EPA and NHTSA Propose First-Ever
                Program to Reduce Greenhouse Gas
                Emissions and Improve Fuel Efficiency
                of Medium- and  Heavy-Duty Vehicles:
                Regulatory Announcement
                    The U.S. Environmental Protection Agency (EPA) and the
                    Department of Transportation's National Highway Traffic Safety
                Administration (NHTSA) are announcing a first-ever program to
                reduce greenhouse gas (GHG) emissions and improve fuel efficiency
                of medium' and heavy-duty vehicles, such as the largest pickup trucks
                and vans, semi trucks, and all types and sizes of work trucks and buses
                in between. These vehicles make up the transportation segment's
                second largest contributor to oil consumption and GHG emissions.

                The proposed rules would create a strong and comprehensive heavy-
                duty national program (the "HD National Program"), designed to
                address the urgent and closely intertwined challenges of dependence
                on oil, energy security, and global climate change. At the same time,
                the proposed program would enhance American competitiveness and
                job creation, benefit consumers and businesses by reducing costs for
                transporting goods, and spur growth in the clean energy sector.

                The agencies estimate that the combined proposed standards have
                the potential to reduce GHG emissions by nearly 250 million metric
                tons and save approximately 500 million barrels of oil over the life of
                vehicles sold during 2014 to 2018, while providing an estimated $35
                billion in net benefits to truckers, or  $41 billion in net benefits when
                societal benefits are included. The proposed HD National Program is
SEPA
United States
Environmental Protection
Agency
      _ A
NHTSA
Office of Transportation and Air Quality
               EPA-420-F-1 0-901
                 October 2010

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a key component of the agencies' response to a Presidential Memorandum
issued last May, and has been developed with support from industry, the State
of California, and environmental stakeholders.1

Need to Reduce Fuel Consumption and Greenhouse Gases from Vehicles
Our country has two intertwined and critically important needs - to reduce oil consumption and
to address global climate change. NHTSA and EPA are proposing the HD National Program
to meet these needs by reducing fuel use and GHG emissions from on-highway transportation
sources. The effect of these actions will be to improve energy security, increase fuel savings,
reduce GHG emissions, and provide regulatory certainty for manufacturers.

Setting fuel consumption standards for the heavy-duty sector will improve our energy security by
reducing our dependence on foreign oil, which has been a national objective since the first oil
price shocks in the 1970s. Net petroleum imports now account for approximately 60 percent of
U.S. petroleum consumption. Transportation accounts for about 72 percent of our domestic oil
use, and heavy-duty vehicles account for about 17 percent of transportation oil use.2

Transportation sources emitted 29 percent of all U.S. GHG emissions in 2007 and have been
the fastest-growing source of U.S. GHG emissions since 1990.3 The primary GHGs of concern
from transportation sources are carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O),
and hydrofluorocarbons (HFC). The heavy-duty sector addressed in this joint proposal accounted
for nearly six percent of all U.S. GHG emissions and 20 percent of transportation GHG emissions
in 2007. Within the transportation sector, heavy-duty vehicles are the fastest-growing contributor
to GHG emissions.
Benefits and Costs of the Proposed HD National Program
The agencies' analysis indicates that the combined proposed standards have the potential to
reduce GHG emissions by nearly 250 million metric tons and save approximately 500 million
barrels of oil over the life of vehicles sold during 2014 to 2018. In total, these combined stan-
dards would reduce CO2 emissions from the U.S. heavy-duty fleet by approximately 72 million
metric tons of CO2-equivalent by 2030, below the level that would occur in the absence of the
HD National Program.

Overall, EPA and NHTSA estimate that the HD National Program would cost the affected
industry approximately $7.7 billion, and generate total societal benefits of $49 billion, providing
1  Improving Energy Security, American Competitiveness and Job Creation, and Environmental Protection
Through a Transformation of Our Nation's Fleet of Cars And Trucks" 75 FR 29399, May 26, 2010,
www.whitehouse.gov/the-press-office/presidential-memorandum-regarding-fuel-efficiency-standards
2  In 2009 Source: EIA Annual Energy Outlook 2010 released May 11, 2010
3  U.S. Environmental Protection Agency. 2009. Inventory of U.S. Greenhouse Gas Emissions and Sinks:
1990-2007. EPA 430-R-09-004. Available at:
http://epa.gov/climatechange/emissions/downloads09/GHG2007entire_report-508.pdf

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$41 billion in net benefits as a result of the standards over the lifetimes of model year 2014'
2018 vehicles, discounted at three percent.4 Using technologies commercially available today,
the majority of vehicles would see a payback period of one to two years, while others, especially
those with with lower annual miles, would experience payback periods of four to five years. For
example, an operator of a semi truck could pay for the technology upgrades in under a year, and
have net savings up to $74,000 over the truck's useful life.

There are also many potential benefits of the proposed program which the agencies have not yet
quantified, including benefits from reductions in emissions of non-GHG pollutants. The benefits
that are currently calculated into dollar amounts include benefits from GHG reductions, energy
security, and other externalities  such as reduced time spent refueling.
Scope of Standards for Heavy-Duty Engines and Vehicles
The agencies are each proposing complementary standards under their respective authorities
covering model years 2014-2018, which together would form a comprehensive HD National
Program. EPA and NHTSA are proposing emission standards for CO2 and fuel consumption
standards, respectively, tailored to each of three main regulatory categories: (1) combination
tractors;5 (2) heavy-duty pickup trucks and vans; and (3) vocational vehicles. Each of these is
described further below. EPA is additionally proposing standards for air conditioning related
emissions of HFC from pickups, vans and tractors; as well as N2O and CH4 standards applicable
to all heavy-duty engines, pickups and vans.

For purposes of this proposal, the heavy-duty fleet incorporates all on-road vehicles rated at a
gross vehicle weight at or above 8,500 pounds, and the engines that power them, except those
covered by the current GHG emissions and Corporate Average Fuel Economy standards for
model years 2012-2016.6 Heavy-duty vehicles include both work trucks and commercial medium
and heavy-duty on-highway vehicles as defined by the Energy Independence and Security Act
(EISA). Heavy-duty engines affected by the proposed standards would generally be those that
are installed in commercial medium- and heavy-duty trucks  and buses. The agencies' scopes
are the same except that EPA is proposing to include recreational on-highway vehicles  (RV's,
or motor homes) within its rulemaking, while NHTSA is not including these vehicles,  due to
EISA's requirement that standards be set for "commercial" medium- and heavy-duty on-highway
vehicles and work trucks.
4 The monetized benefits presented are a summed value of many years worth of emissions reductions and fuel
savings, discounting the value that future reductions have to society vs reductions in the present day. These
benefit estimates use the Annual Energy Outlook 2010 reference case fuel prices, and apply a Social Cost
of Carbon (SCC) value of $22 per ton CO2 reduced. Other SCC values are presented and discussed in the
proposal.
5 Commonly known as semi trucks. The agencies are not proposing standards for trailers, thus this regulatory
category denotes the main power unit portion of a tractor-trailer combined vehicle.
6 The final 2012-2016 standards cover some vehicles above 8,500 Ibs. For example, this proposal excludes
sport-utility vehicles, vans with less than a 13-person capacity, and Vi-ton pickups.

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Trailers are not covered under this proposal, due to the first-ever nature of this proposal and the
agencies' limited experience working in a compliance context with the trailer manufacturing
industry.  However, because trailers do impact the fuel consumption and CO2 emissions from
combination tractors, and because of the opportunities for reductions, we are soliciting com-
ments on controlling GHG emissions and fuel consumption from trailers, to prepare a founda-
tion for a possible future rulemaking.

The agencies are developing these rules collaboratively under their respective authorities: the
EPA is proposing GHG emissions standards under the Clean Air Act, and NHTSA is proposing
fuel efficiency standards under EISA. The goal of the joint rulemakings is to produce coordinated
federal standards that help manufacturers to build a single fleet of vehicles and engines that are
able to comply with both.
Proposed Standards
It is important to note that the joint proposed standards cover not only engines but also the
complete vehicle, allowing the agencies to achieve the greatest possible reductions in fuel con-
sumption and GHG emissions, while avoiding unintended consequences.  The majority of these
vehicles carry payloads of goods or equipment, in addition to passengers.  To account for this in
the regulatory program, two types of standard metrics are proposed: payload-dependent gram
per mile (and gallon per 100-mile) standards for pickups and vans; and gram per ton-mile (and
gallon per 1,000 ton-mile) standards proposed for vocational vehicles and combination tractors.
These proposed metrics account for the fact that the work to move heavier loads burns more
fuel,  and emits more CO2 than in moving lighter loads.

The joint proposed standards are rooted in regulatory history, EPA's Smart Way Transport Part-
nership program, and extensive technical and engineering analyses.  In developing this HD
National Program, the agencies have drawn from the SmartWay Transport Partnership Program
experience to identify technologies as well as operational  approaches that fleet owners, drivers,
and freight customers can incorporate. NHTSA and EPA believe that operational measures
promoted by SmartWay can complement the proposed standards  and provide benefits for the
existing heavy-duty fleet.

The joint proposed standards are also heavily influenced by a study mandated by Congress in
EISA and conducted for NHTSA by the National Research Council.7 This study examined
many aspects of heavy-duty vehicle fuel consumption as well as considerations for establishing
fuel consumption standards.
7  Committee to Assess Fuel Economy Technologies for Medium- and Heavy-Duty Vehicles; National
Research Council; Transportation Research Board (2010). "Technologies and Approaches to Reducing
the Fuel Consumption of Medium- and Heavy-Duty Vehicles," Available electronically from the National
Academies Press Website at http://www.nap.edu/catalog.

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CO2 and Fuel Consumption Standards
Both EPA's and NHTSA's joint proposed standards for the three main heavy-duty regulatory
categories are summarized below.

Combination Tractors
Heavy-duty combination tractors - the semi trucks that typically pull trailers - are built to move
freight. Freight transportation customers choose tractors primarily based on two major char-
acteristics: the gross vehicle weight rating (GVWR, which establishes the maximum carrying
capacity of the tractor and trailer) and cab type (sleeper cabs provide overnight accommodations
for drivers). Operators also consider the tractor roof height when mating with trailers for the
most efficient configuration. The agencies are proposing differentiated standards for nine subcat-
egories of combination tractors based on three attributes: weight class, cab type and roof height.
The standards would phase in to the 2017 levels shown in Table 1. These proposed standards
would achieve from seven to 20 percent reduction in emissions and fuel consumption from
affected tractors over the 2010 baselines.
             Table 1: Proposed MY 2017 Combination Tractor Standards


Day Cab Class 7
Day Cab Class 8
Sleeper Cab
Class 8
EPA Emissions Standards
(g CO2/ton-mile)
Low Roof
103
78
64
Mid Roof
103
78
69
High Roof
116
86
71
NHTSA Fuel Consumption Standards
(gal/1,000 ton- mile)
Low Roof
10.1
7.7
6.3
Mid Roof
10.1
7.7
6.8
High Roof
11.4
8.5
7.0
Heavy-Duty Pickup Trucks and Vans
The agencies are proposing to set corporate average standards for heavy-duty pickup trucks and
vans, similar to the approach taken for light-duty vehicles. Each manufacturer's standard for a
model year would depend on its sales mix, with higher capacity vehicles (payload and towing)
having numerically less stringent target levels, and with an added adjustment for 4-wheel drive
vehicles. This approach recognizes both the inherently higher GHG emissions and fuel con-
sumption of higher-capacity vehicles, and the importance of payload and towing capacity to the
owners of these work trucks and vans.

EPA is proposing to establish standards for this segment in the form of a set of target standard
curves, based on a "work factor" that combines a vehicle's payload, towing capabilities, and
whether or not it has 4-wheel drive. The standards would phase in with increasing stringency in
each model year from 2014 to 2018. The EPA standards proposed for 2018 (including a separate
standard to control air conditioning system leakage) represent an average per-vehicle reduction
in GHG emissions of 17 percent for diesel vehicles and 12 percent for gasoline vehicles, com-
pared to a common baseline.

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NHTSA is proposing to set corporate average standards for fuel consumption that are equivalent
to EPA's proposal (though not including EPA's proposed air conditioning leakage standard). The
proposed NHTSA standards represent an average per-vehicle improvement in fuel consumption
of 15 percent for diesel vehicles and 10 percent for gasoline vehicles, compared to a common
baseline. To satisfy lead time requirements under EISA, NHTSA standards would be voluntary
in 2014 and 2015. Both agencies are proposing to provide manufacturers with two alternative
phase-in approaches that get equivalent overall reductions. One alternative phases the final
standards in at 15-20-40-60-100 percent in model years 2014-2015-2016-2017-2018. The other
phases the final standards in at 15-20-67-67-67-100 percent in model years 2014-2015-2016-
2017-2018-2019.

Vocational Vehicles
Vocational vehicles consist of a very wide variety of truck and bus types including delivery,
refuse, utility, dump, cement, transit bus, shuttle bus, school bus, emergency vehicles, motor
homes, tow trucks, and many more. Vocational vehicles undergo a complex build process, with
an incomplete  chassis often built with an engine and transmission purchased from other manu-
facturers, then sold to a body manufacturer. In these rules, the agencies are proposing to regulate
chassis manufacturers for this segment. The agencies are proposing to divide this segment into
three regulatory subcategories - Light Heavy (Class 2b through 5), Medium Heavy (Class 6 and
7), and Heavy  Heavy (Class 8), which is consistent with the engine classification.

After engines,  tires are the second largest contributor to energy losses of vocational vehicles.
The proposed program for vocational vehicles for this phase of regulatory standards is limited
to tire technologies and hybrid powertrains (along with the separate engine standards). The
proposed standards depicted in Table 2 represent emission reductions from seven to 10 percent,
from a 2010 baseline.
              Table 2: Proposed MY 2017 Vocational Vehicle Standards

Light Heavy Class 3-5
Medium Heavy Class 6-7
Heavy Heavy Class 8
EPA Full Useful Life Emissions
Standards (g CO2/ton-mile)
344
204
107
NHTSA Fuel Consumption
Standards (gal/1,000 ton-mile)
33.8
20
10.5
EPA's Proposed N2O, CH4 and HFC Standards
In addition to the CO2 standards described above, EPA is proposing standards for N2O and
CH4 emissions. N2O and CH4 are important GHGs that contribute to global warming, more
so than CO2 for the same amount of emissions. While today's gasoline and diesel engines emit
relatively low levels of N2O and CH4 emissions, EPA's proposed standards would act to cap
emissions to ensure that manufacturers do not allow the N2O and CH4 emissions of their future
engines to increase significantly above the currently controlled low levels.
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Air conditioning (A/C) systems contribute to GHG emissions in two ways - direct emissions
through refrigerant leakage and indirect emissions due to the extra load on the vehicle's engine
to provide power to the air conditioning system. HFC refrigerants, which are powerful GHG
pollutants, can leak from the A/C system. EPA is proposing a standard of 1.5 percent refrigerant
leakage per year, to assure that high-quality, low-leakage components are used in each air condi-
tioning system design for pickup trucks, vans, and tractors.
Program Flexibilities
EPA's and NHTSA's proposed HD National Program provides flexibilities to manufacturers in
terms of how they could comply with the new standards. These flexibilities are expected to pro-
vide sufficient lead time for manufacturers to make necessary technological improvements and
reduce the overall cost of the program, without compromising overall environmental and fuel
consumption objectives.

The primary proposed flexibility provisions are an engine averaging, banking,  and trading
(ABT) program and a vehicle ABT program. These ABT programs would allow for emission
and/or fuel consumption credits to be averaged, banked, or traded within each of the regulatory
subcategories; however  it is proposed that credits would not be allowed to be transferred across
categories.

In addition to the general ABT programs, EPA is proposing to allow engine manufacturers the
added option of using CO2 credits to offset CH4 or N2O emissions that exceed the applicable
emission standards based on the relative global warming potentials of these emissions.

The structure of the proposed ABT  program for HD engines is based closely on earlier EPA
ABT programs for HD engines; the  proposed program for pickup trucks and vans is built on
the existing light-duty fuel economy credit carry-forward, carry-back, trading and transferring
provisions; and first-time ABT provisions are proposed for HD vehicle manufacturers that are as
consistent as possible with the provisions for other categories.

The agencies are proposing three  additional optional credit opportunities. The first is an early
credit option intended for manufacturers who demonstrate improvements in excess of a pro-
posed standard prior to  the model year that it becomes effective. The second is a credit program
intended to promote implementation of advanced technologies, such as hybrid powertrains,
Rankine  cycle engines,  and electric or fuel cell vehicles. The last is a credit intended to apply to
new and  innovative technologies that reduce vehicle CO2 emissions and fuel consumption, but
for which the benefits are not captured over the test procedure used to determine compliance
with the  standards (i.e., "off-cycle").

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Public Participation Opportunities
We welcome your comments on this action. Written comments will be accepted for 60 days
beginning when the proposal is published in the Federal Register. All comments should be
identified by EPA Docket No. EPA-HQ-OAR-2010-0162 or NHTSA Docket No.
NHTSA-2010-0079 and submitted by one of the methods listed in the following table.

You should consult the Federal Register notice for this joint proposal for more information
about how to submit comments and when the comment period will close. A copy of the Federal
Register notice can be found on the Web sites listed below. Two public hearings will be held, on
November 15 in Chicago, IL and on November 18 in Boston, MA. Please consult the separately
published hearing notice or the Web sites listed below for detailed information about the public
hearings.
Methods To Provide Comments

NHTSA
EPA
Mail
Docket Management Facility,
M-30 U.S. Department of
Transportation West Building,
Rm.W12- 140 1200
New Jersey Avenue, SE
Washington, DC 20590
Environmental Protection
Agency, Air and Radiation
Docket and Information Center
(6102T)
1200 Pennsylvania Avenue
NW Washington DC 20460
Hand Delivery
U.S. Department of Transportation
West Building, Ground Floor, Rm.
W12-140, 1200 New Jersey Avenue,
SE, Washington, DC 20590, between
9 a.m. and 5 p.m. Eastern Time,
Monday through Friday, except
Federal Holidays
EPA West building
EPA Docket Center (Room 3340)
1301 Constitution Avenue NW
Washington, DC
Internet/Email
www. regulations .gov
Docket No. NHTSA-
2010-0079
www. regulations .gov
Docket No. EPA-HQ-
OAR-2010-0162
Email: A-and-R-
Docket@epa.gov
Or speak at a public hearing

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a
For More Information

You can access the proposed joint rules and related documents on EPA's Office of Transportation
and Air Quality (OTAQ) Web site at:

          www.epa.gov/otaq/climate/regulations.htm

You can access the proposed joint rules and related documents, including the draft Environmental
Impact Statement, on NHTSA's Fuel Economy Web site at:

          http://www.nhtsa.gov/fuel-economy

For more information on these rules, please contact EPA or NHTSA at:

          EPA OTAQ Information Hotline
          Assessment and Standards Division
          (734) 214-4636
          E-mail: asdinfo@epa.gov

          NHTSA
          Office of Chief General Counsel
          (202) 366-2992

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