Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium- and Heavy-Duty Engines and Vehicles-Phase 2

AGENCY:

Environmental Protection Agency (EPA) and Department of Transportation (DOT) National Highway Traffic Safety Administration (NHTSA)

ACTION:

Proposed rule.

SUMMARY:

EPA and NHTSA, on behalf of the Department of Transportation, are each proposing rules to establish a comprehensive Phase 2 Heavy-Duty (HD) National Program that will reduce greenhouse gas (GHG) emissions and fuel consumption for new on-road heavy-duty vehicles. This technology-advancing program would phase in over the long-term, beginning in the 2018 model year and culminating in standards for model year 2027, responding to the President's directive on February 18, 2014, to develop new standards that will take us well into the next decade. NHTSA's proposed fuel consumption standards and EPA's proposed carbon dioxide (CO₂) emission standards are tailored to each of four regulatory categories of heavy-duty vehicles: Combination tractors; trailers used in combination with those tractors; heavy-duty pickup trucks and vans; and vocational vehicles. The proposal also includes separate standards for the engines that power combination tractors and vocational vehicles. Certain proposed requirements for control of GHG emissions are exclusive to EPA programs. These include EPA's proposed hydrofluorocarbon standards to control leakage from air conditioning systems in vocational vehicles, and EPA's proposed nitrous oxide (N₂ O) and methane (CH₄) standards for heavy-duty engines. Additionally, NHTSA is addressing misalignment in the Phase 1 standards between EPA and NHTSA to ensure there are no differences in compliance standards between the agencies. In an effort to promote efficiency, the agencies are also proposing to amend their rules to modify reporting requirements, such as the method by which manufacturers submit pre-model, mid-model, and supplemental reports. EPA's proposed HD Phase 2 GHG emission standards are authorized under the Clean Air Act and NHTSA's proposed HD Phase 2 fuel consumption standards authorized under the Energy Independence and Security Act of 2007. These standards would begin with model year 2018 for trailers under EPA standards and 2021 for all of the other heavy-duty vehicle and engine categories. The agencies estimate that the combined standards would reduce CO₂ emissions by approximately 1 billion metric tons and save 1.8 billion barrels of oil over the life of vehicles and engines sold during the Phase 2 program, providing over $200 billion in net societal benefits. As noted, the proposal also includes certain EPA-specific provisions relating to control of emissions of pollutants other than GHGs. EPA is seeking comment on non-GHG emission standards relating to the use of auxiliary power units installed in tractors. In addition, EPA is proposing to clarify the classification of natural gas engines and other gaseous-fueled heavy-duty engines, and is proposing closed crankcase standards for emissions of all pollutants from natural gas heavy-duty engines. EPA is also proposing technical amendments to EPA rules that apply to emissions of non-GHG pollutants from light-duty motor vehicles, marine diesel engines, and other nonroad engines and equipment. Finally, EPA is proposing to require that rebuilt engines installed in new incomplete vehicles meet the emission standards applicable in the year of assembly, including all applicable standards for criteria pollutants.

DATES:

Comments on all aspects of this proposal must be received on or before September 11, 2015. Under the Paperwork Reduction Act (PRA), comments on the information collection provisions are best assured of consideration if the Office of Management and Budget (OMB) receives a copy of your comments on or before August 12, 2015.

EPA and NHTSA will announce the public hearing dates and locations for this proposal in a supplemental Federal Register document.

ADDRESSES:

Submit your comments, identified by Docket ID No. EPA-HQ-OAR-2014-0827 (for EPA's docket) and NHTSA-2014-0132 (for NHTSA's docket) by one of the following methods:

• Online:www.regulations.gov: Follow the on-line instructions for submitting comments.
• Email:a-and-r-docket@epa.gov.
• Mail:

EPA: Air and Radiation Docket and Information Center, Environmental Protection Agency, Mail code: 28221T, 1200 Pennsylvania Ave. NW., Washington, DC 20460.

NHTSA: Docket Management Facility, M-30, U.S. Department of Transportation, West Building, Ground Floor, Rm. W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590.

• Hand Delivery:

EPA: EPA Docket Center, EPA WJC West Building, Room 3334, 1301 Constitution Ave. NW., Washington, DC 20460. Such deliveries are only accepted during the Docket's normal hours of operation, and special arrangements should be made for deliveries of boxed information.

NHTSA: West Building, Ground Floor, Rm. W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590, between 9 a.m. and 4 p.m. Eastern Time, Monday through Friday, except Federal holidays.

Instructions: EPA and NHTSA have established dockets for this action under Direct your comments to Docket ID No. EPA-HQ-OAR-2014-0827 and/or NHTSA-2014-0132, respectively. See the SUPPLEMENTARY INFORMATION section on “Public Participation” for more information about submitting written comments.

Docket: All documents in the docket are listed on the www.regulations.gov Web site. Although listed in the index, some information is not publicly available, e.g., confidential business information or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the Internet and will be publicly available only in hard copy form. Publicly available docket materials are available either electronically through www.regulations.gov or in hard copy at the following locations:

EPA: Air and Radiation Docket and Information Center, EPA Docket Center, EPA/DC, EPA WJC West Building, 1301 Constitution Ave. NW., Room 3334, Washington, DC. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is (202) 566-1744, and the telephone number for the Air Docket is (202) 566-1742.

NHTSA: Docket Management Facility, M-30, U.S. Department of Transportation, West Building, Ground Floor, Rm. W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590. The telephone number for the docket management facility is (202) 366-9324. The docket management facility is open between 9 a.m. and 5 p.m. Eastern Time, Monday through Friday, except Federal holidays.

FOR FURTHER INFORMATION CONTACT:

EPA: For hearing information or to register, please contact: JoNell Iffland, Office of Transportation and Air Quality, Assessment and Standards Division (ASD), Environmental Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI 48105; Telephone number: (734) 214-4454; Fax number: (734) 214-4816; Email address: iffland.jonell@epa.gov. For all other information related to the rule, please contact: Tad Wysor, Office of Transportation and Air Quality, Assessment and Standards Division (ASD), Environmental Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI 48105; telephone number: (734) 214-4332; email address: wysor.tad@epa.gov.

NHTSA: Ryan Hagen or Analiese Marchesseault, Office of Chief Counsel, National Highway Traffic Safety Administration, 1200 New Jersey Avenue SE., Washington, DC 20590. Telephone: (202) 366-2992; ryan.hagen@dot.gov or analiese.marchesseault@dot.gov.

SUPPLEMENTARY INFORMATION:

A. Does this action apply to me?

This proposed action would affect companies that manufacture, sell, or import into the United States new heavy-duty engines and new Class 2b through 8 trucks, including combination tractors, all types of buses, vocational vehicles including municipal, commercial, recreational vehicles, and commercial trailers as well as 3/4-ton and 1-ton pickup trucks and vans. The heavy-duty category incorporates all motor vehicles with a gross vehicle weight rating of 8,500 lbs or greater, and the engines that power them, except for medium-duty passenger vehicles already covered by the greenhouse gas standards and corporate average fuel economy standards issued for light-duty model year 2017-2025 vehicles. Proposed regulated categories and entities include the following:

This table is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely covered by these rules. This table lists the types of entities that the agencies are aware may be regulated by this action. Other types of entities not listed in the table could also be regulated. To determine whether your activities are regulated by this action, you should carefully examine the applicability criteria in the referenced regulations. You may direct questions regarding the applicability of this action to the persons listed in the preceding FOR FURTHER INFORMATION CONTACT section.

B. Public Participation

EPA and NHTSA request comment on all aspects of this joint proposed rule. This section describes how you can participate in this process.

(1) How do I prepare and submit comments?

In this joint proposal, there are many issues common to both EPA's and NHTSA's proposals. For the convenience of all parties, comments submitted to the EPA docket will be considered comments submitted to the NHTSA docket, and vice versa. An exception is that comments submitted to the NHTSA docket on NHTSA's Draft Environmental Impact Statement (EIS) will not be considered submitted to the EPA docket. Therefore, the public only needs to submit comments to either one of the two agency dockets, although they may submit comments to both if they so choose. Comments that are submitted for consideration by one agency should be identified as such, and comments that are submitted for consideration by both agencies should be identified as such. Absent such identification, each agency will exercise its best judgment to determine whether a comment is submitted on its proposal.

Further instructions for submitting comments to either EPA or NHTSA docket are described below.

EPA: Direct your comments to Docket ID No. EPA-HQ-OAR-2014-0827. EPA's policy is that all comments received will be included in the public docket without change and may be made available online at www.regulations.gov, including any personal information provided, unless the comment includes information claimed to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Do not submit information that you consider to be CBI or otherwise protected through www.regulations.gov or email. The www.regulations.gov Web site is an “anonymous access” system, which means EPA will not know your identity or contact information unless you provide it in the body of your comment. If you send an email comment directly to EPA without going through www.regulations.gov your email address will be automatically captured and included as part of the comment that is placed in the public docket and made available on the Internet. If you submit an electronic comment, EPA recommends that you include your name and other contact information in the body of your comment and with any disk or CD-ROM you submit. If EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, EPA may not be able to consider your comment. Electronic files should avoid the use of special characters, any form of encryption, and be free of any defects or viruses. For additional information about EPA's public docket visit the EPA Docket Center homepage at http://www.epa.gov/​epahome/​dockets.htm.

NHTSA: Your comments must be written and in English. To ensure that your comments are correctly filed in the Docket, please include the Docket number NHTSA-2014-0132 in your comments. Your comments must not be more than 15 pages long. NHTSA established this limit to encourage you to write your primary comments in a concise fashion. However, you may attach necessary additional documents to your comments, and there is no limit on the length of the attachments. If you are submitting comments electronically as a PDF (Adobe) file, we ask that the documents submitted be scanned using the Optical Character Recognition (OCR) process, thus allowing the agencies to search and copy certain portions of your submissions. Please note that pursuant to the Data Quality Act, in order for the substantive data to be relied upon and used by the agency, it must meet the information quality standards set forth in the OMB and Department of Transportation (DOT) Data Quality Act guidelines. Accordingly, we encourage you to consult the guidelines in preparing your comments. OMB's guidelines may be accessed at http://www.whitehouse.gov/​omb/​fedreg/​reproducible.html. DOT's guidelines may be accessed at http://www.dot.gov/​dataquality.htm.

(2) Tips for Preparing Your Comments

When submitting comments, please remember to:

• Identify the rulemaking by docket number and other identifying information (subject heading, Federal Register date and page number).
• Explain why you agree or disagree, suggest alternatives, and substitute language for your requested changes.
• Describe any assumptions and provide any technical information and/or data that you used.
• If you estimate potential costs or burdens, explain how you arrived at your estimate in sufficient detail to allow for it to be reproduced.
• Provide specific examples to illustrate your concerns, and suggest alternatives.
• Explain your views as clearly as possible, avoiding the use of profanity or personal threats.
• Make sure to submit your comments by the comment period deadline identified in the DATES section above.

(3) How can I be sure that my comments were received?

NHTSA: If you submit your comments by mail and wish Docket Management to notify you upon its receipt of your comments, enclose a self-addressed, stamped postcard in the envelope containing your comments. Upon receiving your comments, Docket Management will return the postcard by mail.

(4) How do I submit confidential business information?

Any confidential business information (CBI) submitted to one of the agencies will also be available to the other agency. However, as with all public comments, any CBI information only needs to be submitted to either one of the agencies' dockets and it will be available to the other. Following are specific instructions for submitting CBI to either agency. If you have any questions about CBI or the procedures for claiming CBI, please consult the persons identified in the FOR FURTHER INFORMATION CONTACT section.

EPA: Do not submit CBI to EPA through www.regulations.gov or email. Clearly mark the part or all of the information that you claim to be CBI. For CBI information in a disk or CD ROM that you mail to EPA, mark the outside of the disk or CD ROM as CBI and then identify electronically within the disk or CD ROM the specific information that is claimed as CBI. Information not marked as CBI will be included in the public docket without prior notice. In addition to one complete version of the comment that includes information claimed as CBI, a copy of the comment that does not contain the information claimed as CBI must be submitted for inclusion in the public docket. Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2.

NHTSA: If you wish to submit any information under a claim of confidentiality, you should submit three copies of your complete submission, including the information you claim to be confidential business information, to the Chief Counsel, NHTSA, at the address given above under FOR FURTHER INFORMATION CONTACT. When you send a comment containing confidential business information, you should include a cover letter setting forth the information specified in our confidential business information regulation.

In addition, you should submit a copy from which you have deleted the claimed confidential business information to the Docket by one of the methods set forth above.

(5) How can I read the comments submitted by other people?

You may read the materials placed in the docket for this document (e.g., the comments submitted in response to this document by other interested persons) at any time by going to http://www.regulations.gov. Follow the online instructions for accessing the dockets. You may also read the materials at the EPA Docket Center or NHTSA Docket Management Facility by going to the street addresses given above under ADDRESSES.

(6) How do I participate in the public hearings?

EPA and NHTSA will announce the public hearing dates and locations for this proposal in a supplemental Federal Register document. At all hearings, both agencies will accept comments on the rulemaking, and NHTSA will also accept comments on the EIS.

If you would like to present testimony at the public hearings, we ask that you notify EPA and NHTSA contact persons listed in the FOR FURTHER INFORMATION CONTACT section at least ten days before the hearing. Once EPA and NHTSA learn how many people have registered to speak at the public hearing, we will allocate an appropriate amount of time to each participant. For planning purposes, each speaker should anticipate speaking for approximately ten minutes, although we may need to adjust the time for each speaker if there is a large turnout. We suggest that you bring copies of your statement or other material for EPA and NHTSA panels. It would also be helpful if you send us a copy of your statement or other materials before the hearing. To accommodate as many speakers as possible, we prefer that speakers not use technological aids (e.g., audio-visuals, computer slideshows). However, if you plan to do so, you must notify the contact persons in the FOR FURTHER INFORMATION CONTACT section above. You also must make arrangements to provide your presentation or any other aids to EPA and NHTSA in advance of the hearing in order to facilitate set-up. In addition, we will reserve a block of time for anyone else in the audience who wants to give testimony. The agencies will assume that comments made at the hearings are directed to the proposed rule unless commenters specifically reference NHTSA's EIS in oral or written testimony.

The hearing will be held at a site accessible to individuals with disabilities. Individuals who require accommodations such as sign language interpreters should contact the persons listed under FOR FURTHER INFORMATION CONTACT section above no later than ten days before the date of the hearing.

EPA and NHTSA will conduct the hearing informally, and technical rules of evidence will not apply. We will arrange for a written transcript of the hearing and keep the official record of the hearing open for 30 days to allow you to submit supplementary information. You may make arrangements for copies of the transcript directly with the court reporter.

C. Did EPA conduct a peer review before issuing this notice?

This regulatory action is supported by influential scientific information. Therefore, EPA conducted a peer review consistent with OMB's Final Information Quality Bulletin for Peer Review. As described in Section II.C.3, a peer review of updates to the vehicle simulation model (GEM) for the proposed Phase 2 standards has been completed. This version of GEM is based on the model used for the Phase 1 rule, which was peer-reviewed by a panel of four independent subject matter experts (from academia and a national laboratory). The peer review report and the agency's response to the peer review comments are available in Docket ID No. EPA-HQ-OAR-2014-0827.

D. Executive Summary

(1) Commitment to Greenhouse Gas Emission Reductions and Vehicle Fuel Efficiency

As part of the Climate Action Plan announced in June 2013, the President directed the Environmental Protection Agency (EPA) and the Department of Transportation's (DOT) National Highway Traffic Safety Administration (NHTSA) to set the next round of standards to reduce greenhouse gas (GHG) emissions and improve fuel efficiency for medium- and heavy-duty vehicles. More than 70 percent of the oil used in the United States and 28 percent of GHG emissions come from the transportation sector, and since 2009 EPA and NHTSA have worked with industry and states to develop ambitious, flexible standards for both the fuel economy and GHG emissions of light-duty vehicles and the fuel efficiency and GHG emissions of heavy-duty vehicles. The standards proposed here (referred to as Phase 2) would build on the light-duty vehicle standards spanning model years 2011 to 2025 and on the initial phase of standards (referred to as Phase 1) for new medium and heavy-duty vehicles (MDVs and HDVs) and engines in model years 2014 to 2018. Throughout every stage of development for these programs, EPA and NHTSA (collectively, the agencies, or “we”) have worked in close partnership not only with one another, but with the vehicle manufacturing industry, environmental community leaders, and the State of California among other entities to create a single, effective set of national standards.

Through two previous rulemakings, EPA and NHTSA have worked with the auto industry to develop new fuel economy and GHG emission standards for light-duty vehicles. Taken together, the light-duty vehicle standards span model years 2011 to 2025 and are the first significant improvement in fuel economy in approximately two decades. Under the final program, average new car and light truck fuel economy is expected to double by 2025. This is projected to save consumers $1.7 trillion at the pump—roughly $8,200 per vehicle for a MY2025 vehicle—reducing oil consumption by 2.2 million barrels a day in 2025 and slashing GHG emissions by 6 billion metric tons over the lifetime of the vehicles sold during this period. These fuel economy standards are already delivering savings for American drivers. Between model years 2008 and 2013, the unadjusted average test fuel economy of new passenger cars and light trucks sold in the United States has increased by about four miles per gallon. Altogether, light-duty vehicle fuel economy standards finalized after 2008 have already saved nearly one billion gallons of fuel and avoided more than 10 million tons of carbon dioxide emissions.

Similarly, EPA and NHTSA have previously developed joint GHG emission and fuel efficiency standards for MDVs and HDVs. Prior to these Phase 1 standards, heavy-duty trucks and buses—from delivery vans to the largest tractor-trailers—were required to meet pollution standards for soot and smog-causing air pollutants, but no requirements existed for the fuel efficiency or carbon pollution from these vehicles. By 2010, total fuel consumption and GHG emissions from MDVs and HDVs had been growing, and these vehicles accounted for 23 percent of total U.S. transportation-related GHG emissions. In August 2011, the agencies finalized the groundbreaking Phase 1 standards for new MDVs and HDVs in model years 2014 through 2018. This program, developed with support from the trucking and engine industries, the State of California, Environment Canada, and leaders from the environmental community, set standards that are expected to save a projected 530 million barrels of oil and reduce carbon emissions by about 270 million metric tons, representing one of the most significant programs available to reduce domestic emissions of GHGs. The Phase 1 program, as well as the many additional actions called for in the President's 2013 Climate Action Plan including this Phase 2 rulemaking, not only result in meaningful decreases in GHG emissions, but support—indeed are critical for—United States leadership to encourage other countries to also achieve meaningful GHG reductions.

This proposal builds on our commitment to robust collaboration with stakeholders and the public. It follows an expansive and thorough outreach effort in which the agencies gathered input, data and views from many interested stakeholders, involving over 200 meetings with heavy-duty vehicle and engine manufacturers, technology suppliers, trucking fleets, truck drivers, dealerships, environmental organizations, and state agencies. As with the previous light-duty rules and the heavy-duty Phase 1 rule, the agencies have consulted frequently with the California Air Resources Board staff during the development of this Phase 2 proposal, given California's unique ability among the states to adopt their own GHG standards for on-highway engines and vehicles. The agencies look forward to feedback and ongoing conversation following the release of this proposed rule from all stakeholders—including through planned public hearings, written comments, and other opportunities for input.

(2) Overview of Phase 1 Medium- and Heavy-Duty Vehicle Standards

The President's direction to EPA and NHTSA to develop GHG emission and fuel efficiency standards for MDVs and HDVs resulted in the agencies' promulgation of the Phase 1 program in 2011, which covers new trucks and heavy vehicles in model years 2014 to 2018. The Phase 1 program includes specific standards for combination tractors, heavy-duty pickup trucks and vans, and vocational vehicles, and includes separate standards for both vehicles and engines. The program offers extensive flexibility, allowing manufacturers to reach standards through average fleet calculations, a mix of technologies, and the use of various credit and banking programs.

The Phase 1 program was developed through close consultation with industry and other stakeholders, resulting in standards tailored to the specifics of each different class of vehicles and engines.

• Heavy-duty combination tractors. Combination tractors—semi trucks that typically pull trailers—are regulated under nine subcategories based on weight class, cab type, and roof height. These vehicles represent approximately two-thirds of all fuel consumption and GHG emissions from MDVs and HDVs.
• Heavy-duty pickup trucks and vans. Heavy-duty pickup and van standards are based on a “work factor” attribute that combines a vehicle's payload, towing capabilities, and the presence of 4-wheel drive. These vehicles represent about 15 percent of the fuel consumption and GHG emissions from MDVs and HDVs.
• Vocational vehicles. Specialized vocational vehicles, which consist of a very wide variety of truck and bus types (e.g., delivery, refuse, utility, dump, cement, transit bus, shuttle bus, school bus, emergency vehicles, and recreational vehicles) are regulated in three subcategories based on engine classification. These vehicles represent approximately 20 percent of the fuel consumption and GHG emissions from MDVs and HDVs. The Phase 1 program includes EPA GHG standards for recreational vehicles, but not NHTSA fuel efficiency standards.

• Heavy-duty engines. In addition to vehicle types, the Phase 1 rule has separate standards for heavy-duty engines, to assure they contribute to the overall vehicle reductions in fuel consumption and GHG emissions.

The Phase 1 standards are premised on utilization of immediately available technologies. The Phase 1 program provides flexibilities that facilitate compliance. These flexibilities help provide 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 flexibility provisions are an engine averaging, banking, and trading (ABT) program and a vehicle ABT program. These ABT programs allow for emission and/or fuel consumption credits to be averaged, banked, or traded within each of the regulatory subcategories. However, credits are not allowed to be transferred across subcategories.

The Phase 1 program is projected to save 530 million barrels of oil and avoid 270 million metric tons of GHG emissions. At the same time, the program is projected to produce $50 billion in fuel savings, and net societal benefits of $49 billion. Today, the Phase 1 fuel efficiency and GHG reduction standards are already reducing GHG emissions and U.S. oil consumption, and producing fuel savings for America's trucking industry. The market appears to be very accepting of the new technology, and the agencies have seen no evidence of “pre-buy” effects in response to the standards.

(3) Overview of Proposed Phase 2 Medium- and Heavy-Duty Vehicle Standards

The Phase 2 GHG and fuel efficiency standards for MDVs and HDVs are a critical next step in improving fuel efficiency and reducing GHG. The proposed Phase 2 standards carry forward our commitment to meaningful collaboration with stakeholders and the public, as they build on more than 200 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 all potential impacts and effectively minimizes the possibility of unintended consequences.

Phase 2 would include technology-advancing standards that would phase in over the long-term (through model year 2027) to result in an ambitious, yet achievable program that would allow manufacturers to meet standards through a mix of different technologies at reasonable cost. The Phase 2 standards would maintain the underlying regulatory structure developed in the Phase 1 program, such as the general categorization of MDVs and HDVs and the separate standards for vehicles and engines. However, the Phase 2 program would build on and advance Phase 1 in a number of important ways including: Basing standards not only on currently available technologies but also on utilization of technologies now under development or not yet widely deployed while providing significant lead time to assure adequate time to develop, test, and phase in these controls; developing standards for trailers; further encouraging innovation and providing flexibility; including vehicles produced by small business manufacturers; incorporating enhanced test procedures that (among other things) allow individual drivetrain and powertrain performance to be reflected in the vehicle certification process; and using an expanded and improved compliance simulation model.

• Strengthening standards to account for ongoing technological advancements. Relative to the baseline as of the end of Phase 1, the proposed standards (labeled Alternative 3 or the “preferred alternative” throughout this proposal) would achieve vehicle fuel savings of up to 8 percent and 24 percent, depending on the vehicle category. While costs are higher than for Phase 1, benefits greatly exceed costs, and payback periods are short, meaning that consumers will see substantial net savings over the vehicle lifetime. Payback is estimated at about two years for tractors and trailers, about five years for vocational vehicles, and about three years for heavy-duty pickups and vans. The agencies are further proposing to phase in these MY 2027 standards with interim standards for model years 2021 and 2024 (and for certain types of trailers, EPA is proposing model year 2018 phase-in standards as well).

In addition to the proposed standards, the agencies are considering another alternative (Alternative 4), which would achieve the same performance as the proposed standards 2-3 years earlier, leading to overall reductions in fuel use and greenhouse gas emissions. The agencies believe Alternative 4 has the potential to be the maximum feasible and appropriate alternative; however, based on the evidence currently before us, EPA and NHTSA have outstanding questions regarding relative risks and benefits of Alternative 4 due to the timeframe envisioned by that alternative. The agencies are proposing Alternative 3 based on their analyses and projections, and taking into account the agencies' respective statutory considerations. The comments that the agencies receive on this proposal will be instrumental in helping us determine standards that are appropriate (for EPA) and maximum feasible (for NHTSA), given the discretion that both agencies have under our respective statutes. Therefore, the agencies have presented different options and raised specific questions throughout the proposed rule, focusing in particular on better understanding the perspectives on the feasible adoption rates of different technologies, considering associated costs and necessary lead time.

• Setting standards for trailers for the first time. In addition to retaining the vehicle and engine categories covered in the Phase 1 program, which include semi tractors, heavy-duty pickup trucks and work vans, vocational vehicles, and separate standards for heavy-duty engines, the Phase 2 standards propose fuel efficiency and GHG emission standards for trailers used in combination with tractors. Although the agencies are not proposing standards for all trailer types, the majority of new trailers would be covered.
• Encouraging technological innovation while providing flexibility and options for manufacturers. For each category of HDVs, the standards would set performance targets that allow manufacturers to achieve reductions through a mix of different technologies and leave manufacturers free to choose any means of compliance. For tractors and vocational vehicles, enhanced test procedures and an expanded and improved compliance simulation model enable the proposed vehicle standards to encompass more of the complete vehicle and to account for engine, transmission and driveline improvements than the Phase 1 program. With the addition of the powertrain and driveline to the compliance model, representative drive cycles and vehicle baseline configurations become critically important to assure the standards promote technologies that improve real world fuel efficiency and GHG emissions. This proposal updates drive cycles and vehicle configurations to better reflect real world operation. For tractor standards, for example, different combinations of improvements like advanced aerodynamics, engine improvements and waste-heat recovery, automated transmission, and lower rolling resistance tires and automatic tire inflation can be used to meet standards. Additionally, the agencies' analyses indicate that this proposal should have no adverse impact on vehicle or engine safety.
• Providing flexibilities to help minimize effect on small businesses. All small businesses are exempt from the Phase 1 standards. The agencies are proposing to regulate small business entities under Phase 2 (notably certain trailer manufacturers), but have conducted extensive proceedings pursuant to Section 609 of the Regulatory Flexibility Act, and otherwise have engaged in extensive consultation with stakeholders, and developed a proposed approach to provide targeted flexibilities geared toward helping small businesses comply with the Phase 2 standards. Specifically, the agencies are proposing to delay all new requirements by one year and simplify certification requirements for small businesses, and are further proposing additional specific flexibilities adapted to particular types of trailers.

(4) Issues Addressed in This Proposed Rule

This proposed rule contains extensive discussion of the background, elements, and implications of the proposed Phase 2 program. Section I includes information on the MDV and HDV industry, related regulatory and non-regulatory programs, summaries of Phase 1 and Phase 2 programs, costs and benefits of the proposed standards, and relevant statutory authority for EPA and NHTSA. Section II discusses vehicle simulation, engine standards, and test procedures. Sections III, IV, V, and VI detail the proposed standards for combination tractors, trailers, vocational vehicles, and heavy-duty pickup trucks and vans. Sections VII and VIII discuss aggregate GHG impacts, fuel consumption impacts, climate impacts, and impacts on non-GHG emissions. Section IX evaluates the economic impacts of the proposed standards. Sections X, XI, and XII present the alternatives analyses, consideration of natural gas vehicles, and the agencies' initial response to recommendations from the Academy of Sciences. Finally, Sections XIII and XIV discuss the changes that the proposed Phase 2 rules would have on Phase 1 standards and other regulatory provisions. In addition to this preamble, the agencies have also prepared a joint Draft Regulatory Impact Analysis (DRIA) which is available on our respective Web sites and in the public docket for this rulemaking which provides additional data, analysis and discussion of the proposed standards and the alternatives analyzed by the agencies. We request comment on all aspects of this proposed rulemaking, including the DRIA.

Table of Contents

A. Does this action apply to me?

B. Public Participation

C. Did EPA conduct a peer review before issuing this notice?

D. Executive Summary

I. Overview

A. Background

B. Summary of Phase 1 Program

C. Summary of the Proposed Phase 2 Standards and Requirements

D. Summary of the Costs and Benefits of the Proposed Rule

E. EPA and NHTSA Statutory Authorities

F. Other Issues

II. Vehicle Simulation, Engine Standards and Test Procedures

A. Introduction and Summary of Phase 1 and Phase 2 Regulatory Structures

B. Phase 2 Proposed Regulatory Structure

C. Proposed Vehicle Simulation Model—Phase 2 GEM

D. Proposed Engine Test Procedures and Engine Standards

III. Class 7 and 8 Combination Tractors

A. Summary of the Phase 1 Tractor Program

B. Overview of the Proposed Phase 2 Tractor Program

C. Proposed Phase 2 Tractor Standards

D. Feasibility of the Proposed Tractor Standards

E. Proposed Compliance Provisions for Tractors

F. Flexibility Provisions

IV. Trailers

A. Summary of Trailer Consideration in Phase 1

B. The Trailer Industry

C. Proposed Phase 2 Trailer Standards

D. Feasibility of the Proposed Trailer Standards

E. Alternative Standards and Feasibility Considered

F. Trailer Standards: Compliance and Flexibilities

V. Class 2b-8 Vocational Vehicles

A. Summary of Phase 1 Vocational Vehicle Standards

B. Proposed Phase 2 Standards for Vocational Vehicles

C. Feasibility of the Proposed Vocational Vehicle Standards

D. Alternative Vocational Vehicle Standards Considered

E. Compliance Provisions for Vocational Vehicles

VI. Heavy-Duty Pickups and Vans

A. Introduction and Summary of Phase 1 HD Pickup and Van Standards

B. Proposed HD Pickup and Van Standards

C. Feasibility of Pickup and Van Standards

D. DOT CAFE Model Analysis of the Regulatory Alternatives for HD Pickups and Vans

E. Compliance and Flexibility for HD Pickup and Van Standards

VII. Aggregate GHG, Fuel Consumption, and Climate Impacts

A. What methodologies did the agencies use to project GHG emissions and fuel consumption impacts?

B. Analysis of Fuel Consumption and GHG Emissions Impacts Resulting From Proposed Standards and Alternative 4

C. What are the projected reductions in fuel consumption and GHG emissions?

VIII. How will this proposed action impact non-GHG emissions and their associated effects?

A. Emissions Inventory Impacts

B. Health Effects of Non-GHG Pollutants

C. Environmental Effects of Non-GHG Pollutants

D. Air Quality Impacts of Non-GHG Pollutants

IX. Economic and Other Impacts

A. Conceptual Framework

B. Vehicle-Related Costs Associated With the Program

C. Changes in Fuel Consumption and Expenditures

D. Maintenance Expenditures

E. Analysis of the Rebound Effect

F. Impact on Class Shifting, Fleet Turnover, and Sales

G. Monetized GHG Impacts

H. Monetized Non-GHG Health Impacts

I. Energy Security Impacts

J. Other Impacts

K. Summary of Benefits and Costs

L. Employment Impacts

M. Cost of Ownership and Payback Analysis

N. Safety Impacts

X. Analysis of the Alternatives

A. What are the alternatives that the agencies considered?

B. How do these alternatives compare in overall fuel consumption and GHG emissions reductions and in benefits and costs?

XI. Natural Gas Vehicles and Engines

A. Natural Gas Engine and Vehicle Technology

B. GHG Lifecycle Analysis for Natural Gas Vehicles

C. Projected Use of LNG and CNG

D. Natural Gas Emission Control Measures

E. Dimethyl Ether

XII. Agencies' Response to Recommendations From the National Academy of Sciences

A. Overview

B. Major Findings and Recommendations of the NAS Phase 2 First Report

XIII. Amendments to Phase 1 Standards

A. EPA Amendments

B. Other Compliance Provisions for NHTSA

XIV. Other Proposed Regulatory Provisions

A. Proposed Amendments Related to Heavy-Duty Highway Engines and Vehicles

B. Amendments Affecting Gliders and Glider Kits

C. Applying the General Compliance Provisions of 40 CFR Part 1068 to Light-Duty Vehicles, Light-Duty Trucks, Chassis-Certified Class 2B and 3 Heavy-Duty Vehicles and Highway Motorcycles

D. Amendments to General Compliance Provisions in 40 CFR Part 1068

E. Amendments to Light-Duty Greenhouse Gas Program Requirements

F. Amendments to Highway and Nonroad Test Procedures and Certification Requirements

G. Amendments Related to Nonroad Diesel Engines in 40 CFR Part 1039

H. Amendments Related to Marine Diesel Engines in 40 CFR Parts 1042 and 1043

I. Amendments Related to Locomotives in 40 CFR Part 1033

J. Miscellaneous EPA Amendments

K. Amending 49 CFR Parts 512 and 537 To Allow Electronic Submissions and Defining Data Formats for Light-Duty Vehicle Corporate Average Fuel Economy (CAFE) Reports

XV. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review and Executive Order 13563: Improving Regulation and Regulatory Review

B. National Environmental Policy Act

C. Paperwork Reduction Act

D. Regulatory Flexibility Act

E. Unfunded Mandates Reform Act

F. Executive Order 13132: Federalism

G. Executive Order 13175: Consultation and Coordination With Indian Tribal Governments

H. Executive Order 13045: Protection of Children From Environmental Health Risks and Safety Risks

I. Executive Order 13211: Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use

J. National Technology Transfer and Advancement Act and 1 CFR Part 51

K. Executive Order 12898: Federal Actions To Address Environmental Justice in Minority Populations and Low-Income Populations

L. Endangered Species Act

XVI. EPA and NHTSA Statutory Authorities

A. EPA

B. NHTSA

C. List of Subjects

I. Overview

A. Background

This background and summary of the proposed Phase 2 GHG emissions and fuel efficiency standards includes an overview of the heavy-duty truck industry and related regulatory and non-regulatory programs, a summary of the Phase 1 GHG emissions and fuel efficiency program, a summary of the proposed Phase 2 standards and requirements, a summary of the costs and benefits of the proposed Phase 2 standards, discussion of EPA and NHTSA statutory authorities, and other issues.

For purposes of this preamble, the terms “heavy-duty” or “HD” are used to apply to all highway vehicles and engines that are not within the range of light-duty passenger cars, light-duty trucks, and medium-duty passenger vehicles (MDPV) covered by separate GHG and Corporate Average Fuel Economy (CAFE) standards. They do not include motorcycles. Thus, in this rulemaking, unless specified otherwise, the heavy-duty category incorporates all vehicles with a gross vehicle weight rating above 8,500 lbs, and the engines that power them, except for MDPVs.

Consistent with the President's direction, over the past two years as we have developed this proposal, the agencies have met on an on-going basis with a very large number of diverse stakeholders. This includes meetings, and in many cases site visits, with truck, trailer, and engine manufacturers; technology supplier companies and their trade associations (e.g., transmissions, drive lines, fuel systems, turbochargers, tires, catalysts, and many others); line haul and vocational trucking firms and trucking associations; the trucking industries owner-operator association; truck dealerships and dealers associations; trailer manufacturers and their trade association; non-governmental organizations (NGOs, including environmental NGOs, national security NGOs, and consumer advocacy NGOs); state air quality agencies; manufacturing labor unions; and many other stakeholders. In particular, NHTSA and EPA have consulted on an on-going basis with the California Air Resources Board (CARB) over the past two years as we have developed the Phase 2 proposal. In addition, CARB staff and managers have also participated with EPA and NHTSA in meetings with many external stakeholders, in particular with vehicle OEMs and technology suppliers.

NHTSA and EPA staff also participated in a large number of technical and policy conferences over the past two years related to the technological, economic, and environmental aspects of the heavy-duty trucking industry. The agencies also met with regulatory counterparts from several other nations who either have already or are considering establishing fuel consumption or GHG requirements, including outreach with representatives from the governments of Canada, the European Commission, Japan, and China.

These comprehensive outreach actions by the agencies provided us with information to assist in our identification of potential technologies that can be used to reduce heavy-duty GHG emissions and improve fuel efficiency. The outreach has also helped the agencies to identify and understand the opportunities and challenges involved with the proposed standards for the heavy-duty trucks, trailers, and engines detailed in this preamble, including time needed for implementation of various technologies and potential costs and fuel savings. The scope of this outreach effort to gather input for the proposal included well over 200 meetings with stakeholders. These meetings and conferences have been invaluable to the agencies. We believe they have enabled us to develop this proposal in such a way as to appropriately balance all of the potential impacts, to minimize the possibility of unintended consequences, and to ensure that we are requesting comment on a wide range of issues that can inform the final rule.

(1) Brief Overview of the Heavy-Duty Truck Industry

The heavy-duty sector is diverse in several respects, including the types of manufacturing companies involved, the range of sizes of trucks and engines they produce, the types of work for which the trucks are designed, and the regulatory history of different subcategories of vehicles and engines. The current heavy-duty fleet encompasses vehicles from the “18-wheeler” combination tractors one sees on the highway to the largest pickup trucks and vans, as well as vocational vehicles covering a range between these extremes. Together, the HD sector spans a wide range of vehicles with often specialized form and function. A primary indicator of the diversity among heavy-duty trucks is the range of load-carrying capability across the industry. The heavy-duty truck sector is often subdivided by vehicle weight classifications, as defined by the vehicle's gross vehicle weight rating (GVWR), which is a measure of the combined curb (empty) weight and cargo carrying capacity of the truck. Table I-1 below outlines the vehicle weight classifications commonly used for many years for a variety of purposes by businesses and by several Federal agencies, including the Department of Transportation, the Environmental Protection Agency, the Department of Commerce, and the Internal Revenue Service.

In the framework of these vehicle weight classifications, the heavy-duty truck sector refers to “Class 2b” through “Class 8” vehicles and the engines that power those vehicles.

Unlike light-duty vehicles, which are primarily used for transporting passengers for personal travel, heavy-duty vehicles fill much more diverse operator needs. Heavy-duty pickup trucks and vans (Classes 2b and 3) are used chiefly as work trucks and vans, and as shuttle vans, as well as for personal transportation, with an average annual mileage in the range of 15,000 miles. The rest of the heavy-duty sector is used for carrying cargo and/or performing specialized tasks. “Vocational” vehicles, which may span Classes 2b through 8, vary widely in size, including smaller and larger van trucks, utility “bucket” trucks, tank trucks, refuse trucks, urban and over-the-road buses, fire trucks, flat-bed trucks, and dump trucks, among others. The annual mileage of these vehicles is as varied as their uses, but for the most part tends to fall in between heavy-duty pickups/vans and the large combination tractors, typically from 15,000 to 150,000 miles per year.

Class 7 and 8 combination tractor-trailers—some equipped with sleeper cabs and some not—are primarily used for freight transportation. They are sold as tractors and operate with one or more trailers that can carry up to 50,000 lbs or more of payload, consuming significant quantities of fuel and producing significant amounts of GHG emissions. Together, Class 7 and 8 tractors and trailers account for approximately two-thirds of the heavy-duty sector's total CO₂ emissions and fuel consumption. Trailer designs vary significantly, reflecting the wide variety of cargo types. However, the most common types of trailers are box vans (dry and refrigerated), which are a focus of this Phase 2 rulemaking. The tractor-trailers used in combination applications can and frequently do travel more than 150,000 miles per year and can operate for 20-30 years.

EPA and NHTSA have designed our respective proposed standards in careful consideration of the diversity and complexity of the heavy-duty truck industry, as discussed in Section I.B.

(2) Related Regulatory and Non-Regulatory Programs

(a) History of EPA's Heavy-Duty Regulatory Program and Impacts of Greenhouse Gases on Climate Change

This subsection provides an overview of the history of EPA's heavy-duty regulatory program and impacts of greenhouse gases on climate change.

(i) History of EPA's Heavy-Duty Regulatory Program

Since the 1980s, EPA has acted several times to address tailpipe emissions of criteria pollutants and air toxics from heavy-duty vehicles and engines. During the last two decades these programs have primarily addressed emissions of particulate matter (PM) and the primary ozone precursors, hydrocarbons (HC) and oxides of nitrogen (NO_X). These programs, which have successfully achieved significant and cost-effective reductions in emissions and associated health and welfare benefits to the nation, were an important basis of the Phase 1 program. See e.g. 66 FR 5002, 5008, and 5011-5012 (January 18, 2001) (detailing substantial public health benefits of controls of criteria pollutants from heavy-duty diesel engines, including bringing areas into attainment with primary (public health) PM NAAQS, or contributing substantially to such attainment); National Petrochemical Refiners Association v. EPA, 287 F.3d 1130, 1134 (D.C. Cir. 2002) (referring to the “dramatic reductions” in criteria pollutant emissions resulting from those on-highway heavy-duty engine standards, and upholding all of the standards).

As required by the Clean Air Act (CAA), the emission standards implemented by these programs include standards that apply at the time that the vehicle or engine is sold and continue to apply in actual use. EPA's overall program goal has always been to achieve emissions reductions from the complete vehicles that operate on our roads. The agency has often accomplished this goal for many heavy-duty truck categories by regulating heavy-duty engine emissions. A key part of this success has been the development over many years of a well-established, representative, and robust set of engine test procedures that industry and EPA now use routinely to measure emissions and determine compliance with emission standards. These test procedures in turn serve the overall compliance program that EPA implements to help ensure that emissions reductions are being achieved. By isolating the engine from the many variables involved when the engine is installed and operated in a HD vehicle, EPA has been able to accurately address the contribution of the engine alone to overall emissions.

(ii) Impacts of Greenhouse Gases on Climate Change

In 2009, the EPA Administrator issued the document known as the Endangerment Finding under CAA Section 202(a)(1). In the Endangerment Finding, which focused on public health and public welfare impacts within the United States, the Administrator found that elevated concentrations of GHG emissions in the atmosphere may reasonably be anticipated to endanger public health and welfare of current and future generations. See also Coalition for Responsible Regulation v. EPA, 684 F.3d 102, 117-123 (D.C. Cir. 2012) (upholding the endangerment finding in all respects). The following sections summarize the key information included in the Endangerment Finding.

Climate change caused by human emissions of GHGs threatens public health in multiple ways. By raising average temperatures, climate change increases the likelihood of heat waves, which are associated with increased deaths and illnesses. While climate change also increases the likelihood of reductions in cold-related mortality, evidence indicates that the increases in heat mortality will be larger than the decreases in cold mortality in the United States. Compared to a future without climate change, climate change is expected to increase ozone pollution over broad areas of the U.S., including in the largest metropolitan areas with the worst ozone problems, and thereby increase the risk of morbidity and mortality. Other public health threats also stem from projected increases in intensity or frequency of extreme weather associated with climate change, such as increased hurricane intensity, increased frequency of intense storms and heavy precipitation. Increased coastal storms and storm surges due to rising sea levels are expected to cause increased drownings and other adverse health impacts. Children, the elderly, and the poor are among the most vulnerable to these climate-related health effects. See also 79 FR 75242 (December 17, 2014) (climate change, and temperature increases in particular, likely to increase O3 (Ozone) pollution “over broad areas of the U.S., including the largest metropolitan areas with the worst O3 problems, increas[ing] the risk of morbidity and mortality”).

Climate change caused by human emissions of GHGs also threatens public welfare in multiple ways. Climate changes are expected to place large areas of the country at serious risk of reduced water supplies, increased water pollution, and increased occurrence of extreme events such as floods and droughts. Coastal areas are expected to face increased risks from storm and flooding damage to property, as well as adverse impacts from rising sea level, such as land loss due to inundation, erosion, wetland submergence and habitat loss. Climate change is expected to result in an increase in peak electricity demand, and extreme weather from climate change threatens energy, transportation, and water resource infrastructure. Climate change may exacerbate ongoing environmental pressures in certain settlements, particularly in Alaskan indigenous communities. Climate change also is very likely to fundamentally rearrange U.S. ecosystems over the 21st century. Though some benefits may balance adverse effects on agriculture and forestry in the next few decades, the body of evidence points towards increasing risks of net adverse impacts on U.S. food production, agriculture and forest productivity as temperature continues to rise. These impacts are global and may exacerbate problems outside the U.S. that raise humanitarian, trade, and national security issues for the U.S. See also 79 FR 75382 (December 17, 2014) (welfare effects of O3 increases due to climate change, with emphasis on increased wildfires).

As outlined in Section VIII.A. of the 2009 Endangerment Finding, EPA's approach to providing the technical and scientific information to inform the Administrator's judgment regarding the question of whether GHGs endanger public health and welfare was to rely primarily upon the recent, major assessments by the U.S. Global Change Research Program (USGCRP), the Intergovernmental Panel on Climate Change (IPCC), and the National Research Council (NRC) of the National Academies. These assessments addressed the scientific issues that EPA was required to examine, were comprehensive in their coverage of the GHG and climate change issues, and underwent rigorous and exacting peer review by the expert community, as well as rigorous levels of U.S. government review. Since the administrative record concerning the Endangerment Finding closed following EPA's 2010 Reconsideration Denial, a number of such assessments have been released. These assessments include the IPCC's 2012 “Special Report on Managing the Risks of Extreme Events and Disasters to Advance Climate Change Adaptation” (SREX) and the 2013-2014 Fifth Assessment Report (AR5), the USGCRP's 2014 “Climate Change Impacts in the United States” (Climate Change Impacts), and the NRC's 2010 “Ocean Acidification: A National Strategy to Meet the Challenges of a Changing Ocean” (Ocean Acidification), 2011 “Report on Climate Stabilization Targets: Emissions, Concentrations, and Impacts over Decades to Millennia” (Climate Stabilization Targets), 2011 “National Security Implications for U.S. Naval Forces” (National Security Implications), 2011 “Understanding Earth's Deep Past: Lessons for Our Climate Future” (Understanding Earth's Deep Past), 2012 “Sea Level Rise for the Coasts of California, Oregon, and Washington: Past, Present, and Future”, 2012 “Climate and Social Stress: Implications for Security Analysis” (Climate and Social Stress), and 2013 “Abrupt Impacts of Climate Change” (Abrupt Impacts) assessments.

EPA has reviewed these new assessments and finds that the improved understanding of the climate system they present strengthens the case that GHG emissions endanger public health and welfare.

In addition, these assessments highlight the urgency of the situation as the concentration of CO₂ in the atmosphere continues to rise. Absent a reduction in emissions, a recent National Research Council of the National Academies assessment projected that concentrations by the end of the century would increase to levels that the Earth has not experienced for millions of years. In fact, that assessment stated that “the magnitude and rate of the present greenhouse gas increase place the climate system in what could be one of the most severe increases in radiative forcing of the global climate system in Earth history.” What this means, as stated in another NRC assessment, is that:

Emissions of carbon dioxide from the burning of fossil fuels have ushered in a new epoch where human activities will largely determine the evolution of Earth's climate. Because carbon dioxide in the atmosphere is long lived, it can effectively lock Earth and future generations into a range of impacts, some of which could become very severe. Therefore, emission reductions choices made today matter in determining impacts experienced not just over the next few decades, but in the coming centuries and millennia.

Moreover, due to the time-lags inherent in the Earth's climate, the Climate Stabilization Targets assessment notes that the full warming from any given concentration of CO₂ reached will not be realized for several centuries.

The recently released USGCRP “National Climate Assessment” emphasizes that climate change is already happening now and it is happening in the United States. The assessment documents the increases in some extreme weather and climate events in recent decades, the damage and disruption to infrastructure and agriculture, and projects continued increases in impacts across a wide range of peoples, sectors, and ecosystems.

These assessments underscore the urgency of reducing emissions now: Today's emissions will otherwise lead to raised atmospheric concentrations for thousands of years, and raised Earth system temperatures for even longer. Emission reductions today will benefit the public health and public welfare of current and future generations.

Finally, it should be noted that the concentration of carbon dioxide in the atmosphere continues to rise dramatically. In 2009, the year of the Endangerment Finding, the average concentration of carbon dioxide as measured on top of Mauna Loa was 387 parts per million. The average concentration in 2013 was 396 parts per million. And the monthly concentration in April of 2014 was 401 parts per million, the first time a monthly average has exceeded 400 parts per million since record keeping began at Mauna Loa in 1958, and for at least the past 800,000 years according to ice core records.

(b) The NHTSA and EPA Light-Duty National GHG and Fuel Economy Program

On May 7, 2010, EPA and NHTSA finalized the first-ever National Program for light-duty cars and trucks, which set GHG emissions and fuel economy standards for model years 2012-2016 (see 75 FR 25324). More recently, the agencies adopted even stricter standards for model years 2017 and later (77 FR 62624, October 15, 2012). The agencies have used the light-duty National Program as a model for the HD National Program in several respects. This is most apparent in the case of heavy-duty pickups and vans, which are similar to the light-duty trucks addressed in the light-duty National Program both technologically as well as in terms of how they are manufactured (i.e., the same company often makes both the vehicle and the engine, and several light-duty manufacturers also manufacture HD pickups and vans). For HD pickups and vans, there are close parallels to the light-duty program in how the agencies have developed our respective heavy-duty standards and compliance structures. However, HD pickups and vans are true work vehicles that are designed for much higher towing and payload capabilities than are light-duty pickups and vans. The technologies applied to light-duty trucks are not all applicable to heavy-duty pickups and vans at the same adoption rates, and the technologies often produce a lower percent reduction in CO₂ emissions and fuel consumption when used in heavy-duty vehicles. Another difference between the light-duty and the heavy-duty standards is that each agency adopts heavy-duty standards based on attributes other than vehicle footprint, as discussed below.

Due to the diversity of the remaining HD vehicles, there are fewer parallels with the structure of the light-duty program. However, the agencies have maintained the same collaboration and coordination that characterized the development of the light-duty program throughout the Phase 1 rulemaking and the continued efforts for Phase 2. Most notably, as with the light-duty program, manufacturers would continue to be able to design and build vehicles to meet a closely coordinated, harmonized national program, and to avoid unnecessarily duplicative testing and compliance burdens. In addition, the averaging, banking, and trading provisions in the HD program, although structurally different from those of the light-duty program, serve the same purpose, which is to allow manufacturers to achieve large reductions in fuel consumption and emissions while providing a broad mix of products to their customers. The agencies have also worked closely with CARB to provide harmonized national standards.

(c) EPA's SmartWay Program

EPA's voluntary SmartWay Transport Partnership program encourages businesses to take actions that reduce fuel consumption and CO₂ emissions while cutting costs by working with the shipping, logistics, and carrier communities to identify low carbon strategies and technologies across their transportation supply chains. SmartWay provides technical information, benchmarking and tracking tools, market incentives, and partner recognition to facilitate and accelerate the adoption of these strategies. Through the SmartWay program and its related technology assessment center, EPA has worked closely with truck and trailer manufacturers and truck fleets over the last ten years to develop test procedures to evaluate vehicle and component performance in reducing fuel consumption and has conducted testing and has established test programs to verify technologies that can achieve these reductions. SmartWay partners have demonstrated these new and emerging technologies in their business operations, adding to the body of technical data and information that EPA can disseminate to industry, researchers and other stakeholders. Over the last several years, EPA has developed hands-on experience testing the largest heavy-duty trucks and trailers and evaluating improvements in tire and vehicle aerodynamic performance. In developing the Phase 1 program, the agencies drew from this testing and from the SmartWay experience. In the same way, the agencies benefitted from SmartWay in developing the proposed Phase 2 trailer program.

(d) The State of California

California has established ambitious goals for reducing GHG emissions from heavy-duty vehicles and engines as part of an overall plan to reduce GHG emissions from the transportation sector in California. Heavy-duty vehicles are responsible for one-fifth of the total GHG emissions from transportation sources in California. In the past several years the California Air Resources Board (CARB) has taken a number of actions to reduce GHG emissions from heavy-duty vehicles and engines. For example, in 2008, the CARB adopted regulations to reduce GHG emissions from heavy-duty tractors that pull box-type trailers through improvements in tractor and trailer aerodynamics and the use of low rolling resistance tires. The tractors and trailers subject to the CARB regulation are required to use SmartWay certified tractors and trailers, or retrofit their existing fleet with SmartWay verified technologies, consistent with California's state authority to regulate both new and in-use vehicles. Recently, in December 2013, CARB adopted regulations that establish its own parallel Phase 1 program with standards consistent with EPA Phase 1 standards. On December 5, 2014, California's Office of Administrative Law approved CARB's adoption of the Phase 1 standards, with an effective date of December 5, 2014. Complementary to its regulatory efforts, CARB and other California agencies are investing significant public capital through various incentive programs to accelerate fleet turnover and stimulate technology innovation within the heavy-duty vehicle market (e.g., Air Quality Improvement, Carl Moyer, Loan Incentives, Lower-Emission School Bus and Goods Movement Emission Reduction Programs). And, recently, California Governor Jerry Brown established a target of up to 50 percent petroleum reduction by 2030.

In addition to California's efforts to reduce GHG emissions that contribute to climate change, California also faces unique air quality challenges as compared to many other regions of the United States. Many areas of the state are classified as non-attainment for both the ozone and particulate matter National Ambient Air Quality Standards (NAAQS) with California having the nation's only two “Extreme” ozone non-attainment airsheds (the San Joaquin Valley and South Coast Air Basins). By 2016, California must submit to EPA its Clean Air Act State Implementation Plans (SIPs) that demonstrate how the 2008 ozone and 2006 PM_2.5 NAAQS will be met by Clean Air Act deadlines. Extreme ozone areas must attain the 2008 ozone NAAQS by no later than 2032 and PM_2.5 moderate areas must attain the 2006 PM_2.5 standard by 2021 or, if reclassified to serious, by 2025.

Heavy-duty vehicles are responsible today for one-third of the state's oxides of nitrogen (NO_X) emissions. California has estimated that the state's South Coast Air Basin will need nearly a 90 percent reduction in heavy-duty vehicle NO_X emissions by 2032 from 2010 levels to attain the 2008 NAAQS for ozone. Additionally, on November 25, 2014, EPA issued a proposal to strengthen the ozone NAAQS. If a change to the ozone NAAQS is finalized, California and other areas of the country will need to identify and implement measures to reduce NO_X as needed to complement Federal emission reduction measures. While this section is focused on California's regulatory programs and air quality needs, EPA recognizes that other states and local areas are concerned about the challenges of reducing NO_X and attaining, as well as maintaining, the ozone NAAQS (further discussed in Section VIII.D.1 below).

In order to encourage the use of lower NO_X emitting new heavy-duty vehicles in California, in 2013 CARB adopted a voluntary low NO_X emission standard for heavy-duty engines. In addition, in 2013 CARB awarded a major new research contract to Southwest Research Institute to investigate advanced technologies that could reduce heavy-duty vehicle NO_X emissions well below the current EPA and CARB standards.

California has long had the unique ability among states to adopt its own separate new motor vehicle standards per Section 209 of the Clean Air Act (CAA). Although section 209(a) of the CAA expressly preempts states from adopting and enforcing standards relating to the control of emissions from new motor vehicles or new motor vehicle engines (such as state controls for new heavy-duty engines and vehicles) CAA section 209(b) directs EPA to waive this preemption under certain conditions. Under the waiver process set out in CAA Section 209(b), EPA has granted CARB a waiver for its initial heavy-duty vehicle GHG regulation. Even with California's ability under the CAA to establish its own emission standards, EPA and CARB have worked closely together over the past several decades to largely harmonize new vehicle criteria pollutant standard programs for heavy-duty engines and heavy-duty vehicles. In the past several years EPA and NHTSA also consulted with CARB in the development of the Federal light-duty vehicle GHG and CAFE rulemakings for the 2012-2016 and 2017-2025 model years.

As discussed above, California operates under state authority to establish its own new heavy-duty vehicle and engine emission standards, including standards for CO₂, methane, N₂ O, and hydrofluorocarbons. EPA recognizes this independent authority, and we also recognize the potential benefits for the regulated industry if the Federal Phase 2 standards could result in a single, National Program that would meet the NHTSA and EPA's statutory requirements to set appropriate and maximum feasible standards, and also be equivalent to potential future new heavy-duty vehicle and engine GHG standards established by CARB (addressing the same model years as addressed by the final Federal Phase 2 program and requiring the same technologies).

Similarly, CARB has expressed support in the past for a Federal heavy-duty Phase 2 program that would produce significant GHG reductions both at the Federal level and in California that could enable CARB to adopt the same standards at the state level. This is similar to CARB's approach for the Federal heavy-duty Phase 1 program, and with past EPA criteria pollutant standards for heavy-duty vehicles and engines. In order to further the opportunity for maintaining coordinated Federal and California standards in the Phase 2 timeframe (as well as to benefit from different technical expertise and perspective), NHTSA and EPA have consulted on an on-going basis with CARB over the past two years as we have developed the Phase 2 proposal. The agencies' technical staff have shared information on technology cost, technology effectiveness, and feasibility with the CARB staff. We have also received information from CARB on these same topics. EPA and NHTSA have also shared preliminary results from several of our modeling exercises with CARB as we examined different potential levels of stringency for the Phase 2 program. In addition, CARB staff and managers have also participated with EPA and NHTSA in meetings with many external stakeholders, in particular with vehicle OEMs and technology suppliers.

In addition to information on GHG emissions, CARB has also kept EPA and NHTSA informed of the state's need to consider opportunities for additional NO_X emission reductions from heavy-duty vehicles. CARB has asked the agencies to consider opportunities in the Heavy-Duty Phase 2 rulemaking to encourage or incentivize further NO_X emission reductions, in addition to the petroleum and GHG reductions which would come from the Phase 2 standards. When combined with the Phase 1 standards, the technologies the agencies are projecting to be used to meet the proposed GHG emission and fuel efficiency standards would be expected to reduce NO_X emissions by over 450,000 tons in 2050 (see Section VIII).

EPA and NHTSA believe that through this information sharing and dialog we will enhance the potential for the Phase 2 program to result in a National Program that can be adopted not only by the Federal agencies, but also by the State of California, given the strong interest from the regulated industry for a harmonized State and Federal program.

The agencies will continue to seek input from CARB, and from all stakeholders, throughout this rulemaking.

(e) Environment Canada

On March 13, 2013, Environment Canada (EPA's Canadian counterpart) published its own regulations to control GHG emissions from heavy-duty vehicles and engines, beginning with MY 2014. These regulations are closely aligned with EPA's Phase 1 program to achieve a common set of North American standards. Environment Canada has expressed its intention to amend these regulations to further limit emissions of greenhouse gases from new on-road heavy-duty vehicles and their engines for post-2018 MYs. As with the development of the current regulations, Environment Canada is committed to continuing to work closely with EPA to maintain a common Canada-United States approach to regulating GHG emissions for post-2018 MY vehicles and engines. This approach will build on the long history of regulatory alignment between the two countries on vehicle emissions pursuant to the Canada-United States Air Quality Agreement. Environment Canada has also been of great assistance during the development of this Phase 2 proposal. In particular, Environment Canada supported aerodynamic testing, and conducted chassis dynamometer emissions testing.

(f) Recommendations of the National Academy of Sciences

In April 2010 as mandated by Congress in the Energy Independence and Security Act of 2007 (EISA), the National Research Council (NRC) under the National Academy of Sciences (NAS) issued a report to NHTSA and to Congress evaluating medium- and heavy-duty truck fuel efficiency improvement opportunities, titled “Technologies and Approaches to Reducing the Fuel Consumption of Medium- and Heavy-duty Vehicles.” That NAS report was far reaching in its review of the technologies that were available and that might become available in the future to reduce fuel consumption from medium- and heavy-duty vehicles. In presenting the full range of technical opportunities, the report included technologies that may not be available until 2020 or even further into the future. The report provided not only a valuable list of off the shelf technologies from which the agencies drew in developing the Phase 1 program, but also provided useful information the agencies have considered when developing this second phase of regulations.

In April 2014, the NAS issued another report: “Reducing the Fuel Consumption and Greenhouse Gas Emissions of Medium and Heavy-Duty Vehicles, Phase Two, First Report.” This study outlines a number of recommendations to the U.S. Department of Transportation and NHTSA on technical and policy matters to consider when addressing the fuel efficiency of our nation's medium- and heavy-duty vehicles. In particular, this report provided recommendations with respect to:

• The Greenhouse Gas Emission Model (GEM) simulation tool used by the agencies to assess compliance with vehicle standards
• Regulation of trailers
• Natural gas-fueled engines and vehicles
• Data collection on in-use operation

As described in Sections II, IV, and XII, the agencies are proposing to incorporate many of these recommendations into this proposed Phase 2 program, especially those recommendations relating to the GEM simulation tool and to trailers.

B. Summary of Phase 1 Program

(1) EPA Phase 1 GHG Emission Standards and NHTSA Phase 1 Fuel Consumption Standards

The EPA Phase 1 GHG mandatory standards commenced in MY 2014 and include increased stringency for standards applicable to MY 2017 and later MY vehicles and engines. NHTSA's fuel consumption standards are voluntary for MYs 2014 and 2015, due to lead time requirements in EISA, and apply on a mandatory basis thereafter. They also increase in stringency for MY 2017. Both agencies have allowed voluntary early compliance starting in MY 2013 and encouraged manufacturers' participation through credit incentives.

Given the complexity of the heavy-duty industry, the agencies divided the industry into three discrete categories for purposes of setting our respective Phase 1 standards—combination tractors, heavy-duty pickups and vans, and vocational vehicles—based on the relative degree of homogeneity among trucks within each category. The Phase 1 rule also include separate standards for the engines that power combination tractors and vocational vehicles. For each regulatory category, the agencies adopted related but distinct program approaches reflecting the specific challenges in these segments. In the following paragraphs, we summarize briefly EPA's final GHG emission standards and NHTSA's final fuel consumption standards for the three regulatory categories of heavy-duty vehicles and for the engines powering vocational vehicles and tractors. See Sections III, V, and VI for additional details on the Phase 1 standards. To respect differences in design and typical uses that drive different technology solutions, the agencies segmented each regulatory class into subcategories. The category-specific structure enabled the agencies to set standards that appropriately reflect the technology available for each regulatory subcategory of vehicles and the engines for use in each type of vehicle. The Phase 1 program also provided several flexibilities, as summarized in Section I.B(3).

The agencies are proposing to base the Phase 2 standards on test procedures that differ from those used for Phase 1, including the revised GEM simulation tool. Significant revisions to GEM are discussed in Section II and the draft RIA Chapter 4, and other test procedures are discussed further in the draft RIA Chapter 3. It is important to note that due to these test procedure changes, the Phase 1 standards and the proposed Phase 2 standards are not directly comparable in an absolute sense. In particular, the proposed revisions to the 55 mph and 65 mph highway cruise cycles for tractors and vocational vehicles have the effect of making the cycles more challenging (albeit more representative of actual driving conditions). We are not proposing to apply these revisions to the Phase 1 program because doing so would significantly change the stringency of the Phase 1 standards, for which manufacturers have already developed engineering plans and are now producing products to meet. Moreover, the agencies intend such changes to address a broader range of technologies not part of the projected compliance path for use in Phase 1.

(a) Class 7 and 8 Combination Tractors

Class 7 and 8 combination tractors and their engines contribute the largest portion of the total GHG emissions and fuel consumption of the heavy-duty sector, approximately two-thirds, due to their large payloads, their high annual miles traveled, and their major role in national freight transport. These vehicles consist of a cab and engine (tractor or combination tractor) and a detachable trailer. The primary manufacturers of combination tractors in the United States are Daimler Trucks North America, Navistar, Volvo/Mack, and PACCAR. Each of the tractor manufacturers and Cummins (an independent engine manufacturer) also produce heavy-duty engines used in tractors. The Phase 1 standards require manufacturers to reduce GHG emissions and fuel consumption for these vehicles and engines, which we expect them to do through improvements in aerodynamics and tires, reductions in tractor weight, reduction in idle operation, as well as engine-based efficiency improvements.

The Phase 1 tractor standards differ depending on gross vehicle weight rating (GVWR) (i.e., whether the truck is Class 7 or Class 8), the height of the roof of the cab, and whether it is a “day cab” or a “sleeper cab.” The agencies created nine subcategories within the Class 7 and 8 combination tractor category reflecting combinations of these attributes. The agencies set Phase 1 standards for each of these subcategories beginning in MY 2014, with more stringent standards following in MY 2017. The standards represent an overall fuel consumption and CO₂ emissions reduction up to 23 percent from the tractors and the engines installed in them when compared to a baseline MY 2010 tractor and engine.

For Phase 1, manufacturers demonstrate compliance with the tractor CO₂ and fuel consumption standards using a vehicle simulation tool described in Section II. The tractor inputs to the simulation tool in Phase 1 are the aerodynamic performance, tire rolling resistance, vehicle speed limiter, automatic engine shutdown, and weight reduction. The agencies have verified, through our own confirmatory testing, that the values inputs into the model by manufacturers are generally correct. Prior to and after adopting the Phase 1 standards, the agencies worked with manufacturers to minimize impacts of this process on their normal business practices.

In addition to the final Phase 1 tractor-based standards for CO₂, EPA adopted a separate standard to reduce leakage of hydrofluorocarbon (HFC) refrigerant from cabin air conditioning (A/C) systems from combination tractors, to apply to the tractor manufacturer. This HFC leakage standard is independent of the CO₂ tractor standard. Manufacturers can choose technologies from a menu of leak-reducing technologies sufficient to comply with the standard, as opposed to using a test to measure performance. Given that HFC leakage does not relate to fuel efficiency, NHTSA did not adopt corresponding HFC standards.

(b) Heavy-Duty Pickup Trucks and Vans (Class 2b and 3)

Heavy-duty vehicles with a GVWR between 8,501 and 10,000 lb are classified as Class 2b motor vehicles. Heavy-duty vehicles with a GVWR between 10,001 and 14,000 lb are classified as Class 3 motor vehicles. Class 2b and Class 3 heavy-duty vehicles (referred to in these rules as “HD pickups and vans”) together emit about 15 percent of today's GHG emissions from the heavy-duty vehicle sector.

The majority of HD pickups and vans are 3/4-ton and 1-ton pickup trucks, 12- and 15-passenger vans, and large work vans that are sold by vehicle manufacturers as complete vehicles, with no secondary manufacturer making substantial modifications prior to registration and use. These vehicles can also be sold as cab-complete vehicles (i.e., incomplete vehicles that include complete or nearly complete cabs that are sold to secondary manufacturers). The majority of heavy-duty pickups and vans are produced by companies with major light-duty markets in the United States. Furthermore, the technologies available to reduce fuel consumption and GHG emissions from this segment are similar to the technologies used on light-duty pickup trucks, including both engine efficiency improvements (for gasoline and diesel engines) and vehicle efficiency improvements. For these reasons, EPA and NHTSA concluded that it was appropriate to adopt GHG standards, expressed as grams per mile, and fuel consumption standards, expressed as gallons per 100 miles, for HD pickups and vans based on the whole vehicle (including the engine), consistent with the way these vehicles have been regulated by EPA for criteria pollutants and also consistent with the way their light-duty counterpart vehicles are regulated by NHTSA and EPA. This complete vehicle approach adopted by both agencies for HD pickups and vans was consistent with the recommendations of the NAS Committee in its 2010 Report.

For the light-duty GHG and fuel economy standards, the agencies based the emissions and fuel economy targets on vehicle footprint (the wheelbase times the average track width). For those standards, passenger cars and light trucks with larger footprints are assigned higher GHG and lower fuel economy target levels reflecting their inherent tendency to consume more fuel and emit more GHGs per mile. For HD pickups and vans, the agencies believe that setting standards based on vehicle attributes is appropriate, but have found that a work-based metric would be a more appropriate attribute than the footprint attribute utilized in the light-duty vehicle rulemaking, given that work-based measures such as towing and payload capacities are critical elements of these vehicles' functionality. EPA and NHTSA therefore adopted standards for HD pickups and vans based on a “work factor” attribute that combines their payload and towing capabilities, with an added adjustment for 4-wheel drive vehicles.

Each manufacturer's fleet average Phase 1 standard is based on production volume-weighting of target standards for all vehicles, which in turn are based on each vehicle's work factor. These target standards are taken from a set of curves (mathematical functions), with separate curves for gasoline and diesel. However, both gasoline and diesel vehicles in this category are included in a single averaging set. EPA phased in the CO₂ standards gradually starting in the 2014 MY, at 15-20-40-60-100 percent of the MY 2018 standards stringency level in MYs 2014-2015-2016-2017-2018, respectively. The phase-in takes the form of a set of target curves, with increasing stringency in each MY.

NHTSA allowed manufacturers to select one of two fuel consumption standard alternatives for MYs 2016 and later. The first alternative defined individual gasoline vehicle and diesel vehicle fuel consumption target curves that will not change for MYs 2016-2018, and are equivalent to EPA's 67-67-67-100 percent target curves in MYs 2016-2017-2018-2019, respectively. The second alternative defined target curves that are equivalent to EPA's 40-60-100 percent target curves in MYs 2016-2017-2018, respectively. NHTSA allowed manufacturers to opt voluntarily into the NHTSA HD pickup and van program in MYs 2014 or 2015 at target curves equivalent to EPA's target curves. If a manufacturer chose to opt in for one category, they would be required to opt in for all categories. In other words a manufacturer would be unable to opt in for Class 2b vehicles, but opt out for Class 3 vehicles.

EPA also adopted an alternative phase-in schedule for manufacturers wanting to have stable standards for model years 2016-2018. The standards for heavy-duty pickups and vans, like those for light-duty vehicles, are expressed as set of target standard curves, with increasing stringency in each model year. The final EPA standards 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 (relative to pre-control baseline vehicles). The NHTSA standard will require these vehicles to achieve up to about 15 percent reduction in fuel consumption and greenhouse gas emissions by MY 2018 (relative to pre-control baseline vehicles). Manufacturers demonstrate compliance based on entire vehicle chassis certification using the same duty cycles used to demonstrate compliance with criteria pollutant standards.

(c) Class 2b-8 Vocational Vehicles

Class 2b-8 vocational vehicles include a wide variety of vehicle types, and serve a vast range of functions. Some examples include service for urban delivery, refuse hauling, utility service, dump, concrete mixing, transit service, shuttle service, school bus, emergency, motor homes, and tow trucks. In Phase 1, we defined Class 2b-8 vocational vehicles as all heavy-duty vehicles that are not included in either the heavy-duty pickup and van category or the Class 7 and 8 tractor category. EPA's and NHTSA's Phase 1 standards for this vocational vehicle category generally apply at the chassis manufacturer level. Class 2b-8 vocational vehicles and their engines emit approximately 20 percent of the GHG emissions and burn approximately 21 percent of the fuel consumed by today's heavy-duty truck sector.

The Phase 1 program for vocational vehicles has vehicle standards and separate engine standards, both of which differ based on the weight class of the vehicle into which the engine will be installed. The vehicle weight class groups mirror those used for the engine standards—Classes 2b-5 (light heavy-duty or LHD in EPA regulations), Classes 6 & 7 (medium heavy-duty or MHD in EPA regulations) and Class 8 (heavy heavy-duty or HHD in EPA regulations). Manufacturers demonstrate compliance with the Phase 1 vocational vehicle CO₂ and fuel consumption standards using a vehicle simulation tool described in Section II. The Phase 1 program for vocational vehicles limited the simulation tool inputs to tire rolling resistance. The model assumes the use of a typical representative, compliant engine in the simulation, resulting in one overall value for CO₂ emissions and one for fuel consumption.

Engines used in vocational vehicles are subject to separate Phase 1 engine-based standards. Optional certification paths, for EPA and NHTSA, are also provided to enhance the flexibilities for vocational vehicles. Manufacturers producing spark-ignition (or gasoline) cab-complete or incomplete vehicles weighing over 14,000 lbs GVWR and below 26,001 lbs GVWR have the option to certify to the complete vehicle standards for heavy-duty pickup trucks and vans rather than using the separate engine and chassis standards for vocational vehicles.

(d) Engine Standards

The agencies established separate Phase 1 performance standards for the engines manufactured for use in vocational vehicles and Class 7 and 8 tractors. These engine standards vary depending on engine size linked to intended vehicle service class. EPA's engine-based CO₂ standards and NHTSA's engine-based fuel consumption standards are being implemented using EPA's existing test procedures and regulatory structure for criteria pollutant emissions from heavy-duty engines.

The agencies also finalized a regulatory alternative whereby a manufacturer, for an interim period of the 2014-2016 MYs, would have the option to comply with a unique standard based on a three percent reduction from an individual engine model's own 2011 MY baseline level.

(e) Manufacturers Excluded From the Phase 1 Standards

Phase 1 temporarily deferred greenhouse gas emissions and fuel consumption standards for any manufacturers of heavy-duty engines, manufacturers of combination tractors, and chassis manufacturers for vocational vehicles that meet the “small business” size criteria set by the Small Business Administration (SBA). 13 CFR 121.201 defines a small business by the maximum number of employees; for example, this is currently 1,000 for heavy-duty vehicle manufacturing and 750 for engine manufacturing. In order to utilize this exemption, qualifying small businesses must submit a declaration to the agencies. See Section I.F.(1)(b) for a summary of how Phase 2 would apply for small businesses.

The agencies stated that they would consider appropriate GHG and fuel consumption standards for these entities as part of a future regulatory action. This includes both U.S.-based and foreign small-volume heavy-duty manufacturers.

(2) Costs and Benefits of the Phase 1 Program

Overall, EPA and NHTSA estimated that the Phase 1 HD National Program will cost the affected industry about $8 billion, while saving vehicle owners fuel costs of nearly $50 billion over the lifetimes of MY 2014-2018 vehicles. The agencies also estimated that the combined standards will reduce CO₂ emissions by about 270 million metric tons and save about 530 million barrels of oil over the life of MY 2014 to 2018 vehicles. The agencies estimated additional monetized benefits from CO₂ reductions, improved energy security, reduced time spent refueling, as well as possible disbenefits from increased driving accidents, traffic congestion, and noise. When considering all these factors, we estimated that Phase 1 of the HD National Program will yield $49 billion in net benefits to society over the lifetimes of MY 2014-2018 vehicles.

EPA estimated the benefits of reduced ambient concentrations of particulate matter and ozone resulting from the Phase 1 program to range from $1.3 to $4.2 billion in 2030.

In total, we estimated the combined Phase 1 standards will reduce GHG emissions from the U.S. heavy-duty fleet by approximately 76 million metric tons of CO₂-equivalent annually by 2030. In its Environmental Impact Statement for the Phase 1 rule, NHTSA also quantified and/or discussed other potential impacts of the program, such as the health and environmental impacts associated with changes in ambient exposures to toxic air pollutants and the benefits associated with avoided non-CO₂ GHGs (methane, nitrous oxide, and HFCs).

(3) Phase 1 Program Flexibilities

As noted above, the agencies adopted numerous provisions designed to give manufacturers a degree of flexibility in complying with the Phase 1 standards. These provisions, which are essentially identical in structure and function in NHTSA's and EPA's regulations, enabled the agencies to consider overall standards that are more stringent and that will become effective sooner than we could consider with a more rigid program, one in which all of a manufacturer's similar vehicles or engines would be required to achieve the same emissions or fuel consumption levels, and at the same time.

Phase 1 included four primary types of flexibility: Averaging, banking, and trading (ABT) provisions; early credits; advanced technology credits (including hybrid powertrains); and innovative technology credit provisions. The ABT provisions were patterned on existing EPA and NHTSA ABT programs (including the light-duty GHG and fuel economy standards) and will allow a vehicle manufacturer to reduce CO₂ emission and fuel consumption levels further than the level of the standard for one or more vehicles to generate ABT credits. The manufacturer can use those credits to offset higher emission or fuel consumption levels in the same averaging set, “bank” the credits for later use, or “trade” the credits to another manufacturer. As also noted above, for HD pickups and vans, we adopted a fleet averaging system very similar to the light-duty GHG and CAFE fleet averaging system. In both programs, manufacturers are allowed to carry-forward deficits for up to three years without penalty.

The agencies provided in the ABT programs flexibility for situations in which a manufacturer is unable to avoid a negative credit balance at the end of the year. In such cases, manufacturers are not considered to be out of compliance unless they are unable to make up the difference in credits by the end of the third subsequent model year.

In total, the Phase 1 program divides the heavy-duty sector into 19 subcategories of vehicles. These subcategories are grouped into 9 averaging sets to provide greater opportunities in leveraging compliance. For tractors and vocational vehicles, the fleet averaging sets are Classes 2b through 5, Classes 6 and 7, and Class 8 weight classes. For engines, the fleet averaging sets are gasoline engines, light heavy-duty diesel engines, medium heavy-duty diesel engines, and heavy heavy-duty diesel engines. Complete HD pickups and vans (both spark-ignition and compression-ignition) are the final fleet averaging set.

As noted above, the agencies included a restriction on averaging, banking, and trading of credits between the various regulatory subcategories by defining three HD vehicle averaging sets: Light heavy-duty (Classes 2b-5); medium heavy-duty (Class 6-7); and heavy heavy-duty (Class 8). This allows the use of credits between vehicles within the same weight class. This means that a Class 8 day cab tractor can exchange credits with a Class 8 high roof sleeper tractor but not with a smaller Class 7 tractor. Also, a Class 8 vocational vehicle can exchange credits with a Class 8 tractor. However, we did not allow trading between engines and chassis. We similarly allowed for trading among engine categories only within an averaging set, of which there are four: Spark-ignition engines, compression-ignition light heavy-duty engines, compression-ignition medium heavy-duty engines, and compression-ignition heavy heavy-duty engines.

In addition to ABT, the other primary flexibility provisions in the Phase 1 program involve opportunities to generate early credits, advanced technology credits (including for use of hybrid powertrains), and innovative technology credits. For the early credits and advanced technology credits, the agencies adopted a 1.5 × multiplier, meaning that manufacturers would get 1.5 credits for each early credit and each advanced technology credit. In addition, advanced technology credits for Phase 1 can be used anywhere within the heavy-duty sector (including both vehicles and engines). Put another way, as a means of promoting this promising technology, the Phase 1 rule does not restrict averaging or trading by averaging set in this instance.

For other vehicle or engine technologies that can reduce CO₂ and fuel consumption, but for which there do not yet exist established methods for quantifying reductions, the agencies wanted to encourage the development of such innovative technologies, and therefore adopted special “innovative technology” credits. These innovative technology credits apply to technologies that are shown to produce emission and fuel consumption reductions that are not adequately recognized on the Phase 1 test procedures and that were not yet in widespread use in the heavy-duty sector before MY 2010. Manufacturers need to quantify the reductions in fuel consumption and CO₂ emissions that the technology is expected to achieve, above and beyond those achieved on the existing test procedures. As with ABT, the use of innovative technology credits is allowed only among vehicles and engines of the same defined averaging set generating the credit, as described above. The credit multiplier likewise does not apply for innovative technology credits.

(4) Implementation of Phase 1

Manufacturers have already begun complying with the Phase 1 standards. In some cases manufacturers voluntarily chose to comply early, before compliance was mandatory. The Phase 1 rule allows manufacturers to generate credits for such early compliance. The market appears to be very accepting of the new technology, and the agencies have seen no evidence of “pre-buy” effects in response to the standards. In fact sales have been higher in recent years than they were before Phase 1 began. Moreover, manufacturers' compliance plans are taking advantage of the Phase 1 flexibilities, and we have yet to see significant non-compliance with the standards.

(5) Litigation on Phase 1 Rule

The D.C. Circuit recently rejected all challenges to the agencies' Phase 1 regulations. The court did not reach the merits of the challenges, holding that none of the petitioners had standing to bring their actions, and that a challenge to NHTSA's denial of a rulemaking petition could only be brought in District Court. See Delta Construction Co. v. EPA, 783 F. 3d 1291 (D.C. Cir. 2015), U.S. App. LEXIS 6780, F.3d (D.C. Cir. April 24, 2015).

C. Summary of the Proposed Phase 2 Standards and Requirements

The agencies are proposing new standards that build on and enhance existing Phase 1 standards, as well as proposing the first ever standards for certain trailers used in combination with heavy-duty tractors. Taken together, the proposed Phase 2 program would comprise a set of largely technology-advancing standards that would achieve greater GHG and fuel consumption savings than the Phase 1 program. As described in more detail in the following sections, the agencies are proposing these standards because, based on the information available at this time, we believe they would best match our respective statutory authorities when considered in the context of available technology, feasible reductions of emissions and fuel consumption, costs, lead time, safety, and other relevant factors. The agencies request comment on all aspects of our feasibility analysis including projections of feasible market adoption rates and technological effectiveness for each technology.

The proposed Phase 2 standards would represent a more technology-forcing approach than the Phase 1 approach, predicated on use of both off-the-shelf technologies and emerging technologies that are not yet in widespread use. The agencies are proposing standards for MY 2027 that would likely require manufacturers to make extensive use of these technologies. For existing technologies and technologies in the final stages of development, we project that manufacturers would likely apply them to nearly all vehicles, excluding those specific vehicles with applications or uses that would prevent the technology from functioning properly. We also project as one possible compliance pathway that manufacturers could apply other more advanced technologies such as hybrids and waste engine heat recovery systems, although at lower application rates.

Under Alternative 3, the preferred alternative, the agencies propose to provide ten years of lead time for manufacturers to meet these 2027 standards, which the agencies believe is adequate to implement the technologies industry could use to meet the proposed standards. For some of the more advanced technologies production prototype parts are not yet available, though they are in the research stage with some demonstrations in actual vehicles. Additionally, even for the more developed technologies, phasing in more stringent standards over a longer timeframe may help manufacturers to ensure better reliability of the technology and to develop packages to work in a wide range of applications. Moving more quickly, however, as in Alternative 4, would lead to earlier and greater cumulative fuel savings and greenhouse gas reductions.

As discussed later, the agencies are also proposing new standards in MYs 2018 (trailers only), 2021, and 2024 to ensure manufacturers make steady progress toward the 2027 standards, thereby achieving steady and feasible reductions in GHG emissions and fuel consumption in the years leading up to the MY 2027 standards. Moving more quickly, however, as in Alternative 4, would lead to earlier and greater cumulative fuel and greenhouse gas savings.

Providing additional lead time can often enable manufacturers to resolve technological challenges or to find lower cost means of meeting new regulatory standards, effectively making them more feasible in either case. See generally NRDC v. EPA, 655 F. 2d 318, 329 (D.C. Cir. 1981). On the other hand, manufacturers and/or operators may incur additional costs if regulations require them to make changes to their products with less lead time than manufacturers would normally have when bringing a new technology to the market or expanding the application of existing technologies. After developing a new technology, manufacturers typically conduct extensive field tests to ensure its durability and reliability in actual use. Standards that accelerate technology deployment can lead to manufacturers incurring additional costs to accelerate this development work, or can lead to manufacturers beginning production before such testing can be completed. Some industry stakeholders have informed EPA that when manufacturers introduced new emission control technologies (primarily diesel particulate filters) in response to the 2007 heavy-duty engine standards they did not perform sufficient product development validation, which led to additional costs for operators when the technologies required repairs or other resulted in other operational issues in use. Thus, the issues of costs, lead time, and reliability are intertwined for the agencies' determination of whether standards are reasonable.

Another important consideration is the possibility of disrupting the market, such as might happen if we were to adopt standards that manufacturers respond to by applying a new technology too suddenly. Several of the heavy-duty vehicle manufacturers, fleets, and commercial truck dealerships informed the agencies that for fleet purchases that are planned more than a year in advance, expectations of reduced reliability, increased operating costs, reduced residual value, or of large increases in purchase prices can lead the fleets to pull-ahead by several months planned future vehicle purchases by pre-buying vehicles without the newer technology. In the context of the Class 8 tractor market, where a relatively small number of large fleets typically purchase very large volumes of tractors, such actions by a small number of firms can result in large swings in sales volumes. Such market impacts would be followed by some period of reduced purchases that can lead to temporary layoffs at the factories producing the engines and vehicles, as well as at supplier factories, and disruptions at dealerships. Such market impacts also can reduce the overall environmental and fuel consumption benefits of the standards by delaying the rate at which the fleet turns over. See International Harvester v. EPA, 478 F. 2d 615, 634 (D.C. Cir. 1973). A number of industry stakeholders have informed EPA that the 2007 EPA heavy-duty engine criteria pollutant standard resulted in this pull-ahead phenomenon for the Class 8 tractor market. The agencies understand the potential impact that a pull-ahead can have on American manufacturing and labor, dealerships, truck purchasers, and on the program's environmental and fuel savings goals, and have taken steps in the design of the proposed program to avoid such disruption. These steps include the following:

• Providing considerable lead time, including two to three additional years for the preferred alternative compared to Alternative 4
• The standards will result in significantly lower operating costs for vehicle owners (unlike the 2007 standard, which increased operating costs)
• Phasing in the standards
• Structuring the program so the industry will have a significant range of technology choices to be considered for compliance, rather than the one or two new technologies the OEMs pursued in 2007
• Allowing manufacturers to use emissions averaging, banking and trading to phase in the technology even further

We request comment on the sufficiency of the proposed Phase 2 structure, lead time, and stringency to avoid market disruptions. We note an important difference, however, between standards for criteria pollutants, with generally no attendant fuel savings, and the fuel consumption/GHG emission standards proposed today, which provide immediate and direct financial benefits to vehicle purchasers, who will begin saving money on fuel costs as soon as they begin operating the vehicles. It would seem logical, therefore, that vehicle purchasers (and manufacturers) would weigh those significant fuel savings against the potential for increased costs that could result from applying fuel-saving technologies sooner than they might otherwise choose in the absence of the standards.

As discussed in the Phase 1 final rule, NHTSA has certain statutory considerations to take into account when determining feasibility of the preferred alternative. The Energy Independence and Security Act (EISA) states that NHTSA (in consultation with EPA and the Secretary of Energy) shall develop a commercial medium- and heavy-duty fuel efficiency program designed “to achieve the maximum feasible improvement.” Although there is no definition of maximum feasible standards in EISA, NHTSA is directed to consider three factors when determining what the maximum feasible standards are. Those factors are, appropriateness, cost-effectiveness, and technological feasibility, which modify “feasible” beyond its plain meaning.

NHTSA has the broad discretion to weigh and balance the aforementioned factors in order to accomplish EISA's mandate of determining maximum feasible standards. The fact that the factors may often be at odds gives NHTSA significant discretion to decide what weight to give each of the competing factors, policies and concerns and then determine how to balance them—as long as NHTSA's balancing does not undermine the fundamental purpose of the EISA: Energy conservation, and as long as that balancing reasonably accommodates “conflicting policies that were committed to the agency's care by the statute.”

EPA also has significant discretion in assessing, weighing, and balancing the relevant statutory criteria. Section 202(a)(2) of the Clean Air Act requires that the standards “take effect after 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.” This language affords EPA considerable discretion in how to weight the critical statutory factors of emission reductions, cost, and lead time (76 FR 57129-57130). Section 202(a) also allows (although it does not compel) EPA to adopt technology-forcing standards. Id. at 57130.

Giving due consideration to the agencies' respective statutory criteria discussed above, the agencies are proposing these technology-forcing standards for MY 2027. The agencies nevertheless recognize that there is some uncertainty in projecting costs and effectiveness, especially for those technologies not yet widely available, but believe that the thresholds proposed for consideration account for realistic projections of technological development discussed throughout this notice and in the draft RIA. The agencies are requesting comment on the alternatives described in Section X below. These alternatives range from Alternative 1 (which is a no-action alternative that serves as the baseline for our cost and benefit analyses) to Alternative 5 (which includes the most stringent of the alternative standards analyzed by the agencies). The assessment of these different alternatives considers the importance of allowing manufacturers sufficient flexibility and discretion while achieving meaningful fuel consumption and GHG emissions reductions across vehicle types. The agencies look forward to receiving comments on questions of feasibility and long-term projections of costs and effectiveness.

As discussed throughout this document, the agencies believe Alternative 4 has potential to be the maximum feasible alternative, however, based on the evidence currently before us, the agencies have outstanding questions regarding relative risks and benefits of that option in the timeframe envisioned. We are seeking comment on these relative risks and benefits. Alternative 3 is generally designed to achieve the vehicle levels of fuel consumption and GHG reduction that Alternative 4 would achieve, but with two to three years of additional lead-time—i.e., the Alternative 3 standards would end up in the same place as the Alternative 4 standards, but two to three years later, meaning that manufacturers could, in theory, apply new technology at a more gradual pace and with greater flexibility as discussed above. However, Alternative 4 would lead to earlier and greater cumulative fuel savings and greenhouse gas reductions.

In the sections that follow, the agencies have closely examined the potential feasibility of Alternative 4 for each subcategory. The agencies may consider establishing final fuel efficiency and GHG standards in whole or in part in the Alternative 4 timeframe if we deem them to be maximum feasible and reasonable for NHTSA and EPA, respectively. The agencies seek comment on the feasibility of Alternative 4, whether for some or for all segments, including empirical data on its appropriateness, cost-effectiveness, and technological feasibility. The agencies also note the possibility of adoption in MY 2024 of a standard reflecting deployment of some, rather than all, of the technologies on which Alternative 4 is predicated. It is also possible that the agencies could adopt some or all of the proposal (Alternative 3) earlier than MY 2027, but later than MY 2024, based especially on lead time considerations. Any such choices would involve a considered weighing of the issues of feasibility of projected technology penetration rates, associated costs, and necessary lead time, and would consider the information on available technologies, their level of performance and costs set out in the administrative record to this proposal.

Sections II through VI of this notice explain the consideration that the agencies took into account in considering options and proposing a preferred alternative based on balancing of the statutory factors under 42 U.S.C. 7521(a)(1) and (2), and under 49 U.S.C. 32902(k).

(1) Carryover From Phase 1 Program and Proposed Compliance Changes

Phase 2 will carry over many of the compliance approaches developed for Phase 1, with certain changes as described below. Readers are referred to the proposed regulatory text for much more detail. Note that some of these provisions are being carried over with revisions or additions (such as those needed to address trailers).

(a) Certification

EPA and NHTSA are proposing to apply the same general certification procedures for Phase 2 as are currently being used for certifying to the Phase 1 standards. The agencies, however, are proposing changes to the simulation tool used for the vocational vehicle, tractor and trailer standards that would allow the simulation tool to more specifically reflect improvements to transmissions and drivetrains. Rather than the model using default values for transmissions and drivetrains, manufacturers would enter measured or tested values as inputs reflecting performance of their actual transmission and drivetrain technologies.

The agencies apply essentially the same process for certifying tractors and vocational vehicles, and propose largely to apply it to trailers as well. The Phase 1 certification process for engines used in tractors and vocational vehicles was based on EPA's process for showing compliance with the heavy-duty engine criteria pollutant standards, and the agencies propose to continue it for Phase 2. Finally, we also propose to continue certifying HD pickups and vans using the Phase 1 vehicle certification process, which is very similar to the light-duty vehicle certification process.

EPA and NHTSA are also proposing to clarify provisions related to confirming a manufacturer's test data during certification (i.e., confirmatory testing) and verifying a manufacturer's vehicles are being produced to perform as described in the application for certification (i.e., selective enforcement audits or SEAs). The EPA confirmatory testing provisions for engines and vehicles are in 40 CFR 1036.235 and 1037.235. The SEA provisions are in 40 CFR 1036.301 and 1037.301. The NHTSA provisions are in 49 CFR 535.9(a). Note that these clarifications would also apply for Phase 1 engines and vehicles. The agencies welcome suggestions for alternative approaches that would offer the same degree of compliance assurance for GHGs and fuel consumption as these programs offer with respect to EPA's criteria pollutants.

(b) Averaging, Banking and Trading (ABT)

The Phase 1 ABT provisions were patterned on established EPA ABT programs that have proven to work well. In Phase 1, the agencies determined this flexibility would provide an opportunity for manufacturers to make necessary technological improvements and reduce the overall cost of the program without compromising overall environmental and fuel economy objectives. We propose to generally continue this Phase 1 approach with few revisions for vehicles regulated in Phase 1. As described in Section IV, we are proposing a more limited averaging program for trailers. The agencies see the ABT program as playing an important role in making the proposed technology-advancing standards feasible, by helping to address many issues of technological challenges in the context of lead time and costs. It provides manufacturers flexibilities that assist the efficient development and implementation of new technologies and therefore enable new technologies to be implemented at a more aggressive pace than without ABT.

ABT programs are more than just add-on provisions included to help reduce costs, and can be, as in EPA's Title II programs generally, an integral part of the standard setting itself. A well-designed ABT program can also provide important environmental and energy security benefits by increasing the speed at which new technologies can be implemented (which means that more benefits accrue over time than with later-commencing standards) and at the same time increase flexibility for, and reduce costs to, the regulated industry and ultimately consumers. Without ABT provisions (and other related flexibilities), standards would typically have to be numerically less stringent since the numerical standard would have to be adjusted to accommodate issues of feasibility and available lead time. See 75 FR 25412-25413. By offering ABT credits and additional flexibilities the agencies can offer progressively more stringent standards that help meet our fuel consumption reduction and GHG emission goals at a faster and more cost-effective pace.

(i) Carryover of Phase 1 Credits and Credit Life

The agencies propose to continue the five-year credit life provisions from Phase 1, and are not proposing any additional restriction on the use of banked Phase 1 credits in Phase 2. In other words, Phase 1 credits in MY2019 could be used in Phase 1 or in Phase 2 in MYs 2021-2024. Although, as we have already noted, the numerical values of proposed Phase 2 standards are not directly comparable in an absolute sense to the existing Phase 1 standards (in other words, a given vehicle would have a different g/ton-mile emission rate when evaluated using Phase 1 GEM than it would when evaluated using Phase 2 GEM), we believe that the Phase 1 and Phase 2 credits are largely equivalent. Because the standards and emission levels are included in a relative sense (as a difference), it is not necessary for the Phase 1 and Phase 2 standards to be directly equivalent in an absolute sense in order for the credits to be equivalent.

This is best understood by examining the way in which credits are calculated. For example, the credit equations in 40 CFR 1037.705 and 49 CFR 535.7 calculate credits as the product of the difference between the standard and the vehicle's emission level (g/ton-mile or gallon/1,000 ton-mile), the regulatory payload (tons), production volume, and regulatory useful life (miles). Phase 2 would not change payloads, production volumes, or useful lives for tractors, medium and heavy heavy-duty engines, or medium and heavy heavy-duty vocational vehicles. However, EPA is proposing to change the regulatory useful lives of HD pickups and vans, light heavy-duty vocational vehicles, spark-ignited engines, and light heavy-duty compression-ignition engines. Because useful life is a factor in determining the value of a credit, the agencies are proposing interim adjustment factors to ensure banked credits maintain their value in the transition from Phase 1 to Phase 2.

For Phase 1, EPA aligned the useful life for GHG emissions with the useful life already in place for criteria pollutants. After the Phase 1 rules were finalized, EPA updated the useful life for criteria pollutants as part of the Tier 3 rulemaking. The new useful life implemented for Tier 3 is 150,000 miles or 15 years, whichever occurs first. This is the same useful life proposed in Phase 2 for HD pickups and vans, light heavy-duty vocational vehicles, spark-ignited engines, and light heavy-duty compression-ignition engines. The numerical value of the adjustment factor for each of these regulatory categories depends on the Phase 1 useful life. These are described in detail below in this preamble in Sections II, V, and VI. Without these adjustment factors the proposed changes in useful life would effectively result in a discount of banked credits that are carried forward from Phase 1 to Phase 2, which is not the intent of the changes in the useful life. With the relatively flat deterioration generally associated with CO₂, EPA does not believe the proposed changes in useful life would significantly affect the feasibility of the proposed Phase 2 standards. EPA requests comments on the proposed changes to useful life. We note that the primary purpose of allowing manufacturers to bank credits is to provide flexibility in managing transitions to new standards. The five-year credit life is substantial, and would allow credits generated in either Phase 1 or early in Phase 2 to be used for the intended purpose. The agencies believe longer credit life is not necessary to accomplish this transition. Restrictions on credit life serve to reduce the likelihood that any manufacturer would be able to use banked credits to disrupt the heavy-duty vehicle market in any given year by effectively limiting the amount of credits that can be held. Without this limit, one manufacturer that saved enough credits over many years could achieve a significant cost advantage by using all the credits in a single year. The agencies believe, subject to consideration of public comment, that allowing a five year credit life for all credits, and as a consequence allowing use of Phase 1 credits in Phase 2, creates appropriate flexibility and appropriately facilitates a smooth transition to each new level of standards.

Although we are not proposing any additional restrictions on the use of Phase 1 credits, we are requesting comment on this issue. Early indications suggest that positive market reception to the Phase 1 technologies could lead to manufacturers accumulating credit surpluses that could be quite large at the beginning of the proposed Phase 2 program. This appears especially likely for tractors. The agencies are specifically requesting comment on the likelihood of this happening, and whether any regulatory changes would be appropriate in response. For example, should the agencies limit the amount of credits that could be carried over from Phase1 or limit them to the first year or two of the Phase 2 program? Also, if we determine that large surpluses are likely, how should that factor into our decision on the feasibility of more stringent standards in MY 2021?

(ii) Averaging Sets

EPA has historically restricted averaging to some extent for its HD emission standards to avoid creating unfair competitive advantages or environmental risks due to credits being inconsistent. Under Phase 1, averaging, banking and trading can only occur within and between specified “averaging sets” (with the exception of credits generated through use of specified advanced technologies). We propose to continue this regime in Phase 2, to retain the existing vehicle and engine averaging sets, and create new trailer averaging sets. We also propose to continue the averaging set restrictions from Phase 1 in Phase 2. These averaging sets for vehicles are:

• Complete pickups and vans
• Other light heavy-duty vehicles (Classes 2b-5)
• Medium heavy-duty vehicles (Class 6-7)
• Heavy heavy-duty vehicles (Class 8)
• Long dry van trailers
• Short dry van trailers
• Long refrigerated trailers
• Short refrigerated trailers

We also propose not to allow trading between engines and chassis, even within the same vehicle class. Such trading would essentially result in double counting of emission credits, because the same engine technology would likely generate credits relative to both standards. We similarly would limit trading among engine categories to trades within the designated averaging sets:

• Spark-ignition engines
• Compression-ignition light heavy-duty engines
• Compression-ignition medium heavy-duty engines
• Compression-ignition heavy heavy-duty engines

The agencies continue to believe that restricting trading to within the same eight classes would provide adequate opportunities for manufacturers to make necessary technological improvements and to reduce the overall cost of the program without compromising overall environmental and fuel efficiency objectives, and is therefore appropriate and reasonable under EPA's authority and maximum feasible under NHTSA's authority, respectively. We do not expect emissions from engines and vehicles—when restricted by weight class—to be dissimilar. We therefore expect that the lifetime vehicle performance and emissions levels will be very similar across these defined categories, and the estimated credit calculations will fairly ensure the expected fuel consumption and GHG emission reductions.

We continue to believe, subject to consideration of public comment, that the Phase 1 averaging sets create the most flexibility that is appropriate without creating an unfair advantage for manufacturers with erratically integrated portfolios, including engines and vehicles. See 76 FR 57240. The agencies committed in Phase 1 to seek public comment after credit trading begins with manufacturers certifying in 2014 on whether broader credit trading is more appropriate in developing the next phase of HD regulations (76 FR 57128, September 15, 2011). The 2014 model year end of year reports will become available to the agencies in mid-2015. Therefore, the agencies will provide information at that point. We welcome comment on averaging set restrictions. The agencies propose to continue this carry forward provision for phase 2 for the same reasons.

(iii) Credit Deficits

The Phase 1 regulations allow manufacturers to carry-forward deficits for up to three years without penalty. This is an important flexibility because the program is designed to address the diversity of the heavy-duty industry by allowing manufacturers to sell a mix of engines or vehicles that have very different emission levels and fuel efficiencies. Under this construct, manufacturers can offset sales of engines or vehicles not meeting the standards by selling others (within the same averaging set) that are much better than required. However, in any given year it is possible that the actual sales mix will not balance out and the manufacturer may be short of credits for that model year. The three year provision allows for this possibility and creates additional compliance flexibility to accommodate it.

(iv) Advanced Technology Credits

At this time, the agencies believe it is no longer appropriate to provide extra credit for the technologies identified as advanced technologies for Phase 1, although we are requesting comment on this issue. The Phase 1 advanced technology credits were adopted to promote the implementation of advanced technologies, such as hybrid powertrains, Rankine cycle engines, all-electric vehicles, and fuel cell vehicles (see 40 CFR 1037.150(i)). As the agencies stated in the Phase 1 final rule, the Phase 1 standards were not premised on the use of advanced technologies but we expected these advanced technologies to be an important part of the Phase 2 rulemaking (76 FR 57133, September 15, 2011). The proposed Phase 2 heavy-duty engine and vehicles standards are premised on the use of some advanced technologies, making them equivalent to other fuel-saving technologies in this context. We believe the Phase 2 standards themselves would provide sufficient incentive to develop them.

We request comment on this issue, especially with respect to electric vehicle, plug-in hybrid, and fuel cell technologies. Although the proposed standards are premised on some use of Rankine cycle engines and hybrid powertrains, none of the proposed standards are based on projected utilization of the use of the other advanced technologies. (Note that the most stringent alternative is based on some use of these technologies). Commenters are encouraged to consider the recently adopted light-duty program, which includes temporary incentives for these technologies.

(c) Innovative Technology and Off-Cycle Credits

The agencies propose to largely continue the Phase 1 innovative technology program but to redesignate it as an off-cycle program for Phase 2. In other words, beginning in MY 2021 technologies that are not fully accounted for in the GEM simulation tool, or by compliance dynamometer testing would be considered “off-cycle”, including those technologies that may no longer be considered innovative technologies. However, we are not proposing to apply this flexibility to trailers (which were not part of Phase 1) in order to simplify the program for trailer manufacturers.

The agencies propose to maintain that, in order for a manufacturer to receive credits for Phase 2, the off-cycle technology would still need to meet the requirement that it was not in common use prior to MY 2010. Although, we have not identified specific off-cycle technologies at this time that should be excluded, we believe it may be prudent to continue this requirement to avoid the potential for manufacturers to receive windfall credits for technologies that they were already using before MY 2010. Nevertheless, the agencies seek comment on whether off-cycle technologies in the Phase 2 program should be limited in this way. In particular, the agencies are concerned that because the proposed Phase 2 program would be implemented MY 2021 and may extend beyond 2027, the agencies and manufacturers may have difficulty in the future determining whether an off-cycle technology was in common use prior to MY 2010. Moreover, because we have not identified a single off-cycle technology that should be excluded by this provision at this time, we are concerned that this approach may create an unnecessary hindrance to the off-cycle program.

Manufacturers would be able to carry over an innovative technology credits from Phase 1 into Phase 2, subject to the same restrictions as other credits. Manufacturers would also be able to carry over the improvement factor (not the credit value) of a technology, if certain criteria were met. The agencies would require documentation for all off-cycle requests similar to those required by EPA for its light-duty GHG program.

Additionally, NHTSA would not grant any off-cycle credits for crash avoidance technologies. NHTSA would also require manufacturers to consider the safety of off-cycle technologies and would request a safety assessment from the manufacturer for all off-cycle technologies.

The agencies seek comment on these proposed changes, as well as the possibility of adopting aspects of the light-duty off-cycle program.

(d) Alternative Fuels

The agencies are proposing to largely continue the Phase 1 approach for engines and vehicles fueled by fuels other than gasoline and diesel. Phase 1 engine emission standards applied uniquely for gasoline-fueled and diesel-fueled engines. The regulations in 40 CFR part 86 implement these distinctions for alternative fuels by dividing engines into Otto-cycle and Diesel-cycle technologies based on the combustion cycle of the engine. The agencies are, however, proposing a small change that is described in Section II. Under the proposed change, we would require manufacturers to divide their natural gas engines into primary intended service classes, like the current requirement for compression-ignition engines. Any alternative fuel-engine qualifying as a medium heavy-duty engine or a heavy heavy-duty engine would be subject to all the emission standards and other requirements that apply to compression-ignition engines. Note that this small change in approach would also apply with respect to EPA's criteria pollutant program.

We are also proposing that the Phase 2 standards apply exclusively at the vehicle tailpipe. That is, compliance is based on vehicle fuel consumption and GHG emission reductions, and does not reflect any so-called lifecycle emission properties. The agencies have explained why it is reasonable that the heavy duty standards be fuel neutral in this manner. See 76 FR 57123; see also 77 FR 51705 (August 24, 2012) and 77 FR 51500 (August 27, 2012). In particular, EPA notes that there is a separate, statutorily-mandated program under the Clean Air Act which encourages use of renewable fuels in transportation fuels, including renewable fuel used in heavy-duty diesel engines. This program considers lifecycle greenhouse gas emissions compared to petroleum fuel. NHTSA notes that the fuel efficiency standards are necessarily tailpipe-based, and that a lifecycle approach would likely render it impossible to harmonize the fuel efficiency and GHG emission standards, to the great detriment of our goal of achieving a coordinated program. 77 FR 51500-51501; see also 77 FR 51705 (similar finding by EPA); see also section I.F. (1) (a) below.

One consequence of the tailpipe-based approach is that the agencies are proposing to treat vehicles powered by electricity the same as in Phase 1. In Phase 1, EPA treated all electric vehicles as having zero emissions of CO₂, CH₄, and N₂ O (see 40 CFR 1037.150(f)). Similarly, NHTSA adopted regulations in Phase 1 that set the fuel consumption standards based on the fuel consumed by the vehicle. The agencies also did not require emission testing for electric vehicles in Phase 1. The agencies considered the potential unintended consequence of not accounting for upstream emissions from the charging of heavy-duty electric vehicles. In our reassessment for Phase 2, we have not found any all-electric heavy-duty vehicles that have certified by 2014. As we look to the future, we project very limited adoption of all-electric vehicles into the market. Therefore, we believe that this provision is still appropriate. Unlike the 2017-2025 light-duty rule, which included a cap whereby upstream emissions would be counted after a certain volume of sales (see 77 FR 62816-62822), we believe there is no need to propose a cap for heavy-duty vehicles because of the small likelihood of significant production of EV technologies in the Phase 2 timeframe. We welcome comments on this approach. Note that we also request comment on upstream emissions for natural gas in Section XI.

(e) Phase 1 Interim Provisions

EPA adopted several flexibilities for the Phase 1 program (40 CFR 1036.150 and 1037.150) as interim provisions. Because the existing regulations do not have an end date for Phase 1, most of these provisions did not have an explicit end date. NHTSA adopted similar provisions. With few exceptions, the agencies are proposing not to apply these provisions to Phase 2. These will generally remain in effect for the Phase 1 program. In particular, the agencies note that we do not propose to continue the blanket exemption for small manufacturers. Instead, the agencies propose to adopt narrower and more targeted relief.

(f) In-Use Standards

Section 202(a)(1) of the CAA specifies that EPA is to adopt emissions standards that are applicable for the useful life of the vehicle and for the engine. EPA finalized in-use standards for the Phase 1 program whereas NHTSA adopted an approach which does not include these standards. For the Phase 2 program, EPA will carry-over its in-use provisions and NHTSA proposes to adopt EPA's useful life requirements for its vehicle and engine fuel consumption standards to ensure manufacturers consider in the design process the need for fuel efficiency standards to apply for the same duration and mileage as EPA standards. If EPA determines a manufacturer fails to meet its in-use standards, civil penalties may be assessed. NHTSA seeks comment on the appropriateness of seeking civil penalties for failure to comply with its fuel efficiency standards in these instances. NHTSA would limit such penalties to situations in which it determined that the vehicle or engine manufacturer failed to comply with the standards.

(2) Proposed Phase 2 Standards

This section briefly summarizes the proposed Phase 2 standards for each category and identifies the technologies that the agencies project would be needed to meet the standards. Given the large number of different regulatory categories and model years for which separate standards are being proposed, the actual numerical standards are not listed. Readers are referred to Sections II through IV for the tables of proposed standards.

(a) Summary of the Proposed Engine Standards

The agencies are proposing to continue the basic Phase 1 structure for the Phase 2 engine standards. There would be separate standards and test cycles for tractor engines, vocational diesel engines, and vocational gasoline engines. However, as described in Section II, we are proposing a revised test cycle for tractor engines to better reflect actual in-use operation.

For diesel engines, the agencies are proposing standards for MY 2027 requiring reduction in CO₂ emissions and fuel consumption of 4.2 percent better than the 2017 baseline. We are also proposing standards for MY 2021 and MY 2024, requiring reductions in CO₂ emissions and fuel consumption of 1.5 to 3.7 percent better than the 2017 baseline. The agencies project that these reductions would be feasible based on technological changes that would improve combustion and reduce energy losses. For most of these improvements, the agencies project manufacturers will begin applying them to about 50 percent of their heavy-duty engines by 2021, and ultimately apply them to about 90 percent of their heavy-duty engines by 2024. However, for some of these improvements we project more limited application rates. In particular, we project a more limited use of waste exhaust heat recovery systems in 2027, projecting that about 10 percent of tractor engines will have turbo-compounding systems, and an additional 15 percent of tractor engines would employ Rankine-cycle waste heat recovery. We do not project that turbo-compounding or Rankine-cycle waste heat recovery technology will be utilized in vocational engines. Although we see great potential for waste heat recovery systems to achieve significant fuel savings and CO₂ emission reductions, we are not projecting that the technology could be available for more wide-spread use in this time frame.

For gasoline vocational engines, we are not proposing new more stringent engine standards. Gasoline engines used in vocational vehicles are generally the same engines as are used in the complete HD pickups and vans in the Class 2b and 3 weight categories. Given the relatively small sales volumes for gasoline-fueled vocational vehicles, manufacturers typically cannot afford to invest significantly in developing separate technology for these vocational vehicle engines. Thus, we project that vocational gasoline engines would include the same technology as would be used to meet the pickup and van chassis standards, and this would result in some real world reductions in CO₂ emissions and fuel consumption. Although it is difficult at this time to project how much improvement would be observed during certification testing, it seems likely that these improvements would reduce measured CO₂ emissions and fuel consumption by about one percent. Therefore, we are requesting comment on finalizing a Phase 2 standard of 621 g/hp-hr for gasoline engines (i.e., one percent more stringent than the 2016 Phase 1 standard of 627 g/hp-hr) in MY 2027. We note that the proposed MY 2027 vehicle standards for gasoline-fueled vocational vehicles are predicated in part on the use of advanced friction reduction technology with effectiveness over the GEM cycles of about one percent. We also request comment on whether not proposing more stringent standards for gasoline engines would create an incentive for purchasers who would have otherwise chosen a diesel vehicle to instead choose a gasoline vehicle.

(b) Summary of the Proposed Tractor Standards

As explained in Section III, the agencies are proposing to largely continue the Phase 1 tractor program but to propose new standards. The tractor standards proposed for MY 2027 would achieve up to 24 percent lower CO₂ emissions and fuel consumption than a 2017 model year Phase 1 tractor. The agencies project that the proposed 2027 tractor standards could be met through improvements in the:

• Engine (including some use of waste heat recovery systems)

• Transmission
• Driveline
• Aerodynamic design
• Tire rolling resistance
• Idle performance
• Other accessories of the tractor.

The agencies' evaluation shows that some of these technologies are available today, but have very low adoption rates on current vehicles, while others will require some lead time for development. The agencies are proposing to enhance the GEM vehicle simulation tool to recognize these technologies, as described in Section II.C.

We have also determined that there is sufficient lead time to introduce many of these tractor and engine technologies into the fleet at a reasonable cost starting in the 2021 model year. The proposed 2021 model year standards for combination tractors and engines would achieve up to 13 percent lower CO₂ emissions and fuel consumption than a 2017 model year Phase 1 tractor, and the 2024 model year standards would achieve up to 20 percent lower CO₂ emissions and fuel consumption.

(c) Summary of the Proposed Trailer Standards

This proposed rule is a set of GHG emission and fuel consumption standards for manufacturers of new trailers that are used in combination with tractors that would significantly reduce CO₂ and fuel consumption from combination tractor-trailers nationwide over a period of several years. As described in Section IV, there are numerous aerodynamic and tire technologies available to manufacturers to accomplish these proposed standards. For the most part, these technologies have already been introduced into the market to some extent through EPA's voluntary SmartWay program. However, adoption is still somewhat limited.

The agencies are proposing incremental levels of Phase 2 standards that would apply beginning in MY 2018 and be fully phased-in by 2027. These standards are predicated on use of aerodynamic and tire improvements, with trailer OEMs making incrementally greater improvements in MYs 2021 and 2024 as standard stringency increases in each of those model years. EPA's GHG emission standards would be mandatory beginning in MY 2018, while NHTSA's fuel consumption standards would be voluntary beginning in MY 2018, and be mandatory beginning in MY 2021.

As described in Section XV.D and Chapter 12 of the draft RIA, the agencies are proposing special provisions to minimize the impacts on small trailer manufacturers. These provisions have been informed by and are largely consistent with recommendations coming from the SBAR Panel that EPA conducted pursuant to Section 609(b) of the Regulatory Flexibility Act (RFA). Broadly, these provisions provide additional lead time for small manufacturers, as well as simplified testing and compliance requirements. The agencies are also requesting comment on whether there is a need for additional provisions to address small business issues.

(d) Summary of the Proposed Vocational Vehicle Standards

As explained in Section V, the agencies are proposing to revise the Phase 1 vocational vehicle program and to propose new standards. These proposed standards also reflect further sub-categorization from Phase 1, with separate proposed standards based on mode of operation: Urban, regional, and multi-purpose. The agencies are also proposing alternative standards for emergency vehicles.

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, plus some application of hybrid technology. These are described in Section V of this preamble and in Chapter 2.9 of the draft RIA. These MY 2027 standards would achieve up to 16 percent lower CO₂ emissions and fuel consumption than MY 2017 Phase 1 standards. The agencies are also proposing revisions to the compliance regime for vocational vehicles. These include: The addition of an idle cycle that would be weighted along with the other drive cycles; and revisions to the vehicle simulation tool to reflect specific improvements to the engine, transmission, and driveline.

Similar to the tractor program, we have determined that there is sufficient lead time to introduce many of these new technologies into the fleet starting in MY 2021. Therefore, we are proposing new standards for MY 2021 and 2024. Based on our analysis, the MY 2021 standards for vocational vehicles would achieve up to 7 percent lower CO₂ emissions and fuel consumption than a MY 2017 Phase 1 vehicle, on average, and the MY 2024 standards would achieve up to 11 percent lower CO₂ emissions and fuel consumption.

In Phase 1, EPA adopted air conditioning (A/C) refrigerant leakage standards for tractors, as well as for heavy-duty pickups and vans, but not for vocational vehicles. For Phase 2, EPA believes that it would be feasible to apply similar A/C refrigerant leakage standards for vocational vehicles, beginning with the 2021 model year. The process for certifying that low leakage components are used would follow the system currently in place for comparable systems in tractors.

(e) Summary of the Proposed Heavy-Duty Pickup and Van Standards

The agencies are proposing to adopt new Phase 2 GHG 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. These standards are based on the extensive use of most known and proven technologies, and could result in some use of strong hybrid powertrain technology. These proposed standards would commence in MY 2021. Overall, the proposed standards are 16 percent more stringent by 2027.

(f) Summary of the Proposed Final Numeric Standards by Regulatory Subcategory

Table I-7 lists the proposed final (i.e., MY 2027) numeric standards by regulatory subcategory for tractors, trailers, vocational vehicles and engines. Note that these are the same final numeric standards for Alternative 4, but for Alternative 4 these would be implemented in MY 2024 instead of MY 2027.

Similar to Phase 1 the agencies are proposing for Phase 2 a set of continuous equation-based standards for HD pickups and vans. Please refer to Section 6, subsection B.1, for a description of these standards, including associated tables and figures.

D. Summary of the Costs and Benefits of the Proposed Rule

This section summarizes the projected costs and benefits of the proposed NHTSA fuel consumption and EPA GHG emission standards, along with those of Alternative 4. These projections helped to inform the agencies' choices among the alternatives considered, along with other relevant factors, and NHTSA's Draft Environmental Impact Statement (DEIS). See Sections VII through IX and the Draft RIA for additional details about these projections.

For this rule, the agencies conducted coordinated and complementary analyses using two analytical methods for the heavy-duty pickup and van segment by employing both DOT's CAFE model and EPA's MOVES model. The agencies used EPA's MOVES model to estimate fuel consumption and emissions impacts for tractor-trailers (including the engine that powers the tractor), and vocational vehicles (including the engine that powers the vehicle). Additional calculations were performed to determine corresponding monetized program costs and benefits. For heavy-duty pickups and vans, the agencies performed complementary analyses, which we refer to as “Method A” and “Method B.” In Method A, the CAFE model was used to project a pathway the industry could use to comply with each regulatory alternative and the estimated effects on fuel consumption, emissions, benefits and costs. In Method B, the CAFE model was used to project a pathway the industry could use to comply with each regulatory alternative, along with resultant impacts on per vehicle costs, and the MOVES model was used to calculate corresponding changes in total fuel consumption and annual emissions. Additional calculations were performed to determine corresponding monetized program costs and benefits. NHTSA considered Method A as its central analysis and Method B as a supplemental analysis. EPA considered the results of both methods. The agencies concluded that both methods led the agencies to the same conclusions and the same selection of the proposed standards. See Section VII for additional discussion of these two methods.

(1) Reference Case Against Which Costs and Benefits Are Calculated

The No Action Alternative for today's analysis, alternatively referred to as the “baseline” or “reference case,” assumes that the agencies would not issue new rules regarding MD/HD fuel efficiency and GHG emissions. This is the baseline against which costs and benefits for the proposed standards are calculated. The reference case assumes that model year 2018 standards would be extended indefinitely and without change.

The agencies recognize that if the proposed rule is not adopted, manufacturers will continue to introduce new heavy-duty vehicles in a competitive market that responds to a range of factors. Thus manufacturers might have continued to improve technologies to reduce heavy-duty vehicle fuel consumption. Thus, as described in Section VII, both agencies fully analyzed the proposed standards and the regulatory alternatives against two reference cases. The first case uses a baseline that projects very little improvement in new vehicles in the absence of new Phase 2 standards, and the second uses a more dynamic baseline that projects more significant improvements in vehicle fuel efficiency. NHTSA considered its primary analysis to be based on the more dynamic baseline, where certain cost-effective technologies are assumed to be applied by manufacturers to improve fuel efficiency beyond the Phase 1 requirements in the absence of new Phase 2 standards. EPA considered both reference cases. The results for all of the regulatory alternatives relative to both reference cases, derived via the same methodologies discussed in this section, are presented in Section X of the preamble.

The agencies chose to analyze these two different baselines because the agencies recognize that there are a number of factors that create uncertainty in projecting a baseline against which to compare the future effects of the proposed action and the remaining alternatives. The composition of the future fleet—such as the relative position of individual manufacturers and the mix of products they each offer—cannot be predicted with certainty at this time. Additionally, the heavy-duty vehicle market is diverse, as is the range of vehicle purchasers. Heavy-duty vehicle manufacturers have reported that their customers' purchasing decisions are influenced by their customers' own determinations of minimum total cost of ownership, which can be unique to a particular customer's circumstances. For example, some customers (e.g., less-than-truckload or package delivery operators) operate their vehicles within a limited geographic region and typically own their own vehicle maintenance and repair centers within that region. These operators tend to own their vehicles for long time periods, and sometimes for the entire service life of the vehicle. Their total cost of ownership is influenced by their ability to better control their own maintenance costs, and thus they can afford to consider fuel efficiency technologies that have longer payback periods, outside of the vehicle manufacturer's warranty period. Other customers (e.g. truckload or long-haul operators) tend to operate cross-country, and thus must depend upon truck dealer service centers for repair and maintenance. Some of these customers tend to own their vehicles for about four to seven years, so that they typically do not have to pay for repair and maintenance costs outside of either the manufacturer's warranty period or some other extended warranty period. Many of these customers tend to require seeing evidence of fuel efficiency technology payback periods on the order of 18 to 24 months before seriously considering evaluating a new technology for potential adoption within their fleet (NAS 2010, Roeth et al. 2013, Klemick et al. 2014). Purchasers of HD pickups and vans wanting better fuel efficiency tend to demand that fuel consumption improvements pay back within approximately one to three years, but some HD pickup and van owners accrue relatively few vehicle miles traveled per year, such that they may be less likely to adopt new fuel efficiency technologies, while other owners who use their vehicle(s) with greater intensity may be even more willing to pay for fuel efficiency improvements. Regardless of the type of customer, their determination of minimum total cost of ownership involves the customer balancing their own unique circumstances with a heavy-duty vehicle's initial purchase price, availability of credit and lease options, expectations of vehicle reliability, resale value and fuel efficiency technology payback periods. The degree of the incentive to adopt additional fuel efficiency technologies also depends on customer expectations of future fuel prices, which directly impacts customer payback periods. Purchasing decisions are not based exclusively on payback period, but also include the considerations discussed above and in Section X.A.1. For the baseline analysis, the agencies use payback period as a proxy for all of these considerations, and therefore the payback period for the baseline analysis is shorter than the payback period industry uses as a threshold for the further consideration of a technology. The agencies request comment on which alternative baseline scenarios would be most appropriate for analysis in the final rule. Specifically, the agencies request empirical evidence to support whether the agencies should use for the final rule the central cases used in this proposal, alternative sensitivity cases such as those mentioned below, or some other scenarios. See Section X.A.1of this Preamble and Chapter 11 of the draft RIA for a more detailed discussion of baselines.

As part of a sensitivity analysis, additional baseline scenarios were also evaluated for HD pickups and vans, including baseline payback periods of 12, 18 and 24 months. See Section VI of this Preamble and Chapter 10 of the draft RIA for a detailed discussion of these additional scenarios.

(2) Costs and Benefits Projected for the Standards Being Proposed and Alternative 4

The tables below summarize the benefits and costs for the program in two ways: First, from the perspective of a program designed to improve the Nation's energy security and to conserve energy by improving fuel efficiency and then from the perspective of a program designed to reduce GHG emissions. The individual categories of benefits and costs presented in the tables below are defined more fully and presented in more detail in Chapter 8 of the draft RIA.

Table I-8 shows benefits and costs for the proposed standards and Alternative 4 from the perspective of a program designed to improve the Nation's energy security and conserve energy by improving fuel efficiency. From this viewpoint, technology costs occur when the vehicle is purchased. Fuel savings are counted as benefits that occur over the lifetimes of the vehicles produced during the model years subject to the Phase 2 standards as they consume less fuel.

Table I-9 shows benefits and cost from the perspective of reducing GHG.

Table I-10 breaks down by vehicle category the benefits and costs for the proposed standards and Alternative 4 using the Method A analytical approach. For additional detail on per-vehicle break-downs of costs and benefits, please see Chapter 10.

An important metric to vehicle purchasers is the payback period that can be expected on any new purchase. In other words, there is greater willingness to pay for new technology if that new technology “pays back” within an acceptable period of time. The agencies make no effort to define the acceptable period of time, but seek to estimate the payback period for others to make the decision themselves. The payback period is the point at which reduced fuel expenditures outpace increased vehicle costs, including increased maintenance, insurance premiums and taxes. The payback periods for vehicles meeting the standards considered for the final year of implementation (MY2024 for alternative 4 and MY2027 for the proposed standards) are shown in Table I-12, and are similar for both Method A and Method B.

(3) Cost Effectiveness

These proposed regulations implement Section 32902(k) of EISA and Section 202(a)(1) and (2) of the Clean Air Act. Through the 2007 EISA, Congress directed NHTSA to create a medium- and heavy-duty vehicle fuel efficiency program designed to achieve the maximum feasible improvement by considering appropriateness, cost-effectiveness, and technological feasibility to determine maximum feasible standards. The Clean Air Act requires that any air pollutant emission standards for heavy-duty vehicles and engines take into account the costs of any requisite technology and the lead time necessary to implement such technology. Both agencies considered overall costs, overall benefits and cost effectiveness in developing the Phase 1 standards. Although there are different ways to evaluate cost effectiveness, the essence is to consider some measure of costs relative to some measure of impacts.

Considering that Congress enacted EPCA and EISA to, among other things, address the need to conserve energy, the agencies have evaluated the proposed standards in terms of costs per gallon of fuel conserved. As described in the draft RIA, the agencies also evaluated the proposed standards using the same approaches employed in HD Phase 1. Together, the agencies have considered the following three ratios of cost effectiveness:

1. Total costs per gallon of fuel conserved.

2. Technology costs per ton of GHG emissions reduced.

3. Technology costs minus fuel savings per ton of GHG emissions reduced.

By all three of these measures, the proposed standards would be highly cost effective.

As discussed below, the agencies estimate that over the lifetime of heavy-duty vehicles produced for sale in the U.S. during model years 2018-2029, the proposed standards would cost about $30 billion and conserve about 75 billion gallons of fuel, such that the first measure of cost effectiveness would be about 40 cents per gallon. Relative to fuel prices underlying the agencies' analysis, the agencies have concluded that today's proposed standards would be cost effective.

With respect to the second measure, which is useful for comparisons to other GHG rules, the proposed standards would have overall $/ton costs similar to the HD Phase 1 rule. As Chapter 7 of the draft RIA shows, technology costs by themselves would amount to less than $50 per metric ton of GHG (CO₂ eq) for the entire HD Phase 2 program. This compares well to both the HD Phase 1 rule, which was estimated to cost about $30 per metric ton of GHG (without fuel savings), and to the agencies' estimates of the social cost of carbon. Thus, even without accounting for fuel savings, the proposed standards would be cost-effective.

The third measure deducts fuel savings from technology costs, which also is useful for comparisons to other GHG rules. On this basis, net costs per ton of GHG emissions reduced would be negative under the proposed standards. This means that the value of the fuel savings would be greater than the technology costs, and there would be a net cost saving for vehicle owners. In other words, the technologies would pay for themselves (indeed, more than pay for themselves) in fuel savings.

In addition, while the net economic benefits (i.e., total benefits minus total costs) of the proposed standards is not a traditional measure of their cost-effectiveness, the agencies have concluded that the total costs of the proposed standards are justified in part by their significant economic benefits. As discussed in the previous subsection and in Section IX, this rule would provide benefits beyond the fuel conserved and GHG emissions avoided. The rule's net benefits is a measure that quantifies each of its various benefits in economic terms, including the economic value of the fuel it saves and the climate-related damages it avoids, and compares their sum to the rule's estimated costs. The agencies estimate that the proposed standards would result in net economic benefits exceeding $100 billion, making this a highly beneficial rule.

Our current analysis of Alternative 4 also shows that, if technologically feasible, it would have similar cost-effectiveness but with greater net benefits (see Chapter 11 of the draft RIA). For example, the agencies estimate costs under Alternative 4 could be about $40 billion and about 85 billion gallons of fuel could be conserved, such that the first measure of cost effectiveness would be about 47 cents per gallon. However, the agencies considered all of the relevant factors, not just relative cost-effectiveness, when selecting the proposed standards from among the alternatives considered. Relative cost-effectiveness was not a limiting factor for the agencies in selecting the proposed standards. It is also worth noting that the proposed standards and the Alternative 4 standards appear very cost effective, regardless of which reference case is used for the baseline, such that all of the analyses reinforced the agencies' findings.

E. EPA and NHTSA Statutory Authorities

This section briefly summarizes the respective statutory authority for EPA and NHTSA to promulgate the Phase 1 and proposed Phase 2 programs. For additional details of the agencies' authority, see Section XV of this notice as well as the Phase 1 rule.

(1) EPA Authority

Statutory authority for the vehicle controls in this proposal is found in CAA section 202(a)(1) and (2) (which requires EPA to establish standards for emissions of pollutants from new motor vehicles and engines which emissions cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare), and in CAA sections 202(d), 203-209, 216, and 301 (42 U.S.C. 7521 (a)(1) and (2), 7521(d), 7522-7543, 7550, and 7601).

Title II of the CAA provides for comprehensive regulation of mobile sources, authorizing EPA to regulate emissions of air pollutants from all mobile source categories. When acting under Title II of the CAA, EPA considers such issues as technology effectiveness, its cost (both per vehicle, per manufacturer, and per consumer), the lead time necessary to implement the technology, and based on this the feasibility and practicability of potential standards; the impacts of potential standards on emissions reductions of both GHGs and non-GHG emissions; the impacts of standards on oil conservation and energy security; the impacts of standards on fuel savings by customers; the impacts of standards on the truck industry; other energy impacts; as well as other relevant factors such as impacts on safety.

This proposed action implements a specific provision from Title II, Section 202(a). Section 202(a)(1) of the 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.” With EPA's December 2009 final findings that certain greenhouse gases may reasonably be anticipated to endanger public health and welfare and that emissions of GHGs from Section 202(a) sources cause or contribute to that endangerment, Section 202(a) requires EPA to issue standards applicable to emissions of those pollutants from new motor vehicles. See Coalition for Responsible Regulation v. EPA, 684 F. 3d at 116-125, 126-27 cert. granted by, in part Util. Air Regulatory Group v. EPA, 134 S. Ct. 418, 187 L. Ed. 2d 278, 2013 U.S. LEXIS 7380 (U.S., 2013), affirmed in part and reversed in part on unrelated grounds by Util. Air Regulatory Group v. EPA, 134 S. Ct. 2427, 189 L. Ed. 2d 372, 2014 U.S. LEXIS 4377 (U.S., 2014) (upholding EPA's endangerment and cause and contribute findings, and further affirming EPA's conclusion that it is legally compelled to issue standards under Section 202 (a) to address emission of the pollutant which endangers after making the endangerment and cause of contribute findings); see also id. at 127-29 (upholding EPA's light-duty GHG emission standards for MYs 2012-2016 in their entirety).

Other aspects of EPA's legal authority, including it authority under Section 202(a), its testing authority under Section 203 of the Act, and its enforcement authorities under Section 207 of the Act are discussed fully in the Phase 1 rule, and need not be repeated here. See 76 FR 57129-57130.

The proposed rule includes GHG emission and fuel efficiency standards applicable to trailers—an essential part of the tractor-trailer motor vehicle. Class 7/8 heavy-duty vehicles are composed of three major components:—The engine, the cab-chassis (i.e. the tractor), and the trailer. The fact that the vehicle consists of two detachable parts does not mean that either of the parts is not a motor vehicle. The trailer's sole purpose is to serve as the cargo-hauling part of the vehicle. Without the tractor, the trailer cannot transport property. The tractor is likewise incomplete without the trailer. The motor vehicle needs both parts, plus the engine, to accomplish its intended use. Connected together, a tractor and trailer constitute “a self-propelled vehicle designed for transporting . . . property on a street or highway,” and thus meet the definition of “motor vehicle” under Section 216(2) of the CAA. Thus, as EPA has previously explained, we interpret our authority to regulate motor vehicles to include authority to regulate such trailers. See 79 FR 46259 (August 7, 2014).

This analysis is consistent with definitions in the Federal regulations issued under the CAA at 40 CFR 86.1803-01, where a heavy-duty vehicle “that has the primary load carrying device or container attached” is referred to as a “[c]omplete heavy-duty vehicle,” while a heavy-duty vehicle or truck “which does not have the primary load carrying device or container attached” is referred to as an “[i]ncomplete heavy- duty vehicle” or “[i]ncomplete truck.” The trailers that would be covered by this proposal are properly considered “the primary load carrying device or container” for the heavy-duty vehicles to which they become attached for use. Therefore, under these definitions, such trailers are implicitly part of a “complete heavy-duty vehicle,” and thus part of a “motor vehicle.”

The argument that trailers do not themselves emit pollutants and so are not subject to emission standards is also unfounded. First, the argument lacks a factual predicate. Trailers indisputably contribute to the motor vehicle's CO₂ emissions by increasing engine load, and these emissions can be reduced through various means such as trailer aerodynamic and tire rolling resistance improvements. See Section IV below. The argument also lacks a legal predicate. Section 202(a)(1) authorizes standards applicable to emissions of air pollutants “from” either the motor vehicle or the engine. There is no requirement that pollutants be emitted from a specified part of the motor vehicle or engine. And indeed, the argument proves too much, since tractors and vocational vehicle chassis likewise contribute to emissions (including contributing by the same mechanisms that trailers do) but do not themselves directly emit pollutants. The fact that Section 202(a)(1) applies explicitly to both motor vehicles and engines likewise indicates that EPA has unquestionable authority to interpret pollutant emission caused by the vehicle component to be “from” the motor vehicle and so within its regulatory authority under Section 202(a)(1).

(2) NHTSA Authority

The Energy Policy and Conservation Act (EPCA) of 1975 mandates a regulatory program for motor vehicle fuel economy to meet the various facets of the need to conserve energy. In December 2007, Congress enacted the Energy Independence and Security Act (EISA), amending EPCA to require, among other things, the creation of a medium- and heavy-duty fuel efficiency program for the first time.

Statutory authority for the fuel consumption standards in this proposed rule is found in EISA section 103, 49 U.S.C. 32902(k). This section authorizes a fuel efficiency improvement program, designed to achieve the maximum feasible improvement to be created for commercial medium- and heavy-duty on-highway vehicles and work trucks, to include appropriate test methods, measurement metrics, standards, and compliance and enforcement protocols that are appropriate, cost-effective and technologically feasible.

NHTSA has responsibility for fuel economy and consumption standards, and assures compliance with EISA through rulemaking, including standard-setting; technical reviews, audits and studies; investigations; and enforcement of implementing regulations including penalty actions. This proposed rule would continue to fulfill the requirements of Section 103 of EISA, which instructs NHTSA to create a fuel efficiency improvement program for “commercial medium- and heavy-duty on-highway vehicles and work trucks” by rulemaking, which is to include standards, test methods, measurement metrics, and enforcement protocols. See 49 U.S.C. 32902(k)(2).

Congress directed that the standards, test methods, measurement metrics, and compliance and enforcement protocols be “appropriate, cost-effective, and technologically feasible” for the vehicles to be regulated, while achieving the “maximum feasible improvement” in fuel efficiency. NHTSA has broad discretion to balance the statutory factors in Section 103 in developing fuel consumption standards to achieve the maximum feasible improvement.

As discussed in the Phase 1 final rule notice, NHTSA has determined that the five year statutory limit on average fuel economy standards that applies to passengers and light trucks is not applicable to the HD vehicle and engine standards. As a result, the Phase 1 HD engine and vehicle standards remain in effect indefinitely at their 2018 or 2019 MY levels until amended by a future rulemaking action. As was contemplated in that notice, NHTSA is currently engaging in this Phase 2 rulemaking action. Therefore, the Phase 1 standards would not remain in effect at their 2018 or 2019 MY levels indefinitely; they would remain in effect until the MY Phase 2 standards apply. In accordance with Section 103 of EISA, NHTSA will ensure that not less than four full MYs of regulatory lead-time and three full MYs of regulatory stability are provided for in the Phase 2 standards.

(a) Authority To Regulate Trailers

As contemplated in the Phase 1 proposed and final rules, the agencies are proposing standards for trailers in this rulemaking. Because Phase 1 did not include standards for trailers, NHTSA did not discuss its authority for regulating them in the proposed or final rules; that authority is described here.

EISA directs NHTSA to “determine in a rulemaking proceeding how to implement a commercial medium- and heavy-duty on-highway vehicle and work truck fuel efficiency improvement program designed to achieve the maximum feasible improvement. . . .” EISA defines a commercial medium- and heavy-duty on-highway vehicle to mean “an on-highway vehicle with a GVWR of 10,000 lbs or more.” A “work truck” is defined as a vehicle between 8,500 and 10,000 lbs GVWR that is not an MDPV. These definitions do not explicitly exclude trailers, in contrast to MDPVs. Because Congress did not act to exclude trailers when defining GVWRs, despite demonstrating the ability to exclude MDPVs, it is reasonable to interpret the provision to include them.

Both commercial medium- and heavy-duty on-highway vehicles and work trucks, though, must be vehicles in order to be regulated under this program. Although EISA does not define the term “vehicle,” NHTSA's authority to regulate motor vehicles under its organic statute, the Motor Vehicle Safety Act (“Safety Act”), does. The Safety Act defines a motor vehicle as “a vehicle driven or drawn by mechanical power and manufactured primarily for use on public streets, roads, and highways. . . .” NHTSA clearly has authority to regulate trailers under this Act as vehicles that are drawn and has exercised that authority numerous times. Given the absence of any apparent contrary intent on the part of Congress in EISA, NHTSA believes it is reasonable to interpret the term “vehicle” as used in the EISA definitions to have a similar meaning that includes trailers.

Furthermore, the general definition of a vehicle is something used to transport goods or persons from one location to another. A tractor-trailer is designed for the purpose of transporting goods. Therefore it is reasonable to consider all of its parts—the engine, the cab-chassis, and the trailer—as parts of a whole. As such they are all parts of a vehicle, and are captured within the definition of vehicle. As EPA describes above, the tractor and trailer are both incomplete without the other. Neither can fulfill the function of the vehicle without the other. For this reason, and the other reasons stated above, NHTSA interprets its authority to regulate commercial medium- and heavy-duty on-highway vehicles, including tractor-trailers, as encompassing both tractors and trailers.

(b) Authority To Regulate Recreational Vehicles

NHTSA did not regulate recreational vehicles as part of the Phase 1 medium- and heavy-duty fuel consumption standards, although EPA did regulate them as vocational vehicles for GHG emissions. In the Phase 1 proposed rule, NHTSA interpreted “commercial medium- and heavy duty” to mean that recreational vehicles, such as motor homes, were not to be included within the program because recreational vehicles are not commercial. Oshkosh Corporation submitted a comment on the agency's interpretation stating that it did not match the statutory definition of “commercial medium- and heavy-duty on-highway vehicle,” which defines the phrase by GVWR and on-highway use. In the Phase 1 final rule NHTSA agreed with Oshkosh Corporation that the agency had effectively read words into the statutory definition. However, because recreational vehicles were not proposed in the Phase 1 proposed rule, they were not within the scope of the rulemaking and were excluded from NHTSA's standards. NHTSA expressed that it would address recreational vehicles in its next rulemaking.

NHTSA is proposing that recreational vehicles be included in the Phase 2 fuel consumption standards. As discussed above, EISA prescribes that NHTSA shall set average fuel economy standards for work trucks and commercial medium-duty or heavy-duty on-highway vehicles. “Work truck” means a vehicle that is rated between 8,500 and 10,000 lbs GVWR and is not an MDPV. “Commercial medium- and heavy-duty on-road highway vehicle” means an on-highway vehicle with a gross vehicle weight rating of 10,000 lbs or more. Based on the definitions in EISA, recreational vehicles would be regulated as class 2b-8 vocational vehicles. Excluding recreational vehicles from the NHTSA standards in Phase 2 could create illogical results, including treating similar vehicles differently. Moreover, including recreational vehicles under NHTSA regulations furthers the agencies' goal of one national program, as EPA regulations already cover recreational vehicles.

NHTSA is proposing that recreational vehicles be included in the Phase 2 fuel consumption standards and that early compliance be allowed for manufacturers who want to certify during the Phase 1 period.

F. Other Issues

In addition to the standards being proposed, this notice discusses several other issues related to those standards. It also proposes some regulatory provisions related to the Phase 1 program, as well as amendments related to other EPA and NHTSA regulations. These other issues are summarized briefly here and discussed in greater detail in later sections.

(1) Issues Related to Phase 2

(a) Natural Gas Engines and Vehicles

This combined rulemaking by EPA and NHTSA is designed to regulate two separate characteristics of heavy duty vehicles: GHGs and fuel consumption. In the case of diesel or gasoline powered vehicles, there is a one-to-one relationship between these two characteristics. For alternatively fueled vehicles, which use no petroleum, the situation is different. For example, a natural gas vehicle that achieves approximately the same fuel efficiency as a diesel powered vehicle would emit 20 percent less CO₂; and a natural gas vehicle with the same fuel efficiency as a gasoline vehicle would emit 30 percent less CO₂. Yet natural gas vehicles consume no petroleum. In Phase 1, the agencies balanced these facts by applying the gasoline and diesel CO₂ standards to natural gas engines based on the engine type of the natural gas engine. Fuel consumption for these vehicles is then calculated according to their tailpipe CO₂ emissions. In essence, this applies a one-to-one relationship between fuel efficiency and tailpipe CO₂ emissions for all vehicles, including natural gas vehicles. The agencies determined that this approach would likely create a small balanced incentive for natural gas use. In other words, it created a small incentive for the use of natural gas engines that appropriately balanced concerns about the climate impact methane emissions against other factors such as the energy security benefits of using domestic natural gas. See 76 FR 57123. We propose to maintain this approach for Phase 2. Note that EPA is also considering natural gas in a broader context of life cycle emissions, as described in Section XI.

(b) Alternative Refrigerants

In addition to use of leak-tight components in air conditioning system design, manufacturers could also decrease the global warming impact of refrigerant leakage emissions by adopting systems that use alternative, lower global warming potential (GWP) refrigerants, to replace the refrigerant most commonly used today, HFC-134a (R-134a). HFC-134a is a potent greenhouse gas with a GWP 1,430 times greater than that of CO₂.

Under EPA's Significant New Alternatives Policy (SNAP) Program, EPA has found acceptable, subject to use conditions, three alternative refrigerants that have significantly lower GWPs than HFC-134a for use in A/C systems in newly manufactured light-duty vehicles: HFC-152a, CO₂ (R-744), and HFO-1234yf. HFC-152a has a GWP of 124, HFO-1234yf has a GWP of 4, and CO₂ (by definition) has a GWP of 1, as compared to HFC-134a which has a GWP of 1,430. CO₂ is nonflammable, while HFO-1234yf and HFC-152a are flammable. All three are subject to use conditions requiring labeling and the use of unique fittings, and where appropriate, mitigating flammability and toxicity. Currently, the SNAP listing for HFO-1234yf is limited to newly manufactured A/C systems in LD vehicles, whereas HFC-152a and CO₂ have been found acceptable for all motor vehicle air conditioning applications, including heavy-duty vehicles.

None of these alternative refrigerants can simply be “dropped” into existing HFC-134a air conditioning systems. In order to account for the unique properties of each refrigerant and address use conditions required under SNAP, changes to the systems will be necessary. Typically these changes will need to occur during a vehicle redesign cycle but could also occur during a refresh. For example, because CO₂, when used as a refrigerant, is physically and thermodynamically very different from HFC-134a and operates at much higher pressures, a transition to this refrigerant would require significant hardware changes. A transition to A/C systems designed for HFO-1234yf, which is more thermodynamically similar to HFC-134a than is CO₂, requires less significant hardware changes that typically include installation of a thermal expansion valve and could potentially require resized condensers and evaporators, as well as changes in other components. In addition, vehicle assembly plants require re-tooling in order to handle new refrigerants safely. Thus a change in A/C refrigerants requires significant engineering, planning, and manufacturing investments.

EPA is not aware of any significant development of A/C systems designed to use alternative refrigerants in heavy-duty vehicles; however, all three lower GWP alternatives are in use or under various stages of development for use in LD vehicles. Of these three refrigerants, most manufacturers of LD vehicles have identified HFO-1234yf as the most likely refrigerant to be used in that application. For that reason, EPA would anticipate that HFO-1234yf could be a primary candidate for refrigerant substitution in the HD market in the future if it is listed as an acceptable substitute under SNAP for HD A/C applications. EPA has begun, but has not yet completed, our evaluation of the use of HFO-1234yf in HD vehicles. After EPA has conducted a full evaluation based on the SNAP program's comparative risk framework, EPA will list this alternative as either a) acceptable subject to use conditions or b) unacceptable if the risk of use in HD A/C systems is determined to be greater than that of the other currently or potentially available alternatives. EPA is also considering and evaluating additional refrigerant substitutes for use in motor vehicle A/C systems under the SNAP program. EPA welcomes comments related to industry development of HD A/C systems using lower-GWP refrigerants.

LD vehicle manufacturers are currently making investments in systems designed for lower-GWP refrigerants, both domestically and on a global basis. In support of the LD GHG rule, EPA projected a full transition of LD vehicles to lower-GWP alternatives in the United States by MY 2021. We expect the investment required to transition to ease over time as alternative refrigerants are adopted across all LD vehicles and trucks. This may occur in part due to increased availability of components and the continuing increases in refrigerant production capacity, as well as knowledge gained through experience. As lower-GWP alternatives become widely used in LD vehicles, some manufacturers may wish to also transition their HD vehicles. Transitioning could be advantageous for a variety of reasons including platform standardization and company environmental stewardship policies.

Although manufacturers of HD vehicles may begin to transition to alternative refrigerants in the future, there is great uncertainty about when significant adoption of alternative refrigerants for HD vehicles might begin, on what timeline adoption might become widespread, and which refrigerants might be involved. Another factor is that the most likely candidate, HFO-1234yf, remains under evaluation and has not yet been listed under SNAP. For these reasons, EPA has not attempted to project any specific hypothetical scenarios of transition for analytical purposes in this proposed rule.

Because future introduction of and transition to lower-GWP alternative refrigerants for HD vehicles may occur, EPA is proposing regulatory provisions that would be in place if and when such alternatives become available and manufacturers of HD vehicles choose to use them. These proposed provisions would also have the effect of easing the burden associated with complying with the lower-leakage requirements when a lower-GWP refrigerant is used instead of HFC-134a. These provisions would recognize that leakage of refrigerants would be relatively less damaging from a climate perspective if one of the lower-GWP alternatives is used. Specifically, EPA is proposing to allow a manufacturer to be “deemed to comply” with the leakage standard by using a lower-GWP alternative refrigerant. In order to be “deemed to comply” the vehicle manufacturer would need to use a refrigerant other than HFC-134a that is listed as an acceptable substitute refrigerant for heavy-duty A/C systems under SNAP, and defined under the LD GHG regulations at 40 CFR 86.1867-12(e). The refrigerants currently defined at 40 CFR 86.1867-12(e), besides HFC-134a, are HFC-152a, HFO-1234yf, and CO₂. If a manufacturer chooses to use a lower-GWP refrigerant that is listed in the future as acceptable in 40 CFR part 82, subpart G, but that is not identified in 40 CFR 86.1867-12(e), then the manufacturer could contact EPA about how to appropriately determine compliance with the leakage standard.

EPA encourages comment on all aspects of our proposed approach to HD vehicle refrigerant leakage and the potential future use of alternative refrigerants for HD applications. We specifically request comment on whether there should be additional provisions that could prevent or discourage manufacturers that transition to an alternative refrigerant from discontinuing existing, low-leak A/C system components and instead reverting to higher-leakage components.

Recently, EPA proposed to change the SNAP listing for the refrigerant HFC-134a from acceptable (subject to use conditions) to unacceptable for use in A/C systems in new LD vehicles. EPA expects to take final action on this proposed change in listing status for HFC-134a for use in new, light-duty vehicles in 2015. If the final action changes the status of HFC-134a to unacceptable, it would establish a future compliance date by which HFC-134a could no longer be used in A/C systems in newly manufactured LD vehicles; instead, all A/C systems in new LD vehicles would be required to use HFC-152a, HFO-1234yf, CO₂, or any other alternative listed as acceptable for this use in the future. The current proposed rule does not address the use of HFC-134a in heavy-duty vehicles; however, EPA could consider a change of listing status for HFC-134a use in HD vehicles in the future if EPA determines that other alternatives are currently or potentially available that pose lower overall risk to human health and the environment.

(c) Small Business Issues

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. See generally 5 U.S.C. Sections 601-612. The RFA analysis is discussed in Section XIV.

Pursuant to Section 609(b) of the RFA, as amended by the Small Business Regulatory Enforcement Fairness Act (SBREFA), EPA also conducted outreach to small entities and convened a Small Business Advocacy Review Panel to obtain advice and recommendations of representatives of the small entities that potentially would be subject to the rule's requirements. Consistent with the RFA/SBREFA requirements, the Panel evaluated the assembled materials and small-entity comments on issues related to elements of the IRFA. A copy of the Panel Report is included in the docket for this proposed rule.

The agencies determined that the proposed Phase 2 regulations could have a significant economic impact on small entities. Specifically, the agencies identified four categories of directly regulated small businesses that could be impacted:

• Trailer Manufacturers
• Alternative Fuel Converters
• Vocational Chassis Manufacturers
• Glider Vehicle Assemblers

To minimize these impacts the agencies are proposing certain regulatory flexibilities—both general and category-specific. In general, we are proposing to delay new requirements for EPA GHG emission standards by one year and simplify certification requirements for small businesses. For the proposed trailers standards, small businesses would be required to comply with EPA's standards before NHTSA's fuel efficiency standards would begin. NHTSA does not believe that providing small businesses trailer manufacturers with an additional year of delay to comply with those fuel efficiency standards would provide beneficial flexibility. The agencies are also proposing the following specific relief:

• Trailers: Proposing simpler requirements for non-box trailers, which are more likely to be manufactured by small businesses; and making third-party testing easier for certification.
• Alternative Fuel Converters: Omitting recertification of a converted vehicle when the engine is converted and certified; reduced N₂ O testing; and simplified onboard diagnostics and delaying required compliance with each new standard by one model year.
• Vocational Chassis: Less stringent standards for certain vehicle categories.
• Glider Vehicle Assemblers: Exempt existing small businesses, but limit the small business exemption to a capped level of annual production (production in excess of the capped amount would be allowed, but subject to all otherwise applicable requirements including the Phase 2 standards).

These flexibilities are described in more detail in Section XIV and in the Panel Report. The agencies look forward to comments and to feedback from the small business community before finalizing the rule and associated flexibilities to protect small businesses.

(d) Confidentiality of Test Results and GEM Inputs

In accordance with Federal statutes, EPA does not release information from certification applications (or other compliance reports) that we determine to be confidential business information (CBI) under 40 CFR part 2. Consistent with the CAA, EPA does not consider emission test results to be CBI after introduction into commerce of the certified engine or vehicle. (However, we have generally treated test results as protected before the introduction into commerce date). For Phase 2, we expect to continue this policy and thus would not treat any test results or other GEM inputs as CBI after the introduction into commerce date as identified by the manufacturer. We request comment on this approach.

We consider this issue to be especially relevant for tire rolling resistance measurements. Our understanding is that tire manufacturers typically consider such results as proprietary. However, under EPA's policy, tire rolling resistance measurements are not considered to be CBI and can be released to the public after the introduction into commerce date identified by the manufacturer. We request comment on whether EPA should release such data on a regular basis to make it easier for operators to find proper replacement tires for their vehicles.

With regard to NHTSA's treatment of confidential business information, manufacturers must submit a request for confidentiality with each electronic submission specifying any part of the information or data in a report that it believes should be withheld from public disclosure as trade secret or other confidential business information. A form will be available through the NHTSA Web site to request confidentiality. NHTSA does not consider manufacturers to continue to have a business case for protecting pre-model report data after the vehicles contained within that report have been introduced into commerce.

(e) Delegated Assembly

In EPA's existing regulations (40 CFR 1068.261), we allow engine manufacturers to sell or ship engines that are missing certain emission-related components if those components will be installed by the vehicle manufacturer. EPA has found this provision to work well for engine manufacturers and is proposing a new provision in 40 CFR 1037.621 that would provide a similar allowance for vehicle manufacturers to sell or ship vehicles that are missing certain emission-related components if those components will be installed by a secondary vehicle manufacturer. As conditions of this allowance manufacturers would be required to:

• Have a contractual obligation with the secondary manufacturer to complete the assembly properly and provide instructions about how to do so.
• Keep records to demonstrate compliance.
• Apply a temporary label to the incomplete vehicles.
• Take other reasonable steps to ensure the assembly is completed properly.
• Describe in its application for certification how it will use this allowance.

We request comment on this allowance.

(2) Proposed Amendments to Phase 1 Program

The agencies are proposing revisions to test procedures and compliance provisions used for Phase 1. These changes are described in Section XII. As a drafting matter, EPA notes that we are proposing to migrate the GHG standards for Class 2b and 3 pickups and vans from 40 CFR 1037.104 to 40 CFR 86.1819-14. NHTSA is also proposing to amend 49 CFR part 535 to make technical corrections to its Phase 1 program to better align with EPA's compliance approach, standards and CO₂ performance results. In general, these changes are intended to improve the regulatory experience for regulated parties and also reduce agency administrative burden. More specifically, NHTSA proposes to change the rounding of its standards and performance values to have more significant digits. Increasing the number of significant digits for values used for compliance with NHTSA standards reduces differences in credits generated and overall credit balances for the NHTSA and EPA programs. NHTSA is also proposing to remove the petitioning process for off-road vehicles, clarify requirements for the documentation needed for submitting innovative technology requests in accordance with 40 CFR 1037.610 and 49 CFR 535.7, and add further detail to requirements for submitting credit allocation plans as specified in 49 CFR 535.9. Finally, NHTSA is adding the same record requirements that EPA currently requires to facilitate in-use compliance inspections. These changes are intended to improve the regulatory experience for regulated parties and also reduce agency administrative burden.

(3) Other Proposed Amendments to EPA Regulations

EPA is proposing several amendments to regulations not directly related to the HD Phase 1 or Phase 2 programs, as detailed in Section XIII. For these amendments, there would not be corresponding changes in NHTSA regulations (since there are no such regulations relevant to those programs). Some of these relate directly to heavy-duty highway engines, but not to the GHG programs. Others relate to nonroad engines. This latter category reflects the regulatory structure EPA uses for its mobile source regulations, in which regulatory provisions applying broadly to different types of mobile sources are codified in common regulatory parts such as 40 CFR part 1068. This approach creates a broad regulatory structure that regulates highway and nonroad engines, vehicles, and equipment collectively in a common program. Thus, it is appropriate to include some proposed amendments to nonroad regulations in addition to the changes proposed only for highway engines and vehicles.

(a) Standards for Engines Used In Glider Kits

EPA regulations currently allow used pre-2013 engines to be installed into new glider kits without meeting currently applicable standards. As described in Section XIV, EPA is proposing to amend our regulations to allow only engines that have been certified to meet current standards to be installed in new glider kits, with two exceptions. First, engines certified to earlier MY standards that were identical to the current model year standards may be used. Second, the small manufacturer allowance described in Section I.F.(1)(c) for glider vehicles would also apply for the engines used in the exempted glider kits.

(b) Re-Proposal of Nonconformance Penalty Process Changes

Nonconformance penalties (NCPs) are monetary penalties established by regulation that allow a vehicle or engine manufacturer to sell engines that do not meet the emission standards. Manufacturers unable to comply with the applicable standard pay penalties, which are assessed on a per-engine basis.

On September 5, 2012, EPA adopted final NCPs for heavy heavy-duty diesel engines that could be used by manufacturers of heavy-duty diesel engines unable to meet the current oxides of nitrogen (NO_X) emission standard. On December 11, 2013 the U.S. Court of Appeals for the District of Columbia Circuit issued an opinion vacating that Final Rule. It issued its mandate for this decision on April 16, 2014, ending the availability of the NCPs for the current NO_X standard, as well as vacating certain amendments to the NCP regulations due to concerns about inadequate notice. In particular, the amendments revise the text explaining how EPA determines when NCP should be made available. In this action, EPA is re-proposing most of these amendments to provide fuller notice and additional opportunity for public comment. They are discussed in Section XIV.

(c) Updates to Heavy-Duty Engine Manufacturer In-Use Testing Requirements

EPA and manufacturers have gained substantial experience with in-use testing over the last four or five years. This has led to important insights in ways that the test protocol can be adjusted to be more effective. We are accordingly proposing to make changes to the regulations in 40 CFR part 86, subparts N and T.

(d) Extension of Certain 40 CFR Part 1068 Provisions to Highway Vehicles and Engines

As part of the Phase 1 GHG standards, we applied the exemption and importation provisions from 40 CFR part 1068, subparts C and D, to heavy-duty highway engines and vehicles. We also specified that the defect reporting provisions of 40 CFR 1068.501 were optional. In an earlier rulemaking, we applied the selective enforcement auditing under 40 CFR part 1068, subpart E (75 FR 22896, April 30, 2010). We are proposing in this rule to adopt the rest of 40 CFR part 1068 for heavy-duty highway engines and vehicles, with certain exceptions and special provisions.

As described above, we are proposing to apply all the general compliance provisions of 40 CFR part 1068 to heavy-duty engines and vehicles. We propose to also apply the recall provisions and the hearing procedures from 40 CFR part 1068 for highway motorcycles and for all vehicles subject to standards under 40 CFR part 86, subpart S. We also request comment on applying the rest of the provisions from 40 CFR part 1068 to highway motorcycles and to all vehicles subject to standards under 40 CFR part 86, subpart S.

EPA is proposing to update and consolidate the regulations related to formal and informal hearings in 40 CFR part 1068, subpart G. This would allow us to rely on a single set of regulations for all the different categories of vehicles, engines, and equipment that are subject to emission standards. We also made an effort to write these regulations for improved readability.

We are also proposing to make a number of changes to part 1068 to correct errors, to add clarification, and to make adjustments based on lessons learned from implementing these regulatory provisions.

(e) Amendments to Engine and Vehicle Test Procedures in 40 CFR Parts 1065 and 1066

EPA is proposing several changes to our engine testing procedures specified in 40 CFR part 1065. None of these changes would significantly impact the stringency of any standards.

(f) Amendments Related to Marine Diesel Engines in 40 CFR Parts 1042 and 1043

EPA's emission standards and certification requirements for marine diesel engines under the Clean Air Act and the act to Prevent Pollution from Ships are identified in 40 CFR parts 1042 and 1043, respectively. EPA is proposing to amend these regulations with respect to continuous NO_X monitoring and auxiliary engines, as well as making several other minor revisions.

(g) Amendments Related to Locomotives in 40 CFR Part 1033

EPA's emission standards and certification requirements for locomotives under the Clean Air Act are identified in 40 CFR part 1033. EPA is proposing to make several minor revisions to these regulations.

(4) Other Proposed Amendments to NHTSA Regulations

NHTSA is proposing to amend 49 CFR parts 512 and 537 to allow manufacturers to submit required compliance data for the Corporate Average Fuel Economy program electronically, rather than submitting some reports to NHTSA via paper and CDs and some reports to EPA through its VERIFY database system. The agencies are coordinating on an information technology project which will allow manufacturers to submit pre-model, mid-model and final model year reports through a single electronic entry point. The agencies anticipate that this would reduce the reporting burden on manufacturers by up to fifty percent. The amendments to 49 CFR part 537 would allow reporting to an electronic database (i.e. EPA's VERIFY system), and the amendments to 49 CFR part 512 would ensure that manufacturer's confidential business information would be protected through that process. This proposal is discussed further in Section XIII.

II. Vehicle Simulation, Engine Standards and Test Procedures

A. Introduction and Summary of Phase 1 and Phase 2 Regulatory Structures

This Section II. A. gives an overview of our vehicle simulation approach in Phase 1 and our proposed approach for Phase 2; our separate engine standards for tractor and vocational chassis in Phase 1 and our proposed separate engine standards in Phase 2; and it describes our engine and vehicle test procedures that are common among the tractor and vocational chassis standards. Section II. B. discusses in more detail how the Phase 2 proposed regulatory structure would approach vehicle simulation, separate engine standards, and test procedures. Section II. C. discusses the proposed vehicle simulation computer program, GEM, in further detail and Section II. D. discusses the proposed separate engine standards and engine test procedure. See Sections III through VI for discussions of the proposed test procedures that are unique for tractors, trailers, vocational chassis, and HD pickup trucks and vans.

In Phase 1 the agencies adopted a regulatory structure that included a vehicle simulation procedure for certifying tractors and the chassis of vocational vehicles. In contrast, the agencies adopted a full vehicle chassis dynamometer test procedure for certifying complete heavy-duty pickups and vans. The Phase 1 vehicle simulation procedure for tractors and vocational chassis requires regulated entities to use GEM to simulate and certify tractors and vocational vehicle chassis. This program is provided free of charge for unlimited use and may be downloaded by anyone from EPA's Web site: http://www.epa.gov/​otaq/​climate/​gem.htm. This computer program mathematically combines vehicle component test results with other pre-determined vehicle attributes to determine a vehicle's levels of fuel consumption and CO₂ emissions for certification purposes. For Phase 1, the required inputs to this computer program include, for tractors, vehicle aerodynamics information, tire rolling resistance, and whether or not a vehicle is equipped with certain lightweight high-strength steel or aluminum components, a tamper-proof speed limiter, or tamper-proof idle reduction technologies. The sole input for vocational vehicles, was tire rolling resistance. For Phase 1 the computer program's inputs did not include engine test results or attributes related to a vehicle's powertrain, namely, its transmission, drive axle(s), or tire revolutions per mile. Instead, for Phase 1 the agencies specified a generic engine and powertrain within the computer program, and for Phase 1 these cannot be changed by a program user.

The full vehicle chassis dynamometer test procedure for heavy-duty pickups and vans substantially mirrors EPA's existing light-duty vehicle test procedure. EPA also set separate engine so-called cap standards for methane (CH₄) and nitrous oxide (N₂ O) (essentially capping current emission levels). Compliance with the CH₄ and N₂ O standards is measured by an engine dynamometer test procedure, which EPA based on our existing heavy-duty engine emissions test procedure with small adaptations. EPA also set hydro-fluorocarbon refrigerant leakage design standards for cabin air conditioning systems in tractors, pickups, and vans, which are evaluated by design rather than a test procedure.

In this action the agencies are proposing a similar regulatory structure for Phase 2, along with a number of revisions that are intended to more accurately evaluate vehicle and engine technologies' impact on real-world fuel efficiency and GHG emissions. Thus, we are proposing to continue the same certification test regime for heavy duty pickups and vans, and for the CH₄ and N₂ O) standards, as well as tractor and pickup and van air conditioning leakage standards. EPA is also proposing to control vocational vehicle air conditioning leakage and to use that same certification procedure.

We are proposing to continue the vehicle simulation procedure for certifying tractors and vocational chassis, and we are proposing a new regulatory program to regulate some of the trailers hauled by tractors. The agencies are proposing the use of an equation based on the vehicle simulation procedure for trailer certification. In addition, we are proposing a simplified option for trailer certification that would not require testing to be undertaken by manufacturers to generate inputs for the equation. We are also proposing to continue separate fuel consumption and CO₂ standards for the engines installed in tractors and vocational chassis, and we are proposing to continue to require a full vehicle chassis dynamometer test procedure for certifying complete heavy-duty pickups and vans. As described in Section II.B.(2)(b), the agencies see important advantages to maintaining separate engines standards, such as improved compliance assurance and better control during transient engine operation.

The vehicle simulation procedure necessitates some testing of engines and vehicle components to generate the inputs for the simulation tool; that is, to generate the inputs to the model which is used to certify tractors and vocational chassis. For trailers, some testing may be performed in order to generate values that are input into the simulation-based compliance equations. In addition to the testing needed for this purpose for the inputs used in the Phase 1 standards, the agencies are proposing in Phase 2 that manufacturers conduct additional required and optional engine and vehicle component tests, and proposing the additional procedures for conducting these input tests. These include a new required engine test procedure that provides steady-state engine fuel consumption and CO₂ inputs to represent the actual engine in a vehicle. In addition, we are seeking comment on a newly developed engine test procedure that captures transient engine performance for use in the vehicle simulation computer program. As described in detail in the draft RIA Chapter 4, we are proposing to require entering attributes that describe the vehicle's transmission type, and its number of gears and gear ratios. We are proposing an optional powertrain test procedure that would provide inputs to override the agencies' simulated engine and transmission in the vehicle simulation computer program. We are proposing to require entering attributes that describe the vehicle's drive axle(s) type and axle ratio. We are also seeking comment on an optional axle efficiency test procedure that would override the agencies' simulated axle in the vehicle simulation computer program. To improve the measurement of aerodynamic components performance, we are proposing a number of improvements to the aerodynamic coast-down test procedure and data analysis, and we are seeking comment on a newly developed constant speed aerodynamic test procedure. We are proposing that the aerodynamic test procedures for tractors be applicable to trailers when a regulated entity opts to use the GEM-based compliance equation. Additional details about all these test procedures are found in the draft RIA Chapter 3.

We are further proposing to significantly expand the number of technologies that are recognized in the vehicle simulation computer program. These include recognizing lightweight thermoplastic materials, automatic tire inflation systems, advanced cruise control systems, workday idle reduction systems, and axle configurations that decrease the number of drive axles. We are seeking comment on recognizing additional technologies such as high efficiency glass and low global warming potential air conditioning refrigerants as post-process adjustments to the simulation results.

To better reflect real-world operation, we are also proposing to revise the vehicle simulation computer program's urban (55 mph) and rural (65 mph) highway duty cycles to include changes in road grade. We are seeking comment on whether or not these duty cycles should also simulate driver behavior in response to varying traffic patterns. We are proposing a new duty cycle to capture the performance of technologies that reduce the amount of time a vehicle's engine is at idle during a workday when the vehicle is not moving. And to better recognize that vocational vehicle powertrains are configured for particular applications, we are proposing to further subdivide the vocational chassis category into three different vehicle speed categories. This is in addition to the Phase 1 subdivision by three weight categories. The result is nine proposed vocational vehicle subcategories for Phase 2. The agencies are also proposing to subdivide the highest weight class of tractors into two separate categories to recognize the unique configurations and technology applicability to “heavy-haul” tractors.

Even though we are proposing to include engine test results as inputs into the vehicle simulation computer model, we are also proposing to continue the Phase 1 separate engine standard regulatory structure by proposing separate engine fuel consumption and CO₂ standards for engines installed in tractors and vocational chassis. For these separate engine standards, we are proposing to continue to use the Phase 1 engine dynamometer test procedure, which was adapted substantially from EPA's existing heavy-duty engine emissions test procedure. However, we are proposing to modify the weighting factors of the tractor engine's 13-point steady-state duty cycle to better reflect real-world engine operation and to reflect the trend toward operating engines at lower engine speeds during tractor cruise speed operation. Further details on the proposed Phase 2 separate engine standards are provided below in Section II. D. In today's action EPA is proposing to continue the separate engine cap standards for methane (CH₄) and nitrous oxide (N₂ O) emissions.

(1) Phase 1 Vehicle Simulation Computer Program (GEM)

For Phase 1 EPA developed a vehicle simulation computer program called, “Greenhouse gas Emissions Model” or “GEM.” GEM was created for Phase 1 for the exclusive purpose of certifying tractors and vocational vehicle chassis. GEM is similar in concept to a number of other commercially available vehicle simulation computer programs. See 76 FR 57116, 57146, and 57156-57157. However, GEM is also unique in a number of ways.

Similar to other vehicle simulation computer programs, GEM combines various vehicle inputs with known physical laws and justified assumptions to predict vehicle performance for a given period of vehicle operation. For Phase 1 GEM's vehicle inputs include vehicle aerodynamics information (for tractors), tire rolling resistance, and whether or not a vehicle is equipped with lightweight materials, a tamper-proof speed limiter, or tamper-proof idle reduction technologies. Other vehicle and engine characteristics were fixed as defaults that cannot be altered by the user. These defaults included tabulated data of engine fuel rate as a function of engine speed and torque (i.e. “engine fuel maps”), transmissions, axle ratios, and vehicle payloads. For tractors, Phase 1 GEM models the vehicle pulling a standard trailer. For vocational vehicles, Phase 1 GEM includes a fixed aerodynamic drag coefficient and vehicle frontal area.

GEM uses the same physical principles as many other existing vehicle simulation models to derive governing equations which describe driveline components, engine, and vehicle. These equations are then integrated in time to calculate transient speed and torque. Some of the justified assumptions in GEM include average energy losses due to friction between moving parts of a vehicle's powertrain; the logical behavior of an average driver shifting from one transmission gear to the next; ad speed limit assumptions such as 55 miles per hour for urban highway driving and 65 miles per hour for rural interstate highway driving. The sequence of the GEM vehicle simulation can be visualized by imagining a human driver initially sitting in a parked running tractor or vocational vehicle. The driver then proceeds to drive the vehicle over a prescribed route that includes three distinct patterns of driving: Stop-and-go city driving, urban highway driving, and rural interstate highway driving. The driver then exits the highway and brings the vehicle to a stop. This concludes the vehicle simulation.

Over each of the three driving patterns or “duty cycles,” GEM simulates the driver's behavior of pressing the accelerator, coasting, or applying the brakes. GEM also simulates how the engine operates as the gears in the vehicle's transmission are shifted and how the vehicle's weight, aerodynamics, and tires resist the forward motion of the vehicle. GEM combines the driver behavior over the duty cycles with the various vehicle inputs and other assumptions to determine how much fuel must be consumed to move the vehicle forward at each point during the simulation. For each of the three duty cycles, GEM totals the amount of fuel consumed and then divides that amount by the product of the miles travelled and tons of payload carried. The tons of payload carried are specified by the agencies for each vehicle type and weight class. For each regulatory subcategory of tractor and vocational vehicle (e.g., sleeper cab tractor, day cab tractor, small vocational vehicle, large vocational vehicle, etc.), GEM applies prescribed weighting factors to each of the three duty cycles to represent the fraction of city, urban highway, and rural highway driving that would be typical of each subcategory. After completing all the cycles, GEM outputs a single composite result for the vehicle, expressed as both fuel consumed in gallon per 1,000 ton-miles (for NHTSA standards) and an equivalent amount of CO₂ emitted in grams per ton-mile (for EPA standards). These are the vehicle's GEM results that are used along with other information to demonstrate the vehicle complies with the applicable standards. This other information includes the annual sales volume of the vehicle (family) simulated in GEM, plus information on emissions credits that may be generated or used as part of that vehicle family's certification.

While GEM is similar to other vehicle simulation computer programs, GEM is also unique in a number of ways. First, GEM was designed exclusively for regulated entities to certify tractor and vocational vehicle chassis to the agencies' respective fuel consumption and CO₂ emissions standards. For GEM to be effective for this purpose, the inputs to GEM include only information related to vehicle components and attributes that significantly impact vehicle fuel efficiency and CO₂ emissions. For example, these include vehicle aerodynamics, tire rolling resistance, and whether or not a vehicle is equipped with lightweight materials, a tamper-proof speed limiter, or tamper-proof idle reduction technologies. On the other hand, other attributes such as those related to a vehicle's suspension, frame strength, or interior features are not included, where these might be included in other commercially available vehicle simulation programs for other purposes. Furthermore, the simulated driver behavior and the duty cycles cannot be changed in the GEM executable program. This helps to ensure that all vehicles are simulated and certified in the same way, but this does preclude GEM from being of much use as a research tool for exploring the effects of driver behavior and of different duty cycles.

To allow for public comment, GEM is available free of charge for unlimited use, and the GEM source code is open source. That is, the programming source code of GEM is freely available upon request for anyone to examine, manipulate, and generally use without restriction. In contrast commercially available vehicle simulation programs are generally not free and open source. Additional details of GEM are included in Chapter 4 of the RIA.

As part of Phase 1, the agencies conducted a peer review of GEM version 1.0, which was the version released for the Phase 1 proposal. In response to this peer review and comments from stakeholders, EPA has made changes to GEM. The current version of GEM is v2.0.1, which is the version applicable for the Phase 1 standards.

(2) Phase 1 Engine Standards and Engine Test Procedure

For Phase 1 the agencies set separate engine fuel consumption and CO₂ standards for engines installed in tractors and vocational vehicle chassis. EPA also set separate engine cap standards for methane (CH₄) and nitrous oxide (N₂ O) emissions. These Phase 1 engine standards are specified in terms of brake-specific (g/hp-hr) fuel, CO₂, CH₄ and N₂ O emissions limits. For these separate engine standards, the agencies adopted an engine dynamometer test procedure, which was built substantially from EPA's existing heavy-duty engine emissions test procedure. Since the test procedure already specified how to measure fuel consumption, CO₂ and CH₄, few changes were needed to employ the test procedure for purposes of the Phase 1 standards. For Phase 1 the test procedure was modified to specify how to measure N₂ O.

The duty cycles from EPA's existing heavy-duty emissions test procedure were used in a somewhat unique way for Phase 1. In EPA's non-GHG engine emissions standards, heavy-duty engines must meet brake-specific standards for emissions of total oxides of nitrogen (NO_X), particulate mass (PM), non-methane hydrocarbon (NMHC), and carbon monoxide (CO). These standards must be met by all engines both over a 13-mode steady-state duty cycle called the “Supplemental Emissions Test” (SET) and over a composite of a cold-start and a hot-start transient duty cycle called the “Federal Test Procedure” (FTP). In contrast, for Phase 1 the agencies require that engines specifically installed in tractors meet fuel efficiency and CO₂ standards over only the SET but not the FTP. This requirement was intended to reflect that tractor engines typically operate near steady-state conditions versus transient conditions. See 76 FR 57159. The agencies adopted the converse for engines installed in vocational vehicles. That is, these engines must meet fuel efficiency and CO₂ standards over only the hot-start FTP but not the SET. This requirement was intended to reflect that vocational vehicle engines typically operate under transient conditions versus steady-state conditions (76 FR 57178). For both tractor and vocational vehicle engines in Phase 1, EPA set CH₄ and N₂ O emissions cap standards over the cold-start and hot-start FTP only and not over the SET duty cycle. See Section II. D. for details on how we propose to modify the engine test procedure for Phase 2.

B. Phase 2 Proposed Regulatory Structure

For Phase 2, the agencies are proposing to modify the regulatory structure used for Phase 1. Note that we are not proposing to apply the new Phase 2 regulatory structure for compliance with the Phase 1 standards. The structure used to demonstrate compliance with the Phase 1 standards will remain as finalized in the Phase 1 regulation. The modifications we are proposing are consistent with the agencies' Phase 1 commitments to consider a range of regulatory approaches during the development of future regulatory efforts (76 FR 57133), especially for vehicles not already subject to full vehicle chassis dynamometer testing. For example, we committed to consider a more sophisticated approach to vehicle testing to more completely capture the complex interactions within the total vehicle, including the engine and powertrain performance. We also intended to consider the potential for full vehicle certification of complete tractors and vocational chassis using a chassis dynamometer test procedure. We also considered chassis dynamometer testing of complete tractors and vocational chassis as a complementary approach for validating a more complex vehicle simulation approach. We also committed to consider the potential for a regulatory program for some of the trailers hauled by tractors. After considering these various approaches, the agencies are proposing a structure in which regulated tractor and vocational chassis manufacturers would additionally enter engine and powertrain-related inputs into GEM, which was not allowed in Phase 1.

For trailer manufacturers, which would be subject to first-time standards under the proposal, we are also proposing GEM-based certification. However, we are proposing a simplified structure that would allow certification without the manufacturers actually running GEM. More specifically, the agencies have developed a simple equation that uses the same trailer inputs as GEM to represent the emission impacts of aerodynamic improvements, tire improvements, and weight reduction. As described in Chapter 2.10.6 of the draft RIA, these equations have nearly perfect correlation with GEM so that they can be used instead of GEM without impacting stringency.

We are proposing both required and optional test procedures to provide these additional GEM inputs. We are also proposing to significantly expand the number of technologies recognized in GEM. Further, we are proposing to modify the GEM duty cycles and to further subdivide the vocational vehicle subcategory to better represent real-world vehicle operation. In contrast to these changes, we are proposing to maintain essentially the same chassis dynamometer test procedure for certifying complete heavy-duty pickups and vans.

(1) Other Structures Considered

To follow-up on the commitment to consider other approaches, the agencies spent significant time and resources in evaluating six different options for demonstrating compliance with the proposed Phase 2 standards. These six options include full vehicle chassis dynamometer testing, full vehicle simulation, and vehicle simulation in combination with powertrain testing, engine testing, engine electronic controller and/or transmission electronic controller testing. The agencies evaluated these options in terms of the capital investment required of regulated manufacturers to conduct the testing and/or simulation, the cost per test, the accuracy of the simulation, and the challenges of validating the results. Other considerations included the representativeness to the real world behavior, maintaining existing Phase 1 certification approaches that are known to work well, enhancing the Phase 1 approaches that could use improvements, the alignment of test procedures for determining GHG and non-GHG emissions compliance, and the potential to circumvent the intent of the test procedures.

Chassis dynamometer testing is used extensively in the development and certification of light-duty vehicles. It also is used in Phase 1 for complete Class 2b/3 pickups and vans, as well as for certain incomplete vehicles (at the manufacturer's option). The agencies considered chassis dynamometer testing more broadly as a heavy-duty fuel efficiency and GHG certification option because chassis dynamometer testing has the ability to evaluate a vehicle's performance in a manner that most closely resembles the vehicle's in-use performance. Nearly all of the fuel efficiency technologies can be evaluated on a chassis dynamometer, including the vehicle systems' interactions that depend on the behavior of the engine, transmission, and other vehicle electronic controllers. One challenge associated with application of wide-spread heavy-duty chassis testing is the small number of heavy-duty chassis test sites that are available in North America. As discussed in draft RIA Chapter 3, the agencies were only able to locate 11 heavy-duty chassis test sites. However, we have seen an increased interest in building new sites since issuing the Phase 1 Final Rule. For example, EPA is currently building a heavy-duty chassis dynamometer with the ability to test up to 80,000 pound vehicles at the National Vehicle and Fuel Emissions Laboratory in Ann Arbor, Michigan.

Nevertheless, the agencies continue to be concerned about proposing a chassis test procedure for certifying tractors or vocational chassis due to the initial cost of a new test facility and the large number of heavy duty tractor and vocational chassis variants that could require testing. We have also concluded that for heavy-duty tractors and vocational chassis, there can be increased test-to-test variability under chassis dynamometer test conditions. First, the agencies recognize that such testing requires expensive, specialized equipment that is not widely available. The agencies estimate that it would vary from about $1.3 to $4.0 million per new test site depending on existing facilities. In addition, the large number of heavy-duty vehicle configurations would require significant amounts of testing to cover the sector. For example, for Phase 1 tractor manufacturers typically certified several thousand variants of one single tractor model. Finally, EPA's evaluation of heavy-duty chassis dynamometer testing has shown that the variation of chassis test results is greater than light-duty testing, up to 3 percent worse, based on our sponsored testing at Southwest Research Institute. Although the agencies are not proposing chassis dynamometer certification of tractors and vocational chassis, we believe such an approach could be appropriate in the future for some heavy duty vehicles if more test facilities become available and if the agencies are able to address the large number of vehicle variants that might require testing. We request comment on whether or not a chassis dynamometer test procedure should be required in lieu of the vehicle simulation approach we are proposing. Note, as discussed in Section II. C. (4) (b) that we are also proposing a modest complete tractor heavy-duty chassis dynamometer test program only for monitoring complete tractor fuel efficiency trends over the implementation timeframe of the Phase 1 and proposed Phase 2 standards.

Another option considered for certification involves testing a vehicle's powertrain in a modified engine dynamometer test facility. In this case the engine and transmission are installed in a laboratory test facility and a dynamometer is connected to the output shaft of the transmission. GEM or an equivalent vehicle simulation computer program is then used to control the dynamometer to simulate vehicle speeds and loads. The step-by-step test procedure considered for this option was initially developed as an option for hybrid powertrain testing for Phase 1. A key advantage of the powertrain test approach is that it directly measures the effectiveness of the engine, the transmission, and the integration of the two. Engines and transmissions are particularly challenging to simulate within a computer program like GEM because engines and transmissions installed in vehicles today are actively and interactively controlled by their own sophisticated electronic controls. These controls already contain essentially their own vehicle simulation programs that GEM would then have to otherwise simulate.

We believe that the capital investment impact for powertrain testing on manufacturers could be manageable for those that already have heavy-duty engine dynamometer test cells. We have found that in general medium-duty powertrains can be tested in heavy-duty engine test cells. EPA has successfully completed such a test facility conversion at the National Vehicle and Fuel Emissions Laboratory in Ann Arbor, Michigan. Southwest Research Institute (SwRI) in San Antonio, Texas has completed a similar test cell conversion. Oak Ridge National Laboratory in Oak Ridge, Tennessee recently completed construction of a new and specialized heavy heavy-duty powertrain dynamometer facility. EPA also contracted SwRI to evaluate North America's current capabilities for powertrain testing in the heavy-duty sector and the cost of installing a new powertrain cell that would meet agency requirements. Results indicated that one supplier currently has this capability. We estimate that the upgrade costs to an existing engine test facility are on the order of $1.2 million, and a new test facility in an existing building are on the order of $1.9 million. We also estimate that current powertrain test cells that could be upgraded to measure CO₂ emissions would cost approximately $600,000. For manufacturers or suppliers wishing to contract out such testing, SwRI estimated that a cost of $150,000 would provide about one month of powertrain testing services. Once a powertrain test cell is fully operational, we estimate that for a nominal powertrain family (i.e. one engine family tested with one transmission family), the cost for powertrain installation, testing, and data analysis would be $68,972.

Since the Phase 1 Final Rule, the agencies and other stakeholders have completed significant new work toward refining the powertrain test procedure itself. The proposed regulations provide details of the refined powertrain test procedure. See 40 CFR 1037.550.

Furthermore, the agencies have worked with key transmission suppliers to develop an approach to define transmission families. Coupled with the agencies existing definitions of engine families (40 CFR 1036.230 and 1037.230), we are proposing an approach to define a powertrain family in 40 CFR 1037.231. We request comment on what key attributes should be considered when defining a transmission family.

We believe that a combination of a robust powertrain family definition, a refined powertrain test procedure and a refined GEM could become an optimal certification path that leverages the accuracy of powertrain testing along with the versatility of GEM, which alleviates the need to test a large number of vehicle or powertrain variants. To balance the potential advantages of this approach with the fact that it has never been used for vehicle certification in the past, we are proposing to allow this approach as an optional certification path, as described in Section II.B.(2)(b). To be clear, we are not proposing to require powertrain testing at this time, but because this testing would recognize additional technologies that are not recognized directly in GEM (even as proposed to be amended), we are factoring its use into our stringency considerations for vocational chassis. We request comment on whether the agencies should consider requiring powertrain testing more broadly.

Another regulatory structure option considered was engine-only testing over the GEM duty cycles over a range of simulated vehicle configurations. This approach would use GEM to generate engine duty cycles by simulating a range of transmissions and other vehicle variations. These engine duty cycles then would be programmed into a separate controller of a dynamometer connected to an engine's output shaft. Unlike the chassis dynamometer or powertrain dynamometer approaches, which could have significant test facility construction or modification costs, this approach has little capital investment impact on manufacturers because the majority already have engine test facilities to both develop engines and to certify engines to meet both the non-GHG standards and the Phase 1 fuel efficiency and GHG standards. The agencies also have been investigating this approach as an alternative way to generate data that could be used to represent an engine in GEM. Because this approach captures engine performance under transient conditions, this approach could be an improvement over our proposed Phase 2 approach of representing an engine in GEM with only steady-state operating data. Details of this alternative are described in draft RIA. Because this approach is new and has never been used for vehicle development or certification, we are not proposing requiring its use as part of the Phase 2 certification process. However, we encourage others to investigate this new approach in detail, and we request comment on whether or not the agencies should replace our proposed steady-state operation representation of the engine in GEM with this alternative approach.

Additional certification options considered included simulating the engine, transmission, and vehicle using a computer program while having the actual transmission electronic controller connected to the computer running the vehicle simulation program. The output of the simulation would be an engine cycle that would be used to test the engine in an engine test facility. Just as in the engine-only test procedure, this procedure would not require significant capital investment in new test facilities. An additional benefit of this approach would be that the actual transmission controller would be determining the transmission gear shift points during the test, without a transmission manufacturer having to reveal their proprietary transmission control logic. This approach comes with some technical challenges, however. The model would have to become more complex and tailored to each transmission and controller to make sure that the controller would operate properly when it is connected to a computer instead of a transmission. Some examples of the transmission specific requirements would be simulating all the Controller Area Network (CAN) communication to and from the transmission controller and the specific sensor responses both through simulation and hardware. The vehicle manufacturer would have to be responsible for connecting the transmission controller to the computer, which would require a detailed verification process to ensure it is operating properly. Determining full compliance with this test procedure would be a significant challenge for the regulatory agencies because the agencies would have to be able to replicate each of the manufacturer's unique interfaces between the transmission controller and computer running GEM.

Finally, the agencies considered full vehicle simulation plus separate engine standards, which is the proposed approach for Phase 2. These are discussed in more detail in the following sections.

(2) Proposed Regulatory Structure

Under the proposed structure, tractor and vocational chassis manufacturers would be required to provide engine, transmission, drive axle(s) and tire radius inputs into GEM. For Phase 1, GEM used default values for all of these, which limited the types of technologies that could be recognized by GEM to show compliance with the standards. We are proposing to significantly expand GEM to account for a wider range of technological improvements that would otherwise need to be recognized through some off-cycle crediting approach. These include improvements to the driver controller (i.e., the simulation of the driver), engines, transmissions, and axles. Additional technologies that would now be recognized in GEM also include lightweight thermoplastic materials, automatic tire inflation systems, advanced cruise control systems, engine stop-start idle reduction systems, and axle configurations that decrease the number of drive axles. The agencies are also proposing to maintain separate engine standards. As described below, we see advantages to having both engine-based and vehicle-based standards. Moreover, the advantages described here for full vehicle simulation do not necessarily correspond to disadvantages for engine testing or vice versa.

(a) Advantages of Full Vehicle Simulation

The agencies' primary purpose in developing fuel efficiency and GHG emissions standards is to increase the use of vehicle technologies that improve fuel efficiency and decrease GHG emissions. Under the Phase 1 tractor and vocational chassis standards, there is no regulatory incentive for manufacturers to adopt new engine, transmission or axle technologies because GEM was not configured to recognize these technologies uniquely. By recognizing such technologies in GEM under Phase 2, the agencies would be creating a regulatory incentive to improve engine, transmission, and axle technologies to improve fuel efficiency and decrease GHG emissions. In its 2014 report, NAS also recognized the benefits of full vehicle simulation and recommended that Phase 2 incorporate such an approach.

We anticipate that the proposed Phase 2 approach would create three new specific regulatory incentives. First, vehicle manufacturers would have an incentive to use the most efficient engines. Since GEM would no longer use the agency default engine in simulation manufacturers would have their own more efficient engines recognized in GEM. Under Phase 1, engine manufacturers have a regulatory incentive to design efficient engines, but vehicle manufacturers do not have a similar regulatory incentive to use efficient engines in their vehicles. Second, the proposed approach would create incentives for both engine and vehicle manufacturers to design engines and vehicles to work together to ensure that engines actually operate as much as possible near their most efficient points. This is because Phase 2 GEM would allow the vehicle manufactures to use specific transmission, axle, and tire characteristics as inputs, thus having the ability to directly recognize many powertrain integration benefits, such as downspeeding, and different transmission architectures and technologies, such as automated manual transmissions, automatic transmissions,, and different numbers of transmission gears, transmission gear ratios, axle ratios and tire revolutions per mile. No matter how well designed, all engines have speed and load operation points with differing fuel efficiency and GHG emissions. The speed and load point with the best fuel efficiency (i.e., peak thermal efficiency) is commonly known as the engine's “sweet spot”. The more frequently an engine operates near its sweet spot, the better the vehicle's fuel efficiency will be. In Phase 1, a vehicle manufacturer receives no regulatory credit for designing its vehicle to operate closer to the sweet spot because Phase 1 GEM does not model the actual engine, transmission, axle, or tire revolutions per mile. Third, the proposed approach would recognize improvements to the overall efficiency of the drivetrain including the axle. The proposed version of GEM would recognize the benefits of different axle technologies including axle lubricants, and reducing axle losses such as by enabling three-axle vehicles to deliver power to only one rear axle through the proposed post-simulation adjustment approach (see Chapter 4.5 of the Draft RIA).

In addition to providing regulatory incentives to use more fuel efficient technologies, expanding GEM to recognize engine and other powertrain component improvements would also provide important flexibility to vehicle manufacturers. The flexibility to effectively trade engine and other component improvements against other vehicle improvements would allow vehicle manufacturers to better optimize their vehicles to achieve the lowest cost for specific customers. Vehicle manufacturers could use this flexibility to reduce overall compliance costs and/or address special applications where certain vehicle technologies are not practical. The agencies considered in Phase 1 allowing the exchange of emission certification credits generated relative to the separate brake-specific (g/hp-hr) engine standards and credits generated relative to the vehicle standards (g/ton-mile). However, we did not allow this in Phase 1 due in part to concerns about the equivalency of credits generated relative to different standards, with different units of measure and different test procedures. The proposed approach for Phase 2 would eliminate these concerns because engine and other vehicle component improvements would be evaluated relative to the same vehicle standard in GEM. This also means that under the proposed Phase 2 approach there is no need to consider allowing emissions credit trading between engine-generated and vehicle-generated credits because vehicle manufacturers are directly credited by the combination of engine and vehicle technologies they choose to install in each vehicle. Therefore, this approach eliminates one of the concerns about continuing separate engine standards, which was that a separate engine standard and a full vehicle standard were somehow mutually exclusive. That is not the case. In fact, in the next section we describe how we propose to continue the separate engine standard along with recognizing engine performance at the vehicle level. The agencies acknowledge that maintaining a separate engine standard would limit flexibility in cases where a vehicle manufacturer wanted to use less efficient engines and make up for them using more efficient vehicle technologies. However, as described below, we see important advantages to maintaining a separate engine standard, and we believe they more than justify the reduced flexibility.

There could be disadvantages to the proposed approach, however. As is discussed in Section II.B.(2)(b), some of the disadvantages can be addressed by maintaining separate engine standards, which we are proposing to do. We request comment on other disadvantages such as those discussed below.

One disadvantage of the proposed approach is that it would increase complexity for the vehicle standards. For example, vehicle manufacturers would be required to conduct additional engine tests and track additional GEM inputs for compliance purposes. However, we believe that most of the burden associated with this increased complexity would be an infrequent burden of engine testing and updating information systems to track these inputs.

Because GEM measures performance over specific duty cycles intended to represent average operation of vehicles in-use, the proposed approach might also create an incentive to optimize powertrains and drivetrains for the best GEM performance rather than the best in-use performance for a particular application. This is always a concern when selecting duty cycles for certification. There will always be instances, however infrequent, where specific vehicle applications will operate differently than the duty cycles used for certification. The question is would these differences force manufacturers to optimize vehicles to the certification duty cycles in a way that decreases fuel efficiency and increases GHG emissions in-use? We believe that the certification duty cycles would not prevent manufacturers from properly optimizing vehicles for customer fuel efficiency. First, the impact of the certification duty cycles would be relatively small because they affect only a small fraction of all vehicle technologies. Second, the emission averaging and fleet average provisions mean that the proposed regulations would not require all vehicles to meet the standards. Vehicles exceeding a standard over the duty cycles because they are optimized for different in-use operation can be offset by other vehicles that perform better over the certification duty cycles. Third, vehicle manufacturers would also have the ability to lower such a vehicle's measured GHG emissions by adding technology that would improve fuel efficiency both over the certification duty cycles and in-use. The proposed standards are not intended to be at a stringency where manufacturers would be expected to apply all technologies to all vehicles. Thus, there should be technologies available to add to vehicle configurations that initially fail to meet the Phase 2 proposed standards. Fourth, we are proposing further sub-categorization of the vocational vehicle segment, tripling the number of subcategories within this segment from 3 to 9. These 9 subcategories would divide each of the 3 Phase 1 weight categories into 3 additional vehicle speed categories. Each of the 3 speed categories would have unique duty cycle weighting factors to recognize that different vocational chassis are configured for different vehicle speed applications. Furthermore, we are proposing 9 unique standards for each of the subcategories. This further subdivision better recognizes technologies' performance under the conditions for which the vocational chassis was configured to operate. This further decreases the potential of the certification duty cycles to encourage manufacturers to configure vocational chassis differently than the optimum configuration for specific customers' applications. Finally, as required by Section 202 (a) (1) and 202 (d) of the CAA, EPA is proposing specific GHG standards which would have to be met in-use.

One disadvantage of our proposed full vehicle simulation approach is the potential requirement for engine manufacturers to disclose otherwise proprietary information to vehicle manufacturers who install their engines. Under the proposed approach, vehicle manufacturers would need to know details about engine performance long before production, both for compliance planning purposes, as well as for the actual submission of applications for certification. Moreover, vehicle manufacturers would need to know details about the engine's performance that are generally not publicly available—specifically the detailed fuel consumption of an engine over many steady-state operating points. We request comment on whether or not such information could be used to “reverse engineer” intellectual property related to the proprietary design of engines, and what steps the agencies could take to address this.

The agencies also generally request comment on the advantages and disadvantages of the proposed structure that would require vehicle manufacturers to provide additional inputs into GEM to represent the engine, transmission, drive axle(s), and loaded tire radius.

(b) Advantages of Separate Engine Standards

For engines installed in tractors and vocational vehicle chassis, we are proposing to maintain separate engine standards for fuel consumption and GHG emissions in Phase 2 for both SI and CI engines. Moreover, we are proposing new more stringent engine standards for CI engines. While the vehicle standards alone are intended to provide sufficient incentive for improvements in engine efficiency, we continue to see important advantages to maintaining separate engine standards for both SI and CI engines. The agencies believe the advantages described below are critical to fully achieve the goals of the NHTSA and EPA standards.

First, EPA has a robust compliance program based on engine testing. For the Phase 1 standards, we applied the existing criteria pollutant compliance program to ensure that engine efficiency in actual use reflected the improvements manufacturers claimed during certification. With engine-based standards, it is straightforward to hold engine manufacturers accountable by testing in-use engines. If the engines exceed the standards, they can be required to correct the problem or perform other remedial actions. Without separate engine standards in Phase 2, addressing in-use compliance becomes more subjective. Having clearly defined compliance responsibilities is important to both the agencies and to the market.

Second, engine standards for CO₂ and fuel efficiency force engine manufacturers to optimize engines for both fuel efficiency and control of non-CO₂ emissions at the same engine operating points. This is of special concern for NO_X emissions, given the strong counter-dependency between engine-out NO_X emissions and fuel consumption. By requiring engine manufacturers to comply with both NO_X and CO₂ standards using the same test procedures, the agencies ensure that manufacturers include technologies that can be optimized for both rather than alternate calibrations that would trade NO_X emissions against fuel consumption depending how the engine or vehicle is tested. In the past, when there was no CO₂ engine standard and no steady-state NO_X standard, some manufacturers chose this dual calibration approach instead of investing in technology that would allow them to simultaneously reduce both CO₂ and NO_X.

Third, engine fuel consumption can vary significantly between transient operation and steady-state operation, and we are proposing only steady-state engine operating data as the required engine input into GEM for both tractor and vocational chassis certification. Because vocational vehicles can spend significant operation under transient engine operation, the separate engine standard for engines installed in vocational vehicles is a transient test. Therefore, the separate engine standard for vocational engines provides the only measure of engine fuel consumption and CO₂ emissions under transient conditions. Without a transient engine test we would not be able to ensure control of fuel consumption and CO₂ emissions under transient engine conditions.

It is worth noting that these first three advantages are also beneficial for the marketplace. In these respects, the separate engine standards allow each manufacturer to be confident that its competitors are playing by the same rules. The agencies believe that the absence of a separate engine standard would leave open the possibility that a manufacturer might choose to cut corners with respect to in-use compliance margins, the NO_X-CO₂ tradeoff, or transient controls. Concerns that competitors might take advantage of this can put a manufacturer in a difficult situation. On the other hand knowing that the agencies are ensuring all manufacturers are complying fully can eliminate these concerns.

Finally, the existence of meaningful separate engine standards allows the agencies to exempt certain vehicles from some or all of the vehicle standards and requirements without forgoing the engine improvements. A good example of this is the off-road vehicle exemption in 40 CFR 1037.631 and 49 CFR 535.3, which exempts vehicles “intended to be used extensively in off-road environments” from the vehicle requirements. The engines used in such vehicles must still meet the engine standards of 40 CFR 1036.108 and 49 CFR 535.5(d). The agencies see no reason why efficient engines cannot be used in such vehicles. However, without separate engine standards, there would be no way to require them to be efficient.

In the past there has been some confusion about the Phase 1 separate engine standards somehow preventing the recognition of engine-vehicle optimization that vehicle manufacturers perform to minimize a vehicle's overall fuel consumption. It was not the existence of separate engine standards that prevented recognition of this optimization. Rather it was that the agencies did not allow manufacturers to enter inputs into GEM that characterized unique engine performance. For Phase 2 we are proposing to require that manufacturers input such data because we intend for GEM to recognize this engine-vehicle optimization. The continuation of separate engine standards in Phase 2 does not undermine in any way the recognition of this optimization in GEM.

The agencies request comment on the advantages and disadvantages of the proposal to maintain separate engine standards and to increase the stringency of the CI engine standards. We would also welcome suggested alternative approaches that would achieve the same goals. It is important to emphasize that the agencies see the advantages of separate engine standards as fundamental to the success of the program and do not expect to adopt alternative approaches that fall short of these goals.

Note that commenters opposing separate engine standards should also be careful distinguish between concerns related to the stringency of the proposed engine standards, from concerns inherent to any separate engine standards whatsoever. When meeting with manufacturers prior to this proposal, the agencies heard many concerns about the potential problems with separate engines standards that were actually concerns about separate engine standards that are too stringent. However, we see these as two different issues. The agencies do recognize that setting engine standards at a high stringency could increase the cost to comply with the vehicle standard, if lower-cost vehicle technologies are available. Additionally, the agencies recognize that setting engine standards at a high stringency may promote the use of large-displacement engines, which have inherent heat transfer and efficiency advantages over smaller displacement engines over the engine test cycles, though a smaller engine may be more efficient for a given vehicle application. Thus we encourage commenters supporting the separate engine standards to address the possibility of unintended consequences such as these.

C. Proposed Vehicle Simulation Model—Phase 2 GEM ⁸⁷

For tractors and vocational vehicle chassis, the agencies propose that manufacturers would be required to meet vehicle-based standards, and certification to these standards would be facilitated by the required use of the vehicle simulation computer program called, “Greenhouse gas Emissions Model” or “GEM.” GEM was created for Phase 1 for the exclusive purpose of certifying tractors and vocational chassis. The agencies are proposing to modify GEM and to require vehicle manufacturers to provide additional inputs into GEM to represent the engine, transmission, drive axle(s), and loaded tire radius. For Phase 1, GEM used agency default values for all of these parameters. Under the proposed approach for Phase 2, vehicle manufacturers would be able to use these technologies, plus additional technologies to demonstrate compliance with the applicable standards. The additional technologies include lightweight thermoplastic materials, automatic tire inflation systems, advanced cruise control systems, engine stop-start idle reduction systems, and axle configurations that decrease the number of drive axles to comply with the standards.

(1) Description of the Proposed Modifications to GEM

As explained above, GEM is a computer program that was originally developed by EPA specifically for manufacturers to use to certify to the Phase 1 tractor and vocational chassis standards. GEM mathematically combines the results of vehicle component test procedures with other vehicle attributes to determine a vehicle's certified levels of fuel consumption and CO₂ emissions. For Phase 1 the required inputs to GEM include vehicle aerodynamics information, tire rolling resistance, and whether or not a vehicle is equipped with certain lightweight high-strength steel or aluminum components, a tamper-proof speed limiter, or tamper-proof idle reduction technologies for tractors. The vocational vehicle inputs to GEM for Phase 1 only included tire rolling resistance. For Phase 1 the GEM's inputs did not include engine test results or attributes related to a vehicle's powertrain; namely, its transmission, drive axle(s), or loaded tire radius. Instead, for Phase 1 the agencies specified a generic engine and powertrain within GEM, and for Phase 1 these cannot be changed in GEM.

For this proposal GEM has been modified and validated against a set of experimental data that represents over 130 unique vehicle variants. EPA believes this new version of GEM is an accurate and cost-effective alternative to measuring fuel consumption and CO₂ over a chassis dynamometer test procedure. Some of the key proposed modifications would necessitate required and optional vehicle component test procedures to generate additional GEM inputs. The results of which would provide additional inputs into GEM. These include a new required engine test procedure to provide steady-state engine fuel consumption and CO₂ inputs into GEM. We are also seeking comment on a newly developed engine test procedure that also captures transient engine performance for use in GEM. We are proposing to require inputs that describe the vehicle's transmission type, and its number of gears and gear ratios. We are proposing an optional powertrain test procedure that would provide inputs to override the agencies' simulated engine and transmission in GEM. We are proposing to require inputs that describe the vehicle's drive axle(s) type (e.g., 6x4 or 6x2) and axle ratio. We are also seeking comment on an optional axle efficiency test procedure to override the agencies' simulated axle in GEM. We are proposing to significantly expand the number of technologies that are recognized in GEM. These include recognizing lightweight thermoplastic materials, automatic tire inflation systems, advanced cruise control systems, engine stop-start idle reduction systems, and axle configurations that decrease the number of drive axles. We are seeking comment on recognizing (outside of the GEM simulation) additional technologies such as high efficiency glass and low global warming potential air conditioning refrigerants. To better reflect real-world operation, we are also proposing to revise the vehicle simulation computer program's urban and rural highway duty cycles to include changes in road grade. We are seeking comment on whether or not these duty cycles should also simulate driver behavior in response to varying traffic patterns. We are proposing a new duty cycle to capture the performance of technologies that reduce the amount of time a vehicle's engine is at idle during a workday when the vehicle is not moving. And to better recognize that vocational vehicle powertrains are configured for particular applications, we are proposing to further subdivide the vocational chassis category into three different vehicle speed categories, where GEM weights the individual duty cycles' results of each of the speed categories differently. Section 4.2 of the RIA details all these modifications. This section briefly describes some of the key proposed modifications to GEM.

(a) Simulating Engines for Vehicle Certification

Before describing the proposed approach for Phase 2, this section first reviews how engines are simulated for vehicle certification in Phase 1. GEM for Phase 1 simulates the same generic engine for any vehicle in a given regulatory subcategory with a data table of steady-state engine fuel consumption mass rates (g/s) versus a series of steady-state engine output shaft speeds (revolutions per minute, rpm) and loads (torque, N-m). This data table is also sometimes called a “fuel map” or an “engine map”, although the term “engine map” can mean other kinds of data in different contexts. The engine speeds in this map range from idle to maximum governed speed and the loads range from engine motoring (negative load) to the maximum load of an engine. When GEM runs over a vehicle duty cycle, this data table is linearly interpolated to find a corresponding fuel consumption mass rate at each engine speed and load that is demanded by the simulated vehicle operating over the duty cycle. The fuel consumption mass rate of the engine is then integrated over each duty cycle in GEM to arrive at the total mass of fuel consumed for the specific vehicle and duty cycle. Under Phase 1, manufacturers were not allowed to input their own engine fuel maps to represent their specific engines in the vehicle being simulated in GEM. Because GEM was programmed with fixed engine fuel maps for Phase 1 that all manufacturers had to use, interpolation of the tables themselves over each of the three different GEM duty cycles did not have to closely represent how an actual engine might operate over these three different duty cycles.

In contrast, for Phase 2 we are proposing a new and required steady-state engine dynamometer test procedure for manufacturers to use to generate their own engine fuel maps to represent each of their engine families in GEM. The proposed Phase 2 approach is consistent with the 2014 NAS Phase 2 First Report recommendation. To validate this approach we compared the results from 28 individual engine dynamometer tests. Three different engines were used to generate this data, and these engines were produced by two different engine manufacturers. One engine was tested at three different power ratings (13 liters at 410, 450 & 475 hp) and one engine was tested at two ratings (6.7 liters at 240 and 300 hp), and other engine with one rating (15 liters 455 hp) service classes. For each engine and rating our proposed steady-state engine dynamometer test procedure was conducted to generate an engine fuel map to represent that particular engine in GEM. Next, with GEM we simulated various vehicles in which the engine could be installed. For each of the GEM duty cycles we are proposing, namely the urban local (ARB Transient), urban highway with road grade (55 mph), and rural highway with road grade (65 mph) duty cycles, we determined the GEM result for each vehicle configuration, and we saved the engine output shaft speed and torque information that GEM created to interpolate the steady-state engine map for each vehicle configuration. We then had this same engine output shaft speed and torque information programmed into an engine dynamometer controller, and we had each engine perform the same duty cycles that GEM demanded of the simulated version of the engine. We then compared the GEM results based on GEM's linear interpolation of the engine maps to the measured engine dynamometer results. We concluded that for the 55 mph and 65 mph duty cycles, GEM's interpolation of the steady-state data tables was sufficiently accurate versus the measured results. This is an outcome one would reasonably expect because even with changes in road grade, the 55 mph and 65 mph duty cycles do not demand rapid changes in engine speed or load. The 55 mph and 65 mph duty cycles are nearly steady-state, as far as engine operation is concerned, just like the engine maps themselves. However, for the ARB Transient cycle, we observed a consistent bias, where GEM consistently under-predicted fuel consumption and CO₂ emissions. This low bias over the 28 engine tests ranged from 4.2 percent low to 7.8 percent low. The mean was 5.9 percent low and the 90th percentile value was 7.1 percent low. These observations are consistent with the fact that engines generally operate less efficiently under transient conditions than under steady-state conditions.

A number of reasons explain this consistent trend. For example, under rapidly changing engine conditions, it is generally more challenging to program an engine electronic controller to respond with optimum fuel injection rate and timing, exhaust gas recirculation valve position, variable nozzle turbo-charger vane position and other set points than it is to do so under steady-state conditions. Transient heat and mass transfer within the intake, exhaust, and combustion chambers also tend to increase turbulence and enhance energy loss to engine coolant during transient operation. Furthermore, because exhaust emissions control is more challenging under transient engine operation, engineering tradeoffs sometimes need to be made between fuel efficiency and transient emissions control. Special calibrations are typically also required to control smoke and manage exhaust temperatures during transient operation for a transient cycle. We are confident that this low bias in GEM would continue to exist well into the future if we were to test additional engines. However, with the range of the results that we have generated so far we are somewhat less confident in proposing a single numerical value to correct for this effect over the ARB Transient duty cycle. Based on the data we have collected so far, we are conservatively proposing to apply a 5.0 percent correction factor to GEM's ARB Transient results. Note that adjustment would be applied internal to GEM, and no manufacturer input or action would be needed. This means that for GEM fuel consumption and CO₂ emissions results that were generated using the steady-state engine map representation of an engine in GEM, a 1.05 multiplier would be applied to only the ARB Transient result. If a manufacturer chooses to perform the optional powertrain test procedure we are proposing, then this 1.05 multiplier to the ARB Transient would not apply (since we know of no bias in that optional powertrain test). For the same reason, if we were to replace the proposed steady-state engine map in GEM with the alternative approach detailed in draft RIA, then this 1.05 multiplier would not apply. We request comment on whether or not this single value multiplier is an appropriate way to correct between steady-state and transient engine fuel consumption and CO₂ emissions, specifically over the ARB Transient duty cycle. We also request comment on the magnitude of the multiplier itself. For example, for the proposal we have chosen a 1.05 multiplier correction value because it is conservative but still near the mean bias we observed. However, for the tests we have conducted on current technology engines, a 1.05 multiplier would mean that about one half of these engines would be penalized by powertrain testing (or if we utilized the alternative engine approach) because the actual measured transient impact would be slightly higher than 5 percent. While these tests were performed on current technology powertrains rather than the kind of optimized powertrains we project for Phase 2, these results raise still some concerns for us. Because we intend to incentivize powertrain testing and not penalize it, and because we also encourage constructive comments on the alternative approach, we also request comment on increasing the magnitude of this ARB Transient multiplier toward the higher end of the biases we observed. For example, we request comment on increasing the proposed multiplier from 1.05 to 1.07, which is close to the 90th percentile of the results we have collected so far. Using this higher multiplier would imply that only about 10 percent of engines powertrain tested or tested under the alternative approach would show worse fuel consumption over the ARB Transient than its respective representation in a steady-state data table in GEM. This would mean that the remaining 90 percent of engines powertrain tested would receive additional credit in GEM. Using 1.07 would essentially guarantee that any powertrain that was significantly more efficient than current powertrains would receive meaningful credit for the improvement. However, this value would also provide credits for many current powertrain designs.

We also request comment as to whether or not there might be certain vehicle sub-categories or certain small volume vocational chassis, where using the Phase 1 approach of using a generic engine table might be more appropriate. We also request comment as to whether or not the agencies should provide default generic engine maps in GEM for Phase 2 and allow manufacturers to optionally override these generic maps with their own maps, which would be generated according to our proposed engine dynamometer steady-state test procedure.

(b) Simulating Human Driver Behavior and Transmissions for Vehicle Certification

GEM for Phase 1 simulates the same generic human driver behavior and manual transmission for all vehicles. The simulated driver responds to changes in the target vehicle speed of the duty cycles by changing the simulated positions of the vehicle's accelerator pedal, brake pedal, clutch pedal, and gear shift lever. For simplicity in Phase 1 the GEM driver shifted at ideal points for maximum fuel efficiency and the manual transmission was simulated as an ideal transmission that did not have any delay time (i.e., torque interruption) between gear shifts and did not have any energy losses associated with clutch slip during gear shifts.

In GEM for Phase 2 we are proposing to allow manufacturers to select one of three types of transmissions to represent the transmission in the vehicle they are certifying: manual transmission, automated manual transmission, and automatic transmission. We are currently in the process of developing a dual-clutch transmission type in GEM, but we are not proposing to allow its use in Phase 2 at this time. Because production of heavy-duty dual clutch transmissions has only begun in the past few months, we do not yet have any experimental data to validate our GEM simulation of this transmission type. Therefore, we are requesting comment on whether or not there is additional data available for such validation. Should such data be provided in comments, we may finalize GEM for Phase 2 with a fourth transmission types for dual clutch transmissions. We are also considering an option to address dual clutch transmissions through a post-simulation adjustment as discussed in Chapter 4 of the draft RIA.

In the proposed modifications to GEM, the driver behavior and the three different transmission types are simulated in the same basic manner as in Phase 1, but each transmission type features a unique combination of driver behavior and transmission responses that match both the driver behavior and the transmission responses we measured during vehicle testing of these three transmission types. In general the transmission gear shifting strategy for all of the transmissions is designed to shift the transmission so that it is always in the most efficient gear for the current vehicle demand, while staying within certain limits to prevent unrealistically high frequency shifting. Some examples of these limits are torque reserve limits (which vary as function of engine speed), minimum time-in-gear and minimum fuel efficiency benefit to shift to the next gear. Some of the differences between the three transmission types include a driver “double-clutching” during gear shifts of the manual transmission only, and “power shifts” and torque converter torque multiplication, slip, and lock-up in automatic transmissions only. Refer to Chapter 4 of the draft RIA for a more detailed description of these different simulated driver behaviors and transmission types.

We considered an alternative approach where transmission manufacturers would provide vehicle manufacturers with detailed information about their automated transmissions' proprietary shift strategies for representation in GEM. NAS also recommended this approach. The advantages of this approach include a more realistic representation of a transmission in GEM and potentially the recognition of additional fuel efficiency improving strategies to achieve additional fuel consumption and CO₂ emissions reductions. However, there are a number of technical and policy disadvantages of this approach. One disadvantage is that it would require the disclosure of proprietary information between competing companies because some vehicle manufacturers produce their own transmissions and also use other suppliers' transmissions. There are technical challenges too. For example, some transmission manufacturers have upwards of 40 different shift strategies programmed into their transmission controllers. Depending on in-use driving conditions, some of which are not simulated in GEM (e.g., changing payloads, changing tire traction) a transmission controller can change its shift strategy. Representing dynamic switching between multiple proprietary shift strategies would be extremely complex to simulate in GEM. Furthermore, if the agencies were to propose requiring transmission manufacturers to provide shift strategy inputs for use in GEM, then the agencies would have to devise a compliance strategy to monitor in-use shift strategies, including a driver behavior model that could be implemented as part of an in-use shift strategy test. This too would be very complex. If manufacturers were subject to in-use compliance requirements of their transmission shift strategies, this could lead to restricting the use of certain shift strategies in the heavy-duty sector, which would in turn potentially lead to sub-optimal vehicle configurations that do not improve fuel efficiency or adequately serve the wide range of customer needs; especially in the vocational vehicle segment. For example, if the agencies were to restrict the use of more aggressive and less fuel efficient in-use shift strategies that are used only under heavy loads and steep grades, then certain vehicle applications would need to compensate for this loss of capability through the installation of over-sized and over-powered engines that are subsequently poorly matched and less efficient under lighter load conditions. Therefore, as a policy consideration to preserve vehicle configuration choice and to preserve the full capability of heavy-duty vehicles today, the agencies are intentionally not requiring transmission manufacturers to submit detailed proprietary shift strategy information to vehicle manufacturers to input into GEM. This is not unlike Phase 1, where unique transmission and axle attributes were not recognized at all in GEM. Instead, the agencies are proposing that vehicle manufacturers choose from among the three transmission types that the agencies have already developed, validated, and programmed into GEM. The vehicle manufacturers would then enter into GEM their particular transmission's number of gears and gear ratios. The agencies recognize that designing GEM like this would exclude a potentially significant reduction from the GEM simulation. However, if a manufacturer chooses to use the optional powertrain test procedure, then the agencies' transmission types in GEM would be overridden by the actual data collected during the powertrain test, which would recognize the actual benefit of the transmission. Note that the optional powertrain test procedure is only advantageous to a vehicle manufacturer if an actual transmission is more efficient and has a superior shift strategy compared to its respective transmission type simulated in GEM.

(c) Simulating Axles for Vehicle Certification

In GEM for Phase 1 the axle ratio of the primary drive axle and the energy losses assumed in the simulated axle itself were the same for all vehicles. For Phase 2 we are proposing that the vehicle manufacturer input into GEM the axle ratio of the primary drive axle. This input would recognize the intent to operate the engine at a particular engine speed when the transmission is operating in its highest transmission gear; especially for the 55 mph and 65 mph duty cycles in GEM. This input facilitates GEM's recognition of vehicle designs that take advantage of operating the engine at the lowest possible engine speeds. This is commonly known as “engine down-speeding”, and the general rule-of-thumb for heavy-duty engines is that for every 100 rpm decrease in engine speed, there can be about a 1 percent decrease in fuel consumption and CO₂ emissions. Therefore, it is important that GEM allow this value to be input by the vehicle manufacturer. Axle ratio is also straightforward to verify during any in-use compliance audit.

We are proposing a fixed axle ratio energy efficiency of 95.5 percent at all speeds and loads, but are requesting comment on whether this pre-specified efficiency is reasonable. However, we know that this efficiency actually varies as a function of axle speed and axle input torque. Therefore, as an exploratory test we have created a modified version of GEM that has as an input a data table of axle efficiency as a function of axle speed and axle torque. The modified version of GEM subsequently interpolates this table over each of the duty cycles to represent a more realistic axle efficiency at each point of each duty cycle. We have also created a draft axle ratio efficiency test procedure that requires the use of a dynamometer test facility. This procedure includes the use of a baseline fuel-efficient synthetic gear lubricant manufactured by BASF. This baseline will be used to gauge improvements in axle design and lubricants. The draft test procedure includes initial feedback that we have received from axle manufacturers and our own engineering judgment. Refer to 40 CFR 1037.560 of the Phase 2 proposed regulations, which contain this draft test procedure. This test procedure could be used to generate the results needed to create the axle efficiency data table for input into GEM. However, the agencies have not yet conducted experimental tests of axles using this draft test procedure so we are reluctant to propose this test procedure as either mandatory or even optional at this time. Rather we request comment as to whether or not we should finalize this test procedure and either require its use or allow its use optionally to determine an axle efficiency data table as an input to GEM, which would override the fixed axle efficiency we are proposing at this time. We also request comment on improving or otherwise refining the test procedure itself. Note that the agencies believe that allowing the GEM default axle efficiency to be replaced by manufacturer inputs only makes sense if the manufacturer inputs is are the results of a specified test procedure that we could verify by our own independent testing of the axle.

In addition to proposing to require the primary drive axle ratio input into GEM (and potentially an option to input an actual axle efficiency data table), we are also proposing that the vehicle manufacturer input into GEM whether or not one or two drive axles are driven by the engine. When a heavy-duty vehicle is equipped with two rear axles where both are driven by the engine, this is called a “6x4” configuration. “6” refers to the total number of wheel hubs on the vehicle. In the 6x4 configuration there are two front wheel hubs for the two steer wheels and tires plus four rear wheel hubs for the four rear wheels and tires (or more commonly four sets of rear dual wheels and tires). “4” refers to the number of wheel hubs driven by the engine. These are the two rear axles that have two wheel hubs each. Compared to a 6x4 configuration a 6x2 configuration decreases axle energy loss due to friction and oil pumping in two driven axles, by driving only one axle. The decrease in fuel consumption and CO₂ emissions associated with a 6x2 versus 6x4 axle configuration is estimated to be 2.5 percent. Therefore, in the proposed Phase 2 version of GEM, if a manufacturer simulates a 6x2 axle configuration, GEM decreases the overall GEM result by 2.5 percent. Note that GEM will similarly decrease the overall GEM result by 2.5 percent for a 4x2 tractor or Class 8 vocational chassis configuration if it has only two wheel hubs driven. Note that we are not proposing that GEM have an option to increase the overall GEM result by some percentage by selecting, say, a 6x6 or 8x8 option if the front axle(s) are driven. Because these configurations are only manufactured for specialized vehicles that require extra traction for off-road applications, they are very low volume sales and their increased fuel consumption and CO₂ emissions are not significant in comparison to the overall reductions of the proposed Phase 2 program. Note that 40 CFR 1037.631 (for off-road vocational vehicles), which is being continued from the Phase 1 program, would likely exempt many of these vehicles from the vehicle standards.

Instead of directly modeling 6x4 or 6x2 axle configuration, we are proposing use of a post-simulation adjustment approach discussed in Chapter 4 of the drat RIA to model benefits of different axle configuration.

(d) Simulating Accessories for Vehicle Certification

Phase 1 GEM uses a fixed power consumption value to simulate the fuel consumed for powering accessories such as power steering pumps and alternators. While the agencies are not proposing any changes to this approach for Phase 2, we are requesting comment on whether or not we should allow some manufacturer input to reflect the installation of accessory components that result in lower accessory loads. For example, we could consider an accessory load reduction GEM input based on installing a number of qualifying advanced accessory components that could be in production during Phase 2. We request comment on identifying such advanced accessory components, and we request comment on defining these components in such a way that they can be unambiguously distinguished from other similar components that do not decrease accessory loads. We also request comment on how much of a decrease in accessory load should be programmed into GEM if qualifying advanced accessory components are installed.

(e) Aerodynamics for Tractor, Vocational Vehicle, and Trailer Certification

For GEM in Phase 2 the agencies propose to simulate aerodynamic drag in largely the same manner as in Phase 1. For vocational chassis we propose to continue to use the same prescribed products of drag coefficient times vehicle frontal area (Cd*A) that were predefined for each of the vocational subcategories in Phase 1. For tractors we propose to continue to use an aerodynamic bin approach similar to the one that exists in Phase 1 today. This approach requires tractor manufacturers to conduct a certain amount of coast-down vehicle testing, although manufacturers have the option to conduct scaled wind tunnel testing and/or computational fluid dynamics modeling. The results of these tests determine into which bin a vehicle is assigned. Then in GEM the aerodynamic drag coefficient for each vehicle in the same bin is the same. This approach helps to account for limits in the repeatability of aerodynamic testing and it creates a compliance margin since any test result which keeps the vehicle in the same aerodynamic bin is considered compliant. However, for Phase 2 we are proposing new boundary values for the bins themselves and we are adding two additional bins in order to recognize further advances in aerodynamic drag reduction beyond what was recognized in Phase 1. Furthermore, while Phase 1 GEM used predefined frontal areas for tractors while the manufacturers input a Cd value, the agencies propose that manufacturers would use a measured drag area (CdA) value for each tractor configuration for Phase 2. See 40 CFR 1037.525.

In addition to these proposed changes we are proposing a number of aerodynamic drag test procedure improvements. One proposed improvement is to update the so-called standard trailer that is prescribed for use during aerodynamic drag testing of a tractor—that is, the hypothetical trailer modeled in GEM to represent a trailer paired with the tractor in actual use. In Phase 1 a non-aerodynamic 53-foot long box-shaped dry van trailer was specified as the standard trailer for tractor aerodynamic testing (see 40 CFR 1037.501(g)). For Phase 2 we are proposing to modify this standard trailer for tractor testing to make it more similar to the trailers we would require to be produced during the Phase 2 timeframe. More specifically, we would prescribe the installation of aerodynamic trailer skirts (and low rolling resistance tires as applied in Phase 1) on the reference trailer, as discussed in further in Section III.E.2. As explained more fully in Sections III and IV below, the agencies believe that tractor-trailer pairings will be optimized aerodynamically to a significant extent in-use (such as using high-roof cabs when pulling box trailers), and that this real-world optimization should be reflected in the certification testing. We also request comment on whether or not the Phase 2 standard trailer should include the installation of other aerodynamic devices such as a nose fairing, an under tray, or a boat tail or trailer tail. Would a standard trailer including these additional components make the tractor program better?

Another proposed aerodynamic test procedure improvement is intended to better account for average wind yaw angle to better reflect the true impact of aerodynamic features on the in-use fuel consumption and CO₂ emissions of tractors. Refer to the proposed test procedures in 40 CFR 1037.525 for further details of these aerodynamic test procedures.

For trailer certification, the agencies are proposing to use GEM in a different way than GEM is used for tractor certification in Phase 1 and Phase 2. As described in Section IV, the proposed trailer standards are based on GEM simulation, but trailer manufacturers would not run GEM for certification. Instead, manufacturers would use a simple equation to replicate GEM performance from the inputs. As with GEM, the only technologies recognized by this GEM-based equation for trailer certification are aerodynamic technologies, tire technologies (including tire rolling resistance and automatic tire inflation systems), and some weight reduction technologies. Note that since the purpose of this equation is to measure GEM performance, it can be considered as simply another form of the model using a different input interface. Thus, for simplicity, the remainder of this Section II. C. sometimes discusses GEM as being used for trailers, without regard to how manufacturers will actually input GEM variables.

Similar to tractor certification, we propose that trailer manufacturers may at their option conduct some amount of aerodynamic testing (e.g., coast-down testing, scale wind tunnel testing, computational fluid dynamics modeling, or possibly aerodynamic component testing) and use this information with the equation. In this case the agencies propose the configuration of a reference tractor for conducting trailer testing. Refer to Section IV of this preamble and to 40 CFR 1037.501 of the proposed regulations for details on the proposed reference tractor configuration for trailer test procedures.

(f) Tires and Tire Inflation Systems for Truck and Trailer Certification

For GEM in Phase 1 vehicle manufacturers input the tire rolling resistance of steer and drive tires directly into GEM. The agencies prescribed an internationally recognized tire rolling resistance test procedure, ISO 28580, for determining the tire rolling resistance value that is input into GEM, as described in 40 CFR 1037.520(c). For Phase 2 we are proposing to continue this same approach and the use of ISO 28580, and we propose to expand these requirements to trailer tires as well. We request comment on whether specific modifications to this test procedure would improve its accuracy, repeatability or its test lab to test lab variability.

In addition to tire rolling resistance, we are proposing that for Phase 2 vehicle manufacturers enter into GEM the tire manufacturer's specified tire loaded radius for the vehicle's drive tires. This value is commonly reported by tire manufacturers already so that vehicle speedometers can be adjusted appropriately. This input value is needed so that GEM can accurately convert simulated vehicle speed into axle speed, transmission speed, and ultimately engine speed. We request comment on whether the proposed test procedure should be modified to measure the tire's revolutions per distance directly, as opposed to using the loaded radius to calculate the drive axle rotational speed from vehicle speed.

For tractors and trailers, we propose to allow manufacturers to specify whether or not an automatic tire inflation system is installed. If one is installed, GEM, or in the case of trailers, the equations based on GEM, would assign a 1 percent decrease in the overall fuel consumption and CO₂ emissions simulation results for tractors, and a 1.5 percent decrease for trailers. This would be done through post-simulation adjustments discussed in Chapter 4 of the draft RIA. In contrast, we are not proposing to assign any decrease in fuel consumption and CO₂ emissions for tire pressure monitoring systems. We do recognize that some drivers would respond to a warning indication from a tire pressure monitoring system, but we are unsure how to assign a fixed decrease in fuel consumption and CO₂ emissions for tire pressure monitoring systems. We would estimate that the value would be less than any value we would assign for an automatic tire inflation system. We request comment on whether or not we should assign a fixed decrease in fuel consumption and CO₂ emissions for tire pressure monitoring systems, and if so, we request comment on what would be an appropriate assigned fixed value.

(g) Weight Reduction for Tractor, Vocational Chassis and Trailer Certification

We propose for Phase 2 that GEM continues the weight reduction recognition approach in Phase 1, where the agencies prescribe fixed weight reductions, or “deltas”, for using certain lightweight materials for certain vehicle components. In Phase 1 the agencies published a list of weight reductions for using high-strength steel and aluminum materials on a part by part basis. For Phase 2 we propose to use these same values for high-strength steel and aluminum parts for tractors and for trailers and we have scaled these values for use in certifying the different weight classes of vocational chassis. In addition we are proposing a similar part by part weight reduction list for tractor parts made from thermoplastic material. We are also proposing to assign a fixed weight increase to natural gas fueled vehicles to reflect the weight increase of natural gas fuel tanks versus gasoline or diesel tanks. This increase would be allocated partly to the chassis and from the payload using the same allocation as weight reductions for the given vehicle type. For tractors we are proposing to continue the same mathematical approach in GEM to assign 1/3 of a total weight decrease to a payload increase and 2/3 of the total weight decrease to a vehicle mass decrease. For Phase 1 these ratios were based on the average frequency that a tractor operates at its gross combined weight rating. Therefore, we propose to use these ratios for trailers in Phase 2. However, as with the other fuel consumption and GHG reducing technologies manufacturers use for compliance, reductions associated with weight reduction would be calculated using the trailer compliance equation rather than GEM. For vocational chassis, for which Phase 1 did not address weight reduction, we propose a 50/50 ratio. In other words, for vocational chassis in GEM we propose to assign 1/2 of a total weight decrease to a payload increase and 1/2 of the total weight decrease to a vehicle mass decrease. We request comment on all aspects of applying weight reductions in GEM, including proposed weight increases for alternate fuel vehicles and whether a 50/50 ratio is appropriate for vocational chassis.

(h) GEM Duty Cycles for Tractor, Vocational Chassis and Trailer Certification

In Phase 1, there are three GEM vehicle duty cycles that represented stop-and-go city driving (ARB Transient), urban highway driving (55 mph), and rural interstate highway driving (65 mph). In Phase 1 these cycles were time-based. That is, they were specified as a function of simulated time and the duty cycles ended once the specified time elapsed in simulation. The agencies propose to use these three drive cycles in Phase 2, but with some revisions. First the agencies propose that GEM would simulate these cycles on a distance-based specification, rather than on a time-based specification. A distance-based specification ensures that even if a vehicle in simulation does not always achieve the target vehicle speed, the vehicle will have to continue in simulation for a longer period of time to complete the duty cycle. This ensures that vehicles are evaluated over the complete distance of the duty cycle and not just the portion of the duty cycle that a vehicle completes in a given time period. A distance-based duty cycle specification also facilitates a straightforward specification of road grade as a function of distance along the duty cycle. For Phase 2 the agencies are proposing to enhance the 55 mph and 65 mph duty cycles by adding representative road grade to exercise the simulated vehicle's engine, transmission, axle, and tires in a more realistic way. A flat road grade profile over a constant speed test does not present many opportunities for a transmission to shift gears, and may have the unintended consequence of enabling underpowered vehicles or excessively downsped drivetrains to generate credits. The road grade profile proposed is the same for both the 55 mph and 65 mph duty cycles, and the profile was based on real over-the-road testing the agencies directed under an agency-funded contract with Southwest Research Institute. See Section III.E for more details on development of the proposed road grade profile. The agencies are continuing to evaluate alternate road grade profiles including actual sections of restricted access highway with road grades that are statistically similar to the national road grade profile as well as purely synthetic road grade profiles. We request comments on the proposed road grade profile, and would welcome additional statistical evaluations of this road grade profile and other road grade profiles for comparison. We believe that the enhancement of the 55 mph and 65 mph duty cycles with road grade is consistent with the NAS recommendation regarding road grade.

We recognize that even with the proposed road grade profile, GEM may continue to under predict the number of transmission shifts of vehicles on restricted access highways if the model simulates constant speeds. We request comment on other ways in which the proposed 55 mph and 65 mph duty cycles could be enhanced. For example, we request comment on whether a more aggressive road grade profile would induce a more realistic and representative number of transmission gear shifts. We also request comment on whether we should consider varying the vehicle target speed over the 55 mph and/or 65 mph duty cycles to simulate human driver behavior reacting to traffic congestion. This would increase the number of shifts during the 55 mph and 65 mph duty cycles, though it may be possible for an equivalent effect to be achieved by assigning a greater weighting to the transient cycle in the GEM composite test score.

(i) Workday Idle Operation for Vocational Vehicle Certification

In the Phase 1 program, reduction in idle emissions was recognized only for sleeper cab tractors, and only with respect to hotelling idle, where a driver needs power to operate heating, ventilation, air conditioning and other electrical equipment in order to use the sleeper cab to eat, rest, or conduct other business. As described in Section V, the agencies are now proposing to recognize in GEM technologies that reduce workday idle emissions, such as automatic stop-start systems and automatic transmissions that shift to neutral at idle. Many vocational vehicle applications operate on patterns implicating workday idle cycles, and the agencies are proposing test procedures in GEM to account specifically for these cycles and potential controls. GEM would recognize these idle controls in two ways. For technologies like neutral-idle that address idle that occurs during the transient cycle (representing the type of operation that would occur when the vehicle is stopped at a stop light), GEM would interpolate lower fuel rates from the engine map. For technologies like start-stop and auto-shutdown that eliminate some of the idle that occurs when a vehicle is stopped or parked, GEM would assign a value of zero fuel rate for what we are proposing as an “idle cycle”. This idle cycle would be weighted along with the 65 mph, 55 mph, and ARB Transient duty cycles according to the vocational chassis duty cycle weighting factors that we are proposing for Phase 2. These weighting factors are different for each of the three vocational chassis speed categories that we are proposing for Phase 2. While we are not proposing to apply this idle cycle for tractors, we do request comment on whether or not we should consider a applying this idle cycle to certain tractor types, like day cabs that could experience more significant amounts of time stopped or parked as part of an urban delivery route. We also request comment on whether or not start-stop or auto-shutdown technologies are being developed for tractors; especially for Class 7 and 8 day cabs that could experience more frequent stops and more time parked for deliveries.

(2) Validation of the Proposed GEM

After making the proposed changes to GEM, the agencies validated the model in comparison to over 130 vehicle variants, consistent with the recommendation made by the NAS in their Phase 2-First Report. As is described in Chapter 4 of the Draft RIA, good agreement was observed between GEM simulations and test data over a wide range of vehicles. In general, the model simulations agreed with the test results within ±5 percent on an absolute basis. As pointed out in Chapter 4.3.2 of the RIA, relative accuracy is more relevant to this rulemaking. This is because all of the numeric standards proposed for tractors, trailers and vocational chassis are derived from running GEM first with Phase 1 “baseline” technology packages and then with various candidate Phase 2 technology packages. The differences between these GEM results are examined to select stringencies. In other words, the agencies used the same version of GEM to establish the standards as was used to evaluate baseline performance for this rulemaking. Therefore, it is most important that GEM accurately reflects relative changes in emissions for each added technology. For vehicle certification purposes it is less important that GEM's absolute value of the fuel consumption or CO₂ emissions are accurate compared to laboratory testing of the same vehicle. The ultimate purpose of this new version of GEM will be to evaluate changes or additions in technology, and compliance is demonstrated on a relative basis to the numerically standards that were also derived from GEM. Nevertheless, the agencies concluded that the absolute accuracy of GEM is generally within ±5 percent, as shown in Figure II-1. Chapter 4.3.2 of the draft RIA shows that relative accuracy is even better, ±2-3 percent.

In addition to this successful validation against experimental results, the agencies have also initiated a peer review of the proposed GEM source code. This peer review has been submitted to Docket # EPA-HQ-OAR-2014-0827.

(3) Supplements to GEM Simulation

As in Phase 1, for most tractors and vocational vehicles, compliance with the Phase 2 g/ton-mile vehicle standards could be evaluated by directly comparing the GEM result to the standard. However, in Phase 1, manufacturers incorporating innovative or advanced technologies could apply improvement factors to lower the GEM result slightly before comparing to the standard. For example, a manufacturer incorporating a launch-assist mild hybrid that was approved for a 5 percent benefit would apply a 0.95 improvement factor to its GEM results for such vehicles. In this example, a GEM result of 300 g/ton-mile would be reduced to 285 g/ton-mile.

For Phase 2, the agencies are proposing to largely continue the existing Phase 1 innovative technology approach. We are also proposing to create a parallel option specifically related to innovative powertrain designs. These proposals are discussed below.

(a) Innovative/Off-Cycle Technology Procedures

In Phase 1 the agencies adopted an emissions credit generating opportunity that applied to new and innovative technologies that reduce fuel consumption and CO₂ emissions, that were not in common use with heavy-duty vehicles before model year 2010 and are not reflected over the test procedures or GEM (i.e., the benefits are “off-cycle”). See 76 FR 57253. As was the case in the development of Phase 1, the agencies are proposing to continue this approach for technologies and concepts with CO₂ emissions and fuel consumption reduction potential that might not be adequately captured over the proposed Phase 2 duty cycles or are not proposed inputs to GEM. Note, however, that the agencies are proposing to refer to these technologies as off-cycle rather than innovative. See Section I for more discussion of innovative and off-cycle technologies.

We recognize that the Phase 1 testing burden associated with the innovative technology credit provisions discouraged some manufacturers from applying. To streamline recognition of many technologies, default values have been integrated directly into GEM. For example, automatic tire inflation systems and 6x2 axles both have fixed default values, recognized through a post-simulation adjustment approach discussed in Chapter 4 of the draft RIA. This is similar to the technology “pick list” from our light-duty programs. See 77 FR 62833-62835 (October 15, 2012). If manufacturers wish to receive additional credit beyond these fixed values, then the innovative/off-cycle technology credit provisions would provide the regulatory path toward that additional recognition.

Beyond the additional technologies that the agencies have added to GEM, the agencies also believe there are several emerging technologies that are being developed today, but would not be accounted for in GEM as we are proposing it because we do not have enough information about these technologies to assign fixed values to them in GEM. Any credits for these technologies would need to be based on the off-cycle technology credit generation provisions. These require the assessment of real-world fuel consumption and GHG reductions that can be measured with verifiable test methods using representative operating conditions typical of the engine or vehicle application.

As in Phase 1, the agencies are proposing to continue to provide two paths for approval of the test procedure to measure the CO₂ emissions and fuel consumption reductions of an off-cycle technology used in the HD tractor. See 40 CFR 1037.610 and 49 CFR 535.7. The first path would not require a public approval process of the test method. A manufacturer can use “pre-approved” test methods for HD vehicles including the A-to-B chassis testing, powerpack testing or on-road testing. A manufacturer may also use any developed test procedure which has known quantifiable benefits. A test plan detailing the testing methodology is required to be approved prior to collecting any test data. The agencies are also proposing to continue the second path which includes a public approval process of any testing method which could have questionable benefits (i.e., an unknown usage rate for a technology). Furthermore, the agencies are proposing to modify its provisions to better clarify the documentation required to be submitted for approval aligning them with provisions in 40 CFR 86.1869-12, and NHTSA is separately proposing to prohibit credits from technologies addressed by any of its crash avoidance safety rulemakings (i.e., congestion management systems). We welcome recommendations on how to improve or streamline the off-cycle technology approval process.

Sections III and V describe tractor and vocational vehicle technologies, respectively, that the agencies anticipate may qualify for these off-cycle credit provisions.

(b) Powertrain Testing

The agencies are proposing a powertrain test option to allow for a robust way to quantify the benefits of CO₂ reducing technologies that are a part of the powertrain (conventional or hybrid) that are not captured in the GEM simulation. Powertrain testing and certification was included as one of the NAS recommendations in the Phase 2 -First Report. Some of these improvements are transient fuel control, engine and transmission control integration and hybrid systems. To limit the amount of testing, the powertrain would be divided into families and powertrains would be tested in a limited number of simulated vehicles that cover the range of vehicles in which the powertrain would be installed. The powertrain test results would then be used to override the engine and transmission simulation portion of GEM.

The largest proposed change from the Phase 1 powertrain procedure is that only the advanced powertrain would need to be tested (as opposed to the Phase 1 requirement where both the advanced powertrain and the conventional powertrain had to be tested). This change is possible because the proposed GEM simulation uses the engine fuel map and torque curve from the actual engine in the vehicle to be certified. For the powertrain results to be used broadly across all the vehicles that the powertrain would go into, a matrix of 8 to 9 tests would be needed per vehicle cycle. These tests would cover the range of coefficient of drag, coefficient of rolling resistance, vehicle mass and axle ratio of the vehicles that the powertrain will be installed in. The main output of this matrix of tests would be fuel mass as a function of positive work and average transmission output speed over average vehicle speed. This matrix of test results would then be used to calculate the vehicle's CO₂ emissions by taking the work per ton-mile from the GEM simulation and multiplying it by the interpolated work specific fuel mass from the powertrain test and mass of CO₂ to mass of fuel ratio.

Along with proposing changes to how the powertrain results are used, the agencies are also proposing changes to the procedures that describe how to carry out a powertrain test. The changes are to give additional guidance on controlling the temperature of the powertrains intake-air, oil, coolant, block, head, transmission, battery, and power electronics so that they are within their expected ranges for normal operation. The equations that describe the vehicle model are proposed to be changed to allow for input of the axle's efficiency, driveline rotational inertia, as well as the mechanical and electrical accessory loads.

The determine the positive work and average transmission output speed over average vehicle speed in GEM for the vehicle that will be certified, the agencies have defined a generic powertrain for each vehicle category. The agencies are requesting comment on if the generic powertrains should be modified according to specific aspects of the actual powertrain. For example using the engine's rated power to scale the generic engine's torque curve. Similarly, the transmission gear ratios could be scaled by the axle ratio of the drive axle, to make sure the generic engine is operated in GEM at the correct engine speed.

(4) Production Vehicle Testing for Comparison to GEM

The agencies are is proposing to require tractor and vocational vehicle manufacturers to annually chassis test 5 production vehicles over the GEM cycles to verify that relative reductions simulated in GEM are being achieved in actual production. See 40 CFR 1037.665. We would not expect absolute correlation between GEM results and chassis testing. GEM makes many simplifying assumptions that do not compromise its usefulness for certification, but do cause it to produce emission rates different from what would be measured during a chassis dynamometer test. Given the limits of correlation possible between GEM and chassis testing, we would not expect such testing to accurately reflect whether a vehicle was compliant with the GEM standards. Therefore, we are proposing to not apply compliance liability to such testing. Rather, this testing would be for informational purposes only. However, we do expect there to be correlation in a relative sense. Vehicle to vehicle differences showing a 10 percent improvement in GEM should show a similar percent improvement with chassis dynamometer testing. Nevertheless, manufacturers would not be subject to recall or other compliance actions if chassis testing did not agree with the GEM results on a relative basis. Rather, the agencies would continue evaluate in-use compliance by verifying GEM inputs and testing in-use engines.

EPA believes this chassis test program is necessary because of our experience implementing regulations for heavy-duty engines. In the past, manufacturers have designed engines that have much lower emissions on the duty cycles than occur during actual use. By proposing this simple test program, we hope to be able to identify such issues earlier and to dissuade any attempts to design solely to the certification test. We also expect the results of this testing to help inform the need for any further changes to GEM.

As already noted in Section II.B.(1), it can be expensive to build chassis test cells for certification. However, EPA is proposing to structure this pilot-scale program to minimize the costs. First, we are proposing that this chassis testing would not need to comply with the same requirements as would apply for official certification testing. This would allow testing to be performed in developmental test cells with simple portable analyzers. Second, since the proposed program would require only 5 tests per year, manufacturers without their own chassis testing facility would be able to contract with a third party to perform the testing. Finally, EPA proposes to apply this testing to only those manufacturers with annual production in excess of 20,000 vehicles.

We request comment on this proposed testing requirement. Commenters are encouraged to suggest alternate approaches that could achieve the assurance that the projected emissions reductions would occur in actual use.

(5) Use of GEM in Establishing Proposed Numerical Standards

Just like in Phase 1, the agencies are proposing specific numerical standards against which tractors and vocational vehicles would be evaluated using GEM (We propose that trailers use a simplified equation-based approach that was derived from GEM). Although the proposed standards are performance-based standards, which do not specifically require the use of any particular technologies, the agencies established the proposed standards by evaluating specific vehicle technology packages using a prepublication version of the Phase 2 GEM. This prepublication version was an intermediate version of the GEM source code, rather than the executable file version of GEM, which is being docketed for this proposal and is available on EPA's GEM Web page. Both the GEM source code and the GEM executable file are generally functionally equivalent.

The agencies determined the proposed numerical standards essentially by evaluating certain specific technology packages representing the packages we are projecting to be feasible in the Phase 2 time frame. For each technology package, GEM was used determine a cycle-weighted g/ton-mile emission rate and a gal/1,000 ton-mile fuel consumption rate. These GEM results were then essentially averaged together, weighted by the adoption rates the agencies are projecting for each technology package and for each model year of standards. Consider as an oversimplified example of two technology packages for Class 8 low-roof sleepers cabs: one package that resulted in 60 g/ton-mile and a second that resulted in 80 g/ton-mile. If we project that the first package could be applied to 50 percent of the Class 8 low-roof sleeper cab fleet in MY 2027, and that the rest of the fleet could do no better than the second technology package, then we would set the fleet average standard at 70 g/ton-mile (0.5 · 60 + 0.5 · 80 = 70).

Formal external peer review and expert external user review was then conducted on the version of the GEM source code that was used to calculate the numerical values of the proposed standards. It was discovered via these external review processes that the GEM source code contained some minor software “bugs.” These bugs were then corrected by EPA and the Phase 2 proposed GEM executable file was derived from this corrected version of the GEM source code. Moreover, we expect to also receive technical comments during the comment period that could potentially identify additional GEM software bugs, which would lead EPA to make additional changes to GEM before the Final Rule. Nevertheless, EPA has repeated the analysis described above using the corrected version of the GEM source code that was used to create the proposed GEM executable file. The results of this analysis are available in the docket to this proposal.

Thus, even without the agencies making any changes in our projections of technology effectiveness or market adoption rates, it is likely that further revisions to GEM could result in us finalizing different numerical values for the standards. It is important to note that the agencies would not necessarily consider such GEM-based numerical changes by themselves to be changes in the stringency of the standards. Rather, we believe that stringency is more appropriately evaluated in technological terms; namely, by evaluating technology effectiveness and the market adoption rates of technologies. Nevertheless, the agencies will docket any updates and supporting information in a timely manner.

D. Proposed Engine Test Procedures and Engine Standards

For the most part, the proposed Phase 2 engine standards are a continuation of the Phase 1 program, but with more stringent standards for compression-ignition engines. Nevertheless, the agencies are proposing important changes related to the test procedures and compliance provisions. These changes are described below.

As already discussed in Section II.B. the agencies are proposing a regulatory structure in which engine technologies are evaluated using engine-specific test procedures as well using GEM, which is vehicle-based. We are proposing separate standards for each procedure. The proposed engine standards described in Section II.D.(2) and the proposed vehicle standards described in Sections III and V are based on the same engine technology, which is described in Section II.D.(2). We request comment on whether the engine and vehicle standards should be based on the same projected technology. As described below, while the agencies projected the same engine technology for engine standards and for vehicle standards, we separately projected the technology that would be appropriate for:

• Gasoline vocational engines and vehicles
• Diesel vocational engines and vehicles
• Tractor engines and vehicles

Before addressing the engine standards and engine technology in Section II.D.(2), the agencies describe the test procedures that would be used to evaluate these technologies in Section II.D.(1) below. We believe that without first understanding the test procedures, the numerical engine standards would not have the proper context.

(1) Engine Test Procedures

The Phase 1 engine standards relied on the engine test procedures specified in 40 CFR part 1065. These procedures were previously used by EPA to regulate criteria pollutants such as NO_X and PM, and few changes were needed to employ them for purposes of the Phase 1 standards. The agencies are proposing significant changes to two areas for Phase 2: (1) cycle weighting; and (2) GEM inputs. (Note that EPA is also proposing some minor changes to the basic part 1065 test procedures, as described in Section XIII).

The diesel (i.e., compression-ignition) engine test procedure relies on two separate engine test cycles. The first is the Heavy-duty Federal Test Procedure (Heavy-duty FTP) that includes transient operation typified by frequent accelerations and decelerations, similar to urban or suburban driving. The second is the Supplemental Engine Test (SET) which includes 13 steady-state test points. The SET was adopted by EPA to address highway cruise operation and other nominally steady-state operation. However, it is important to note that it was intended as a supplemental test cycle and not necessarily to replicate precisely any specific in-use operation.

The gasoline (i.e., spark-ignition) engine test procedure relies on a single engine test cycle: a gasoline version of Heavy-duty FTP. The agencies are not proposing changes to the gasoline engine test procedures.

It is worth noting that EPA sees great value in using the same test procedures for measuring GHG emissions as is used for measuring criteria pollutants. From the manufacturers' perspective, using the same procedures minimizes their test burden. However, EPA sees additional benefits. First, as already noted in Section(b), requiring engine manufacturers to comply with both NO_X and CO₂ standards using the same test procedures discourages alternate calibrations that would trade NO_X emissions against fuel consumption depending how the engine or vehicle is tested. Second, this approach leverages the work that went into developing the criteria pollutant cycles. Taken together, these factors support our decision to continue to rely on the 40 CFR part 1065 test procedures with only minor adjustments, such as those described in Section II.D.(1)(a). Nevertheless, EPA would consider more substantial changes if they were necessary to incentivize meaningful technology changes, similar to the changes being made to GEM for Phase 2 to address additional technologies.

(a) SET Cycle Weighting

The SET cycle was adopted by EPA in 2000 and modified in 2005 from a discrete-mode test to a ramped-modal cycle to broadly cover the most significant part of the speed and torque map for heavy-duty engines, defined by three non-idle speeds and three relative torques. The low speed is often called the “A speed”, the intermediate speed is often called the “B speed”, and the high speed is often called the “C speed.” As is shown in Table II-1, the SET weights these three speeds at 23 percent, 39 percent, and 23 percent.

The C speed is typically in the range of 1800 rpm for current HHD engine designs. However, it is becoming less common for engines to operate often in such a high speed in real world driving condition, and especially not during cruise vehicle speed between 55 and 65 mph. The agencies receive confidential business information from a few vehicle manufacturers that support this observation. Thus, although the current SET represents highway operation better than the FTP cycle, it is not an ideal cycle to represent future highway operation. Furthermore, given the recent trend configure drivetrains to operate engines at speeds down to a range of 1150-1200 rpm at vehicle speed of 65mph. This trend would make the typical highway engine speeds even further away from C speed.

To address this issue, the agencies are proposing new weighting factors for the Phase 2 GHG and fuel consumption standards. The proposed new SET mode weightings move most of C weighting to “A” speed, as shown in Table II-2. It would also slightly reduce the weighting factor on the idle speed.

The agencies request comment on the proposed reweighting.

(b) Measuring GEM Engine Inputs

Although GEM does not apply directly to engine certification, implementing the Phase 2 GEM would impact engine manufacturers. To recognize the contribution of the engine in GEM the engine fuel map, full load torque curve and motoring torque curve have to be input into GEM. To insure the robustness of each of those inputs, a standard procedure has to be followed. Both the full load and motoring torque curve procedures are already defined in 40 CFR part 1065 for engine testing. However, the fuel mapping procedure being proposed would be new. The agencies have compared the proposed procedure against other accepted engine mapping procedures with a number of engines at various labs including EPA's NVFEL, Southwest Research Institute sponsored by the agencies, and Environment Canada's laboratory. The proposed procedure was selected because it proved to be accurate and repeatable, while limiting the test burden to create the fuel map. This proposed provision is consistent with NAS's recommendation (3.8).

One important consideration is the need to correct measured fuel consumption rates for the carbon and energy content of the test fuel. For engine tests, we propose to continue the Phase 1 approach, which is specified in 40 CFR 1036.530. We propose a similar approach to GEM fuel maps in Phase 2.

The agencies are proposing that engine manufacturers must certify fuel maps as part of their certification to the engine standards, and that they be required to provide those maps to vehicle manufacturers beginning with MY 2020. The one exception to this requirement would be for cases in which the engine manufacturer certifies based on powertrain testing, as described in Section (c). In such cases, engine manufacturers would not be required to also certify the otherwise applicable fuel maps. We are not proposing that vehicle manufacturers be allowed to develop their own fuel maps for engines they do not manufacture.

The current engine test procedures also require the development of regeneration emission rate and frequency factors to account for the emission changes for criteria pollutants during a regeneration event. In Phase 1, the agencies adopted provisions to exclude CO₂ emissions and fuel consumption due to regeneration. However, for Phase 2, we propose to include CO₂ emissions and fuel consumption due to regeneration over the FTP and RMC cycles as determined using the infrequently regenerating aftertreatment devices (IRAF) provisions in 40 CFR 1065.680. We do not believe this would significantly impact the stringency of the proposed standards because manufacturers have already made great progress in reducing the impact of regeneration emissions since 2007. Nevertheless, we believe it would be prudent to begin accounting for regeneration emissions to discourage manufacturers from adopting compliance strategies that would reverse this trend. We request comment on this requirement.

We are not proposing, however, to include fuel consumption due to regeneration in the creation of the fuel map used in GEM for vehicle compliance. We believe that the proposed requirements for the duty-cycle standards, along with market forces that already exist, would create sufficient incentives to reduce fuel consumption during regeneration over the entire fuel map.

(c) Engine Test Procedures for Replicating Powertrain Tests

As described in Section II.B.(2)(b), the agencies are proposing a powertrain test option to quantify the benefits of CO₂ reducing powertrain technologies. These powertrain test results would then be used to override the engine and transmission simulation portion of GEM. The agencies are proposing to require that any manufacturer choosing to use this option also measure engine speed and engine torque during the powertrain test so that the engine's performance during the powertrain test could be replicated in a non-powertrain engine test cell. Subsequent engine testing would be conducted using the normal part 1065 engine test procedures, and g/hp-hr CO₂ results would be compared to the levels the manufacturer reported during certification. Such testing would apply for both confirmatory and selective enforcement audit testing.

Under the proposed regulations, engine manufacturers certifying powertrain performance (instead of or in addition to the multi-point fuel maps) would be held responsible for powertrain test results. If the engine manufacturer does not certify powertrain performance and instead certifies only the multi-point fuel maps, it would held responsible for fuel map performance rather than the powertrain test results. Engine manufacturers certifying both would be responsible for both.

(d) CO₂ From Urea SCR Systems

For diesel engines utilizing urea SCR emission control systems for NO_X reduction, the agencies are proposing to allow correction of the final engine fuel map and powertrain duty cycle CO₂ emission results to account for the contribution of CO₂ from the urea injected into the exhaust. This urea could contribute up to 1 percent of the total CO₂ emissions from the engine. Since current urea production methods use gaseous CO₂ captured from the atmosphere (along with NH₃), CO₂ from urea consumption does not represent a net carbon emission. This adjustment is necessary so that fuel maps developed from CO₂ measurements would be consistent with fuel maps from direct measurements of fuel flow rates. Thus, we are only proposing to allow this correction for emission tests where CO₂ emissions are determined from direct measurement of CO₂ and not from fuel flow measurement, which would not be impacted by CO₂ from urea.

We note that this correction would be voluntary for manufacturers, and expect that some manufacturers may determine that the correction is too small to be of concern. The agencies will use this correction with any engines for which the engine manufacturer applied the correction for its fuel maps during certification.

We are not proposing this correction for engine test results with respect to the engine CO₂ standards. Both the Phase 1 standards and the proposed standards for CO₂ from diesel engines are based on test results that included CO₂ from urea. In other words, these standards are consistent with using a test procedure that does not correct for CO₂ from urea. We request comment on whether it would be appropriate to allow this correction for the Phase 2 engine CO₂ standards, but also adjust the standards to reflect the correction. At this time, we believe that reducing the numerical value of the CO₂ standards by 1 g/hp-hr would make the standards consistent with measurement that are corrected for CO₂ from urea. However, we also request comment on the appropriateness of applying a 2 g/hp-hr adjustment should we determine it would better reflect the urea contribution for current engines.

(e) Potential Alternative Certification Approach

In Section II.B.(2)(b), we explained that although GEM does not apply directly to engine certification, implementing the Phase 2 GEM would impact engine manufacturers by requiring that they measure engine fuel maps. In Section II.B.(2), the agencies noted that some stakeholders may have concerns about the proposed regulatory structure that would require engine manufacturers to provide detailed fuel consumption maps for GEM. Given such concerns, the agencies are requesting comment on an approach that could mitigate the concerns by allowing both vehicle and engine to use the same driving cycles for certification. The detailed description of this alternative certification approach can be seen in the draft RIA. We are requesting comment on allowing this approach as an option, or as a replacement to the proposed approach. Commenters supporting this approach should address possible impacts on the stringency of the proposed standards.

This approach utilizes GEM with a default engine fuel map pre-defined by the agency to run a number of pre-defined vehicle configurations over three certification cycles. Engine torque and speed profile would be obtained from the simulations, and would be used to specify engine dynamometer commands for engine testing. The results of this testing would be a CO₂ map as function of the integrated work and the ratio of averaged engine speed (N) to averaged vehicle speed (V) defined as (N/V) over each certification cycle. In vehicle certification, vehicle manufacturers would run GEM with the to-be-certified vehicle configuration and the agency default engine fuel map separately for each GEM cycle. Applying the total work and N/V resulted from the GEM simulations to the CO₂ map obtained from engine tests would determine CO₂ consumption for vehicle certification. For engine certification, we are considering allowing the engine to be certified based on one of the points conducted during engine alternative CO₂ map tests mentioned above rather than based on the FTP and SET cycle testing.

(2) Proposed Engine Standards for CO₂ and Fuel Consumption

We are proposing to maintain the existing Phase 1 regulatory structure for engine standards, which had separate standards for spark-ignition engines (such as gasoline engines) and compression-ignition engines (such as diesel engines), but we are proposing changes to how these standards would apply to natural gas fueled engines. As discussed in Section II.B.(2)(b), the agencies see important advantages to maintaining separate engines standards, such as improved compliance assurance and better control during transient engine operation.

Phase 1 also applied different test cycles depending on whether the engine is used for tractors, vocational vehicles, or both, and we propose to continue this as well. We assume that CO₂ at the end of Phase 1 is the baseline of Phase 2. Table II-3 shows the Phase 1 CO₂ standards for diesel engines, which serve as the baseline for our analysis of the proposed Phase 2 standards.

The gasoline engine baseline CO₂ is 627 (g/bhp-hr). The agencies used the baseline engine to assess the potential of the technologies described in the following sections. As described below, the agencies are proposing new compression-ignition engine standards for Phase 2 that would require additional reductions in CO₂ emissions and fuel consumption beyond the baseline. However, as also described below in Section II.B.(2)(b), we are not proposing more stringent CO₂ or fuel consumption standards for new heavy-duty gasoline engines. Note, however, that we are projecting some small improvement in gasoline engine performance that would be recognized over the vehicle cycles.

For heavy-heavy-duty diesel engines to be installed in Class 7 and 8 combination tractors, the agencies are proposing the standards shown in Table II-4. The proposed MY 2027 standards for engines installed in tractors would require engine manufacturers to achieve, on average, a 4.2 percent reduction in fuel consumption and CO₂ emissions beyond the Phase 1 standard. We propose to adopt interim engine standards in MY 2021 and MY 2024 that would require diesel engine manufacturers to achieve, on average, 1.5 percent and 3.7 percent reductions in fuel consumption and CO₂ emissions, respectively.

Forcompression-ignition engines fitted into vocational vehicles, the agencies are proposing MY 2027 standards that would require engine manufacturers to achieve, on average, a 4.0 percent reduction in fuel consumption and CO₂ emissions beyond the Phase 1 standard. We propose to adopt interim engine standards in MY 2021 and MY 2024 that would require diesel engine manufacturers to achieve, on average, 2.0 percent and 3.5 percent reductions in fuel consumption and CO₂ emissions, respectively.

Table II-5 presents the CO₂ and fuel consumption standards the agencies propose for compression-ignition engines to be installed in vocational vehicles. The first set of standards would take effect with MY 2021, and the second set would take effect with MY 2024.

Although both EPA and NHTSA are proposing to begin the Phase 2 engine standards, EPA considered proposing Phase 2 standards that would begin before MY 2021—that is with less lead time. NHTSA is required by statute to provide four models years of lead time, while EPA is required only to provide lead time “necessary to permit the development and application of the requisite technology” (CAA Section 202(a)(2)). However, as noted in Section I, lead time cannot be separated for other relevant factors such as costs, reliability, and stringency. Proposing these standards before 2021 could increase the risk of reliability issues in the early years. Given the limited number of engine models that each manufacturer produces, managing that many new standards would be problematic (i.e., new Phase 1 standards in 2017, new Phase 2 EPA standards in 2018, 2019, or 2020, new standards in 2021, 2024, and again in 2027). Considering these challenges, EPA determined that earlier model year standards would not be appropriate, especially given the value of harmonizing the NHTSA and EPA standards.

(a) Feasibility of the Diesel (Compression-Ignition) Engine Standards

In this section, the agencies discuss our assessment of the feasibility of the proposed engine standards and the extent to which they would conform to our respective statutory authority and responsibilities. More details on the technologies discussed here can be found in the Draft RIA Chapter 2.3. The feasibility of these technologies is further discussed in draft RIA Chapter 2.7 for tractor and vocational vehicle engines. Note also, that the agencies are considering adopting engine standards with less lead time, and may do so in the Final Rules. These standards are discussed in Section (e).

Based on the technology analysis described below, the agencies can project a technology path exists to allow manufacturers to meet the proposed final Phase 2 standards by 2027, as well as meeting the intermediate 2021 and 2024 standards. The agencies also project that manufacturers would be able to meet these standards at a reasonable cost and without adverse impacts on in-use reliability. Note that the agencies are still evaluating whether these same standards could be met sooner, as was analyzed in Alternative 4.

In general, engine performance for CO₂ emissions and fuel consumption can be improved by improving combustion and reducing energy losses. More specifically, the agencies have identified the following key areas where fuel efficiency can be improved:

• Combustion optimization
• Turbocharging system
• Engine friction and other parasitic losses
• Exhaust aftertreatment
• Engine breathing system
• Engine downsizing
• Waste heat recovery
• Transient control for vocational engines only

The agencies are proposing to phase-in the standards from 2021 through 2027 so that manufacturers could gradually introduce these technologies. For most of these improvements, the agencies project manufacturers could begin applying them to about 45-50 percent of their heavy-duty engines by 2021, 90-95 percent by 2024, and ultimately apply them to 100 percent of their heavy-duty engines by 2027. However, for some of these improvements (such as waste heat recovery and engine downsizing) we project lower application rates in the Phase 2 time frame. This phase-in structure is consistent with the normal manner in which manufacturers introduce new technology to manage limited R&D budgets and well as to allow them to work with fleets to fully evaluate in-use reliability before a technology is applied fleet-wide. The agencies believe the proposed phase-in schedule would allow manufacturers to complete these normal processes. As described in Section (e), the agencies are also requesting comment on whether manufacturers could complete these development steps more quickly so that they could meet these standards sooner.

Based on our technology assessment described below, the proposed engine standards appear to be consistent with the agencies' respective statutory authorities. All of the technologies with high penetration rates above 50 percent have already been demonstrated to some extent in the field or in research laboratories, although some development work remains to be completed. We note that our feasibility analysis for these engine standards is not based on projecting 100 percent application for any technology until 2027. We believe that projecting less than 100 percent application is appropriate and gives us additional confidence that the interim standards would be feasible.

Because this analysis considers reductions from engines meeting the Phase 1 standards, it assumes manufacturers would continue to include the same compliance margins as Phase 1. In other words, a manufacturer currently declaring FCLs 10 g/hp-hr above its measured emission rates (in order to account for production and test-to-test variability) would continue to do the same in Phase 2. We request comment on this assumption.

The agencies have carefully considered the costs of applying these technologies, which are summarized in Section II.D.(2) (d). These costs appear to be reasonable on both a per engine basis, and when considering payback periods. The engine technologies are discussed in more detail below. Readers are encouraged to see the draft RIA Chapter 2 for additional details (and underlying references) about our feasibility analysis.

(i) Combustion Optimization

Although manufacturers are making significant improvements in combustion to meet the Phase 1 engine standards, the agencies project that even more improvement would be possible after 2018. For example, improvements to fuel injection systems would allow more flexible fuel injection capability with higher injection pressure, which can provide more opportunities to improve engine fuel efficiency. Further optimization of piston bowls and injector tips would also improve engine performance and fuel efficiency. We project that a reduction of up to 1.0 percent is feasible in the 2024 model year through the use of these technologies, although it would likely apply to only 95 percent of engines until 2027.

Another important area of potential improvement is advanced engine control incorporating model based calibration to reduce losses of control during transient operation. Improvements in computing power and speed would make it possible to use much more sophisticated algorithms that are more predictive than today's controls. Because such controls are only beneficial during transient operation, they would reduce emission over the FTP cycle, and during in-use operation, they would not reduce emissions over the SET cycle. Thus the agencies are projecting model based control reductions only for vocational engines. Although this control concept is not currently available, we project model based controls achieving a 2 percent improvement in transient emissions could be in production for some engine models by 2021. By 2027, we project over one-third of all vocational diesel engines would incorporate model-based controls.

(ii) Turbocharging System

Many advanced turbocharger technologies can be potentially added into production in the time frame between 2021 and 2027, and some of them are already in production, such as mechanical or electric turbo-compound, more efficient variable geometry turbine, and Detroit Diesel's patented asymmetric turbocharger. A turbo compound system extracts energy from the exhaust to provide additional power. Mechanical turbo-compounding includes a power turbine located downstream of the turbine which in turn is connected to the crankshaft to supply additional power. On-highway demonstrations of this technology began in the early 1980s. It was used first in heavy duty production by Detroit Diesel for their DD15 and DD16 engines and reportedly provided a 3 to 5 percent fuel consumption reduction. Results are duty cycle dependent, and require significant time at high load to see a fuel efficiency improvement. Light load factor vehicles can expect little or no benefit. Volvo reports two to four percent fuel consumption improvement in line haul applications, which could be in production even by 2020.

(iii) Engine Friction and Parasitic Losses

The friction associated with each moving part in an engine results in a small loss of engine power. For example, frictional losses occur at bearings, in the valvetrain, and at the piston-cylinder interface. Taken together such losses represent a large fraction of all energy lost in an engine. For Phase 1, the agencies projected a 1-2 percent reduction in fuel consumption due to friction reduction. However, new information leads us to project that an additional 1.4 percent reduction would be possible for some engines by 2021 and all engines by 2027. These reductions would be possible due to improvements in bearing materials, lubricants, and new accessory designs such as variable-speed pumps.

(iv) Aftertreatment Optimization

All diesel engines manufacturers are already using diesel particulate filter (DPF) to reduce particulate matter (PM) and selective catalytic reduction (SCR) to reduce NO_X emissions. The agencies see two areas in which improved aftertreatment systems can also result in lower fuel consumption. First, increased SCR efficiency could allow re-optimization of combustion for better fuel consumption because the SCR would be capable of reducing higher engine-out NO_X emissions. Second, improved designs could reduce backpressure on the engine to lower pumping losses. The agencies project the combined impact of such improvements could be 0.6 percent or more.

(v) Engine Breathing System

Various high efficiency air handling (for both intake air and exhaust) processes could be produced in the 2020 and 2024 time frame. To maximize the efficiency of such processes, induction systems may be improved by manufacturing more efficiently designed flow paths (including those associated with air cleaners, chambers, conduit, mass air flow sensors and intake manifolds) and by designing such systems for improved thermal control. Improved turbocharging and air handling systems would likely include higher efficiency EGR systems and intercoolers that reduce frictional pressure loss while maximizing the ability to thermally control induction air and EGR. EGR systems that often rely upon an adverse pressure gradient (exhaust manifold pressures greater than intake manifold pressures) must be reconsidered and their adverse pressure gradients minimized. Other components that offer opportunities for improved flow efficiency include cylinder heads, ports and exhaust manifolds to further reduce pumping losses by about 1 percent.

(vi) Engine Downsizing

Proper sizing of an engine is an important component of optimizing a vehicle for best fuel consumption. This Phase 2 rule would improve overall vehicle efficiency, which would result in a drop in the vehicle power demand for most operation. This drop moves the vehicle operating points down to a lower load zone, which can move the engine away from the sweet spot. Engine downsizing combined with engine downspeeding can allow the engine to move back to higher loads and lower speed zone, thus achieving slightly better fuel economy in the real world. However, because of the way engines are tested, little of the benefit of engine downsizing would be detected during engine testing (if power density remains the same) because the engine test cycles are normalized based on the full torque curve. Thus the current engine test is not the best way to measure the true effectiveness of engine downsizing. Nevertheless, we project that some small benefit would be measured over the engine test cycles—perhaps up to a one-quarter percent improvement in fuel consumption. Note that a bigger benefit would be observed during GEM simulation, better reflecting real world improvements. This is factored into the vehicle standards. Thus, the agencies see no reason to fundamentally revise the engine test procedure at this time.

(vii) Waste Heat Recovery

More than 40 percent of all energy loss in an engine is lost as heat to the exhaust and engine coolant. For many years, manufacturers have been using turbochargers to convert some of the waste heat in the exhaust into usable mechanical power than is used to compress the intake air. Manufacturers have also been working to use a Rankine cycle-based system to extract additional heat energy from the engine. Such systems are often called waste heat recovery (WHR) systems. The possible sources of energy include the exhaust, recirculated exhaust gases, compressed charge air, and engine coolant. The basic approach with WHR is to use waste heat from one or more of these sources to evaporate a working fluid, which is passed through a turbine or equivalent expander to create mechanical or electrical power, then re-condensed.

Prior to the Phase 1 Final Rule, the NAS estimated the potential for WHR to reduce fuel consumption by up to 10 percent. However, the agencies do not believe such levels would be achievable within the Phase 2 time frame. There currently are no commercially available WHR systems for diesel engines, although research prototype systems are being tested by some manufacturers. The agencies believe it is likely a commercially-viable WHR capable of reducing fuel consumption by over three percent would be available in the 2021 to 2024 time frame. Cost and complexity may remain high enough to limit the use of such systems in this time frame. Moreover, packaging constraints and transient response challenges would limit the application of WHR systems to line-haul tractors. Refer to RIA Chapter 2 for a detailed description of these systems and their applicability. The agencies project that WHR recovery could be used on 1 percent of all tractor engines by 2021, on 5 percent by 2024, and 15 percent by 2027.

The net cost and effectiveness of future WHR systems would depend on the sources of waste heat. Systems that extract heat from EGR gases may provide the side benefit of reducing the size of EGR coolers or eliminating them altogether. To the extent that WHR systems use exhaust heat, they would increase the overall cooling system heat rejection requirement and likely require larger radiators. This could have negative impacts on cooling fan power needs and vehicle aerodynamics. Limited engine compartment space under hood could leave insufficient room for additional radiator size increasing. On the other hand, WHR systems that extract heat from the engine coolant, could actually improve overall cooling.

(viii) Technology Packages for Diesel Engines Installed in Tractors

Typical technology packaged for diesel engines installed in tractors basically includes most technologies mentioned above, which includes combustion optimization, turbocharging system, engine friction and other parasitic losses, exhaust aftertreatment, engine breathing system, and engine downsizing. Depending on the technology maturity of WHR and market demands, a small number of tractors could install waste heat recovery device with Rankine cycle technology. During the stringency development, the agencies received strong support from various stakeholders, where they graciously provided many confidential business information (CBI) including both technology reduction potentials and estimated market penetrations. Combining those CBI data with the agencies' engineering judgment, Table II-4 lists those potential technologies together with the agencies' estimated market penetration for tractor engine. Those reduction values shown as “SET reduction” are relative to Phase 1 engine, which is shown in Table II-6. It should be pointed out that the stringency in Table II-6 are developed based on the proposed SET reweighting factors l shown in Table II-2. The agencies welcome comment on the market penetration rates listed below.

(ix) Technology Packages for Diesel Engines Installed in Vocational Vehicles

For compression-ignition engines fitted into vocational vehicles, the agencies are proposing MY 2021 standards that would require engine manufacturers to achieve, on average, a 2.0 percent reduction in fuel consumption and CO₂ emissions beyond the baseline that is the Phase 1 standard. Beginning in MY 2024, the agencies are proposing engine standards that would require diesel engine manufacturers to achieve, on average, a 3.5 percent reduction in fuel consumption and CO₂ emissions beyond the Phase 1 baseline standards for all diesel engines including LHD, MHD, and HHD. The agencies are proposing these standards based on the performance of reduced parasitics and friction, improved aftertreatment, combustion optimization, superchargers with VGT and bypass, model-based controls, improved EGR cooling/transport, and variable valve timing (only in LHD and MHD engines). The percent reduction for the MY2021, MY2024, and MY2027 standards is based on the combination of technology effectiveness and market adoption rate projected.

Most of the potential engine related technologies discussed previously can be applied here. However, neither the waste heat technologies with the Rankine cycle concept nor turbo-compound would be applied into vocational sector due to the inefficient use of waste heat energy with duty cycles and applications with more transient operation than highway operation. Given the projected cost and complexity of such systems, we believe that for the Phase 2 time frame manufacturers will focus their development work on tractor applications (which would have better payback for operators) rather than vocational applications. In addition, the benefits due to engine downsizing, which can be seen in tractor engines, may not be clearly seen in vocational sector, again because this control technology produces few benefits in transient operation.

One of the most effective technologies for vocational engines is the optimization of transient control. It would be expected that more advanced transient control including different levels of model based control and neural network control package could provide substantial benefits in vocational engines due to the extensive transient operation of these vehicles. For this technology, the use of the FTP cycle would drive engine manufacturers to invest more in transient control to improve engine efficiency. Other effective technologies would be parasitic/friction reduction, as well as improvements to combustion, air handling systems, turbochargers, and aftertreatment systems. Table II-7 below lists those potential technologies together with the agencies' projected market penetration for vocational engines. Again, similar to tractor engine, the technology reduction and market penetration are estimated by combining the CBI data together with the agencies' engineering judgment. Those reduction values shown as “FTP reduction” are relative to a Phase 2 baseline engine, which is shown in Table II-3. The weighted reductions combine the emission reduction values weighted by the market penetration of each technology).

(x) Summary of the Agencies' Analysis of the Feasibility of the Proposed Diesel Engine Standards

The proposed HD Phase 2 standards are based on adoption rates for technologies that the agencies regard, subject to consideration of public comment, as the maximum feasible for purposes of EISA Section 32902(k) and appropriate under CAA Section 202(a) for the reasons given above. The agencies believe these technologies can be adopted at the estimated rates for these standards within the lead time provided, as discussed in draft RIA Chapter 2. The 2021 and 2024 MY standards are phase-in standards on the path to the 2027 MY standards and were developed using less aggressive application rates and therefore have lower technology package costs than the 2027 MY standards.

As described in Section II.D.(2)(d) below, the cost of the proposed standards is estimated to range from $270 to $1,698 per engine. This is slightly higher than the costs for Phase 1, which were estimated to be $234 to $1,091 per engine. Although the agencies did not separately determine fuel savings or emission reductions due to the engine standards apart from the vehicle program, it is expected that the fuel savings would be significantly larger than these costs, and the emission reductions would be roughly proportional to the technology costs when compared to the corresponding vehicle program reductions and costs. Thus, we regard these standards as cost-effective. This is true even without considering payback period. The proposed phase-in 2021 and 2024 MY standards are less stringent and less costly than the proposed 2027 MY standards. Given that the agencies believe the proposed standards are technologically feasible, are highly cost effective, and highly cost effective when accounting for the fuel savings, and have no apparent adverse potential impacts (e.g., there are no projected negative impacts on safety or vehicle utility), the proposed standards appear to represent a reasonable choice under Section 202(a) of the CAA and the maximum feasible under NHTSA's EISA authority at 49 U.S.C. 32902(k)(2).

(b) Basis for Continuing the Phase 1 Spark-Ignited Engine Standard

Today most SI-powered vocational vehicles are sold as incomplete vehicles by a vertically integrated chassis manufacturer, where the incomplete chassis shares most of the same technology as equivalent complete pickups or vans, including the powertrain. The number of such incomplete SI-powered vehicles is small compared to the number of completes. Another, even less common way that SI-powered vocational vehicles are built is by a non-integrated chassis manufacturer purchasing an engine from a company that also produces complete and/or incomplete HD pickup trucks and vans. The resulting market structure leads manufacturers of heavy-duty SI engines to have little market incentive to develop separate technology for vocational engines that are engine-certified. Moreover, the agencies have not identified a single SI engine technology that we believe belongs on engine-certified vocational engines that we do not also project to be used on complete heavy-duty pickups and vans.

In light of this market structure, when the agencies considered the feasibility of more stringent Phase 2 standards for SI vocational engines, we identified the following key questions:

1. Will there be technologies available that could reduce in-use emissions from vocational SI engines?

2. Would these technologies be applied to complete vehicles and carried-over to engine certified engines without a new standard?

3. Would these technologies be applied to meet the vehicle-based standards described in Section V?

4. What are the drawbacks associated with setting a technology-forcing Phase 2 standard for SI engines?

With respect to the first and second questions, as noted in Chapter 2.6 of the draft RIA, the agencies have identified improved lubricants, friction reduction, and cylinder deactivation as technologies that could potentially reduce in-use emissions from vocational engines; and the agencies have further determined that to the extent these technologies would be viable for complete vehicles, they would also be applied to engine-certified engines. Nevertheless, significant uncertainty remains about how much benefit would be provided by these technologies. It is possible that the combined impact of these technologies would be one percent or less. With respect to the third question, we believe that to the extent these technologies are viable and effective, they would be applied to meet the vehicle-based standards for vocational vehicles.

At this time, it appears the fourth question regarding drawbacks is the most important. The agencies could propose a technology forcing standard for vocational SI engines based on a projection of each of these technologies being effective for these engines. However, as already noted in Section I, the agencies see value in setting the standards at levels that would not require every projected technology to work as projected. Effectively requiring technologies to match our current projections would create the risk that the standards would not be feasible if even a single one of technologies failed to match our projections. This risk is amplified for SI engines because of the very limited product offerings, which provide far fewer opportunities for averaging than exist for CI engines. Given the relatively small improvement projected, and the likelihood that most or all of this improvement would result anyway from the complete pickup and van standards and the vocational vehicle-based standards, we do not believe such risk is justified or needed. The approach the agencies are proposing accomplishes the same objective without the attendant potential risk. With this approach, the Phase 1 SI engine standard for these engines would remain in place, and engine improvements would be reflected in the stringency of the vehicle standard for the vehicle in which the engine would be installed. Nevertheless, we request comment on the merits of adopting a more stringent SI engine standard in the 2024 to 2027 time frame, including comment on technologies, adoption rates, and effectiveness over the engine cycle that could support adoption of a more stringent standard. Please see Section V.C of this preamble for a description of the SI engine technologies that have been considered in developing the proposed vocational vehicle standards. Please see Section VI.C of this preamble for a description of the SI engine technologies that have been considered in developing the proposed HD pickup truck and van standards.

(c) Engine Improvements Projected for Vehicles over the GEM Duty Cycles

Because we are proposing that tractor and vocational vehicle manufacturers represent their vehicles' actual engines in GEM for vehicle certification, the agencies aligned our engine technology effectiveness assessments for both the separate engine standards and the tractor and vocational vehicle standards for each of the regulatory alternatives considered. This was an important step because we are proposing to recognize the same engine technologies in both the separate engine standards and the vehicle standards, which each have different test procedures for demonstrating compliance. As explained earlier in Section II. D. (1), compliance with the tractor separate engine standards is determined from a composite of the Supplemental Engine Test (SET) procedure's 13 steady-state operating points. Compliance with the vocational vehicle separate engine standards is determined over the Federal Test Procedure's (FTP) transient engine duty cycle. In contrast, compliance with the vehicle standards is determined using GEM, which calculates composite results over a combination of 55 mph and 65 mph steady-state vehicle cycles and the ARB Transient vehicle cycle. Note that we are also proposing a new workday idle cycle for vocational vehicles. Each of these duty cycles emphasizes different engine operating points; therefore, they can each recognize certain technologies differently.

Our first step in aligning our engine technology assessment at both the engine and vehicle levels was to start with an analysis of how we project each technology to impact performance at each of the 13 individual test points of the SET steady-state engine duty cycle. For example, engine friction reduction technology would be expected to have the greatest impact at the highest engine speeds, where frictional energy losses are the greatest. As another example, turbocharger technology is generally optimized for best efficiency at steady-state cruise vehicle speed. For an engine this is near its lower peak-torque speed and at a moderately high load that still offers sufficient torque reserve to climb modest road grades without frequent transmission gear shifting. The agencies also considered the combination of certain technologies causing synergies and dis-synergies with respect to engine efficiency at each of these test points. See RIA Chapter 2 for further details.

Next we estimated unique brake-specific fuel consumption values for each of the 13 SET test points for two hypothetical MY2018 tractor engines that would be compliant with the Phase 1 standards. These were a 15 liter displacement 455 horsepower engine and an 11 liter 350 horsepower engine. We then added technologies to these engines that we determined were feasible for MY2021, MY2024, and MY 2027, and we determined unique improvements at each of the 13 SET points. We then calculated composite SET values for these hypothetical engines and determined the SET improvements that we could use to propose more stringent separate tractor engine standards for MY2021, MY2024, and MY 2027.

To align our engine technology analysis for vehicles to the SET engine analysis described above, we then fit a surface equation through each engine's SET points versus engine speed and load to approximate their analogous fuel maps that would represent these same engines in GEM. Because the 13 SET test points do not fully cover an engine's wide range of possible operation, we also determined improvements for an additional 6 points of engine operation to improve the creation of GEM fuel maps for these engines. Then for each of these 8 tractor engines (two each for MY2018, MY2021, MY2024, and MY2027) we ran GEM simulations to represent low-, mid-, and high-roof sleeper cabs and low-, mid-, and high-roof day cabs. Class 8 tractors were assumed for the 455 horsepower engine and Class 7 tractors (day cabs only) were assumed for the 350 horsepower engine. Each GEM simulation calculated results for the 55 mph, 65 mph, and ARB Transient cycles, as well as the composite GEM value associated with each of the tractor types. After factoring in our Alternative 3 projected market penetrations of the engine technologies, we then compared the percent improvements that the same sets of engine technology caused over the separate engines' SET composites and the various vehicles' GEM composites. Compared to their respective MY2018 baseline engines, the two engines of different horsepower showed the same percent improvements. All of the tractor cab types showed nearly the same relative improvements too. For example, for the MY2021 Alternative 3 engine technology package in a high roof sleeper tractor, the SET engine composites showed a 1.5 percent improvement and the GEM composites a 1.6 percent improvement. For the MY2024 Alternative 3 engine technology packages, the SET engine composites showed a 3.7 percent improvement and the GEM composites a 3.7 percent improvement. For MY2027 Alternative 3 engine technology packages, the SET engine composites showed a 4.2 percent improvement and the GEM composites a 4.2 percent improvement. We therefore concluded that tractor engine technologies will improve engines and tractors proportionally, even though the separate engine and vehicle certification test procedures have different duty cycles.

We then repeated this same process for the FTP engine transient cycle and the GEM vocational vehicle types. For the vocational engine analysis we investigated four engines: 15 liter displacement engine at 455 horsepower rating, 11 liter displacement engine at 345 horsepower rating, a 7 liter displacement engine at a 200 horsepower rating and a 270 horsepower rating. These engines were then used in GEM over the light-heavy, medium-heavy, and heavy-heavy vocational vehicle configurations. Because the technologies were assumed to impact each point of the FTP in the same way, the results for all engines and vehicles were 2.0 percent improvement in MY2021, 3.5 percent improvement in MY2024, and 4.0 percent improvement in MY2027. Therefore, we arrived at the same conclusion that vocational vehicle engine technologies are recognized at the same percent improvement over the FTP as the GEM cycles. We request comment on our approach to arrive at this conclusion.

(d) Engine Technology Package Costs for Tractor and Vocational Engines (and Vehicles)

As described in Chapters 2 and 7 of the draft RIA, the agencies estimated costs for each of the engines technologies discussed here. All costs are presented relative to engines projected to comply with the model year 2017 standards—i.e., relative to our baseline engines. Note that we are not presenting any costs for gasoline engines (SI engines) because we are not proposing to change the standards.

Our engine cost estimates include a separate analysis of the incremental part costs, research and development activities, and additional equipment. Our general approach used elsewhere in this action (for HD pickup trucks, gasoline engines, Class 7 and 8 tractors, and Class 2b-8 vocational vehicles) estimates a direct manufacturing cost for a part and marks it up based on a factor to account for indirect costs. See also 75 FR 25376. We believe that approach is appropriate when compliance with proposed standards is achieved generally by installing new parts and systems purchased from a supplier. In such a case, the supplier is conducting the bulk of the research and development on the new parts and systems and including those costs in the purchase price paid by the original equipment manufacturer. The indirect costs incurred by the original equipment manufacturer need not include much cost to cover research and development since the bulk of that effort is already done. For the MHD and HHD diesel engine segment, however, the agencies believe that OEMs will incur costs not associated with the purchase of parts or systems from suppliers or even the production of the parts and systems, but rather the development of the new technology by the original equipment manufacturer itself. Therefore, the agencies have directly estimated additional indirect costs to account for these development costs. The agencies used the same approach in the Phase 1 HD rule. EPA commonly uses this approach in cases where significant investments in research and development can lead to an emission control approach that requires no new hardware. For example, combustion optimization may significantly reduce emissions and cost a manufacturer millions of dollars to develop but would lead to an engine that is no more expensive to produce. Using a bill of materials approach would suggest that the cost of the emissions control was zero reflecting no new hardware and ignoring the millions of dollars spent to develop the improved combustion system. Details of the cost analysis are included in the draft RIA Chapter 2. To reiterate, we have used this different approach because the MHD and HHD diesel engines are expected to comply in part via technology changes that are not reflected in new hardware but rather reflect knowledge gained through laboratory and real world testing that allows for improvements in control system calibrations—changes that are more difficult to reflect through direct costs with indirect cost multipliers. Note that these engines are also expected to incur new hardware costs as shown in Table II-8 through Table II-11. EPA also developed the incremental piece cost for the components to meet each of the 2021 and 2024 standards. The costs shown in Table II-12 include a low complexity ICM of 1.15 and assume the flat-portion of the learning curve is applicable to each technology.

(i) Tractor Engine Package Costs

(ii) Vocational Diesel Engine Package Costs

(e) Feasibility of Phasing In the CO₂ and Fuel Consumption Standards Sooner

The agencies are requesting comment on accelerated standards for diesel engines that would achieve the same reductions as the proposed standards, but with less lead time. Table II-14 and Table II-15 below show a technology path that the agencies project could be used to achieve the reductions that would be required within the lead time allowed by the alternative standards. As discussed in Sections I and X, the agencies are proposing to fully phase in these standards through 2027. The agencies believe that standards that fully phase in through 2024 have the potential to be the maximum feasible and appropriate option. However, based on the evidence currently before the agencies, we have outstanding questions (for which we are seeking comment) regarding relative risks and benefits of that option in the timeframe envisioned. Commenters are encouraged to address how technologies could develop if a shorter lead time is selected. In particular, we request comment on the likelihood that WHR systems would be available for tractor engines in this time frame, and that WHR systems would achieve the projected level of reduction and the necessary reliability. We also request comment on whether it would be possible to apply the model based controls described in Section II.D.(2) (a)(i) to this many vocational engines in this time frame.

The projected HDD engine package costs for both tractors and vocational engines in MYs 2021 and 2024 under Alternative 4 are shown in Table II-16. Note that, while the technology application rates in MY2024 under Alternative 4 are essentially identical to those for MY2027 under the proposal, the costs are about 5 to 11 percent higher under Alternative 4 due to learning effects and markup changes that are estimated to have occurred by MY2027 under Alternative 3. Note also that the agencies did not include any additional costs for accelerating technology development or to address potential in-use durability issues. We request comment on whether such costs would occur if we finalized this alternative. We also request comment on what steps could be taken to mitigate such costs.

The agencies' analysis shows that, in the absence of additional costs for accelerating technology development or to address potential in-use durability issues, the costs associated with Alternative 4 would be very similar to those we project for the proposed standards. Alternative 4 would also have similar payback times and cost-effectiveness. In other words, Alternative 4 would achieve some additional reductions for model years 2021 through 2026, with roughly proportional additional costs unless there were additional costs for accelerating development or for in-use durability issues. (Note that reductions and costs for MY 2027 and later would be equivalent for Alternative 4 and the proposed standards). In order to help make this assessment, we request comment on the following issues: whether manufacturers could meet these standards with three years less lead time, what additional expenses would be incurred to meet these standards with less lead time, and how reliable would the engines be if the manufacturers had to bring them to market three years earlier.

(3) Proposed EPA Engine Standards for N₂ O

EPA is proposing to adopt the MY 2021 N₂ O engine standards that were originally proposed for Phase 1. The proposed level for Phase 2 would be 0.05 g/hp-hr with a default deterioration factor of 0.01 g/hp-hr, which we believe is technologically feasible because a number of engines meet this level today. This level of stringency is consistent with the agency's Phase 1 approach to set “cap” standards for N₂ O. EPA finalized Phase 1 standards for N₂ O as engine-based standards at 0.10 g/hp-hr and a 0.02 g/hp-hr default deterioration factor because the agency believes that emissions of this GHG are technologically related solely to the engine, fuel, and emissions aftertreatment systems, and the agency is not aware of any influence of vehicle-based technologies on these emissions. We continue to believe this approach is appropriate, but we believe that more stringent standards are appropriate to ensure that N₂ O emissions do not increase in the future. Note that NHTSA did not adopt standards for N₂ O because these emissions do not impact fuel consumption in a significant way, and is not proposing such standards for Phase 2 for the same reason.

We are proposing this change at no additional cost and no additional benefit because manufacturers are generally meeting the proposed standard today. The purpose of this standard is to prevent increases in N₂ O emissions absent this proposed increase in stringency. We request comment on whether or not we should be considering additional costs for compliance. Similarly, we request comment on whether or not we should assume N₂ O increases in our “No Action” regulatory Alternatives 1a and 1b described in Section X.

Although N₂ O is emitted in very small amounts, it can have a very significant impact on the climate. The global warming potential (GWP) of one molecule of N₂ O is 298 times that of one molecule CO₂. Because N₂ O and CO₂ coincidentally have the same molar mass, this means that one gram of N₂ O would have the same impact on the climate as 298 grams of CO₂. To further put this into perspective, the difference between the proposed N₂ O standard (and deterioration factor) and the current Phase 1 standard is 0.40 g/hp-hr of N₂ O emissions. This is equivalent to 11.92 g/hp-hr CO₂. Over the same certification test cycle (i.e. EPA's HD FTP) the Phase 1 engine CO₂ emissions standard ranges from 460 to 576 g/hp-hr, depending on the service class of the engine. Therefore, absent today's proposed action, engine N₂ O increases equivalent to 2.1 to 2.6 percent of the Phase 1 CO₂ standard could occur.

We are proposing this lower cap because we have determined that manufacturers generally are meeting this level today but in the future could increase N₂ O emissions up to the current Phase 1 cap standard. Because we do not believe any manufacturer would need to do anything more than recalibrate their SCR systems to comply, the lead time being provided would be sufficient. This section later describes why manufacturers may increase N₂ O emissions from SCR-equipped compression-ignition engines in the absence of a lower N₂ O cap standard. We request comment on this. We also note that, as described in Section XI, EPA does not believe there is a similar opportunity to lower the pickup and van N₂ O standard because it was set at a more stringent level in Phase 1.

(a) N₂ O Formation

N₂ O formation in modern diesel engines is a by-product of the SCR process. It is dependent on the SCR catalyst type, the NO₂ to NO_X ratio, the level of NO_X reduction required, and the concentration of the reactants in the system (NH₃ to NO_X ratio).

Two current engine/aftertreatment designs are driving N₂ O emission higher. The first is an increase in engine out NO_X, which puts a higher NO_X reduction burden on the SCR NO_X emission control system. The second is an increase in NO₂ formation from the diesel oxidation catalyst (DOC) located upstream of the passive catalyzed diesel particulate filter (CDPF). This increase in NO₂ serves two functions: Improving passive CDPF regeneration and optimization of faster SCR reaction.

There are multiple mechanisms through which N₂ O can form in an SCR system:

1. Low temperature formation of N₂ O over the DOC prior to the SCR catalyst.

2. Low temperature formation of NH₄ NO₃ with subsequent decomposition as exhaust temperatures increase, leading to conversion to N₂ O over the SCR catalyst.

3. Formation of N₂ O from NO₂ over the SCR catalyst at NO₂ to NO ratios greater than 1:1. N₂ O formation increases significantly at 300 to 350 °C.

4. Formation of N₂ O from NH₃ via partial oxidation over the ammonia slip catalyst.

5. High-temperature N₂ O formation over the SCR catalyst due to NH₃ oxidation facilitated by high SCR catalyst surface coverage of NH₃.

Thus, as discussed below, control of N₂ O formation requires precise optimization of SCR controls including thermal management and dosing rates, as well as catalyst composition.

(b) N₂ O Emission Reduction

Through on-engine and reactor bench experiments, this same work showed that the key to reducing N₂ O emissions lies in intelligent emission control system design and operation, namely:

1. Selecting the appropriate DOC and/or CDPF catalyst loadings to maintain NO₂ to NO ratios at or below 1:1.

2. Avoiding high catalyst surface coverage of NH₃ though urea dosing management when the system is in the ideal N₂ O formation window.

3. Utilizing thermal management to push the SCR inlet temperature outside of the N₂ O low-temperature formation window.

EPA believes that reducing the standard from 0.1 g/hp-hr to 0.05 g/hp-hr is feasible because most engines have emission rates that would meet this standard today and the others could meet it with minor calibration changes at no additional cost. Numerous studies have shown that diesel engine technologies can be fine-tuned to meet the current NO_X and proposed N₂ O standards while still providing passive CDPF regeneration even with earlier generations of SCR systems. Currently model year 2014 systems have already moved on to newer generation systems in which the combined CDPF and SCR functions have been further optimized. The result of this is 18 of 24 engines in the EPA 2014 certification database emitting N₂ O at less than half of the 2014 standard, and thus below the proposed standard. Given the discussions in the literature, there are still additional calibration steps that can be taken to further reduce N₂ O emissions for the higher emitters to afford an adequate compliance margin and room to account for deterioration, without having an adverse effect on criteria pollutant emissions.

It is important to note, however, that there is a trade off when trying to optimize SCR systems to achieve peak NO_X reduction efficiencies. When transitioning from a <93 percent efficient MY 2011 system to a 98 percent efficient system of the future, lowering the N₂ O cap to 0.05 g/hp-hr would put constraints on the techniques that can be applied to improve efficiency. If system designers push the NH₃ to NO_X ratio higher to try and achieve the maximum possible NO_X reduction, it could increase N₂ O emissions. If EPA were to adopt a very low NO_X standard (e.g., 0.02 g/hp-hr) over existing test cycles, some reductions would be needed throughout the hot portion of the cycle (although most of the reductions would have to come from the cold start portion of the test cycle). Thermal management would need to play a key role, and reducing catalyst light-off time would move the SCR catalyst through the ammonium nitrate formation and decomposition thermal range quicker, thus lowering N₂ O emissions. An increase in the NH₃ to NO_X ratio could also further reduce NO_X emissions; however this would also adversely affect NH₃ slip and N₂ O formation. The inability of NH₃ slip catalysts to handle the increased NH₃ load and the EPA NH₃ slip limit of 10 ppm would guard against this NH₃ to NO_X ratio increase, and thus subsequent N₂ O increase.

In summary, EPA believes that engine manufacturers would be able to respond with highly efficient NO_X reducing systems that can meet the proposed lower N₂ O cap of 0.05 g/hp-hr with no additional cost or lead time. When optimizing SCR systems for better NO_X reduction efficiency, that optimization includes lowering the emissions of undesirable side reactions, including those that form N₂ O.

(4) EPA Engine Standards for Methane

EPA is proposing to apply the Phase 1 methane engine standards to the Phase 2 program. EPA adopted the cap standards for CH₄ (along with N₂ O standards) as engine-based standards because the agency believes that emissions of this GHG are technologically related solely to the engine, fuel, and emissions aftertreatment systems, and the agency is not aware of any influence of vehicle-based technologies on these emissions. Note that NHTSA did not adopt standards for CH₄ (or N₂ O) because these emissions do not impact fuel consumption in a significant way, and is not proposing CH₄ standards for Phase 2 either.

EPA continues to believe that manufacturers of most engine technologies will be able to comply with the Phase 1 CH₄ standard with no technological improvements. We note that we are not aware of any new technologies that would allow us to adopt more stringent standards at this time. We request comment on this.

(5) Compliance Provisions and Flexibilities for Engine Standards

The agencies are proposing to continue most of the Phase 1 compliance provisions and flexibilities for the Phase 2 engine standards.

(a) Averaging, Banking, and Trading

The agencies' general approach to averaging is discussed in Section I. We are not proposing to offer any special credits to engine manufacturers. Except for early credits and advanced technology credits, the agencies propose to retain all Phase 1 credit flexibilities and limitations to continue for use in the Phase 2 program.

As discussed below, EPA is proposing to change the useful life for LHD engines for GHG emissions from the current 10 years/110,000 miles to 15 years/150,000 miles to be consistent with the useful life of criteria pollutants recently updated in EPA's Tier 3 rule. In order to ensure that banked credits would maintain their value in the transition from Phase 1 to Phase 2, NHTSA and EPA propose an adjustment factor of 1.36 (i.e., 150,000 mile ÷ 110,000 miles) for credits that are carried forward from Phase 1 to the MY 2021 and later Phase 2 standards. Without this adjustment factor the proposed change in useful life would effectively result in a discount of banked credits that are carried forward from Phase 1 to Phase 2, which is not the intent of the change in the useful life. See Sections V and VI for additional discussion of similar adjustments of vehicle-based credits.

(b) Request for Comment on Changing Global Warming Potential Values in the Credit Program for CH₄ and N₂ O

The Phase 1 rule included a compliance alternative allowing heavy-duty manufacturers and conversion companies to comply with the respective methane or nitrous oxide standards by means of over-complying with CO₂ standards (40 CFR 1036.705(d)). The heavy-duty rules allow averaging only between vehicles or engines of the same designated type (referred to as an “averaging set” in the rules). Specifically, the phase 1 heavy-duty rulemaking added a CO₂ credits program which allowed heavy-duty manufacturers to average and bank pollutant emissions to comply with the methane and nitrous oxide requirements after adjusting the CO₂ emission credits based on the relative GHG equivalents. To establish the GHG equivalents used by the CO₂ credits program, the Phase 1 rule incorporated the IPCC Fourth Assessment Report global warming potential (GWP) values of 25 for CH₄ and 298 for N₂ O, which are assessed over a 100 year lifetime.

Since the Phase 1 rule was finalized, a new IPCC report has been released (the Fifth Assessment Report), with new GWP estimates. This is prompting us to look again at the relative CO₂ equivalency of methane and nitrous oxide and to seek comment on whether the methane and nitrous oxide GWPs used to establish the GHG equivalency value for the CO₂ Credit program should be updated to those established by IPCC in its Fifth Assessment Report. The Fifth Assessment Report provides four 100 year GWPs for methane ranging from 28 to 36 and two 100 year GWPs for nitrous oxide, either 265 or 298. Therefore, we not only request comment on whether to update the GWP for methane and nitrous oxide to that of the Fifth Assessment Report, but also on which value to use from this report.

(c) In-Use Compliance and Useful Life

Consistent with Section 202(a)(1) and 202 (d) of the CAA, for Phase 1, EPA established in-use standards for heavy-duty engines. Based on our assessment of testing variability and other relevant factors, we established in-use standards by adding a 3 percent adjustment factor to the full useful life emissions and fuel consumption results measured in the EPA certification process to address measurement variability inherent in comparing results among different laboratories and different engines. See 40 CFR part 1036. The agencies are not proposing to change this for Phase 2, but request comment on whether this allowance is still necessary.

We note that in Phase 1, we applied these standards to only certain engine configurations in each engine family (often called the parent rating). We welcome comment on whether the agencies should set Phase 2 CO₂ and fuel consumption standards for the other ratings (often called the child ratings) within an engine family. We are not proposing specific engine standards for child ratings in Phase 2 because we are proposing to include the actual engine's fuel map in the vehicle certification. We believe this approach appropriately addresses our concern that manufacturers control CO₂ emissions and fuel consumption from all in-use engine configurations within an engine family.

In Phase 1, EPA set the useful life for engines and vehicles with respect to GHG emissions equal to the respective useful life periods for criteria pollutants. In April 2014, as part of the Tier 3 light-duty vehicle final rule, EPA extended the regulatory useful life period for criteria pollutants to 150,000 miles or 15 years, whichever comes first, for Class 2b and 3 pickup trucks and vans and some light-duty trucks (79 FR 23414, April 28, 2014). As described in Section V, EPA is proposing that the Phase 2 GHG standards for vocational vehicles at or below 19,500 lbs GVWR apply over the same useful life of 150,000 miles or 15 years. To be consistent with that proposed change, we are also proposing that the Phase 2 GHG standards for engines used in vocational vehicles at or below 19,500 lbs GVWR apply over the same useful life of 150,000 miles or 15 years. NHTSA proposes to use the same useful life values as EPA for all vocational vehicles.

We are proposing to continue regulatory allowance in 40 CFR 1036.150(g) that allows engine manufacturers to use assigned deterioration factors (DFs) for most engines without performing their own durability emission tests or engineering analysis. However, the engines would still be required to meet the standards in actual use without regard to whether the manufacturer used the assigned DFs. This allowance is being continued as an interim provision and may be discontinued for later phases of standards as more information becomes known. Manufacturers are allowed to use an assigned additive DF of 0.0 g/bhp-hr for CO₂ emissions from any conventional engine (i.e., an engine not including advance or off-cycle technologies). Upon request, we could allow the assigned DF for CO₂ emissions from engines including advance or off-cycle technologies, but only if we determine that it would be consistent with good engineering judgment. We believe that we have enough information about in-use CO₂ emissions from conventional engines to conclude that they will not increase as the engines age. However, we lack such information about the more advanced technologies.

We are also requesting comment on how to apply DFs to low level measurements where test-to-test variability may be larger than the actual deterioration rates being measured, such as might occur with N₂ O. Should we allow statistical analysis to be used to identifying trends rather than basing the DF on the highest measured value? How would we allow this where emission deterioration is not linear, such as saw-tooth deterioration related to maintenance or other offsetting emission effects causing emissions to peak before the end of the useful life? Finally, EPA requests comment on whether a similar allowance would be appropriate for criteria pollutants as well.

(d) Alternate CO₂ Standards

In the Phase 1 rulemaking, the agencies proposed provisions to allow certification to alternate CO₂ engine standards in model years 2014 through 2016. This flexibility was intended to address the special case of needed lead time to implement new standards for a previously unregulated pollutant. Since that special case does not apply for Phase 2, we are not proposing a similar flexibility in this rulemaking. We also request comment on whether this allowance should be eliminated for Phase 1 engines.

(e) Proposed Approach to Standards and Compliance Provisions for Natural Gas Engines

EPA is also proposing certain clarifying changes to its rules regarding classification of natural gas engines. This proposal relates to standards for all emissions, both greenhouse gases and criteria pollutants. These clarifying changes are intended to reflect the status quo, and therefore should not have any associated costs.

EPA emission standards have always applied differently for gasoline-fueled and diesel-fueled engines. The regulations in 40 CFR part 86 implement these distinctions by dividing engines into Otto-cycle and Diesel-cycle technologies. This approach led EPA to categorize natural gas engines according to their design history. A diesel engine converted to run on natural gas was classified as a diesel-cycle engine; a gasoline engine converted to run on natural gas was classified as an Otto-cycle engine.

The Phase 1 rule described our plan to transition to a different approach, consistent with our nonroad programs, in which we divide engines into compression-ignition and spark-ignition technologies based only on the operating characteristics of the engines. However, the Phase 1 rule included a provision allowing us to continue with the historic approach on an interim basis.

Under the existing EPA regulatory definitions of “compression-ignition” and “spark-ignition”, a natural gas engine would generally be considered compression-ignition if it operates with lean air-fuel mixtures and uses a pilot injection of diesel fuel to initiate combustion, and would generally be considered spark-ignition if it operates with stoichiometric air-fuel mixtures and uses a spark plug to initiate combustion.

EPA's basic premise here is that natural gas engines performing similar in-use functions should be subject to similar regulatory requirements. The compression-ignition emission standards and testing requirements reflect the operating characteristics for the full range of heavy-duty vehicles, including substantial operation in long-haul service characteristic of tractors. The spark-ignition emission standards and testing requirements do not include some of those provisions related to use in long-haul service or other applications where diesel engines predominate, such as steady-state testing, Not-to-Exceed standards, and extended useful life. We believe it would be inappropriate to apply the spark-ignition standards and requirements to natural gas engines that would be used in applications mostly served by diesel engines today. We are therefore proposing to replace the interim provision described above with a differentiated approach to certification of natural gas engines across all of the EPA standards—for both GHGs and criteria pollutants. Under the proposed clarifying amendment, we would require manufacturers to divide all their natural gas engines into primary intended service classes, as we already require for compression-ignition engines, whether or not the engine has features that otherwise could (in theory) result in classification as SI under the current rules. Any natural gas engine qualifying as a medium heavy-duty engine (19,500 to 33,000 lbs GVWR) or a heavy heavy-duty engine (over 33,000 lbs GVWR) would be subject to all the emission standards and other requirements that apply to compression-ignition engines.

Table II-17 describes the provisions that would apply differently for compression-ignition and spark-ignition engines:

The onboard diagnostic requirements already differentiate requirements by fuel type, so there is no need for those provisions to change based on the considerations of this section.

We are not aware of any currently certified engines that would change from compression-ignition to spark-ignition under the proposed clarified approach. Nonetheless, because these proposed standards implicate rules for criteria pollutants (as well as GHGs), the provisions of CAA section 202(a)(3)(C) apply (for the criteria pollutants), notably the requirement of four years lead time. We are therefore proposing to continue to apply the existing interim provision through model year 2020.¹¹⁰Starting in model year 2021, all the provisions would apply as described above. Manufacturers would not be permitted to certify any engine families using carryover emission data if a particular engine model switched from compression-ignition to spark-ignition, or vice versa. However, as noted above, in practice these vehicles are already being certified as CI engines, so we view these changes as clarifications ratifying the current status quo.

We are also proposing that these provisions would apply equally to engines fueled by any fuel other than gasoline or ethanol, should such engines be produced in the future. Given the current and historic market for vehicles above 19,500 lbs GVWR, EPA believes any alternative-fueled vehicles in this weight range would be competing primarily with diesel vehicles and should be subject to the same requirements as them. We request comment on all aspects of classifying natural-gas and other engines for purposes of applying emission standards. See Sections XI and XII for additional discussion of natural gas fueled engines.

(f) Crankcase Emissions From Natural Gas Engines

EPA is proposing one fuel-specific provision for natural gas engines, likewise applicable to all pollutant emissions, both GHGs and criteria pollutant emissions. Note that we are also proposing other vehicle-level emissions controls for the natural gas storage tanks and refueling connections. These are presented in Section XIII.

EPA is proposing to require that all natural gas-fueled engines have closed crankcases, rather than continuing the provision that allows venting to the atmosphere all crankcase emissions from all compression-ignition engines. This has been allowed as long as these vented crankcase emissions are measured and accounted for as part of an engine's tailpipe emissions. This allowance has historically been in place to address the technical limitations related to recirculating diesel-fueled engines' crankcase emissions, which have high PM emissions, back into the engine's air intake. High PM emissions vented into the intake of an engine can foul turbocharger compressors and aftercooler heat exchangers. In contrast, historically EPA has mandated closed crankcase technology on all gasoline fueled engines and all natural gas spark-ignition engines. The inherently low PM emissions from these engines posed no technical barrier to a closed crankcase mandate. Because natural gas-fueled compression ignition engines also have inherently low PM emissions, there is no technological limitation that would prevent manufacturers from closing the crankcase and recirculating all crankcase gases into a natural gas-fueled compression ignition engine's air intake. We are requesting comment on the costs and effectiveness of technologies that we have identified to comply with these provisions. In addition, EPA is proposing that this revised standard not take effect until the 2021 model year, consistent with the requirement of section 202(a)(3)(C) to provide four years lead time.

III. Class 7 and 8 Combination Tractors

Class 7 and 8 combination tractors-trailers contribute the largest portion of the total GHG emissions and fuel consumption of the heavy-duty sector, approximately two-thirds, due to their large payloads, their high annual miles traveled, and their major role in national freight transport. These vehicles consist of a cab and engine (tractor or combination tractor) and a trailer. In general, reducing GHG emissions and fuel consumption for these vehicles would involve improvements to all aspects of the vehicle.

As we found during the development in Phase 1 and as continues to be true in the industry today, the heavy-duty combination tractor-trailer industry consists of separate tractor manufacturers and trailer manufacturers. We are not aware of any manufacturer that typically assembles both the finished truck and the trailer and introduces the combination into commerce for sale to a buyer. There are also large differences in the kinds of manufacturers involved with producing tractors and trailers. For HD highway tractors and their engines, a relatively limited number of manufacturers produce the vast majority of these products. The trailer manufacturing industry is quite different, and includes a large number of companies, many of which are relatively small in size and production volume. Setting standards for the products involved—tractors and trailers—requires recognition of the large differences between these manufacturing industries, which can then warrant consideration of different regulatory approaches. Thus, although tractor-trailers operate essentially as a unit from both a commercial standpoint and for purposes of fuel efficiency and CO₂ emissions, the agencies have developed separate proposed standards for each.

Based on these industry characteristics, EPA and NHTSA believe that the most appropriate regulatory approach for combination tractors and trailers is to establish standards for tractors separately from trailers. As discussed below in Section IV, the agencies are also proposing standards for certain types of trailers.

A. Summary of the Phase 1 Tractor Program

The design of each tractor's cab and drivetrain determines the amount of power that the engine must produce in moving the truck and its payload down the road. As illustrated in Figure III-1, the loads that require additional power from the engine include air resistance (aerodynamics), tire rolling resistance, and parasitic losses (including accessory loads and friction in the drivetrain). The importance of the engine design is that it determines the basic GHG emissions and fuel consumption performance for the variety of demands placed on the vehicle, regardless of the characteristics of the cab in which it is installed.

Accordingly, for Class 7 and 8 combination tractors, the agencies adopted two sets of Phase 1 tractor standards for fuel consumption and CO₂ emissions. The CO₂ emission and fuel consumption reductions related to engine technologies are recognized in the engine standards. For vehicle-related emissions and fuel consumption, tractor manufacturers are required to meet vehicle-based standards. Compliance with the vehicle standard must be determined using the GEM vehicle simulation tool.

The Phase 1 tractor standards were based on several key attributes related to GHG emissions and fuel consumption that reasonably represent the many differences in utility and performance among these vehicles. Attribute-based standards in general recognize the variety of functions performed by vehicles and engines, which in turn can affect the kind of technology that is available to control emissions and reduce fuel consumption, or its effectiveness. Attributes that characterize differences in the design of vehicles, as well as differences in how the vehicles will be employed in-use, can be key factors in evaluating technological improvements for reducing CO₂ emissions and fuel consumption. Developing an appropriate attribute-based standard can also avoid interfering with the ability of the market to offer a variety of products to meet the customer's demand. The Phase 1 tractor standards differ depending on GVWR (i.e., whether the truck is Class 7 or Class 8), the height of the roof of the cab, and whether it is a “day cab” or a “sleeper cab.” These later two attributes are important because the height of the roof, designed to correspond to the height of the trailer, significantly affects air resistance, and a sleeper cab generally corresponds to the opportunity for extended duration idle emission and fuel consumption improvements. Based on these attributes, the agencies created nine subcategories within the Class 7 and 8 combination tractor category. The Phase 1 rules set standards for each of them. Phase 1 standards began with the 2014 model year and were followed with more stringent standards following in model year 2017. The standards represent an overall fuel consumption and CO₂ emissions reduction up to 23 percent from the tractors and the engines installed in them when compared to a baseline 2010 model year tractor and engine without idle shutdown technology. Although the EPA and NHTSA standards are expressed differently (grams of CO₂ per ton-mile and gallons per 1,000 ton-mile respectively), the standards are equivalent.

In Phase 1, the agencies allowed manufacturers to certify certain types of combination tractors as vocational vehicles. These are tractors that do not typically operate at highway speeds, or would otherwise not benefit from efficiency improvements designed for line-haul tractors (although standards would still apply to the engines installed in these vehicles). The agencies created a subcategory of “vocational tractors,” or referred to as “special purpose tractors” in 40 CFR part 1037, because real world operation of these tractors is better represented by our Phase 1 vocational vehicle duty cycle than the tractor duty cycles. Vocational tractors are subject to the standards for vocational vehicles rather than the combination tractor standards. In addition, specific vocational tractors and heavy-duty vocational vehicles primarily designed to perform work off-road or having tires installed with a maximum speed rating at or below 55 mph are exempted from the Phase 1 standards.

In Phase 1, the agencies also established separate performance standards for the engines manufactured for use in these tractors. EPA's engine-based CO₂ standards and NHTSA's engine-based fuel consumption standards are being implemented using EPA's existing test procedures and regulatory structure for criteria pollutant emissions from medium- and heavy-duty engines. These engine standards vary depending on engine size linked to intended vehicle service class (which are the same service classes used for many years for EPA's criteria pollutant standards).

Manufacturers demonstrate compliance with the Phase 1 tractor standards using the GEM simulation tool. As explained in Section II above, GEM is a customized vehicle simulation model which is the preferred approach to demonstrating compliance testing for combination tractors rather than chassis dynamometer testing used in light-duty vehicle compliance. As discussed in the development of HD Phase 1 and recommended by the NAS 2010 study, a simulation tool is the preferred approach for HD tractor compliance because of the extremely large number of vehicle configurations. The GEM compliance tool was developed by EPA and is an accurate and cost-effective alternative to measuring emissions and fuel consumption while operating the vehicle on a chassis dynamometer. Instead of using a chassis dynamometer as an indirect way to evaluate real world operation and performance, various characteristics of the vehicle are measured and these measurements are used as inputs to the model. For HD Phase 1, these characteristics relate to key technologies appropriate for this category of truck including aerodynamic features, weight reductions, tire rolling resistance, the presence of idle-reducing technology, and vehicle speed limiters. The model also assumes the use of a representative typical engine in compliance with the separate, applicable Phase 1 engine standard. Using these inputs, the model is used to quantify the overall performance of the vehicle in terms of CO₂ emissions and fuel consumption. CO₂ emission reduction and fuel consumption technologies not measured by the model must be evaluated separately, and the HD Phase 1 rules establish mechanisms allowing credit for such “off-cycle” technologies.

In addition to the final Phase 1 tractor-based standards for CO₂, EPA adopted a separate standard to reduce leakage of HFC refrigerant from cabin air conditioning (A/C) systems from combination tractors, to apply to the tractor manufacturer. This HFC leakage standard is independent of the CO₂ tractor standard. Manufacturers can choose technologies from a menu of leak-reducing technologies sufficient to comply with the standard, as opposed to using a test to measure performance.

The Phase 1 program also provided several flexibilities to advance the goals of the overall program while providing alternative pathways to achieve compliance. The primary flexibility is the averaging, banking, and trading program which allows emissions and fuel consumption credits to be averaged within an averaging set, banked for up to five years, or traded among manufacturers. Manufacturers with credit deficits were allowed to carry-forward credit deficits for up to three model years, similar to the LD GHG and CAFE carry-back credits. Phase 1 also included several interim provisions, such as incentives for advanced technologies and provisions to obtain credits for innovative technologies (called off-cycle in the Phase 2 program) not accounted for by the HD Phase 1 version of GEM or for certifying early.

B. Overview of the Proposed Phase 2 Tractor Program

The proposed HD Phase 2 program is similar in many respects to the Phase 1 approach. The agencies are proposing to maintain the Phase 1 attribute-based regulatory structure in terms of dividing the tractor category into the same nine subcategories based on the tractor's GVWR, cab configuration, and roof height. This structure is working well in the implementation of Phase 1. The one area where the agencies are proposing to change the regulatory structure is related to heavy-haul tractors. As noted above, the Phase 1 regulations include a set of provisions that allow vocational tractors to be treated as vocational vehicles. However, because the agencies propose to include the powertrain as part of the technology basis for the tractor and vocational vehicle standards in Phase 2, we are proposing to classify a certain set of these vocational tractors as heavy-haul tractors and subject them to a separate tractor standard that reflects their unique powertrain requirements and limitations in application of technologies to reduce fuel consumption and CO₂ emissions.

The agencies propose to also retain much of the certification and compliance structure developed in Phase 1 but to simplify end of the year reporting. The agencies propose that the Phase 2 tractor CO₂ emissions and fuel consumption standards, as in Phase 1, be aligned. The agencies also propose to continue to have separate engine and vehicle standards to drive technology improvements in both areas. The reasoning behind the proposal to maintain separate standards is discussed above in Section II.B.2. As in Phase 1, the agencies propose to certify tractors using the GEM simulation tool and to require manufacturers to evaluate the performance of subsystems through testing (the results of this testing to be used as inputs to the GEM simulation tool). Other aspects of the proposed HD Phase 2 certification and compliance program also mirror the Phase 1 program, such as maintaining a single reporting structure to satisfy both agencies, requiring limited data at the beginning of the model year for certification, and determining compliance based on end of year reports. In the Phase 1 program, manufacturers participating in the ABT program provided 90 day and 270 day reports after the end of the model year. The agencies required two reports for the initial program to help manufacturers become familiar with the reporting process. For the Phase 2 program, the agencies propose that manufacturers would only be required to submit one end of the year report, which would simplify reporting.

Even though many aspects of the proposed HD Phase 2 program are similar to Phase 1, there are some key differences. While Phase 1 focused on reducing CO₂ emissions and fuel consumption in tractors through the application of existing (“off-the-shelf”) technologies, the proposed HD Phase 2 standards seek additional reductions through increased use of existing technologies and the development and deployment of more advanced technologies. To evaluate the effectiveness of a more comprehensive set of technologies, the agencies propose several additional inputs to GEM. The proposed set of inputs includes the Phase 1 inputs plus parameters to assess the performance of the engine, transmission, and driveline. Specific inputs for, among others, predictive cruise control, automatic tire inflation systems, and 6x2 axles would now be required. Manufacturers would conduct component testing to obtain the values for these technologies (should they choose to use them), which testing values would then be input into the GEM simulation tool. See Section III.D.2 below. To effectively assess performance of the technologies, the agencies also propose to change some aspects of the drive cycle used in certification through the addition of road grade. To reflect the existing trailer market, the agencies are proposing to refine the aerodynamic test procedure for high roof cabs by adding some aerodynamic improving devices to the reference trailer (used for determining the relative aerodynamic performance of the tractor). The agencies also propose to change the aerodynamic certification test procedure to capture aerodynamic improvement of trailers and the impact of wind on tractor aerodynamic performance. The agencies are also proposing to change some of the interim provisions developed in Phase 1 to reflect the maturity of the program and reduced need and justification for some of the Phase 1 flexibilities. Further discussions on all of these matters are covered in the following sections.

C. Proposed Phase 2 Tractor Standards

EPA is proposing CO₂ standards and NHTSA is proposing fuel consumption standards for new Class 7 and 8 combination tractors. In addition, EPA is proposing to maintain the HFC standards for the air conditioning systems that were adopted in Phase 1. EPA is also seeking comment on new standards to further control emissions of particulate matter (PM) from auxiliary power units (APU) installed in tractors that would prevent an unintended consequence of increasing PM emissions from tractors during long duration idling.

This section describes in detail the proposed standards. In addition to describing the proposed alternative (“Alternative 3”), in Section III.D.2.f we also detail another alternative (“Alternative 4”). Alternative 4 provides less lead time than the proposed set of standards but may provide more net benefits in the form of greater emission and fuel consumption reductions (with somewhat higher costs) in the early years of the program. The agencies believe Alternative 4 has the potential to be maximum feasible and appropriate as discussed later in this section.

The agencies welcome comment on all aspects of the proposed standards and the alternative standards described in Section III.D.2.f. Commenters are encouraged to address all aspects of feasibility analysis, including costs, the likelihood of developing the technology to achieve sufficient relaibility within the proposed and alternative lead-times, and the extent to which the market could utilize the technology. It would be helpful if comments addressed these issues separately for each type of technology.

(1) Proposed Fuel Consumption and CO₂ Standards

The proposed fuel consumption and CO₂ standards for the tractor cab are shown below in Table III-1. These proposed standards would achieve reductions of up to 24 percent compared to the 2017 model year baseline level when fully phased in beginning in the 2027 MY. The proposed standards for Class 7 are described as “Day Cabs” because we are not aware of any Class 7 sleeper cabs in the market today; however, the agencies propose to require any Class 7 tractor, regardless of cab configuration, meet the standards described as “Class 7 Day Cab.” We welcome comment on this proposed approach.

The agencies' analyses, as discussed briefly below and in more detail later in this preamble and in the draft RIA Chapter 2, indicate that these proposed standards, if finalized, would be maximum feasible (within the meaning of 49 U.S.C. Section 32902 (k)) and would be appropriate under each agency's respective statutory authorities. The agencies solicit comment on all aspects of these analyses.

It should be noted that the proposed HD Phase 2 CO₂ and fuel consumptions standards are not directly comparable to the Phase 1 standards. This is because the agencies are proposing several test procedure changes to more accurately reflect real world operation of tractors. These changes will result in the following differences. First, the same vehicle evaluated using the proposed HD Phase 2 version of GEM will obtain higher (i.e. less favorable) CO₂ and fuel consumption values because the Phase 2 drive cycles include road grade. Road grade, which (of course) exists in the real-world, requires the engine to operate at higher horsepower levels to maintain speed while climbing a hill. Even though the engine saves fuel on a downhill section, the overall impact increases CO₂ emissions and fuel consumption. The second of the key differences between the CO₂ and fuel consumption values in Phase 1 and Phase 2 is due to proposed changes in the evaluation of aerodynamics. In the real world, vehicles are exposed to wind which increases the drag of the vehicle and in turn increases the power required to move the vehicle down the road. To more appropriately reflect the in-use aerodynamic performance of tractor-trailers, the agencies are proposing to input into Phase 2 GEM the wind averaged coefficient of drag instead of the no-wind (zero yaw) value used in Phase 1. The final key difference between Phase 1 and the proposed Phase 2 program includes a more realistic and improved simulation of the transmission in GEM, which could increase CO₂ and fuel consumption relative to Phase 1.

The agencies are proposing Phase 2 CO₂ emissions and fuel consumption standards for the combination tractors that reflect reductions that can be achieved through improvements in the tractor's powertrain, aerodynamics, tires, and other vehicle systems. The agencies have analyzed the feasibility of achieving the proposed CO₂ and fuel consumption standards, and have identified means of achieving the proposed standards that are technically feasible in the lead time afforded, economically practicable and cost-effective. EPA and NHTSA present the estimated costs and benefits of the proposed standards in Section III.D.2. In developing the proposed standards for Class 7 and 8 tractors, the agencies have evaluated the following:

• the current levels of emissions and fuel consumption
• the kinds of technologies that could be utilized by tractor and engine manufacturers to reduce emissions and fuel consumption from tractors and associated engines
• the necessary lead time
• the associated costs for the industry
• fuel savings for the consumer
• the magnitude of the CO₂ and fuel savings that may be achieved

The technologies on whose performance the proposed tractor standards are predicated include: Improvements in the engine, transmission, driveline, aerodynamic design, tire rolling resistance, other accessories of the tractor, and extended idle reduction technologies. These technologies, and other accessories of the tractor, are described in draft RIA Chapter 2.4. The agencies' evaluation shows that some of these technologies are available today, but have very low adoption rates on current vehicles, while others will require some lead time for development. EPA and NHTSA also present the estimated costs and benefits of the proposed Class 7 and 8 combination tractor standards in draft RIA Chapter 2.8 and 2.12, explaining as well the basis for the agencies' proposed stringency level.

As explained below in Section III.D, EPA and NHTSA have determined that there would be sufficient lead time to introduce various tractor and engine technologies into the fleet starting in the 2021 model year and fully phasing in by the 2027 model year. This is consistent with NHTSA's statutory requirement to provide four full model years of regulatory lead time for standards. As was adopted in Phase 1, the agencies are proposing for Phase 2 that manufacturers may generate and use credits from Class 7 and 8 combination tractors to show compliance with the standards. This is discussed further in Section III.F.

Based on our analysis, the 2027 model year standards for combination tractors and engines represent up to a 24 percent reduction in CO₂ emissions and fuel consumption over a 2017 model year baseline tractor, as detailed in Section III.D.2. In considering the feasibility of vehicles to comply with the proposed standards over their useful lives, EPA also considered the potential for CO₂ emissions to increase during the regulatory useful life of the product. As we discuss in Phase 1 and separately in the context of deterioration factor (DF) testing, we have concluded that CO₂ emissions are likely to stay the same or actually decrease in-use compared to new certified configurations. In general, engine and vehicle friction decreases as products wear, leading to reduced parasitic losses and consequent lower CO₂ emissions. Similarly, tire rolling resistance falls as tires wear due to the reduction in tread height. In the case of aerodynamic components, we project no change in performance through the regulatory life of the vehicle since there is essentially no change in their physical form as vehicles age. Similarly, weight reduction elements such as aluminum wheels are (evidently) not projected to increase in mass through time, and hence, we can conclude will not deteriorate with regard to CO₂ performance in-use. Given all of these considerations, the agencies are confident in projecting that the tractor standards being proposed today would be technically feasible throughout the regulatory useful life of the program.

(2) Proposed Non-CO₂ GHG Standards for Tractors

EPA is also proposing standards to control non-CO₂ GHG emissions from Class 7 and 8 combination tractors.

(a) N₂ O and CH₄ Emissions

The proposed heavy-duty engine standards for both N₂ O and CH₄ as well as details of the proposed standards are included in the discussion in Section II.D.3 and II.D.4. No additional controls for N₂ O or CH₄ emissions beyond those in the proposed HD Phase 2 engine standards are being considered for the tractor category.

(b) HFC Emissions

Manufacturers can reduce hydrofluorocarbon (HFC) emissions from air conditioning (A/C) leakage emissions in two ways. First, they can utilize leak-tight A/C system components. Second, manufacturers can largely eliminate the global warming impact of leakage emissions by adopting systems that use an alternative, low-Global Warming Potential (GWP) refrigerant, to replace the commonly used R-134a refrigerant. EPA proposes to address HFC emissions by maintaining the A/C leakage standards adopted in HD Phase 1 (see 40 CFR 1037.115). EPA believes the Phase 1 use of leak-tight components is at an appropriate level of stringency while maintaining the flexibility to produce the wide variety of A/C system configurations required in the tractor category. In addition, there currently are not any low GWP refrigerants approved for the heavy-duty vehicle sector. Without an alternative refrigerant approved for this sector, it is challenging to demonstrate feasibility to reduce the amount of leakage allowed under the HFC leakage standard. Please see Section I.F(1)(b) for a discussion related to alternative refrigerants.

(3) PM Emissions From APUs

Auxiliary power units (APUs) can be used in lieu of operating the main engine during extended idle operations to provide climate control and power to the driver. APUs can reduce fuel consumption, NO_X, HC, CH₄, and CO₂ emissions when compared to main engine idling. However, a potential unintended consequence of reducing CO₂ emissions from combination tractors through the use of APUs during extended idle operation is an increase in PM emissions. Therefore, EPA is seeking comment on the need and appropriateness to further reduce PM emissions from APUs.

EPA conducted an analysis evaluating the potential impact on PM emissions due to an increase in APU adoption rates using MOVES. In this analysis, EPA assumed that these APUs emit criteria pollutants at the level of the EPA standard for this type of non-road diesel engines. Under this assumption, an APU would emit 1.8 grams PM per hour, assuming an extended idle load demand of 4.5 kW (6 hp). However, a 2010 model year or newer tractor that uses its main engine to idle emits approximately 0.35 grams PM per hour. The results from these MOVES runs are shown below in Table III-2. These results show that an increase in use of APUs could lead to an overall increase in PM emissions if left uncontrolled. Column three labeled “Proposed Program PM_2.5 Emission Impact without Further PM Control (tons)” shows the incremental increase in PM_2.5 without further regulation of APU PM_2.5 emissions.

Since January 1, 2008, California ARB has prohibited the idling of sleeper cab tractors during periods of sleep and rest. The regulations apply additional requirements to diesel-fueled APUs on tractors equipped with 2007 model year or newer engines. Truck owners in California must either: (1) Fit the APU with an ARB verified Level 3 particulate control device that achieves 85 percent reduction in particulate matter; or (2) have the APU exhaust plumbed into the vehicle's exhaust system upstream of the particulate matter aftertreatment device. Currently ARB includes four control devices that have been verified to meet the Level 3 p.m. requirements. These devices include HUSS Umwelttechnik GmbH's FS-MK Series Diesel Particulate filters, Impco Ecotrans Technologies' ClearSky Diesel Particulate Filter, Thermo King's Electric Regenerative Diesel Particulate Filter, and Proventia's Electronically Heated Diesel Particulate Filter. In addition, ARB has approved a Cummins integrated diesel-fueled APU and several fuel-fired heaters produced by Espar and Webasto.

EPA conducted an evaluation of the impact of potentially requiring further PM control from APUs nationwide. As shown in Table III-2, EPA projects that the HD Phase 2 program as proposed (without additional PM controls) would increase PM_2.5 emissions by 1,631 tons in 2035 and 2,257 tons in 2050. The annual impact of a program to further control PM could lead to a reduction of PM_2.5 emissions nationwide by 3,084 tons in 2035 and by 4,344 tons in 2050, as shown in Table III-3 the column labeled “Net Impact on National PM_2.5 Emission with Further PM Control of APUs (tons).”

EPA developed long-term cost projections for catalyzed diesel particulate filters (DPF) as part of the Nonroad Diesel Tier 4 rulemaking. In that rulemaking, EPA estimated the DPF costs would add $580 to the cost of 150 horsepower engines (69 FR 39126, June 29, 2004). On the other hand, ARB estimated the cost of retrofitting a diesel powered APU with a PM trap to be $2,000 in 2005. The costs of a DPF for an APU that provides less than 25 horsepower would be less than the projected cost of a 150 HP engine because the filter volume is in general proportional to the engine-out emissions and exhaust flow rate. Proventia is charging customers $2,240 for electronically heated DPF. EPA welcomes comments on cost estimates associated with DPF systems for APUs.

EPA requests comments on the technical feasibility of diesel particulate filters ability to reduce PM emissions by 85 percent from non-road engines used to power APUs. EPA also requests comments on whether the technology costs outlined above are accurate, and if so, if projected reductions are appropriate taking into account cost, noise, safety, and energy factors. See CAA section 213(a)(4).

(4) Proposed Exclusions From the Phase 2 Tractor Standards

As noted above, in Phase 1, the agencies adopted provisions to allow tractor manufacturers to reclassify certain tractors as vocational vehicles. The agencies propose in Phase 2 to continue to allow manufacturers to exclude certain vocational-types of tractors from the combination tractor standards and instead be subject to the vocational vehicle standards. However, the agencies propose to set unique standards for tractors used in heavy haul applications in Phase 2. Details regarding the proposed heavy-haul standards are included below in Section II.D.3.

During the development of Phase 1, the agencies received multiple comments from several stakeholders supporting an approach for an alternative treatment of a subset of tractors because they were designed to operate at lower speeds, in stop and go traffic, and sometimes operate at higher weights than the typical line-haul tractor. These types of applications have limited potential for improvements in aerodynamic performance to reduce CO₂ emissions and fuel consumption. Consistent with the agencies' approach in Phase 1, the agencies agree that these vocational tractors are operated differently than line-haul tractors and therefore fit more appropriately into the vocational vehicle category. However, we need to continue to ensure that only tractors that are truly vocational tractors are classified as such. A vehicle determined by the manufacturer to be a HHD vocational tractor would fall into one of the HHD vocational vehicle subcategories and be regulated as a vocational vehicle. Similarly, MHD tractors which the manufacturer chooses to reclassify as vocational tractors would be regulated as a MHD vocational vehicle. Specifically, the agencies are proposing to change the provisions in EPA's 40 CFR 1037.630 and NHTSA's regulation at 49 CFR 523.2 and only allow the following two types of vocational tractors to be eligible for reclassification by the manufacturer:

(1) Low-roof tractors intended for intra-city pickup and delivery, such as those that deliver bottled beverages to retail stores.

(2) Tractors intended for off-road operation (including mixed service operation), such as those with reinforced frames and increased ground clearance.

Because the difference between some vocational tractors and line-haul tractors is potentially somewhat subjective, we are also proposing to continue to limit the use of this provision to a rolling three year sales limit of 21,000 vocational tractors per manufacturer consistent with past production volumes of such vehicles. We propose to carry-over the existing three year sales limit with the recognition that heavy-haul tractors would no longer be permitted to be treated as vocational vehicles (suggesting a lower volumetric cap could be appropriate) but that the heavy-duty market has improved since the development of the HD Phase 1 rule (suggesting the need for a higher sales cap). The agencies welcome comment on whether the proposed sales volume limit is set at an appropriate level looking into the future.

Also in Phase 1, EPA determined that manufacturers that met the small business criteria specified in 13 CFR 121.201 for “Heavy Duty Truck Manufacturing” were not subject to the greenhouse gas emissions standards of 40 CFR 1037.106. The regulations required that qualifying manufacturers must notify the Designated Compliance Officer each model year before introducing the vehicles into commerce. The manufacturers are also required to label the vehicles to identify them as excluded vehicles. EPA and NHTSA are seeking comments on eliminating this provision for tractor manufacturers in the Phase 2 program. The agencies are aware of two second stage manufacturers building custom sleeper cab tractors. We could treat these vehicles in one of two ways. First, the vehicles may be considered as dromedary vehicles and therefore treated as vocational vehicles. Or the agencies could provide provisions that stated if a manufacturer changed the cab, but not the frontal area of the vehicle, then it could retain the aerodynamic bin of the original tractor. We welcome comments on these considerations.

EPA is proposing to not exempt glider kits from the Phase 2 GHG emission standards. Gliders and glider kits are exempt from NHTSA's Phase 1 fuel consumption standards. For EPA purposes, the CO₂ provisions of Phase 1 exempted gliders and glider kits produced by small businesses but did not include such a blanket exemption for other glider kits. Thus, some gliders and glider kits are already subject to the requirement to obtain a vehicle certificate prior to introduction into commerce as a new vehicle. However, the agencies believe glider manufacturers may not understand how these regulations apply to them, resulting in a number of uncertified vehicles.

EPA is concerned about adverse economic impacts on small businesses that assemble glider kits and glider vehicles. Therefore, EPA is proposing an option that would grandfather existing small businesses, but cap annual production based on their recent sales. EPA requests comment on whether any special provisions would be needed to accommodate glider kits. See Section XIV for additional discussion of the proposed requirements for glider vehicles.

Similarly, NHTSA is considering including glider vehicles under its Phase 2 program. The agencies request comment on their respective considerations.

We believe that the agencies potentially having different policies for glider kits and glider vehicles under the Phase 2 program would not result in problematic disharmony between the NHTSA and EPA programs, because of the small number of vehicles that would be involved. EPA believes that its proposed changes would result in the glider market returning to the pre-2007 levels, in which fewer than 1,000 glider vehicles would be produced in most years. Only non-exempt glider vehicles would be subject to different requirements under the NHTSA and EPA regulations. However, we believe that this is unlikely to exceed a few hundred vehicles in any year, which would be few enough not to result in any meaningful disharmony between the two agencies.

With regard to NHTSA's safety authority over gliders, the agency notes that it has become increasingly aware of potential noncompliance with its regulations applicable to gliders. NHTSA has learned of manufacturers who are creating glider vehicles that are new vehicles under 49 CFR 571.7(e); however, the manufacturers are not certifying them and obtaining a new VIN as required. NHTSA plans to pursue enforcement actions as applicable against noncompliant manufacturers. In addition to enforcement actions, NHTSA may consider amending 49 CFR 571.7(e) and related regulations as necessary. NHTSA believes manufacturers may not be using this regulation as originally intended.

(5) In-Use Standards

Section 202(a)(1) of the CAA specifies that EPA is to propose emissions standards that are applicable for the useful life of the vehicle. The in-use Phase 2 standards that EPA is proposing would apply to individual vehicles and engines, just as EPA adopted for Phase 1. NHTSA is also proposing to use the same useful life mileage and years as EPA for Phase 2.

EPA is also not proposing any changes to provisions requiring that the useful life for tractors with respect to CO₂ emissions be equal to the respective useful life periods for criteria pollutants, as shown below in Table III-4. See 40 CFR 1037.106(e). EPA does not expect degradation of the technologies evaluated for Phase 2 in terms of CO₂ emissions, therefore we propose no changes to the regulations describing compliance with GHG pollutants with regards to deterioration. See 40 CFR 1037.241. We welcome comments that highlight a need to change this approach.

D. Feasibility of the Proposed Tractor Standards

This section describes the agencies' technical feasibility and cost analysis in greater detail. Further detail on all of these technologies can be found in the draft RIA Chapter 2.

Class 7 and 8 tractors are used in combination with trailers to transport freight. The variation in the design of these tractors and their typical uses drive different technology solutions for each regulatory subcategory. As noted above, the agencies are proposing to continue the Phase 1 provisions that treat vocational tractors as vocational vehicles instead of as combination tractors, as noted in Section III.C. The focus of this section is on the feasibility of the proposed standards for combination tractors including the heavy-haul tractors, but not the vocational tractors.

EPA and NHTSA collected information on the cost and effectiveness of fuel consumption and CO₂ emission reducing technologies from several sources. The primary sources of information were the Southwest Research Institute evaluation of heavy-duty vehicle fuel efficiency and costs for NHTSA, the Department of Energy's SuperTruck Program, 2010 National Academy of Sciences report of Technologies and Approaches to Reducing the Fuel Consumption of Medium- and Heavy-Duty Vehicles, TIAX's assessment of technologies to support the NAS panel report, the analysis conducted by the Northeast States Center for a Clean Air Future, International Council on Clean Transportation, Southwest Research Institute and TIAX for reducing fuel consumption of heavy-duty long haul combination tractors (the NESCCAF/ICCT study), and the technology cost analysis conducted by ICF for EPA.

(1) What technologies did the agencies consider to reduce the CO₂ emissions and fuel consumption of combination tractors?

Manufacturers can reduce CO₂ emissions and fuel consumption of combination tractors through use of many technologies, including engine, drivetrain, aerodynamic, tire, extended idle, and weight reduction technologies. The agencies' determination of the feasibility of the proposed HD Phase 2 standards is based on our projection of the use of these technologies and an assessment of their effectiveness. We will also discuss other technologies that could potentially be used, such as vehicle speed limiters, although we are not basing the proposed standards on their use for the model years covered by this proposal, for various reasons discussed below.

In this section we discuss generally the tractor and engine technologies that the agencies considered to improve performance of heavy-duty tractors, while Section III.D.2 discusses the baseline tractor definition and technology packages the agencies used to determine the proposed standard levels.

Engine technologies: As discussed in Section II.D above, there are several engine technologies that can reduce fuel consumption of heavy-duty tractors. These technologies include friction reduction, combustion system optimization, and Rankine cycle. These engine technologies would impact the Phase 2 vehicle results because the agencies propose that the manufacturers enter a fuel map into GEM.

Aerodynamic technologies: There are opportunities to reduce aerodynamic drag from the tractor, but it is sometimes difficult to assess the benefit of individual aerodynamic features. Therefore, reducing aerodynamic drag requires optimizing of the entire system. The potential areas to reduce drag include all sides of the truck—front, sides, top, rear and bottom. The grill, bumper, and hood can be designed to minimize the pressure created by the front of the truck. Technologies such as aerodynamic mirrors and fuel tank fairings can reduce the surface area perpendicular to the wind and provide a smooth surface to minimize disruptions of the air flow. Roof fairings provide a transition to move the air smoothly over the tractor and trailer. Side extenders can minimize the air entrapped in the gap between the tractor and trailer. Lastly, underbelly treatments can manage the flow of air underneath the tractor. DOE has partnered with the heavy-duty industry to demonstrate vehicles that achieve a 50 percent improvement in freight efficiency. This SuperTruck program has led to significant advancements in the aerodynamics of combination tractor-trailers. The manufacturers' SuperTruck demonstration vehicles are achieving approximately 7 percent freight efficiency improvements over a 2010 MY baseline vehicle due to improvements in tractor aerodynamics. The 2010 NAS Report on heavy-duty trucks found that aerodynamic improvements which yield 3 to 4 percent fuel consumption reduction or 6 to 8 percent reduction in Cd values, beyond technologies used in today's SmartWay trucks are achievable.

Lower Rolling Resistance Tires: A tire's rolling resistance results from the tread compound material, the architecture and materials of the casing, tread design, the tire manufacturing process, and its operating conditions (surface, inflation pressure, speed, temperature, etc.). Differences in rolling resistance of up to 50 percent have been identified for tires designed to equip the same vehicle. Since 2007, SmartWay designated tractors have had steer tires with rolling resistance coefficients of less than 6.6 kg/metric ton for the steer tire and less than 7.0 kg/metric ton for the drive tire. Low rolling resistance (LRR) drive tires are currently offered in both dual assembly and wide-based single configurations. Wide based single tires can offer rolling resistance reduction along with improved aerodynamics and weight reduction. The lowest rolling resistance value submitted for 2014MY GHG and fuel efficiency certification was 4.3 and 5.0 kg/metric ton for the steer and drive tires respectively.

Weight Reduction: Reductions in vehicle mass lower fuel consumption and GHG emissions by decreasing the overall vehicle mass that is moved down the road. Weight reductions also increase vehicle payload capability which can allow additional tons to be carried by fewer trucks consuming less fuel and producing lower emissions on a ton-mile basis. We treated such weight reduction in two ways in Phase 1 to account for the fact that combination tractor-trailers weigh-out approximately one-third of the time and cube-out approximately two-thirds of the time. Therefore in Phase 1 and also as proposed for Phase 2, one-third of the weight reduction would be added payload in the denominator while two-thirds of the weight reduction is subtracted from the overall weight of the vehicle in GEM. See 76 FR 57153.

In Phase 1, we reflected mass reductions for specific technology substitutions (e.g., installing aluminum wheels instead of steel wheels). These substitutions were included where we could with confidence verify the mass reduction information provided by the manufacturer. The agencies propose to expand the list of weight reduction components which can be input into GEM in order to provide the manufacturers with additional means to comply via GEM with the combination tractor standards and to further encourage reductions in vehicle weight. As in Phase 1, we recognize that there may be additional potential for weight reduction in new high strength steel components which combine the reduction due to the material substitution along with improvements in redesign, as evidenced by the studies done for light-duty vehicles. In the development of the high strength steel component weights, we are only assuming a reduction from material substitution and no weight reduction from redesign, since we do not have any data specific to redesign of heavy-duty components nor do we have a regulatory mechanism to differentiate between material substitution and improved design. Additional weight reduction would be evaluated as a potential off-cycle credit.

Extended Idle Reduction: Auxiliary power units (APU), fuel operated heaters, battery supplied air conditioning, and thermal storage systems are among the technologies available today to reduce main engine extended idling from sleeper cabs. Each of these technologies reduces fuel consumption during idling from a truck without this equipment (the baseline) from approximately 0.8 gallons per hour (main engine idling fuel consumption rate) to approximately 0.2 gallons per hour for an APU. EPA and NHTSA agree with the TIAX assessment that a 5 percent reduction in overall fuel consumption reduction is achievable.

Idle Reduction: Day cab tractors often idle while cargo is loaded or unloaded, as well as during the frequent stops that are inherent with driving in urban traffic conditions near cargo destinations. To recognize idle reduction technologies that reduce workday idling, the agencies have developed a new idle-only duty cycle that is proposed to be used in GEM. As discussed above in Section II.D, this new proposed certification test cycle would measure the amount of fuel saved and CO₂ emissions reduced by two primary types of technologies: Neutral idle and stop-start. The proposed rules apply this test cycle only to vocational vehicles because these types of vehicles spend more time at idle than tractors. However, the agencies request comment on whether we should extend this vocational vehicle idle reduction approach to day cab tractors. Neutral idle would only be available for tractors using torque-converter automatic transmissions, and stop-start would be available for any tractor. Unlike the fixed numerical value in GEM for automatic engine shutdown systems to reduce overnight idling of combination tractors, this new idle reduction approach would result in different numerical values depending on user inputs. The required inputs and other details about this cycle, as it would apply to vocational vehicles, are described in the draft RIA Chapter 3. If we extended this approach to day cab tractors, we could set a fixed GEM composite cycle weighting factor at a value representative of the time spent at idle for a typical day cab tractor, possibly five percent. Under this approach, tractor manufacturers would be able to select GEM inputs that identify the presence of workday idle reduction technologies, and GEM would calculate the associated benefit due to these technologies, using this new idle-only cycle as described in the draft RIA Chapter 3.

The agencies have also received a letter from the California Air Resources Board requesting consideration of credits for reducing solar loads. Solar reflective paints and solar control glazing technologies are briefly discussed in draft RIA Chapter 2.4.9.3. The agencies request comment on the Air Resources Board's letter and recommendations.

Vehicle Speed Limiters: Fuel consumption and GHG emissions increase proportional to the square of vehicle speed. Therefore, lowering vehicle speeds can significantly reduce fuel consumption and GHG emissions. A vehicle speed limiter (VSL), which limits the vehicle's maximum speed, is another technology option for compliance that is already utilized today by some fleets (though the typical maximum speed setting is often higher than 65 mph).

Downsized Engines and Downspeeding: As tractor manufacturers continue to reduce the losses due to vehicle loads, such as aerodynamic drag and rolling resistance, the amount of power required to move the vehicle decreases. In addition, engine manufacturers continue to improve the power density of heavy-duty engines through means such as reducing the engine friction due to smaller surface area. These two changes lead to the ability for truck purchasers to select lower displacement engines while maintaining the previous level of performance. Engine downsizing could be more effective if it is combined with the downspeeding assuming increased BMEP does not affect durability. The increased efficiency of the vehicle moves the operating points down to a lower load zone on a fuel map, which often moves the engine away from its sweet spot to a less efficient zone. In order to compensate for this loss, downspeeding allows the engine to run at a lower engine speed and move back to higher load zones, thus can slightly improve fuel efficiency. Reducing the engine size allows the vehicle operating points to move back to the sweet spot, thus further improving fuel efficiency. Engine downsizing can be accounted for as a vehicle technology through the use of the engine's fuel map in GEM.

Transmission: As discussed in the 2010 NAS report, automatic (AT) and automated manual transmissions (AMT) may offer the ability to improve vehicle fuel consumption by optimizing gear selection compared to an average driver. However, as also noted in the report and in the supporting TIAX report, the improvement is very dependent on the driver of the truck, such that reductions ranged from 0 to 8 percent. Well-trained drivers would be expected to perform as well or even better than an automatic transmission since the driver can see the road ahead and anticipate a changing stoplight or other road condition that neither an automatic nor automated manual transmission can anticipate. However, poorly-trained drivers that shift too frequently or not frequently enough to maintain optimum engine operating conditions could be expected to realize improved in-use fuel consumption by switching from a manual transmission to an automatic or automated manual transmission. As transmissions continue to evolve, we are now seeing in the European heavy-duty vehicle market the addition of dual clutch transmissions (DCT). DCTs operate similar to AMTs, but with two clutches so that the transmission can maintain engine speed during a shift which improves fuel efficiency. We believe there may be real benefits in reduced fuel consumption and GHG emissions through the adoption of dual clutch, automatic or automated manual transmission technology.

Low Friction Transmission, Axle, and Wheel Bearing Lubricants: The 2010 NAS report assessed low friction lubricants for the drivetrain as providing a 1 percent improvement in fuel consumption based on fleet testing. A field trial of European medium-duty trucks found an average fuel consumption improvement of 1.8 percent using SAE 5W-30 engine oil, SAE 75W90 axle oil and SAE 75W80 transmission oil when compared to SAE 15W40 engine oil and SAE 90W axle oil, and SAE 80W transmission oil. The light-duty 2012-16 MY vehicle rule and the pickup truck portion of this program estimate that low friction lubricants can have an effectiveness value between 0 and 1 percent compared to traditional lubricants.

Drivetrain: Most tractors today have three axles—a steer axle and two rear drive axles, and are commonly referred to as 6x4 tractors. Manufacturers offer 6x2 tractors that include one rear drive axle and one rear non-driving axle. The 6x2 tractors offer three distinct benefits. First, the non-driving rear axle does not have internal friction and therefore reduces the overall parasitic losses in the drivetrain. In addition, the 6x2 configuration typically weighs approximately 300 to 400 lbs less than a 6x4 configuration. Finally, the 6x2 typically costs less or is cost neutral when compared to a 6x4 tractor. Sources cite the effectiveness of 6x2 axles at between 1 and 3 percent. Similarly, with the increased use of double and triple trailers, which reduce the weight on the tractor axles when compared to a single trailer, manufacturers offer 4x2 axle configurations. The 4x2 axle configuration would have as good as or better fuel efficiency performance than a 6x2.

Accessory Improvements: Parasitic losses from the engine come from many systems, including the water pump, oil pump, and power steering pump. Reductions in parasitic losses are one of the areas being developed under the DOE SuperTruck program. As presented in the DOE Merit reviews, Navistar stated that they demonstrated a 0.45 percent reduction in fuel consumption through water pump improvements and 0.3 percent through oil pump improvements compared to a current engine. In addition, Navistar showed a 0.9 percent benefit for a variable speed water pump and variable displacement oil pump. Detroit Diesel reports a 0.5 percent coming from improved water pump efficiency. It should be noted that water pump improvements include both pump efficiency improvement and variable speed or on/off controls. Lube pump improvements are primarily achieved using variable displacement pumps and may also include efficiency improvement. All of these results shown in this paragraph are demonstrated through the DOE SuperTruck program at single operating point on the engine map, and therefore the overall expected reduction of these technologies is less than the single point result.

Intelligent Controls: Skilled drivers know how to control a vehicle to obtain maximum fuel efficiency by, among other things, considering road terrain. For example, the driver may allow the vehicle to slow down below the target speed on an uphill and allow it to go over the target speed when going downhill, to essentially smooth out the engine demand. Electronic controls can be developed to essentially mimic this activity. The agencies propose to provide a 2 percent reduction in fuel consumption and CO₂ emissions for vehicles configured with intelligent controls, such as predictive cruise control.

Automatic Tire Inflation Systems: Proper tire inflation is critical to maintaining proper stress distribution in the tire, which reduces heat loss and rolling resistance. Tires with reduced inflation pressure exhibit a larger footprint on the road, more sidewall flexing and tread shearing, and therefore, have greater rolling resistance than a tire operating at its optimal inflation pressure. Bridgestone tested the effect of inflation pressure and found a 2 percent variation in fuel consumption over a 40 psi range. Generally, a 10 psi reduction in overall tire inflation results in about a 1 percent reduction in fuel economy. To achieve the intended fuel efficiency benefits of low rolling resistance tires, it is critical that tires are maintained at the proper inflation pressure.

Proper tire inflation pressure can be maintained with a rigorous tire inspection and maintenance program or with the use of tire pressure and inflation systems. According to a study conducted by FMCSA in 2003, about 1 in 5 tractors/trucks is operating with 1 or more tires underinflated by at least 20 psi. A 2011 FMCSA study estimated underinflation accounts for one service call per year and increases tire procurement costs 10 to 13 percent. The study found that total operating costs can increase by $600 to $800 per year due to underinflation. A recent study by The North American Council on Freight Efficiency, found that adoption of tire pressure monitoring systems is increasing. It also found that reliability and durability of commercially available tire pressure systems are good and early issues with the systems have been addressed. These automatic tire inflation systems monitor tire pressure and also automatically keep tires inflated to a specific level. The agencies propose to provide a 1 percent CO₂ and fuel consumption reduction value for tractors with automatic tire inflation systems installed.

Tire pressure monitoring systems notify the operator of tire pressure, but require the operator to manually inflate the tires to the optimum pressure. Because of the dependence on the operator's action, the agencies are not proposing to provide a reduction value for tire pressure monitoring systems. We request comment on this approach and seek data from those that support a reduction value be assigned to tire pressure monitoring systems.

Hybrid: Hybrid powertrain development in Class 7 and 8 tractors has been limited to a few manufacturer demonstration vehicles to date. One of the key benefit opportunities for fuel consumption reduction with hybrids is less fuel consumption when a vehicle is idling, but the standard is already premised on use of extended idle reduction so use of hybrid technology would duplicate many of the same emission reductions attributable to extended idle reduction. NAS estimated that hybrid systems would cost approximately $25,000 per tractor in the 2015 through the 2020 time frame and provide a potential fuel consumption reduction of 10 percent, of which 6 percent is idle reduction which can be achieved (less expensively) through the use of other idle reduction technologies. The limited reduction potential outside of idle reduction for Class 8 sleeper cab tractors is due to the mostly highway operation and limited start-stop operation. Due to the high cost and limited benefit during the model years at issue in this action (as well as issues regarding sufficiency of lead time (see Section III.D.2 below), the agencies are not including hybrids in assessing standard stringency (or as an input to GEM).

Management: The 2010 NAS report noted many operational opportunities to reduce fuel consumption, such as driver training and route optimization. The agencies have included discussion of several of these strategies in draft RIA Chapter 2, but are not using these approaches or technologies in the standard setting process. The agencies are looking to other resources, such as EPA's SmartWay Transport Partnership and regulations that could potentially be promulgated by the Federal Highway Administration and the Federal Motor Carrier Safety Administration, to continue to encourage the development and utilization of these approaches.

(2) Projected Technology Effectiveness and Cost

EPA and NHTSA project that CO₂ emissions and fuel consumption reductions can be feasibly and cost-effectively met through technological improvements in several areas. The agencies evaluated each technology and estimated the most appropriate adoption rate of technology into each tractor subcategory. The next sections describe the baseline vehicle configuration, the effectiveness of the individual technologies, the costs of the technologies, the projected adoption rates of the technologies into the regulatory subcategories, and finally the derivation of the proposed standards.

The agencies propose Phase 2 standards that project by 2027, all high-roof tractors would have aerodynamic performance equal to or better today's SmartWay performance—which represents the best of today's technology. This would equate to having 40 percent of new high roof sleeper cabs in 2027 complying with the current best practices and 60 percent of the new high-roof sleeper cab tractors sold in 2027 having better aerodynamic performance than the best tractors available today. For tire rolling resistance, we premised the proposed standards on the assumption that nearly all tires in 2027 would have rolling resistance equal to or superior to tires meeting today's SmartWay designation. As discussed in Section II.D, the agencies assume the proposed 2027 MY engines would achieve an additional 4 percent improvement over Phase 1 engines and we project would include 15 percent of waste heat recovery (WHR) and many other advanced engine technologies. In addition, we are proposing standards that project improvements to nearly all of today's transmissions, incorporation of extended idle reduction technologies on 90 percent of sleeper cabs, and significant adoption of other types of technologies such as predictive cruise control and automatic tire inflation systems.

In addition to the high cost and limited utility of hybrids for many tractor drive cycles noted above, the agencies believe that hybrid powertrains systems for tractors may not be sufficiently developed and the necessary manufacturing capacity put in place to base a standard on any significant volume of hybrid tractors. Unlike hybrids for vocational vehicles and light-duty vehicles, the agencies are not aware of any full hybrid systems currently developed for long haul tractor applications. To date, hybrid systems for tractors have been primarily focused on idle shutdown technologies and not on the broader energy storage and recovery systems necessary to achieve reductions over typical vehicle drive cycles. The proposed standards reflect the potential for idle shutdown technologies through GEM. Further as highlighted by the 2010 NAS report, the agencies do believe that full hybrid powertrains may have the potential in the longer term to provide significant improvements in tractor fuel efficiency and to greenhouse gas emission reductions. However, due to the high cost, limited benefit during highway driving, and lacking any existing systems or manufacturing base, we cannot conclude with certainty, absent additional information, that such technology would be available for tractors in the 2021-2027 timeframe. However the agencies welcome comment from industry and others on their projected timeline for deployment of hybrid powertrains for tractor applications.

(a) Tractor Baselines for Costs and Effectiveness

The fuel efficiency and CO₂ emissions of combination tractors vary depending on the configuration of the tractor. Many aspects of the tractor impact its performance, including the engine, transmission, drive axle, aerodynamics, and rolling resistance. For each subcategory, the agencies selected a theoretical tractor to represent the average 2017 model year tractor that meets the Phase 1 standards (see 76 FR 57212, September 15, 2011). These tractors are used as baselines from which to evaluate costs and effectiveness of additional technologies and standards. The specific attributes of each tractor subcategory are listed below in Table III-5. Using these values, the agencies assessed the CO₂ emissions and fuel consumption performance of the proposed baseline tractors using the proposed version of Phase 2 GEM. The results of these simulations are shown below in Table III-6.

As noted earlier, the Phase 1 2017 model year tractor standards and the baseline 2017 model year tractor results are not directly comparable. The same set of aerodynamic and tire rolling resistance technologies were used in both setting the Phase 1 standards and determining the baseline of the Phase 2 tractors. However, there are several aspects that differ. First, a new version of GEM was developed and validated to provide additional capabilities, including more refined modeling of transmissions and engines. Second, the determination of the proposed HD Phase 2 CdA value takes into account a revised test procedure, a new standard reference trailer, and wind averaged drag as discussed below in Section III.E. In addition, the proposed HD Phase 2 version of GEM includes road grade in the 55 mph and 65 mph highway cycles, as discussed below in Section III.E. Finally, the agencies assessed the current level of automatic engine shutdown and idle reduction technologies used by the tractor manufacturers to comply with the 2014 model year CO₂ and fuel consumption standards. To date, the manufacturers are meeting the 2014 model year standards without the use of this technology. Therefore, in this proposal the agencies reverted back to the baseline APU adoption rate of 30 percent, the value used in the Phase 1 baseline.

The fuel consumption and CO₂ emissions in the baseline described above remains the same over time with no assumed improvements after 2017, absent a Phase 2 regulation. An alternative baseline was also evaluated by the agencies in which there is a continuing uptake of technologies in the tractor market that reduce fuel consumption and CO₂ emissions absent a Phase 2 regulation. This alternative baseline, referred to as the more dynamic baseline, was developed to estimate the effect of market pressures and non-regulatory government initiatives to improve tractor fuel consumption. The more dynamic baseline assumes that the significant level of research funded and conducted by the Federal government, industry, academia and other organizations will, in the future, result the adoption of some technologies beyond the levels required to comply with Phase 1 standards. One example of such research is the Department of Energy Super Truck program which has a goal of demonstrating cost-effective measures to improve the efficiency of Class 8 long-haul freight trucks by 50 percent by 2015. The more dynamic baseline also assumes that manufacturers will not cease offering fuel efficiency improving technologies that currently have significant market penetration, such as automated manual transmissions. The baselines (one for each of the nine tractor types) are characterized by fuel consumption and CO₂ emissions that gradually decrease between 2019 and 2028. In 2028, the fuel consumption for the alternative tractor baselines is approximately 4.0 percent lower than those shown in Table III-6. This results from the assumed introduction of aerodynamic technologies such as down exhaust, underbody airflow treatment in addition to tires with lower rolling resistance. The assumed introduction of these technologies reduces the CdA of the baseline tractors and CRR of the tractor tires. To take one example, the CdA for baseline high roof sleeper cabs in Table III-5 is 6.22 (m²) in 2018. In 2028, the CdA of a high roof sleeper cab would be assumed to still be 6.22 m² in the baseline case outlined above. Alternatively, in the dynamic baseline, the CdA for high roof sleeper cabs is 5.61 (m²) in 2028 due to assumed market penetration of technologies absent the Phase 2 regulation. The dynamic baseline analysis is discussed in more detail in draft RIA Chapter 11.

(b) Tractor Technology Packages

The agencies' assessment of the proposed technology effectiveness was developed through the use of the GEM in coordination with modeling conducted by Southwest Research Institute. The agencies developed the proposed standards through a three-step process, similar to the approach used in Phase 1. First, the agencies developed technology performance characteristics for each technology, as described below. Each technology is associated with an input parameter which in turn would be used as an input to the Phase 2 GEM simulation tool and its effectiveness thereby modeled. The performance levels for the range of Class 7 and 8 tractor aerodynamic packages and vehicle technologies are described below in Table III-7. Second, the agencies combined the technology performance levels with a projected technology adoption rate to determine the GEM inputs used to set the stringency of the proposed standards. Third, the agencies input these parameters into Phase 2 GEM and used the output to determine the proposed CO₂ emissions and fuel consumption levels. All percentage improvements noted below are over the 2017 baseline tractor.

(i) Engine Improvements

There are several technologies that could be used to improve the efficiency of diesel engines used in tractors. Details of the engine technologies, adoption rates, and overall fuel consumption and CO₂ emission reductions are included in Section II.D. The proposed heavy-duty tractor engine standards would lead to a 1.5 percent reduction in 2021MY, a 3.5 percent reduction in 2024MY, and a 4 percent reduction in 2027MY. These reductions would show up in the fuel map used in GEM.

(ii) Aerodynamics

The aerodynamic packages are categorized as Bin I, Bin II, Bin III, Bin IV, Bin V, Bin VI, or Bin VII based on the wind averaged drag aerodynamic performance determined through testing conducted by the manufacturer. A more complete description of these aerodynamic packages is included in Chapter 2 of the draft RIA. In general, the proposed CdA values for each package and tractor subcategory were developed through EPA's coastdown testing of tractor-trailer combinations, the 2010 NAS report, and SAE papers.

(iii) Tire Rolling Resistance

The proposed rolling resistance coefficient target for Phase 2 was developed from SmartWay's tire testing to develop the SmartWay certification, testing a selection of tractor tires as part of the Phase 1 and Phase 2 programs, and from 2014 MY certification data. Even though the coefficient of tire rolling resistance comes in a range of values, to analyze this range, the tire performance was evaluated at four levels for both steer and drive tires, as determined by the agencies. The four levels are the baseline (average) from 2010, Level I and Level 2 from Phase 1, and Level 3 that achieves an additional 25 percent improvement over Level 2. The Level 1 rolling resistance performance represents the threshold used to develop SmartWay designated tires for long haul tractors. The Level 2 threshold represents an incremental step for improvements beyond today's SmartWay level and represents the best in class rolling resistance of the tires we tested. The Level 3 values represent the long-term rolling resistance value that the agencies predicts could be achieved in the 2025 timeframe. Given the multiple year phase-in of the standards, the agencies expect that tire manufacturers will continue to respond to demand for more efficient tires and will offer increasing numbers of tire models with rolling resistance values significantly better than today's typical low rolling resistance tires. The tire rolling resistance level assumed to meet the 2017 MY Phase 1 standard high roof sleeper cab is considered to be a weighted average of 10 percent baseline rolling resistance, 70 percent Level 1, and 20 percent Level 2. The tire rolling resistance to meet the 2017MY Phase 1 standards for the high roof day cab, low roof sleeper cab, and mid roof sleeper cab includes 30 percent baseline, 60 percent Level 1 and 10 percent Level 2. Finally, the low roof day cab 2017MY standard can be met with a weighted average rolling resistance consisting of 40 percent baseline, 50 percent Level 1, and 10 percent Level 2.

(iv) Idle Reduction

The benefits for the extended idle reductions were developed from literature, SmartWay work, and the 2010 NAS report. Additional details regarding the comments and calculations are included in draft RIA Section 2.4.

(v) Transmission

The benefits for automated manual, automatic, and dual clutch transmissions were developed from literature and from simulation modeling conducted by Southwest Research Institute. The benefit of these transmissions is proposed to be set to a two percent improvement over a manual transmission due to the automation of the gear shifting.

(vi) Drivetrain

The reduction in friction due to low viscosity axle lubricants is set to 0.5 percent. 6x4 and 4x2 axle configurations lead to a 2.5 percent improvement in vehicle efficiency. Downspeeding would be as demonstrated through the Phase 2 GEM inputs of transmission gear ratio, drive axle ratio, and tire diameter. Downspeeding is projected to improve the fuel consumption by 1.8 percent.

(vii) Accessories and Other Technologies

Compared to 2017MY air conditioners, air conditioners with improved efficiency compressors will reduce CO₂ emissions by 0.5 percent. Improvements in accessories, such as power steering, can lead to an efficiency improvement of 1 percent over the 2017MY baseline. Based on literature information, intelligent controls such as predictive cruise control will reduce CO₂ emissions by 2 percent while automatic tire inflation systems improve fuel consumption by 1 percent by keeping tire rolling resistance to its optimum based on inflation pressure.

(viii) Weight Reduction

The weight reductions were developed from tire manufacturer information, the Aluminum Association, the Department of Energy, SABIC and TIAX, as discussed above in Section II.B.3.e.

(ix) Vehicle Speed Limiter

The agencies did not consider the availability of vehicle speed limiter technology in setting the Phase 1 stringency levels, and again did not consider the availability of the technology in developing regulatory alternatives for Phase 2. However, as described in more detail above, speed limiters could be an effective means for achieving compliance, if employed on a voluntary basis.

(x) Summary of Technology Performance

Table III-7 describes the performance levels for the range of Class 7 and 8 tractor vehicle technologies.

(c) Tractor Technology Adoption Rates

As explained above, tractor manufacturers often introduce major product changes together, as a package. In this manner the manufacturers can optimize their available resources, including engineering, development, manufacturing and marketing activities to create a product with multiple new features. In addition, manufacturers recognize that a truck design will need to remain competitive over the intended life of the design and meet future regulatory requirements. In some limited cases, manufacturers may implement an individual technology outside of a vehicle's redesign cycle.

With respect to the levels of technology adoption used to develop the proposed HD Phase 2 standards, NHTSA and EPA established technology adoption constraints. The first type of constraint was established based on the application of fuel consumption and CO₂ emission reduction technologies into the different types of tractors. For example, extended idle reduction technologies are limited to Class 8 sleeper cabs using the reasonable assumption that day cabs are not used for overnight hoteling. A second type of constraint was applied to most other technologies and limited their adoption based on factors reflecting the real world operating conditions that some combination tractors encounter. This second type of constraint was applied to the aerodynamic, tire, powertrain, and vehicle speed limiter technologies.

Table III-8 and Table III-10, specify the adoption rates that EPA and NHTSA used to develop the proposed standards. The agencies welcome comments on these adoption rates.

NHTSA and EPA believe that within each of these individual vehicle categories there are particular applications where the use of the identified technologies would be either ineffective or not technically feasible. For example, the agencies are not predicating the proposed standards on the use of full aerodynamic vehicle treatments on 100 percent of tractors because we know that in many applications (for example gravel truck engaged in local aggregate delivery) the added weight of the aerodynamic technologies will increase fuel consumption and hence CO₂ emissions to a greater degree than the reduction that would be accomplished from the more aerodynamic nature of the tractor.

(i) Aerodynamics Adoption Rate

The impact of aerodynamics on a tractor-trailer's efficiency increases with vehicle speed. Therefore, the usage pattern of the vehicle will determine the benefit of various aerodynamic technologies. Sleeper cabs are often used in line haul applications and drive the majority of their miles on the highway travelling at speeds greater than 55 mph. The industry has focused aerodynamic technology development, including SmartWay tractors, on these types of trucks. Therefore the agencies are proposing the most aggressive aerodynamic technology application to this regulatory subcategory. All of the major manufacturers today offer at least one SmartWay sleeper cab tractor model, which is represented as Bin III aerodynamic performance. The proposed aerodynamic adoption rate for Class 8 high roof sleeper cabs in 2027 (i.e., the degree of technology adoption on which the stringency of the proposed standard is premised) consists of 20 percent of Bin IV, 35 percent Bin V, 20 percent Bin VI, and 5 percent Bin VII reflecting our assessment of the fraction of tractors in this segment that could successfully apply these aerodynamic packages with this amount of lead time. We believe that there is sufficient lead time to develop aerodynamic tractors that can move the entire high roof sleeper cab aerodynamic performance to be as good as or better than today's SmartWay designated tractors. The changes required for Bin IV and better performance reflect the kinds of improvements projected in the Department of Energy's SuperTruck program. That program assumes that such systems can be demonstrated on vehicles by 2017. In this case, the agencies are projecting that truck manufacturers would be able to begin implementing these aerodynamic technologies as early as 2021 MY on a limited scale. Importantly, our averaging, banking and trading provisions provide manufacturers with the flexibility (and incentive) to implement these technologies over time even though the standard changes in a single step.

The aerodynamic adoption rates used to develop the proposed standards for the other tractor regulatory categories are less aggressive than for the Class 8 sleeper cab high roof. Aerodynamic improvements through new tractor designs and the development of new aerodynamic components is an inherently slow and iterative process. The agencies recognize that there are tractor applications which require on/off-road capability and other truck functions which restrict the type of aerodynamic equipment applicable. We also recognize that these types of trucks spend less time at highway speeds where aerodynamic technologies have the greatest benefit. The 2002 VIUS data ranks trucks by major use. The heavy trucks usage indicates that up to 35 percent of the trucks may be used in on/off-road applications or heavier applications. The uses include construction (16 percent), agriculture (12 percent), waste management (5 percent), and mining (2 percent). Therefore, the agencies analyzed the technologies to evaluate the potential restrictions that would prevent 100 percent adoption of more advanced aerodynamic technologies for all of the tractor regulatory subcategories.

As discussed in Section III.C.2, the agencies propose to increase the number of aerodynamic bins for low and mid roof tractors from the two levels adopted in Phase 1 to four levels in Phase 2. The agencies propose to increase the number of bins for these tractors to reflect the actual range of aerodynamic technologies effective in low and mid roof tractor applications. The aerodynamic improvements to the bumper, hood, windshield, mirrors, and doors are developed for the high roof tractor application and then carried over into the low and mid roof applications.

(ii) Low Rolling Resistance Tire Adoption Rate

For the tire manufacturers to further reduce tire rolling resistance, the manufacturers must consider several performance criteria that affect tire selection. The characteristics of a tire also influence durability, traction control, vehicle handling, comfort, and retreadability. A single performance parameter can easily be enhanced, but an optimal balance of all the criteria will require improvements in materials and tread design at a higher cost, as estimated by the agencies. Tire design requires balancing performance, since changes in design may change different performance characteristics in opposing directions. Similar to the discussion regarding lesser aerodynamic technology application in tractor segments other than sleeper cab high roof, the agencies believe that the proposed standards should not be premised on 100 percent application of Level 3 tires in all tractor segments given the potential interference with vehicle utility that could result.

(iii) Weight Reduction Technology Adoption Rate

Unlike in HD Phase 1, the agencies propose setting the 2021 through 2027 model year tractor standards without using weight reduction as a technology to demonstrate the feasibility. However, as described in Section III.C.2 below, the agencies are proposing an expanded list of weight reduction options which could be input into the GEM by the manufacturers to reduce their certified CO₂ emission and fuel consumption levels. The agencies view weight reduction as a technology with a high cost that offers a small benefit in the tractor sector. For example, our estimate of a 400 pound weight reduction would cost $2,050 (2012$) in 2021MY, but offers a 0.3 percent reduction in fuel consumption and CO₂ emissions.

(iv) Idle Reduction Technology Adoption Rate

Idle reduction technologies provide significant reductions in fuel consumption and CO₂ emissions for Class 8 sleeper cabs and are available on the market today. There are several different technologies available to reduce idling. These include APUs, diesel fired heaters, and battery powered units. Our discussions with manufacturers indicate that idle technologies are sometimes installed in the factory, but it is also a common practice to have the units installed after the sale of the truck. We would like to continue to incentivize this practice and to do so in a manner that the emission reductions associated with idle reduction technology occur in use. Therefore, as adopted in Phase 1, we are allowing only idle emission reduction technologies which include an automatic engine shutoff (AES) with some override provisions. However, we welcome comment on other approaches that would appropriately quantify the reductions that would be experienced in the real world.

We propose an overall 90 percent adoption rate for this technology for Class 8 sleeper cabs. The agencies are unaware of reasons why AES with extended idle reduction technologies could not be applied to this high fraction of tractors with a sleeper cab, except those deemed a vocational tractor, in the available lead time.

The agencies are interested in extending the idle reduction benefits beyond Class 8 sleepers, to day cabs. The agencies reviewed literature to quantify the amount of idling which is conducted outside of hoteling operations. One study, conducted by Argonne National Laboratory, identified several different types of trucks which might idle for extended amounts of time during the work day. Idling may occur during the delivery process, queuing at loading docks or border crossings, during power take off operations, or to provide comfort during the work day. However, the study provided only “rough estimates” of the idle time and energy use for these vehicles. The agencies are not able to appropriately develop a baseline of workday idling for day cabs and identify the percent of this idling which could be reduced through the use of AES. We welcome comment and data on quantifying the effectiveness of AES on day cabs.

(v) Vehicle Speed Limiter Adoption Rate

As adopted in Phase 1, we propose to continue the approach where vehicle speed limiters may be used as a technology to meet the proposed standard. In setting the proposed standard, however, we assumed a zero percent adoption rate of vehicle speed limiters. Although we believe vehicle speed limiters are a simple, easy to implement, and inexpensive technology, we want to leave the use of vehicles speed limiters to the truck purchaser. Since truck fleets purchase tractors today with owner-set vehicle speed limiters, we considered not including VSLs in our compliance model. However, we have concluded that we should allow the use of VSLs that cannot be overridden by the operator as a means of compliance for vehicle manufacturers that wish to offer it and truck purchasers that wish to purchase the technology. In doing so, we are providing another means of meeting that standard that can lower compliance cost and provide a more optimal vehicle solution for some truck fleets or owners. For example, a local beverage distributor may operate trucks in a distribution network of primarily local roads. Under those conditions, aerodynamic fairings used to reduce aerodynamic drag provide little benefit due to the low vehicle speed while adding additional mass to the vehicle. A vehicle manufacturer could choose to install a VSL set at 55 mph for this vehicle at the request of the customer. The resulting tractor would be optimized for its intended application and would be fully compliant with our program all at a lower cost to the ultimate tractor purchaser.

As in Phase 1, we have chosen not to base the proposed standards on performance of VSLs because of concerns about how to set a realistic adoption rate that avoids unintended adverse impacts. Although we expect there would be some use of VSL, currently it is used when the fleet involved decides it is feasible and practicable and increases the overall efficiency of the freight system for that fleet operator. To date, the compliance data provided by manufacturers indicate that none of the tractor configurations include a tamper-proof VSL setting less than 65 mph. At this point the agencies are not in a position to determine in how many additional situations use of a VSL would result in similar benefits to overall efficiency or how many customers would be willing to accept a tamper-proof VSL setting. As discussed in Section III.E.2.f below, we welcome comment on suggestions to modify the tamper-proof requirement while maintaining assurance that the speed limiter is used in-use throughout the life of the vehicle. We are not able at this time to quantify the potential loss in utility due to the use of VSLs, but we welcome comment on whether the use of a VSL would require a fleet to deploy additional tractors. Absent this information, we cannot make a determination regarding the reasonableness of setting a standard based on a particular VSL level. Therefore, the agencies are not premising the proposed standards on use of VSL, and instead would continue to rely on the industry to select VSL when circumstances are appropriate for its use. The agencies have not included either the cost or benefit due to VSLs in analysis of the proposed program's costs and benefits, therefore it remains a significant flexibility for manufacturers to choose.

(vi) Summary of the Adoption Rates Used To Determine the Proposed Standards

Table III-8 through Table III-10 provide the adoption rates of each technology broken down by weight class, cab configuration, and roof height.

(d) Derivation of the Proposed Tractor Standards

The agencies used the technology effectiveness inputs and technology adoption rates to develop GEM inputs to derive the proposed HD Phase 2 fuel consumption and CO₂ emissions standards for each subcategory of Class 7 and 8 combination tractors. Note that we have analyzed one technology pathway for each proposed level of stringency, but manufacturers would be free to use any combination of technology to meet the standards, and with the flexibility of averaging, banking and trading, to meet the standard on average. The agencies derived a scenario tractor for each subcategory by weighting the individual GEM input parameters included in Table III-7 with the adoption rates in Table III-8 through Table III-10. For example, the proposed CdA value for a 2021MY Class 8 Sleeper Cab High Roof scenario case was derived as 40 percent times 6.3 plus 35 percent times 5.6 plus 20 percent times 5.1 plus 5 percent times 4.7, which is equal to a CdA of 5.74 m. Similar calculations were made for tire rolling resistance, transmission types, idle reduction, and other technologies. To account for the proposed engine standards and engine technologies, the agencies assumed a compliant engine fuel map in GEM. The agencies then ran GEM with a single set of vehicle inputs, as shown in Table III-11, to derive the proposed standards for each subcategory. Additional detail is provided in the draft RIA Chapter 2.

The proposed level of the 2027 model year standards, in addition to the phase-in standards in model years 2021 and 2024 for each subcategory is included in Table III-14.

A summary of the draft technology package costs is included in Table III-15 through Table III-17 for MYs 2021, 2024, and 2027, respectively, with additional details available in the draft RIA Chapter 2.12. We welcome comments on the technology costs.

(i) Proposed Heavy-Haul Tractor Standards

For Phase 2, the agencies propose to add a tenth subcategory to the tractor category for heavy-haul tractors. The agencies recognize the need for manufacturers to build these types of vehicles for specific applications and believe the appropriate way to prevent penalizing these vehicles is to set separate standards recognizing a heavy-haul vehicle's unique needs, such as requiring a higher horsepower engine or different transmissions. The agencies are proposing this change in Phase 2 because unlike in Phase 1 the engine, transmission, and drivetrain technologies are included in the technology packages used to determine the stringency of the proposed tractor standards and are included as manufacturer inputs in GEM. This means that the agencies can adopt a standard reflecting individualized performance of these technologies in particular applications, in this case, heavy-haul tractors, and further, have a means of reliably assessing individualized performance of these technology at certification.

The typical tractor is designed with a Gross Combined Weight Rating (GCWR) of approximately 80,000 lbs due to the effective weight limit on the federal highway system, except in states with preexisting higher weight limits. The agencies propose to consider tractors with a GCWR over 120,000 lbs as heavy-haul tractors. Based on comments received during the development of HD Phase 1 (76 FR 57136-57138) and because we are not proposing a sales limit for heavy-haul like we have for the vocational tractors, the agencies also believe it would be appropriate to further define the heavy-haul vehicle characteristics to differentiate these vehicles from the vehicles in the other nine tractor subcategories. The two additional requirements would include a total gear reduction greater than or equal to 57:1 and a frame Resisting Bending Moment (RBM) greater than or equal to 2,000,000 in-lbs per rail or rail and liner combination. Heavy-haul tractors typically require the large gear reduction to provide the torque necessary to start the vehicle moving. These vehicles also typically require frame rails with extra strength to ensure the ability to haul heavy loads. We welcome comment on the proposed heavy-haul tractor specifications, including whether Gross Vehicle Weight Rating (GVWR) or Gross Axle Weight Rating (GAWR) would be a more appropriate metric to differentiate between a heavy-haul tractor and a typical tractor.

The agencies propose that heavy-haul tractors demonstrate compliance with the proposed standards using the day cab drive cycle weightings of 19 percent transient cycle, 17 percent 55 mph cycle, and 64 percent 65 mph cycle. We also propose that GEM simulates the heavy-haul tractors with a payload of 43 tons and a total tractor, trailer, and payload weight of 118,500 lbs. In addition, we propose that the engines installed in heavy-haul tractors meet the proposed tractor engine standards included in 40 CFR 1036.108. We welcome comments on these proposed specifications.

The agencies recognize that certain technologies used to determine the stringency of the proposed Phase 2 tractor standards are less applicable to heavy-haul tractors. Heavy-haul tractors are not typically used in the same manner as long-haul tractors with extended highway driving, and therefore would experience less benefit from aerodynamics. Aerodynamic technologies are very effective at reducing the fuel consumption and GHG emissions of tractors, but only when traveling at highway speeds. At lower speeds, the aerodynamic technologies may have a detrimental impact due to the potential of added weight. The agencies therefore are not considering the use of aerodynamic technologies in the development of the proposed Phase 2 heavy-haul tractor standards. Moreover, because aerodynamics would not play a role in the heavy-haul standards, the agencies propose to combine all of the heavy-haul tractor cab configurations (day and sleeper) and roof heights (low, mid, and high) into a single heavy-haul tractor subcategory. We welcome comment on this approach.

Certain powertrain and drivetrain components are also impacted during the design of a heavy-haul tractor, including the transmission, axles, and the engine. Heavy-haul tractors typically require transmissions with 13 or 18 speeds to provide the ratio spread to ensure that the tractor is able to start pulling the load from a stop. Downsped powertrains are typically not an option for heavy-haul operations because these vehicles require more torque to move the vehicle because of the heavier load. Finally, due to the loading requirements of the vehicle, it is not likely that a 6x2 axle configuration can be used in heavy-haul applications.

The agencies used the following heavy-haul tractor inputs for developing the proposed 2021, 2024, and 2027 MY standards, as shown in Table III-18 and Table III-19.

The baseline 2017 MY heavy-haul tractor would emit 57 grams of CO₂ per ton-mile and consume 5.6 gallons of fuel per 1,000 ton-mile. The agencies propose the heavy-haul standards shown in Table III-20. We welcome comment on the heavy-haul tractor technology path and standards proposed by the agencies.

The technology costs associated with the proposed heavy-haul tractor standards are shown below in Table III-21. We welcome comment on the technology costs.

(e) Consistency of the Proposed Tractor Standards With the Agencies' Legal Authority

The proposed HD Phase 2 standards are based on adoption rates for technologies that the agencies regard, subject to consideration of public comment, as the maximum feasible for purposes of EISA Section 32902 (k) and appropriate under CAA Section 202 (a) for the reasons given in Section III.D.2(b) through (d) above; see also draft RIA Chapter 2.4. The agencies believe these technologies can be adopted at the estimated rates for these standards within the lead time provided, as discussed in draft RIA Chapter 2. The 2021 and 2024 MY standards are phase-in standards on the path to the 2027 MY standards and were developed using less aggressive application rates and therefore have lower technology package costs than the 2027 MY standards. Moreover, we project the cost of these technologies would be rapidly recovered by operators due to the associated fuel savings, as shown in the payback analysis included in Section IX below. The cost per tractor to meet the proposed 2027 MY standards is projected to range between $10,000 and $13,000 (much or all of this would be mitigated by the fuel savings during the first two years of ownership). The agencies note that while the projected costs are significantly greater than the costs projected for Phase 1, we still consider that cost to be reasonable, especially given the relatively short payback period. In this regard the agencies note that the estimated payback period for tractors of less than two years is itself shorter than the estimated payback period for light duty trucks in the 2017-2025 light duty greenhouse gas standards. That period was slightly over three years, see 77 FR 62926-62927, which EPA found to be a highly reasonable given the usual period of ownership of light trucks is typically five years. The same is true here. Ownership of new tractors is customarily four to six years, meaning that the greenhouse gas and fuel consumption technologies pay for themselves early on and the purchaser sees overall savings in succeeding years—while still owning the vehicle. The agencies note further that the costs for each subcategory are relatively proportionate; that is, costs of any single tractor subcategory are not disproportionately higher (or lower) than any other. Although the proposal is technology-forcing (especially with respect to aerodynamic and tire rolling resistance improvements), the agencies believe that manufacturers retain leeway to develop alternative compliance paths, increasing the likelihood of the standards' successful implementation. The agencies also regard these reductions as cost-effective, even without considering payback period. The agencies estimate the cost per metric ton of CO₂ eq reduction without considering fuel savings to be $20 in 2030, and we estimate the cost per gallon of avoided fuel consumption to be about $0.25 per gallon, which compares favorably with the levels of cost effectiveness the agencies found to be reasonable for light duty trucks. See 77 FR 62922. The proposed phase-in 2021 and 2024 MY standards are less stringent and less costly than the proposed 2027 MY standards. For these reasons, and because the agencies have carefully considered lead time, EPA believes they are also reasonable under Section 202(a) of the CAA. Given that the agencies believe the proposed standards are technically feasible, are highly cost effective, and highly cost effective when accounting for the fuel savings, and have no apparent adverse potential impacts (e.g., there are no projected negative impacts on safety or vehicle utility), the proposed standards appear to represent a reasonable choice under Section 202(a) of the CAA and the maximum feasible under NHTSA's EISA authority at 49 U.S.C. 32902(k)(2).

Based on the information before the agencies, we currently believe that Alternative 3 would be maximum feasible and reasonable for the tractor segment for the model years in question. The agencies believe Alternative 4 has potential to be the maximum feasible and reasonable alternative; however, based on the evidence currently before us, EPA and NHTSA have outstanding questions regarding relative risks and benefits of Alternative 4 due to the timeframe envisioned by the alternative. Alternative 3 is generally designed to achieve the levels of fuel consumption and GHG reduction that Alternative 4 would achieve, but with several years of additional lead-time—i.e., the Alternative 3 standards would end up in the same place as the Alternative 4 standards, but several years later, meaning that manufacturers could, in theory, apply new technology at a more gradual pace and with greater flexibility. However, Alternative 4 would provide earlier GHG benefits compared to Alternative 3.

(f) Alternative Tractor Standards Considered

The agencies developed and considered other alternative levels of stringency for the Phase 2 program. The results of the analysis of these alternatives are discussed below in Section X of the preamble. For tractors, the agencies developed the following alternatives as shown in Table III-22.

When evaluating the alternatives, it is necessary to evaluate the impact of a proposed regulation in terms of CO₂ emission reductions, fuel consumption reductions, and technology costs. However, it is also necessary to consider other aspects, such as manufacturers' research and development resources, the impact on purchase price, and the impact on purchasers. Manufacturers are limited in their ability to develop and implement new technologies due to their human resources and budget constraints. This has a direct impact on the amount of lead time that is required to meet any new standards. From the owner/operator perspective, heavy-duty vehicles are a capital investment for firms and individuals so large increases in the upfront cost could impact buying patterns. Though the dollar value of the lifetime fuel savings will far exceed the upfront technology costs, purchasers often discount future fuel savings for a number of reasons. The purchaser often has uncertainty in the amount of fuel savings that can be expected for their specific operation due to the diversity of the heavy-duty tractor market. Although a nationwide perspective that averages out this uncertainty is appropriate for rulemaking analysis, individual operators must consider their potentially narrow operation. In addition, purchasers often put a premium on reliability (because downtime is costly in terms of towing, repair, late deliveries, and lost revenue) and may perceive any new technology as a potential risk with respect to reliability. Another factor that purchasers consider is the impact of a new technology on the resale market, which can also be impacted by uncertainty.

The agencies selected the proposed standards over the more stringent alternatives based on considering the relevant statutory factors. In 2027, the proposed standards achieve up to a 24 percent reduction in CO₂ emissions and fuel consumption compared to a Phase 1 tractor at a per vehicle cost of approximately $13,000. Alternative 4 achieves the same percent reduction in CO₂ emissions and fuel consumption compared to a Phase 1 tractor, but three years earlier, at a per vehicle cost of approximately $14,000. The alternative standards are projected to result in more emission and fuel consumption reductions from the heavy-duty tractors built in model years 2021 through 2026. We project the proposed standards to be achievable within known design cycles, and we believe these standards would allow different paths to compliance in addition to the one we outline and cost here.

The agencies solicit comment on all of these issues and again note the possibility of adopting, in a final action, standards that are more accelerated than those proposed in Alternative 3. The agencies are also assuming that both the proposed standards and Alternative 4 could be accomplished with all changes being made during manufacturers' normal product design cycles. However, we note that doing so would be more challenging for Alternative 4 and may require accelerated research and development outside of design cycles with attendant increased costs.

The agencies are especially interested in seeking detailed comments on Alternative 4. Therefore, we are including the details of the Alternative 4 analysis below. The adoption rates considered for the 2021 and 2024 MY standards developed for Alternative 4 are shown below in Table III-23 and Table III-24. The inputs to GEM used to develop the Alternative 4 CO₂ and fuel consumption standards are shown below in Table III-25 and Table III-26. The standards associated with Alternative 4 are shown below in Table III-27. Commenters are encouraged to address all aspects of feasibility analysis, including costs, the likelihood of developing the technology to achieve sufficient relaibility within the proposed lead time, and the extent to which the market could utilize the technology.

(g) Derivation of Alternative 4 Tractor Standards

The adoption rates considered for the 2021 and 2024 MY standards developed for Alternative 4 are shown below in Table III-23 and Table III-24. The inputs to GEM used to develop the Alternative 4 CO₂ and fuel consumption standards are shown below in Table III-25 and Table III-26. The standards associated with Alternative 4 are shown below in Table III-27. Commenters are encouraged to address all aspects of feasibility analysis, including costs, the likelihood of developing the technology to achieve sufficient relaibility within the lead time.