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and extensive stakeholder outreach. The proposed standards would promote a new generation of
cleaner, more fuel efficient trucks by encouraging the development and deployment of advanced
cost-effective technologies that reduce GHG emissions and fuel consumption.

Cost effective for businesses and consumers: Payback periods for truck owners would be
favorable: the typical buyer of a new long-haul truck in 2027 would recoup the extra cost of the
technology in under two years through fuel savings. After that point, it's money in the owner's
pocket. When these fuel savings bring down the costs of transporting goods, consumers can save
money as well.

Forward-looking, with time for long-term planning:  The Phase 2 proposal responds to the
President's directive to develop new GHG and fuel efficiency standards for heavy-duty trucks
that reach well into the next decade. The standards phase in over the long-term beginning in
model year 2021 and culminate in standards for model year 2027. Standards for trailers would
start in 2018 for EPA and in 2021 for NHTSA. The long phase in and incremental increases in
stringency are designed to give industry time to ensure products are reliable and durable, and to
provide long-term regulatory certainty.

Supportive of a single national program: This proposed program fully harmonizes EPA and
NHTSA standards. Moreover, the agencies have worked closely with the State of California's
Air Resources Board in developing these proposed standards. All three  agencies  are committed
to the final goal of a single national program that would allow manufacturers to continue to
build a single fleet of vehicles and engines.

Responsive to stakeholder input: The proposed Phase 2 standards carry forward the Admin-
istration's longstanding commitment to meaningful collaboration with stakeholders and  the
public, as they build on more than 300 meetings with manufacturers, suppliers, trucking  fleets,
dealerships, state air quality agencies, non-governmental organizations (NGOs), and other
stakeholders to identify and understand the opportunities and challenges involved with this
next level of fuel-saving technology. These meetings have been invaluable to the agencies,
enabling the development of a proposal that appropriately balances potential impacts and effec-
tively minimizes the possibility of unintended consequences. The proposed standards represent
the next step in an on ongoing conversation with stakeholders, and the agencies look forward to
further feedback during the comment period.

Proposed CO2 and Fuel Consumption Standards
The agencies are proposing new, more stringent standards for the same classes of heavy-duty
vehicles currently regulated through model 2018 and beyond under Phase 1. They are  also
proposing the first ever CO2 and fuel efficiency standards for certain trailers used with heavy-
duty combination tractors. Specifically, EPA's proposed CO2 emissions  standards and NHTSA's
proposed fuel consumption standards are tailored to each of four regulatory categories of
heavy-duty vehicles: (1) Combination Tractors; (2) Trailers Pulled by Combination Tractors;
(3)  Heavy-duty Pickup Trucks and Vans; and (4)  Vocational Vehicles which include all other
heavy-duty vehicles such as buses, refuse trucks, and concrete mixers. The proposal also includes
separate standards for the engines that power combination tractors and vocational vehicles.

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In addition to the proposed standards, EPA and NHTSA are seeking comment on alternative
standards that would accelerate the program by 2-3 years as well as several other alternative sets
of standards, including less stringent and more stringent options.

Combination Tractors
Class 7 and 8 combination tractors and their engines account for roughly two thirds of total
GHG emissions and fuel consumption from the heavy-duty sector. This is due to their large pay-
loads and high number of vehicle miles traveled. These combination tractors play a major role
in freight transport in the United States. The proposed CO2 and fuel consumption standards for
combination tractors and engines would start in model year (MY) 2021, increase incrementally
in MY 2024, and phase in completely by MY 2027. The proposed standards differ by vehicle
weight class, roof height, and cab type (sleeper or day). The fully phased-in standards would
achieve  up to 24 percent lower CO2 emissions and fuel consumption compared to  the Phase 1
standards. The proposed tractor standards could be met through improvements in  the engine,
transmission, driveline, aerodynamic design, lower rolling resistance tires, extended idle reduc-
tion technologies, and other accessories of the tractor.

Trailers
Recognizing the trailer as an integral part of the tractor-trailer vehicle that significantly
contributes to the emissions and fuel consumption of the tractor, the Phase 2 program includes
proposed standards for trailers used with heavy-duty combination tractors. The proposed stan-
dards would apply to certain trailer types beginning in MY 2018 for EPA's standards, and would
be voluntary for NHTSA from 2018 to 2020, with mandatory standard beginning  in 2021. The
proposed standards would extend to more trailer types in MY 2021. The fully-phased standards
would apply to the following 5 categories of trailers:

     Long (longer than 50 feet) highway box trailers-dry vans;
     Long highway box trailers -refrigerated vans;
     Short (50 feet and shorter) highway box trailers - dry vans;
     Short highway box trailers -refrigerated vans; and
     Non-box highway trailers

The standards increase in stringency in MYs 2021 and 2024, with final standards in MY 2027.
Some types of trailers would have reduced requirements or would be excluded from the trailer
standards altogether, including those designed for logging and mining, as well as mobile homes.
The fully phased-in trailer standards would achieve up to 8 percent lower CO2 emissions and
fuel consumption compared to an average MY 2017  trailer. Technologies that could be used to
meet the proposed standards include: aerodynamic devices, lower rolling resistance tires, auto-
matic tire inflation systems, and weight reduction.

Vocational Vehicles
Vocational vehicles consist of a wide variety of truck and bus types, including delivery trucks,
refuse haulers, public utility trucks, transit,  shuttle, and school buses. This segment also includes
very specialized vehicles such  as emergency vehicles, and cement and dump trucks. Vocational
vehicles represent about one fifth of the total medium- and heavy-duty fuel consumption.

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The agencies are proposing new CO2 and fuel consumption standards for vocational vehicles
starting in MY 2021, with increased stringency in MY 2024, and a fully phased'in stringency
level in MY 2027. The proposed vocational vehicle standards are differentiated using three
vehicle weights and three driving cycles. The agencies are also proposing separate standards for
emergency vehicles. The fully phased-in standards would achieve up to 16 percent reduction in
CO2 emissions and fuel consumption relative to Phase 1. The agencies project that the proposed
vocational vehicle standards could be met through improvements in the engine, transmission,
driveline, lower rolling resistance  tires, workday idle reduction technologies, and weight
reduction.

Heavy-Duty Pickup Trucks and  Vans
Heavy- and medium- duty pickup trucks and vans represent about 15 percent of the fuel con-
sumption and GHG emissions from the heavy- and medium-duty vehicle sector. The agencies
are proposing new CO2 emission and fuel consumption standards for heavy-duty pickups and
vans that would be applied in largely the same manner as the Phase 1 standards. Under this ap-
proach, all manufacturers face the same standards,  but the average emission and fuel consump-
tion rates applicable to each manufacturer depend on the manufacturer's  sales mix, with higher
capacity vehicles (payload and towing) having less stringent targets. The proposed standards for
this segment take the form of a  set of target standard curves, based on a "work factor" that, as
in Phase 1, combines a vehicle's payload, towing capabilities, and whether or not it has 4-wheel
drive. The proposed standards would become 2.5% more stringent every year from model years
2021 to 2027.

The proposed program would reduce CO2 emissions and fuel consumption for these vehicles by
about 16 percent beyond Phase 1  when fully phased in. We believe most manufacturers would
choose to meet the performance standards through increased use of the same technologies al-
ready  being used to meet the  2014-2018 standards. These technologies include improvements in
engines, transmissions, and lower  rolling resistance tire technologies. Under Phase 2, the agen-
cies expect newer, advanced technologies such as engine stop start and powertrain hybridization
will also become available in this  segment of the market. These newer technologies are NOT
mandated but some manufacturers may choose to use them to meet the standard.

Engine Standards
As with the Phase 1 program, the agencies are proposing separate standards and test cycles for
tractor engines, vocational diesel  engines, and vocational gasoline engines. For diesel engines,
the proposed standards would begin in model year  2021  and phase in to MY 2027, with interim
standards in MY 2024. We are also proposing a revised test cycle weighting for tractor engines
to better reflect actual in-use  operation. The proposed diesel engine standards would reduce
CO2 emissions and fuel consumption by up to 4 percent compared to Phase 1. Technologies that
could  be used to meet the standards include: combustion optimization; improved air handling;
reduced friction within the engine; improved emissions after-treatment technologies; and waste
heat recovery.

Standards for Other Greenhouse Gases
Because certain refrigerants are  also extremely potent GHGs, the program includes EPA-
proposed standards to control leakage of hydrofluorocarbons (HFCs) from air conditioning

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systems in vocational vehicles. Similar HFC standards already apply under the Phase 1 program
for combination tractors, and for pickup trucks and vans.

EPA is also proposing more stringent nitrous oxide (N2O) standards for heavy-duty engines.
Program Flexibilities
This rule includes averaging, banking, and trading (ABT) compliance provisions for the
engine and vehicle standards in this program. These provisions would allow manufactures to
trade credits, bank credits for future years, and average credits, which allows manufacturers to
certify engines or vehicles that do not perform up to the standard and offset them with engines
or vehicles that perform better than the standard. ABT provisions allow manufacturers to
balance market fluctuations impacting their sales volumes and projected compliance plans. This
program was established under Phase 1, and EPA and NHTSA are proposing to continue it with
some minor revisions. The ABT flexibilities are designed to help increase the rate at which new
technologies could be implemented, reduce the cost of compliance, and address potential lead
time challenges in meeting the standards.

As with similar flexibilities  in the light'duty Corporate Average Fuel Economy program and
other mobile source pollution control programs, the Phase 2 ABT program includes rigorous
compliance provisions to ensure that the energy savings and environmental goals of the program
are met and the standards are applied equitably among all manufacturers.

We are not proposing to include a full ABT program for the trailer standards because the nature
of the industry makes it a challenge for trailer manufacturers to benefit from this type of program.
Instead, we are proposing limited averaging provisions for certain trailer manufacturers.

The agencies are also proposing flexibilities for small businesses including an extra year of
lead time before meeting the standards, less stringent standards, and reduced compliance
requirements.

Public Participation  Opportunities

EPA and NHTSA welcome your comments on this proposed rule. Information on how to submit
comments, the length of the public comment period, and where and when public hearings will
be held may be found on both NHTSA's and EPA's websites (see For More Information below).

For NHTSA:
All comments should be identified by Docket ID No. NHTSA- 2014-0132 and submitted by
one of the following methods:

          Internet: www.regulations.gov
          Mail or Hand Delivery:
             Docket Management Facility, M-30
             U.S. Department of Transportation, West Building

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                      Ground Floor, Rm. W12-140
                      1 200 New Jersey Avenue SE
                      Washington, DC 20590

         For EPA:
          All comments should be identified by Docket ID No. EPA-HQ-OAR-2014-0827 and submitted
         by one of the following methods:

                   Internet: www.regulations.gov
                   E-mail: A-and-R-Docket@epa.gov
                   Mail:
                      Environmental Protection Agency
                      Air and Radiation Docket and Information Center (6102T)
                      1200 Pennsylvania Avenue NW
                      Washington, DC 20460
                   Hand Delivery:
                      EPA West building
                      EPA Docket Center (Room 3340)
                      1301 Constitution Avenue NW
                      Washington, DC
         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/regs-heavy-duty.htm

         You can access the proposed joint rules and related documents, including the Draft Environ-
         mental Impact Statement, on NHTSA's Fuel Economy Web site at:
^^

                   www.nhtsa.gov/fuel-economy

         For more information on these and related rules, please contact EPA or NHTSA.

         EPA OTAQ Public Inquiries                    NHTSA Public Inquiries

         www.epa.gov/otaq/oms-cmt.htm                  www.nhtsa.gov/Contact

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