Cruze and the Volt, restoring
500 jobs. I mean, there are so many cascading effects that come from investing in innovation.
[EPA-HQ-OAR-2009-0472-4621, p. 163]
Shaw, Donald F.
The imposition of these standards will impose severe financial hardships on the already
economically challenged Auto industry, resulting in the massive loss of jobs and disruption to
the entire economy. People will not buy the new impractical cars, but will keep their "useful"
autos until they die. [OAR-2009-0472-7270.1, p. 1]
Our economy is already fragile, why risk further deterioration? How much additional
government subsidy dollars are required to aid the auto industry? [OAR-2009-0472-7270.1, p. 1]
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Chew, Yuli
As to the economic costs, I believe that that buyer will be more concerned with the full life-cycle
costs, personally value savings as the most important issue. This is in line with the CARS's
Regulations to Control Greenhouse Gas Emissions from Motor Vehicles, Final Statements of
Reasons, August 4, 2006, it stated that "cost effective" is defined as "Economical to an owner or
operator of a vehicle, taking into account the full life-cycle costs of a vehicle. [O AR-2009-0472-
7042.1,p.6]
US Steel Corporation
In any case, the application of these aggressive fuel economy standards will require vehicle
manufacturers to apply new technology, including advanced materials (including aluminum,
magnesium, composites, and advanced high-strength steels) to vehicles, the sum total of which
will raise vehicle prices and slow down sales accordingly with negative consequences to the
general economy. [OAR-2009-0472-7197.1, pp.6-7]
University of Pennsylvania, Environmental Law Project
3. Expected Costs of Implementation of the Proposed Rule
As previously mentioned, some groups worry about the economic costs of rule implementation.
They argue that the proposed rule could add too much to the price of new cars. This will lead,
they say, to people sticking with their older, gas-guzzling cars instead of buying new ones,
thereby undermining the primary goal of the rule of lowering vehicle emissions [OAR-2009-
0472-7286.1, pp. 20-21].
However, most stakeholders, including the auto industry and Auto Dealers Association support
the rule and agree that this standard can be met without undue costs. They also point to the
benefits of a predictable national standard that will help to lessen uncertainty for the auto
industry when they develop new models, and lower compliance costs by avoiding a patchwork of
rules between the states. Furthermore, it will allow them time to build improvements into new
models during the normal production and design process, which will minimize the additional
costs imposed. [OAR-2009-0472-7286.1, p. 21]
National Automobile Dealers Association
Regarding vehicle affordability, the critical importance of fuel price and availability cannot be
overstated. New vehicle purchasers typically aren't early adaptors of high priced new
technologies, nor are they so well off as to ignore fuel efficiency even when fuel prices are high.
Instead, the vast majority of new vehicle purchasers are payment buyers with multi-year loans
who only become keenly interested in fuel economy when fuel prices skyrocket. Clearly, it is
very difficult to forecast fuel prices in a free market. By relying on conservative fuel price
forecast assumptions, the National Program will at worse achieve better fuel economy and GHG
benefits should prices prove to be higher than forecast. On the other hand, should fuel prices
prove to be lower than forecast, the result could be a scenario of high priced new vehicles sitting
unwanted and unaffordable on dealers lots, with unacceptable negative consequences.
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EPA Response:
EPA and NHTSA have included a number of flexibilities in the rule to reduce the costs of
implementation and to increase the options that auto makers have for achieving the standards.
We have also considered the lead times for auto makers to comply with the standards. The
technologies analyzed in this rule are, generally, already available. EPA expects that auto
companies will continue to pursue new technologies. EPA's Preamble Section III.H.5 and RIA
Section 8.1.3 estimate a payback period of under 3 years for the fuel-saving technologies to
comply with the standards. If consumers consider at least 3 years of fuel savings when buying
vehicles, then the new vehicles should be more attractive to them than existing vehicles, and
sales might increase, as estimated in the analyses found in these sections.
EPA's benefits analysis incorporates the life-cycle costs and fuel savings, to reflect the effects of
the vehicles over the years. Because (as discussed in Response to Comments Section 4.5.1) the
evidence is uncertain on the role of fuel economy in consumer vehicle purchases, EPA assumes,
in its vehicle sales impact analysis, that consumers consider five years' worth of fuel savings
when buying a vehicle. As also discussed in Response to Comments Section 4.5.1, the role of
fuel savings in vehicle purchase need not be the same as the actual savings that will occur.
5.13.6. Non-Greenhouse Gas Health and Environmental Impacts
OrganizationrEnvironmental Defense Fund
Institute for Policy Integrity at New York University School of Law
University of Pennsylvania, Environmental Law Project
South Coast Air Quality Management District
Comment:
Environmental Defense Fund
To maximize the benefits of the final standards, it is essential to fully account for the
extraordinary and far-reaching protections that result from reducing heat-trapping emissions.
Accordingly, the full range of environmental, social, and economic impacts of greenhouse gas
emissions should be taken into account when calculating the societal costs of carbon. Where
impacts cannot be quantified, federal policy makers should present a transparent qualitative
analysis along with a recognition that monetized benefits are likely to be underestimates.
The co-benefits of the proposed standards, such as the health benefits from the reductions in
smog-forming air pollutants, must also be incorporated into the economic analysis. And the
analysis must not rely on flawed economic assumptions that diminish the value of
protecting future generations.
Indeed, we have a solemn duty to provide a secure future for my generation and those
that follow. The final rule must reflect this responsibility through appropriate economic
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assumptions while also relying on ethical considerations beyond the scope of economic
analysis alone.
[Comments are from LA Testimony, OAR-2009-0472-7283, pp.72-79]
Institute for Policy Integrity at New York University School of Law
Uses of the Social Cost of Carbon:
Central estimates of the social cost of carbon should not be used in optimization models, and
should not replace traditional regulatory impact analysis for GHG emissions reductions. While
incorporating ancillary benefits directly into the SCC is likely to prove difficult, the interagency
group should provide guidance on the types of ancillary benefits typically associated with GHG
reductions. [OAR-2009-0472-7246.1, p. 2] [See OAR-2009-0472-7246.1, pp. 39-44 for
discussion and commenter recommendations related to the uses of the social cost of carbon.]
Ancillary Benefits:
There is a significant literature showing the relationship between greenhouse gas reductions and
a host of ancillary benefits or "co-benefits." Because rules that control greenhouse gas emissions
will often end up reducing fossil fuel combustion, emission of a range of conventional pollutants
associated with fossil fuels can be expected to decline in the face of GHG regulation. Reductions
in particulate matter, nitrogen oxides, sulfur dioxides, volatile organic compounds, and other
pollutants can be anticipated to accompany GHG controls. [OAR-2009-0472-7246.1, p. 41]
For example, measures that increase energy efficiency or encourage clean energy generation will
also lead to reductions in local air pollutants, with attendant benefits for human health and
ecosystems. Other ancillary benefits include reduced ocean acidification and increased forest
preservation. [OAR-2009-0472-7246.1, p. 41]
The magnitude of such ancillary benefits may be significant. For example, a forthcoming
working paper estimates that representative federal climate legislation would result in health-
related co-benefits of $3 to $9 per ton of carbon dioxide avoided (due to reductions in
conventional air pollutants). Other studies, using different methodologies, have found similarly
large benefits. Because the ancillary benefits of greenhouse gas reductions could represent an
important component of total benefits, it is essential for rulemakings that use the interagency
SCC estimates not to omit significant ancillary benefits. [OAR-2009-0472-7246.1, p. 42]
One mechanism to take ancillary benefits into account would be to imbed a default estimate of
ancillary benefits within the SCC. An estimate of $5-$10 for ancillary benefits could be added
directly to the SCC. Incorporating these ancillary benefits directly into the SCC would ensure
that they were accounted for in regulatory analysis. [OAR-2009-0472-7246.1, p. 42]
However, because different rules will have different effects on ancillary pollutants, directly
incorporating a default ancillary benefit estimate into the SCC is a second-best approach.
Transportation rules may have different ancillary effects than rules governing power plants.
Some rules may be directly targeted at reducing a conventional pollutant, so incorporating an
"ancillary" effect in the SCC could result in double counting. For these reason, simply including
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EPA Response to Comments
a default assumption concerning ancillary benefits will skew the analysis in some cases. [OAR-
2009-0472-7246.1, p. 42]
If such a default assumption is not included, it is important for the interagency group to clarify
that GHG reductions are often accompanied by ancillary benefits, and also to provide some
guidance for agencies to ensure that they identify and take account of relevant ancillary effects.
Citation to the literature on ancillary benefits associated with GHG reductions, as well as a
default list of likely ancillary effects of GHG reductions, and perhaps a default value in a
"typical rule," could also be provided by the interagency group to give guidance for future
rulemakings. [OAR-2009-0472-7246.1, p. 42]
We recommend that the interagency group give explicit direction to agencies on how to account
for ancillary benefits associated with GHG reductions. [OAR-2009-0472-7246.1, p. 42]
University of Pennsylvania, Environmental Law Project
NHTSA has not monetized reductions in toxic air pollutants due to the proposed standards (a
benefit), nor potential reductions in vehicle performance or utility (a cost) that might result from
the proposed standards. However, by any metric, NHTSA expects that the benefits of the
proposed standards will vastly outweigh the costs. [OAR-2009-0472-7286.1, p. 16]
South Coast Air Quality Management District
The South Coast AQMD is the nation's largest regional air pollution district, and we appreciate
this opportunity to testify on this joint rulemaking.
The AQMD staff strongly support the proposed greenhouse gas emission standards and timeline.
The proposed emission standards and companion fuel economy standards will result in a
significant reduction in greenhouse gas emissions as well as provide crucially important co-
benefits in reducing criteria emissions in support of attainment of federal and state air quality
standards for ozone and fine particulates.
Given the strong correlation of rising temperature and increased ozone levels, it is especially
germane that this hearing is being held in one of the nation's most polluted air basins.
There are over ten million registered light-duty vehicles in the South Coast Air Basin.
Reductions in fuel use associated with the standards proposed will therefore have a direct and
tangible benefit in terms of public health and welfare in our region.
[Comments are from LA Testimony, OAR-2009-0472-7283, pp.59-60.]
EPA Response:
EPA agrees with commenters that it is important to quantify the non-GHG health and
environmental impacts associated with the proposed standard because a failure to adequately
consider these ancillary impacts could lead to an incorrect assessment of their net costs and
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benefits. Moreover, co-pollutant impacts tend to accrue in the near term, while any effects from
reduced climate change mostly accrue over a time frame of several decades or longer.
In this final rule, EPA quantified and monetized the health and environmental impacts related to
both PM and ozone in its regulatory impact analysis (RIA), based on changes in ambient air
quality as determined by full-scale photochemical modeling. Although this modeling was not
possible in the timeframe for the proposal, EPA did perform this modeling for the final rule, as
described below.
To model the ozone and PM air quality benefits of the final rule, EPA used the Community
Multiscale Air Quality (CMAQ) model (see Chapter 7.2 of the RIA that accompanies the final
rule for a description of the CMAQ model). The modeled ambient air quality data served as an
input to the Environmental Benefits Mapping and Analysis Program (BenMAP). BenMAP is a
computer program developed by EPA that integrates a number of the modeling elements used in
previous RIAs (e.g., interpolation functions, population projections, health impact functions,
valuation functions, analysis and pooling methods) to translate modeled air concentration
estimates into health effects incidence estimates and monetized benefits estimates.
In addition to the non-GHG ancillary health and environmental impacts that EPA quantified for
analysis of the final Light-Duty Vehicle GHG standard, there are a number of other health and
human welfare endpoints that EPA was unable to quantify because of current limitations in the
methods or available data. For example, EPA has not quantified a number of known or
suspected health effects linked with ozone and PM for which appropriate health impact functions
are not available or which do not provide easily interpretable outcomes (e.g., changes in heart
rate variability). In addition, EPA is currently unable to quantify a number of known welfare
effects, including reduced acid and particulate deposition damage to cultural monuments and
other materials, and environmental benefits due to reductions of impacts of eutrophication in
coastal areas. For air toxics, the available tools and methods to assess risk from mobile sources
at the national scale are not adequate for extrapolation to benefits assessment. In addition to
inherent limitations in the tools for national-scale modeling of air toxics and exposure, there is a
lack of epidemiology data for air toxics in the general population. All of the above-mentioned
health impact omissions contribute to a likely underestimate of the total benefits attributable to
the final rule.
Please refer to Chapter 7.3 of the RIA that accompanies the final rule for more information
about the quantification and monetization of non-GHG-related benefits.
EPA notes IPI and EDF's recommendation for the interagency group to "give explicit direction
to agencies on how to account for ancillary benefits associated with GHG reductions" (7246.1,
pg 42). As noted in Section 4.5.4, the SCC TSD reiterates the need to document more
thoroughly omitted impacts and monitor the literature for emerging research. As the research
evolves, the Federal government, including EPA, is committed to exploring how modeling can
be improved so that these aspects are better reflected in the SCC.
5.13.7. Energy Security Impacts
437
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EPA Response to Comments
Organization: Fraas, Arthur, G
Comment:
The joint DOT and EPA proposed CAFE standard represents an ambitious and challenging
policy initiative that will reduce the oil consumption and the greenhouse gas emissions of light
duty cars and trucks for the model years 2012 through 2016. At the same time, this rule will
increase the initial purchase price of new vehicles and pose a substantial challenge to car and
truck manufacturers in their efforts to comply with the proposed standards. As a result, the
proposal raises a number of interesting analytical and policy questions. This comment will focus
on one of these questions—the quantification of the energy security benefits of the proposed
rule. [OAR-2009-0472-7523, p. 1]
Energy security benefits—typically including several disparate categories: national security
benefits, macroeconomic disruption and adjustment benefits, and the benefits of exercising
monopsony power to counter the exercise of market power by oil producing countries—have
served as critical arguments in support of the rationale for government policies designed to
secure greater energy independence for the United States. Over the last several decades, there has
been a continuing debate about the nature and magnitude of each of these energy security benefit
categories and the role that they ought to play in shaping U.S. energy policy. The DOT/EPA
joint proposal discusses some of these issues and develops an estimate of energy security
benefits as an integral part of the joint proposed CAFE rule. In particular, DOT and EPA would
incorporate an estimate of the macroeconomic disruption/adjustment benefits as a part of the
proposed rule's decision framework, while excluding from the CAFE calculation an estimate of
the monopsony premium. [OAR-2009-0472-7523, pp. 1-2]
I support the DOT and EPA proposal to exclude the monopsony premium from the CAFE
calculation although for a more general reason than that put forward by DOT and EPA—and will
address the proposed macroeconomic disruption/adjustment benefits incorporated in the
calculation of the standard in their CAFE proposal. [OAR-2009-0472-7523, p. 2]
The Monopsony Premium
DOT and EPA Proposed Approach—As a part of the CAFE NPRM, DOT and EPA have
proposed to consider only the macroeconomic disruption/adjustment component in developing
an estimate of energy security benefits associated with a reduction in the consumption of
petroleum products. This departs from recent practice. In developing estimates of the energy
security benefit of reducing petroleum consumption in past rules, DOT and EPA have also
included an estimate of the "monopsony premium." The monopsony premium represents the
avoided payments to oil producers in foreign countries associated with a decline in the world
price of oil resulting from decreases in U.S. oil consumption. [OAR-2009-0472-7523, p. 2]
DOT and EPA propose to exclude the monopsony premium from the estimate of energy security
benefits because this proposed rule adopts a global value for the social cost of carbon (SCC).
DOT and EPA provide their rationale for excluding monopsony benefits as follows (74
FR 49622):
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How should the energy security premium be used when some benefits from the proposed rule,
such as the benefits of reducing greenhouse gas emissions, are calculated at a global level?
Monopsony benefits represent avoided payments by the U.S. to oil producers in foreign countries
that result from a decrease in the world price as the U.S. decreases its consumption of imported
oil. Although there is clearly a benefit to the U .S. when considered from the domestic
perspective, the decrease in price due to decreased demand in the U .S. also represents a loss of
income to oil producing countries. Given the redistributive nature of this effect, do the negative
effects on other countries "net out" the positive impacts to the U.S.? If this is the case, then, the
monopsony portion of the energy security premium should be excluded from the net benefits
calculation for the rule. [OAR-2009-0472-7523, p. 2]
However, DOT and EPA also offer an alternative rationale that would justify including the
monopsony premium in the estimate of energy security benefits (74 FR 49623):
"...the global SCC is used in these calculations, not because the global net benefits of the rule are
being computed (they are not), but rather because in the context of a global public good, the
global marginal benefit is the correct domestic benefit against which domestic costs are to be
compared. Similarly, energy security is inherently a domestic benefit. Thus, should the
two benefits, if they are both viewed from this domestic perspective, be counted in the net
benefits estimates for this rulemaking and more generally what are the overall implications of
this approach to justifying regulation? If the monopsony benefits were included in this case, they
could be significant. [OAR-2009-0472-7523, p. 3]
DOT and EPA have requested comment on their approach and on the alternative rationale
presented above for including a monopsony premium in the benefits analysis. [OAR-2009-0472-
7523, p. 3]
Comment on the Monopsony Premium — There is a more general—and I believe more
compelling—rationale that justifies the decision not to consider the monopsony premium as a
part of a benefit-cost analysis of regulatory action than that offered by DOT and EPA. The
monopsony premium reflects a pecuniary externality—that is, an externality that operates
through the effect of the regulatory action on prices—rather than a direct resource effect on a
third party. There is a general consensus among economists that pecuniary externalities should
not be considered in benefit-cost analyses of governmental actions. Economists point out that the
pecuniary externality does not affect resource allocation, but government action to address the
pecuniary externality will further distort resource use. In the specific case of energy security
benefits, for example, Brown and Huntington, in their September 2009 paper titled "Estimating
U .S. Oil Security Premiums," [See OAR-2009-0472-7523, pp. 7-38 for Brown and Huntington
2009 paper.] exclude the consideration of the monopsony premium "because it is not a security
concern and because pursuing these gains would distort global resource use rather than offset an
externality." Similarly, the October 2009 National Academy of Sciences (NAS) report on the
Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use finds with
respect to the monopsony premium "...that no externality in the sense considered in this report
exists." (p. 235) As a result, the NAS report does not include the monopsony premium as a part
of an estimate of the "unpriced consequences" of energy production and use. [OAR-2009-0472-
7523, p. 3]
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The existence of an externality is a crucial test because by addressing true externalities—
sometimes identified as technical externalities—government regulation can improve the well-
being of society. This is the context and purpose of a benefit-cost analysis. On the other hand,
addressing a pecuniary externality only serves to affect the transfer of income without improving
the allocation of resources and the production possibilities of the economy. [OAR-2009-0472-
7523, p.3]
There is a policy argument that because OPEC exercises market power to inflate the world oil
price (by restricting oil production), it would be appropriate for the United States to exercise its
monopsony power as a major consumer of oil to reclaim some of the oil revenues realized by oil
producing countries. However, there are some countervailing reasons that support a decision to
exclude the consideration of a monopsony premium. First, such a policy further distorts the use
of oil resources because its effect, like that associated with the exercise of monopoly power,
would be to reduce consumption below the optimal level. Second, the successful use of
monopsony power depends on the response of OPEC, other oil producing countries, and oil
consuming countries. The exercise of market power by the United States is designed purely to
transfer income from oil producing countries to the United States. Any policy initiative taken for
this purpose should carefully develop the rationale for the pursuit of such a "beggar thy
neighbor" policy. In any event, even if the revenue transfers realized by exercising monopsony
power are used to support a policy decision to restrict the consumption of oil through regulation,
these transfers are unrelated to a standard externality and ought not be included as a part of the
benefit-cost analysis of the rule. [OAR-2009-0472-7523, pp. 3-4]
Oil Disruption Costs
DOT and EPA Proposed Approach—With respect to disruption costs, DOT and EPA have
adopted the updated estimates for the macroeconomic disruption/adjustment costs based on a
March 2008 study titled "The Energy Security Benefits of Reduced Oil Use, 2006-2015." These
estimates (in 2007 $) range from $6.70 per barrel ($3 .11- $10.67) in 2015 to $8.12 per barrel
($3.90 - $13.04) in 2030. [OAR-2009-0472-7523, p. 4]
Comment on Oil Disruption Costs—The September 2009 Brown and Huntington paper develops
an alternative, lower estimate of the macroeconomic disruption/adjustment costs. Their estimate
of the cost of displacing a barrel of domestic oil with a barrel of imported oil ranges from $2.17
per barrel in 2015 to $2 .37 per barrel in 2030 (in 2007 dollars). The differences in the estimates
reported by EPA and Brown and Huntington appear to reside in differences in the approach used
in estimating the change in U .S. oil prices resulting from an oil supply shock. The EPA estimate
is based on a methodology that allocates a portion of the oil supply shock to the U.S. and then
calculates the effect on oil prices using estimates of short-run demand and non-OPEC supply
elasticity. Brown and Huntington use a world oil market model to develop effects of an oil
supply shock on the world oil price and then use the resulting world oil price to estimate U.S.
macroeconomic disruption costs. [OAR-2009-0472-7523, p. 4]
In addition, although the October 2009 NAS report on the hidden costs of energy recognizes that
"...policies that lead to a reduction in oil consumption in the United States will most assuredly
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reduce our vulnerability to future oil shocks, ...", it reaches the conclusion that oil disruption
costs are not an externality. As a result, the NAS report recommends that further research is
needed to better understand this possible externality and the report does not include a
quantitative estimate of the energy disruption costs of imported oil in developing estimates of the
unpriced externalities associated with energy infrastructure and security, (p. 236) [OAR-2009-
0472-7523, p. 4]
In light of this advice, I believe that DOT and EPA need to sort out whether to include a
macroeconomic disruption/adjustment cost component in their evaluation of the benefits and
costs of the proposed CAFE rule. If DOT and EPA decide to retain some estimate of the
disruption costs as an estimate of energy security benefits, the agencies need to justify the
decision and develop a reasoned basis for the magnitude of their estimate taking into
consideration the recent estimates provided by Brown and Huntington. [OAR-2009-0472-7523,
p. 4-5] [See OAR-2009-0472-7523, pp. 7-38 for Brown and Huntington 2009 paper.]
EPA Response:
EPA appreciates that this commenter felt that that the magnitude of the economic disruption
portion of the energy security benefit may be too high. This commenter cites a recent paper
written by Stephen P.A. Brown and Hillard G. Huntington, entitled "Estimating U.S. Oil Security
Premiums" (September 2009) as the basis for his comment. EPA reviewed this paper and found
that it conducted a somewhat different analysis than the one conducted by ORNL in support of
this rule. The Brown and Huntington paper focuses on policies and the energy security
implications of increasing U.S. demand for oil (or at least holding U.S. oil consumption
constant), while the ORNL analysis examines the energy security implications of decreasing
U.S. oil consumption and oil imports. These asymmetrical analyses would be expected to yield
somewhat different energy security results.
However, even given the different scenarios considered, the Brown and Huntington estimates are
roughly similar to the ORNL estimates. For example, for an increase in U.S. consumption that
leads to an increase in U.S. imports of oil, Brown and Huntington estimate a 2015 disruption
premium of $4.87 per barrel, with an uncertainty range from $1.03 to $14.10 per barrel. The
corresponding 2015 estimate for ORNL as the result of a reduction in U.S. oil imports is $6.70
per barrel, with an uncertainty range of $3.11 to $10.67 per barrel. Given that the two studies
analyze different scenarios, since the Brown and Huntington disruption premiums are well
within the uncertainty range of the ORNL study, and given that the ORNL scenario matches the
specific oil market impacts anticipated from the rule while the Brown and Huntington paper does
not, EPA has concluded that the ORNL disruption security premium estimates are more
applicable for analyzing this final rule.
This commenter also felt that the monopsony effect should be excluded from net benefits
calculations for the rule since it is a "pecuniary" externality or does not represent an efficiency
gain. EPA disagrees that all pecuniary externalities should a priori be excluded from net benefits
calculations. For example, in the case here, the oil market is non-competitive, and if the social
decision-making unit of interest is the U.S., there is an argument for accounting for the
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monopsony premium to assess the excess transfer of wealth caused by the exercise of cartel
power outside of the U.S.
However, for the final rule, EPA continues to take a global perspective with respect to climate
change by using the global SCC value. Therefore, the EPA did not count monopsony benefits
since they "net out" with losses to other countries outside the U.S. Since EPA is taking a global
perspective, EPA did not undertake a distributional analysis for this final rule, since the losses to
the losers (oil producers that export oil to the U.S.) would equal the gains to the winners (U.S.
consumers of imported oil). As a result, EPA continues to included only the macroeconomic
disruption portion of the energy security benefits to monetize the total energy security benefits of
this rule.
Organization: New York University School of Law, Institute for Policy Integrity (IPI)
Mr. Richter - Environmental Capital Partners
Comment:
Energy Security Effects
The agencies consider how the proposed regulations might generate three possible benefits to
"energy security" by reducing U.S. consumption of petroleum: (1) lower oil prices worldwide as
U.S. demand drops; (2) decreased risk to the U.S. economy from a sudden disruption in oil
supplies; and (3) reduced costs for U.S. energy security policies. The first effect should be
treated as a distributional consequence, not a standard efficiency benefit. The second effect
should be valued as a benefit, so long as the agencies disaggregate any wealth transfers that
occur during price shocks. The agencies were justified in not quantifying the last effect (i.e.
treating it as having zero value), provided the agencies incorporate the increased protection value
of the Strategic Petroleum Reserve into their calculation of disruption effects. [OAR-2009-0472-
7232.3, p. 12]
Demand Effects
Often referred to as a "monopsony" effect, oil consumers in the United States do, in aggregate,
exert enough influence on the worldwide demand for oil that a variation in U.S. demand will
affect prices (although recent evidence suggests the effect might be limited). If the proposed
regulations reduce U.S. demand, prices will drop, and U.S. consumers will experience some
additional savings. [OAR-2009-0472-7232.3, p. 12]
But these perceived savings come at the expense of lost revenue to the oil suppliers. Globally,
there are no net benefits from the demand effects. The agencies currently choose not to calculate
any benefits from demand effects because they select a global value for the social cost of carbon,
and they believe a consistently global perspective on costs and benefits may be required. [OAR-
2009-0472-7232.3, p. 12]
However, the agencies seek comment on another possible approach:
"From one perspective, the global social cost of carbon is used in these calculation, not because
the global net benefits of the rule are being computed (they are not), but rather because in the
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context of a global public good [like climate change mitigation], the global marginal benefit is
the correct domestic benefit against which domestic costs are to be compared. Similarly, energy
security is inherently a domestic benefit. Thus, should the two benefits, if they are both viewed
from this domestic perspective, be counted in the net benefits estimates for this rulemaking, and
more generally what are the overall implications of this approach to justifying
regulation?" [OAR-2009-0472-7232.3, p. 13]
The agencies repeatedly note that demand effects could be "significant." But the issue of how to
include demand effects is not a choice between a global or a domestic perspective on costs and
benefits. Rather, the agencies should address the demand effects through a distributional
analysis. [OAR-2009-0472-7232.3, p. 13]
As the agencies note, wealth transfers are not typically included as a "benefit." OMB guidance
provided in the Circular A4 confirms that cost-benefit analysis focuses on measuring the
economic efficiency of a regulation, and wealth transfers do not offer any efficiency gains or
losses. However, efficiency is not necessarily the only relevant policy consideration, and
therefore such transfers and other distributional effects must be considered as part of a separate
distributional analysis. [OAR-2009-0472-7232.3, p. 13]
The agencies should assess how demand effects might generate distributional gains for U.S. oil
consumers at the expense of foreign (and domestic) oil producers. The agencies could consider
how income, or other distributional weights, might factor into such an analysis. The agencies
should also, pursuant to OMB recommendations and the principles of Executive Order 12866,
incorporate such a study of demand effects into a broader distributional analysis. [OAR-2009-
0472-7232.3, p. 13]
Note that—given the agencies' statutory mandates—there is nothing inconsistent about using a
global social cost of carbon estimate and still giving some preference to policies that generate
distributional gains for the United States at the expense of foreign companies or
countries. [OAR-2009-0472-7232.3, p. 13]
Disruption Effects
The agencies calculate how reducing U.S. oil consumption will decrease the risk of lost
economic output during a sudden, unanticipated disruption in oil imports and supplies. However,
the Joint Technical Support Document suggests part of this calculation might include the higher
price of imported oil caused by a supply disruption and price shock, which, as the agencies
acknowledge, is a "wealth transfer." Such effects are no different analytically than the
demand/monopsony effects considered above. Thus, any such import effects should be
disaggregated from the disruption effects, and should instead be considered in the type of
distributional analysis discussed above. [OAR-2009-0472-7232.3, p. 14]
Security Policy Effects
The two main security policy effects of reducing U.S. demand for oil are: a possible impact on
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U.S. military activities in politically instable regions that supply oil; and a possible impact on the
size or valuation of U.S. Strategic Petroleum Reserve. [OAR-2009-0472-7232.3, p. 14]
The agencies have chosen not to calculate any budgetary outlays for military expenses as a
benefit because, given the size of likely oil import reductions and the broad range of policy
objectives targeted by various U.S. military missions, economic analysis predicts military costs
are unlikely to change as a result of the proposed regulations. Importantly, this case is distinct
from the agencies' decision not to quantify other uncertain costs or benefits (particularly, lost
consumer welfare), because zero is, according to the best economic analysis, a plausible estimate
for this hard-to-quantify element. Therefore, fewer policy and legal risks are raised by the choice
not to quantify. It is also commendable that NHTSA conducted a sensitivity analysis on potential
military effects. [OAR-2009-0472-7232.3, p. 14]
By decreasing U.S. demand for oil, the proposed regulations could either decrease the need to
maintain such a large Strategic Petroleum Reserve, or it could increase the protective value
offered by the current Strategic Petroleum Reserve. The decision not to quantify any cost savings
from maintaining a smaller Strategic Petroleum Reserve is justified so long as the agencies have
incorporated the increased protective value from maintaining the current Strategic Petroleum
Reserve into the calculation of disruption effects. [OAR-2009-0472-7232.3, p. 14]
Less obvious, but more really more important, is the connection to our strategic defense. I'm sure
you've heard this argument, but the less gas we burn, of course, the less foreign oil we import,
and it's estimated that we export the equivalent of the TARP bail-out, approximately $750 billion
every year to import foreign carbon. That's money flowing out of our economy and primarily
into countries that do not have our best interest in mind. The more we rely on other countries for
strategic resources, the less stability that we have here at home, less foreign oil imported means
more domestic security. [EPA-HQ-OAR-2009-0472-4621, p. 160]
EPA Response:
EPA has addressed the monopsony issue in its response to the previous comment.
In the energy security literature, the macroeconomic disruption component of the energy security
premium traditionally has included both (1) increased payments for petroleum imports associated
with a rapid increase in world oil prices, and (2) the GDP losses and adjustment costs that result
from projected future oil price shocks. This comment from the New York University School of
Law suggested that the increased payments associated with rapid increases in petroleum prices
(i.e., price increases in a disrupted market) represent transfers from U.S. oil consumers to
petroleum suppliers rather than real economic costs, and therefore, should not be counted as a
benefit.
The approach recommended by the commentor would represent a significant departure from how
the macroeconomic disruption costs associated with oil price shocks have been quantified in the
broader energy security literature, and the EPA believes it should be analyzed in more detail
before being applied in a regulatory context. In addition, the EPA also believes that there are
compelling reasons to treat higher oil import costs during oil supply disruptions differently than
simple wealth transfers that reflect the exercise of market power by petroleum sellers or
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consumers. According to the OMB definition of a transfer: "Benefit and cost estimates should
reflect real resource use. Transfer payments are monetary payments from one group to another
that do not affect total resources available to society... The net reduction in the total surplus
(consumer plus producer) is a real cost to society, but the transfer from buyers to sellers resulting
from a higher price is not a real cost since the net reduction automatically accounts for the
transfer from buyers to sellers."59 In other words, pure transfers do not lead to changes in the
allocation or consumption of economic resources, whereas changes in the resource allocation or
use produce real economic costs or benefits.
While price increases during oil price disruptions can result in large transfers of wealth, they also
result in a combination of real resource shortages, costly short-run shifts in energy supply,
behavioral and demand adjustments by energy users, and other response costs. Unlike pure
transfers, the root cause of the disruption price increase is a real resource supply reduction due,
for example, to disaster or war. Regions where supplies are disrupted (i.e., the U.S.) suffer very
high costs. Businesses' and households' emergency responses to supply disruptions and rapid
price increases are likely to consume some real economic resources, in addition to causing
financial losses to the U.S. economy that are matched by offsetting gains elsewhere in the global
economy.
While households and businesses can reduce their petroleum consumption, invest in fuel
switching technologies, or use futures markets to insulate themselves in advance against the
potential costs of rapid increases in oil prices, when deciding how extensively to do so, they are
unlikely to account for the effect of their petroleum consumption on the magnitude of costs that
supply interruptions and accompanying price shocks impose on others. As a consequence, the
U.S. economy as a whole will not make sufficient use of these mechanisms to insulate itself from
the real costs of rapid increases in energy prices and outlays that usually accompany oil supply
interruptions.60 Therefore, the ORNL estimate of macroeconomic disruption and adjustment
costs that the EPA uses to value energy security benefits includes the increased oil import costs
stemming from oil price shocks that are unanticipated and not internalized by advance actions of
U.S. consumers of petroleum products. The EPA believes that, as the ORNL analysis argues, the
uninternalized oil import costs that occur during oil supply interruptions represents a real cost
associated with U.S. petroleum consumption and imports, and that reducing its value by lowering
domestic petroleum consumption and imports thus represents a real economic benefit from lower
fuel consumption.
EPA appreciates the comments on how to account for the potential military cost associated with
maintaining a U.S. military presence to help secure stable oil supply from potentially vulnerable
regions of the world. These comments indicated that EPA should not attempt to monetize U.S.
59 OMB Circular A-4, September 17, 2003. See
http://www.whitehouse.gov/omb/assets/omb/circulars/a004/a-4.pdf
60 For a more complete discussion of the reasons why the oil import cost component of the
macroeconomic disruption and adjustment costs includes some real costs and does not represent
a pure transfer, see Paul N. Leiby, Estimating the Energy Security Benefits of Reduced U.S. Oil
Imports: Final Report, ORNL-TM-2007-028, Oak Ridge National Laboratory, March 14, 2008,
pp. 21-25.
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EPA Response to Comments
military costs nor include these costs in the energy security analysis. At this time, EPA agrees
with these comments. In fact, a recent study conducted by the National Academy of Sciences
(NAS)61 notes that it is difficult to disentangle military spending to achieve political goals from
spending to protect petroleum supply routes. Further, it notes that spending to protect petroleum
supply routes would not likely change, given a moderate reduction in oil flowing from volatile
regions to the U.S. However, the NAS study also suggests that a very large reduction in oil
demand could affect military spending. The EPA has adopted the NAS position that a change in
military spending is unlikely given a moderate reduction in oil demand, and continues to exclude
a monetary estimate of military costs in our energy security calculations for this rule. However,
EPA also believes that more examination of this issue may be warranted in the future.
Organization: Environmental Defense Fund.
Comment:
And, finally, there's this looming question about - and this is discussed again in the preamble
about one of the other factors that NHTSA has to consider about the need to conserve energy —
and I was interested that the preamble quotes from the June 30, 1977 Federal Register to the
effect that the need to conserve energy encompasses, and this is a quote from the preamble, the
consumer cost, national balance of payments, environmental and foreign policy implications of
our needs for large quantities of petroleum, especially imported petroleum. And, by the way, this
letter that I attached on the social cost of carbon talks about those factors in greater length, but
then the preamble itself only mentions really three of those four factors, [These comments were
submitted as testimony at the New York public hearing. See docket number EPA-HQ-OAR-
2009-0472-4621, p. 125.] which are the impacts of our national debt on the world oil price, the
risks of disruption and securing imported oil military expenses, which are obviously considerable
for this country, but it doesn't mention the fourth, which is the impact of our oil consumption in
the motor vehicle sector on our balance of payments, and I think we have to recognize, you
know, a year and a half ago when our trade deficit was at $800 billion, our current account
deficit was almost at $800 billion, oil accounted for almost half of it. Today, because of this
recession that we're in, the latest figures are that our trade deficit has been halved, down to a
mere $400 billion, but you multiply the amount of oil that we're now importing, which is down
from where it was about a year and a half ago, but about 10 million gallons per day total, and a
good portion of that is in the motor vehicle sector, we are spending [These comments were
submitted as testimony at the New York public hearing. See docket number EPA-HQ-OAR-
2009-0472-4621, p. 126.] 250 to 300 billion dollars on importing oil, which is, you know, two
thirds or more of our current, you know, trade deficit, and there is beginning to be in the
economic literature a lot of talk about the status of the dollar as a reserve currency, and, you
know, the status of the dollar in the payments for oil. Oil is denominated in dollars. Well, the fact
is that if that trade deficit and the amount of money that we're spending on imported oil
continues, the likelihood that oil is going to continue to be denominated in dollars is going down,
and that really has to be a factor. It's not a factor that the Energy Information Administration is
probably going to take into account, but it does seem to me in the social cost of carbon
something that you do need to take into account. If that happened, there could be radical changes
61 Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use, NAS, ISBN - 10: 0-309-14636-
4. February 2010.
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in the price of oil. So I think, particularly from NHTSA's [These comments were submitted as
testimony at the New York public hearing. See docket number EPA-HQ-OAR-2009-0472-4621,
p. 127.] point of view in setting the standard, you really have to take into account the
contribution of imported oil to our balance of payments and the implications of all that for the
sustain ability of the value of the dollar, and, you know, given world trade organization rules, I
don't see anyway in which this country can discriminate between imported oil and domestically
produced oil, and, therefore, the only way to reduce the huge contribution that imported oil
makes to our trade deficit and our current account deficit and what it's doing to our economy,
which is awful, the only way to deal with it is to cut down very significantly in the use of oil in
our transportation sector, and what you're doing is a step in the right direction, but I believe that
this consideration would drive you to be just as aggressive as you possibly can. [These comments
were submitted as testimony at the New York public hearing. See docket number EPA-HQ-
OAR-2009-0472-4621, p. 128.]
EPA Response:
EPA's energy security analysis estimates the impacts of this rule on U.S. oil imports. Clearly,
these estimated reductions in U.S. oil imports will have impacts on the U.S. trade balance and
balance of payments with other countries through time. It is beyond the scope of this analysis to
estimate how changes in the U.S.'s trade and balance of payments from this rule will influence
the world financial system.
5.14. Statutory and Executive Order Reviews
Organization:Competitive Enterprise Institute
Institute for Liberty
National Asphalt Pavement Association
American Chemistry Council, American Iron and Steel Institute, American Meat
Institute, Corn Refiners Association, National Oilseed Processors Association
Peabody Energy Company
American Petroleum Institute
Comment:
Competitive Enterprise Institute
III. The proposed standards will spawn an economically-chilling regulatory morass.
EPA Administrator Jackson certifies that the proposed rule "would not have a significant
economic impact on a substantial number of small entities." In reality, EPA's proposed GHG
standards will subject millions of previously unregulated small entities to the risk of new
regulation, controls, paperwork, penalties, and litigation. Moreover, the endangerment finding on
which the proposed rule is predicated will also expose the economy as a whole to the risk of
unprecedented^ severe constraints under the NAAQS program. [OAR-2009-0472-7281.1, p. 10]
Institute for Liberty
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The disproportionate impact of federal environmental regulations on the small business sector
led President Clinton to support the 1996 Small Business Regulatory Enforcement Fairness Act
(SBREFA). Among other things, SBREFA amended the Regulatory Flexibility Act of 1980 to
require a panel of government officials (made up of employees from the EPA, the U.S. Small
Business Administration's (SB A) Office of Advocacy, and the Office of Management and
Budget's Office of Information and Regulatory Affairs) and representatives of small entities to
examine regulatory proposals and suggest less burdensome alternatives that would meet EPA's
underlying environmental protection objectives while minimizing impact on small entities. These
panels, entitled, "Small Business Advocacy Review Panels," issue a report that is published in
conjunction with a proposed regulation. That way, the EPA benefits from sensitivity towards its
impact on small business and the public benefits from a more transparent disclosure of benefits,
costs, and potential alternatives.
Unfortunately, the EPA did not avail itself of the Small Business Advocacy Review Panel
process prior to proposing this rule. This is unfortunate, especially since the U.S. Small Business
Administration, Office of Advocacy, twice advised the EPA to convene the small business panel
well before EPA issued its proposal.
We respectfully request that EPA to withdraw this rule. And, we further request that EPA
convene a Small Business Advocacy Review panel under section 609 of the Regulatory
Flexibility Act. These recommendations, if followed, will allow for EPA to develop alternatives
that will minimize the impact on small business while reducing GHG emissions. Our
recommendations come at a time when sensitivity towards small business not only makes sense;
it is of vital importance for our country's economic recovery. [OAR-2009-0472-7284.1, p.4]
EPA's reliance on Section 609(c) of the RFA to avoid the required analysis is equally illogical.
That section authorizes EPA to forgo the statutory requirement to —prepare and make available
for public comment an initial regulatory flexibility analysis describing the rule's impact on small
entities. 5 U.S.C. § 603(a). The RFA directs that this analysis —shall be published in the Federal
Register at the time of the publication of general notice of proposed rulemaking for the rule.
Thus, 609(c) does not exempt EPA from these clear mandates—rather, Section 609's small
entity outreach —requirements apply before the EPA proposes a rule. West Va. Chamber of
Comm. v. Browner, 166 F.3d 366, 1998 WL 827315, *3 (4th Cir. 1998). [OAR-2009-0472-
7143.1,p.4]
National Asphalt Pavement Association
Our concern is in EPA's certification statement in the current proposal [74 Fed Reg 49629]: ' ....
that this proposed rule will not have a significant economic impact on a substantial number of
small entities. However, EPA recognizes that some small entities continue to be concerned about
the potential impacts of the statutory imposition of PSD requirements that may occur given the
various EPA rulemakings currently under consideration concerning greenhouse gas emissions .
.... Concerns about the potential impacts of statutorily imposed PSD requirements on small
entities will be the subject of deliberations in that consultation and outreach. Concerned small
entities should direct any comments relating to potential adverse economic impacts on small
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entities from PSD requirements for GHG emissions to the docket for the PSD tailoring rule.'
[OAR-2009-0472-7224.1, pp. 1-2]
It is critical that all potentially affected entities understand the impact of EPA regulating
greenhouse gas emissions under the light-duty vehicle proposal. In contrast to EPA's suggestion
recommending that stationary (industrial) sources address any concerns that they have through
comments on the upcoming 'tailoring rule' — once EPA regulates greenhouse gases from light-
duty vehicles, these sources will already be subject to PSD as defined in the Clean Air Act.
Bottom line: the greenhouse gas threshold values proposed are totally discordant with the current
Clean Air Act. As representatives of a small industrial source sector, we implore EPA to correct
and address this situation now. [OAR-2009-0472-7224.1, p.2]
For example, any state operating permit issued with greenhouse gas, i.e., carbon dioxide
thresholds, higher than those identified within the current Clean Air Act, would be vulnerable to
appeal and litigation. Certainly, EPA must fully evaluate the collateral impact this proposal
would have on all other aspects of the Clean Air Act including, but not limited to, the impact on
state and local air permitting authorities, businesses, industry and the economy in all areas of the
country. [OAR-2009-0472-7224.1, p.2]
Once EPA 'regulates' greenhouse gas emissions from mobile sources, the Clean Air Act requires
that stationary sources be regulated under the threshold requirements as specified within the
Clean Air Act - regardless of any 'tailoring rule' EPA develops - as those thresholds are specified
within federal law. [OAR-2009-0472-7224.1, p .2]
Not only are states and local permitting authorities wholly unprepared for the millions of entities
that will be required to comply with the Clean Air Act once greenhouse gas standards are set by
EPA on light-duty vehicles, but EPA has failed to carefully evaluate the number of sources that
could be affected once the light-duty vehicle GHG proposal goes into effect. We think that EPA
has grossly underestimated the number and types of facilities that will be impacted by the light-
duty vehicle greenhouse gas proposal by becoming subject to NSR pollutants and the Title V and
PSD requirements. [OAR-2009-0472-7224.1, p.2]
For example, asphalt plants, typically considered as a small industrial source, would now become
subject to Title V and PSD permitting as soon as greenhouse gases are regulated under the light-
duty vehicle greenhouse gas standards. There are over 4,000 of these asphalt plants across the
country. The same can be said of large malls and hotels, for example. Any source that emits
more than 250 tons of carbon dioxide would now be subject to these stringent permitting
programs, thereby increasing costs associated with paperwork, testing, and more importantly,
control or mitigation technologies. Additionally, moving forward with this action will further
exacerbate the economic downturn in the road construction and other small industries - some
already in dire economic straits, by creating more uncertainty and greater operational expenses.
[OAR-2009-0472-7224.1, p.2]
Our industry takes compliance with the Clean Air Act seriously. If it is not the intention of EPA
to regulate relatively minor sources of greenhouse gas emissions, then the statutory language of
the Clean Air Act must be amended, or specific and clear legislative efforts must be provided to
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the states where these small sources operate. Inevitably, litigation will ensue. Our members,
builders of the nation's roads, do not want to respond to litigation when their operations, as small
industrial sources, are in compliance with the intent of the Clean Air Act - but not in conformity
with existing statutory language that lags behind agency regulation. [OAR-2009-0472-7224.1,
p.3]
EPA must not move forward with regulating greenhouse gas emissions under the light-duty
vehicle proposal until its impact on small and minor industrial sources of greenhouse gas
emissions are taken into account. EPA has indicated it is not the intent of the Agency to regulate
industrial sources of greenhouse gas emissions below 25,000 tons annually. In fact, finalization
of this rule will do just the opposite - it will require small industrial sources to comply with Title
V and PSD permitting requirements, and potentially face a spate of litigation. [OAR-2009-0472-
7224.1, p.3]
American Chemistry Council, American Iron and Steel Institute, American Meat Institute,
Corn Refiners Association, National Oilseed Processors Association
EPA's Failure to Analyze the PSD and Title V Effects of Finalizing the Motor Vehicle Rule
Runs Contrary to Procedural Requirements
Failure to account for the PSD and Title V implications of proposed Motor Vehicle Rule also
violates the Regulatory Flexibility Act and the Paperwork Reduction Act. [NHTSA-2009-0059-
0094.1, p.6] [[See Docket Number NHTSA-2009-0059-0094.1, pp.6-8 for a detailed discussion
on this issue.]]
The PRA and the RFA promote overriding public interests in transparency and ensuring that
costs imposed by agency actions are fully considered. These are not mere boxes for the Agency
to check perfunctorily. Entities affected by agency actions depend on these safeguards in order to
be kept abreast of rules that will impact them, and to know how to provide meaningful input. By
ignoring the obvious, admitted, and enormous implications that this proposed Rule poses for
stationary sources, EPA thwarts those public interests. [NHTSA-2009-0059-0094.1, pp.7-8]
Peabody Energy Company
EPA failed to address the economic and regulatory effects of making major sources subject to
PSD regulation for their GHG emissions under a number of Executive Orders and statutes
Despite the large economic and regulatory consequences that the motor vehicle rule will have on
major stationary sources, EPA unaccountably failed to produce the necessary studies of these
effects in conformance with the relevant Executive Orders and statutes. The motor vehicle rule
docket contains an RIA and certain other regulatory reviews, but these analyses are all confined
to the direct benefits and effects of motor vehicle GHG regulation and do not address the PSD
effects that motor vehicle regulation will automatically trigger. [OAR-2009-0472-7223.1, pp.5-
6]
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EPA seems to have been of the view when it promulgated the motor vehicle rule that it would
address the PSD effects of that rule when it undertook the tailoring rulemaking. EPA did, in fact,
produce analyses in the tailoring rule docket of PSD impacts of regulating GHG emissions under
the CAA but only for small sources, not major sources. Indeed, EPA's RIA and other Executive
Order and statutory reviews in the tailoring rule docket were all premised on the notion that the
tailoring rule reduces costs associated with PSD, on the theory that the tailoring rule defers PSD
and Title V regulation of small sources that would otherwise occur absent the rule. [OAR-2009-
0472-7223.1, p.6]
Peabody will comment on that premise in its tailoring rule comments, but for purposes here EPA
completely missed the point that the tailoring rule did not reduce or otherwise affect PSD
regulation of major source GHG emitters (other than to define the major source threshold). As a
result, none of the Executive Order and statutory reviews in the tailoring rule or motor vehicle
dockets addressed the effect on major sources of making GHGs regulated CAA air pollutants
through promulgation of the motor vehicle rule. [OAR-2009-0472-7223.1,p.6]
That failure is plain legal error. By regulating motor vehicle GHG emissions, EPA is
automatically initiating PSD regulation of major source GHG emissions. EPA therefore has a
responsibility under the Executive Orders and statutes discussed below to examine the economic
and regulatory impacts of that decision. [OAR-2009-0472-7223.1,p.6]
Moreover, EPA's error is so fundamental that it can only be cured by EPA producing the
necessary studies as a part of a re-noticed proposed motor vehicle rule. Each of the Executive
Order and statutory reviews discussed below is required to be prepared at the time of the notice
of proposed rulemaking and is intended to inform the public comment process. Particularly given
the potentially very large costs that the motor vehicle rule will impose on major stationary
sources and the economy in general, the public is entitled to have the benefit of EPA's analysis
of these costs when it files comments on the motor vehicle rule. [OAR-2009-0472-7223.1, p.6]
Finally, it would be no defense for EPA to respond that it cannot at this time precisely monetize
the cost of GHG B ACT for large sources. In the first place, EPA did not take this position in its
motor vehicle proposal. EPA's reason for not assessing PSD impacts in the motor vehicle
rulemaking docket was not because of its inability to estimate BACT costs; it was because EPA
evidently did not think of it. Moreover, the Executive Orders and statutes discussed below do not
require precise monetization, only estimation to the best of EPA's ability. For instance, under
Section 3(d) of Executive Order 12291, agencies are required to describe potential benefits and
costs of the rule and to determine potential net benefits, including any benefits, effects, and net
benefits that "cannot be quantified in monetary terms." [OAR-2009-0472-7223.1, p.6]
1. Executive Order 12291 - Federal Regulation. Executive Order 12291 provides that an agency
promulgating a "major rule" must prepare, at the time of the notice of proposed rulemaking, an
RIA setting forth essentially a cost-benefit analysis of the rule. EPA agrees that the motor vehicle
rule is a major rule and prepared an RIA setting forth the costs and benefits of the rule. That
analysis, however, did not discuss the costs and benefits of the PSD regulation that would be
triggered automatically by the rule. Among the purposes of the RIA requirement is to ensure that
"[a]administrative decisions shall be based on adequate information concerning the need for and
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consequences of proposed government action." Since one of the main consequences of
regulating motor vehicle GHG emissions is PSD regulation of large source GHG emissions, EPA
should have included those costs in its motor vehicle RIA. [OAR-2009-0472-7223.1, p.7]
2. Executive Order 12866 - Regulatory Planning and Review. Under Executive Order 12866,
agencies are required to specify to the Office of Information and Regulatory Affairs (OIRA) in
the Office of Management and Budget any actions that the agency believes are "significant
regulatory actions." If the agency or OIRA concludes that an action is a "significant regulatory
action," the agency is required to submit to OIRA the analysis set forth in Section 6(a)(3)(B). If
the agency action is a "significant regulatory action" because it will "[h]ave an annual effect on
the economy of $100 million or more or adversely affect in a material way the economy, a sector
of the economy, productivity, competition, jobs, the environment, public health or safety, or
State, local, or tribal governments or communities," the agency is required to submit the more
detailed analysis under Section 6(a)(3)(C). EPA concluded that the motor vehicle rule is a
significant regulatory action under Executive Order 12866 but the analysis was legally deficient
because it did not examine PSD impacts on large sources. [OAR-2009-0472-7223.1, p.7]
3. Executive Order 13211 - Energy Effects. Executive Order 13211 requires that agencies
produce a Statement of Energy Effects whenever they take a "significant energy action," defined
as one that is a significant regulatory action under Executive Order 12866 and is "likely to have a
significant adverse effect on the supply, distribution, or use of energy." The motor vehicle
preamble says that a Statement of Energy Effects was not required because the rule will not
adversely affect the supply, distribution or use of energy, and will in fact have a positive effect
through improved automobile fuel economy. Again, however, this conclusion was reached
without consideration of PSD effects on major sources. As set forth above, EPA states that, even
with the tailoring rule limitations, almost all of the nation's electric generating and oil refining
fleets will become subject to PSD regulation for their GHG emissions. It is inarguable that this
regulation will impose costs and therefore potentially affect the supply, distribution or use of
energy. At least EPA must examine the issue. [OAR-2009-0472-7223.1, p.7]
4. Unfunded Mandates Reform Act (UMRA). UMRA applies to any Federal mandate that may
result in the expenditure by State, local and tribal governments, in the aggregate, or by the
private sector of $100,000,000 or more. An agency proposing such a mandate must produce the
analysis required by Section 202(a). [OAR-2009-0472-7223.1, p.8]
The motor vehicle preamble states that UMRA does not apply to the motor vehicle rule as to
possible impacts to state, local or tribal governments but that it does apply as to impacts to the
private sector. It states that impacts to the private sector are analyzed in its RIA, but as noted
above, that RIA is deficient because it does not consider PSD impacts. [OAR-2009-0472-7223.1,
p.8]
Additionally, EPA's conclusion that UMRA does not apply as to impacts on state governments is
incorrect. For the reasons discussed above, the tailoring rule does not automatically prevent
small sources from being subject to PSD regulation in "most states," that is, those that administer
their own PSD programs subject to EPA approval. In order for small sources not to be subject to
PSD regulation for their GHG emissions in those states, the states must amend their laws and
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EPA Vehicle Program, Feasibility, and Estimated Impacts
regulations setting forth the 100/250 tpy and zero significance levels. [OAR-2009-0472-7223.1,
p.8]
As a result, under the tailoring rule standing alone, state permitting agencies will be
overwhelmed with new PSD permit applications. Although states may change those laws, those
that wish to do so will require some time to amend their PSD rules through rulemaking and/or
legislation. Thus, notwithstanding the tailoring rule, making GHGs regulated air pollutants
through adoption of the motor vehicle rule could have very large and immediate consequences
for state governments in overwhelming their permit systems before they can make the necessary
rule changes. These consequences must be examined under UMRA. [OAR-2009-0472-7223.1,
p.8]
5. Executive Order 13132 - Federalism. Executive Order 131312 applies to "policies that have
federalism implications," defined as regulations and other agency actions that have "substantial
direct effects on the States, on the relationship between the national government and the States,
or on the distribution of power and responsibilities among the various levels of government."
Agencies may not promulgate regulations that have federalism implications unless the federal
government funds the States' costs or the agency consults with the States and provides, in the
notice of proposed rulemaking, the statement set forth in Section 6(b)(2)(B). The motor vehicle
rule preamble states that EPA does not have to provide this statement because the motor vehicle
rule does not impose mandates on any States. However, for the reasons just discussed, the motor
vehicle rule does impose significant PSD permit burdens on states. EPA therefore should have
provided the relevant statement under Executive Order 13132. [OAR-2009-0472-7223.1, p.8]
6. CAA § 317. Section 317 provides that EPA must prepare an economic impact assessment
before publishing a notice of proposed rulemaking in the federal register for certain specified
types of rules. Under Section 317(a)(4), such a statement is required for "any regulation under
part C of subchapter I of this chapter (relating to prevention of significant deterioration of air
quality)" [OAR-2009-0472-7223.1, pp.8-9]
Because the motor vehicle rule makes GHGs subject to CAA regulation for the first time, and
therefore triggers PSD regulation of GHGs for the first time, there is no question that the rule is
both a Section 202(a) rule and a PSD rule under part C. Accordingly, EPA was required to but
failed to produce the necessary economic impact assessment. [OAR-2009-0472-7223.1, p.9]
7. Regulatory Flexibility Act (RFA). The RFA generally requires that an agency prepare a
regulatory flexibility analysis for any rulemaking unless it certifies that the rule will not have a
significant economic impact on a substantial number of small entities. The motor vehicle
preamble concluded that the rule would not cause such an impact because the rule was only
targeted at large automakers. EPA, however, did not examine how many small entities within the
meaning of the RFA are major sources of GHG emissions that would be subject to PSD
regulation. Until that analysis is performed, EPA has no basis to conclude that it is not required
to prepare a regulatory flexibility analysis. [OAR-2009-0472-7223.1, p.9]
EPA Response:
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EPA Response to Comments
The Regulatory Flexibility Act (RFA) generally requires an agency to prepare a regulatory
flexibility analysis of any rule subject to notice and comment rulemaking requirements under the
Administrative Procedure Act or any other statute unless the agency certifies that the rule will
not have a significant economic impact on a substantial number of small entities subject to the
rule. If a covered agency, such as EPA, is unable to certify a rule at proposal, they must conduct
a Small Business Advocacy Review (SBAR) panel.
If an agency certifies that the rule at issue does not have a significant impact on a substantial
number of small entities (SISNOSE), the agency is not required to undertake any regulatory
flexibility analyses or conduct a SBAR panel. When considering whether or not a rule should be
certified at proposal stage, the RFA requires the agency to look only at the "small entities to
which the proposed rule will apply" and small entities "subject to the requirement' of the
specific rule in question. 5 U.S.C. § 603(b) (emphases added).62 Though the agency must have a
"factual basis" for this certification, that factual basis can be supported by the fact that the rule
"does not directly regulate any small entities." ATA v. EPA, 175 F.3d 1027, 1045 (D.C. Cir.
1999).
Courts have "consistently rejected the contention that the RFA applies to small businesses
indirectly affected by the regulation of other entities." Cement Kiln Recycling Coalition v. EPA,
255 F.3d 855, 869 (D.C. Cir. 2001). The D.C. Circuit has previously addressed an RFA claim in
the context of motor vehicle regulation, and held that EPA was not required to conduct RFA
analyses where the rule did not directly impose requirements on small automobile manufacturers.
Motor & EquipmentMfrs. Ass'n v. Nichols (MEMA), 142 F.3d 449, 467 (D.C. Cir. 1998) (EPA
is only "obliged to consider the impact of the rule on small automobile manufacturers subject to
the rule").
This rule, as did the rule in MEMA, regulates exclusively large motor vehicle manufacturers and
thus has no direct impacts on any small entities.63 EPA recognizes that in some cases the Clean
Air Act will require application of PSD permitting requirements to GHG emissions when the
regulatory requirement to control those emissions "takes effect" under this rule. However, those
permitting requirements are imposed by operation of section 165 of the Clean Air Act and are
not imposed by the regulatory requirements contained in this separate regulatory action under
section 202(a) (1). EPA is not required to base its certification decision on indirect impacts
62 Likewise, in discussing the consideration of significant alternatives to the proposed rule in an initial regulatory
flexibility analysis, the RFA refers to the "establishment of differing ... requirements" that take into account the
resources available to small entities, the simplification of "requirements under the rule for such small entities," and
"an exemption from coverage of the rule ... for such small entities."
63 Small manufacturers are exempted from the GHG standards and other regulatory requirements adopted in this
final rule. For the proposal, a limited number of small entities were subject to a proposed reporting requirement, but
the economic impact of that proposed regulatory requirement was clearly not significant. EPA proposed to exempt
small manufacturers and other entities from the GHG standards and other regulatory requirements, and the only
proposed regulatory requirement they were subject to was a one-time reporting obligation to obtain such exemption.
This single regulatory requirement did not have a significant economic impact. For the proposal, EPA was not
required to consider the indirect impacts on these small entities of other requirements that were not contained in the
proposed rule, but instead flow from the operation of other provisions of the CAA. EPA properly based its
NOSISNOSE certification for the proposal on the lack of significant impact imposed by the regulations themselves
on small entities subject to the proposed rule. For the final rule, EPA is not adopting this proposed one-time
reporting requirement, as it is not needed.
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EPA Vehicle Program, Feasibility, and Estimated Impacts
imposed on parties that are not subject to the regulatory requirements of this rule, such as parties
that are not motor vehicle manufacturers. EPA properly bases its certification by considering the
impacts of the regulatory requirements contained in the proposed and final rule, determining
whether these regulatory requirements themselves imposed a significant impact on a substantial
number of small entities subject to the rule.
As this rulemaking is limited to issues involved in setting emissions standards for large motor
vehicle manufacturers, EPA would not be able to account for any potential indirect impacts from
separate statutory requirements on entities not directly subject to or impacted by this rule. Even
where a rule could "doubtless have economic impacts in many sectors of the economy," courts
have refused to "convert every rulemaking process into a massive exercise in economic
modeling" by requiring a full RFA analysis. Cement Kiln Recycling Coalition v. EPA, 255 F.3d
855, 869 (D.C. Cir. 2001).
Although the RFA does not apply to this action, EPA recognized that some small entities were
concerned about the potential indirect impacts of the statutory imposition of PSD requirements
that may occur given the various EPA rulemakings concerning greenhouse gas emissions. In the
interest of providing small entities a forum to express their concerns in addition to the
opportunity provided in the notice and comment process, EPA used the discretion afforded to it
under section 609(c) of the RFA to consult with OMB and SB A, with input from outreach to
small entities, regarding the potential impacts of PSD regulatory requirements on small entities
that might occur as EPA considers regulations of GHGs.
Section 609(c) of the RFA allows agencies to, in their discretion, apply the provisions of the
RFA that address SBAR panels to a rule that "the agency intends to certify... but the agency
believes may have a greater than de minimis impact on a substantial number of small entities." 5
U.S.C. § 609(c) (emphasis added).64 EPA does not believe that the use of this discretion requires
a rigid application of the entirety of section 609(c). Instead, agencies may pick and choose
elements of the SBAR panel process to apply as they deem appropriate for the rule at issue.
EPA believes that section 609(c) of the RFA authorizes agencies to engage in outreach similar to
that of a formal SBAR panel where, as in this action, the RFA would not otherwise apply due to
the certification of the rule.65 EPA maintains that this action does not have any significant
impacts on small entities directly subject to the rule, and EPA's use of 609(c) does not indicate
otherwise. As indicated by the word "may," an agency has discretion to invoke this provision in
a variety of circumstance and is not limited to those situations where it is certain that a rule has a
greater than de minimis impact.
64 One commenter misunderstood this provision, believing that Section 609(c) only authorizes agencies to forgo an
Initial Regulatory Flexibility Analysis (IRFA). This is not an accurate reading of the statute. Section 609(c) applies
where agencies certify that a rule will have no SISNOSE under 605(c). When an agency certifies no SISNOSE
under 605(c), they are not obligated to conduct an IRFA. Since the 609(b) SBAR panel requirements are triggered
only when EPA is "required to conduct" an IRFA, Section 609(c) discretion applies only to the SBAR panel process
provisions of 609(b), but not the substantive IFRA requirement. The 4th Cir. opinion referenced by the commenter
does not involve agency use of section 609(c) and has no meaningful bearing on the matter at hand.
65 EPA does not believe that section 609(c) of the RFA offers agencies a chance to circumvent the panel process
where they do not intend to certify that the rule does not have a SISNOSE, and EPA remains committed to holding
SBAR panels where contemplated by the RFA.
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EPA Response to Comments
Commenters have cited almost no case law to support their claim that EPA has violated the
RFA.66 One case, Aero. Repair Station Ass 'n v. F.A.A., 494 F.3d 161 (D.C. Cir. 2007), is plainly
distinguishable from this action. In Aero. Repair, the FAA certified a regulation that imposed
requirements on "employer air carriers", but which also "expressly require[d] that the employees
of contractors and subcontractors be tested" under the regulation. Id. at 177. FAA argued that
since the phrase "employer air carriers" did not include contractors and subcontractors, they were
not required to consider impacts on contractors and subcontractors in fulfilling their RFA
obligations. The court rejected the claim, finding that "the 2006 Final Rule imposes
responsibilities directly on the contractors and subcontractors." Id. (emphasis added).67
In this action, the only entities that have responsibilities under this rule are motor vehicle
manufacturers, and the rule explicitly exempts small motor vehicle manufacturers from those
responsibilities. No other entities, whether implicitly or explicitly, have any responsibilities
under this rule. EPA will not enforce this rule against anyone other than the large automobile
manufacturers subject to it.
Accordingly, EPA maintains that it has fully complied with the requirements of the Regulatory
Flexibility Act in this action. Because this rule does not significantly impact a substantial number
of small entities that are subject to the rule, EPA has statutory authority to certify this rule under
the RFA. Thus, EPA was not required to conduct a SBAR panel or any regulatory flexibility
analyses.
EPA rejects the argument that it needs to provide additional analyses beyond that in the
Regulatory Impact Analysis, to be responsive to various Executive Orders on analyses of the
costs and benefits of this rule. These Executive Orders call for EPA to analyze the impacts of
this rule and its requirements, not indirect impacts of statutory requirements that flow from this
rule. Likewise, compliance with UMRA and Executive Order 13132 are properly focused don
the impacts of this rule on States, not the impacts of indirect effects that flow from this rule.
Finally, EPA believes that its RIA satisfies the requirements of Section 317 of the Act, which
calls for an analysis of the impacts of the requirements imposed by this rule, not indirect effects
that flow from it.
The various comments on consideration of the economic impacts of the PSD permitting
provisions fail to recognize that any analysis of such impacts would not aid EPA in determining
what GHG standards to adopt in this rulemaking. They are not related to any of the issues EPA
needs to consider and decide in determining the content of the GHG standards that will apply to
automobile manufacturers. EPA has addressed elsewhere the separate issue of whether EPA
should delay issuance of this rule because of concerns raised over PSD permitting.
66 EPA is not aware of a prior situation where EPA voluntarily conducted a SB AR panel where the regulatory action
at hand triggered a subsequent statutory obligation, and commenters have not indicated otherwise. Although EPA is
aware of a handful of examples of other agencies voluntarily engaging in regulatory flexibility analyses where their
regulatory action arguably triggered a statutory obligation, we note that none of those agencies conducted a SBAR
panel prior to proposal. In addition, any analyses they completed were post proposal. See e.g. 71 Fed. Reg. 8,265
(Feb. 16, 2006).
67 It is also worth noting that the FAA is not a covered agency under the RFA, and thus is not required to complete
an SBAR panel.
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EPA Vehicle Program, Feasibility, and Estimated Impacts
5.15. Comments on EPA Regulatory Text
OrganizationrChrysler Group LLC (Chrysler)
Alliance of Automobile Manufacturers (Alliance)
New York State Department of Environmental Conservation
Comment:
Chrysler Group LLC (Chrysler):
Clarity of Intent
The intent of the proposed regulatory text is unclear in several cases and additional clarity is
required. The following comments are provided. [NHTSA-2009-0059-0124, p.39] [[See
NHTSA-2009-0059-0124, pp.39-41 for detailed comments regarding the regulatory text]]
Definitions
The following concerns were noted with the definitions given in the proposed regulatory text.
[[See NHTSA-2009-0059-0124, p.42 for detailed comments regarding the definitions in the
proposed regulatory text]]
Reference to Appropriate Greenhouse Gas Metric
Throughout the proposed regulatory text, a variety of greenhouse gas metrics are referred to
(CO2, CO2-equivalent, and CREE). The intermingling of terms can cause confusion, especially
in cases where it is unclear whether actual CO2 emissions are meant or whether a metric which
includes CO2 emissions is meant. Chrysler recommends that the proposed regulatory text only
use the exact term meant in each instance. [NHTSA-2009-0059-0124, p.42]
The following instances were identified where the apparent intended metric was CREE, but an
alternative greenhouse gas metric was specified. [[See NHTSA-2009-0059-0124, p.42 for
detailed comments regarding the regulatory text]]
Reference Issues
Some references within the regulatory text appear to be incorrect. [[See NHTSA-2009-0059-
0124, p.43 for detailed comments regarding the regulatory text]]
Regulatory Text Changes Are Indicated, but Could Not Be Identified
In several instances, the NPRM indicated that modifications had been made to regulatory text
from previously existing language, but Chrysler could not identify the difference between the
original and proposed text. [NHTSA-2009-0059-0124, p.43]
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EPA Response to Comments
86.1803-01 Round, Rounded, or Rounding: Comment 11 notes that the definition is revised, but
no difference could be identified.
86.1841-0 1 (b): Comment 21 notes that paragraph (b) is revised, but no difference could be
identified. [NHTSA-2009-0059-0124, p.43]
Alliance of Automobile Manufacturers (Alliance):
Net Heating Value (NHV) Determinations (Proposed regulations in 40 C.F.R. 600.113-08 and
600.510-12)
In the proposed 40 C.F.R. 600.113-08(f)(4)(iii) and again in 40 C.F.R. 600.510(g)(l)(ii)(A), EPA
proposed to use the ASTM D 240-92 test method for determining the NHV for ethanol and
alcohol fuels. [OAR-2009-0472-6952.1, p.53]
The current practice for determining NHV for gasoline is ASTM D 3338-92 which has superior
precision as compared to that of ASTM D-240. ASTM D 3338 has repeatability and
reproducibility of 9 Btu/lb and 20 Btu/lb respectively, whereas ASTM D-240 has repeatability
and reproducibility of 56 Btu/lb and 172 Btu/lb respectively. The two methods are not equivalent
and if the new procedure (ASTM D-240) is adopted, a bias in fuel properties can be assumed.
[OAR-2009-0472-6952.1, p.53]
Recommendation:
The current ASTM D3338 process for determining the Net Heating Value (NHV) should be
retained for fuels with ethanol blends that are <10%. For fuels that have a greater than 10%
ethanol composition, EPA should work with industry on an acceptable method for determining
NHV, possibly with a modified ASTM D 3338 calculation and a sample for distillation of the
gasoline portion of the fuel. [OAR-2009-0472-6952.1, p.53]
New York State Department of Environmental Conservation
Apparent Internal Citation Errors (Federal Register Notice pages 49759-49762)
The proposed language for §86.1848-10(c)(9). includes reference to §86.1865-12(k)(7) for the
procedure to be used to determine the vehicles deemed to have been sold in violation of the fleet
average C02 standards, in the event a manufacturer does violate those standards. This procedure
is found in §86.1865-12(k)(8). Similarly there are other references to paragraph §86.1865-
12(k)(7) in §86.1865-12(j) and (k) that appear to more properly refer to §86.1865-12(k)(8).
[OAR-2009-0472-7454, p.4]
Carbon Related Exhaust Emissions Formula (Proposed Amendments to Section 600.113-08)
EPA includes the CO2 formed from hydrocarbons and CO as C02 regulated by this standard. We
concur with this approach. However the proposed Carbon Related Exhaust Emission equations in
600.113-08(h) reduce hydrocarbons to carbon rather than carbon dioxide. [OAR-2009-0472-
7454, p.5]
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EPA Vehicle Program, Feasibility, and Estimated Impacts
The formula for calculating carbon related exhaust emissions (CREE) contain an error in the
hydrocarbon term. The equation follows: [OAR-2009-0472-7454, p.5]
CREE = CWF(HC) + 1.571(CO) + (CO2) [OAR-2009-0472-7454, p.5]
The purpose of the 1.571 factor for carbon monoxide is to convert the mass of CO to the mass of
an equivalent number of moles of C02. However, the hydrocarbon term is multiplied by the
carbon weight fraction, which converts to the mass of an equivalent number of moles of carbon.
Another representation of the proposed equation is: [OAR-2009-0472-7454, p.5]
CREE = CWF(HC) +(44/28)(CO) + (44/44) (CO2) [OAR-2009-0472-7454, p.5]
To properly express CREE on a consistent basis as CO2, the equation should be: [OAR-2009-
0472-7454, p.5]
CREE = CWF (44/12) (HC) + (44/28) (CO) + (44/44) (CO2) [OAR-2009-0472-7454, p.5]
Or:
CREE = 3.667(CWF)(HC) + 1.571(CO) + (C02) [OAR-2009-0472-7454, p.5]
There appear to be similar errors in the hydrocarbon terms for other, non-gasoline, fuels. [OAR-
2009-0472-7454, p.5]
EPA Response:
Comments will be addressed below on the following topics: ASTM Test Procedure to Determine
the Net Heating Value for Methanol and Ethanol; and Regulatory Text Clarifications.
ASTM Test Procedure to Determine the Net Heating Value for Methanol and Ethanol: EPA
proposed revisions to paragraphs §600.113-08(f)(2)(iii), §600.113-08(f)(4)(iii) and
§600.510(g)(l)(ii)(A), regarding the net heating value (NHV) used for methanol and ethanol
fuels. The proposed regulation changes required manufacturers to use ASTM D 240-92 test
method to determine the NHV for ethanol and methanol fuels.
Comments submitted by the Alliance indicated that that "The current practice for determining
NHV for gasoline is ASTM D 3338-92 which has superior precision as compared to that of
ASTM D-240. ASTM D 3338 has repeatability and reproducibility of 9 Btu/lb and 20 Btu/lb
respectively, whereas ASTM D-240 has repeatability and reproducibility of 56 Btu/lb and 172
Btu/lb respectively. The two methods are not equivalent and if the new procedure (ASTM D-
240) is adopted, a bias in fuel properties can be assumed." The Alliance recommended that "The
current ASTM D3338 process for determining the Net Heating Value (NHV) should be retained
for fuels with ethanol blends that are <10%. For fuels that have a greater than 10% ethanol
composition, EPA should work with industry on an acceptable method for determining NHV,
possibly with a modified ASTM D 3338 calculation and a sample for distillation of the gasoline
portion of the fuel."
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EPA Response to Comments
EPA agrees with the Alliance comments and has corrected the regulations in the final rule
accordingly. The reference to ASTM D 240-92 is not needed in paragraphs §600.113-
08(f)(2)(iii) and (f)(4)(iii) and does not appear in the final rule (because NHV is not used in the
fuel economy equation for vehicles operated on ethanol or methanol fuels). Paragraph
§600.510(g)(l)(ii)(A) reads in the final rule as follows:
"(ii)(A) The net heating value for alcohol fuels shall be
premeasured using a test method which has been approved in advance by
the Administrator."
EPA intends to work with the Industry to help develop an appropriate test procedure to
determine the NHV of alcohol fuels.
Regulatory Text Clarifications: Chrysler and the New York Department of Environmental
Conservation submitted a list of paragraphs in the proposed regulations which Chrysler believes
to be ambiguous, to contain typographical mistakes, or to contain incorrect regulatory references.
EPA has made appropriate corrections in response. In addition, Chrysler commented that
"Throughout the proposed regulatory text, a variety of greenhouse gas metrics are referred to
(CO2, CO2-equivalent, and CREE). The intermingling of terms can cause confusion, especially
in cases where it is unclear whether actual CO2 emissions are meant or whether a metric which
includes CO2 emissions is meant. Chrysler recommends that the proposed regulatory text only
use the exact term meant in each instance."
EPA appreciates the comments about the errata in the regulations, and the final rule has corrected
the regulations, accordingly. The final rule also contains a number of minor amendments to
update the regulations as needed and to ensure that the regulations are consistent with changes
discussed in the preamble to the final rule. Regarding Chrysler's comment about the
intermingling of CO2 and CREE terms, the final rule revised most of the CO2 emission
references to carbon-related exhaust emissions (CREE) references, where appropriate. The GHG
emission standards still refer to a CO2 standard (although CREE emissions are measured and
compared to the CO2 standard) because a CO2 standard is easier for the general public to
understand. To prevent confusion about this concept, the final rule revised the CREE definition
contained in §600.002-08, to read as follows:
§600.002-08 Definitions.
Carbon-related exhaust emissions (CREE) means the summation of the
carbon-containing constituents of the exhaust emissions, with each constituent
adjusted by a coefficient representing the carbon weight fraction of each
constituent, as specified in §600.113-08. For example, carbon-related exhaust
emissions (weighted 55 percent city and 45 percent highway) are used to
demonstrate compliance with fleet average CC>2 emission standards outlined in
§86.1818(c).
5-460
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Section 6 Reserved
6-1
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EPA Response to Comments
6. Reserved
6-2
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Other Comments
7. Other Comments 2
7.1. Stationary Source and Permitting Issues 2
7.2. Endangerment Finding 69
7.3. Vehicle Life-Cycle Emissions Issues 80
7-1
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EPA Response to Comments
7. Other Comments
7.1. Stationary Source and Permitting Issues
Organization: Air Permitting Forum
Alliance of Automobile Manufacturers (Alliance)
American Chemistry Council (ACC)
American Farm Bureau Federation (AFB A)
American Forest and Paper Association (AF&PA)
American Iron and Steel Institute
American Meat Institute
American Petroleum Institute
Arizona Public Service
BCCA Appeal Group (the Group)
Brick Industry Association
California Cotton Ginners Association (CCGA)
Charleston Metro Chamber of Commerce
Consumers Energy
Corn Refiners Association
Council of Industrial Boiler Owners (CIBO)
County of Greenville, SC
Dow Chemical Company (Dow)
Duke Energy
Edison Electric Institute
Energy-Intensive Manufacturers Working Group
Fertilizer Institute
Georgia Department of Natural Resources
Georgia-Pacific (GP)
Industry Coalition
Mass Comment Campaign (48 comments) (unknown organization)
Mississippi Department of Environmental quality
National Association of Home Builders (NAHB)
National Association of Manufacturers
National Climate Coalition
National Cotton Ginners Association
National Mining Association (NMA)
National Oilseed Processors Association
National Petrochemical & Refiners Association
NISEI Farmers League
Peabody Energy Company
SCANA Corporation
Sierra Research Inc.
South Carolina Chamber of Commerce
South Carolina Department of Health and Environmental Control
South Carolina Manufacturers Alliance (SCMA)
South Carolina Pulp & Paper Association (SCPPA)
7-2
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Other Comments
Southeastern States Air Resources Managers, Inc. (SESARM)
Spurgeon, C. M.
Stanton, Neil
Texas Chemical Council (TCC)
Texas Cotton Ginners Association
Texas Department of Agriculture
Texas Industry Project (TIP)
Texas Oil and Gas Association
Utility Air Regulatory Group
Western Agricultural Processors Association
Wood, John
Comment:
Air Permitting Forum
The Air Permitting Forum believes that comprehensive climate legislation is far
preferable to using the existing Clean Air Act case-by-case permitting programs to
address GHG emissions. These permitting programs are resource-intensive for both
regulated entities and regulators. Moreover, in an arena in which efficiency is the key to
reducing impacts, the case by-case nature of the PSD and Title V programs indicates that
they are perhaps the least efficient mechanisms to mitigate the effects of climate change.
In sum: [OAR-2009-0472-7253.1, p.l]
[See Docket Number OAR-2009-0472-7253.1, pp. 1-2 for detailed comments on the
introduction]
EPA's Assumption that the Section 202 Rule Will Automatically Trigger PSD Permitting
for Sources Solely Based on Their Emissions of Greenhouse Gases Is Incorrect
The common wisdom is that the Clean Air Act and the PSD regulations require EPA to
subject to PSD review any source that is major and any modification of a major source
above significance levels for any pollutant. The only exception this conventional wisdom
allows is for nonattainment pollutants. [OAR-2009-0472-7253.1, p.2]
[See Docket OAR-2009-0472-7253.1, pp.2-5 for detailed comments pertaining to:
Background, Relevant Statutory and Regulatory Applicability Provisions, Sections 161
and 165(a) Limit PSD Applicability Based on the Location of the Source and Case Law
Confirms This Limitation, and EPA Can Implement the Proper Scope of PSD
Applicability Under the Existing Regulations]
EPA Has Not Properly Accounted for the Costs of This Regulatory Action
As discussed above, the Clean Air Act and the PSD regulations are structured such that
PSD should only impose BACT for GHGs on sources that are otherwise required to
obtain a PSD permit based on their emissions of a NAAQS pollutant. To the extent that
EPA continues in its view that PSD will be triggered and sources will be classified as
7-3
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EPA Response to Comments
major for PSD solely on the basis of GHG emissions, the Agency must properly analyze
those impacts in this rulemaking. [OAR-2009-0472-7253.1, p.5] EPA has acknowledged
in the Proposed Tailoring Rule that, under its interpretation of the PSD applicability
provisions, some 40,000 sources would be subject to PSD (an estimate that we believe is
low). [OAR-2009-0472-7253.1, p.6]
[See Docket OAR-2009-0472-7253.1, pp. 5-7 for detailed comments pertaining to: If EPA
Does Not Adopt the Proper Interpretation of the PSD Program's Scope, It Must Include
the Costs of Triggering PSD in Its Section 202 Rulemaking Analysis and Regardless of
the Interpretation of the PSD Provisions, EPA Must Include the Costs of Triggering Title
V Permitting for Stationary Sources in Its Section 202 Rulemaking Analysis]
Alliance of Automobile Manufacturers (Alliance)
Concerns with EPA's Position on Implications for Stationary Source Programs Under the
Clean Air Act
EPA has stated in the NPRM that the issuance of regulations under Section 202 of the
Clean Air Act will trigger application of the Prevention of Significant Deterioration
(PSD) program of the CAA for stationary sources. 74 Fed. Reg. 49,629. EPA has
reiterated this interpretation of CAA Section 165 in its proposal regarding reconsideration
of the so-called Johnson Memo (74 Fed. Reg. 51,535, October 7, 2009) and in its
proposal on the so-called Tailoring Rule for PSD (74 Fed. Reg. 55,292, October 27,
2009). [OAR-2009-0472-6952.1, p.68]
None of the three Federal Register notices cited above contain a thorough discussion of
EPA's legal and policy options with regard to Section 165, nor have they addressed the
regulatory impact of automatically and immediately triggering PSD on the sources that
would be directly affected. Instead, EPA has focused narrowly on the "benefits" of
"tailoring" the threshold emissions amount to 25,000 tons for PSD and Title V
permitting. [OAR-2009-0472-6952.1, p.69]
The Alliance does not request, and would not support, delaying the final mobile source
rule in order to address concerns regarding the implications for stationary sources.
Having said that, the Alliance also believes that the implications of the mobile source rule
for stationary sources have not been adequately addressed by the Agency, and need
further analysis. [OAR-2009-0472-6952.1, p.69]
The Alliance urges EPA to deal with this issue within the confines of the Johnson Memo
and PSD Tailoring rules, as is the Agency's apparent intent. The Alliance urges EPA to
consider ways to avoid the automatic application of the PSD program to stationary
sources. Moreover, to the extent that EPA concludes the application of PSD for GHGs is
inevitable upon issuance of Section 202 regulations, the Agency should more thoroughly
analyze the impacts of the PSD program in the context of the Johnson Memo and PSD
Rulemakings. The Alliance does not believe that the Clean Air Act compels EPA to
automatically and immediately trigger PSD as a result of the mobile source rule. Further
7-4
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Other Comments
discussion of the legal and policy issues will be provided in Alliance comments on those
later proposals. [OAR-2009-0472-6952.1, p.69]
American Chemistry Council (ACC)
EPA Must Assess and Address the Motor Vehicle Rule's Impacts on Stationary Sources
Before Finalizing the Rule.
EPA's failure to account for the Title V and PSD consequences of finalizing the Motor
Vehicle Rule would render the final Rule both arbitrary and capricious, and also invalid
based on other procedural requirements for rulemaking. [OAR-2009-0472-7148.1, p.2]
The Associations acknowledge EPA's desire to address GHG emissions from mobile
sources quickly, as well as NHTSA's need to set new fuel economy standards, which
must be promulgated at least 18 months before the affected model year (in this case the
2012 model year). 49 U.S.C. § 32902(g)(2). However, as proposed, the Motor Vehicle
Rule ignores the enormous burdens the Rule would impose on stationary sources. This
omission violates legal requirements for agency rulemaking, constitutes arbitrary and
capricious action, and is simply bad policy. This is especially so because nearly all the
environmental benefits EPA says will result from its promulgation of the Motor Vehicle
Rule under CAA authority would also result from the NHTSA rule alone. Yet, unlike
NHTSA action to raise corporate average fuel economy (CAFE) standards, the redundant
EPA standards promulgated under the CAA would have regulatory impacts reaching far
beyond the automotive industry and would impose billions of dollars in additional
permitting and compliance costs. [OAR-2009-0472-7148.1, p.2]
Thus, although the Associations take no position on NHTSA's proposal to increase
CAFE standards, we vigorously object to EPA's proposal to finalize the superfluous
Motor Vehicle Rule under CAA Section 202. EPA's failure to account here for the PSD
and Title V burdens it elsewhere acknowledges will flow from this rulemaking renders
this rulemaking legally invalid. EPA must fully consider those burdens in this
rulemaking. [OAR-2009-0472-7148.1, p.2]
[See Docket number OAR-2009-0472-7148.1, cover page 1-2 for detailed comments]
[See Docket OAR-2009-0472-7148.1, pp. 2-8 for detailed comments pertaining to: EPA's
failure to Analyze the PSD and Title V Effects of Finalizing the Motor Vehicle Rule Is
Arbitrary and Capricious and EPA's Failure to Analyze the PSD and Title V Effects of
Finalizing the Motor Vehicle Rule Runs Contrary to Procedural Requirements]
PSD Permitting Requirements Need Not and Should Not Apply to Stationary Sources'
GHG Emissions Solely by Virtue of EPA Finalizing the Motor Vehicle Rule
EPA could properly decline to consider the PSD impacts of the proposed Motor Vehicle
Rule in this rulemaking docket only if those impacts would not, in fact, result from the
Rule. EPA has stated that PSD requirements will be triggered when the proposed Motor
Vehicle Rule first subjects GHG emissions from cars to control—that is, model year
2012. See PSD Interpretive Memo Reconsideration, 74 Fed. Reg. at 51545-46. But EPA
7-5
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EPA Response to Comments
can interpret the statute and regulations to avoid that result and eliminate the need to
analyze the proposed Motor Vehicle Rule's effect on stationary sources in this
proceeding. Moreover, by doing so, EPA would eliminate the need for the legally
questionable GHG Tailoring Rule. [OAR-2009-0472-7148.1, p.8]
[See Docket OAR-2009-0472-7148.1, pp. 8-12 for detailed comments pertaining to:
EPA's View that Issuance of the Motor Vehicle Rule Automatically Triggers PSD Based
Solely on Emissions of GHGs Is Inconsistent with the Plain Meaning of the CAA and
EPA's Regulations and The Phrase 'Pollutants Subject to Regulation' Is Also Most
Reasonably Interpreted to Exclude GHGs]
EPA Should Exercise its Discretion to Defer Finalizing a Motor Vehicle Rule
EPA has clear legal authority to defer promulgation of an emission standard under CAA
Section 202, even if the Agency proceeds in the near future to finalize a positive
endangerment finding under CAA Section 202. It would be arbitrary and capricious for
EPA not to exercise that authority because the potential economic consequences of the
Motor Vehicle Rule are massive, and unquestionably outweigh any environmental
benefits that would flow from EPA placing its imprimatur on the NHTSA rule. [OAR-
2009-0472-7148.1, p. 12]
[See Docket OAR-2009-0472-7148.1, pp. 12-14 for detailed comments pertaining
to: Nothing Compels EPA to Finalize GHG Emissions Standards for Mobile
Sources, Nothing Compels EPA to Finalize GHG Emissions Standards for Mobile
Sources, There Are Numerous Compelling Reasons to Defer the Motor Vehicle Rule, and
EPA Should Not Proceed Under CAA Section 202 Until the Agency Considers Acting
Under CAA Section 115]
American Chemistry Council, American Iron and Steel Institute, American Meat
Institute, Corn Refiners Association, National Oilseed Processors Association
The Associations and their members represent a sizeable and diverse collection of
commercial interests. The Motor Vehicle Rule would have a substantial and direct effect
on the Associations' members. The Motor Vehicle Rule, if finalized, would purport to
subject greenhouse gases ("GHGs") to regulation under the Clean Air Act (CAA) for the
first time. As a result, under EPA's current interpretation of its regulations, the Rule
would trigger Title V and Prevention of Significant Deterioration (PSD) permitting and
emission-control requirements for millions of stationary sources owned and operated by
the Associations' members. These Title V and PSD requirements would impose
unprecedented costs and burdens on the Associations' members, EPA, and state
regulatory authorities. [NHTSA-2009-0059-0094.1, p.l]
The Associations acknowledge EPA's desire to address GHG emissions from mobile
sources quickly, as well as NHTSA's need to set new fuel economy standards, which
must be promulgated at least 18 months before the affected model year (in this case the
2012 model year). 49 U.S.C. § 32902(g)(2). However, as proposed, the Motor Vehicle
Rule ignores the enormous burdens the Rule would impose on stationary sources. This
7-6
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Other Comments
omission violates legal requirements for agency rulemaking, constitutes arbitrary and
capricious action, and is simply bad policy. This is especially so because nearly all the
environmental benefits EPA says will result from its promulgation of the Motor Vehicle
Rule under CAA authority would also result from the NHTSA rule alone. Yet, unlike
NHTSA action to raise corporate average fuel economy (CAFE) standards, the redundant
EPA standards promulgated under the CAA would have regulatory impacts reaching far
beyond the automotive industry and would impose billions of dollars in additional
permitting and compliance costs. [NHTSA-2009-0059-0094.1, pp. 1-2]
Thus, although the Associations take no position on NHTSA's proposal to increase
CAFE standards, we vigorously object to EPA's proposal to finalize the superfluous
Motor Vehicle Rule under CAA Section 202. EPA's failure to account here for the PSD
and Title V burdens it elsewhere acknowledges will flow from this rulemaking renders
this rulemaking legally invalid. EPA must fully consider those burdens in this
rulemaking. [NHTSA-2009-0059-0094.1, p.2]
Alternatively, EPA could defer finalizing the proposed Motor Vehicle Rule at this time.
EPA has ample authority and discretion to do so. And if EPA deferred, NHTSA still
could finalize its regulations, yielding nearly all the emissions reductions that EPA seeks
through the Motor Vehicle Rule, and none of the adverse PSD consequences. Moreover,
deferring action on this rulemaking would permit EPA to fully consider the burdens
associated with regulating GHGs under the CAA. EPA obviously has not performed or
considered this analysis, and instead has improperly deflected comments on these
consequences to the proposed GHG Tailoring Rule, which is inadequate to the task. EPA
would abuse its discretion and act arbitrarily if it rushes to finalize the Motor Vehicle
Rule before conducting the proper analysis. [NHTSA-2009-0059-0094.1, p.2]
There are, however, several ways in which the unprecedented PSD implications of the
Motor Vehicle Rule could be avoided. First, EPA could interpret its PSD authority to
ensure that only pollutants for which a National Ambient Air Quality Standard (NAAQS)
has been set trigger PSD permitting requirements. This interpretation is faithful to the
plain text of the CAA and EPA regulations, as well as Congress' original vision for the
PSD program. Moreover, this interpretation would allow EPA to finalize a rule under
CAA Section 202(a) that sets standards for GHG emissions from mobile sources without
triggering unprecedented, costly, and burdensome regulatory consequences for stationary
sources. [NHTSA-2009-0059-0094.1, p.2]
EPA Must Assess and Address the Motor Vehicle Rule's Impacts on Stationary Sources
Before Finalizing the Rule.
EPA's failure to account for the Title V and PSD consequences of finalizing the Motor
Vehicle Rule would render the final Rule both arbitrary and capricious, and also invalid
based on other procedural requirements for rulemaking. [NHTSA-2009-0059-0094.1,
p.2]
7-7
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EPA Response to Comments
1. If finalized, the Motor Vehicle Rule would run afoul of the fundamental prohibition
against "arbitrary and capricious" agency action. The Supreme Court has explained that
"an agency rule would be arbitrary and capricious if the agency has relied on factors
which Congress has not intended it to consider, entirely failed to consider an important
aspect of the problem, offered an explanation for its decision that runs counter to the
evidence before the agency, or is so implausible that it could not be ascribed to a
difference in view or the product of agency expertise." Motor Vehicle Mfrs. Ass'n v.
State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) (emphasis added). [NHTSA-
2009-0059-0094.1, pp.2-3] [[See Docket Number NHTSA-2009-0059-0094.1, pp.3-4 for
more discussion on this issue.]]
2. EPA apparently seeks to justify its failure to consider the PSD and Title V
consequences of the proposed Motor Vehicle Rule by directing comments on these
consequences to the proposed GHG Tailoring Rule docket. It is improper for EPA to
ignore these comments because they relate directly to and flow directly from the
proposed Motor Vehicle Rule. [[See Docket Number NHTSA-2009-0059-0094.1, pp.4-6
for a detailed discussion on this issue.]]
Because EPA contends that PSD and Title V requirements for stationary sources will
result from this rulemaking, it would arbitrary and capricious for EPA to finalize the
Motor Vehicle Rule without considering that consequence. For the reasons stated above,
EPA cannot avoid that result by pointing to the GHG Tailoring rulemaking. [NHTSA-
2009-0059-0094.1, p.6]
In sum, EPA has no choice but to consider the impacts of the proposed Motor Vehicle
Rule in this rulemaking. [NHTSA-2009-0059-0094.1, p.8]
PSD Permitting Requirements Need Not and Should Not Apply to Stationary Sources'
GHG Emissions Solely by Virtue of EPA Finalizing the Motor Vehicle Rule
EPA could properly decline to consider the PSD impacts of the proposed Motor Vehicle
Rule in this rulemaking docket only if those impacts would not, in fact, result from the
Rule. EPA has stated that PSD requirements will be triggered when the proposed Motor
Vehicle Rule first subjects GHG emissions from cars to control—that is, model year
2012. See PSD Interpretive Memo Reconsideration, 74 Fed. Reg. at 51545-46. But EPA
can interpret the statute and regulations to avoid that result and eliminate the need to
analyze the proposed Motor Vehicle Rule's effect on stationary sources in this
proceeding. Moreover, by doing so, EPA would eliminate the need for the legally
questionable GHG Tailoring Rule. [NHTSA-2009-0059-0094.1, p.8]
The immense burdens associated with PSD permitting that the Agency states would
follow from issuance of the proposed Motor Vehicle Rule is not mandated by the Clean
Air Act or the PSD regulations but rather is the result of EPA's interpretations of the
statute and regulations. EPA's textual analysis, however, skips a crucial step, which is
whether the PSD program is actually applicable under the plain language of the statute
and regulations to sources that are major only by virtue of GHG emissions or to increases
7-8
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Other Comments
in GHG emissions when a criteria pollutant is not otherwise experiencing a significant
increase. [NHTSA-2009-0059-0094.1, p.8] [[See Docket Number NHTSA-2009-0059-
0094.1, pp.8-10 for a detailed discussion on this issue.]]
The Phrase "Pollutants Subject to Regulation" Is Also Most Reasonably Interpreted to
Exclude GHGs
If EPA does not interpret the statutory provisions regarding applicability as discussed in
II. A, above, EPA should recognize the unique nature of carbon dioxide (CO2) and that
Congress did not intend such a pollutant to trigger PSD. The endangerment finding under
CAA Title II is distinctly different from the air quality purposes of the PSD program.
Specifically, carbon dioxide emissions from motor vehicles are required to be regulated
under Title II where, in the Administrator's judgment, such emissions "may reasonably
be anticipated to endanger public health or welfare." See 42 U.S.C. 751 l(a)(l) (emphasis
added). To the extent anthropogenic carbon dioxide emissions may reasonably be viewed
as presenting an "endangerment" to "public health or welfare" within the meaning of
Title II, it does not follow that EPA is thereby authorized, much less compelled, to
regulate CO2 emissions from stationary sources under the CAA's PSD program.
[NHTSA-2009-0059-0094.1, p. 10] [[See Docket Number NHTSA-2009-0059-0094.1,
pp. 10-12 for a detailed discussion on this issue.]]
American Farm Bureau Federation (AFBF)
At What Point Will The Economic Impacts on Small Businesses be Described ? [OAR-
2009-0472-7171.1, p.3]
As indicated in our comments and the comments of others to the ANPR, the application
of these programs will have significant and serious adverse economic impacts on farmers,
ranchers, and small businesses as well as schools, hospitals and churches. For example,
an endangerment finding automatically subjects stationary sources (buildings, facilities,
structures) that have the potential to emit more than 250 tons of GHGs per year to costly
and burdensome permits under the PSD program. The PSD permits require the applicant
to comply with best available control technology as a condition for obtaining the permit.
Title V requires entities that emit, or have the potential to emit, 100 tons per year of a
regulated pollutant to also obtain a permit for such emissions. [OAR-2009-0472-7171.1,
p.4]
EPA has failed to perform the required economic impact assessment under section 317 of
the Clean Air Act. The assessment must be conducted prior to the Tailpipe Rule
becoming final. [OAR-2009-0472-7171.1, p.4]
[See Docket Number OAR-2009-0472-7171.1, pp.3-11 for detailed comments pertaining
to: The Proposed EPA Tailoring rule' does not change the economic implications of
regulating GHGs under the Clean Air Act, Title V Permit Requirements Lead to Fees on
Livestock, Application of Requirements for Prevention of Significant Deterioration
(PSD) Permits Will Cause Adverse Economic Impacts to Agriculture, and Regulation of
Greenhouse Gases Under the Clean Air Act Allows Little or No Flexibility]
7-9
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EPA Response to Comments
The de minimis amount of methane emitted from light duty motor vehicles does not
sufficiently "cause or contribute" to the endangerment of public health and welfare to
warrant regulation under section 202(a) of the Clean Air Act. [OAR-2009-0472-7171.1,
p.ll]
Seeking to join the six different greenhouse gases together as a single "air pollutant"
raises a series of questions and issues. As the agency illustrates, not only must these
substances be found to "endanger the public health or welfare" but their emission from
the sources sought to be regulated must "cause or contribute" to the air pollution which
endangers the public health or welfare. Both of these requirements must be satisfied in
order to regulate the substance. [OAR-2009-0472-7171.1, p. 12]
[See Docket Number OAR-2009-0472-7171.1, pp. 11 -14 for detailed comments
pertaining to: The de minimis amount of methane emitted from light duty motor vehicles
does not sufficiently "cause or contribute" to the endangerment of public health and
welfare to warrant regulation under section 202(a) of the Clean Air Act.]
Section 424 of the FY 2010 Interior-Environment Appropriations Act Prohibits the
Promulgation of the Tailpipe Rule and the Tailoring Rule during FY 2010. [OAR-2009-
0472-7171.1, p.14]
As indicated above, once the Tailpipe Rule has been enacted, a number of Clean Air Act
programs and requirements are automatically triggered, including permit requirements
under Title V. Title Visa self-executing program such that once a pollutant is regulated
under any provision of the Clean Air Act (such as the Tailpipe Rule for GHG), no further
rulemaking is required to make covered entities liable to obtain operating permits
required by Title V. [OAR-2009-0472-7171.1, p. 14]
[See Docket Number OAR-2009-0472-7171.1, pp.14-15 for detailed comments
pertaining to: Section 424 of the FY 2010 Interior-Environment Appropriations Act
Prohibits the Promulgation of the Tailpipe Rule and the Tailoring Rule during FY 2010]
GHG Regulation May Lead to Promulgation of National Ambient Air Quality Standards
The Clean Air Act and the subsequent judicial interpretations placed upon it, describes
the procedure required by the Administrator once she makes an endangerment
determination. [OAR-2009-0472-7171.1, p. 15]
[See Docket Number OAR-2009-0472-7171.1, pp.14-15 for detailed comments
pertaining to: GHG Regulation May Lead to Promulgation of National Ambient Air
Quality Standards and the pertinent language in Section 108 of the Clean Air Act]
American Forest and Paper Association (AF&PA)
EPA Must Complete Sufficient Regulatory Impact Analyses Before Promulgating
Tailpipe Emission Standards
The preceding discussion showed how using Clean Air Act authorities to impose GHG
emission standards on motor vehicles would impose huge burdens on businesses and on
regulatory authorities, not only directly, but also because imposition of GHG emission
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Other Comments
limits on new motor vehicles would, pursuant to the CAA and EPA regulations, mean
that tens of thousands of additional new and modified stationary sources would be subject
to pre-construction PSD permitting requirements, as well as requiring Title V operating
permits for the first time for millions of sources. In addition to just the cost and delay
those sources would incur to apply for such permits, the massive increase in affected
sources would overwhelm permitting authorities and result in permitting "gridlock,"
dramatically slowing economic development and innovation. [OAR-2009-0472-7126.1,
p.3]
[See Docket Number OAR-2009-0472-7126.1, pp.3-4 for detailed comments]
EPA Should Defer GHG Emission Standards for Motor Vehicles
For the reasons described above, EPA should not promulgate motor vehicle emissions
standards for GHGs at this time. The proposed endangerment and cause-or-contribute
findings that are a prerequisite for such standards raised many issues of first impression
that have not yet been adequately addressed by EPA. Congress is in the midst of actively
considering comprehensive legislation addressing climate change and GHGs, which is
much more appropriate than trying to force GHG regulation through Clean Air Act
programs that were designed to address entirely different types of air pollution issues.
And the imposition of tailpipe emission standards for GHGs will trigger massive
stationary source permitting burdens for businesses and regulatory authorities, burdens
that EPA has failed to assess and address as required by law. [OAR-2009-0472-7126.1,
p.4]
[See Docket Number OAR-2009-0472-7126.1, pp.4-5 for detailed comments]
American Petroleum Institute
However, and even though the direct emissions reductions and fuel economy costs and
benefits of the proposed EPA action and the proposed NHTSA fuel economy standards
are nearly identical, the proposal entirely ignores the fact that the EPA regulations, if
finalized, would have dramatically broader and more costly effects than the NHTSA rule.
Unlike NHTSA action to raise corporate average fuel economy (CAFE) standards, new
EPA standards promulgated under the Clean Air Act (CAA) would have regulatory
impacts reaching far beyond the automotive industry and would trigger EPA regulation of
GHG emissions from millions of sources never previously subject to regulation of GHG
emissions, including millions of sources not previously subject to any CAA regulation at
all.
Thus, while API has only very focused objections to NHTSA increasing CAFE standards
in the manner proposed, see Part IV infra, API strongly objects to EPA finalizing its
proposed rule under CAA section 202 authority. API urges EPA to assess and address the
dramatically adverse impacts of its proposal under CAA section 202 before finalizing its
rule. EPA must assess and appropriately minimize these impacts, within this rulemaking
if EPA is to promulgate section 202(a) standards that are not flawed as a matter of law.
7-11
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EPA Response to Comments
First, EPA must acknowledge that only pollutants for which a National Ambient Air
Quality Standard (NAAQS) has been set trigger Prevention of Significant Deterioration
(PSD) permitting requirements.
Second and alternatively, EPA has the full authority and discretion to defer finalizing
CAA section 202(a) standards at this time. [OAR-2009-0472-7143.1, p.2]
EPA Cannot Finalize the 202 Rule Before Evaluating and Addressing Its Impacts on
Stationary Sources. [OAR-2009-0472-7143.1, p.2]
EPA's Proposed Rule Unlawfully Fails to Analyze Its Effects. [OAR-2009-0472-7143.1,
p.3]
EPA May Not Shunt Comments Regarding the Effects of its Proposed Car Rule to the
Proposed Tailoring Rule. [OAR-2009-0472-7143.1, p.4]
EPA's View that Issuance of the Proposed Car Rule Automatically Triggers PSD Based
Solely on Emissions of GHGs Is Inconsistent with the Plain Meaning of the CAA and
EPA's Regulations. [OAR-2009-0472-7143.1, p.5]
EPA Should Exercise its Discretion to Defer Promulgation of a Section 202 Rule: EPA
has clear legal authority to defer action on this rule, and should do so because the
potential economic consequences of the rule are unprecedented and the environmental
benefits of adding its imprimatur to the NHTSA rule are nearly nonexistent.
a. EPA Is Not Compelled to Act at This Time, and Should Exercise Its Discretion to
Defer Finalizing New GHG Emissions Standards for Mobile Sources.
b. There Are Numerous Compelling Reasons to Defer the Section 202 Rule
Adding EPA's imprimatur to nearly identical NHTSA fuel economy standards will not
achieve any marginal environmental benefit. NHTSA standards without this duplicative
reliance on the CAA will not trigger PSD results that EPA has labeled "absurd,
"impossible," and "contrary to expressed congressional intent." The fact that the timing
of the 202 Rule is discretionary means that EPA's proposed PSD Tailoring Rule cannot
be justified under the "absurd results" doctrine, and if the PSD Tailoring Rule is rejected
the full range of "absurd" and "impossible" results will then flow from promulgation of
the 202 rule. Further considerations also support this conclusion: Ongoing congressional
and international deliberations may impact the validity of, or perceived necessity for, the
proposed rule. [OAR-2009-0472-7143.1, p.9]
These are only the topic headings, for details please refer to the docket [OAR-2009-0472-
7143.1]
Arizona Public Service (APS)
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Other Comments
APS has significant concerns regarding the proposed Light-Duty Vehicle Greenhouse
Gas Emission Standards and Corporate Average Fuel Economy Standards. Specifically, a
comparison of the proposed benefits resulting from the EPA program to the NHTSA
program reveals the programs to be virtually identical and that EPA's proposal provides
no apparent additional benefit. For this reason, APS believes that EPA's action is simply
a means to regulate greenhouse gas emissions from stationary sources through the Clean
Air Act Prevention of Significant Deterioration (PSD) and Title V permit programs. As
such, APS also believes the economic and environmental cost and benefits analysis of
this joint proposal fails to assess impacts on stationary sources. [OAR-2009-0472-7107.1,
p.l]
If this rule is finalized, a significant number of stationary sources will become subject to
PSD and Tide V permitting requirements. However, EPA did not include the economic
and environmental consequences of triggering these rules. It is APS' position that EPA
either withdraw its portion of the rule or perform a thorough economic and environmental
cost and benefit analysis, and provide an adequate public notice and comment period to
address the impacts to stationary sources. [OAR-2009-0472-7107.1, p.l]
BCCA Appeal Group (the Group)
More importantly, Congress is moving forward quickly on comprehensive legislation that
would address the problem of climate change outside of the structure of the current Act.
Despite a clear need to proceed with the utmost caution in this important area, EPA has
proposed to regulate GHG emissions from motor vehicles in the Proposed Rulemaking to
Establish Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate
Average Fuel Economy Standards (the "Motor Vehicle GHG Rule"). Under EPA's
current interpretation of the CAA, the Motor Vehicle GHG Rule may (as EPA has stated
in the Proposed PSD and Title V GHG Tailoring Rule (the "PSD Tailoring Rule")3)
trigger regulation of GHG emissions from millions of stationary sources, including
hundreds of thousands of Texas sources, many of which have never before been regulated
under the Clean Air Act ("CAA"). [OAR-2009-0472-7505.1, pp. 1-2]
The Motor Vehicle GHG Rule, as well as its companion, the PSD Tailoring Rule, are
fundamentally flawed, both procedurally and substantively, and Texas, as the nation's
leading energy producer and a leader in chemical manufacturing and agriculture, could be
significantly impacted by these federal rulemakings. Most notably, EPA completely
failed to evaluate the burdens of triggering PSD and Title V for GHG emissions under the
required federal regulatory review statutes and Executive Orders. Furthermore, even had
the Agency conducted the required burden analysis, the rule is unlawful, would devastate
the Texas and national economies, and the burdens of regulating GHGs under CAA
Section 202 far outweigh the insignificant environmental benefits of the GHG emission
standards. [OAR-2009-0472-7505.1, p. 2]
Accordingly, for all of the reasons discussed in these comments, EPA should withdraw
the Motor Vehicle GHG Rule, and proceed with caution going forward by allowing both
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EPA Response to Comments
the international community and Congress time to develop a comprehensive and sensible
approach to the global problem of climate change. [OAR-2009-0472-7505.1, p. 2]
[See OAR-2009-0472-7505.1, pp. 2-11 for comments related to PSD and NRS for
stationary sources in Texas. These comments include the following topics: A. The Motor
Vehicle GHG Rule Will Disproportionately Harm Texas, B. EPA Utterly Failed to
Account for these Devastating Impacts to Texas and the Entire U.S. in its Burden
Analysis of the Motor Vehicle GHG Rule, C. A Full Analysis of Actual Impacts on
Sectors Beyond Autos Would Demonstrate That the Rule Cannot be Justified—the
Burdens Associated with the Motor Vehicle GHG Rule Would Devastate the Texas
Economy, D. EPA Should Adopt a More Reasonable Interpretation of the Clean Air Act
Under which the Final Motor Vehicle GHG Rule Would Not Trigger PSD For Stationary
Sources, and E. Nothing Compels EPA to Action under Section 202 at this Time—the
Rule Provides Little or No Benefit and Produces Overwhelming Burdens.]
Brick Industry Association
The Brick Industry Association (BIA) is providing these comments because we are,
directly affected by this rulemaking, even though none of our members will be directly
subject to the requirements promulgated as a result of this process. As this rulemaking
has the potential to impact virtually every manufacturer (and many consumers) in the
country by its precedent setting regulation of greenhouse gases, this rulemaking directly
impacts all of us. The brick industry provides one of the leading wall cladding materials
for both commercial and residential construction throughout the country. There
are approximately seventy brick manufacturing companies in the United States, with well
over sixty of these companies being considered 'small businesses.' [OAR-2009-0472-
11279, p.l]
In developing the Light Duty rule, and assessing the impacts on small businesses, the
EPA completely ignored the tens of thousands of facilities that would be impacted by the
fact that greenhouse gases would become a regulated pollutant at some point after this
rule goes into effect (we are aware that EPA is still evaluating which specific 'triggering
action' will make this happen). By deliberately ignoring the broader impact of this
rulemaking process, the EPA was able to certify that there was not a significant impact on
a substantial number of small entities 'pursuant to the Regulatory Flexibility Act (5 U
.S.C. 601 et seq., as amended by the Small Business Regulatory Enforcement Fairness
Act (SBREFA) of 1996).' The EPA is disingenuous at best. [OAR-2009-0472-11279,
p.l]
Clearly, publishing the 'GHG Tailoring Rule' for the New Source Review Program under
Part 50 of the Clean Air Act (published October 27, 2009, 74FR55291) represents
significant effort on the EPA's part to mitigate the known impacts of the light Duty
rulemaking. That proposal was also certified as having no significant impact on a
substantial, number of small entities because it results in a net reduction of burden to
industry over the burden that would exist if no 'Tailoring Rule' were promulgated. This
clearly demonstrates that EPA understands that an impact occurred, based on their
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Other Comments
actions, that impacts industry. We assert that they also should recognize that this
impacted industry includes a substantial number of small entities. For our industry, even
if the Tailoring Rule is published, the Light Duty Rule means that well over half of our
industry will be thrust into the complex, and expensive, New Source Review process for
the very first time. Some of our industry will also be pushed back into Title V, even
though they will only be major sources for GHG. [OAR-2009-0472-11279, pp. 1-2]
The EPA cannot reasonably assert that the Light Duty Rule has no significant impact on a
substantial number of small entities in one rule, when less than one month later, it
publishes another rule that attempts, but falls short, of mitigating those impacts. [OAR-
2009-0472-11279, p.2]
California Cotton Ginners Association (CCGA)
EPA should review the economic benefit of this rule, considering all costs; both of those
currently in the docket, and those outlined in the proposed Tailoring Rule. In addition,
EPA should clearly evaluate the benefit of regulations solely based on CAFE standards.
Finally EPA should consider extending the comment period in this docket, considering
the significant additional costs discussed in the Tailoring Rule Proposal. [OAR-2009-
0472-7139.1, p.2]
[See Docket Number OAR-2009-0472-7139.1, pp. 1-2 for detailed comments]
Charleston Metro Chamber of Commerce
Our Chamber's Environmental Committee has studied the proposed rule and have major
concerns primarily relating to the triggering of other provisions of the Clean Air Act
(specifically Title V permitting and New Source Review permitting). We do not believe
that EPA has adequately evaluated those consequences or options for minimizing and
avoiding other collateral impacts. Our interpretation is that this rulemaking will trigger
other provisions of the Clean Air Act (specifically Tile V permitting and New Source
Review (NSR) permitting). [OAR-2009-0472-7061.1, p.l]
Unlike NHTSA, EPA is under no statutory deadline to promulgate the standards that it is
now considering. It has the time and the obligation to analyze more fully its regulatory
proposal and the wide-ranging impacts that it anticipates will likely be incurred after its
finalization. Finally, EPA has failed even to consider possible ways in which it might
avoid prematurely imposing significant regulatory burdens, like PSD and Title V
requirements, on stationary sources while pursuing mobile source regulation under
section 202(a). These are matters of the utmost significance, and EPA cannot simply
ignore them consistent with its obligations under the CAA. For all of the foregoing
reasons, Consumers Energy agrees with UARG and requests that EPA withdraw its
portion of the Joint Motor Vehicle Proposal, that NHTSA revise its regulations as may be
appropriate to address this change, and that EPA engage in a new, more thoroughly
reasoned regulatory decision-making process while providing adequate public notice and
opportunity for comment on these important issues. [OAR-2009-0472-7264.1, p.2]
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EPA Response to Comments
Specifically, EPA has failed to carefully evaluate the number of sources that could be
affected once the Light-Duty Vehicle GHG Standards go into effect. We feel that EPA
has grossly underestimated the number and types of facilities that will be impacted by the
light-duty vehicle GHG proposal by becoming subject to NSR pollutants and the Title V
and NSR permitting requirements. The South Carolina Department of Health and
Environmental Control (SCDHEC) has identified over 800 of the currently permitted
small sources that would become subject to Tile V and NSR permitting as soon as GHGs
are regulated under Light-duty Vehicle GHG standards. In comparison, South Carolina
currently has 281 Title V permitted facilities.
[See Docket Number OAR-2009-0472-7061.1, pp. 1-2 for detailed comments]
Consumers Energy
Consumers Energy is a member of the Utility Air Regulatory Group (UARG). We
endorse the comments filed by UARG in this docket and incorporate them by reference.
While we will not reiterate those detailed legal and technical comments, our comments
will highlight several of the issues raised by UARG. [OAR-2009-0472-7264.1, p.l]
1. It is not clear that PSD and Title V permitting requirements would be triggered by the
proposed rule.
2. EPA has not established that its proposal is capable of averting any endangerment
caused by GHG emissions. Therefore, EPA is not authorized to issue proposed standards
under Section 202(a) of the CAA. [OAR-2009-0472-7264.1, p.l]
3. EPA has misinterpreted the legal standard for finding endangerment.
4. EPA's proposed regulations would be largely duplicative of NHTSA's proposed
program, adding essentially nothing. The effects of the joint program are too small to
attack any climate-related endangerment fruitfully.
5. The environmental and economic impacts analysis underlying the joint motor vehicle
proposal suffers from significant weaknesses and must be revised.
6. EPA Has Time To Take These Issues Into Consideration and Is Obligated To Do So.
[OAR-2009-0472-7264.1, p.2]
Although the Agency acknowledges the speculative and unquantifiable nature of the
matters it has attempted to assess, it fails entirely to address what may be the single most
significant issue associated with its proposed standards — the potential application of the
PSD and Title V permitting programs to GHGs emitted by stationary sources. EPA's
attempt to address these issues in other rulemakings cannot satisfy its obligations to
provide adequate public notice and opportunity for comment on the impacts of the Joint
Motor Vehicle Proposal, and indeed, examination of EPA's analysis in the PSD
Reconsideration Rule and the Proposed Tailoring Rule demonstrates that issues relevant
to this rulemaking will not be analyzed in those proceedings either. [OAR-2009-0472-
7264.1, p.2]
Council of Industrial Boiler Owners (CIBO)
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Other Comments
Although GHGs are not currently 'subject to regulation' under the CAA, once EPA
finalizes the LDV rule to regulate GHG emissions under CAA Section 202, strong legal
arguments can be made that other CAA regulatory requirements will be triggered,
affecting stationary source CAA compliance. Due to the strong possibility that EPA
could be legally compelled to regulate GHG emissions from stationary sources as a result
of this regulation, it is unreasonable and arbitrary for EPA not to analyze impacts on
stationary sources that could be required to limit their GHG emissions under a reasonable
reading of the CAA. EPA has failed to conduct a proper regulatory impact analysis.
CIBO takes the position overall that the CAA is an inappropriate vehicle for regulating
GHG emissions and any effort to reduce GHG emissions from stationary sources is
appropriately left to the federal legislature in the context of comprehensive, nationwide
and economy-wide climate legislation. [OAR-2009-0472-7271.3, p.2]
ACCORDING TO EPA'S OWN LEGAL ANALYSIS, GHGS ARE NOT CURRENTLY
POLLUTANTS 'SUBJECT TO REGULATION UNDER THE CAA
As EPA explains in its recently proposed rule reconsidering the December 18, 2008 'PSD
Interpretive Memo,' and supported by historic Agency practice and decisions of EPA
officials, GHGs are not pollutants that are now 'subject to regulation' under the CAA.
EPA [OAR-2009-0472-7271.3, p.2] has long held that for a pollutant to be 'subject to
regulation' there must be actual control measures and not only monitoring or reporting
requirements. [OAR-2009-0472-7271.3, p.3]
[See docket OAR-2009-0472-7271.3, pp.2-3 for detailed comments pertaining to:
According to EPA's Own Legal Analysis, GHGs are not Currently Pollutants 'Subject to
Regulation' Under the CAA]
IF GHGs ARE REGULATED UNDER SECTION 202 OF THE CAA, IT IS LIKELY
THAT OTHER REGULATORY REQUIREMENTS WILL BE TRIGGERED
In other pending rulemakings, EPA has clearly stated its view that EPA's proposed
LDV Rule, if finalized as proposed, will trigger other unrelated CAA regulatory
requirements. Specifically, under EPA's interpretation of the CAA, regulation of GHGs
under Section 202 will trigger requirements under the Prevention of Significant
Deterioration (PSD) program. EPA acknowledged this in its October 27, 2009 proposed
rule, Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule;
Proposed Rule) (Tailoring Rule). In the opening paragraphs of the Tailoring Rule, EPA
notes that once GHGs are regulated [OAR-2009-0472-7271.3, p.3] under Section 202(a),
PSD permitting requirements will immediately apply to stationary sources emitting
GHGs above the significance threshold. [OAR-2009-0472-7271.3, p.4]
[See docket OAR-2009-0472-7271.3, pp.3-4 for detailed comments pertaining to: If
GHGs are Regulated Under Section 202 of the CAA, It is Likely That Other Regulatory
Requirements Will Be Triggered]
EPA HAS FAILED TO CONDUCT AN ADEQUATE ANALYSIS OF THE IMPACTS
OF THE LDV RULE ON STATIONARY SOURCES.
EPA has failed to conduct a complete analysis of the impacts associated with
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EPA Response to Comments
regulating GHGs under Section 202(a) of the CAA. EPA has openly acknowledged that
the promulgation of standards to control GHG emissions from light-duty motor vehicles
under Section 202(a) will inevitably trigger PSD permitting requirements for stationary
sources; nonetheless, EPA has not included in this proposal an impact analysis that
addresses the effect this rule will have on stationary sources. This represents a major flaw
in the proposed rule. [OAR-2009-0472-7271.3, p.4]
[See docket OAR-2009-0472-7271.3, pp.4-10 for detailed comments pertaining to: EPA
has Failed to Conduct an Adequate Analysis of the Impacts of the LDV Rule on
Stationary Sources]
County of Greenville, SC
Greenville County joins the SC Department of Health and Environmental Control
(SCDHEC) in that we do not support EPA moving forward with greenhouse gas
standards under the Clean Air Act at this time and request that EPA delay this action until
adequate evaluation occurs. EPA has not evaluated the detrimental collateral effect that
will occur if these standards are finalized. The additional EPA regulation comes at an
enormous cost with virtually no additional environmental benefits from greenhouse gas
standards on light-duty vehicles. EPA acknowledges that the only way to reduce carbon
dioxide (CO2) emissions from light-duty vehicles is to increase fuel economy and,
similarly, that there are no emission control technologies that reduce CO2 emissions from
light-duty vehicles. [NHTSA-2009-0059-0101, p.l]
According to DHEC, since the Supreme Court decision, EPA has proposed several
actions. First, in February 2009, EPA decided to 'reconsider' the previous administration's
decision on whether or not CO2 was a regulated pollutant under Prevention of Significant
Deterioration (PSD). Second, in April 2009, EPA proposed a finding that greenhouse
gases contribute to air pollution that may endanger public health or welfare. This decision
has not been finalized but we understand that the 'endangerment finding' is currently at
the Office of Management and Budget for review. Third, in September 2009 EPA and
NHTSA proposed this rule to improve fuel economy and regulate greenhouse gases from
light-duty vehicles. And finally, EPA has now proposed a 'tailoring rule' to attempt to
address the 'absurd results' that will occur in the Title V and PSD permitting programs for
New Source Review regulated pollutants once the light-duty vehicle GHG rule is
finalized.
EPA Administrator Jackson, before the Senate Committee on Environment and Public
Works and in her January 23, 2009, memorandum to all EPA employees, expressed her
commitment to uphold the values of transparency and openness in conducting EPA
operations. She went on the say in her memo on transparency that, The success of our
environmental efforts depends on earning and maintaining the trust of the public we
serve. The American people will not trust us to protect their health or their environment if
they do not trust us to be transparent and inclusive in our decision-making. To earn this
trust, we must conduct business with the public openly and fairly.' Greenville County
commends EPA Administrator Jackson for her commitment to transparency.
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Other Comments
With that being said, the county is concerned that EPA may not be as transparent as they
should be and that they are sending mixed or confusing messages about the potential
impact of the light-duty vehicle GHG proposal on all sources that could be impacted, in
particular small business. EPA actually suggested to affected entities that they should not
comment on the light-duty vehicle GHG proposal but should instead submit comments on
the proposed 'tailoring rule.' SCDHEC experts believe that EPA was misleading to
suggest this point and that it may inappropriately influence small business, industry, and
other affected entities to refrain from commenting on an important rulemaking.
It is critical that all potentially affected entities understand the impact of EPA regulating
greenhouse gas emissions under the light-duty vehicle proposal. It will be too late to
address any concerns that stationary (industrial) sources have in the 'tailoring rule' as they
will already be subject to PSD, as defined in the Clean Air Act, once EPA regulates
greenhouse gases from light-duty vehicles. There are fundamental issues related to the
'tailoring rule.' and EPA's continued message of the 'absurd results' and 'administrative
burden' of not moving forward with a 'tailoring rule' only confuses the real situation as
the thresholds being proposed are 'illegal' under the Clean Air Act. Any permit issued
with thresholds higher than those within the Clean Air Act would be vulnerable to appeal
and litigation, even though EPA attempts to justify the tailoring rule by saying that by not
doing so would create results 'so illogical or contrary to sensible policy as to be beyond
anything that Congress could reasonably have intended.' We do not understand how EPA
could know this and not also know that there is no guarantee their legal interpretation to
exempt small sources or set different thresholds in the tailoring rule will not be
challenged and upheld in court. EPA moving forward in this direction is very disturbing.
As previously stated, Greenville County has concerns about the collateral effects of EPA
moving forward at this time to regulate greenhouse gas emissions from light-duty
vehicles. EPA must fully evaluate the collateral impact this proposal would have on all
other aspects of the Clean Air Act including, but not limited to, the impact on state and
local air permitting authorities, business, industry and the economy to all areas of the
country, but in particular states like South Carolina who still employ many people in the
manufacturing sector. As they have not fully evaluated the impact to state and local
permitting authorities, EPA has not met the requirements under the Unfunded Mandates
Reform Act of 2005 for the light-duty vehicle GHG proposal. EPA even states in the
tailoring rule for stationary sources, 'State permitting authorities would be paralyzed by
permit applications in numbers that are orders of magnitude greater than their current
administrative resources could accommodate' yet they have not taken this into
consideration in the light-duty vehicle greenhouse gas proposal.
Finalizing this proposal would have a detrimental effect on our state's economy at a time
when unemployment is currently at 11.6% and is only expected to increase. Once EPA
'regulates' greenhouse gas emissions from mobile sources, the Clean Air Act requires that
stationary sources be regulated under the threshold requirements as specified within the
Clean Air Act - regardless of any 'tailoring rule' EPA develops - as those thresholds are
specified within federal law. States and local permitting authorities are totally unprepared
for the millions of entities which will be required to comply with the Clean Air Act once
7-19
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EPA Response to Comments
greenhouse gas standards are set by EPA on light-duty vehicles. The permitting process
with SCDHEC will become so backlogged as to create a permitting moratorium. New
business and industry will not be built; existing business will not expand; and, existing
business and industry will not repair equipment if such repairs would require a permit.
Again, these are detrimental effects in the economy and unintended consequences with
the minuscule environmental benefit that would occur from EPA greenhouse gas
standards on light-duty vehicles. [NHTSA-2009-0059-0101, pp.2-4]
The commenter has the same concerns as SCDHEC and supports their comments.
Regarding the impact to state and local permitting authorities, one of the areas that EPA
has not fully evaluated is that many states, including South Carolina, have state-specific
rules that EPA has required be promulgated and approved into the State Implementation
Plans that address threshold levels for NSR pollutants. What EPA has also failed to
recognize is that regardless of the thresholds they establish in the 'tailoring rule,' business
and industry (and possibly other sources) within a SIP approved state are still subject to
the state specific regulations - which comply with the federal Clean Air Act. This means
that if a state were to move forward with issuing a permit utilizing the federal thresholds
that are established under a tailoring rule, the permit would be ripe for appeal and
litigation by third parties as the state rule is more stringent. To address this EPA has
encouraged states to begin the process as soon as possible to revise these state specific
requirements - even knowing that thresholds they are suggesting are illegal because the
federal Clean Air Act thresholds are more stringent. We are positive that SCDHEC can
not take a regulation to the South Carolina Legislature that violates federal law.
Another area that EPA has failed to carefully evaluate is related to the number of sources
that could be affected once the light-duty vehicle GHG proposal goes into effect. The
DHEC feels that EPA has grossly underestimated the number and types of facilities that
will be impacted by the light-duty vehicle greenhouse gas proposal by becoming subject
to NSR pollutants and the Title V and PSD requirements. While SCDHEC continues to
evaluate the specific impact to currently permitted SC sources and will make comment to
this effect to the 'tailoring rule,' EPA has estimated that 12,000 sources in South Carolina
could become major sources; therefore, they would become subject to Title V and PSD
permitting as soon as greenhouse gases are regulated under light-duty vehicle greenhouse
gas standards. In comparison, South Carolina currently has 281 Title V permitted
facilities. In addition to all of the other associated impacts, even the smallest modification
or expansion activity may trigger a PSD technology review and modeling analysis. The
technology review would encompass all the triggered PSD pollutants, not just greenhouse
gases. Economically, these facilities would have no choice but to abandon any new
project or modification. It is interesting to note that many of these facilities would be
subject to PSD and Title V because of natural gas combustion, which is considered to be
a clean burning fuel. In addition, it is expected that new construction would halt because
of these new requirements. [OAR-2009-0472-8346, p.4]
Dow Chemical Company (Dow)
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Other Comments
EPA should use its discretion and postpone finalizing the proposed rule until all potential
impacts are fully considered.
EPA has clear legal authority to defer promulgation of a GHG emission standard under
CAA Section 202, even if the Agency proceeds in the near future to finalize a positive
endangerment finding under CAA Section 202. EPA should take the time to deliberately
and carefully evaluate and consider all potential impacts of the proposed rule before final
promulgation, as the agency itself said, "EPA recognizes that some small entities
continue to be concerned about the potential impacts of the statutory imposition of PSD
requirements that may occur given the various EPA rulemakings currently under
consideration concerning greenhouse gas emissions." (74 FR at 49629). Even the
Supreme Court in Massachusetts v. EPA, whose ruling is the impetus for this proposal,
indicated that EPA has "significant latitude as to the manner, timing, content, and
coordination of its regulations with those of other agencies." (Slip op. at 30). [OAR-
2009-0472-7221.1, p.2]
EPA should not rush to promulgate this or any rule that has such an enormous impact on
regulated entities, both industrial facilities as well as small businesses, and potentially
devastating effect on the US [OAR-2009-0472-7221.1, p.2] economy without careful and
considerable deliberation and discussion with affected parties. Rather, EPA should
exercise its authority to defer promulgation of this proposed rule because the potential
economic consequences of the Motor Vehicle Rule are massive and unquestionably
outweigh any environmental benefits that would flow from EPA finalizing the rule.
Instead, EPA should allow NHTSA to finalize its portion of the rule which proposes
CAFE standards in order to allow that agency to meet its Model Year 2012 deadline
without finalizing EPA's portion of the rule that proposes GHG emissions standards.
The NHTSA portion of the rule alone will accomplish both agencies' stated goal of
addressing emissions from light duty motor vehicles to significant environmental benefit
without unleashing the devastating cascade effects of triggering the PSD program on
small and stationary sources under the CAA. Delaying this rulemaking would eliminate
the immediate impact of PSD on these sources, or at least allow EPA the time to evaluate
other options and to truly recognize the potential impacts of this proposed rule
on stationary sources. As a result, there is no need for EPA to finalize this proposed rule
at this time. [OAR-2009-0472-7221.1, p.3]
In this proposal, EPA needs to consider potential impacts on stationary sources of GHGs.
As a part of this rulemaking, EPA needs to consider and assess the potential impact of
this rule on stationary sources. Even though the Proposed Motor Vehicle Rule purports to
concern only regulation of mobile source GHG emissions, EPA has stated in other
proceedings that the proposed Motor Vehicle Rule's impact is not limited to motor
vehicles. In EPA's Advance Notice of Proposed Rulemaking (ANPR) to seek public
input on the ramifications of regulating GHGs under the CAA (73 FR 44354), the agency
stated that a Motor Vehicle Rule would trigger PSD permitting requirements for GHG
emissions from myriad stationary sources throughout the United States that had never
before been subject to CAA regulation. Because EPA has made it quite clear that they
believe finalizing this rule will automatically impact stationary sources, they are
obligated to thoroughly analyze these impacts as part of this rulemaking before final
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EPA Response to Comments
promulgation. This evaluation should compare the impacts to any benefit the EPA rule
provides above and beyond the proposed NHTSA Rule. [OAR-2009-0472-7221.1, p.3]
Duke Energy
Duke Energy Business Services LLC ("Duke Energy"), on behalf of Duke Energy
Carolinas, LLC, Duke Energy Indiana, Inc., Duke Energy Ohio, Inc., Duke Energy
Kentucky, Inc., and Duke Energy Generation Services ("DEGS"), therefore submits the
following comments on the Joint Motor Vehicle Proposal. Specifically, the significant
flaws and shortcomings of the Joint Motor Vehicle Proposal necessitate the withdrawal of
EPA's portion of the proposed rule. Duke Energy continues to support the enactment of
environmentally and economically sustainable federal climate change legislation.
Regulating GHGs under the CAA is the wrong approach. [OAR-2009-0472-7136.1, p.2]
The U.S. Environmental Protection Agency's ("EPA") has stated its view that
promulgation of the GHG motor vehicle standards will subject GHGs to the CAA
Prevention of Significant Deterioration ("PSD") program and the permitting requirements
of Title V of the CAA, potentially as soon as the date on which the rule becomes final
and effective. Duke Energy believes, however, that EPA's legal positions in this regard
and the analysis presented in the proposed rule are seriously flawed and must be
corrected. [OAR-2009-0472-7136.1, p.2]
Moreover, because of EPA's stated view that promulgation of the GHG motor vehicle
standards will subject GHGs to the PSD program and the permitting requirements of Title
V of the CAA, and the fact that EPA's proposed GHG motor vehicle emission standards
would be an unnecessary duplication of NHTSA's proposed fuel efficiency requirements,
EPA's action is more a proposal to regulate GHG emissions from stationary sources
through the PSD and Title V permitting programs than it is a proposal to regulate GHG
emissions from motor vehicles. Yet EPA has failed to analyze and address in its proposal
what is likely the single most significant issue associated with its proposed standard - the
potential application of the PSD and Title V permitting programs to GHGs emitted by
stationary sources. This would include an analysis of the significant burdens the rule
would place on stationary sources and the impact on jobs and the economy, at a time
when unemployment is still rising and the economy is struggling to recover from
recession. The EPA has instead suggested that similar issues be addressed through its
Proposed Tailoring Rule and PSD Reconsideration Rule. Those proceedings, however,
will not adequately evaluate the impact of EPA's proposed joint program with NHTSA;
indeed, EPA's selected approach has effectively removed all meaningful opportunities to
evaluate and provide comments on the effect of EPA's proposed GHG motor vehicle
emission standards on stationary sources. A decision to regulate GHG emissions from
stationary sources is of such magnitude that it should be made only based on careful
analysis and reasoned determinations of cost, technology, and other relevant factors. It
should not result from a back door approach via regulation of automobile fuel efficiency
with little more than bare acknowledgement. Given the [OAR-2009-0472-7136.1,
p.3] significance of the impacts that are likely to result from the establishment of a CAA-
based program to regulate GHG emissions from motor vehicles that, according to EPA,
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Other Comments
ultimately result in significant regulation of stationary sources, EPA must analyze these
issues adequately as a part of this rulemaking. [OAR-2009-0472-7136.1, p.4]
In addition, because EPA's proposed regulatory program fails to add significantly to the
results that could be achieved through NHTSA's proposal alone, EPA should instead
consider how it might avoid prematurely triggering PSD and Title V, including through
the option of simply addressing carbon dioxide ("CO2") emissions through NHTSA's
CAFE standards and not through emission standards promulgated under section 202 of
the CAA. EPA is under no statutory or other deadline to promulgate CAA-based
regulations of GHGs. It has time and the obligation to consider and analyze fully the
various issues raised by this proposed rule, and it should make use of that time. Further,
because EPA has additional time to analyze its options, the Agency should examine
various mechanisms for regulating under section 202(a) of the CAA that might not result
in the imposition of PSD and Title V on countless stationary sources. Duke Energy does
not believe that EPA's current proposal would necessarily trigger PSD for GHGs, and the
Agency should assess whether it has the ability to avoid needlessly imposing such
significant regulatory burdens through a rulemaking that should address only motor
vehicles. [OAR-2009-0472-7136.1, p.4]
In summary, for all of foregoing reasons, EPA lacks the legal authority to issue its
proposed GHG motor vehicle emission standards under section 202(a) of the CAA. Duke
Energy therefore requests that EPA withdraw its portion of the joint Motor Vehicle
Proposal and substantially revise its proposal to eliminate the CAA-based portion of the
proposed program. Duke Energy further requests that EPA engage in a new and
substantially more transparent [OAR-2009-0472-7136.1, p.4] rulemaking process that
addresses all of the significant issues that regulation under section 202(a) of the CAA
raises, including the ramifications for stationary sources and the economy. At the very
least, EPA should reopen the comment period on its proposed GHG motor vehicle
emission standards to allow the public to provide comments on these serious matters that
EPA has, thus far, neglected. [OAR-2009-0472-7136.1, p.5]
In addition to the above comments, Duke Energy strongly supports the comments
submitted by the Utility Air Regulatory Group on the Joint Motor Vehicle Proposal and
refers EPA to those comments for a more detail discussion of the issues raised above.
[OAR-2009-0472-7136.1, p.5]
Edison Electric Institute
Specific Comments on the Light-Duty Vehicle Proposal
EEI has no comment on the substance or timing of the applicability of the standards to be
applied to light-duty motor vehicles. We understand that they can be applied through the
NHTSA regulations without recourse to the CAA and fully support the proposal to
implement the NHTSA regulations. [OAR-2009-0472-7212.1, p.2]
However, we believe it is important for EPA to consider whether it should promulgate
separate rules under the CAA at this time (which would be almost identical as the
7-23
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EPA Response to Comments
NHTSA regulations in their impact on vehicle GHG emissions). Given the interconnected
nature of the CAA's provisions for regulating mobile and stationary sources, EPA
currently interprets the CAA such that: 1) a final CAA section 202 rule applicable to
light-duty motor vehicles would trigger regulated status 2 for the first time for stationary
sources emitting GHGs as well; 2) new stationary sources and those existing sources that
modify their facilities above specified significance levels would be subject to PSD
permitting requirements; and 3) new and existing sources would be obligated to
incorporate applicable GHG requirements in title V operating permits. Unfortunately,
EPA does not address or even acknowledge these ramifications for stationary sources in
the Proposed Rulemaking, nor does the Agency acknowledge the possible CAA remedies
to delay such a triggering event. [OAR-2009-0472-7212.1, p.2]
EEI urges EPA to consider whether the Agency should trigger stationary source
regulation before it has developed guidance and rules to apply to facilities that would be
affected by such regulation. We are concerned that the agency could create a regulatory
vacuum were it to proceed without developing needed guidance for regulated entities and
their state and federal regulators once GHG regulations apply to stationary sources.
While EPA has proposed two rules addressing some aspects of its regulation of GHG
emissions from stationary sources, EPA has not proposed any approach to guide the
applicability of CAA standards to specific facilities seeking to obtain permits. [OAR-
2009-0472-7212.1, p.2]
EPA staff currently are working on a constricted schedule to prepare best available
control technology (BACT) guidance under the PSD program, with the assistance of a
working group of the Clean Air Act Advisory Committee (CAAAC), for permitting
agencies charged with implementing BACT reviews for GHGs. We believe EPA should
consider whether the guidance [OAR-2009-0472-7212.1, p.2] being developed will be in
place when GHG regulations are applied to stationary sources and consider how the
stationary source program could go forward without such guidance. We also request that
EPA consider whether additional time for the CAAAC working group and EPA staff to
complete such guidance would facilitate a more efficient and orderly transition to
regulating GHGs under the PSD program and allow enhanced assessment of the options
for incorporating GHG requirements into title V operating permits. [OAR-2009-0472-
7212.1, p.3]
Given the substantial impacts of the Proposal on all stationary sources, we request that
EPA consider whether administrative necessity requires it to coordinate the timing of this
regulation with the issuance of guidance needed to explain how new GHG regulation will
apply to permitting of stationary sources. This is the same standard that EPA proposes to
apply in the Tailoring rule. Massachusetts v. EPA clearly indicated that the agency has
discretion as to the "manner, timing, content, and coordination of its rulemaking with
those of other agencies." [OAR-2009-0472-7212.1, p.3]
Importantly, if EPA delays finalizing the CAA section 202 portion of this proposal,
NHTSA's estimates of the impacts of the proposed CAFE standards are nearly identical
7-24
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Other Comments
to EPA's estimates of the impacts of its proposed section 202 motor vehicle emissions
standards.[OAR-2009-0472-7212.1,p.3]
Finally, delaying the imposition of regulations on stationary sources would be consistent
with the Administration's transition team announcement at the end of last year that
Congress would have 18 months to pass comprehensive climate change legislation,
obviating the need for piecemeal GHG regulation by EPA via the CAA. Such an 18-
month period would continue through approximately July 2010 and provide additional
time for Congress to act. Comprehensive legislation, as noted by many Administration
officials and by EEI, is far preferable to CAA regulation to reduce GHG emissions.
[OAR-2009-0472-7212.1, p.3]
Consequently, EEI asks EPA to consider the timing of the issuance of its proposed light
duty motor vehicles rule, in light of the administrative implications such rules would have
for stationary sources, to assure that the best regulatory guidance is in place when new
GHG related requirements take effect. EEI appreciates the opportunity to provide
comments. Questions may be directed to John Kinsman (202-508-5711) or Emily Fisher
(202-508-5616). [OAR-2009-0472-7212.1, p.3]
Energy-Intensive Manufacturers Working Group
[[These comments were originally submitted in response to the Prevention of Significant
Deterioration and Title V Greenhouse Gas Tailoring Rule; Proposed Rule, 74 Fed. Reg.
55292 (October 27, 2009). Because the comments are relevant to related agency
proceedings that would culminate in the regulation of greenhouse gas emitters, including
the energy-intensive trade-exposed (EITE) members of the Working Group, under the
Prevention of Significant Deterioration (PSD) regulatory scheme, the commenter filed
them in this docket.]]
[See Docket Number OAR-2009-0472-11276.1, pp.3-42 for all comments on this issue.]
Fertilizer Institute
Best Available Control Technology (BACT)
EPA explains in the preamble to the Prevention of Significant Deterioration (PSD)
tailoring rule that the motor vehicle rule will make GHGs a regulated pollutant under the
CAA. TFI understands that EPA has formed an advisory committee to evaluate BACT
options and that the agency intends to issue guidance on the subject in conjunction with
final regulations. However, EPA has failed to comply with its statutory obligations to
analyze the cost of potential BACT to impacted industries. Whatever BACT is
determined to be, complying with those requirements will pose a significant cost to the
industry. [OAR-2009-0472-7279.1, p.2]
TFI requests that an economic analysis of the implementation of BACT will have on
industry and more details regarding acceptable BACTs to use for pollution abatement be
conducted. [OAR-2009-0472-7279.1, p.2]
7-25
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EPA Response to Comments
Permitting of PSD and Title V Permitting Programs
EPA estimates PSD permit applications would increase by 150-fold and process time for
applications could take up to ten years. Additionally, EPA estimates that Title V permit
applications will increase and years of delay will result in the program. TFI does not see
any near-term benefits to the PSD rule due to the backlog of permits estimated to occur.
Furthermore, EPA indicates it will not issue a State Implementation Plan (SIP) call or
require states to adjust their PSD rules. The result of this will be uncertainty for
applicants and an overwhelmed permitting system with little effective results. [OAR-
2009-0472-7279.1, p.2]
TFI requests that EPA evaluate and provide a solution to the expected permitting system
conundrum. [OAR-2009-0472-7279.1, p.2]
Economic Impact Analysis (EIA)
EPA, under the CAA, is required to perform an EIA for individual rulemakings under the
CAA's authority. Failure to perform this mandatory obligation is a clear violation of the
CAA and jeopardizes the credibility and integrity of EPA's ability to make informed
policy decisions. [OAR-2009-0472-7279.1, p.2]
TFI requests that EPA perform a full EIA and make these findings available to the public.
[OAR-2009-0472-7279.1, p.2]
Georgia Department of Natural Resources
We do, however, have significant concerns with the rule as currently proposed, primarily
related to the triggering of other sections of the Clean Air Act (specifically Title V
permitting and New Source Review permitting). We do not believe that EPA has
adequately evaluated those impacts. We do not believe that EPA has adequately
evaluated the options for minimizing, or avoiding, these collateral impacts. Our concerns
are described herein along with recommended changes to the proposed rule that will still
produce the intended results of the rule, while minimizing, or avoiding, these collateral
impacts. [OAR-2009-0472-7150.1, p.l]
EPA should evaluate, as a part of this rulemaking, whether or not other sections of the
Clean Air Act (specifically Title V permitting and New Source Review permitting) will
be triggered by this rule. And, if these other sections of the Clean Air Act are triggered by
this rule, EPA should evaluate, as part of this rulemaking, what the impacts of that
triggering are. [OAR-2009-0472-7150.1, p.l]
Our interpretation is that this rulemaking is the action that triggers other sections of the
Clean Air Act (specifically Title V permitting and New Source Review permitting).
However, in the proposed rule, EPA actually suggested to affected entities that they
should not comment on this issue in this rulemaking, but should instead submit comments
on the proposed 'Prevention of Significant Deterioration and Title V Greenhouse Gas
Tailoring Rule' (GHG Tailoring Rule). We believe that EPA was in error to suggest this
7-26
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Other Comments
point and that it may inappropriately influence agencies and other affected entities to
refrain from commenting on an important rulemaking. [OAR-2009-0472-7150.1, pp. 1-2]
The EPA GHG Tailoring Rule is a wholly independent rulemaking from the Light-Duty
Vehicle GHG Standards rule. The GHG Tailoring rule does not trigger the Title V
permitting and New Source Review permitting requirements; the Light-Duty Vehicle
GHG Standards rule does. EPA should not rely upon the GHG Tailoring rule to address
this issue, particularly in light of the fact that the GHG Tailoring rule may not be in place
at the time that EPA finalizes the Light-Duty Vehicle GHG Standards rule. EPA has
clearly stated its intent to finalize the Light-Duty Vehicle GHG Standards rule by the end
of March 2010. The public comment period on the GHG Tailoring rule ends on
December 28, 2009. EPA is expected to get thousands of comments on the GHG
Tailoring rule and it would have only three months to address those comments and
finalize the rule. This appears to be a monumental task if EPA is going to adequately
review all of the comments and make necessary revisions to the proposed rule in response
to critical comments received. EPA can not assume, as part of this rulemaking, that the
GHG Tailoring rule will be finalized on, or before, the Light-Duty Vehicle GHG
Standards rule is finalized. [OAR-2009-0472-7150.1, p.2]
EPA failed to take into account the length of time that it will take for permitting
authorities with SIP approved New Source Review (NSR) programs to go through
rulemaking (and possibly some state legislatures), hiring, and training in order to
implement the mandate of regulating GHG emissions under the Title V and NSR
permitting programs. In Georgia, rulemaking will be required in order to insert the new
GHG emission thresholds. Rulemaking will also be required in order to increase Title V
fees consistent with the Clean Air Act requirement that permitting programs collect
enough revenue to implement the program requirements. Given the current state of the
economic situation in our state and country, this issue should not be taken lightly. Then,
permitting authorities must hire and train staff to issue these complicated permits. This
could take up to two years after the requirement is triggered. [OAR-2009-0472-7150.1,
p.2]
More fundamentally, the GHG Tailoring Rule appears to be legally vulnerable and may
not provide intended relief from the statutory permitting thresholds for PSD and Title V.
If the tailoring rule is vacated, the workload for permitting authorities will increase
exponentially at a time when State and Local governments are experiencing severe
budgetary challenges due to the current economic climate. Vacatur of the GHG Tailoring
Rule seems to be a very real possibility if promulgated as proposed. In the Preamble to
the proposed rule, EPA provides a lengthy justification for adjusting the statutory
permitting thresholds for PSD and Title V, relying on the legal doctrines
of'administrative necessity' and 'absurd results.' However, if the rule is challenged the
D.C. Circuit Court of Appeals could hold that these arguments are unpersuasive given the
circumstances. The Court could conclude that the proper way to address an excessive
burden imposed by statute is to ask Congress to amend the statute. The excessive burden
doesn't empower an administrative agency to rewrite the statute. The fact that EPA
knowingly promulgated regulations that triggered the concepts of'administrative
7-27
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EPA Response to Comments
necessity' and 'absurd results,' when equivalent reductions in GHG emissions from
vehicles could have been achieved without these collateral impacts, may weaken EPA's
legal justification for the Tailoring Rule even further. The sound approach is to prevent
the 'administrative necessity' and 'absurd results' by tailoring the GHG and CAFE
standards to avoid triggering the permitting requirements, not by attempting to amend
administratively the statutory permitting requirements. [OAR-2009-0472-7150.1, pp.2-3]
In short, EPA failed to consider how the rule would affect state/local air permitting
authorities. More specifically, EPA failed to comply with the Unfunded Mandates
Reform Act of 1995. EPA states in the preamble that this rule only affects manufacturers
of cars and light trucks. However, this action has the potential to affect state/local air
permitting authorities immensely because it would cause GHG emissions to become
regulated under the Title V and New Source Review permitting programs. The proposed
rule does not take this into account. The potential impact to state/local air permitting
authorities is unprecedented and enormous. In fact, EPA acknowledges in the GHG
Tailoring rule preamble that 'State permitting authorities would be paralyzed by permit
applications in numbers that are orders of magnitude greater than their current
administrative resources could accommodate?' [OAR-2009-0472-7150.1, p.3]
EPA claims that the proposed rule imposes no enforceable duty on any state, local or
tribal governments. The basis for this claim is not understood and we believe it to be
incorrect. As stated previously, the GHG Tailoring rule acknowledges that state
permitting authorities will be 'paralyzed' by the workload created by the triggering of the
Title V and NSR permitting provisions for GHG emissions. In the GHG Tailoring rule,
EPA purports to reduce this burden by arbitrarily selecting new GHG emission thresholds
of 25,000 tons per year CO2 equivalent (or in some cases 10,000 tons per year). Even if
the GHG Tailoring rule is finalized as EPA has proposed it, we believe that EPA has
significantly underestimated the number of sources that will become subject to the Title
V and NSR permitting provisions due to the fmalization of the GHG emission standards
required by this rule. We will be submitting separate comments to the docket for the
GHG Tailoring rule that address this issue. However, the GHG Tailoring rule does not
trigger the Title V and NSR permitting provisions for GHG emissions; it only attempts to
reduce the burden of that triggering effect. [OAR-2009-0472-7150.1, p.3]
We believe that EPA can accomplish the goals of this rule without triggering other
sections of the Clean Air Act (specifically Title V permitting and New Source Review
permitting). EPA stated in the preamble that the primary goals of this rule were to
achieve substantial reductions of greenhouse gas (GHG) emissions and improvements in
fuel economy. [OAR-2009-0472-7150.1, p.4]
EPA, as a policy decision, should not establish GHG emission limits under Section
202(a) of the Clean Air Act at this time. EPA and NHTSA should, instead, establish fuel
economy standards that accomplish the desired goals of substantial reductions in GHG
emissions and improvements in fuel economy. Therefore, the other sections of the Clean
Air Act (specifically Title V permitting and New Source Review permitting) would not
be triggered. [OAR-2009-0472-7150.1, p.4]
7-28
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Other Comments
EPA is under no legal obligation (court decision or Clean Air Act requirement) to finalize
GHG emission limits under Section 202(a) of the Clean Air Act at this time. The
preamble states that 'EPA has the discretion to take into consideration NHTSA's CAFE
standards in determining appropriate action under section 202(a), and we agree. EPA
should take into consideration that the new NHTSA CAFE standards accomplish the
goals of the rule and EPA should not finalize any GHG emission standards under the
authority of the Clean Air Act at this time. [OAR-2009-0472-7150.1, p.4]
Virtually all of the GHG emission reductions required by the proposed rule come from
the improvement to NHTSA's CAFE standards. Therefore, the additional EPA regulation
comes at an enormous cost with virtually no additional environmental benefits. EPA
acknowledges that the only way to reduce CO2 emissions from light-duty vehicles is to
increase fuel economy and, similarly, that there are no emission control technologies that
reduce CO2 emissions from Light-Duty Vehicles. [OAR-2009-0472-7150.1, p.4]
Georgia-Pacific (GP)
EPA's Failure to Fully Analyze the Burden of the Proposed Section 202 Tailpipe Rule on
Stationary Sources Renders the Proposal Unlawful.
Finalization of the Section 202 Tailpipe Rule, assuming EPA also finalizes its
endangerment finding, will trigger CAA permitting actions under the PSD and Title V
programs. In EPA's proposed Prevention of Significant Deterioration and Title V
Greenhouse Gas Tailoring Rule ("Tailoring Rule"), the Agency stated that the issuance of
the Section 202 Rule will automatically trigger a dramatic increase in PSD (from 300
permits per year to 41,000) and Title V (from 14,000 permits per year to over 6 million)
permits for stationary sources each year. Yet, EPA failed to analyze this consequence and
burden on stationary sources in its Regulatory Impact Analysis for the Section 202
Tailpipe Rule and to seek public comment on this issue, violating various statutes and
Executive Orders. [OAR-2009-0472-7122.1, p.l]
[See Docket Number OAR-2009-0472-7122.1, pp. 1-3 for detailed comments pertaining
to: EPA Conducted an Insufficient Regulatory Review and Inadequate Public Notice]
EPA Does Not Have to Issue the Section 202 Rule at This Time
In the preamble to the proposed Section 202 Tailpipe Rule, EPA states that the joint
rulemaking with the NHTSA corporate average fuel economy (CAFE) standards will
enable vehicle manufacturers to build a single national light duty vehicle fleet that
satisfies both CAFE and federal and California emissions standards. However, due to the
potential enormous implications of the Section 202 Tailpipe Rule on stationary sources
(as previously noted), and the fact that EPA has multiple options available for [OAR-
2009-0472-7122.1, p.3] regulating GHG from light duty vehicles, EPA should withdraw
or postpone its Section 202 Tailpipe Rule. [OAR-2009-0472-7122.1, p.4]
[See Docket Number OAR-2009-0472-7122.1, pp. 1-3 for detailed comments pertaining
to: EPA's proposed Tailoring Rule provides a reasonable basis for withdrawing or
7-29
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EPA Response to Comments
postponing the proposed Section 202 Rule and EPA has multiple options to issue light-
duty vehicle emissions standards under the CAA]
EPA Failed to Seek Comment on the Timing of its Section 202 Rulemaking Action,
Violating the Administrative Procedure Act
Notwithstanding the numerous issues upon which EPA sought comment in the proposed
rule, EPA did not solicit comment on the key substantive issue that has been identified
above - when the Agency should issue a Section 202 Rule. Without notice of this
significant issue in the proposed Section 202 Tailpipe Rule, the proposal notice is
unlawful under the Administrative Procedure Act and Section 307(d) as described above.
See 42 U.S.C. § 7607(d)(3); 5 U.S.C. § 553(b)(3). [OAR-2009-0472-7122.1, p.5]
Industry Coalition
The Associations acknowledge EPA's desire to address GHG emissions from mobile
sources quickly, as well as NHTSA's need to set new fuel economy standards, which
must be [OAR-2009-0472-7673.1, p.l] promulgated at least 18 months before the
affected model year (in this case the 2012 model year). 49 U.S.C. § 32902(g)(2).
However, as proposed, the Motor Vehicle Rule ignores the enormous burdens the Rule
would impose on stationary sources. This omission violates legal requirements for agency
rulemaking, constitutes arbitrary and capricious action, and is simply bad policy. This is
especially so because nearly all the environmental benefits EPA says will result from its
promulgation of the Motor Vehicle Rule under CAA authority would also result from the
NHTSA rule alone. Yet, unlike NHTSA action to raise corporate average fuel economy
(CAFE) standards, the redundant EPA standards promulgated under the CAA would have
regulatory impacts reaching far beyond the automotive industry and would impose
billions of dollars in additional permitting and compliance costs. [OAR-2009-0472-
7673.1,p.2]
Thus, although the Associations take no position on NHTSA's proposal to increase
CAFE standards, we vigorously object to EPA's proposal to finalize the superfluous
Motor Vehicle Rule under CAA Section 202. EPA's failure to account here for the PSD
and Title V burdens it elsewhere acknowledges will flow from this rulemaking renders
this rulemaking legally invalid. EPA must fully consider those burdens in this
rulemaking. [OAR-2009-0472-7673.1, p.2]
EPA Must Assess and Address the Motor Vehicle Rule's Impacts on Stationary Sources
Before Finalizing the Rule.
EPA's failure to account for the Title V and PSD consequences of finalizing the Motor
Vehicle Rule would render the final Rule both arbitrary and capricious, and also invalid
based on other procedural requirements for rulemaking.
[See Docket Number OAR-2009-0472-7673.1, pp.2-8 for detailed comments pertaining
to: EPA's Failure to Analyze the PSD and Title V Effects of Finalizing the Motor
Vehicle Rule Is Arbitrary and Capricious, EPA's Failure to Analyze the PSD and Title V
Effects of Finalizing the Motor Vehicle Rule Runs Contrary to Procedural Requirements
7-30
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Other Comments
and EPA's Failure to Analyze the PSD and Title V Effects of Finalizing the Motor
Vehicle Rule Runs Contrary to Procedural Requirements ]
PSD Permitting Requirements Need Not and Should Not Apply to Stationary Sources'
GHG Emissions Solely by Virtue of EPA Finalizing the Motor Vehicle Rule
EPA could properly decline to consider the PSD impacts of the proposed Motor Vehicle
Rule in this rulemaking docket only if those impacts would not, in fact, result from the
Rule. EPA has stated that PSD requirements will be triggered when the proposed Motor
Vehicle Rule first subjects GHG emissions from cars to control—that is, model year
2012. See PSD Interpretive Memo Reconsideration, 74 Fed. Reg. at 51545-46. But EPA
can interpret the statute and regulations to avoid that result and eliminate the need to
analyze the proposed Motor Vehicle Rule's effect on stationary sources in this
proceeding. Moreover, by doing so, EPA would eliminate the need for the legally
questionable GHG Tailoring Rule.
[See Docket Number OAR-2009-0472-7673.1, pp.8-12 for detailed comments pertaining
to: EPA's View that Issuance of the Motor Vehicle Rule Automatically Triggers PSD
Based Solely on Emissions of GHGs Is Inconsistent with the Plain Meaning of the CAA
and EPA's Regulations and The Phrase "Pollutants Subject to Regulation" Is Also Most
Reasonably Interpreted to Exclude GHGs]
EPA Should Exercise its Discretion to Defer Finalizing a Motor Vehicle Rule
EPA has clear legal authority to defer promulgation of an emission standard under CAA
Section 202, even if the Agency proceeds in the near future to finalize a positive
endangerment finding under CAA Section 202. It would be arbitrary and capricious for
EPA not to exercise that authority because the potential economic consequences of the
Motor Vehicle Rule are massive, and unquestionably outweigh any environmental
benefits that would flow from EPA placing its imprimatur on the NHTSA rule.
[See Docket Number OAR-2009-0472-7673.1, pp.12-14 for detailed comments
pertaining to: Nothing Compels EPA to Finalize GHG Emissions Standards for Mobile
Sources, EPA Has Not Provided Adequate Reasons for Finalizing GHG
Emission Standards for Mobile Sources at This Time, and There Are Numerous
Compelling Reasons to Defer the Motor Vehicle Rule]
Mass Comment Campaign (48) (unknown organization)
To make matters worse, these regulations would start a regulatory cascade. EPA would
start regulating emissions from millions of sources, including large buildings, churches,
sports arenas, office buildings, farms, schools, hospitals' you name it. EPA will be forced
to regulate greenhouse gases with many sections of the Clean Air Act, including sections
108, 111, and 112. This will further harm our economy, reduce American jobs, and
worsen our employment situation. NHTSA already has the ability to regulate fuel
economy without EPA further harming the economy.
Mississippi Department of Environmental Quality
7-31
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EPA Response to Comments
We do, however, have significant concerns with the rule as currently proposed, primarily
related to the triggering of other sections of the Clean Air Act (specifically Title V
permitting and New Source Review permitting). We do not believe that EPA has
adequately evaluated those impacts or has adequately evaluated the options for
minimizing, or avoiding, these collateral impacts. In addition, restrictions on GHG
emissions from vehicles do not appear necessary to achieve the goal of reducing GHGs;
the CAFE standards alone will achieve this goal. Our concerns are described herein along
with recommended changes to the proposed rule that will still produce the intended
results of the rule, while minimizing, or avoiding, these collateral impacts.
EPA must evaluate, as a part of this rulemaking, whether or not other sections of the
Clean Air Act (specifically Title V permitting and New Source Review permitting) will
be triggered by this rule. And, if these other sections of the Clean Air Act are triggered by
this rule, EPA must evaluate, as part of this rulemaking, what the impacts of that
triggering are.
Our interpretation is that this rulemaking is the action that triggers other sections of the
Clean Air Act (specifically Title V permitting and New Source Review permitting).
However, in the proposed rule, EPA actually suggested to affected entities that they
should not comment on this issue in this rulemaking, but should instead submit comments
on the proposed 'Prevention of Significant Deterioration and Title V Greenhouse Gas
Tailoring Rule' (GHG Tailoring Rule).l We believe that EPA was in error to suggest this
point and that it may inappropriately influence agencies to refrain from commenting on
an important rulemaking.
The EPA GHG Tailoring Rule is a wholly independent rulemaking from the Light-Duty
Vehicle GHG Standards rule. The GHG Tailoring rule does not trigger the Title V
permitting and New Source Review permitting requirements; the Light-Duty Vehicle
GHG Standards rule does. EPA must not rely upon the GHG Tailoring rule to address
this issue, particularly in light of the fact that the GHG Tailoring rule may not be in place
at the time that EPA finalizes the Light-Duty Vehicle GHG Standards rule. EPA has
clearly stated its intent to finalize the Light-Duty Vehicle GHG Standards rule by the end
of March 2010. The public comment period on the GHG Tailoring rule ends on
December 28, 2009. EPA is expected to get thousands of comments on the GHG
Tailoring rule and it would have only three months to address those comments and
finalize the rule. This appears to be a monumental task if EPA is going to adequately
review all of the comments and make necessary revisions to the proposed rule in response
to critical comments received. EPA cannot assume, as part of this rulemaking, that the
GHG Tailoring rule will be finalized on, or before, the Light-Duty Vehicle GHG
Standards rule is finalized. [OAR-2009-0472-7102.1, pp. 1-5]
The commenter expresses concern about the current state of economy the negative effects
of the proposed rule due increase in cost and administrative burden.
National Association of Home Builders (NAHB)
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Other Comments
[These comments were originally submitted On December 28, 2009 to the following
rulemaking docket: Prevention of Significant Deterioration and Title V Greenhouse Gas
Tailoring Rule, 74 Fed. Reg. 55,292 (Oct. 27, 2009), Docket Number EPA-HQ-OAR-
2009-0517. Because the NAHB believes that the Tailoring Rule is intertwined with other
EPA actions under the Clean Air Act, the NAHB requests that a copy of the NAHB's
Tailoring Rule comments also be filed to the EPA-HQ-OAR-2009-0472 docket.]
[See Docket Number EPA-HQ-OAR-2009-0472-11278, pp.4-22 for the comments
specific to the PSD and Title V GHG Tailoring Rule.]]
[See Docket Number EPA-HQ-OAR-2009-0472-11278, pp.23-42 for the legal
comments on EPA's Tailoring Rule and interrelated agency actions.]
National Association of Manufacturers
On November 18, 2009, the following organizations ('the Associations') jointly requested
that the Environmental Protection Agency ('EPA') and the National Highway Traffic
Safety Administration ('NHTSA') extend the public comment period for the Motor
Vehicle GHG Rule, until December 28, 2009 and that EPA extend the public comment
periods for both the GHG Tailoring Rule, and the PSD Interpretive Memo
Reconsideration, until January 28, 2010 (collectively, these three rulemakings are
referred to herein as the 'GHG rulemakings'): [OAR-2009-0472-11277, p.l]
American Bakers Association, American Chemistry Council, American Iron and Steel
Institute, The American Meat Institute, American Petroleum Institute, Chamber of
Commerce of the United States of America, Corn Refiners Association, The Institute of
Shortening and Edible Oils, National Association of Manufacturers, National Chicken
Council, National Council of Farmer Cooperatives, National Grain and Feed Association,
National Oilseed Processors Association, National Petrochemical and Refiners
Association, The National Renderers Association, Natural Gas Supply Association,
Society of Chemical Manufacturers and Affiliates. [OAR-2009-0472-11277, p.2]
On November 25, 2009, EPA Assistant Administrator Gina McCarthy replied by letter to
Bryan L. Brendle, Director of Energy and Resources Policy for the National Association
of Manufacturers ('NAM'), denying the extension request in its entirety. The Associations
hereby request that EPA reconsider its denial of the Associations' original November 18
request for extensions of the GHG rulemakings comment periods for the reasons
explained in the request. Alternatively, the Associations request that EPA make
comments submitted in each docket part of the docket for all three rules, considering all
relevant comments received in the PSD Tailoring Rule docket in both the Motor Vehicle
GHG Rule and PSD Interpretive Memo Reconsideration dockets, and vice-versa. A
refusal to grant either or both of the Associations' necessary and reasonable requests
would be arbitrary and capricious due to both the close timing and interrelatedness of the
GHG rulemakings. [OAR-2009-0472-11277, pp.2-3]
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EPA Response to Comments
The close timing of the GHG rulemakings makes it difficult for the Associations and their
members to fully analyze the rules, develop useful data, and submit comments on all
relevant aspects of the rules. Problematically, the GHG rulemakings were all published in
the Federal Register within just one month of each other. Meanwhile, many sources,
including Associations' members, are also focused and have allocated substantial
resources towards analyzing and preparing to comply with the final mandatory GHG
Reporting Rule for large emitting sources, which was finalized in September 2009.
Further compounding the already tight timeline, the GHG rulemaking comment deadlines
fall within the holiday season-the Motor Vehicle GHG Rule comments were due during
the Thanksgiving holiday and the GHG Tailoring Rule comments are due immediately
after Christmas, times when many U.S. businesses and state agencies are closed and/or
short staffed. As the Associations explained in the November 18 request, the GHG
rulemakings are legally and technically complex, with significant and likely
unprecedented consequences for the Associations, their members, and the U.S. economy
as a whole. Each rulemaking on its own requires sufficient time and resources to fully
evaluate the consequences of the rulemaking, develop data and analyses, and formulate
appropriate comments. Given the close timing of the publication of the GHG
rulemakings, the current comment periods are simply insufficient to allow the
Associations a fair opportunity to do so. [OAR-2009-0472-11277, p.3]
Furthermore, the GHG rulemakings are so interrelated that many comments on the GHG
Tailoring Rule are equally applicable to both the PSD Interpretive Memo and the Motor
Vehicle GHG Rule, and vice-versa. This is particularly important with regards to the
Motor Vehicle GHG Rule's impacts on stationary sources. At the time of publication,
Association members as well as many other U.S. businesses, states, and consumers, were
not on notice of the Rule's severe consequences for stationary sources. The Motor
Vehicle GHG Rule does not even mention, let alone fully address, the impacts on
stationary sources; rather, it disingenuously presents itself as a rulemaking solely
affecting light-duty motor vehicles. Not until October 27, 2009, just 30 days prior to the
Motor Vehicle GHG Rule comment deadline, did the GHG Tailoring Rule's publication
in the Federal Register put the American public and the regulated community officially
on notice that the CAA Section 202 regulations to control GHG emission from motor
vehicles would 'trigger PSD and title V applicability requirements for GHG emissions.'
And EPA has still not conducted a full Regulatory Impact Analysis assessing the
combined results of the three interrelated rulemakings. [OAR-2009-0472-11277, p.3]
Comments submitted in the Motor Vehicle GHG Rule docket reflect the inadequacy of
public notice regarding the Rule's impacts on sources other than motor vehicles. As the
South Carolina Department of Health and Environmental Control explained in comments
on the Motor Vehicle GHG Rule:
We are concerned that EPA may not be as transparent as they should be and that they are
sending mixed or confusing messages about the potential impact of the light-duty vehicle
GHG proposal on all sources that could be impacted, in particular small business. EPA
actually suggested to affected entities that they should not comment on the light-duty
vehicle GHG proposal but should instead submit comments on the proposed 'tailoring
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Other Comments
rule.' We believe that EPA was misleading to suggest this and that it may inappropriately
influence small business, industry, and other affected entities to refrain from commenting
on an important rulemaking. [OAR-2009-0472-11277, pp.3-4]
The absence of comments on the Motor Vehicle GHG Rule's impact on stationary
sources in many submissions, reflects the accuracy of South Carolina's prediction. Many
organizations have heeded EPA's direction to submit comments on PSD and Title V
permitting requirements in the GHG Tailoring Rule docket only, and may have missed
EPA's subsequent suggestion that the Motor Vehicle GHG Rule, and not the GHG
Tailoring Rule, imposes these requirements. [OAR-2009-0472-11277, p.4]
To ensure an adequate and complete record for the GHG rulemakings, to give
commenters a fair and full opportunity to analyze the proposals individually and
collectively, and given the close timing and interrelatedness of the rulemakings, the
Associations respectfully request that either: (1) EPA and NHTSA extend the public
comment deadline for the Motor Vehicle GHG Rule until December 28, 2009, and that
EPA extend the public comment deadlines for both the GHG Tailoring Rule and the PSD
Interpretive Memo Reconsideration until January 28, 2010; or alternatively (2) that EPA
consider comments submitted in the GHG Tailoring Rule to be submitted in both the PSD
Interpretive Memo Reconsideration and Motor Vehicle GHG Rule dockets, and vice-
versa. The Associations believe that a failure to grant this reasonable request would be
arbitrary and capricious. [OAR-2009-0472-11277, p.4]
The NAM supports the Administration's goal to harmonize fuel efficiency standards by
implementing a federal rule that will pre-empt disparate state and regional programs.
However, manufacturers believe that the process established by EPA, by using the Clean
Air Act as its primary statutory vehicle, is deeply flawed and will have the unintended
and unmanageable consequence of triggering regulation of millions of stationary sources.
By resorting to the CAA, the EPA has established a process that will undermine private
and public efforts to recover from the deepest economic downturn since the 1930s.
Alternatively, the EPA should promulgate a rule that adequately decouples the goal of
achieving greater fuel efficiency and reduced light-duty vehicle GHG emissions from the
consequence of regulating GHG emissions from millions of stationary facilities. Any
failure to do so will inflict harm on the manufacturing sector for which the NAM must
seek appropriate remedies, legislative or otherwise. [OAR-2009-0472-7215.1, p.5]
National Climate Coalition
Stabilizing atmospheric greenhouse gas concentrations will require the transformation of
our energy, manufacturing and transportation systems. We believe that this is the work of
Congress. Federal legislation should not only take a broad, flexible multi-sector
approach, but also must be designed to meet multiple objectives, including energy and
transportation security, reliability and affordability; ensuring the economic
competitiveness of United States businesses; energy conservation; strategic technology
development; and environmental performance. Such legislation should also allow for and
define the appropriate involvement of other departments and agencies with expertise in
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EPA Response to Comments
energy, environment, security and transportation in addition to EPA - something that is
necessary yet not permitted under the Clean Air Act. Our highest priority must be for
Congress to establish a uniform national program that will be consistent with the
emerging and overarching international framework. [NHTSA-2009-0059-0086.1, p.4]
For a variety of reasons, the existing Clean Air Act is a poor mechanism for addressing
climate change. Congressional intent in drafting the Clean Air Act was to identify and
regulate sources based on their relatively large emissions. Such sources typically have
also been financially able to bear the costs of regulation. By establishing major source
thresholds, the Act excluded from regulation the large numbers of smaller sources that
exist in the United States. The number of stationary sources subject to regulation has thus
historically been relatively small. By all estimates, however, this number could grow by
at least an order of magnitude, perhaps two, and affect for the first time many previously
unaffected sources (e.g., large retail establishments, schools, hospitals and government
facilities) if greenhouse gases are regulated in the same manner as criteria pollutants
under NSR, and Title V — let alone §112, which has even lower thresholds for
regulation. [NHTSA-2009-0059-0086.1, pp.4-5]
The permitting thresholds under the Act, however, are keyed to emissions levels that are
meaningful only in the context of regulating the local and regional health and welfare
impacts of lower-emitting criteria or hazardous air pollutants. Even small sources have
emissions of CO2 as a result of typical fuel use that would exceed current permitting
thresholds on this basis. As EPA itself underscored in the ANPR and the Tailoring Rule
Proposal, the PSD and Title V programs would sweep hundreds of thousands of sources
not previously subject to regulation into the scope of the Clean Air Act, at great cost and
consequence for the functioning of the economy and at great administrative burden on
regulated sources, EPA, the states and local governments. EPA estimates that its
approach in the Tailoring Rule would avoid over $55.6 billion in the first six years of
regulation - or, stated differently, in the absence of the Tailoring Rule, the cost of
compliance for affected sources and permitting agencies will increase by more than $55.6
billion. [NHTSA-2009-0059-0086.1, p.5]
Paradoxically, forcing the square peg of greenhouse gas emissions into the round hole of
the existing Clean Air Act also has the potential to create adverse incentives that may
stifle innovation and even increase greenhouse gas emissions. This could occur, for
instance, if a company decides to delay improvements that would otherwise reduce
emissions intensity to avoid triggering regulatory requirements, as we have seen occur
time and time again under the New Source Review programs. A practical example of this
situation is a turbine upgrade at an electric generating station. While the project results in
more efficient production of electricity, if that energy efficiency were projected to result
in more criteria pollutant emissions on an annual basis due to increased operations, it is
likely the project would not be pursued due to the time consuming and expensive
requirements of the New Source Review programs, including the likely need to
implement additional controls for all pollutants that exceed the NSR pollutant thresholds.
That is contrary to the desired outcome. [NHTSA-2009-0059-0086.1, p.5]
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Other Comments
Regulation under the Clean Air Act has historically focused on control of criteria and
hazardous air pollutants to address the local or regional human health, welfare and
environmental impacts. The architecture of the Clean Air Act is thus premised on the
concept that state, regional and federal control of emissions will improve air quality in
the corresponding area. This is not accurate as to greenhouse gases. The greenhouse
effect is global — and localized (or even United States-wide) emissions reductions will
not result in environmental benefits to the United States in the absence of corresponding
international action. Moreover, greenhouse gases at current and projected atmospheric
concentrations have no known direct adverse human health impacts to which to link
standards, and any environmental and welfare impacts only occur over substantial time,
due to the indirect effects of aggregate global levels of greenhouse gases. Thus,
greenhouse gases present a particular regulatory challenge. The same requirements that
apply to emissions of criteria pollutants from stationary sources are not likely optimally
to control and provide the most effective incentives to reduce greenhouse gases
emissions. [NHTSA-2009-0059-0086.1, p.5]
Because the Clean Air Act is such a poor vehicle for addressing climate change, we
believe that further federal legislation is the best approach to reduce emissions that
may contribute to global warming. We recognize that the Supreme Court's decision in
Massachusetts v. EPA may require the Agency to commence regulatory action in absence
of, or in the face of delayed, Congressional action. Congress, however, is poised to act.
Comprehensive climate change and energy legislation has been passed by the U.S. House
of Representatives, H.R. 2454 - the American Clean Energy and Security Act of 2009
(Waxman-Markey), and the Senate is considering stand alone climate change legislation,
the "Clean Energy Jobs and American Power Act" (Kerry-Boxer), and energy legislation,
S. 1462 - the American Clean Energy Leadership Act of 2009 (ACELA). The NCC urges
EPA and the Administration to work in support of prompt Congressional efforts, and
exercise its authority only where it can adopt flexible, appropriate measures to control
greenhouse gases in a manner best designed to facilitate ultimate Congressional action.
[NHTSA-2009-0059-0086.1, pp.5-6]
Absent Congressional Action, Should EPA Decide To Regulate Mobile and Stationary
Sources Under The Clean Air Act, It Must Select Appropriate Trigger Dates On Which
Regulatory Requirements Would Apply to Stationary Sources
EPA proposed three interrelated actions with respect to greenhouse gases emissions
within weeks of each other: the Light Duty Vehicle Rule, the Interpretive Rule, and the
Tailoring Rule. In the Interpretive Rule proposal, EPA supports the position that a
greenhouse gas becomes a "regulated pollutant" once it is "subject to regulation" in the
form of an "actual control" under a final and "effective" Clean Air Act national
regulation. See PSD Interpretive Rule, 74 F.R. 51538-41, 51545-46. EPA proposes that
the Light Duty Vehicle Rule, which it intends to finalize by March 30, 2010, would
present the first such rule applicable to any greenhouse gas emissions. See PSD
Interpretive Rule, 74 F.R. 51547. Unless Congress enacts preemptive legislation, the
combined effect of EPA's positions in the PSD Interpretive Rule, the Light Duty Vehicle
Rule and the Tailoring Rule (which would phase-in and tailor application of PSD and
7-37
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EPA Response to Comments
Title V to stationary sources) would be to subject stationary sources to PSD and Title V
requirements on the "effective date" of the Light Duty Vehicle Rule - as soon as 60 days
after publication of the final Light Duty Vehicle Rule in the Federal Register
(approximately June 2010). See PSD Interpretive Rule, 74 F.R. 51545-46; Tailoring
Rule, 74 F.R. 55294, 55299- 55300.
The NCC intends to submit comments on the Interpretive Rule supporting EPA's initial
and currently-supported interpretation that the date on which a pollutant becomes subject
to an "actual control" under a final national rule is a better measure of the date at which a
pollutant becomes "subject to regulation" than the other options discussed by EPA in the
Interpretive Rule. However, we also intend to indicate that we believe EPA's preferred
choice of the "effective date" of such a rule, while a better choice than promulgation date,
still does not properly mark the date on which a pollutant is actually controlled. Instead, it
is the "first substantive compliance date" of that national rule establishing emission
standards for greenhouse gases that is the date on which those greenhouse gases will be
actually controlled and, thus, subject to regulation. [NHTSA-2009-0059-0086.1, pp.6-7]
Assuming for purposes of these comments that EPA will implement the "effective date"
approach in the Interpretive Rule rather than the "first substantive compliance date"
approach advocated by the NCC, we request that EPA use the fullest extent of its
discretion to set the effective date for the Light Duty Vehicle Rule as one that gives EPA,
affected sources and permitting authorities the greatest lead time for implementation of
the PSD and Title V programs' applicability to greenhouse gases. In particular, we
request that the effective date for the Light Duty Vehicle Rule be set no sooner than
January 2, 2011 - the first date on which a 2012 model year vehicle can be produced. See
Light Duty Vehicle Rule, 74 F.R. 49454; 40 CFR 85.2302-2304. [NHTSA-2009-0059-
0086.1,p.7]
EPA has substantial discretion in setting the effective date of the Light Duty Vehicle
Rule. While the effective date can be no sooner than 60 days after promulgation, there is
no definite limit on how long after promulgation a rule must be effective. As noted by the
Supreme Court in Massachusetts v. EPA," EPA [] has significant latitude as to the
manner, timing, content, and coordination of its regulations with those of other agencies."
Slip Op. at 30. Additionally, as documented at length by EPA in the Tailoring Rule, the
long-held judicial doctrines of absurd results and administrative necessity support even
agency action that would deviate from statutory language, if such action is necessary to
avoid results contrary to Congressional intent or due to administrative necessity. See
Tailoring Rule, 74 F.R. 55311- 55320. [NHTSA-2009-0059-0086.1, p.7]
While the "effective date" the NCC promotes for the Light Duty Vehicle Rule would
differ by only six months from that which would result from applying the minimum time
between promulgation and effectiveness required by the Congressional Review Act, there
are legal and policy factors that make these six months crucial for affected stationary
sources and permitting authorities as they scramble to comply with PSD and Title V
requirements as applied to greenhouse gases. The importance of affording EPA, affected
sources and permitting authorities the necessary lead time to study and evaluate the
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Other Comments
emissions characteristics and control options for new pollutants prior to making
emissions of those pollutants subject to PSD and Title V permitting requirements cannot
be overstated. This is particularly true for sources that would be newly subject to Title V
because of their potential to emit GHGs, and would therefore need to apply for Title V
permits or synthetic minor permits (and their permitting authorities that would need to
timely issue these permits). Furthermore, if phase-in approaches such as the Tailoring
Rule are to provide true legal relief for potentially affected sources, the states which
implement PSD and/or Title V under their own regulations will need this additional time
- and perhaps more - to promulgate their own tailoring rules. [NHTSA-2009-0059-
0086.1,p.7]
Thus, EPA should use the fullest extent of its discretion to set the effective date of the
Light Duty Vehicle Rule's emission standards for greenhouse gases in the manner that
provides the greatest lead time for EPA, affected sources and permitting authorities to
comply with the PSD and Title V requirements that will be triggered by the Light Duty
Vehicle Rule. In particular, the "effective date" of the Light Duty Vehicle Rule should be
set no sooner than January 2, 2011, the first date on which any model year 2012 vehicle
could be produced which would have to comply with the greenhouse gas emissions
standards in that rule. [NHTSA-2009-0059-0086.1, pp.7-8]
The National Climate Coalition appreciates the opportunity to submit these comments
and looks forward to providing further input. We encourage EPA to work with Congress
towards prompt national greenhouse gas legislation. If EPA must continue to move ahead
with rulemakings under the Clean Air Act, then we urge the Agency to exercise its
discretion to limit application of those sections of the statute that would impose
unintended economic harm and divert scarce public and private resources without
commensurate benefit in stabilizing global greenhouse gas concentrations. As
appropriate, in the course of regulating greenhouse gases under the statute, EPA also
should seek prompt Congressional confirmation that such harmful provisions may be so
limited or need not be implemented to address climate change. [NHTSA-2009-0059-
0086.1, p.8]
National Cotton Ginners Association
Neither the NCGA nor other gin associations had intended to comment on this proposal
since our primary concern is the effect of Greenhouse Gas (GHG) regulations on
stationary sources. For this reason, we had not exhausted much effort evaluating this
docket until the proposed Greenhouse Gas Tailoring Rule was proposed on October 27,
2009 (74 FR 55292). The proposed Tailoring Rule is based on the assumption that the act
of regulating GHG emissions from automobiles under the Clean Air Act will trigger
regulatory requirements that affect stationary sources (i.e., PSD/NSR and Title V
programs) of GHG emissions. In supporting documents for the Tailoring Rule, EPA
estimates that without this rule, over 6 million stationary sources will become subject to
Title V, permitting requirements at a cost of over $38 billion. EPA is using the Tailoring
Rule to adjust the stationary thresholds to a more manageable level, relying on "absurd
7-39
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EPA Response to Comments
results" and "administrative necessity" doctrines as legal justifications for modifying
ctatiitr\r\r tVirr=>cVir\1rlc
statutory thresholds
If the analysis of the Tailoring Rule is correct, then the additional cost burden for
stationary sources should be reflected in the economic analysis for the Light Duty
Vehicle GHG Rule. The impact of this rulemaking on stationary sources was not
considered. Proper consideration of the complete cost picture is very important in this
docket. This is especially true, considering that EPA would gain almost all of their GHG
reductions from Light Duty Vehicles through the NHTSA CAFE standards. If EPA used
the CAFE standards to calculate GHG reductions, the GHG reductions would remain
very comparable, and the unnecessary regulatory burden on stationary sources could be
avoided.
It appears that the origin of the "absurd results" and "administrative necessity" lies in this
very docket, and the solution to the "absurd results" and "administrative necessity" is
achievable through the CAFE standards without significant loss of GHG reduction
benefits.
NCGA strongly requests that EPA review the full economic impact of this rule,
considering all costs: both those currently in the Light Duty Vehicle proposed rule and
those outlined in the proposed Tailoring Rule before promulgating any rule for Light
Duty Vehicles. In addition, EPA should clearly evaluate the benefits of regulations solely
based on CAFE standards. Finally, EPA should consider extending the comment period
in this docket, considering the significant additional costs that are discussed in the
Tailoring Rule proposal. [OAR-2009-0472-7209.1, pp. 1-2]
National Mining Association (NMA)
NMA believes that the economic and regulatory implications a final motor vehicle rule
will have for all sources of GHG emissions economy-wide will be extraordinarily
significant. EPA has neglected, however, to conduct required statutory analyses of these
impacts. EPA implies in this rule and explains in its proposed PSD tailoring rule that it
understands the regulatory consequences under the CAA that will result when the motor
vehicle rule is finalized. The agency has not, however, taken the necessary steps to avoid
these consequences, nor to avoid the legal ramifications that may jeopardize the rule.
[OAR-2009-0472-7237.1, p.2]
A final light-duty motor vehicle rule will trigger regulatory requirements under the PSD
program of the CAA that will result in significant economic and regulatory
consequences. [OAR-2009-0472-7237.1, p.2]
[See Docket Number OAR-2009-0472-7237.1, pp. 1-2 for detailed comments]
NMA understands that EPA has formed an advisory committee to examine BACT
options and that the agency intends to issue guidance on the subject in conjunction with
final regulations. EPA has failed, however, to comply with its statutory obligations to
7-40
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Other Comments
analyze the cost of potential BACT to impacted industries. Whatever BACT is
determined to be, complying with those requirements will pose significant cost to
industry. If EPA has already gathered information on the type of BACT controls that may
be required for industrial source categories, it has not made that information available as
part of this rulemaking docket. [OAR-2009-0472-7237.1, p.3]
[See Docket Number OAR-2009-0472-7237.1, pp.2-3 for detailed comments]
Until State PSD programs are revised, the severe permitting consequences of a final
motor vehicle rule that the proposed PSD tailoring rule is designed to avoid will come to
fruition. [OAR-2009-0472-7237.1, p.3]
Even if the PSD tailoring rule is finalized, and is successful accomplishing what EPA
expects it to, all of the consequences described in the tailoring proposal will still occur, at
least in the near term. In order for the "beneficial impacts" of the PSD tailoring rule
[OAR-2009-0472-7237.1, p.3] to come to fruition, most states would first need to adjust
their individual PSD programs accordingly. Although EPA approves state programs
under the State Implementation Plan (SIP) process, each state program would remain
legal and enforceable under state law until changed. [OAR-2009-0472-7237.1, p.4]
[See Docket Number OAR-2009-0472-7237.1, pp.3-4 for detailed comments]
EPA has failed in its statutory obligations to analyze the impacts of its proposed GHG
regulations on the public.
EPA is required by relevant Executive Orders and statutes to produce studies necessary to
fully analyze the large economic and regulatory consequences that the motor vehicle rule
will have on major stationary sources. As has been previously stated, EPA has conducted
an RIA with respect to the motor vehicle rule, but those analyses are limited to the direct
benefits and effects of GHG regulation of motor vehicles, and do not address the PSD
effects on major stationary sources triggered thereby. [OAR-2009-0472-7237.1, p.4]
[See Docket Number OAR-2009-0472-7237.1, pp.4-7 for detailed comments pertaining
to: Regulatory Flexibility Act, CAA § 317, and Unfunded Mandates Reform Act]
EPA is not obligated to finalize the motor vehicle rule in the time frame it has identified
NHTSA is under a statutory obligation to promulgate CAFE standards by March 30,
2010. EPA has identified this same date as the date it must finalize the motor vehicle rule.
EPA, however, is under no statutory obligation to promulgate this rule, nor a deadline to
finalize its portion of the Joint Motor Vehicle Proposal.
EPA has failed in its obligation under various Executive Orders and statutes to review the
economic and regulatory impacts on major stationary sources and the economy as a
whole that will result when the proposed motor vehicle rule is finalized and becomes
effective. EPA's attempts to address these issues in other rulemakings are also precarious,
and at the very least insufficient to satisfy the identified statutory mandates. Unlike
NHTSA, EPA is not under deadline to promulgate the proposed standards. EPA has the
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EPA Response to Comments
authority and obligation to fully analyze the broad-ranging and significant impacts that
the agency itself recognizes will occur after this proposal is finalized, and to make that
analysis available to the public. [OAR-2009-0472-7237.1, p.8]
For these reasons, NMA urges EPA to withdraw the motor vehicle rule and undertake a
new, public process aimed at sufficiently analyzing all of the impacts that will result from
such action. NMA appreciates this opportunity to submit these comments. [OAR-2009-
0472-7237.1, p.8]
[See Docket Number OAR-2009-0472-7237.1, pp.7-8 for detailed comments]
National Petrochemical & Refiners Association
EPA's Section 202 Rule Should Be Withdrawn or Reproposed Since It Violates Several
Statutes and Executive Orders.
In the proposed rulemaking, EPA has completely failed to take into account the enormous
economic and regulatory consequences of this rulemaking on stationary sources. Even
though the Agency's current interpretation of the CAA considers a final section 202 rule
to constitute a "triggering" event that would require CAA permitting actions either at the
time of promulgation of the rule or upon the effective date of the rule, the proposed rule
and its associated "Regulatory [OAR-2009-0472-7234.1, p.3] Impact Analysis" ("RIA")
thoroughly ignore this consequence, a consequence that the Agency considers to be
legally inevitable. Specifically, this proposed rule: [OAR-2009-0472-7234.1, p.4]
[See Docket Number OAR-2009-0472-7234.1, pp.3-5 for detailed comments pertaining
to: Violates the Paperwork Reduction Act, Violates the Regulatory Flexibility Act,
Violates Executive Order 12866, Violates the Unfunded Mandates Reform Act, Violates
Executive Orders 13132 and 13175, and Violates Executive Order 13211]
EPA Is Not Required Either to Propose or Finalize the Section 202 Rulemaking At This
Time.
There is no statutory schedule or judicial order applicable to this rulemaking.
EPA is proposing to regulate GHG emissions from individual manufacturer fleets sold in
each model year. EPA relies on CAA section 202(a) to establish an attribute-based
approach for a CO2 fleet-wide standard based on the footprint of the vehicle. EPA
separately relies on section 202(a) to propose per-vehicle standards for nitrous oxide and
methane emissions. In addition, EPA cites several other sections of Title II of the CAA
that are relevant to the standards, including provisions affecting Agency discretion with
regard to useful life, certificates of conformity, testing requirements, and warranties.
[OAR-2009-0472-7234.1, p.6]
[See Docket Number OAR-2009-0472-7234.1, pp.6-10 for detailed comments pertaining
to: There is no statutory schedule or judicial order applicable to this rulemaking, There
would not be a significant public health or environmental impact if EPA withdraws the
proposed section 202 standards or delays fmalization of such standards, EPA proposes to
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Other Comments
regulate only three GHGs, and If EPA were to withdraw or delay finalization of the
proposal rules, regulatory delay and uncertainty would not result]
EPA May Avoid "Impossible" Results By Redefining PSD Applicability
As indicated above, EPA is not compelled to finalize the Section 202 rulemaking at this
time, but has significant discretion as to the manner, timing and content of any action that
it takes to respond to Massachusetts v. EPA. In addition, however, EPA can avoid
"impossible burdens" the Agency identified in the Tailoring Rule (e.g., the near-
immediate expansion of state and local permitting programs to include assessments of
GHG emissions) and at the same time properly confine the effects of this rulemaking to
light duty vehicle manufacturers. As detailed below, the Agency should redefine PSD
applicability to follow the clear language and structure of the CAA. By doing so, EPA
could proceed to finalize the section 202 rulemaking while not imposing "impossible
burdens" it has projected will result from this rulemaking. EPA could also avoid
unnecessary and unsupported reliance on administrative law doctrines in the Tailoring
Rule and comply with the CAA in the manner in which it is plainly written [OAR-2009-
0472-7234.1, p. 10]
[See Docket Number OAR-2009-0472-7234.1, pp. 10-12 for detailed comments
pertaining to: EPA May Avoid 'Impossible' Results By Redefining PSD Applicability]
EPA Should Withdraw Its Proposed Section 202 Rules or Delay Finalization of the Rules
In Order to Avoid "Impossible" Burdens That Could Result from Other CAA Provisions.
EPA's Legal Theories For Reducing the Burdens of the PSD and Title V programs in the
Proposed Tailoring Rule Do Not Relieve the Agency of the Requirement to Analyze the
Burdens That the Section 202 Rule Imposes.
Under EPA's current interpretation of the CAA and associated regulations, PSD, and
Title V permitting requirements will apply to new, modified and operating sources of
GHGs as of 60 [OAR-2009-0472-7234.1, p. 15] days following the Federal Register
publication of this rulemaking. Since EPA expects to finalize the light duty vehicle
rulemaking by the end of March 2010, this would mean that EPA would seek to apply
permitting requirements to new sources and sources undergoing a major modification
which increased emissions by late May/June of 2010 and require various state and local
permitting agencies to also apply these requirements. Under EPA's current interpretation
of the relevant law and regulations, existing sources could be required to apply for Title
V operating permits covering GHG emissions one year later. [OAR-2009-0472-7234.1,
p.16]
[See Docket Number OAR-2009-0472-7234.1, pp. 15-18 for detailed comments
pertaining to: EPA has the ability to avoid 'impossible' results of this rulemaking and
EPA must take time and effort to analyze the full burden of this rulemaking]
The Rulemaking Process Is Unprecedented and Designed to Reach a Predetermined
Result and Therefore Violates the Requirements of the Clean Air Act and the
Administrative Procedure Act
The "joint rulemaking" between EPA and NHTSA is unprecedented and calls into serious
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EPA Response to Comments
question how each Agency exerted independent judgment in fulfilling their separate
statutory responsibilities under the CAA and EPCA. Moreover, the history of this
rulemaking indicates that EPA and other Administration officials engaged in a series of
meetings which predated this proposal and predetermined the end result of the
rulemaking process either directly or through impermissible incentives to promulgate a
final rule within certain parameters. Therefore, the rulemaking violates sections 202(a)
and 307(d) of the CAA and requirements of the Administrative Procedure Act. Since the
issues involve the timing, stringency and final form of the promulgated standards, they
are of central relevance to the rule. [OAR-2009-0472-7234.1, p. 18]
[See Docket Number OAR-2009-0472-7234.1, pp. 18-21 for detailed comments
pertaining to: This 'joint rulemaking' is unprecedented and prevents EPA from exercising
independent judgment, Agreements between the Administration, EPA, the Department of
Transportation ('DOT'), the State of California and auto manufacturers have
predetermined the content and overall result of this rulemaking, EPA's consideration and
approval of the California waiver request under section 209 of the CAA improperly
influenced the Agency's actions in this rulemaking]
The Proposed Rule Violates the Administrative Procedure Act since EPA Did Not Seek
Comment on When the Agency Should Act, By Virtue of this Rulemaking, to Make
GHGs "Regulated Air Pollutants" Under the Clean Air Act
In its proposed endangerment determination, EPA took comment on the question of
whether the Agency should regulate GHGs individually, or as a group. EPA has
otherwise indicated that fmalization of the endangerment determination itself will not
make any GHG a "regulated air pollutant" under the CAA. Therefore, if EPA considers
this rulemaking to have the effect of making several GHGs "regulated air pollutants," the
Agency must take comment on the question of when the Agency should take action to
affect the regulatory status of various GHGs by making them a "regulated air pollutants"
subject to "actual control" under the Clean Air Act. As demonstrated in this rulemaking
and in the proposed Tailoring Rule and proposed endangerment determination, EPA fully
understands its actions to have enormous consequences under the CAA. This notice, by
not taking comment on when EPA should take action to impose actual controls on
emissions of GHGs under the CAA is deficient under 5 U.S.C. 553(b)(3). In effect, the
proposed rulemaking ignores the elephant in the room. [OAR-2009-0472-7234.1, p.22]
[See Docket Number OAR-2009-0472-7234.1, pp.22-23 for detailed comments
pertaining to: The Proposed Rule Violates the Administrative Procedure Act since EPA
Did Not Seek Comment on When the Agency Should Act, By Virtue of this Rulemaking,
to Make GHGs "Regulated Air Pollutants" Under the Clean Air Act]
Fuel Requirements
NPRA also notes and would incorporate by reference comments filed by the American
Petroleum concerning proposed fuel requirements in the Section 202 Rule. Fuel
specification changes have not been proposed in this rulemaking, however the proposed
rule and Draft Technical Support Document describe vehicle engine and equipment
options that EPA believes will require lowering current sulfur requirements. NPRA
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Other Comments
believes there is inadequate lead time for such an action which would require
considerable analysis and assessment for its impact on refineries. NPRA also supports
API comments with respect to ethanol blended certification fuel, flexible fuel vehicle
credits and dedicated alternative fuel vehicles. [OAR-2009-0472-7234.1, p.25]
NISEI Farmers League
The Nisei Farmers League submits these comments on behalf of growers, packers, and
shippers in California, Oregon, Utah, and Washington. NFL represents more than 1,100
operations in these states. We did not intend to participate in this docket, as our primary
focus relates to the effect of Greenhouse Gas (GHG) regulations on stationary sources.
For this reason, we had not spent much effort evaluating this docket until the proposed
Greenhouse Gas Tailoring Rule was filed on October 27, 2009.
The proposed Tailoring Rule is based on the assumption that the act of regulating GHG
emissions from automobiles under the clean air act will trigger regulatory requirements
affecting stationary sources of GHG emissions. In supporting documents for the Tailoring
Rule, EPA estimates that without the Tailoring Rule, over 6 million stationary sources
will become subject to Title V permitting requirements, at a cost of over 38 billion
dollars.
It would seem logical that if the analysis in the Tailoring rule is correct, then the
additional cost burden for stationary sources should be reflected in the economic analysis
for this docket. To the best of our knowledge, the impact of this rulemaking on stationary
sources was not considered.
Proper consideration of the complete cost picture is very important in this docket. This is
especially true, considering that EPA could gain almost all of their GHG reductions from
Automobiles through NHTSA' s CAFE standards. It would seem that if EPA used the
CAFE standards to calculate GHG reductions, the GHG reductions would remain very
comparable, yet the regulatory burden on stationary sources could be avoided.
The proposed Tailoring Rule uses the doctrine of'absurd results' as a portion of the
justification for the proposed rule. It would appear that the origin of the 'absurd result' lies
in this very docket, and the solution to the 'absurd result' is achievable in this docket
without significant loss of GHG reduction benefits.
EPA should review the economic benefit of this rule, considering all costs; both those
currently in this docket, and those outlined in the proposed Tailoring Rule. In addition,
EPA should clearly evaluate the benefit of regulations solely based on CAFE standards.
Finally EP A should consider extending the comment period in this docket, considering
the significant additional costs discussed in the Tailoring Rule proposal. [OAR-2009-
0472-7142.1, pp. 1-2]
Peabody Energy Company
In particular, Peabody believes that EPA has failed, as a part of the motor vehicle GHG
rulemaking, to conduct a number of analyses required by Executive Orders and statutes
of the highly significant economic and regulatory effects that will result from PSD
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EPA Response to Comments
regulation of major source GHG emissions. Unless these analyses are produced and made
subject to comment before the motor vehicle rule is finalized, the legal status of that rule
will be in jeopardy. Moreover, apart from legal requirements and as a matter of sound
regulatory policy, EPA should take the necessary steps to understand the consequences
that will necessarily flow when the motor vehicle rule is finalized and numerous
stationary sources become subject to GHG regulation under the PSD program. [OAR-
2009-0472-7223.1, p. 1]
Peabody understands that EPA has proposed the tailoring rule in order to defer PSD and
Title V regulation for what that rule defines as small (non-major) GHG emitters - those
whose potential to emit (PTE) CO2e emissions is less than 25,000 tons per year (tpy).
Peabody further understands that the motor vehicle rule preamble asks that "concerned
small entities" address their comments about PSD and Title V to the tailoring rule docket.
Except as relevant to our comments here, Peabody will withhold its detailed comments
on the small source issue for that docket. [OAR-2009-0472-7223.1, p.l]
However, Peabody's concern as to PSD impacts in the present docket relates not to the
small-source emitters but to the major-source emitters. Except for defining the major
source threshold at 25,000 tpy CO2e, the tailoring rule does not affect PSD regulation of
major stationary sources of GHGs and indeed specifically states that normal PSD
requirements will apply to such major sources. Thus, the motor vehicle rule is the EPA
regulatory decision point that triggers PSD regulation of major-source emissions of
GHGs and therefore, as a matter of law, EPA's responsibility to examine the PSD
consequences of that decision on major sources arises here. Accordingly, Peabody directs
its comments on the major source PSD issue to the present docket and urges EPA to re-
notice the rule for further comment when it has produced the necessary studies. [OAR-
2009-0472-7223.1, p.2]
PSD regulation will have two types of consequences for major-source GHG-emitters: it
will result in significant Best Available Control Technology (B ACT) requirements, and,
at least in the near term, will make it very difficult to obtain needed PSD permits or
permit modifications. [OAR-2009-0472-7223.1, p.2]
Regulating light-duty motor vehicle GHG emissions will have far-reaching economic and
regulatory consequences by subjecting most of the nation's industrial production to GHG
regulation under the PSD program
As the tailoring rule preamble explains, EPA's motor vehicle rule will make GHGs a
regulated pollutant under the Clean Air Act (CAA) and will therefore trigger PSD
regulation of major source GHG-emitters. According to the tailoring rule Technical
Support Document (TSD), at the 25,000 tpy CO2e threshold, some 13,600 sources are
major sources of GHG emissions throughout the economy. This represents the large
majority of the nation's fossil fuel-fired industrial base and accounts for 87 percent of the
CO2 emitted by every stationary source of any size in America. [OAR-2009-0472-
7223. l,p .2] [See Docket Number OAR-2009-0472-7223.1, pp.2-4 for a detailed
discussion on this issue.]
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Other Comments
Despite the tailoring rule, regulating light-duty motor vehicle GHG emissions will have
the further consequence for major sources of essentially making it impossible for them to
obtain needed permits, at least in the near term
According to EPA, without the tailoring rule, regulation of GHGs triggered by the motor
vehicle rule will result in sustained regulatory gridlock in the PSD and Title V programs.
EPA says that "the number of [PSD] permit applications would increase by 150-fold, an
unprecedented increase that would far exceed administrative resources." Moreover,
"[permitting authorities have estimated that it would take 10 years to process a PSD
application, on average, and the resulting backlog would affect the permit applications for
all sources, not just GHG emitters. This backlog would grow by tens of thousands each
year following the triggering of PSD applicability." EPA estimates that there would be
"some 6.1 million" Title V permit applications, a number that is "almost 100 times
greater than what Congress expected," which would lead to "multi-year delays in permit
issuance." [OAR-2009-0472-7223.1, p.4]
EPA also states that this regulatory gridlock would not be confined to just small sources.
As EPA states, "a literal application of the 100/250 tpy thresholds would sweep into the
PSD program tens of thousands of smaller sources that Congress did not intend to
include, and the resulting strain on administrative resources would preclude the hundreds
of larger sources that Congress did intend to be subject to the program from obtaining
permits at least for an initial period of time." [OAR-2009-0472-7223.1, p.4]
EPA says that the tailoring rule will prevent these dire consequences from occurring, but
that is not the case, at least in the near term. The tailoring rule preamble frankly
recognizes that most states have adopted their own PSD programs. Although these
programs are submitted to and approved by EPA as a part of the State Implementation
Plan (SIP) process, these programs retain independent legal force under state law.
According to EPA, "virtually all of [these state permit programs] establish the PSD
permitting threshold at the 100/250-tpy level," and in fact "a few states have adopted
lower permitting threshold levels." Similarly, "virtually all EPA approved SIPs establish
the significance level for any new pollutant that it covers - including GHG emissions, if
covered - at zero." This means that, under state law in most states, once GHGs become
regulated pollutants, any major-source modification that increases GHG emissions by any
amount will trigger PSD applicability. [OAR-2009-0472-7223.1, pp.4-5]
Under the tailoring rule, these state PSD provisions will no longer be enforceable as a
matter of federal law. But, as EPA specifically states, the 100/250 tpy state thresholds
and the zero state significance levels for CO2 will remain in effect as a matter of state
law. Moreover, EPA says it will not issue a SIP Call, impose a Federal Implementation
Plan, or take any other action that will require states to change their current thresholds
and significance levels. Thus, absent state action to revise their PSD regulations, the
regulatory gridlock that EPA predicts without the tailoring rule will occur anyway.
[OAR-2009-0472-7223.1, p.5]
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EPA Response to Comments
EPA seems to be counting on the states' unilaterally revising their PSD regulations, but
EPA does not allow them any time to do so before GHGs become regulated pollutants
triggering PSD and Title V requirements. Many states could take a year or more to
change their regulations, and many require either legislative approval or legislative
review of some kind. In the meantime, the regulatory gridlock that EPA predicts - for
both large and small sources - will be a reality. Of course, EPA could defer the
effectiveness of the motor vehicle rule until states have taken the necessary action, but
that is not what EPA proposed in the tailoring rule. Under the regulatory structure EPA
proposes to implement, a very large number of sources, both large and small, will
become subject to PSD GHG requirements when the motor vehicle rule goes into effect,
with the resulting regulatory quagmire, and that quagmire will abate only if and when
most states amend their PSD rules. And indeed, since EPA will not compel states to
change their rules, and instead takes the position that states can set any thresholds and
significance levels below 25,000 tpy CO2e that they want, there is no assurance that
states will in fact make the necessary changes. [OAR-2009-0472-7223.1, p.5]
The impact of this state of affairs will ripple through the economy. As permitting comes
to a stop because of an overwhelmed permit system, or because of uncertainty as to
applicable regulatory requirements, construction activity for new projects and for a
variety of building and facility expansions and upgrades will be forced to cease. This may
not be the result that EPA. [OAR-2009-0472-7223.1, p.5]
EPA cannot validly argue that it is not responsible for analyzing the costs of BACT
controls for major source GHG emissions because of the state role in developing BACT
requirements
States that administer their own PSD programs undoubtedly play a significant role in
determining BACT controls for major source emitters. But that fact does not relieve EPA
of the obligation to examine the likely costs of GHG BACT controls that will be made
necessary as a result of EPA's decision to regulate GHG emissions from motor vehicles.
[OAR-2009-0472-7223.1, p.9]
As confirmed by the Supreme Court, although states have discretion in making BACT
determinations, that discretion is ultimately controlled and circumscribed by EPA. As
required by the CAA, the Agency promulgated regulations requiring states that
administer their own PSD programs to submit those programs to EPA for approval as a
part of their SIPs. EPA may disapprove a state's PSD SIP and/or prevent construction of
a project subject to PSD if a state, in EPA's view, incorrectly applies BACT
requirements. According to the Court, EPA's authority "extends to ensuring that a state
permitting authority's BACT determination is reasonable in light of the statutory
guides." [OAR-2009-0472-7223.1, p.9]
Thus, since it is EPA that is triggering the GHG BACT requirement by promulgating the
motor vehicle GHG rule, and since it is EPA's responsibility to ensure that states are
conforming to the statutory BACT requirements that EPA is triggering, it is EPA's
obligation to assess the resulting economic consequences. Although EPA at this time
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Other Comments
perhaps cannot know exactly how stringent state B ACT determinations will be, it can
make reasonable assumptions both as to its own minimum requirements and as to likely
states requirements. [OAR-2009-0472-7223.1, p.9]
SCANA Corporation
Either EPA has failed to evaluate the number of sources that could be affected once the
Light-Duty Vehicle GHG Standards go into effect carefully, or it has recklessly
disregarded the substantial, negative impacts. It would appear that EPA has grossly
underestimated the number and types of facilities that will be impacted by the light-duty
vehicle GHG proposal by making them subject to PSD pollutants and the Title V and
PSD permitting requirements . The South Carolina Department of Health and
Environmental Control (SCDHEC) has identified over 800 of [OAR-2009-0472-7316,
p. 1] the currently permitted small sources that they project would become subject to Title
V and PSD permitting by virtue of the triggering provision as soon as GHGs become
regulated under Light- Duty Vehicle GHG Standards. South Carolina currently has 281
Title V permitted facilities. Did EPA evaluate the effects of a tripling of the number of
Title V permitted facilities, in South Carolina alone, including the resources required to
process them? We are being told to prepare for a three year permitting process, assuming
resources are available. In addition to this impact, even the most minor modification or
expansion activity may trigger a Prevention of Significant Deterioration (PSD)
technology review and modeling analysis. And the technology review would encompass
all of the triggered PSD pollutants, not just GHG. [OAR-2009-0472-7316, p.2]
The GHG Tailoring rule is ill suited to address the problems caused when the Light-Duty
Vehicle GHG Standards trigger the Title V and PSD permitting requirements. EPA must
acknowledge that the GHG Tailoring rule may not even be in place at the time that EPA
finalizes the Light-Duty Vehicle GHG Standards. EPA has stated clearly its intent to
finalize the Light- Duty Vehicle GHG Standards by the end of March 2010. The public
comment period on the GHG Tailoring rule ends on December 28, 2009. EPA
undoubtedly will receive thousands of comments on the GHG Tailoring rule. It would be
sheer folly to assume that it can consider and resolve those comments and finalize the
rule in only three months, at least if EPA plans to conduct an honest and meaningful
review of comments. No doubt, it will be a monumental task for EPA to review
adequately all of the comments and make necessary, meaningful, and responsive
revisions to the proposed rule. [OAR-2009-0472-7316, p.2]
Recommended Alternative: EPA should not establish GHG emission limits under Section
202(a) of the Clean Air Act. Instead, EPA and NHTSA should simply work together to
establish fuel economy standards that accomplish the desired goals of substantial
reductions in GHG emissions and improvements in fuel economy. If this simple and
direct approach were taken, the other sections of the Clean Air Act (specifically Title V
permitting and PSD permitting) would not be triggered. [OAR-2009-0472-7316, p.3]
[See Docket Number OAR-2009-0472-7316, pp. 1-3 for detailed comments]
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EPA Response to Comments
Sierra Research Inc.
[Sierra Research Inc. Submitted Docket Number OAR-2009-0472-7977.1 as a comment
attachment regarding the NHTSA Proposal for Average Fuel Economy Standards
Passenger Cars and Light Trucks Model Years 2011-2015, Sierra Research, Inc., June 27,
2008. No other comment document from Sierra Research Inc. was received.]
South Carolina Chamber of Commerce
Specifically, EPA has failed to carefully evaluate the number of sources that could be
affected once the Light-Duty Vehicle GHG Standards go into effect. We feel that EPA
has grossly underestimated the number and types of facilities that will be impacted by the
light-duty vehicle GHG proposal by becoming subject to NSR pollutants and the Title V
and NSR permitting requirements. While we continue to evaluate the specific impact to
currently permitted South Carolina (SC) sources and will make comment to this effect to
the 'tailoring rule,' South Carolina Department of Health and Environmental Control
(SCDHEC) has identified over 800 of the currently permitted small sources that would
become subject to Title V and NSR permitting as soon as GHGs are regulated under
Light-Duty Vehicle GHG Standards. In comparison, SC currently has 281 Title V
permitted facilities. In addition to this impact, even the smallest modification or
expansion activity may trigger a Prevention of Significant Deterioration (PSD)
technology review and modeling analysis. The technology review would encompass all
of the triggered NSR pollutants, not just GHG. Economically, these facilities would have
no choice but to abandon any new project or modification. It is interesting to note that
many of these [OAR-2009-0472-7298, p. 1] facilities would be subject to NSR and Title
V permitting requirements because of natural gas combustion, which is considered to be a
clean burning fuel. In addition, we would expect new construction to halt because of
these new requirements. [OAR-2009-0472-7298, p.2]
EPA must not rely upon the GHG Tailoring rule to address the fact that the Light-Duty
Vehicle GHG Standards trigger the Title V and NSR permitting requirements.
Furthermore, EPA must acknowledge that the GHG Tailoring rule may not be in place at
the time that EPA finalizes the Light-Duty Vehicle GHG Standards. EPA has clearly
stated its intent to finalize the Light-Duty Vehicle GHG Standards by the end of March
2010. The public comment period on the GHG Tailoring rule ends on December 28,
2009. EPA is expected to get thousands of comments on the GHG Tailoring rule and it
would have only three months to address those comments and finalize the rule. This
appears to be a monumental task if EPA is going to adequately review all of the
comments and make necessary revisions to the proposed rule in response to critical
comments received. [OAR-2009-0472-7298, p.2]
EPA clearly believes that promulgation of the proposed Section 202(a) GHG rule will be
extremely costly and a regulatory burden as evidenced by its preemptory promulgation of
the Tailoring Rule. EPA explicitly states that the Tailoring Rule was promulgated for the
sole purpose of addressing the paralyzing costs that would be borne by stationary sources
in the wake of GHG regulation under Section 202(a). EPA notes in the Tailoring Rule
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Other Comments
that as soon as the Section 202(a) GHG rule is finalized, 'GHGs subject to regulation
under that rule would become immediately subject to regulation under the PSD program.'
If EPA had conducted a proper impact analysis of the proposed Section 202(a) GHG rule,
it would have included an assessment of the obvious burdens that would be placed on
stationary sources via the PSD permitting trigger. EPA cannot simply extricate portions
of its cost analysis in order to provide a rule that is more economically feasible. Such an
approach is arbitrary and does not provide the minimal required support for EPA's rule.
[OAR-2009-0472-7298, p.2]
The SC Chamber of Commerce believes that many existing facilities will need new Title
V or PSD permits to replace, repair or improve the efficiency of aging equipment,
including energy efficiency projects. Permitting delays will force facilities to evaluate the
possibility of shutting down domestic operations and relocating to beyond the United
States borders. Furthermore, small businesses, such as asphalt and concrete batch plants,
metals manufacturing, the remaining textile industry, food packaging, wood products,
even hospitals will be subject to many more requirements than they currently are (not just
GHGs but also all other NSR pollutants). It will be significantly more costly for them to
receive a permit and they will experience significant permit delays, discontinued
construction and loss of jobs. This permitting process will grind economic development
and industrial growth to a halt causing adverse consequences to an already struggling
economy. [OAR-2009-0472-7298, p.3]
[See Docket Number OAR-2009-0472-7298, pp. 1-3 for detailed comments]
South Carolina Department of Health and Environmental Control
It is critical that all potentially effected entities understand the impact of EPA regulating
greenhouse gas emissions under the light-duty vehicle proposal. It will be too late to
address any concerns that stationary (industrial) sources have in the 'tailoring rule' as they
will already be subject to PSD, as defined in the Clean Air Act, once EPA regulates
greenhouse gases from light-duty vehicles. There are fundamental issues related to the
'tailoring rule,' and EPA's continued message of the 'absurd results' and 'administrative
burden' of not moving forward with a 'tailoring rule' only confuses the real situation as
the thresholds being proposed are 'illegal' under the Clean Air Act and violate many state
laws across the country. Any permit issued with thresholds higher than those within the
Clean Air Act and current state laws would be vulnerable to appeal and litigation, even
though EPA attempts to justify the tailoring rule by saying that by not doing so would
create results 'so illogical or contrary to sensible policy as to be beyond anything that
Congress could reasonably have intended.' We do not understand how EPA could know
this and not also know that there is no guarantee their legal interpretation to exempt small
sources or set different thresholds in the tailoring rule will not be challenged or if
challenged, upheld in court. We are very concerned with EPA moving forward in this
direction.
Again, we have significant concerns about the collateral effects of EPA moving forward
at this time to regulate greenhouse gas emissions from light-duty vehicles. EPA must
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EPA Response to Comments
fully evaluate the collateral impact this proposal would have on all other aspects of the
Clean Air Act including, but not limited to, the impact on state and local air permitting
authorities, business, industry and the economy to all areas of the country, but in
particular states like South Carolina who still employ many people in the manufacturing
sector. As they have not fully evaluated the impact to state and local permitting
authorities, EPA has not met the requirements under the Unfunded Mandates Reform Act
of 2005 for the light-duty vehicle GHG proposal. EPA even states in the tailoring rule for
stationary sources, 'State permitting authorities would be paralyzed by permit
applications in numbers that are orders of magnitude greater than their current
administrative resources could accommodate' yet they have not taken this into
consideration in the light-duty vehicle greenhouse gas proposal.
Finalizing this proposal would have a detrimental effect on our state's economy at a time
when unemployment is currently at 12.1% and is only expected to increase. Once EPA
'regulates' greenhouse gas emissions from mobile sources, the Clean Air Act requires that
stationary sources be regulated under the threshold requirements as specified within the
Clean Air Act -regardless of any 'tailoring rule' EPA develops -as those thresholds are
specified within federal law. States and local permitting authorities are wholly
unprepared for the millions of entities who will be required to comply with the Clean Air
Act once greenhouse gas standards are set by EPA on light-duty vehicles. Bottom line,
the permitting process will become so backlogged as to create a permitting moratorium.
New business and industry will not be built; existing business will not expand; and,
existing business and industry will not repair equipment if such repairs would require a
permit. Again, detrimental effects and unintended consequences with the minimum
environmental benefit that would occur from EPA greenhouse gas standards on light-duty
vehicles, as almost all of the environmental benefit comes from NHTSA's CAFE
standards.[OAR-2009-0472-7202.1, p.3]
Again, we ask that EPA not move forward until further review and understanding of the
full collateral impact of regulating greenhouse gases from tailpipes is completed and
appropriate public participation is allowed. We also challenge EPA to take this
opportunity to develop a well thought out, comprehensive, holistic, common sense
approach to air quality management that focuses on environmental results and not
process. [OAR-2009-0472-7202.1, p.6]
In summary the commenter is concerned about detrimental effect on state's economy,
budget shortfalls and extra work load related to permitting.
South Carolina Manufacturers Alliance (SCMA)
ACCORDING TO EPA'S OWN LEGAL ANALYSIS, GHGS ARE NOT CURRENTLY
POLLUTANTS 'SUBJECT TO REGULATION UNDER THE CAA
As evidenced by EPA's legal analysis in its recently proposed rule reconsidering the
December 18, 2008 'PSD Interpretive Memo', and supported by historic Agency practice
and decisions of EPA officials, GHGs are not pollutants that are currently 'subject to
regulation' under the CAA. EPA has long held that for a pollutant to be 'subject to
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Other Comments
regulation' there must be actual control measures and not mere monitoring or reporting
requirements. [OAR-2009-0472-7296, p.2]
Although GHGs are not currently 'subject to regulation' under the CAA, once EPA
finalizes a rule to regulate GHG emissions under CAA Section 202, legal arguments can
be made that other CAA regulatory requirements will be triggered, thus affecting
stationary source CAA compliance. Due to the strong possibility that EPA could be
legally compelled to regulate GHG emissions from stationary sources as a result of this
regulation, it is unreasonable and arbitrary for EPA to not analyze impacts on the tens of
thousands of sources that could be required to limit their GHG emissions. EPA has failed
to conduct a proper impact analysis. [OAR-2009-0472-7296, p.l] Such an analysis would
identify the significant burdens the rule would place on stationary sources and the
resulting impact on jobs and the nation's economy. The CAA is not an appropriate
vehicle to regulate GHGs and such a task is better left for the members of U.S. Congress
to address. [OAR-2009-0472-7296, p.2]
[See Docket Number OAR-2009-0472-7296, p.2 for detailed comments]
IF GHGS ARE REGULATED UNDER SECTION 202 OF THE CAA, IT IS LIKELY
THAT OTHER REGULATORY REQUIREMENTS WILL BE TRIGGERED [OAR-
2009-0472-7296, p.2]
There are strong legal arguments that indicate that if the proposed Section 202(a) GHG
rule is finalized it will generate an array of other regulatory requirements. Specifically, it
is likely that regulation of GHGs under Section 202 will trigger requirements under the
Prevention of Significant Deterioration (PSD) program. This is acknowledged by EPA in
a proposed rule published in the Federal Register on October 27, 2009 (Prevention of
Significant Deterioration and Title V Greenhouse Gas Tailoring Rule; Proposed Rule)
(the Tailoring Rule). In the opening paragraphs of the Tailoring Rule, EPA notes that that
once GHGs are regulated under Section 202(a) PSD permitting requirements will
immediately apply to stationary sources emitting GHGs above the significance threshold.
[OAR-2009-0472-7296, p.3]
[See Docket Number OAR-2009-0472-7296, p.3 for detailed comments]
EPA HAS FAILED TO CONDUCT AN ADEQUATE ANALYSIS OF THE IMPACTS
THAT THIS MOBILE SOURCE GHG RULE WILL HAVE ON STATIONARY
SOURCES
EPA has failed to conduct a complete analysis of the impacts associated with regulating
GHGs under Section 202(a) of the CAA. EPA has openly acknowledged that the
promulgation of standards to control GHG emissions from light-duty motor vehicles
under Section 202(a) will inevitably trigger PSD permitting requirements for stationary
sources; nonetheless, EPA has not included in this proposal an impact analysis that
addresses the effect this rule will have on stationary sources. This represents a major flaw
in the proposed rule. [OAR-2009-0472-7296, p.3]
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EPA Response to Comments
SCMA strongly requests that EPA not proceed with finalizing the proposed Section
202(a) GHG rule because the proposed rule will trigger other regulatory requirements,
and EPA has failed to conduct a proper impact analysis . This rule and the other recent
GHG regulatory proposals combined demonstrate clearly that EPA should defer action to
allow the U.S. Congress to settle on a national approach through comprehensive
legislation that is economy-wide, which will have a better chance of balancing the
economy-altering changes that the proposed finding will ultimately bring. [OAR-2009-
0472-7296, p.4]
[See Docket Number OAR-2009-0472-7296, pp.3-4 for detailed comments]
South Carolina Pulp & Paper Association (SCPPA)
SCPPA believes that EPA has tremendously underestimated the number and types of
facilities that will be impacted by the light-duty vehicle GHG proposal (i.e., residential
home heating gas-fired furnaces above 0.5 million BTU/hour would trigger the major
source thresholds for GHGs). We question whether EPA has adequately evaluated the
consequences and collateral impacts of the proposed rule and request that EPA delay any
action until further analysis and understanding of these impacts has been completed.
[OAR-2009-0472-7479, p.l]
Even the smallest modification, energy efficiency project, or expansion activity at our
facilities could trigger a Prevention of Significant Deterioration (PSD) technology review
and modeling analysis. The technology review would encompass all of the triggered NSR
pollutants, not just GHG. Economically, our facilities may have no choice but to abandon
any new project or modification. [OAR-2009-0472-7479, p.l]
EPA must not rely upon the GHG Tailoring rule to address the fact that the Light-Duty
Vehicle GHG Standards trigger the Title V and NSR permitting requirements. While this
sort of rule would reduce the impacts of EPA's adoption of the GHG tailpipe standards to
a degree, the impacts on businesses and regulatory authorities would still be dramatic,
and they would be a direct result of the proposed GHG tailpipe standards for which EPA
has never completed a statutorily required impact analysis. Furthermore, EPA must
acknowledge that the GHG Tailoring rule may not be in place at the time that EPA
finalizes the Light-Duty Vehicle GHG Standards, or may be rejected by the court as
arbitrary and capricious and beyond EPA's Clean Air Act authority. [OAR-2009-0472-
7479, p.2]
SCPPA believes that many existing facilities will need new Title V or PSD permits to
operate, replace, repair or improve the efficiency of aging equipment, including energy
efficiency projects. Permitting delays will force facilities to evaluate the possibility of
shutting down domestic operations and relocating outside the United States. Furthermore,
our smaller wood products facilities will be subject to many more requirements than they
currently are (not just GHGs but also all other NSR pollutants). It will be a significant
cost for them to receive permits and they will experience significant permit delays,
discontinued operation, and loss of jobs. This permitting process will grind economic
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Other Comments
development and industrial growth to a halt causing adverse consequences to an already
struggling economy. [OAR-2009-0472-7479, p.2]
Recommendation
SCPPA believes that EPA should not establish GHG emission limits under Section
202(a) of the Clean Air Act. EPA should take into consideration that the new NHTSA
CAFE standards accomplish the goals of the Light-Duty Vehicle GHG Standards and
EPA should not finalize any GHG emission standards under the authority of the Clean
Air Act. Virtually all of the GHG emission reductions required by the Light-Duty Vehicle
GHG Standards come from the improvement to NHTSA's CAFE standards. Therefore,
the additional EPA regulation comes at an enormous cost with virtually no additional
environmental benefits. [OAR-2009-0472-7479, p.2]
Southeastern States Air Resource Managers, Inc. (SESARM)
We do, however, have significant concerns with the subject rule as currently proposed,
primarily due to expected impacts from it triggering other sections of the Clean Air Act,
specifically New Source Review (NSR) and Title V permitting. We do not believe that
EPA has thoroughly examined these impacts. We further do not believe that EPA has
adequately evaluated the options for minimizing, or avoiding, these collateral impacts.
Our concerns are described herein along with recommended changes that will still
produce the intended results of the proposed rule while minimizing or avoiding these
collateral impacts. [OAR-2009-0472-7137.1, p.2]
EPA must evaluate, as a part of this rulemaking, whether or not other sections of the
Clean Air Act will be triggered by this rule. If so, EPA must evaluate as part of this
rulemaking the impacts of such triggering. Our understanding is that this rulemaking is
the action that will trigger future requirements for permitting of GHGs under the NSR
and Title V programs. However, in the proposed rule, EPA actually suggested that "small
entities" should not comment on the triggering issue in this rulemaking, but should
instead submit comments on the proposed "Prevention of Significant Deterioration and
Title V Greenhouse Gas Tailoring Rule" (GHG Tailoring Rule). 1 We believe that EPA
was in error to suggest this point and that it may inappropriately influence small entities,
other affected sources, and permitting agencies to refrain from commenting on an
important rulemaking. The EPA GHG Tailoring Rule is a wholly independent rulemaking
from the Light-Duty Vehicle GHG Standards Rule. The GHG Tailoring Rule does not
trigger the NSR and Title V permitting requirements; the Light-Duty Vehicle GHG
Standards Rule does. [OAR-2009-0472-7137.1, p.2]
EPA failed to take into account in the Light-Duty Vehicle GHG Standards Rule the
length of time that it may take for permitting authorities with SIP-approved NSR
programs to go through rulemaking (which requires approval of state legislatures in some
cases), hiring, and training in order to implement the mandate of regulating GHG
emissions under the NSR and Title V permitting programs. [OAR-2009-0472-7137.1,
p.2]
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EPA Response to Comments
The GHG Tailoring Rule appears to be legally vulnerable and may not provide intended
relief from the NSR Prevention of Significant Deterioration (PSD) and Title V statutory
permitting thresholds. If the GHG Tailoring Rule is not finalized in time or is stayed or
vacated by the courts, the workload for permitting authorities will increase exponentially
at a time when state and local governments are experiencing severe budgetary challenges
due to the current economic climate. [OAR-2009-0472-7137.1, p.3]
EPA has failed to evaluate and quantify fully the effects of the proposed Light-Duty
Vehicle GHG Standards Rule on state and local air permitting authorities. More
specifically, EPA does not appear to have complied fully with the Unfunded Mandates
Reform Act of 1995. EPA states in the preamble that this rule only affects manufacturers
of cars and light trucks. However, the proposed rule, if finalized as currently proposed,
has the potential to affect state and local air permitting authorities immensely because it
would cause GHG emissions to become regulated under the NSR and Title V permitting
programs. The proposed rule does not take this into account. The potential impact to state
and local air permitting authorities is unprecedented and enormous. [OAR-2009-0472-
7137.1, p.3]
EPA claims that the proposed Light-Duty Vehicle GHG Standards Rule imposes no
enforceable duty on any state, local or tribal governments. While the rule may not impose
duties on governments as regulated entities, the negative impact of the rule on state and
local permitting agencies cannot be overemphasized. As stated previously, the GHG
Tailoring Rule acknowledges that state permitting authorities will be "paralyzed" by the
workload created by the triggering of the NSR and Title V permitting provisions for
GHG emissions. [OAR-2009-0472-7137.1, p.4]
In the final Light-Duty Vehicle GHG Standards Rule, EPA should avoid or minimize the
impacts of the triggering effect. EPA can accomplish the goals of this rule without
triggering NSR and Title V permitting. [OAR-2009-0472-7137.1, p.4]
Virtually all of the GHG emission reductions required by the proposed Light-Duty
Vehicle GHG Standards Rule will come from improvements in NHTSA's CAFE
standards. EPA acknowledges that the only way to reduce CO2 emissions from light-duty
vehicles is to increase fuel economy and that there are no emission control technologies
that reduce CO2 emissions from light-duty vehicles. EPA states in the proposed rule that
N2O and CH4 emissions are low and that the proposed rule is not designed to require
technology to reduce emissions of these compounds. EPA then justifies the inclusion of
the proposed emission standards with a seemingly conflicting statement that the agency is
concerned about those emissions increasing in the future. Because of the enormous
collateral consequences of regulating GHG emissions under the Clean Air Act at this
time and because the proposed rule does not require reductions of N2O or CH4
emissions, EPA should not finalize emission standards for N2O or CH4 as part of this
rulemaking. [OAR-2009-0472-7137.1, p.5]
As an alternative, should EPA promulgate GHG emission limits under Section 202(a) of
the CAA, it may be possible to defer regulation of GHG emissions until the first vehicle
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Other Comments
model year required by the Light-Duty Vehicle GHG Standards Rule. [OAR-2009-0472-
7137.1, p.5]
Spurgeon, C. M.
To make matters worse, these regulations would start a regulatory cascade. EPA would
start regulating emissions from millions of sources, including large buildings, churches,
sports arenas, office buildings, farms, schools, hospitals—you name it. EPA will be
forced to regulate greenhouse gases with many sections of the Clean Air Act, including
sections 108, 111, and 112. This will further harm our economy, reduce American jobs,
and worsen our employment situation. NHTSA already has the ability to regulate fuel
economy without EPA further harming the economy. [OAR-2009-0472-7092.1, p. 2]
Stanton, Neil
To make matters worse, these regulations would start a regulatory cascade. EPA would
start regulating emissions from millions of sources, including large buildings, churches,
sports arenas, office buildings, farms, schools, hospitals—you name it. EPA will be
forced to regulate greenhouse gases with many sections of the Clean Air Act, including
sections 108, 111, and 112. This will further harm our economy, reduce American jobs,
and worsen our employment situation. NHTSA already has the ability to regulate fuel
economy without EPA further harming the economy. [OAR-2009-0472-10169, p.2]
Texas Chemical Council (TCC)
TCC opposes EPA's promulgation of the proposed light-duty vehicle rule because of
significant concerns with the rulemaking process with respect to EPA's failure to perform
an adequate review and analysis of the regulatory burdens and costs of this proposed
rulemaking thereby depriving the public the opportunity to comment. In addition, we
believe that the CAA was not designed, nor is it functionally suited, for the regulation of
GHG emissions from mobile or stationary sources. Furthermore, moving forward with
the rule is unnecessary since the corporate average fuel economy (CAFE) standard
proposed by the National Highway Traffic Safety Administration will accomplish the
same environmental benefits, but without the administrative and permitting burden that
regulation of GHGs under the CAA is sure to cause. Finally, any regulation of
GHG emissions under the CAA would harm the economic viability or the Texas
chemical industry. [OAR-2009-0472-7290, p.2]
The Proposed Rule Contains Significant Procedural Deficiencies
In the proposed § 202 rulemaking, EPA considers the impact of the proposal on car and
truck manufacturers, but provides insufficient review and analysis of the impact of this
rule on stationary sources. The following statutes and Executive Orders require EPA to
fully and transparently consider all regulatory costs and impacts of its proposed rules:
Paperwork Reduction Act, Regulatory Flexibility Act, Unfunded Mandates Act, and
Executive Orders 12866 (regulatory planning and review), 13132 (federalism
implications), 13175 (coordination with Indian tribal governments) and 13211 (impacts
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EPA Response to Comments
on energy use, supply and distribution). In the proposed rule, EPA is legally required to
consider the full regulatory impact of its action on stationary sources and cannot rely on
other proposed rulemakings to provide that analysis. [OAR-2009-0472-7290, p.3]
[See Docket Number OAR-2009-0472-7290, pp.2-3 for detailed comments]
The CAA was Not Designed for the Regulation of GHG Emissions
TCC strongly believes that the CAA is not the appropriate tool for regulating GHG
emissions from mobile or stationary sources. Furthermore, there is no compelling reason
- legal or otherwise - for EPA to proceed down this road at this time. In the
Massachusetts decision, the Court gave EPA wide flexibility in the manner, timing,
content and coordination of it regulations. Particularly in light of the fact that the U.S.
House of Representatives has passed GHG cap-and-trade legislation, and the U.S. Senate
is deliberating similar legislation, EPA should wait for Congress to proceed before it
swiftly moves to regulate GHG emissions under a permitting mechanism that was not
constructed, nor intended, to tackle the regulation of the vast number of sources that emit
GHGs.
[See Docket Number OAR-2009-0472-7290, pp.3-6 for detailed comments]
Regulation of GHG Emissions under the CAA Would Harm the Texas Chemical Industry
The Texas chemical industry is a leader in our state's economy. Our industry provides
almost 600,000 direct and indirect jobs to Texans across the state. These jobs generate
$27.3 billion in earnings. The chemical industry has invested more than $50 billion in
physical assets in the state and pays over $1 billion annually in state and local taxes.
Chemicals are also the state's number one export at over $30 billion annually. The
products manufactured in Texas account for 60% of the U.S. chemical production, which
go into millions of consumer products and many of which go into energy-efficient, high
performance technologies and products for Texas and the rest of the nation, such as
insulation, wind and solar power equipment, lightweight vehicle parts, compact
fluorescent light bulbs and energy-efficient appliances. [OAR-2009-0472-7290, p.6]
[See Docket Number OAR-2009-0472-7290, pp.6-8 for detailed comments]
Texas Cotton Ginners Association
The proposed Tailoring Rule is based on the assumption that the act of regulating GHG
emissions from automobiles under the clean air act will trigger regulatory requirements
affecting stationary sources of GHG emissions. In supporting documents for the Tailoring
Rule, EPA estimates that without the Tailoring Rule, over 6 million stationary sources
will become subject to Title V permitting requirements, at a cost of over 38 billion
dollars.
It would seem logical that if the analysis in the Tailoring rule is correct, then the
additional cost burden for stationary sources should be reflected in the economic analysis
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Other Comments
for this docket. To the best of our knowledge, the impact of this rulemaking on stationary
sources was not considered.
The proposed Tailoring Rule uses the doctrine of'absurd results' as a portion of the
justification for the proposed rule. It would appear that the origin of the 'absurd result' lies
in this very docket, and the solution to the 'absurd result' is achievable in this docket
without significant loss of GHG reduction benefits. [OAR-2009-0472-7081.1, pp. 1-2]
Texas Department of Agriculture
I am specifically concerned that the GHG provisions included in the motor vehicle
proposal may impose Prevention of Significant Deterioration (PSD) and Clean Air Act
Title V permitting requirements on a host of stationary sources . In the proposed PSD
tailoring rules, EPA estimates that nationwide 'small sources' will be subject to
approximately $38 billion in permitting costs under the Title V program. [OAR-2009-
0472-7300, p. 1]
Texas Industry Project (TIP)
Global climate change is a serious issue that is best addressed through concerted
international action and/or comprehensive federal legislation, rather than through
unilateral agency regulation under the current Clean Air Act ("CAA" or the "Act"). Not
only did the Supreme Court make clear in Massachusetts v. EPA that the U.S.
Environmental Protection Agency ("EPA" or the "Agency") has substantial discretion
regarding the timing of any rules, but the Court of Appeals for the District of Columbia
("D.C. Circuit") subsequently denied a petition to compel EPA action in response to
Massachusetts v. EPA. [OAR-2009-0472-7430.1, p. 1]
More importantly, Congress is moving forward quickly on comprehensive legislation that
would address the problem of climate change outside of the structure of the current Act.
Despite a clear need to proceed with the utmost caution in this important area, EPA has
proposed to regulate GHG emissions from motor vehicles in the Proposed Rulemaking to
Establish Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate
Average Fuel Economy Standards (the "Motor Vehicle GHG Rule"). Under EPA's
current interpretation of the CAA, the Motor Vehicle GHG Rule may (as EPA has stated
in the Proposed PSD and Title V GHG Tailoring Rule (the "PSD Tailoring Rule") trigger
regulation of GHG emissions from millions of stationary sources, including hundreds of
thousands of Texas sources, many of which have never before been regulated under the
Clean Air Act ("CAA"). [OAR-2009-0472-7430.1, p. 1]
The Motor Vehicle GHG Rule, as well as its companion, the PSD Tailoring Rule, are
fundamentally flawed, both procedurally and substantively, and Texas, as the nation's
leading energy producer and a leader in chemical manufacturing and agriculture, could
be significantly impacted by these federal rulemakings. Most notably, EPA completely
failed to evaluate the burdens of triggering PSD and Title V for GHG emissions under the
required federal regulatory review statutes and Executive Orders. Furthermore, even had
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EPA Response to Comments
the Agency conducted the required burden analysis, the rule is unlawful, would devastate
the Texas and national economies, and the burdens of regulating GHGs under CAA
Section 202 far outweigh the insignificant environmental benefits of the GHG emission
standards. [OAR-2009-0472-7430.1, pp. 1-2]
Accordingly, for all of the reasons discussed in these comments, EPA should withdraw
the Motor Vehicle GHG Rule, and proceed with caution going forward by allowing both
the international community and Congress time to develop a comprehensive and sensible
approach to the global problem of climate change. [OAR-2009-0472-7430.1, p. 2]
[See OAR-2009-0472-7430.1, pp. 2-11 for comments related to PSD and NRS for
stationary sources in Texas. These comments include the following topics: A. The Motor
Vehicle GHG Rule Will Disproportionately Harm Texas, B. EPA Utterly Failed to
Account for these Devastating Impacts to Texas and the Entire U.S. in its Burden
Analysis of the Motor Vehicle GHG Rule, C. A Full Analysis of Actual Impacts on
Sectors Beyond Autos Would Demonstrate That the Rule Cannot be Justified—the
Burdens Associated with the Motor Vehicle GHG Rule Would Devastate the Texas
Economy, D. EPA Should Adopt a More Reasonable Interpretation of the Clean Air Act
Under which the Final Motor Vehicle GHG Rule Would Not Trigger PSD For Stationary
Sources, and E. Nothing Compels EPA to Action under Section 202 at this Time—the
Rule Provides Little or No Benefit and Produces Overwhelming Burdens.]
Texas Oil and Gas Association
Introduction
EPA's statement in the PSD Tailoring Rule that the Motor Vehicle GHG Rule will trigger
regulation of GHG emissions from millions of stationary sources has substantive
implications for TxOGA members. EPA claims that the PSD Tailoring Rule offers relief
and "lessens the regulatory burden" associated with regulating GHG emissions under the
ill-suited federal Clean Air Act ("CAA"). However, the proposed rule will actually
impose burdens on stationary sources, including sources operated by TxOGA members.
The PSD Tailoring Rule relies on questionable legal doctrines, rarely, if ever, relied on
by courts, violates a host of procedural statutes and executive orders, and is ineffective on
its face, as it fails to address PSD [OAR-2009-0472-11275.1, p.l] and Title V thresholds
in corresponding state rules. Accordingly, TxOGA recommends that EPA withdraw the
PSD Tailoring Rule and instead adopt a more rational interpretation of the CAA. [OAR-
2009-0472-11275.1, p.2]
[See docket number OAR-2009-0472-11275.1, p. 1&2 for detailed comments]
By Declining to Extend the Comment Periods for its GHG Rulemaking, EPA has
Deprived TxOGA of a Meaningful Opportunity to Comment on the Motor Vehicle GHG
Rule and the PSD Interpretive Reconsideration
On November 18, 2009, a group of trade associations led by the National Association of
Manufacturers ("NAM") submitted a request to EPA to extend the comment deadlines for
the Motor Vehicle GHG Rule, the PSD Interpretive Reconsideration, and the PSD
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Other Comments
Tailoring Rule. EPA denied NAM's request. As a result, and as explained in more detail
below, TxOGA has been deprived of an adequate opportunity to comment on the Motor
Vehicle GHG Rule and the PSD Interpretive Reconsideration. Accordingly, TxOGA
respectfully requests that EPA consider the instant comments on the PSD Tailoring Rule
timely filed in both of the other GHG Rulemaking dockets. [OAR-2009-0472-11275.1,
p.2]
[See docket number OAR-2009-0472-11275.1, p.2&3 for detailed comments pertaining
to: The Close-Timing of the GHG Rulemaking Precluded A Thorough and Sufficient
Analysis of the Rules and Public Notice Was Inadequate Regarding the Motor Vehicle
GHG Rule's Impacts on Stationary Sources]
EPA's Conclusion That PSD Is Automatically Triggered By the Motor Vehicle GHG
Rule Misinterprets the CAA
The PSD Tailoring Rule provides that PSD requirements will be triggered when the
Motor Vehicle GHG Rule is finalized. However, the Agency relies on two
questionable legal conclusions to support its factual findings that GHG emissions alone
can trigger PSD permit requirements and the conclusion that, absent an "administrative
necessity"-based regulatory relief rule, there will be 40,000 new PSD applications per
year. These conclusions are: [OAR-2009-0472-11275.1, p.3]
The CAA requires that GHGs, as regulated pollutants, be considered in determining
whether a source is a major source for purposes of PSD, even though there is no NAAQS
for GHGs; and [OAR-2009-0472-11275.1, p.3]
If a source is major for GHGs, it is therefore major for all other regulated pollutants - the
"major for one, major for all" policy that EPA has applied in the past to all but
nonattainment NSR pollutants under the program. [OAR-2009-0472-11275.1, p.3]
[See docket number OAR-2009-0472-11275.1, pp.3-7 for detailed comments pertaining
to: The CAA Limits PSD Applicability for GHGs to (1) Areas Designated as Attainment
or Unclassifiable Under a GHG NAAQS or (2) Sources that Require a PSD Permit Based
on Emissions of a Criteria Pollutant That Also Will Experience a Significant Increase in
GHG Emissions, Alabama Power Supports the Interpretation that a NAAQS is Required
as a Prerequisite to Regulation Under the Clean Air Act, and EPA Can Implement the
Proper Scope of PSD Applicability Under the Existing Regulations]
Alternatively, EPA Should Interpret the Term "Pollutants Subject to Regulation" to Refer
Only to Pollutants With Local or Regional Impacts
EPA should construe the phrases "any pollutant" in Section 169(1) and "any pollutant
subject to regulation" in Section 165(a) to refer only to conventional pollutants
whose emissions have regional or local impact, rather than any pollutant subject to
regulation under the Act. Such an interpretation would automatically exclude GHGs,
which are "global in nature because the GHG emissions emitted from the United States . .
. become globally well-mixed." In the PSD Tailoring Rule, EPA's own analysis—which
demonstrates that Congress could not have intended those CAA sections to require PSD
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EPA Response to Comments
applicability for GHGs, because, if they did, the number of sources requiring PSD
permits would rise to absurd and unanticipated levels— supports this interpretation. EPA
proposes only one solution to avoid the absurdity of triggering PSD for GHGs: rewriting
the statutory PSD and Title V applicability thresholds and significance levels. [OAR-
2009-0472-11275.1, p.7]
[See docket number OAR-2009-0472-11275.1, pp.7-8 for detailed comments]
The PSD Tailoring Rule is Not a Relief Rule and Requires a Full Regulatory Impacts
Analysis
The PSD Tailoring Rule avoids a full regulatory impacts analysis on the basis that the
Rule is a "relief rule." To the contrary, EPA's decision to interpret "subject to
regulation" such that motor vehicle emission standards will trigger PSD applicability for
40,000 new PSD permit applications and six million new Title V sources creates massive
burdens for stationary sources. TxOGA members will experience significant impacts,
including increased costs in complying with these new requirements and lengthy delays
and/or a complete shut-down of new projects and project-expansions due to the Texas
Commission on Environmental Quality's ("TCEQ's") inability to process the influx of
new PSD and Title V permit applications. These added costs of doing business and the
effective permit moratorium will result in lost jobs and lost profits for TxOGA
members. [OAR-2009-0472-11275.1, p.8]
[See docket number OAR-2009-0472-11275.1, pp.8-13 for detailed comments pertaining
to: Even if the PSD Tailoring Rule Offers Limited Relief for Small Sources of GHG
Emissions, EPA Must Account for the Remaining Substantial Burdens Imposed by the
Rule, By Failing to Assess Costs, the PSD Tailoring Rule Violates a Host of Statutes and
Executive Orders That Require Analysis and Public Review of Regulatory Burdens,
and The Burden Analysis for Title V was Deficient—EPA's Reliance on States' Ability
to Assess Permit Fees to Cover Additional Title V Permitting Costs is Contrary to the
Statute]
EPA Cannot Justify the Tailoring Rule Under the Limited and Narrow "Absurd Results"
or "Administrative Necessity" Doctrines [OAR-2009-0472-11275.1, p. 14]
[See docket number OAR-2009-0472-11275.1, pp. 14-16 for detailed comments
pertaining to: EPA's Reliance on the "Administrative Necessity" Doctrine is
Unsupported by Law and EPA has Misapplied the Doctrine of Absurd Results]
EPA's Tailoring Rule Is Facially Invalid Because It Proposes to Illegally Rewrite SIP and
Title V Approvals
To implement its proposed approach, EPA imagines a broad, multi-state SIP revision,
retroactively inserting new major source and modification thresholds into a majority of
the states' existing, approved SIPs. EPA is not suggesting that any state has asked for
such a revision. Instead, EPA is announcing an assumption—that states lack the resources
to implement EPA's view of the new challenge it is creating—and inserting into the
states' plans EPA's chosen approach to managing the challenge. EPA is rewriting the
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Other Comments
states' SIPs, an approach that turns on its head the structure that Congress established for
SIP planning. The implications of this approach would reach well beyond the current
issue, and would contravene settled law on the role of EPA and the states in SIP
planning. [OAR-2009-0472-11275.1, p. 17]
[See docket number OAR-2009-0472-11275.1, p. 17-19 for detailed comments pertaining
to: The PSD Tailoring Rule's Retroactive Re-interpretation of SIP and Title V Submittals
and Approvals That Occurred Years (and in Some Cases Decades) Ago Violates
Established CAA SIP Revision Procedures and is Unlikely to be Sustained by the Courts
and Even if EPA Could Accomplish the Reinterpretation of SIPs and State Title V
Programs Under Federal Law, the PSD Tailoring Rule Provides No Burden Relief
Because States Will be Obligated to Follow Adopted State Regulations and Apply the
100/250 Ton Thresholds]
If EPA Concludes that the CAA and PSD Must Apply to GHGs, EPA Cannot Choose
"Winners and Losers" Among Different Regulated Entities by Ignoring Clear CAA
Definitions. EPA's Decision to Set the Thresholds Between 10,000 and 25,000 Tons
CO2e/Year is Arbitrary and Capricious
Finally, EPA's selected major source thresholds of 25,000 tpy for PSD and Title V and
significance level of 10,000-25,000 tpy for PSD are arbitrary and capricious because
there is no health and/or welfare basis for these cut-offs. GHGs, such as CO2, are
distributed roughly equally throughout the global atmosphere. As a result, localized
emissions, unlike emissions of other pollutants currently regulated under the Act, have no
direct effect on the region that is the source of the emissions. This stands in sharp contrast
to the pollutants currently regulated under the CAA (e.g., ozone), which create local air
quality problems. Therefore, GHG emissions should be viewed on a global scale for
purposes of setting applicability thresholds and significance levels. [OAR-2009-0472-
11275.1,p.l9]
[See docket number OAR-2009-0472-11275.1, pp. 19-20 for detailed comments]
Finally, Nothing Compels EPA to Action under Section 202 at this Time—the Rule
Provides Little or No Benefit and Produces Overwhelming Burdens
EPA has clear legal authority to defer promulgation of Section 202 GHG emission
standards thereby avoiding the need for the PSD Tailoring Rule altogether, even now that
the Agency has proceeded to finalize the endangerment and cause or contribute findings
under CAA Section 202. Massachusetts v. EPA recognizes that EPA retains significant
discretion regarding timing of rules. And in fact, it would be arbitrary and capricious for
EPA to not exercise this discretion because the economic consequences of the Motor
Vehicle GHG and PSD Tailoring Rules are so disastrous, while the GHG emission
standards themselves will not yield any benefits distinct from the Department of
Transportation's ("DOT") proposed corporate average fuel economy ("CAFE")
standards. There are numerous compelling reasons to defer promulgating motor vehicle
GHG emission standards at this time. [OAR-2009-0472-11275.1, p.20]
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EPA Response to Comments
[See docket number OAR-2009-0472-11275.1, pp.20-21 for detailed comments
pertaining to: The Benefits of the Section 202 GHG Emission Standards Could be
Largely Achieved Through CAFE Standards Alone and Delaying Promulgation Would
Avoid 'Absurd' and 'Impossible' Results]
Utility Air Regulatory Group
Because EPA Has Not Established that Its Proposed Section 202(a) Rules Will Avert to
Any Significant Extent the Endangerment EPA Proposes To Find — and, to the Contrary,
Has Presented Information that Shows Those Rules Will Not Meaningfully Address That
Endangerment — EPA Lacks Any Statutory Basis for Promulgating Those Rules. [OAR-
2009-0472-7262.1, p.8. Full discussion on pp.8-10]
EPA's Proposed Motor Vehicle Rules Would Be Essentially Duplicative of NHTSA's
Proposed Standards and, in Any Event, the Projected Effects of the Joint Program Are
Too Slight To Fruitfully Attack Any Climate-Related Endangerment. [OAR-2009-0472-
7262.1, p. 11. Full discussion on pp. 11-16]
Agency Analyses of the Environmental and Economic Impacts Associated with the Joint
Motor Vehicle Proposal Are Either Entirely Absent or Substantially Deficient; EPA Must
Prepare Proper Analyses for Public Review and Comment If It Decides To Proceed with
This Rulemaking. [OAR-2009-0472-7262.1, p. 16. Full discussion on pp. 16-21]
EPA Must Take Into Account Reasons Why Promulgation of Final Section 202(a) Rules
for GHGs Should Not Trigger PSD and Title V Permitting Requirements. [OAR-2009-
0472-7262.1, p. 16. Full discussion on pp.21-24]
For all of the foregoing reasons, and those presented in UARG's other comments, EPA
must withdraw its proposed motor vehicle rules (and NHTSA should revise its
regulations, if necessary, to address this change). If EPA decides nevertheless to proceed
with its rulemaking, it must prepare and publish a supplemental notice of proposed
rulemaking that corrects the deficiencies in the proposed rules as described in these
comments.
Western Agricultural Processors Association
The Western Agricultural Processors Association submits these comments on behalf of
the tree nut processing industry in California. WAPA did not intend to participate in this
docket, as our primary focus relates to the effect of Greenhouse Gas (GHG) regulations
on stationary sources. For this reason, we had not spent much effort evaluating this
docket until the proposed Greenhouse Gas Tailoring Rule was filed on October 27, 2009.
The proposed Tailoring Rule is based on the assumption that the act of regulating GHG
emissions from automobiles under the clean air act will trigger regulatory requirements
affecting stationary sources of GHG emissions. In supporting documents for the Tailoring
Rule, EPA estimates that without the Tailoring Rule, over 6 million stationary sources
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will become subject to Title V permitting requirements, at a cost of over 38 billion
dollars.
It would seem logical that if the analysis in the Tailoring rule is correct, then the
additional cost burden for stationary sources should be reflected in the economic analysis
for this docket. To the best of our knowledge, the impact of this rulemaking on stationary
sources was not considered.
Proper consideration of the complete cost picture is very important in this docket. This is
especially true, considering that EPA could gain almost all of their GHG reductions from
Automobiles through NHTSA' s CAFE standards. It would seem that if EPA used the
CAFE standards to calculate GHG reductions, the GHG reductions would remain very
comparable, yet the regulatory burden on stationary sources could be avoided.
The proposed Tailoring Rule uses the doctrine of'absurd results' as a portion of the
justification for the proposed rule. It would appear that the origin of the 'absurd result' lies
in this very docket, and the solution to the 'absurd result' is achievable in this docket
without significant loss of GHG reduction benefits.
EPA should review the economic benefit of this rule, considering all costs; both those
currently in this docket, and those outlined in the proposed Tailoring Rule. In addition,
EPA should clearly evaluate the benefit of regulations solely based on CAFE standards.
Finally EP A should consider extending the comment period in this docket, considering
the significant additional costs discussed in the Tailoring Rule proposal. [OAR-2009-
0472-7140.1, p.l]
Wood, John
In addition, under this regulation, the EPA would have the authority to regulate not only
moving, but also stationary emitters of carbon dioxide. This would include almost
everything that releases carbon dioxide; obvious ones like factories, businesses, and
farms; and not-so-obvious ones, like schools, hospitals, and housing areas. This would
also allow the government to step in and control things which they are not meant to
control, such as churches or other places of worship. This regulatory cascade would
therefore allow the government to control almost every facet of our lives. [OAR-2009-
0472-7157.1, p.3]
EPA Response:
As indicated by the above comment summaries, EPA received numerous comments on
issues related to the impacts on stationary sources, due to the Clean Air Act's provisions
for permitting requirements related to the issuance of the GHG standards for new motor
vehicles. These comments fall into several categories of issues: 1) comments related to
EPA's interpretation of the CAA's provisions for subjecting stationary sources to permit
regulation after GHG standards are set; 2) comments suggesting that EPA should fully
assess (or had underestimated) the stationary source permitting impacts before finalizing
the GHG vehicle rule; 3) comments suggesting that EPA did not adequately consider the
permitting impact on small business sources; 4) comments suggesting that EPA should
defer setting GHG standards for new motor vehicles to avoid any stationary source
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EPA Response to Comments
permitting impacts; 5) comments stating that EPA failed to provide adequate public
notice under section 307(d) of the Clean Air Act and the Administrative Procedure Act;
and 6) comments related to the impacts on state and local air agencies in issuing
stationary source permits .
The first category of comments pertains to EPA's interpretation of the CAA's provisions
for when pollutants are "subject to regulation" for the purposes of the federal PSD
permitting program after this rule is promulgated. This issue is addressed in EPA's final
action on Reconsideration of Interpretation of Regulations that Determine Pollutants
Covered by Clean Air Act Permitting Programs ("permitting program interpretation"),
which was issued on March 29, 2010. Among other things, the Agency's final permitting
program interpretation explains that the PSD permitting requirements will not apply to a
newly regulated pollutant until a regulatory requirement to control emissions of that
pollutant "takes effect." In addition, the permitting program interpretation addresses
several questions regarding the applicability of the PSD and Title V permitting programs
to GHGs upon the promulgation of EPA regulations establishing limitations on emissions
of GHGs from vehicles under Title II of the CAA. As explained in the permitting
program interpretation, EPA has determined that PSD and Title V permitting
requirements will not apply to GHG emissions until at least January 2, 2011, which is the
earliest date by which model year 2012 vehicles meeting the proposed GHG standards
can be sold in the United States. This determination is consistent with the request made
by a number of commenters here, including the National Climate Coalition.
The second category of comments suggests that EPA must fully assess the permitting
impacts on stationary sources, including its estimates of how many sources are likely to
be subject to GHG permitting requirements. These are issues that EPA is addressing in
developing its final action on the proposed Prevention of Significant Deterioration and
Title V Greenhouse Gas Tailoring Rule, 74 FR 55292 (October 27, 2009) ("Tailoring
Rule"). The various comments on consideration of the economic impacts of the PSD
permitting provisions fail to recognize that any analysis of such impacts would not aid
EPA in determining what GHG standards to adopt in this rulemaking. Impacts on
stationary source are not related to any of the issues EPA needs to consider and decide in
determining the content of the GHG standards that will apply to automobile
manufacturers. The same response applies to those commenters stating that EPA must
assess impacts on stationary sources in this rule if it is promulgated before the tailoring
rule. Analyses of indirect impacts on stationary sources are not legally relevant to the
standard setting issues under consideration in this rule. Moreover, as noted above, EPA
has determined in the permitting program interpretation that GHGs will not be air
pollutants "subject to regulation" earlier than January 2, 2011, consistent with the GHG
control requirements finalized in this rule. In addition, EPA plans to finalize the
Tailoring Rule in the very near future, and the final Tailoring Rule will address the
applicability of PSD requirements for GHG-emitting stationary sources that are not
presently subject to PSD permitting. EPA addresses below the separate issue of whether
EPA should delay issuance of this rule because of concerns raised over PSD and Title V
permitting.
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The third category of comments, relating to small business impacts, is addressed in
Section 5.14 of this Response to Comments document, including EPA's response to
comments regarding compliance with the Regulatory Flexibility Act. As stated in that
response, EPA is certifying that the rule does not have a significant impact on a
substantial number of small entities after considering the impacts of the regulatory
requirements contained in this final rule, on the small entities directly subject to the rule.
Accordingly, EPA is able to certify this rule under the RFA because small entities are
exempt from regulation under the rule. As explained in that response, this rulemaking is
limited to issues involved in setting emissions standards for large motor vehicle
manufacturers, and EPA would not be able to account for any potential indirect impacts
from separate statutory requirements on entities not directly subject to or impacted by this
rule. Accordingly, because the RFA requires the agency to look only at the "small entities
to which the proposed rule will apply" and small entities "subject to the requirement" of
the specific rule in question, 5 U.S.C. § 603(b), the RFA does not apply to small entities
indirectly affected by the regulation of other entities.
The fourth category of comments suggested that EPA should defer setting GHG
standards for new motor vehicles to avoid such stationary source permitting impacts.
EPA is issuing these final GHG standards for light-duty vehicles as part of its efforts to
expeditiously respond to the Supreme Court's nearly three year old ruling in
Massachusetts v. EPA. 549 U.S. 497 (2007). In that case, the Court held that greenhouse
gases fit within the definition of air pollutant in the Clean Air Act, and that EPA is
therefore compelled to respond to the rulemaking petition under section 202(a)(l) by
determining whether or not emissions from new motor vehicles cause or contribute to air
pollution which may reasonably be anticipated to endanger public health or welfare, or
whether the science is too uncertain to make a reasoned decision. The Court further ruled
that, in making these decisions, the EPA Administrator is required to follow the language
of section 202(a)(l) of the CAA. The Court stated that under section 202(a), "[i]f EPA
makes [the endangerment and cause or contribute findings], the Clean Air Act requires
the agency to regulate emissions of the deleterious pollutant." 549 U.S. at 534. As
discussed above, EPA has made the two findings on contribution and endangerment. 74
FR 66496 (December 15, 2009). Thus, EPA is required to issue standards applicable to
emissions of this air pollutant from new motor vehicles1.
The Court properly noted that EPA retained "significant latitude" as to the "timing ... and
coordination of its regulations with those of other agencies" (id.). However, it has now
been nearly three years since the Court issued its opinion, and the time for delay has
passed. In the absence of these final standards, there would be three separate federal and
state regimes independently regulating light-duty vehicles to increase fuel economy and
reduce GHG emissions: NHTSA's CAFE standards, EPA's GHG standards, and the
GHG standards applicable in California and other states adopting the California
standards. This joint EPA-NHTSA program will allow automakers to meet all of these
requirements with a single national fleet because California has indicated that it will
accept compliance with EPA's GHG standards as compliance with California's GHG
1 EPA consequently disagrees strongly with the view of Duke Energy and others that "EPA lacks the legal
authority to issue its proposed GHG motor vehicle emission standards under section 202(a) of the CAA".
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EPA Response to Comments
standards. 74 FR at 49460. California has not indicated that it would accept NHTSA's
CAFE standards by themselves. Without EPA's vehicle GHG standards, the states will
not offer the federal program as an alternative compliance option to automakers and the
benefits of a harmonized national program will be lost. California and several other
states have expressed strong concern that, without comparable federal vehicle GHG
standards (not fuel economy standards), the states will not offer the federal program as an
alternative compliance option to automakers. Letter dated February 23, 2010 from
Commissioners of California, Maine, New Mexico, Oregon and Washington to Senators
Harry Reid and Mitch McConnell (Docket EPA-HQ-OAR-2009-0472). The automobile
industry also strongly supports issuance of these rules to allow implementation of the
national program and avoid "a myriad of problems for the auto industry in terms of
product planning, vehicle distribution, adverse economic impacts and, most importantly,
adverse consequences for their dealers and customers." Letter dated March 17, 2010
from Alliance of Automobile Manufacturers to Senators Harry Reid and Mitch
McConnell, and Representatives Nancy Pelosi and John Boehner (Docket EPA-HQ-
OAR-2009-0472). Thus, without EPA's GHG standards as part of a federal harmonized
program, important GHG reductions as well as benefits to the automakers and to
consumers would be lost.2 In addition, delaying the rule would impose significant
burdens and uncertainty on automakers, who are already well into planning for
production of MY 2012 vehicles, relying on the ability to produce a single national fleet.
Delaying the issuance of this final rule would very seriously disrupt the industry's plans.
Instead of delaying the LDV rule and losing the benefits of this rule and the harmonized
national program, EPA is directly addressing concerns about stationary source permitting
in other actions that EPA is taking with regard to such permitting. That is the proper
approach to address the issue of stationary source permitting, as compared to delaying the
issuance of this rule for some undefined, indefinite time period.
Some parties have argued that EPA's issuance of this light-duty vehicle rule amounts to a
denial of various administrative requests pending before EPA, in which parties have
requested that EPA reconsider and stay the GHG endangerment finding published on
December 15, 2009. That is not an accurate characterization of the impact of this final
rule. EPA has not taken final action on these administrative requests, and issuance of this
vehicle rule is not final agency action, explicitly or implicitly, on those requests.
Currently, while we carefully consider the pending requests for reconsideration on
endangerment, these final findings on endangerment and contribution remain in place.
Thus under section 202(a) EPA is obligated to promulgate GHG motor vehicle standards,
although there is no statutory deadline for issuance of the light-duty vehicle rule or other
motor vehicle rules. In that context, issuance of this final light-duty vehicle rule does no
more than recognize the current status of the findings — they are final and impose a
rulemaking obligation on EPA, unless and until we change them. In issuing the vehicle
rule we are not making a decision on requests to reconsider or stay the endangerment
finding, and are not in any way prejudicing or limiting EPA's discretion in making a final
decision on these administrative requests.
2 As discussed elsewhere, EPA's GHG standards achieve greater overall reductions in GHGs than
NHTS A's CAFE standards.
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A fifth category of comments stated that EPA had failed to give adequate notice under
section 307 (d) of the Clean Air Act and the Administrative Procedure Act because EPA
did not solicit comment on when to issue the vehicle rule or present information on
stationary source indirect impacts. EPA in fact "recognize(d) that some small entities
continue to be concerned about the potential impacts of the statutory imposition of PSD
requirements" and directed commenters to address those concerns in the PSD tailoring
rule. 74 FR at 49629. The number of comments received certainly indicates that
commenters were aware of the issue. More to the point, EPA gave notice on all issues
relevant to this rulemaking. Commenters that request consideration of the economic
impacts of the PSD permitting provisions fail to recognize that any analysis of such
impacts would not aid EPA in determining what GHG standards to adopt in this
rulemaking. Such impacts are not related to any of the issues EPA needs to consider and
decide in determining the content of the GHG standards that will apply to automobile
manufacturers.
Finally, a number of state entities stated that EPA failed to comply with the Unfunded
Mandates Reform Act of 1995 because the rule has the potential to affect state/local air
permitting authorities because it would cause GHG emissions to become regulated under
the Title V and New Source Review permitting programs. This issue is addressed in
comment response 5.14.
7.2 Endangerment Finding
Organization: Arthur G. Randol
Clark, Roy
Coalition for Responsible Regulation
Competitive Enterprise Institute
Custom Lights and Iron
Ford, Jonathan
Hagen, David L.
Shaw, Donald F.
Weber, David
Comment:
Arthur G. Randol
A commenter resubmits comments and attachments previously submitted on the April 24,
2009 Proposed Endangerment and Cause or Contribute Findings for Greenhouse Gases
Under the Clean Air Act (herein referred to as the Findings) and the associated Technical
Support Document (TSD) dated April 17, 2009. The commenter notes the submitted
comments and attachments include detailed references to science, data, and models used
to justify comments in the Endangerment Finding which are also the basis for this
proposed vehicle rule. The comments pertain to the validity of models used for the
Endangerment Finding analysis, consideration of economic welfare and national energy
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EPA Response to Comments
security consequences, implications for the National Ambient Air Quality Standards
(NAAQS) regulation, and implications for energy costs. [See OAR-2009-0472-7254.1,
pp. 1-6, and OAR-2009-0472-7254.2, pp. 1-44 for significant commentary on the
Endangerment Finding]
Coalition for Responsible Regulation
CRR strongly opposes EPA's proposed Greenhouse Gas Vehicle Emission Standards
Rulemaking, 74 Fed. Reg. 49454-49789 (Sept. 28, 2009) ('Proposed Vehicle Rule'), on
the grounds that it presupposes a finding that GHGs, including CO2, endanger public
health or welfare. EPA does so prematurely, without scientific basis, and when a
separate, still-pending EPA rulemaking is currently evaluating this key scientific issue.
Notwithstanding EPA's explicit acknowledgement that the regulation of GHGs
contemplated in the Proposed Vehicle Rule cannot take place until the Proposed
Endangerment Finding is first finalized, EPA has nevertheless proceeded to make a de
facto endangerment finding in its Proposed Vehicle Rule without a supporting
administrative record and without adequate consideration of the underlying climate
change science, data or literature. In conclusory, unsubstantiated fashion, EPA asserts:
'[t]he primary greenhouse gases of concern are directly emitted by human activities ...
These gases, once emitted, remain in the atmosphere for decades to centuries ... The
heating effect caused by the human-induced buildup of the greenhouse gases in the
atmosphere is very likely the cause of most of the observed global warming over the last
50 years. The key effects of climate change observed to date and projected to occur in the
future include, but are not limited to, more frequent and intense heat waves, more severe
wildfires, degraded air quality, heavier and more frequent downpours and flooding,
increased drought, greater sea level rise, more intense storms, harm to water resources,
continued ocean acidification, harm to agriculture, and harm to wildlife and ecosystems.
74 Fed. Reg. at 49508. See also id at 49630, where a number of similarly unsubstantiated
statements are made.
Virtually every one of EPA's bold assertions about climate change in the Proposed
Vehicle Rule are factually and/or scientifically either demonstrably incorrect or lack
supporting scientific basis. Some of CRR's members, as well as other commenters, have
already systematically rebutted all of EPA's assertions, with supporting scientific
documentation, in the detailed Comments the Coalition submitted in EP A's Proposed
Endangerment Rulemaking [OAR-2009-0472-7053.1, p.l]
Clark, Roy
The commenter asserts the emission of greenhouse gases from motor vehicles does not
pose any threat to the Earth's climate. The commenter indicates: "In spite of everything
that has been published about CC>2 induced global warming and the effects of related
greenhouse gases, no quantitative relationship between climate change and atmospheric
CC>2 concentration has ever been demonstrated because none exists. The entire global
warming case is based on the empirical speculation that the observed 100 ppm
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Other Comments
anthropogenic increase in atmospheric CC>2 concentration over the last 200 years has
produced an 'average' increase of 1 degree Celsius in the meteorological surface air
temperature."
The commenter asserts that this is flagrant scientific fraud based on deliberate distortions
of the historical temperature record and invalid computer simulation by an elite group of
climate 'scientists' which has been made abundantly clear by the recent availability of
long requested documents from the UK Hadley Climate Center. [OAR-2009-0472-
7179.1, p. 1]
Shaw, Donald F.
A commenter asserts the globe has not warmed for the last 11 years and recent peer-
reviewed papers have indicated that the latest IPCC report (2007) exaggerates the
temperature rise by using large positive feedback factors. The feedback factors are not
scientifically determined and some noted scientists claim that they are actually negative.
The commenter indicates that some scientists have recently indicated that the effects of
methane and aerosols have been underestimated and that the impact of CC>2 on warming
may be only half that previously believed and the IPCC report erroneously dismisses
natural variations as well as methane and other gasses as being significant. [OAR-2009-
0472-7270, pp. 1-2]
Custom Lights and Iron
Another commenter indicates that the climate change science is weak at best and it is
necessary to wait for better data. The commenter indicates there has been no proof of
warming since 1997 based on observational data despite increasing CC>2 in the
atmosphere. [OAR-2009-0472-7110, p.l]
Hagen, David L.
A commenter notes the EPA's Endangerment and Cause or Contribute Findings for
Greenhouse Gases Under Section 202(a) of the Clean Air Act are critically flawed by
ignoring:
• The global oil production rates and the necessity of rapidly finding alternatives to
replace rapid declines in existing oil production.
• The costs and rate limitations to providing alternative fuels.
• The investment required to develop alternative fuels.
• The Principles of Scientific Forecasting.
• The Hurst-Kolgomorov parameters of natural climate change.
The commenter also asserts the EPA is relies on politically-biased science by relying
only on the IPCC which has a political mandate to find evidence for anthropogenic
climate change. The commenter also indicates the EPA reliance on IPCC models is
fatally flawed by ignoring the major impact of solar/climate correlations, and
overestimating the influence of CO2. [OAR-2009-0472-7218.1, p.2]
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EPA Response to Comments
Competitive Enterprise Institute
The proposed standards are authorized only if EPA determines that "air pollution" related
to GHG emissions from new motor vehicles "may reasonably be anticipated to endanger
public health or welfare." However, as explained in my comment on EPA's
endangerment proposal, EPA has not exercised its judgment with regard to the
fundamental scientific issues - detection, attribution, and sensitivity - deferring instead to
literature reviews produced by external authorities. Moreover, the core scientific issues
are more "unsettled" today than at any time in the past decade. For example, MIT
Professor Richard Lindzen's recent satellite study of top-of-the-atmosphere radiative flux
indicates that climate sensitivity is six times lower than the mid-range estimate of the
Intergovernmental Panel on Climate Change (TPCC). [OAR-2009-0472-7281.1, p.9]
Ford, Jonathan
The commenter asserts that CO2 is not a pollutant. [OAR-2009-0472-7674]
Weber, David
I have not seen convincing scientific evidence that CO2 causes global warming and I
have not seen any evidence that global warming will be bad for the environment or that
global warming is a health issue. The EPA paper saying that GHG's are a health and
safety risk is incorrect and it is not backed up with any data. I have seen on-line reports as
evidence that the recent warming of the last 100 years (compared to the last 2000 years of
direct or indirect measurements) is a normal fluctuation from natural forces and that it is
unrelated to CO2 in the atmosphere.
But, even if GHG's do increase temperature, my opinion is that the world would be
greener if the average temperature was higher. A warmer earth would increase the
temperature of the world's oceans. The higher temperature will cause higher rainfall.
Plants grow best with higher rainfall, higher temperature and higher CO2 concentration.
So, the area of usable agricultural land (i.e. non-desert land and non-permafrost land) will
increase if we have more GHG's and higher temperatures.
The Supreme Court [Massachusetts v. EPA] ruled that the EPA may regulate CO2, only
if, they determine that CO2 is a GHG and that GHG's are a health risk. They have not
done so for either postulate. So, this EPA regulation is not constitutional. [OAR-2009-
0472-1410]
EPA Response:
This rulemaking is on the issues relevant to issuing emissions standards for new motor
vehicles under Section 202(a) of the Clean Air Act. The comments are not relevant to the
issues and decisions before the Agency in this standard setting rulemaking, as they relate
to the separate rulemaking on the endangerment and contribution findings.
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EPA has made a decision on the endangerment and contribution findings, with final
Findings published in the Federal Register on December 15, 2009 (74 FR 66496).
Comments in that rulemaking were carefully reviewed and considered in that rulemaking
and addressed in the associated Response to Comments document, available at:
http://www.epa.gov/climatechange/endangerment.html. EPA is not responding to them
here as they are not relevant to this rulemaking.
EPA refers commenters to the Response to Comments Document associated with the
endangerment findings, available at
http://www.epa.gov/climatechange/endangerment.html, for
numerous detailed responses to comments, including the following topics:
• attribution of observed climate change to anthropogenic emissions of greenhouse
gases (Volume 3)
• validity of observations and data used by EPA to determine trends in increasing
global mean temperatures (Volume 2)
• discussion of the use of IPCC, USGCRP, and NRC reports as the primary scientific
basis for the Findings, and response to claims that IPCC is a politically biased
organization (Volume 1)
Finally, EPA refers the commenter to the Findings, TSD, and Response to Comments
document for detailed discussion of the multiple lines of evidence that the climate system
is warming and that most of that warming over the last 50 years is very likely due to
human emissions of GHGs.
Organization: Arthur G. Randol
Clark, Roy
Coalition for Responsible Regulation (Holland & Hart)
Congress of Racial Equality
Ford, Jonathan
Hagen, David L.
Shaw, Donald F.
Spurgeon, C. M.
Wood, John S.
Comment:
A few commenters refer to the computer files released from the Climate Research Unit
(CRU) at the East Anglia University, UK and indicate it seriously questions the veracity
of the temperature data that has been widely used in the IPCC and other reports. The
commenter indicates that according to news reports the released files and e-mails
revealed that the leading scientists from the US and UK (that provide key temperature
data to the IPCC) have apparently fudged the data to exaggerate warming and suppress
temperature declines using "tricks" and cherry-picked data. The commenter also asserts
there is evidence that the peer review process has been corrupted and technical papers
suppressed that question the reported plots and temperatures. Another commenter
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EPA Response to Comments
indicates the recently released CRU e-mails show scientists refusing to release the data
and models for independent scientific review.
A commenter indicates: "Due to the recent release of the e-mails and data from "Climatic
Research Institute at the University of East Anglia" (which has excessive influence over
the IPCC), this proposed rulemaking as well as any other actions related to Greenhouse
Gas Emission Standards must be postponed until an independent audit of any climate
temperature increase due to CO2 has been scientifically verified and all data for this
determination has been made public, along with the questionable computer model used."
Commenters request that the EPA suspend any actions pending the outcome of all
investigations. One commenter indicates "[i]n light of recent developments within the
scientific community on climate data and manipulation of the peer-review process, EPA
should hold off on any further proposed rulemaking regarding any GHG's until a formal
and full investigation is completed."
EPA Response:
This rulemaking is on the issues relevant to issuing emissions standards for new motor
vehicles under Section 202(a) of the Clean Air Act. The comments are not relevant to the
issues and decisions before the Agency in this standard setting rulemaking, as they relate
to the separate rulemaking on the endangerment and contribution findings.
EPA has made a decision on the endangerment and contribution findings, with final
Findings published in the Federal Register on December 15, 2009 (74 FR 66496).
Comments in that rulemaking were carefully reviewed and considered in that rulemaking
and addressed in the associated Response to Comments document, available at:
http://www.epa.gov/climatechange/endangerment.html. EPA is not responding to them
here as they are not relevant to this rulemaking.
EPA addressed comments on the recently disclosed CRU e-mails in Volume 11 of the
Response to Comments document associated with the final Findings, which is available
at http://www.epa.gov/climatechange/endangerment.html. In addition, EPA has received
multiple administrative petitions for reconsideration of the Findings, which raise issues
related to the released CRU emails. Responses are under development and will be made
public when completed. Also see the response to the following comment.
Organization: Coalition for Responsible Regulation (Holland & Hart)
Comment:
The commenter opposes EPA's Proposed Vehicle Rule on the grounds that it presupposes
a finding that GHGs endanger public health and welfare and EPA does so prematurely,
without scientific basis, and when a separate, still pending EPA rulemaking is currently
evaluating this key scientific issue. The commenter urges the EPA Administrator not to
finalize the proposed Vehicle Rule until EPA's Proposed Endangerment Finding has been
rejected or supported by sound and comprehensive scientific evidence; and until
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whatever ensuing Petitions for Reconsideration or Petitions for Review regarding the
Proposed Endangerment Finding have been finally mid fully resolved. The commenter
asserts that proceeding with the Proposed Vehicle Rule prior to fmalization and judicial
review of the Proposed Endangerment Finding would violate EPA's statutory charge, as
reinforced by the Supreme Court in Massachusetts v. EPA, 549 U.S. at 533, to first make
a finding of GHG endangerment, only after which EPA may prescribe regulations and
promulgate standards to control GHG emissions. [OAR-2009-0472-7053.1, p.4]
EPA Response:
EPA has made a decision on the endangerment and contribution findings, with final
Findings published in the Federal Register on December 15, 2009 (74 FR 66496). This
rulemaking is on the issues relevant to issuing emissions standards for new motor
vehicles under Section 202(a) of the Clean Air Act. The comments are not relevant to the
issues and decisions before the Agency in this standard setting rulemaking, as they relate
to the separate rulemaking on the endangerment and contribution findings.
EPA has made a decision on the endangerment and contribution findings, with final
Findings published in the Federal Register on December 15, 2009 (74 FR 66496). EPA
notes that these comments, references, and attachments previously submitted by the
commenter were carefully reviewed and fully addressed in the Final Findings published
in the Federal Register on December 15, 2009 (74 FR 66496) and associated Response to
Comments document, available at:
http://www.epa.gov/climatechange/endangerment.html EPA is not responding to them
here as they are not relevant to this rulemaking.
EPA is issuing these final GHG standards for light-duty vehicles as part of its efforts to
expeditiously respond to the Supreme Court's nearly three-year-old ruling in
Massachusetts v. EPA, 549 U.S. 497 (2007). In that case, the Court held that GHGs fit
within the definition of air pollutant under in the Clean Air Act, and that EPA is therefore
compelled to respond to the rulemaking petition under section 202(a) by determining
whether or not emissions from new motor vehicles cause or contribute to air pollution
which may reasonably be anticipated to endanger public health or welfare , or whether
the science is too uncertain to make a reasoned decision. The Court further ruled that, in
making these decisions, the EPA Administrator is required to follow the language of
section 202(a) of the CAA. The Court stated that under section 202(a), "[i]f EPA makes
[the endangerment and cause or contribute findings], the Clean Air Act requires the
agency to regulate emissions of the deleterious pollutant." 549 U.S. at 534. As discussed
above, EPA has made the two findings on contribution and endangerment. 74 FR 66496
(December 15, 2009). Thus, EPA is required to issue standards applicable to emissions
of this air pollutant from of new motor vehicles.
The Court properly noted that EPA retained "significant latitude" as to the "timing ... and
coordination of its regulations with those of other agencies" (id.). However it has now
been nearly three years since the Court issued its opinion, and the time for delay has
passed. In the absence of these final standards, there would be three separate federal and
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state regimes independently regulating light-duty vehicles to increase fuel economy and
reduce GHG emissions: NHTSA's CAFE standards, EPA's GHG standards, and the
GHG standards applicable in California and other states adopting the California
standards. This joint EPA-NHTSA program will allow automakers to meet all of these
requirements with a single national fleet because California has indicated that it will
accept compliance with EPA's GHG standards as compliance with California's GHG
standards. 74 FR at 49460. NHTSA's CAFE standards by themselves would not lead to
this result. Without EPA's vehicle GHG standards, the states will not be able to offer the
federal program as an alternative compliance option to automakers and the benefits of a
harmonized national program will be lost. California and several other states have
expressed strong concern that, without comparable federal vehicle GHG standards, the
states will not be able to offer the federal program as an alternative compliance option to
automakers. Letter dated February 23, 2010 from Commissioners of California, Maine,
New Mexico, Oregon and Washington to Senators Harry Reid and Mitch McConnell
(Docket EPA-HQ-OAR-2009-0472). The automobile industry also strongly supports
issuance of these rules to allow implementation of the national program and avoid "a
myriad of problems for the auto industry in terms of product planning, vehicle
distribution, adverse economic impacts and, most importantly, adverse consequences for
their dealers and customers." Letter dated March 17, 2010 from Alliance of Automobile
Manufacturers to Senators Harry Reid and Mitch McConnell, and Representatives Nancy
Pelosi and John Boehner (Docket EPA-HQ-OAR-2009-0472). Thus, without EPA's
GHG standards as part of a federal harmonized program, important GHG reductions as
well as benefits to the automakers and to consumers would be lost.3 In addition, delaying
the rule would impose significant burdens and uncertainty on automakers, who are
already well into planning for production of MY 2012 vehicles, relying on the ability to
produce a single national fleet. Delaying the issuance of this final rule would very
seriously disrupt the industry's plans
Instead of delaying the light-duty vehicle rule and losing the benefits of this rule and the
harmonized national program, EPA is directly addressing concerns about stationary
source permitting in other actions that EPA is taking with regard to such permitting. That
is the proper approach to address the issue of stationary source permitting, as compared
to delaying the issuance of this rule for some undefined, indefinite time period.
Some parties have argued that EPA's issuance of this light-duty vehicle rule amounts to a
denial of various administrative requests pending before EPA, in which parties have
requested that EPA reconsider and stay the GHG endangerment finding published on
December 15, 2009. That is not an accurate characterization of the impact of this final
rule. EPA has not taken final action on these administrative requests, and issuance of this
vehicle rule is not final agency action, explicitly or implicitly, on those requests.
Currently, while we carefully consider the pending requests for reconsideration on
endangerment, these final findings on endangerment and contribution remain in place.
Thus under section 202(a) EPA is obligated to promulgate GHG motor vehicle standards,
although there is no statutory deadline for issuance of the light-duty vehicle rule or other
3 As discussed elsewhere, for a variety of reasons EPA's GHG standards achieve greater overall reductions
in GHGs than NHTSA's CAFE standards.
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Other Comments
motor vehicle rules. In that context, issuance of this final light-duty vehicle rule does no
more than recognize the current status of the findings — they are final and impose a
rulemaking obligation on EPA, unless and until we change them. In issuing the vehicle
rule we are not making a decision on requests to reconsider or stay the endangerment
finding, and are not in any way prejudicing or limiting EPA's discretion in making a final
decision on these administrative requests.
Organization: Consumers Energy
Comment:
The Joint Motor Vehicle Proposal contains a number of significant flaws and
shortcomings that necessitate withdrawal of EPA's portion of the proposed rule. EPA's
analysis demonstrates that it cannot properly reach an affirmative endangerment finding
given the inability of the emission standards to avert or to attack fruitfully the source of
GHG-related endangerment. Because an affirmative endangerment finding in this context
cannot be legally made, EPA lacks the authority to finalize its proposed GHG motor
vehicle emission standards under section 202(a) of the CAA. In addition, the analyses of
economic and environmental costs and benefits of the Joint Motor Vehicle Proposal are
wholly insufficient and cannot support EPA's proposed standards. [OAR-2009-0472-
7264.1,p.2]
Unlike NHTSA, EPA is under no statutory deadline to promulgate the standards that it is
now considering. It has the time and the obligation to analyze more fully its regulatory
proposal and the wide-ranging impacts that it anticipates will likely be incurred after its
finalization. Finally, EPA has failed even to consider possible ways in which it might
avoid prematurely imposing significant regulatory burdens, like PSD and Title V
requirements, on stationary sources while pursuing mobile source regulation under
section 202(a). These are matters of the utmost significance, and EPA cannot simply
ignore them consistent with its obligations under the CAA. For all of the foregoing
reasons, Consumers Energy agrees with UARG and requests that EPA withdraw its
portion of the Joint Motor Vehicle Proposal, that NHTSA revise its regulations as may be
appropriate to address this change, and that EPA engage in a new, more thoroughly
reasoned regulatory decision-making process while providing adequate public notice and
opportunity for comment on these important issues. [OAR-2009-0472-7264.1, p.2]
EPA Response:
This rulemaking is on the issues relevant to issuing emissions standards for new motor
vehicles under Section 202(a) of the Clean Air Act. The comments are not relevant to the
issues and decisions before the Agency in this standard setting rulemaking, as they relate
to the separate rulemaking on the endangerment and contribution findings and to other
pending actions before EPA. See the responses above for further discussion of EPA's
reasons for issuing this vehicle rule at this time. In addition, the comment provides no
details on their objections to EPA's analyses of environmental and economic impacts.
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EPA Response to Comments
EPA has made a decision on the endangerment and contribution findings, with final
Findings published in the Federal Register on December 15, 2009 (74 FR 66496).
Comments in that rulemaking were carefully reviewed and considered in that rulemaking
and addressed in the associated Response to Comments document, available at:
http://www.epa.gov/climatechange/endangerment.html. EPA is not responding to them
here as they are not relevant to this rulemaking.
Organization: Duke Energy
Comment:
Duke Energy Business Services LLC ("Duke Energy"), on behalf of Duke Energy
Carolinas, LLC, Duke Energy Indiana, Inc., Duke Energy Ohio, Inc., Duke Energy
Kentucky, Inc., and Duke Energy Generation Services ("DEGS"), therefore submits the
following comments on the Joint Motor Vehicle Proposal. Specifically, the significant
flaws and shortcomings of the Joint Motor Vehicle Proposal necessitate the withdrawal of
EPA's portion of the proposed rule. Duke Energy continues to support the enactment of
environmentally and economically sustainable federal climate change legislation.
Regulating GHGs under the CAA is the wrong approach. [OAR-2009-0472-7136.1, p.2]
The U.S. Environmental Protection Agency's ("EPA") has stated its view that
promulgation of the GHG motor vehicle standards will subject GHGs to the CAA
Prevention of Significant Deterioration ("PSD") program and the permitting requirements
of Title V of the CAA, potentially as soon as the date on which the rule becomes final
and effective. Duke Energy believes, however, that EPA's legal positions in this regard
and the analysis presented in the proposed rule are seriously flawed and must be
corrected. [OAR-2009-0472-7136.1, p.2]
The Joint Motor Vehicle Proposal and its supporting documentation makes clear that
EPA's proposed GHG motor vehicle emission standards are largely duplicative of
NHTSA's proposed program and that EPA's proposal will not add in any significant
manner to the GHG reductions and associated impacts of NHTSA's proposed CAFE
standards. Therefore, EPA cannot properly reach an affirmative endangerment finding to
satisfy the requirements of the CAA's test for finding "endangerment," rendering EPA's
proposed GHG motor vehicle emission [OAR-2009-0472-7136.1, p.2] standards legally
(and scientifically) unjustified. Because an affirmative endangerment finding cannot be
legally made, EPA lacks the authority to finalize its proposed GHG motor vehicle
standards under section 202(a) of the CAA. [OAR-2009-0472-7136.1, p.3]
EPA Response:
This rulemaking is on the issues relevant to issuing emissions standards for new motor
vehicles under Section 202(a) of the Clean Air Act. The comments are not relevant to the
issues and decisions before the Agency in this standard setting rulemaking, as they relate
to the separate rulemaking on the endangerment and contribution findings.
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Other Comments
EPA has made a decision on the endangerment and contribution findings, with final
Findings published in the Federal Register on December 15, 2009 (74 FR 66496).
Comments in that rulemaking were carefully reviewed and considered in that rulemaking
and addressed in the associated Response to Comments document, available at:
http://www.epa.gov/climatechange/endangerment.html. EPA addressed comments in that
rulemaking claiming that EPA could not make an endangerment finding because of the
relationship of EPA's GHG standards to NHTSA's CAFE standards. See 74 FR 66496,
66507-508 (December 15, 2009). EPA is not responding to them here as they are not
relevant to this rulemaking.
Organization: Texas Commission on Environmental Quality
Comment:
In providing these comments, the TCEQ emphasizes that it does not support EPA's
actions to regulate GHG under the federal Clean Air Act (CAA). As stated in TCEQ
comments dated June 23, 2009, to EPA's Proposed Endangerment and Cause or
Contribute Findings for Greenhouse Gases, the CAA is not an appropriate vehicle for the
regulation of GHG, and the proposed endangerment finding, if finalized, would likely
force EPA to begin regulating other sources through other major CAA programs resulting
in significant impacts to the economy of Texas and thus, the nation, without measurable
environmental benefits. TCEQ recommends that EPA not finalize the GHG emission
standards for light-duty vehicles under the proposed rule. [OAR-2009-0472-7180.1, p.l]
EPA Response:
This rulemaking is on the issues relevant to issuing emissions standards for new motor
vehicles under Section 202(a) of the Clean Air Act. The comments are not relevant to the
issues and decisions before the Agency in this standard setting rulemaking, as they relate
to the separate rulemaking on the endangerment and contribution findings or on other
pending or potential rulemakings.
EPA has made a decision on the endangerment and contribution findings, with final
Findings published in the Federal Register on December 15, 2009 (74 FR 66496).
Comments in that rulemaking were carefully reviewed and considered in that rulemaking
and addressed in the associated Response to Comments document, available at:
http://www.epa.gov/climatechange/endangerment.html. EPA is not responding to them
here as they are not relevant to this rulemaking. See responses to comments above
concerning EPA's reasons for issuing the light-duty vehicle rule now instead of delaying
issuance of the rule.
Organization: Georgia-Pacific (GP)
Comment:
Since the carbon-neutral motor vehicle emissions of CO2 from biofuels do not contribute
to the increase in atmospheric CO2 concentrations which constitute the public
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EPA Response to Comments
endangerment in EPA's view, EPA lacks a statutory basis for restricting motor vehicle
CO2 emissions to the extent that they result from use of biofuels.
[See Docket Number OAR-2009-0472-7122.1, pp.6-9 for detailed comments pertaining
to: Biofuel Combustion Is Carbon-Neutral and EPA Must Account for the CO2-
Neutrality of Biofuels To Be Consistent With Its Endangerment Finding]
EPA Response:
EPA's authority to adopt emissions standards under section 202(a)(l) is not limited to
motor vehicles powered by fuels other than biofuels. Vehicles operating on biofuels do
emit GHGs, and as discussed in the preamble, from a lifecycle perspective biofuels such
as ethanol are not carbon neutral in the sense the commenter uses.
This is also fully consistent with the endangerment and contribution findings. EPA
included all motor vehicles emissions in calculating emissions for purposes of the
contribution finding, and did not exclude emissions from vehicles operated by biofuels.
In addition, the content or form of the emissions control to follow under section 202(a)(l)
was not relevant to the determination that the air pollution of atmospheric concentrations
of GHGs endanger public health and welfare. See also Section 5.7.2 of this Response to
Comments document.
7.3 Vehicle Life-Cycle Emissions Issues
EPA's proposed GHG emissions standards are tailpipe-based standards, consistent with
other EPA vehicle emissions standards. Although EPA did not ask for comment on this
issue, we did receive four comments from organizations recommending that EPA not
only account for vehicle tailpipe GHG emissions, but also GHG emissions associated
with other steps of the vehicle life-cycle. The structure of this section is to provide a
sampling of excerpts of these four comments, followed by an EPA response.
Organization: American Iron and Steel Institute
University of Pennsylvania, Environmental Law Project
US Steel Corporation
Washington State Department of Commerce
Comment:
American Iron and Steel Institute
Clearly, the regulation's purpose is to reduce the energy consumption and greenhouse gas
emissions (mainly CO2) associated with the combustion of fuel during the driving cycle
of light-duty vehicles for the U.S. fleet. AISI is concerned that focusing only on the
driving-phase of a vehicle's life will lead to increased energy consumption and CO2
emissions while reducing vehicle affordability. This is because technology selections will
be made to lower driving phase energy use and GHG emissions that will increase energy
use and GHG emissions in other phases of vehicle life, more than offsetting the driving
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Other Comments
phase reductions. A methodology based on Life Cycle Assessment [LCA] of the vehicle
[considering all phases of a vehicle's life as opposed to only the driving phase] will
ensure energy reduction and GHG reductions occur. [OAR-2009-0472-7088.1, p.2]
1. Life Cycle Assessment (LCA): In order to ensure the steps taken by automakers to
comply with the proposed rule result in lower energy use and GHG emissions, it is
critically important that energy use and GHG emissions over the full life cycle of the
vehicle are considered. Clearly, the reduction in fuel consumption per mile over the
driving phase, as the proposed rule stipulates, will directly reduce energy use and GHG
emissions for the driving phase of the vehicle's life. However, by ignoring the
consequences of the likely steps automakers may use to comply with a driving phase-
only rule [such as mass reduction through materials substitution] higher energy use and
GHG emissions will result. [OAR-2009-0472-7088.1, p.3]
The proposed rule already considers an expanded view [beyond driving phase emissions]
by encouraging the use of air conditioning refrigerants with low global warming
potential. AISI recommends the proposed rule include energy use and GHG emissions
attributable to vehicle materials and their manufacturing phase. A methodology is
described below. [OAR-2009-0472-7088.1, p.3]
An article (Attachment 1) published by American Metal Market in May 2008 by Dr.
Roland Geyer of the University of California-Santa Barbara, thoughtfully explains, in
general, the concerns about regulations and unintended consequences. He includes
examples of an overenthusiastic approach to the regulation of a single phase of a life
cycle, while ignoring the full life cycle of the process or product regulated. A diagram
showing energy consumption and GHG emissions during the life cycle of a vehicle is
shown in Figure 2. The LCA approach is detailed in ISO Standard 14040 Series. Geyer
has produced a methodology, endorsed by ISO peer review, through which energy use
and CO2 emissions resulting from the selection of materials for vehicles can be evaluated
for the entire life cycle of the vehicle. AISI recommends that materials selection for
vehicles be evaluated by a model [such as the Geyer model] that considers life-cycle
impact on energy use and GHG emissions. Similar studies and public statements about
this approach have been made by automakers. For example, recently published
information from Mercedes in its S-Class Environmental Certificate (Attachment 2)
shows how car makers are using LCA in materials decisions. [OAR-2009-0472-7088.1,
p.3] [[Attachment 1 is Docket Number OAR-2009-0472-7088.2 which is copyrighted
material and not available on FDMS. Attachment 2 is Docket Number OAR-2009-0472-
7088.3.]]
EPA and NHTSA should promulgate regulations that require manufacturers to meet
regulations by the lowest life cycle emissions solution, for example by selecting
comparatively low energy and low C02 materials like high-strength steel. Materials that
lower the overall life-cycle energy use and GHG emissions of the vehicle should be
preferred to those that consume more energy and raise the total GHG burden. [OAR-
2009-0472-7088.1, p.6]
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EPA Response to Comments
Methodologies for conducting life cycles assessment of vehicles are well established
through exiting tools such as ISO Standard 14040 Series. Vehicle manufacturers already
have the in-house capability of conducting LCA for materials selection and there are
many published examples where these studies have been applied. Many materials
suppliers have established materials energy and CO2 emissions databases. The tools for
implementing a life cycle assessment guideline for materials selection are already
established and in use by some manufacturers (Attachment 2). [OAR-2009-0472-7088.1,
p.6]
AISI strongly recommends the proposed rule incorporate the energy and emissions
associated with creating the materials used in building the vehicle and the energy and
emissions saved at end of life through recycling. In this way, the reduction in emissions
during the driving cycle will not be offset by increases in energy use and GHG emissions
associated with use of energy- and GHG intensive materials and the lowest total impact
on the environment will be achieved. [OAR-2009-0472-7088.1, p.6]
AISI supports a national standard that can be uniformly applied in order to reduce the
consumption of fuel and the emissions associated with light vehicles. However, the
current proposal to regulate based only the vehicle driving phase may very well increase
energy use and GHG emissions while increasing vehicle cost. Increased vehicle cost
would further delay the adoption of compliant vehicles, slowing the reduction in
emissions. [OAR-2009-0472-7088.1, p.8]
To avoid these outcomes, we strongly recommend EPA and NHTSA incorporate all life
cycle energy use and GHG emissions associated with light-duty vehicles into this rule. A
life cycle approach is more consistent with achieving the objectives of the Clean Air Act,
the Energy Independence and Security Act (EISA) of 2007, and President Obama's
October 5,2009 Executive Order on Federal Leadership in Environmental, Energy, and
Economic Performance. [OAR-2009-0472-7088.1, p.9]
University of Pennsylvania, Environmental Law Project
Significantly, the EPA/DOT joint proposed rulemaking also fails to take into account a
few potentially major factors because it fails to do a complete life cycle impact
assessment. Thus, while the rule would achieve the admirable goal of reducing source
emissions of GHGs from motor vehicles in operation, the rule could potentially increase
overall global GHG emissions. [OAR-2009-0472-7286.1, p. 19]
Automobile manufacturers (and their parts suppliers) may need to build more advanced
facilities or convert existing facilities in order to produce the more advanced vehicles that
will be required by the proposed rule. This building process will require the extraction
and processing of raw and recycled materials into useable building materials,
transportation of those building materials to the site of existing or new facilities, and
construction. Each of these steps in the renovation or new construction process will be a
source of new GHG emissions attributable to the proposed rule. [OAR-2009-0472-
7286.1, p. 19]
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Other Comments
Aside from the actual physical buildings where parts are manufactured or motor vehicles
assembled, the tools required for manufacturing and assembly are likely to become more
complex and energy intensive. The manufacture and use of these new tools will require
additional GHG outputs. Moreover, vehicles will likely be manufactured of lighter-
weight materials in order to meet higher fuel economy requirements; some of these
materials may be more energy intensive to produce or recycle, leading to increased GHG
emissions in those processes at least indirectly attributable to the proposed rule. [OAR-
2009-0472-7286.1, p. 20]
Finally, consumers will be resistant to purchasing new vehicles because of the increased
up-front cost, even with a net savings due to reduction in fuel costs, because they may not
take the net savings into account or may not value those savings as highly as an upfront
cost savings. In any case, in order to reduce up-front costs to consumers of new vehicles,
manufacturers (and their suppliers) may increase the proportion of vehicle parts produced
and motor vehicles assembled in countries with cheaper labor. Notwithstanding the likely
impact on the domestic job market, this will also create a greater need to transport such
parts to assembly plants and assembled vehicles to their points-of-sale. This will also
result in increased GHG emissions attributable to the proposed rule. [OAR-2009-0472-
7286.1, p. 20]
Importantly, this report does not claim to be able to predict the increase in GHG
emissions that will be associated with the manufacturing and transportation of the more
advanced vehicles that the EPA/DOT joint rule will necessitate. Instead, it aims only to
point out that such a complete life cycle analysis should be performed in order to assess
the net effect the rule will have on GHG emissions. [OAR-2009-0472-7286.1, p. 20]
US Steel Corporation
Life Cycle Assessment (LCA): It is important to consider the impact of compliance to the
proposed aggressive fuel economy regulations on energy and CO2 emissions over the full
life cycle of the vehicle. Clearly, the reduction in fuel consumption per mile over the
driving phase, as the proposed NPRM would stipulate, will directly reduce energy use
and CO2 emissions for the use-phase of the vehicle's life. However, by ignoring the
consequences of those probable technologies (one of which is mass reduction through
materials selection) to be used by car companies to achieve these results, it is possible for
higher-energy and CO2-intensive manufacturing of low density materials to offset the
benefit of the regulations imposed on the driving phase alone. [OAR-2009-0472-7197.1,
p.3 full discussion follows in document]
[[These comments were submitted as testimony at the Detroit public hearing. See docket
number OAR-2009-0472-6185, pp. 102-103.]]
The methodology for a life cycle approach as well as establish an ISO standard 1440,
many vehicle manufacturers are already implementing this methodology in vehicle
designs. The concern is vehicle makers may select technologies that increase the full life
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EPA Response to Comments
cycle energy and CO2 footprint of the vehicle in order to comply with the tailpipe-only
regulations.
We will continue to invest in steel technologies that reduce the full life cycle energy and
the CO2 footprint of the vehicle. Since the 1990s the North American Steel Industry has
reduced the energy and carbon intensity of steel by 33 percent, more than doubling the
target set by the protocol. Looking to the future, the steel industry is exploring over 100
independent CO technologies to reduce or eliminate carbon emissions associated with
steel making. We continue to develop new grades of steel both independently and in
partnership with the National Science Foundation and universities that will enable
additional lightweighting. And at the end-of-life steel will continue to be the most
recycled material on the planet, more than all other materials combined.
The combinations of these investments will reduce the energy and CO2 intensity of the
steel supply, reduce the amount of steel needed per vehicle, reduce the tailpipe emissions
through weight reduction, and reduce the emissions at the end-of-life through recycling.
However, without the appropriate regulations, these opportunities to reduce the energy
use and CO2 emissions associated with a vehicle may not be realized.
The current fuel economy and tailpipe emissions regulations may result in the unintended
consequences of increasing the full life cycle energy used and CO2 emissions of the
vehicle.
It is my recommendation and request on behalf of U.S. Steel that the EPA and NHTSA
develop policies that comprehend the full life cycle environmental impact associated with
the vehicle and encourages vehicle manufacturers to choose technologies that result in the
lowest environmental impact on the entire vehicle's life.
Washington State Department of Commerce
[Following comments are from LA Testimony, OAR-2009-0472-7283, pp. 123-124]
EPA is structuring their regulation — standards, cost-benefit analysis, et cetera — on the
basis of GHG emitted directly from the vehicle. We urge EPA to explore the areas in the
regulation where the use of life-cycle GHG emission would not be prevented by statute.
We believe a life-cycle approach would be particularly important and helpful to provide
the right incentives, A, to different vehicle technologies at a given point in time; and, B,
to a given vehicle technology over time.
EPA Response:
EPA's final GHG emissions standards are vehicle tailpipe-based standards. The four
commenters all suggested that EPA consider accounting for GHG emissions associated
with other steps of the vehicle life-cycle. The American Iron and Steel Institute and US
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Other Comments
Steel Corporation primarily focus on the GHG emissions impacts associated with
producing the materials used in vehicle and component assembly and in materials end-of-
life considerations (i.e., recycling or disposal). The University of Pennsylvania,
Environmental Law Project goes further and suggests that EPA should consider the GHG
emissions impacts of building and operating new, more advanced assembly facilities and
tooling, and even the potential GHG emissions impacts that might be associated with a
greater reliance on imported vehicles and components, on the theory that technologies
with a higher up-front cost might be more likely to be produced in countries with lower
labor costs. Each of these three commenters makes the point that these non-tailpipe GHG
emissions considerations could reduce the effective GHG savings of the program. The
University of Pennsylvania, Environmental Law Project suggests that the non-tailpipe
GHG emissions impacts "could potentially increase overall global GHG emissions."
EPA understands the technical issues associated with life-cycle analysis. But, vehicle
life-cycle GHG emissions impacts are beyond the scope of this rulemaking. EPA has
wide discretion under section 202(a) and has chosen to first focus on vehicle tailpipe
GHG emissions, both because tailpipe emissions are the largest single source of vehicle
life-cycle GHG emissions, and because the EPA motor vehicle program has traditionally
focused on tailpipe emissions. The time involved in developing a methodology and the
necessary data, noticing all of the information and assessing the public comments would
significantly delay issuing GHG standards in time for MY 2012 and perhaps later model
years as well, undermining any potential benefits of the approach. In addition, extending
the vehicle tailpipe GHG emissions standards to include other steps of the vehicle life-
cycle would reduce the harmonization with NHTSA's CAFE program, and EPA has
reasonably considered such harmonization to be appropriate in this rulemaking.
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