Rule: Fuel Economy Standards: Light Trucks 2008-2011 Model Years

Thursday,
April 6, 2006
Part II
Department of
Transportation
National Highway Traffic Safety
Administration
49 CFR Parts 523, 533 and 537

Average Fuel Economy Standards for
Light Trucks Model Years 2008–2011;
Final Rule
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17566 Federal Register / Vol. 71, No. 66 / Thursday, April 6, 2006 / Rules and Regulations
DEPARTMENT OF TRANSPORTATION wide costs of the Reformed standards We recognize that financial
are roughly equivalent to the industry- difficulties currently exist in the motor
National Highway Traffic Safety wide costs of the Unreformed CAFE vehicle industry and that a substantial
Administration standards in those model years. For MY number of job reductions have been
2011, the Reformed CAFE standard is announced recently by large full-line
49 CFR Parts 523, 533 and 537 set at the level that maximizes net manufacturers. Accordingly, we have
[Docket No. NHTSA 2006–24306]
benefits. Net benefits includes the carefully balanced the costs of the rule
increase in light truck prices due to with the benefits of conservation.
RIN 2127–AJ61 technology improvements, the decrease Compared to Unreformed CAFE,
in fuel consumption, and a number of Reformed CAFE enhances overall fuel
Average Fuel Economy Standards for other factors viewed from a societal savings while providing vehicle
Light Trucks Model Years 2008–2011 perspective. All of the standards have manufacturers with the flexibility they
AGENCY: National Highway Traffic been set at the maximum feasible level, need to respond to changing market
Safety Administration (NHTSA), while accounting for technological conditions. Reformed CAFE will also
Department of Transportation. feasibility, economic practicability and provide a more equitable regulatory
other relevant factors. framework by creating a level-playing
ACTION: Final rule. Since a manufacturer’s compliance field for manufacturers, regardless of
SUMMARY: This final rule reforms the
obligation for a model year under whether they are full-line or limited-line
Reformed CAFE depends in part on its manufacturers. We are particularly
structure of the corporate average fuel
actual production in that model year, its encouraged that Reformed CAFE will
economy (CAFE) program for light
obligation cannot be calculated with reduce the adverse safety risks
trucks and establishes higher CAFE
absolute precision until the final generated by the Unreformed CAFE
standards for model year (MY) 2008–
production figures for that model year program. The transition from the
2011 light trucks. Reforming the CAFE
become known. However, a Unreformed CAFE to the Reformed
program will enable it to achieve larger
manufacturer can calculate its CAFE system will begin soon, but ample
fuel savings, while enhancing safety and
obligation with a reasonably high degree lead time is provided before Reformed
preventing adverse economic
of accuracy in advance of that model CAFE takes full effect in MY 2011.
consequences.
year, based on its product plans for the
During a transition period of MYs year. Prior to and during the model year, DATES: Today’s final rule is effective
2008–2010, manufacturers may comply the manufacturer will be able to track all August 4, 2006. Petitions for
with CAFE standards established under of the key variables in the formula used reconsideration must be received by
the reformed structure (Reformed CAFE) for calculating its obligation (e.g., May 22, 2006.
or with standards established in the distribution of production and the fuel ADDRESSES: Petitions for reconsideration
traditional way (Unreformed CAFE). economy of each of its models). This must be submitted to: Administrator,
This will permit manufacturers and the final rule announces estimates of the National Highway Traffic Safety
agency to gain experience with compliance obligations, by Administration, 400 Seventh Street,
implementing the Reformed CAFE manufacturer, for MYs 2008–2011 under SW., Nassif Building, Washington, DC
standards. In MY 2011, all Reformed CAFE, using the fuel economy 20590–001.
manufacturers will be required to targets established by NHTSA and the FOR FURTHER INFORMATION CONTACT: For
comply with a Reformed CAFE product plans submitted to NHTSA by technical issues, call Ken Katz, Lead
standard. the manufacturers in response to an Engineer, Fuel Economy Division,
Under Reformed CAFE, fuel economy August 2005 request for updated Office of International Vehicle, Fuel
standards are restructured so that they product plans. Economy, and Consumer Standards, at
are based on a measure of vehicle size This rulemaking is mandated by the (202) 366–0846, facsimile (202) 493–
called ‘‘footprint,’’ the product of Energy Policy and Conservation Act 2290, electronic mail
multiplying a vehicle’s wheelbase by its (EPCA), which was enacted in the kkatz@nhtsa.dot.gov. For legal issues,
track width. A target level of fuel aftermath of the energy crisis created by call Stephen Wood or Christopher
economy is established for each the oil embargo of 1973–74. The Calamita of the Office of the Chief
increment in footprint. Smaller footprint concerns about reliance on petroleum Counsel, at (202) 366–2992, or e-mail
light trucks have higher targets and imports, energy security, and the effects them at swood@nhtsa.dot.gov or
larger ones, lower targets. A particular of energy prices and supply on national ccalamita@nhtsa.dot.gov.
manufacturer’s compliance obligation economic well-being that led to the
for a model year will be calculated as enactment of EPCA remain very much SUPPLEMENTARY INFORMATION:
the harmonic average of the fuel alive today. America is still overly Table of Contents
economy targets for the manufacturer’s dependent on petroleum. Sustained I. Executive summary
vehicles, weighted by the distribution of growth in the demand for oil A. Events leading to today’s final rule
manufacturer’s production volumes worldwide, coupled with tight crude oil B. Today’s final rule
among the footprint increments. Thus, supplies, are the driving forces behind C. Energy demand and supply and the
each manufacturer will be required to the sharp price increases seen over the value of conservation
comply with a single overall average past several years and are expected to II. Background
fuel economy level for each model year remain significant factors in the years A. 1974 DOT/EPA report to Congress on
of production. ahead. Increasingly, the oil consumed in potential for motor vehicle fuel economy
The Unreformed CAFE standards are: the U.S. originates in countries with improvements
22.5 miles per gallon (mpg) for MY B. Energy Policy and Conservation Act of
political and economic situations that
1975
2008, 23.1 mpg for MY 2009, and 23.5 raise concerns about future oil supply C. 1979–2002 light truck standards
mpg for MY 2010. To aid the transition and prices. In the long run, D. 2001 National Energy Policy
to Reformed CAFE, the Reformed CAFE technological innovation will play an E. 2002 NAS study of CAFE reform
standards for those years are set at levels increasingly larger role in reducing our F. 2003 final rule establishing MY 2005–
intended to ensure that the industry- dependence on petroleum. 2007 light truck standards
Federal Register / Vol. 71, No. 66 / Thursday, April 6, 2006 / Rules and Regulations 17567
G. 2003 comprehensive plans for F. MY 2008–2011 Reformed CAFE C. Reporting requirements

addressing vehicle rollover and standards D. Preemption
compatibility VII. Technology issues XV. Rulemaking analyses and notices
H. 2003 ANPRM A. Reliance on the NAS report A. Executive Order 12866 and DOT
1. Need for reform B. Technologies included in the Regulatory Policies and Procedures
2. Reform options manufacturers’ product plans B. National Environmental Policy Act
I. Recent Developments C. Lead Time C. Regulatory Flexibility Act
1. Factors underscoring need for reform D. Technology effectiveness and practical D. Executive Order 13132 Federalism
2. Revised Product Plans limitations E. Executive Order 12988 (Civil Justice
III. Summary of the NPRM E. Technology incompatibility Reform)
IV. Summary of public comments F. Weight reduction F. Unfunded Mandates Reform Act
V. The Unreformed CAFE standards for MYs VIII. Economic assumptions G. Paperwork Reduction Act
2008–2010 A. Costs of technology H. Regulation Identifier Number (RIN)
A. Legal authority and requirements under B. Fuel prices I. Executive Order 13045
EPCA C. Consumer valuation of fuel economy J. National Technology Transfer and
B. Establishing Unreformed standards and payback period Advancement Act
according to EPCA—process for D. Opportunity costs K. Executive Order 13211
determining maximum feasible levels E. Rebound effect L. Department of Energy review
C. Baseline for determining manufacturer F. Discount rate M. Privacy Act
capabilities in MYs 2008–2010 G. Import externalities (monopsony, oil XVI. Regulatory Text
D. Technologically feasible additions to disruption effects, and costs of
product plans maintaining U.S. presence and strategic I. Executive Summary
E. Improved product plans petroleum reserve)
F. Economic practicability and other H. Uncertainty analysis
A. Events Leading to Today’s Final Rule
economic issues I. The 15 percent gap In the notice of proposed rulemaking
1. Costs J. Pollution and greenhouse gas valuation (NPRM) that the agency published on
2. Benefits K. Increased driving range and vehicle August 30, 2005, the agency proposed to
3. Comparison of estimated costs to miles traveled reform the light truck CAFE program.
estimated benefits L. Added costs from congestion, crashes, The Reformed CAFE standard was to be
4. Uncertainty and noise
based on a step function.1 To aid the
G. Unreformed standards for MYs 2008– M. Employment impacts
2010 IX. MY 2008–2010 Transition period transition to the Reformed CAFE
VI. The Reformed CAFE standards for MYs A. Choosing the Reformed or Unreformed system, we proposed to provide
2008–2011 CAFE system manufacturers with two alternative
A. Overview of Reformed CAFE B. Application of credits between compliance options (Unreformed and
B. Authority for Reformed CAFE compliance options Reformed) for manufacturers in MYs
C. Legal issues related to Reformed CAFE X. Impact of other Federal motor vehicle 2008–2010. The agency proposed
1. Maximum feasible standards requiring compliance with the Reformed
2. Backstop A. Federal motor vehicle safety standards CAFE system, beginning in MY 2011.
3. Transition period 1. FMVSS 138, Tire Pressure Monitoring The agency noted in the NPRM that it
D. Structure of Reformed CAFE System 2 FMVSS 202, Head Restraints
was publishing a separate notice
1. Footprint based function 3. FMVSS 208, Occupant Crash Protection
2. Continuous function (Rear Center Seat Lap/Shoulder Belts) inviting the manufacturers to submit
a. Overview of establishing the continuous 4. FMVSS 208, Occupant Crash Protection more updated product plans and stated
function standard (35 mph Frontal Impact Testing) that it recognized that the new plans
b. Industry-wide considerations in defining 5. FMVSS 301, Fuel System Integrity might differ enough from the previously
the stringency of the standard B. Potential future safety standards and submitted plans to necessitate changes
c. Improving the light truck fleet voluntary safety improvements in the shape of the step function as well
d. Defining the function and the 1. Anti-lock Brakes and Electronic Stability as in the levels of stringency of the
preliminary shape of the curve Control (ESC) standards.
e. Final level of the curve (and the targets) 2. Roof Crush, FMVSS 216 In addition, the agency invited public
3. Application of the continuous function 3. Side Impact and Ejection Mitigation Air comment on a number of additional
based standard Bags (Thorax and Head Air Bags)
4. Why this approach to reform and not 4. Offset Frontal Crash Testing
changes to the CAFE program. One was
another? C. Cumulative weight impacts of the safety whether to base the Reformed CAFE on
a. Continuous function vs. the proposed standards and voluntary improvements a continuous function instead of a step
step-function (categories) D. Federal Motor Vehicle Emissions function. A second was whether to
b. Continuous function and targets vs. Standards include large sport utility vehicles
classes and standards 1. Tier 2 requirements (SUVs) in the CAFE standards. A third
c. Consideration of additional attributes 2. Onboard vapor recovery was whether to revise the ‘‘flat floor’’
d. Backstop and ‘‘fuel saving’’ mechanisms 3. California Air Resources Board—Clean criterion for classifying vehicles as light
5. Benefits of reform Air Act Section 209 standards trucks so that minivans and passenger
a. Increased energy savings XI. Need of the Nation to Conserve Energy vans would be treated as light trucks.
b. Reduced incentive to respond to the XII. Comparison of the final and proposed In response to the NPRM and request
CAFE program in ways harmful to safety standards
i. Reduces incentive to reduce vehicle size A. Changes in the Volpe model
for new product plans, the agency
and to offer smaller vehicles B. Higher fuel price forecasts
1 As proposed, the structure of Reformed CAFE
ii. Reduces the difference between car and C. Revisions to the Reformed CAFE system
for each model year would have three basic
light truck CAFE standards D. Updated product plans
elements—
c. More equitable regulatory framework E. Evaluating the adopted Reformed CAFE
(1)—six footprint categories of vehicles.
d. More responsive to market changes XIII. Applicability of the CAFE standards
(2)—a target level of average fuel economy for

E. Comparison of estimated costs to A. Inclusion of MDPVs in MY 2011 each footprint category, as expressed by a step
estimated benefits B. ‘‘Flat-floor’’ provision function (see figure 1 below).
1. Costs XIV. Additional issues (3)—a Reformed CAFE standard based on the
2. Benefits A. Limited-line manufacturer standard harmonic production-weighted average of the fuel
3. Uncertainty B. Credit trading economy targets for each category.
obtained a great deal of new safety by eliminating the previous We estimate that compliance with these
information. Compared to the plans that regulatory incentive to downsize standards will save 4.4 billion gallons of
the manufacturers submitted to the vehicles and by raising the light truck fuel over the lifetime of the vehicles
agency in early 2004, the new plans standards so that there is no regulatory sold during those model years,
submitted in November 2005 contained incentive from the CAFE program to compared to the savings that would
a significant increase in the variety and design small vehicles as light trucks occur if the standards remained at the
amount of efforts to improve fuel instead of passenger cars. It prevents MY 2007 level of 22.2 mpg.
economy. The agency also received adverse economic consequences by Under Reformed CAFE, each
critiques of the analyses it performed to incorporating greater consideration of manufacturer’s required level of CAFE
determine the fuel economy capabilities economic practicability issues into the is based on target levels set according to
of the manufacturers in MYs 2008–2011. projections of the timing and rate at vehicle size. The targets are assigned
In response to the public comments, which manufacturers can introduce fuel according to a vehicle’s ‘‘footprint’’—the
the agency revised its analyses and economy improving technologies into product of the average track width (the
assumptions including those related to their fleets, and by setting the Reformed distance between the centerline of the
the rate at which increased amounts of CAFE standards, beginning in MY 2011, tires) and wheelbase (basically, the
fuel saving technologies can be added to at the level at which marginal benefits distance between the centers of the
a manufacturer’s fleet. The new equal marginal costs. axles). Each vehicle footprint value is
assumptions are closer to the During a transition period of MYs assigned a target specific to that
assumptions made by the National 2008–2010, manufacturers may comply footprint value. This differs from what
Academies of Science in a 2002 study with CAFE standards established under we proposed. The proposed reform was
of the CAFE program, and provide the reformed structure (Reformed CAFE) based on a discontinuous (or ‘‘step’’)
increased assurance that the standards or with standards established in the function. The proposal segmented the
adopted today will be economically traditional way (Unreformed CAFE). light truck fleet into six discrete
practicable. This will permit manufacturers to gain categories based on ranges of footprint
NHTSA also made other changes. It experience with the Reformed CAFE and assigned a target fuel economy
decided to base Reformed CAFE on a standards. The Reformed CAFE value for each category. The reform
continuous function instead of a step standards for those model years are set adopted in today’s final rule is based on
function in order to reduce the incentive at levels intended to ensure that the a continuous function. Under it, targets
under Reformed CAFE for industry-wide costs of those standards are assigned along the continuum of
manufacturers to downsize (thus are roughly equivalent to the industry- footprint values in the light truck fleet.
reducing safety) or upsize (thus wide costs of the Unreformed CAFE Each footprint value has a different
reducing fuel economy) vehicles. It also standards for those model years. The target. The target values reflect the
decided to add the larger SUVs and technological and economic capabilities
additional lead time provided by the
passenger vans to the mandatory of the industry. The target for a given
transition period will aid, for example,
Reformed CAFE program in MY 2011 footprint value is the same for all
those manufacturers that, for the first
and beyond to increase long-term energy manufacturers, regardless of differences
time, face a binding CAFE standard (i.e.,
savings. in their overall fleet mixes. Compliance
one set above their planned level of
B. Today’s Final Rule CAFE) and will be required to make fuel is determined by comparing a
manufacturer’s harmonically averaged
The final rule adopted today reforms economy improvements to achieve
fleet fuel economy in a model year with
the structure of the CAFE regulatory compliance. In MY 2011, all
a required fuel economy level calculated
program so that it achieves higher fuel manufacturers are required to comply
using the manufacturer’s actual
savings while enhancing safety and with a Reformed CAFE standard. The
production levels and the category
preventing adverse economic Reformed CAFE standard for that model
targets.
consequences. We have previously set year is set at the level that maximizes The Reformed CAFE standards
forth our concerns about the way in net benefits by setting the fuel economy adopted today are more stringent than
which the current CAFE program targets at the point at which marginal those proposed in the NPRM. Under the
operates and sought comment on benefits of the last added increment of Reformed CAFE system in the NPRM,
approaches to reforming the CAFE fuel savings equal the marginal costs of we estimated that the average CAFE
program. We have also previously the added technology that produced level required of light truck
increased light truck CAFE standards, those savings. manufacturers would be 23.9 mpg. It is
from the ‘‘frozen’’ level of 20.7 mpg As in prior CAFE rulemakings important to note that the MY 2011
applicable from MY 1996 through MY establishing Unreformed standards, this standard as adopted in this rule applies
2004, to a level of 22.2 mpg applicable final rule sets the Unreformed standards to a larger population of vehicles than
to MY 2007. In adopting those increased for MYs 2008–2010 with particular that in the NPRM. Today’s final rule
standards, we noted that we were regard to the capabilities of and impacts includes medium duty passenger
limited in our ability to make further on the ‘‘least capable’’ full line vehicles (MDPVs) (i.e., larger passenger
increases without reforming the manufacturer (i.e., a full line vans and SUVs) as part of the MY 2011
program. manufacturer is one that produces a regulated fleet. We estimate that the
The Reformed CAFE structure wide variety of types and sizes of average CAFE level required of
established and institutionalized in this vehicles) with a significant share of the manufacturers under this rule in MY
document minimizes those limitations market. A single CAFE level, applicable 2011 will be 24.0 mpg. Thus, the MY
by establishing a system based on light to each manufacturer, is established for 2011 standard is more stringent than
truck size, which allows us to establish each model year. that proposed while regulating more
higher CAFE standards for MY 2008– The Unreformed CAFE standards for vehicles, i.e., larger vehicles with
2011 light trucks and achieve greater MYs 2008–2010 are: typically low fuel economy
fuel savings across the industry. In MY 2008: 22.5 mpg performance.
addition to the improved energy MY 2009: 23.1 mpg As stated above, manufacturers
savings, this CAFE program enhances MY 2010: 23.5 mpg provided updated product plans that
reflect changes made to the evaluated light trucks would be paid back 2 in Average Fuel Economy (CAFE)
light truck fleet used in the NPRM, additional fuel savings in an average of Standards). The agency believes that
partly in response to changes in fuel 2.9 years and to buyers of MY 2011 light these reforms give the Reformed CAFE
prices. Changing market conditions, a trucks in an average of 4,4 years, approach four basic advantages over the
regulatory landscape revised by our assuming fuel prices ranging from $1.96 Unreformed CAFE approach.
proposal, and the more stringent fuel to $2.39 per gallon (in 2003 dollars).3 First, Reformed CAFE increases
efficiency levels required under Reform We estimate that the total benefits under energy savings. The energy-saving
CAFE will result in the production of the Unreformed CAFE standards for potential of Unreformed CAFE is
MY 2008–2011 light truck fleets that MYs 2008–2010 plus the Reformed limited because only a few full-line
will consume approximately 11 billion CAFE standard for MY 2011 are manufacturers are required to make
fewer gallons of fuel over their lifetimes approximately $7.6 billion (2003 improvements. In effect, the capabilities
than the fleets that were originally dollars, discounted at 7%), and under of these full-line manufacturers, whose
planned in 2004. the Reformed CAFE standards for MYs offerings include larger and heavier
Apart from the updated product 2008–2011 are approximately $8.1 light trucks, constrain the stringency of
billion (2003 dollars, discounted at 7%). the uniform, industry-wide standard. As
plans, the agency has revised some of
We have determined that the a result, the Unreformed CAFE standard
the assumptions inputted into the
standards under both Unreformed CAFE is generally set below the capabilities of
Reformed CAFE analysis. In response to
and Reformed CAFE represent the limited-line manufacturers, who sell
comments and consistent with the
maximum feasible fuel economy level predominantly lighter and smaller light
findings of the National Academy of
for each system. In reaching this trucks. Under Reformed CAFE, which
Sciences, we revised the phase-in rates
conclusion, we have balanced the accounts for size differences in product
to provide for additional lead-time
express statutory factors and other mix, virtually all light-truck
when projecting technology
relevant considerations, such as safety manufacturers will be required to use
applications. The agency also revised
concerns, effects on employment and advanced fuel-saving technologies to
fuel prices and the vehicle miles the need for flexibility to transition to a achieve the requisite fuel economy for
traveled schedule, which is used to Reformed CAFE program that can their vehicles. Thus, Reformed CAFE
calculate fuel savings, in response to achieve greater fuel savings in a more will continue to require full-line
higher fuel price forecasts. economically efficient way. manufacturers to improve the overall
Given the revised product plans, the The Reformed CAFE approach fuel economy of their fleets, while also
revisions to the model assumptions, and incorporates several important elements requiring limited-line manufacturers to
the more stringent standards adopted in of reform suggested by the National enhance the fuel economy of the
this rule, the Reformed standards will Academy of Sciences in its 2002 report vehicles they sell.
save approximately 7.8 billion (Effectiveness and Impact of Corporate Second, Reformed CAFE offers
additional gallons of fuel over the enhanced safety. Due to the structure of
lifetime of the vehicles sold during 2 The payback period represents the length of Unreformed CAFE standards, vehicle
those four model years. The Reformed time required for a vehicle buyer to recoup the manufacturers that need to supplement
higher cost of purchasing a more fuel-efficient
standards for MYs 2008–2010 will save vehicle through savings in fuel use. When a more
their product plans in order to comply
approximately 500 million more gallons stringent CAFE standard requires a manufacturer to with the standards can increase their
of fuel than the Unreformed standards improve the fuel economy of some of its vehicle likelihood of compliance by pursuing a
for those model years. As noted above, models, the manufacturer’s added costs for doing so variety of compliance strategies that
are reflected in higher prices for these models.
the Reformed standard for MY 2011 is While buyers of these models pay higher prices to entail safety risks: Downsizing of
the first Reformed standard set through purchase these vehicles, their improved fuel vehicles, design of some vehicles to
a process the explicitly maximizes net economy lowers their owners’ costs for purchasing permit classification as ‘‘light trucks’’
benefits. It will save more than 2.8 fuel to operate them. Over time, buyers thus recoup for CAFE purposes, and offering smaller
the higher purchase prices they pay for these
billion gallons of fuel over the lifetime vehicles in the form of savings in outlays for fuel.
and lighter vehicles to offset sales of
of vehicle sold in that model year. The length of time required to repay the higher cost larger and heavier vehicles. The adverse
In order to provide a comparison of of buying a more fuel-efficient vehicle is referred to safety effects of downsizing and
as the buyer’s ‘‘payback period.’’ downweighting have already been
the fuel savings of the final rule versus The length of this payback period depends on the
the proposed rule, we recalculated the documented for passenger cars in the
initial increase in a vehicle’s purchase price, the
fuel savings from the proposed improvement in its fuel economy, the number of CAFE program. For example, when a
Reformed CAFE standards using the miles it is driven each year, and the retail price of manufacturer designs a vehicle to
updated product plans and the final rule
fuel. We calculated payback periods using the fuel permit its classification as a light truck,
economy improvement and average price increase it may increase the vehicle’s propensity
assumptions. Under this analysis, we for each manufacturer’s vehicles estimated to result
calculated that the proposed Reformed from the proposed standard, the U.S. Energy to roll over.
Information Administration’s forecast of future Reformed CAFE is designed to lessen
standards would save 5.4 billion gallons
retail gasoline prices, and estimates of the number each of these safety risks. Downsizing of
under these more current assumptions. of miles light trucks are driven each year as they vehicles is discouraged under Reformed
This compares to the 7.8 billion gallons age developed from U.S. Department of
CAFE since as vehicles become smaller,
of fuel saved under the more stringent Transportation data. Energy Information
Administration, Annual Energy Outlook 2005 (AEO the applicable fuel economy target
Reformed CAFE standards adopted
2005), Table 100, http://www.eia.doe.gov/oiaf/aeo/ becomes more stringent. Moreover,
today. supplement/index.html; and U.S. Department of Reformed CAFE lessens the incentive to
If all manufacturers comply with the Transportation, 2001 National Household Travel
design smaller vehicles to achieve a
Reformed CAFE standards, the total Survey, http://nhts.ornl.gov/2001/index.shtml.
Under these assumptions, payback periods for the ‘‘light truck’’ classification, since many
costs would be approximately $6.7 final rule alternatives (i.e., Unreformed and small light trucks are subject to targets
billion for MYs 2008–2011, compared to Reformed CAFE) range from 2.9 to 4.9 years. . that have at least the same degree of
the costs they would incur if the 3 The fuel prices used to calculate the length of
stringency as passenger car standards, if
standards remained at the MY 2007 the payback periods are those expected over the life
of the MY 2008–2011 light trucks, not the current not higher stringency.
level of 22.2 mpg. The resulting vehicle fuel prices. Those future fuel prices were obtained Third, Reformed CAFE provides a
price increases to buyers of MY 2008 from the AEO 2006 (Early Report). more equitable regulatory framework for
different vehicle manufacturers. Under today.5 The demand for oil is steadily II. Background
Unreformed CAFE, the cost burdens and growing in the U.S. and around the In proposing the CAFE standards for
compliance difficulties have been world. By 2030, U.S. demand for MYs 2008–2011, the agency provided a
imposed nearly exclusively on the full- petroleum products is expected to detailed summary of the history of fuel
line manufacturers. Reformed CAFE increase 33 percent compared to 2004.6 economy standards, and in particular,
spreads the regulatory cost burden for World oil demand is expected to fuel economy standards for light trucks.
fuel economy more broadly across the increase by nearly 44 percent between Below we have provided a summary of
industry. 2004 and 2025.7 Most of these increases that discussion. For more background
Fourth, Reformed CAFE is more would occur in the transportation on the light truck CAFE program, refer
market-oriented because it more fully sector. To meet this projected increase to the NPRM.
respects economic conditions and in world demand, worldwide
productive capacity would have to A. 1974 DOT/EPA Report to Congress on
consumer choice. Reformed CAFE does Potential for Motor Vehicle Fuel
not force vehicle manufacturers to increase by more than 36 million barrels
per day over current levels. OPEC Economy Improvements
adjust fleet mix toward smaller vehicles
producers are expected to supply nearly In 1974, the Department of
unless that is what consumers are Transportation (DOT) and
demanding. Instead, it allows the 40 percent of the increased production.
By 2025, 60 percent of the oil consumed Environmental Protection Agency (EPA)
manufacturers to adjust the mix of their submitted to Congress a report entitled
in the U.S. would be imported oil.
product offerings in response to the ‘‘Potential for Motor Vehicle Fuel
Strong growth in the demand for oil
market place. As a result, as the Economy Improvement (1974 Report).8
worldwide, coupled with tight crude oil
industry’s sales volume and mix This report was prepared in compliance
supplies, is the driving force behind the
changes in response to economic with Section 10 of the Energy Supply
sharp price increases seen over the past
conditions (e.g., gasoline prices and and Environmental Coordination Act of
four years. Increasingly, the oil
household income) and consumer 1974, Public Law 93–319 (the Act). In
consumed in the U.S. originates in
preferences (e.g., desire for seating the 1974 Report, DOT/EPA said that
countries with political and economic
capacity or hauling capability), the level performance standards regulating fuel
situations that raise concerns about
of CAFE required of manufacturers economy could take either of two
future oil supply and prices.
under Reformed CAFE will, at least modes: a production-weighted average
partially, adjust automatically to these Energy is an essential input to the standard for each manufacturer’s entire
changes. Accordingly, Reformed CAFE U.S. economy and having a strong fleet of vehicles or a fuel economy
reduces the need that the agency might economy is essential to maintaining and standard tailored to individual classes
otherwise have to revisit previously strengthening our national security. of vehicles. Included as a possible form
established standards in light of Conserving energy, especially reducing for a production-weighted standard was
changed market conditions, a difficult the nation’s dependence on petroleum, a variable standard based on the costs or
process that undermines regulatory benefits the U.S. in several ways. potential to improve for each
certainty for the industry. In the mid- Reducing total petroleum use decreases manufacturer (1974 Report, p. 77).
1980’s, for example, the agency relaxed our economy’s vulnerability to oil price DOT/EPA concluded in the 1974
several Unreformed CAFE standards shocks. Reducing dependence on oil Report that a production-weighted
because fuel prices fell more than had imports from regions with uncertain standard establishing one uniform
been expected when those standards conditions enhances our energy specific fuel economy average for all
were established and, as a result, security. Reducing the growth rate of oil manufacturers would, if sufficiently
consumer demand for small vehicles use will help relieve pressures on stringent to have the needed effect,
with high fuel economy did not already strained domestic refinery impact most heavily on manufacturers
capacity, decreasing the likelihood of who have lower fuel economy, while
materialize as expected.
future product price volatility. not requiring manufacturers of current
In addition to reforming the structure vehicles with better fuel economy to
of the light truck CAFE program, we are Today’s final rule is one piece of
President Bush’s strategy to move the maintain or improve their performance.
also expanding its applicability. Starting (1974 Report, p. 12) Production-
in MY 2011, the CAFE program will nation beyond a petroleum-based
economy. Aside from the fuel savings weighted standards specifically tailored
include MPDVs, light trucks that have a to each manufacturer would eliminate
that will be realized by today’s final
gross vehicle weight rating (GVWR) less some inequities, but were considered to
rule, the Administration is focusing
than 10,000 lbs., a GVWR greater than be difficult to administer fairly. (Ibid.)
research on bio-based transportation
8,500 lbs. or a curb weight greater than
fuels, improved batteries for hybrid B. Energy Policy and Conservation Act
6,000 lbs., and that primarily transport
vehicles, and the on-going hydrogen of 1975
passengers. We estimate this will bring
fuel initiative. The President’s Congress enacted the Energy Policy
an additional 240,000 vehicles into the Advanced Energy Initiative and today’s
CAFE program in that model year. and Conservation Act (EPCA Pub. L. 94–
final rule will build on the progress 163) during the aftermath of the energy
C. Energy Demand and Supply and the made by the Administration’s 2001 crisis created by the oil embargo of
Value of Conservation National Energy Policy and the 1973–74. The Act established an
increased CAFE standards for MY 2005– automobile fuel economy regulatory
As we noted in the notice of proposed 2007 light trucks. program by adding Title V, ‘‘Improving
rulemaking (NPRM),4 many of the Automotive Efficiency,’’ to the Motor
concerns about energy security and the 5 The sources of the figures in this section can be
Vehicle Information and Cost Savings
effects of energy prices and supply on found below in section VIII, ‘‘Need for Nation to
Act. Title V has been amended from
national economic well-being that led to conserve energy.’’
6 Annual Energy Outlook 2006 with projections to time to time and codified without
the enactment of EPCA in 1975 persist 2030 (Early Release), http://www.eia.doe.gov/oiaf/
aeo/index.html. 8 The 1974 report is available in the docket for
4 70 FR 51414, August 30, 2005. 7 Id. this rulemaking.
substantive change as Chapter 329 of choice of establishing a form of a economy benefits from various
title 49, United States Code. Chapter 329 production-weighted average standard technological improvements and larger
provides for the issuance of average fuel for each manufacturer’s entire fleet of than expected adverse impacts from
economy standards for passenger light trucks, as suggested in the 1974 other federal vehicle standards and test
automobiles and separate standards for Report, or a form of production- procedures (December 31, 1979; 44 FR
automobiles that are not passenger weighted standards for classes of light 77199).
automobiles (light trucks). trucks. Congress directed the Secretary In 1984, the agency reduced the MY
For the purposes of the CAFE statute, to establish maximum feasible CAFE 1985 light truck standards after we
‘‘automobiles’’ include any ‘‘4-wheeled standards applicable to each concluded that market demand for light
vehicle that is propelled by fuel (or by manufacturer’s light truck fleet, or truck performance, as reflected in
alternative fuel) manufactured primarily alternatively, to classes of light trucks, engine mix and axle ratio usage, had not
for use on public streets, roads, and and to establish them at least 18 months materialized as anticipated when the
highways (except a vehicle operated prior to the start of each model year. agency initially established the MY
only on a rail line), and rated at not When determining a ‘‘maximum feasible 1985 standards. The agency said that
more than 6,000 pounds gross vehicle level of fuel economy,’’ the Secretary is this resulted from lower than
weight.’’ They also include any such directed to balance factors including the anticipated fuel prices. The agency
vehicle rated at between 6,000 and nation’s need to conserve energy, concluded that the only actions then
10,000 pounds gross vehicle weight technological feasibility, economic available to manufacturers to improve
(GVWR) if the Secretary decides by practicability and the impact of other their fuel economy levels for MY 1986
regulation that an average fuel economy motor vehicle standards on fuel would have involved product
standard for the vehicle is feasible, and economy. restrictions likely resulting in
that either such a standard will result in significant adverse economic impacts.
significant energy conservation or the C. 1979–2002 Light Truck Standards The reduction of the MY 1985 standard
vehicle is substantially used for the NHTSA established the first light was upheld by the U.S. Circuit Court of
same purposes as a vehicle rated at not truck CAFE standards for MY 1979 and Appeals for the District of Columbia.
more than 6,000 pounds GVWR.9 applied them to light trucks with a Center for Auto Safety v. NHTSA, 793
The CAFE standards set a minimum GVWR up to 6,000 pounds (March 14, F.2d 1322 (D.C. Cir. 1986) (rejecting the
performance requirement in terms of an 1977; 42 FR 13807). Beginning with MY contention that the agency gave
average number of miles a vehicle 1980, NHTSA raised this GVWR ceiling impermissible weight to the effects of
travels per gallon of gasoline or diesel to 8,500 pounds. For MYs 1979–1981, shifts in consumer demand toward
fuel. Individual vehicles and models are the agency established separate larger, less fuel-efficient trucks on the
not required to meet the mileage standards for two-wheel drive (2WD) fuel economy levels manufacturers
standard. Instead, each manufacturer and four-wheel drive (4WD) light trucks could achieve).10
must achieve a harmonically averaged without a ‘‘combined’’ standard On November 15, 1995, the
level of fuel economy for all specified reflecting the combined capabilities of Department of Transportation and
vehicles manufactured by a 2WD and 4WD light trucks. Related Agencies Appropriations Act for
manufacturer in a given MY. The statute Manufacturers that produced both 2WD FY 1996 was enacted, which limited the
distinguishes between ‘‘passenger vehicles and 4WD vehicles could, ability of the agency to establish CAFE
automobiles’’ and ‘‘non-passenger however, decide to treat them as a single standards for light trucks (Section 330,
automobiles.’’ We generally refer to non- fleet and comply with the 2WD Pub. L. 104–50). Pursuant to that Act,
passenger automobiles as light trucks. standard. we then issued a final rule limited to
In enacting EPCA and after Beginning with MY 1982, NHTSA MY 1998, setting the light truck CAFE
considering the variety of approaches established a combined standard standard for that year at 20.7 mpg, the
presented in the 1974 Report, Congress reflecting the combined capabilities of same level as the standard we had set
made a clear and specific choice about 2WD and 4WD light trucks, plus for MY 1997 (61 FR 14680; April 3,
the structure of the average fuel optional 2WD and 4WD standards. 1996). The same limitation on the
economy standard for passenger cars. Manufacturers had the option of setting of CAFE standards was included
Congress established a common complying under the combined fleet in the Appropriations Acts for each of
statutory CAFE standard applicable to standard, or under the separate 2WD FYs 1997–2001. The agency followed
each manufacturer’s fleet of passenger and 4WD standards. Although the the same process as for MY 1998,
automobiles. combined standard reflected the established the light truck CAFE
Congress was considerably less combined capabilities of 2WD and 4WD standard at 20.7 mpg, for MYs 1999–
decided and prescriptive with respect to light trucks, it did not necessarily reflect 2002.
what sort of standards and procedures the combined capabilities of the 2WD
should be established for light trucks. It and 4WD fleets of an individual 10 NHTSA similarly found it necessary on
neither made a clear choice among the manufacturer (e.g., a manufacturer may occasion to reduce the passenger car CAFE
approaches (or among the forms of those have found it easier to comply with the standards in response to new information. The
approaches) identified in the 1974 combined standard than the 2WD and agency reduced the MY 1986 passenger car
standard because a continuing decline in gasoline
Report nor precluded the selection of 4WD standards separately, or vice prices prevented a projected shift in consumer
any of those approaches or forms. versa). After MY 1991, NHTSA dropped demand toward smaller cars and smaller engines
Further, it did not establish by statute a the optional 2WD and 4WD standards. and because the only actions available to
CAFE standard for light trucks. Instead, As explained in the NPRM, NHTSA manufacturers to improve their fuel economy levels
for MY 1986 would have involved product
Congress provided the Secretary with a twice found it necessary to reduce a restrictions likely resulting in significant adverse
light truck standard when it received economic impacts. (October 4, 1985; 40 FR 40528)
9 In 1978, we extended the CAFE program to new information relating to the agency’s This action was upheld in Public Citizen v. NHTSA,
include vehicles rated between 6,000 and 8,500 past projections. In 1979, the agency 848 F.2d 256 (D.C. Cir. 1988). NHTSA also reduced
pounds GVWR (March 23, 1978; 43 FR 11995, at the MY 1987–88 passenger car standards (October
11997). Vehicles rated at between 6,000 and 8,500
reduced the MY 1981 2WD standard 6, 1986; 51 FR 35594) and MY 1989 passenger car
pounds GVWR first became subject to the CAFE after Chrysler demonstrated that there standard (October 6, 1988; 53 FR 39275) for similar
standards in MY 1980. were smaller than expected fuel reasons.
While the Department of should increase efficiency without economy would not be reimbursed by
Transportation and Related Agencies negatively impacting the U.S. fuel savings.’’ (NAS, p. 4 (Finding 6))
Appropriations Act for FY 2001 (Pub. L. automotive industry. The Recognizing the many trade-offs that
106–346) contained a restriction on determination of future fuel economy must be considered in setting fuel
CAFE rulemaking identical to that standards must therefore be addressed economy standards, the report took no
contained in prior appropriation acts, analytically and based on sound position on what CAFE standards would
the conference committee report for that science. be appropriate for future years. It noted,
Act directed NHTSA to fund a study by —Consider passenger safety, economic ‘‘(s)election of fuel economy targets will
the NAS to evaluate the effectiveness concerns, and disparate impact on the require uncertain and difficult trade-offs
and impacts of CAFE standards (H. Rep. U.S. versus foreign fleet of among environmental benefits, vehicle
No. 106–940, at p. 117–118). automobiles. safety, cost, oil import dependence, and
In a letter dated July 10, 2001, consumer preferences.’’
—Look at other market-based The report found that, to minimize
following the release of the President’s
approaches to increasing the national financial impacts on manufacturers, and
National Energy Policy, Secretary of
average fuel economy of new motor on their suppliers, employees, and
Transportation Mineta asked the House
vehicles. consumers, sufficient lead-time
and Senate Appropriations Committees
to lift the restriction on the agency E. 2002 NAS Study of CAFE Reform (consistent with normal product life
spending funds for the purposes of cycles) should be given when
improving CAFE standards. The In response to direction from considering increases in CAFE
Department of Transportation and Congress, NAS published a lengthy standards. The report stated that there
Related Agencies Appropriations Act for report in 2002 entitled ‘‘Effectiveness are advanced technologies that could be
FY 2002 (Pub. L. 107–87), which was and Impact of Corporate Average Fuel employed, without negatively affecting
enacted on December 18, 2001, did not Economy (CAFE) Standards.’’ 12 the automobile industry, if sufficient
contain a provision restricting the The report concludes that the CAFE lead-time were provided to the
Secretary’s authority to prescribe fuel program has clearly contributed to manufacturers.
economy standards. increased fuel economy and that it was The report expressed concerns about
appropriate to consider further increases increasing the standards under the
D. 2001 National Energy Policy in CAFE standards. (NAS, p. 3 (Finding CAFE program as currently structured.
The National Energy Policy,11 1)) It cited not only the value of fuel While raising CAFE standards under the
released in May 2001, stated that ‘‘(a) savings, but also adverse consequences existing structure would reduce fuel
fundamental imbalance between supply (i.e., externalities) associated with high consumption, doing so under alternative
and demand defines our nation’s energy levels of petroleum importation and use structures ‘‘could accomplish the same
crisis’’ and that ‘‘(t)his imbalance, if that are not reflected in the price of end at lower cost, provide more
allowed to continue, will inevitably petroleum (e.g., the adverse impact on flexibility to manufacturers, or address
undermine our economy, our standard energy security). The report further inequities arising from the present’’
of living, and our national security.’’ concluded that technologies exist that structure. (NAS, pp. 4–5 (Finding 10))13
The National Energy Policy was could significantly reduce fuel Further, the committee said, ‘‘to the
designed to promote dependable, consumption by passenger cars and extent that the size and weight of the
affordable and environmentally sound light trucks within 15 years, while fleet have been constrained by CAFE
energy for the future. The Policy maintaining vehicle size, weight, utility requirements * * * those requirements
envisions a comprehensive long-term and performance. (NAS, p. 3 (Finding have caused more injuries and fatalities
strategy that uses leading edge 5)) Light duty trucks were said to offer on the road than would otherwise have
technology to produce an integrated the greatest potential for reducing fuel occurred.’’ (NAS, p. 29) Specifically,
energy, environmental and economic consumption. (NAS, p. 4 (Finding 5)) they noted: ‘‘the downweighting and
policy. It set forth five specific national The report also noted that vehicle downsizing that occurred in the late
goals: ‘‘modernize conservation, development cycles—as well as future 1970s and early 1980s, some of which
modernize our energy infrastructure, economic, regulatory, safety and was due to CAFE standards, probably
increase energy supplies, accelerate the consumer preferences—would influence resulted in an additional 1300 to 2600
protection and improvement of the the extent to which these technologies traffic fatalities in 1993.’’ (NAS, p. 3
environment, and increase our nation’s could lead to increased fuel economy in (Finding 2)).
energy security.’’ the U.S. market. The report noted that To address those structural problems,
The National Energy Policy included the widespread penetration of even the report suggested various possible
recommendations regarding the path existing technologies will probably 13 The report noted the following about the
that the Administration’s energy policy require 4–8 years. To assess the concept of equity:
should take and included specific economic trade-offs associated with the Potential Inequities
recommendations regarding vehicle fuel introduction of existing and emerging The issue of equity or inequity is subjective.
economy and CAFE. It recommended technologies to improve fuel economy, However, one concept of equity among
that the President direct the Secretary of the NAS conducted what it called a manufacturers requires equal treatment of
equivalent vehicles made by different
Transportation to— ‘‘cost-efficient analysis’’—‘‘that is, the manufacturers. The current CAFE standards fail this
—Review and provide committee [that authored the report] test. If one manufacturer was positioned in the
recommendations on establishing identified packages of existing and market selling many large passenger cars and
thereby was just meeting the CAFE standard,
CAFE standards with due emerging technologies that could be adding a 22-mpg car (below the 27.5-mpg standard)
consideration of the National introduced over the next 10 to 15 years would result in a financial penalty or would require
Academy of Sciences study released that would improve fuel economy up to significant improvements in fuel economy for the
(in prepublication form) in July 2001. the point where further increases in fuel remainder of the passenger cars. But, if another
manufacturer was selling many small cars and was
Responsibly crafted CAFE standards significantly exceeding the CAFE standard, adding
12 The NAS submitted its preliminary report to a 22-mpg vehicle would have no negative
11 http://www.whitehouse.gov/energy/National- the Department of Transportation in July 2001 and consequences.
Energy-Policy.pdf. released its final report in January 2002. (NAS, p. 102).
reforms.14 The report found that the In February 2002, Secretary Mineta agency issued detailed reports analyzing
‘‘CAFE program might be improved asked Congress ‘‘to provide the each of the problem areas and
significantly by converting it to a system Department of Transportation with the recommending coordinated strategies
in which fuel targets depend on vehicle necessary authority to reform the CAFE that, if implemented effectively, will
attributes.’’ (NAS, p. 5 (Finding 12)). program, guided by the NAS report’s lead to significant improvements in
The report noted that a system in which suggestions.’’ safety.
fuel economy targets were dependent on Two of the problems areas are vehicle
F. 2003 Final Rule Establishing MY rollover and vehicle compatibility. The
vehicle weight, with lower fuel 2005–2007 Light Truck Standards
consumption targets set for lighter reports on those areas identify a series
vehicles and higher targets for heavier On April 7, 2003, the agency of vehicle, roadway and behavioral
vehicles, up to some maximum weight, published a final rule establishing light strategies for addressing the problems.16
would create incentives to reduce the truck CAFE standards for MYs 2005– Among the vehicle strategies, both
variance in vehicle weights between 2007: 21.0 mpg for MY 2005, 21.6 mpg reports identified reform of the CAFE
large and small vehicles, thus providing for MY 2006, and 22.2 mpg for MY 2007 program as one of the steps that needed
for overall vehicle safety. (NAS, p. 5 (68 FR 16868; Docket No. 2002–11419; to be taken to reduce those problems:
(Finding 12)). The report stated that Notice 3). The agency determined that The current structure of the CAFE system
such a system has the potential to these levels are the maximum feasible can provide an incentive to manufacturers to
increase fuel economy with fewer CAFE levels for light trucks for those downweight vehicles, increase production of
negative effects on both safety and model years, balancing the express vehicle classes that are more susceptible to
statutory factors and other included or rollover crashes, and produce a less
consumer choice.
relevant considerations such as the homogenous fleet mix. As a result, CAFE is
The report noted further that under an critical to the vehicle compatibility and
attribute-based approach, the required impact of the standard on motor vehicle
rollover problems.
CAFE levels could vary among the safety and employment. NHTSA
manufacturers based on the distribution estimated that the fuel economy Recognizing the role of CAFE, we
increases required by the standards for stated:
of their product mix. NAS stated that
targets could vary among passenger cars MYs 2005–2007 would generate It is NHTSA’s goal to identify and
and among trucks, based on some approximately 3.6 billion gallons of implement reforms to the CAFE system that
gasoline savings over the 25-year will facilitate improvements in fuel economy
attribute of these vehicles such as
lifetime of the affected vehicles. without compromising motor vehicle safety
weight, size, or load-carrying capacity. or American jobs. * * *
The report explained that a particular We recognized in the final rule that
* * * NHTSA intends to examine the safety
manufacturer’s average target for the standard established for MY 2007
impacts, both positive and negative, that may
passenger cars or for trucks would could be a challenge for General Motors. result from any modifications to CAFE as it
depend upon the fractions of vehicles it We recognized further that, between the now exists. Regardless of the root causes, it
sold with particular levels of these issuance of the final rule and the last is clear that the downsizing of vehicles that
attributes (NAS, p. 87). For example, if (MY 2007) of the model years for which occurred during the first decade of the CAFE
standards were being established, there program had serious safety consequences.
weight were the criterion, a Changes to the existing system are likely to
manufacturer that sells mostly light was more time than in previous light
truck CAFE rulemakings for significant have equally significant impacts. NHTSA is
vehicles would have to achieve higher determined to ensure that these impacts are
average fuel economy than would a changes to occur in external factors positive.
manufacturer that sells mostly heavy capable of affecting the achievable
levels of CAFE. These external factors H. 2003 ANPRM
vehicles.
The report illustrated an example of include fuel prices and the demand for On December 29, 2003, the agency
an attribute-based system using a vehicles with advanced fuel saving published an ANPRM seeking comment
continuous function (NAS, p. 109). technologies, such as hybrid electric on various issues relating to reforming
Essentially, as illustrated, the and advanced diesel vehicles. We said the CAFE program (68 FR 74908; Docket
continuous function was represented as that changes in these factors could lead No. 2003–16128).17 The agency sought
a line, which graphed ‘‘gallons per to higher or lower levels of CAFE, comment on possible enhancements to
mile’’ versus ‘‘curb weight.’’ Under the particularly in MY 2007. Recognizing the program that would assist in further
continuous function example, a that it may be appropriate to re-examine fuel conservation, while protecting
vehicle’s target fuel economy would be the MY 2007 standard in light of any motor vehicle safety and the economic
determined by locating the vehicle’s significant changes in those factors, the vitality of the automobile industry. The
curb weight along the line and agency reaffirms its plans to monitor the agency indicated that it was particularly
identifying the corresponding gallons compliance efforts of the manufacturers. interested in structural reform. That
per mile value. G. 2003 Comprehensive Plans for document, while not espousing any
Addressing Vehicle Rollover and particular form of reform, sought
14 In assessing and comparing possible reforms,
Compatibility specific input on various options aimed
the report urged consideration of the following
factors: In September 2002, NHTSA 16 See http://www-nrd.nhtsa.dot.gov/vrtc/ca/
Fuel use responses encouraged by the policy, completed a thorough examination of capubs/IPTRolloverMitigationReport/; http://www-
Effectiveness in reducing fuel use, the opportunities for significantly nrd.nhtsa.dot.gov/departments/nrd-11/aggressivity/
Minimizing costs of fuel use reduction, IPTVehicleCompatibilityReport/.
improving vehicle and highway safety 17 On the same date, we also published a request
Other potential consequences
and announced the establishment of for comments seeking manufacturer product plan
—Distributional impacts
—Safety
interdisciplinary teams to formulate information for MYs 2008–2012 to assist the agency
comprehensive plans for addressing the in analyzing possible reforms to the CAFE program
—Consumer satisfaction
four most promising problem areas.15 which are discussed in a companion notice
—Mobility published today. (68 FR 74931) The agency sought
—Environment Based on the work of the teams, the information that would help it assess the effect of
—Potential inequities, and Administrative these possible reforms on fuel economy,
feasibility. 15 A fifth problem area was announced in 2004, manufacturers, consumers, the economy, motor
(NAS, p. 94). improving traffic safety data. vehicle safety and American jobs.
at adapting the CAFE program to today’s are low compared to manufacturers that I. Recent developments
vehicle fleet and needs. produce more relatively light vehicles
1. Factors underscoring need for reform
because their sales mixes service a
1. Need for Reform In the NPRM, we recognized two
market demand for bigger and heavier
The 2003 ANPRM discussed the vehicles capable of more demanding important complicating factors that
principal criticisms of the current CAFE utilitarian functions. An attribute-based underscore the need for CAFE reform.
program that led the agency to explore (weight and/or size) system could avoid One factor is the fiscal problems
light truck CAFE reform (68 FR 74908, disparate impacts on full-line reported by General Motors and Ford,
at 74910–13). First, the energy-saving manufacturers that could result from a while the other is the recent surge in
potential of the CAFE program is sustained increase in CAFE standards. gasoline prices, a development that may
hampered by the current regulatory be exacerbating the financial challenges
structure. The Unreformed approach to 2. Reform Options faced by both companies.
CAFE does not distinguish between the In discussing potential changes, the Two of the larger, full-line light-truck
various market segments of light trucks, agency focused primarily on structural manufacturers, General Motors and
and therefore does not recognize that improvements to the current CAFE Ford, have reported serious financial
some vehicles designed for program authorized under the current difficulties. The investment community
classification purposes as light trucks statutory authority, and secondarily on has downgraded the bonds of both
may achieve fuel economy similar to definitional changes to the current companies. Further, both companies
that of passenger cars. The Unreformed vehicle classification system and have announced significant layoffs and
CAFE approach instead applies a single whether to include vehicles between other actions to improve their financial
standard to the light truck fleet as a 8,500 to 10,000 lbs. GVWR. The NPRM condition. While these financial
whole, encouraging manufacturers to explored the various reform options problems did not give rise to the
offer small light trucks that will offset raised in the ANPRM. It is worth noting Administration’s CAFE reform
the larger vehicles that get lower fuel again several of those options. initiative, the financial risks now faced
economy. A CAFE system that more Included in the reform discussion was by these companies, including their
closely links fuel economy standards to an attribute-based ‘‘continuous- workers and suppliers, underscore the
the various market segments reduces the function’’ system, such as that discussed importance to full-line vehicle
incentive to design vehicles that are in the NAS report. We chose various manufacturers of establishing an
functionally similar to passenger cars measures of vehicle weight and/or size equitable CAFE regulatory framework.
but classified as light trucks. to illustrate the possible design of an There has also been a sharp and
Second, because weight strongly sustained surge in gasoline prices since
attribute-based system. However, we
affects fuel economy, the current light our last light truck final rule in April
also sought comment as to the merits of
truck CAFE program encourages vehicle 2003 and the December 2003 ANPRM
using other vehicle attributes as the
manufacturers to reduce weight in their on CAFE reform. According to the
basis of an attribute-based system.
light truck offerings to achieve greater Energy Information Administration
fuel economy.18 As the NAS report and The 2003 ANPRM also presented
(EIA), the retail price for gasoline in
a more recent NHTSA study have found, potential reform options under which
April 2003 was $1.59 per gallon and in
downweighting of the light truck fleet, vehicles with a GVWR of up to 10,000
December 2003 was $1.48 per gallon.21
especially those trucks in the low and lbs. could be included under the CAFE
When the NPRM was published the
medium weight ranges, creates more program. One presented option would
weekly U.S. retail price was $2.55 per
safety risk for occupants of light trucks be to include vehicles defined by EPA
gallon.22 While the retail price of
and all motorists combined.19 as medium duty passenger vehicles 20
gasoline has declined since publication
Third, the agency noted the adverse for use in the CAFE program. This
of the NPRM it is still $2.34, which is
economic impacts that might result from definition would essentially make SUVs
$.75 per gallon higher than when the
steady future increases in the stringency and passenger vans between 8,500 and
2003 final rule was published.23
of CAFE standards under the current 10,000 lbs. GVWR subject to CAFE, We noted in the NPRM that it is
regulatory structure. Rapid increases in while continuing to exclude most important to recognize that CAFE
the light truck CAFE standard could medium- and heavy-duty pickups and standards for MYs 2008–2011 should
have serious adverse economic most medium- and heavy-duty cargo not be based on current gasoline prices.
consequences. The vulnerability of full- vans that are primarily used for They should be based on our best
line manufacturers to tighter CAFE agricultural and commercial purposes. forecast of what average real gasoline
standards does not arise primarily from Through the 2003 ANPRM, the agency prices will be in the U.S. during the
poor fuel economy ratings within intended to begin a public discussion on years that these vehicles will be used by
weight classes, i.e., from less extensive potential ways, within current statutory consumers: The 36-year period
use of fuel economy improving authority, to improve the CAFE program beginning in 2008 and extending to
technologies. As explained in the 2003 to better achieve our public policy 2034.24 Since miles of travel tend to be
ANPRM, their overall CAFE averages objectives. The agency set forth a
number of possible concepts and 21 See http://tonto.eia.doe.gov/oog/info/gdu/
18 Manufacturers can reduce weight without measures, and invited the public to gaspump.html.
changing the fundamental structure of the vehicle present additional concepts. The agency 22 See http://www.eia.doe.gov/oil_gas/petroleum/
by using lighter materials or eliminating available expressed interest in any suggestions data_publications/wrgp/mogas_home_page.html
equipment or options. In contrast, reducing vehicle and http://tonto.eia.doe.gov/oog/info/gdu/
size, and particularly footprint, generally entails an
toward revamping the CAFE program in gasdiesel.asp.
alteration of the basic architecture of the vehicle. such a way as to enhance overall fuel 23 See id.
19 However, both studies also suggest that if economy while protecting occupant 24 To calculate the fuel savings for the light trucks
downweighting is concentrated on the heaviest safety and the economic vitality of the manufactured in a model year, we consider the
light trucks in the fleet there would be no net safety auto market. savings over a 26-year period. The number of light
impact, and there might even be a small fleet-wide trucks manufactured during each model year that
safety benefit. There is substantial uncertainty remains in service during each subsequent calendar
about the curb weight cut-off above which this 20 The EPA’s discussion of the MDPV definition year is estimated by applying estimates of the
would occur. is at 65 FR 6698, 6749–50, 6851–6852. proportion of light trucks surviving to each age up
concentrated in the early years of a standards for model years (MYs) 2008 and impacts on the ‘‘least capable’’ full-
vehicle’s lifetime, the projected gasoline through 2011, and more importantly to line manufacturer (a full-line
price in the 2008–2020 period is reform the CAFE program (70 FR manufacturer is one that produces a
particularly relevant for this 51414). The NPRM was one piece of the wide variety of types and sizes of
rulemaking. Department of Transportation’s vehicles) with a significant share of the
The Preliminary Regulatory Impact continuing effort to achieve higher fuel market. A single CAFE level, applicable
Analysis (PRIA) for the NPRM was savings while enhancing safety and to each manufacturer, was proposed
based on projected gasoline prices from preventing adverse economic each model year as follows:
the then most recent Annual Energy consequences. We noted that the MY 2008: 22.5 mpg
Outlook 2005 (AEO2005) (published in previous rulemaking efforts increased MY 2009: 23.1 mpg
2004 before the recent price rises), the light truck CAFE standards, from the MY 2010: 23.5 mpg
which projected gasoline prices ranging ‘‘frozen’’ level of 20.7 mpg applicable
from $1.51 to $1.58 per gallon.25 The We estimated that these standards could
from MY 1996 through MY 2004, to a
Final Regulatory Impact Analysis (FRIA) save 4.4 billion gallons of fuel over the
level of 22.2 mpg applicable to MY
for today’s rule is based on the revised lifetime of the vehicles sold during
2007. However, in order to continue
forecast EIA published in the AEO2006 those model years, compared to the
moving forward with improved fuel
(Early outlook) (see FRIA p. XIII–26). savings that would occur if the
savings while enhancing safety and
The current forecasted price for gasoline standards remained at the MY 2007
preventing adverse economic
ranges from $1.96 to $2.39 per gallon.26 level of 22.2 mpg.
consequences the agency proposed to
The proposed Reformed CAFE system
2. Revised product plans reform the light truck CAFE system.
relied on a category and target system in
In response to a request for comment In the NPRM, we proposed fuel which the light truck fleet was
(RFC) 27 published in conjunction with economy standards for light trucks in segmented according to size and a
the NRPM, the agency has received MYs 2008–2010, established under the manufacturer’s required fuel economy
updated product plans from the vehicle traditional CAFE system (Unreformed level would be based on its actual fleet
manufacturers. While the NPRM was CAFE system). We also proposed distribution across the categories as
based on product plans received in standards for MYs 2008–2010 compared to applicable fuel economy
response to the 2003 ANPRM, the final established under a proposed reformed targets. As proposed, the structure of
rule relied on product plans received in CAFE system (Reformed CAFE). During Reformed CAFE for each model year
response to the August 2005 RFC. MYs 2008–2010, manufacturers would would have three basic elements—
have an option of complying with (1)—six footprint 28 categories of
III. Summary of the NPRM standards established under the vehicles.
On August 30, 2005, the agency Unreformed or the Reformed CAFE (2)—a target level of average fuel
published a notice of proposed system. We proposed that this period economy for each footprint category, as
rulemaking (NPRM) to establish CAFE would serve as a transition period to expressed by a step function (The step
provide manufacturers an opportunity or ‘‘staircase’’ nature of the function can
to 26 years (see Table VIII–2 in the PRIA). At the to adjust to changes in the CAFE system be seen in Figure 1 below.).
end of 26 years, the proportion of light trucks and to provide this agency and the
remaining in service falls below 10 percent. (3)—a Reformed CAFE standard based
manufacturers’ opportunity to gain
25 http://www.eia.doe.gov/oiaf/aeo/index.html. on the harmonic production-weighted
experience with the new system. For
26 The EIA gasoline prices are provided in 2003
average of the fuel economy targets for
dollars. In terms of 2006 dollars (based on the 2003 MY 2011, we proposed standards
each category.
GDP deflator; see, http://www.gpoaccess.gov/ established under Reformed CAFE only.
usbudget/fy05/sheets/hist10z1.xls) the forecasted
range of fuel prices would be $2.04 to 2.49. The Unreformed standards for MYs 28 Footprint is an aspect of vehicle size—the
27 70 FR 51466; August 30, 2005; Docket No. 2008–2010 were proposed with product of multiplying a vehicle’s wheelbase by its
NHTSA–2005–22144–03. particular regard to the capabilities of average track width.
To define the proposed category process. First, the agency applied Under the proposed reform, the
boundaries (step boundaries), we first feasible technology to each of the seven required level of CAFE for a particular
plotted the light truck production largest light truck manufacturers’ manufacturer for a model year would be
volumes by footprint. We then sought to fleets 29 individually until the marginal calculated after inserting the following
designate the category boundaries at cost of the added technology equaled data into the standard for that model
points where there was low volume the marginal benefit of the additional year: that manufacturer’s actual total
footprint immediately adjacent to and to technology. Next, initial targets were production and its production in each
left of a high volume footprint. Our determined by placing all of the footprint category for that model year.30
intent in doing this was to reduce any improved vehicles into the six The calculation of the required level
incentive for manufacturers to increase categories and calculating a production- would be made by dividing the
footprint in order to move a model into weighted fuel economy average within manufacturer’s total production for the
a category with a lower fuel economy each category. Finally, the initial targets model year by the sum of the six
target. We sought to create a reasonable were adjusted by equal increments of
fractions (one for each category)
number of categories that would also fuel savings to a level at which marginal
obtained by dividing the manufacturer’s
combine, to the extent practicable, cost equaled marginal benefit for
similar vehicle types into the same industry as a whole. This final level production in a category by the
category. Each category was then provided the targets as proposed, which category’s target.
assigned a fuel economy target. would be used to determine a As proposed, a manufacturer’s
The proposed fuel economy targets manufacturer’s required fuel economy required fuel economy was represented
were determined by a three-step level. as the following formula:
Manufacturer X’s Total Production of Light Trucks

= X’s required level of CAFE
X’s producction in category 1 X’s production in category 2
+ + etc
Target for category 1 Target for category 2
During the MY 2008–2010 transition Unreformed CAFE. To further ease the industry-wide cost of those standards
period, we proposed that manufacturers transition, and to ensure that the were roughly equivalent to the industry-
may comply with CAFE standards Reformed standards were economically wide cost of the Unreformed CAFE
established under Reformed CAFE or practical, the proposed Reformed CAFE standards for those model years.
with standards established under standards were set at levels at which the
ER06ap06.001</GPH>
29 The seven largest light truck manufacturers are 30 Since the calculation of a manufacturer’s occur until after those figures are submitted by the
General Motors, Ford, DaimlerChrysler, Toyota, required level of average fuel economy for a manufacturer to EPA. That submission would not,
Honda, Hyundai, and Nissan. particular model year would require knowing the of course, be made until after the end of that model
final production figures for that model year, the year.
ER06AP06.000</GPH>
final formal claculation of that level would not
As proposed, all manufacturers would In addition to the proposed step DaimlerChrysler (Docket No. 20005–
be required to comply with a Reformed function approach, the agency also 22223–1573), Toyota (Docket No.
CAFE standard in MY 2011. The discussed a continuous function NHTSA–2005–22223–1724), Honda
proposed Reformed CAFE standard for approach. We explained that under a (Docket No. NHTSA–2005–22223–
that model year was set at the level that continuous function approach there 1649), Nissan (Docket No. NHTSA–
maximized net benefits. would be no categories, but instead each 2005–22223–2058), Mitsubishi Motor
Under the NPRM, the range of targets footprint value would be assigned a fuel Company (Docket No. NHTSA–2005–
for each model year was as follows: economy target. We provided an 22223–1819), Hyundai (Docket No.
MY 2008: From 26.8 mpg for the example of a continuous function NHTSA–2005–22223–2035), Porsche
smallest vehicles to 20.4 mpg for the standard and requested comment on (Docket No. NHTSA–2005–22223–
largest; such an approach. 1688), BMW of North America (Docket
MY 2009: From 27.4 mpg for the Aside from proposing structural No. NHTSA–2005–22223–1616),
smallest vehicles to 21.0 mpg for the changes to the CAFE program, the Volkswagen of North America (Docket
largest; agency also discussed the potential of No. NHTSA–2005–22223–1674), the
MY 2010: From 27.8 mpg for the expanding the applicability of the Alliance of Automobile Manufacturers
smallest vehicles to 20.8 mpg for the program to include heavier and heavier (Alliance; Docket No. NHTSA–2005–
largest; rated light trucks in MY 2011. The 22223–1642), and the Association of
MY 2011: From 28.4 mpg for the agency requested comment on the International Automobile Manufacturers
smallest vehicles to 21.3 mpg for the inclusion of vehicles classified by the (Docket No. NHTSA–2005–22223–
largest Environmental Protection Agency (EPA) 1645).
as medium duty passenger vehicles Manufacturers generally agreed that
We estimated that the standards based
(MDPVs) 31 in the light truck CAFE distinguishing vehicles within the light
on these targets would save
program. truck fleet according to a size metric,
approximately 10.0 billion gallons of Along with soliciting comment on the i.e., footprint, adequately recognized
fuel over the lifetime of the vehicles CAFE proposal, the agency also differences in manufacturers’
sold during those four model years, requested updated product plan compliance efforts due to differences in
compared to the savings that would information and other data to assist in fleet mix. They stated that step-function
occur if the standards remained at the developing a final rule. We noted that standard based on footprint would
MY 2007 level of 22.2 mpg. The based on public comments and other provide manufacturers greater flexibility
Reformed standards for MYs 2008–2010 information, new data and analysis, and in complying with the CAFE
were estimated to save 525 million more updated product plans, the standards requirements while at the same time,
gallons of fuel than the Unreformed adopted in the final rule could well be address safety concerns associated with
standards for those years. We estimated different then those proposed. the program. Contrary to their general
the proposed MY 2011 standard to save support for the proposed step function
an additional 2.8 billion gallons of fuel. IV. Summary of Public Comments
standard, manufacturers expressed
We tentatively determined that the NHTSA received over 45,000 reservations with a continuous function
proposed standards under both individual submissions to the standard as discussed in the NPRM.
Unreformed CAFE and Reformed CAFE rulemaking docket prior to the close of Manufacturers stated that a continuous
represent the maximum feasible fuel the comment period, including ones function standard would be overly
economy level for each system. In from vehicle manufacturers and complex to administer and with which
reaching this conclusion, we balanced associations, environmental and to comply.
the express statutory factors and other consumer advocacy groups, members of While manufacturers expressed
relevant considerations, such as safety Congress, and private individuals. The general support for the structure of the
concerns, effects on employment and vast majority of the submissions were proposed Reformed CAFE,
the need for flexibility to transition to a letters or e-mails prepared by various manufacturers generally expressed
Reformed CAFE program that can organizations and submitted by private concern with the process, as well as the
achieve greater fuel savings in a more individuals to the docket. assumptions relied upon in that process,
economically efficient way. Light truck manufacturers and their used to define the Reformed CAFE
The proposed Reformed CAFE trade associations that commented on standards. Manufacturers argued that
approach incorporated several the proposal included General Motors the agency’s reliance on a cost-benefit
important elements of reform suggested Corporation (Docket No. 2005–22223– analysis to determine the stringency of
by the National Academy of Sciences in 1493), Ford Motor Company (Docket No. the light truck CAFE standards did not
its 2002 report (Effectiveness and NHTSA–2005–22223–1570), adequately account for the capabilities
Impact of Corporate Average Fuel of the industry, and in some instances
Economy (CAFE) Standards; NAS 31 In 40 CFR 86–1803–01, EPA defines ‘‘MPDV’’
would not satisfy the ‘‘economic
report). The agency outlined four basic as a light truck rated at more than 8,500 lbs GVWR, practicability’’ consideration required
or that has a vehicle curb weight of more than 6,000
advantages that the proposed Reformed pounds, or that has a basic vehicle frontal area in under EPCA. Additionally,
CAFE approach has over the excess of 45 square feet. ‘‘MDPV’’ does not include manufacturers took issue with the
Unreformed CAFE approach: enlarged a vehicle that: economic and technological
energy savings, enhanced safety, a more Is an ‘‘incomplete truck’’ as defined in this assumptions employed in the Reformed
equitable regulatory framework for subpart; or
CAFE analysis, as well as in the
Has a seating capacity of more than 12 persons;
different vehicle manufacturers, and a or Unreformed CAFE analysis.
more market oriented approach that Is designed for more than 9 persons in seating Manufacturers asserted that the agency
more fully respects economic conditions rearward of the driver’s seat; or did not properly account for
and consumer choice. Reformed CAFE Is equipped with an open cargo area (for example, technological and market risks that have
forces vehicle manufacturers to ensure a pick-up truck box or bed) of 72.0 inches in the potential to render the standards
interior length or more. A covered box not readily
that they are incorporating available accessible from the passenger compartment will be infeasible.
technologies to enhance fuel efficiency considered an open cargo area for purposes of this With regard to the applicability of the
in all the vehicles they produce. definition. light truck CAFE program, the vehicle
manufacturers generally opposed ‘‘upsize’’ their fleets, which would include any such statement in the final
including vehicles with a GVWR greater result in reduced fuel savings. Several rule. These commenters generally also
than 8,500 lbs in the light truck commenters stated that the statutory requested that the agency increase the
program. Manufacturers asserted that requirement to set ‘‘maximum feasible’’ stringency of the final fuel economy
standards were not practical for these standards makes it impermissible for the requirements as well as regulate the fuel
vehicles; these vehicles are used in a agency to limit the level of the new economy of light trucks with a GVWR
substantially different manner than standards based on the concepts of up to 10,000 lbs. The Attorneys General
lighter vehicles, making the CAFE ‘‘optimal economic efficiency’’ or ‘‘least for California, Massachusetts, New
standards inappropriate; and that capable manufacturer.’’ They argued York, Connecticut, New Jersey, Maine,
regulation of these vehicles would not that setting the Reformed CAFE Oregon, Vermont, and the New York
result in significant fuel savings. standards during the transition period at City Corporation Counsel (Attorneys
Environmental, consumer and safety levels that impose the same costs as the General; Docket No. NHTSA–22223–
advocacy groups commenting on the Unreformed standards was inconsistent 2223) also objected to the preemption
proposal included Environmental with the ‘‘maximum feasible’’ language, and further stated that the
Defense (Docket No. NHTSA–2005– requirement. Additionally, some of agency is obligated to perform an
22223–1491, 1698–1703, 1805), Natural these groups disagreed with the environmental impact statement under
Resource Defense Council (NRDC; agency’s statement regarding the the National Environmental Policy Act.
Docket No. NHTSA–2005–22223–1705 preemption of State regulation of The California Energy Commission
through 1710), the Union of Concerned greenhouse gas emissions from motor expressed support for the Reformed
Scientists (Docket No. NHTSA–2005– vehicles. The Center for Biological CAFE structure, but stated that, because
22223–1977, 1978), the Insurance Diversity asserted that the of uncertainty in the economic
Institute for Highway Safety (IIHS; accompanying draft Environmental assumptions relied upon by the agency,
Docket No. NHTSA–2005–22223–2082), Assessment was inadequate. standards should be established at this
Center for Biological Diversity (Docket IIHS expressed concern that the time for model year 2008 only (Docket
No. NHTSA–2005–22223–1638 through category system as proposed would No. NHTSA–22144–19).
1641), National Environmental Trust provide an incentive for unsafe Members of Congress also submitted
(Docket No. NHTSA–2005–22223–1483, compliance strategies. IIHS stated that comment, expressing concern over the
1484), Sierra Club (Docket No. NHTSA– the category system still provided an proposal. A letter signed by
2005–22223–1623), U.S. PIRG (Docket incentive to downsize a vehicle within Representatives Tammy Baldwin, Jim
No. NHTSA–2005–22223-1623), a category in order to improve its fuel McDermott, Susan Davis, Raul Grijalva,
Alliance to Save Energy—American economy. IIHS stated that downsizing, Barbara Lee, Michael Michaud, Ed Case,
Council for an Energy-Efficient particularly among the smaller vehicles, Robert Wexler, Pete Stark, Dennis
Economy (ACEEE; (Docket No. NHTSA– can have a negative impact on safety. To Cardoza, Allyson Y. Schwartz, and Jim
2005–22223–1711), the American address this issue, IIHS recommended Moran stated that the proposal contains
Jewish Committee (Docket No. NHTSA– that the agency adopt a continuous a number of positive aspects,
2005–22223–1420), Alliance for function approach as discussed in the particularly the use of footprint instead
Affordable Energy et al. (Docket No. NPRM. of weight as the basis for Reformed
NHTSA–2005–22223–1726),32 AAA A number of comments representing CAFE (Docket No. NHTSA–22223–
(Docket No. NHTSA–2005–22223– the interests of States were received. 1334). However, Representative
1804), and Public Citizen (Docket No. These comments generally voiced Baldwin et. al asked that the agency
NHTSA–2005–22223–2188, 2189). opposition to various parts of the establish more stringent standards and
In general, the environmental and NPRM. The New York State Department establish standards for vehicles with a
consumer groups stated that the of Environmental Conservation (NY GVWR between 8,500 and 10,000 lbs,
increased fuel prices, the need of the DEC; Docket No. NHTSA–22223–1646), stating that such revisions are necessary
nation to conserve energy and the the State of New Jersey Department of to reduce the nation’s demand for
availability of ‘‘effective technologies’’ Environmental Protection (Docket No. foreign oil and to lower gasoline costs
necessitate more stringent standards. NHTSA–22223–1651), NESCAUM 33 for consumers.
Several of these commenters stated that (Docket No. NHTSA–22223–1625), the Comments were also received from a
the light truck standard should Pennsylvania Department of variety of additional organizations and
approach that for passenger cars or Environmental Protection (PA DEP; interests. The Competitive Enterprise
higher. These groups generally asserted Docket No. NHTSA–22223–1807), the Institute (Docket No. NHTSA–22223–
that any reform proposal must include California Air Resources Board (Docket 1682) commented that the proposal
a mechanism to guarantee the fuel No. NHTSA–22144–31), STAPPA/ would provide more flexibility to
savings projected by the agency under ALAPCO 34 (Docket No. NHTSA– manufacturers and be more
the new standards. Many of these 22223–1494), and the Connecticut accommodating to consumer preference,
groups expressed concern that the Department of Environmental Protection but argued that increased CAFE
proposed structure and reliance on (Docket No. NHTSA–22223–1624) standards have the potential to affect
vehicle footprint in the Reformed CAFE disagreed with the statement in the motor vehicle safety adversely. The
system would permit manufacturers to NPRM preamble about preemption of Mercatus Center (Docket No. NHTSA–
State greenhouse gas regulations for 22223–1632) and Criterion Economics
32 Signatories to the Alliance for Affordable
motor vehicles and requested that not (Docket No. NHTSA–22223–1976)
Energy et al., included representatives from raised concerns relating to many of the
Environmental and Energy Study Group,
Environmental Energy Solutions, Global 33 NESCAUM (Northeast States for Coordinated analytic assumptions used in the
Possibilities, Institute for Environmental Research Air Use Management) is an interstate association of preliminary regulatory impact analysis.
Education, Mainstay Energy, National air quality control divisions representing the six The Sport Utility Vehicle Owners of
Environmental Trust, North Carolina Solar Center, New England States, as well as New York and New America (Docket No. NHTSA–22223–
Oregon Environmental Council, Redwood Alliance, Jersey.
The Stella Group, Ltd., SUN DAY Campaign, 34 State and Territorial Air Pollution Program 1599) and Marine Retailers Association
SustainableBusiness.com, Triangle Clean Cities Administrators and the Association of Local Air of America (Docket No. NHTSA–22223–
Coalition, and Vermont Energy Investment Corp. Pollution Control Officials. 84) argued that there was a need to
consider the utility of light trucks, Reformed CAFE systems are linked to would not require significant changes to
particularly towing capacity. those of the Unreformed system, in the the vehicle’s driveline components (i.e.,
As stated above, the vast majority of sense that the Reformed CAFE standards the engine and transmission). Stage II
comments received were submitted by for MYs 2008–2010 are set at levels analysis involves the application of
individual citizens. Private individuals intended to ensure that the industry- more advanced transmission upgrades
expressed concern that the proposed wide cost of the Reformed standards are and engine improvements that are
standards would not be sufficient to roughly equivalent to the industry-wide readily available in the marketplace.
meet the nation’s need to conserve cost of the Unreformed CAFE standards Stage III analysis involves the
energy, would not protect the nation in those model years. application of diesel and hybrid
from future spikes in fuel prices, would As stated in the NPRM, this transition powertrains to select products.
negatively impact the environment, and approach has several important The Volpe Analysis was described in
would encourage manufacturers to build advantages. We have determined the detail in the NPRM and Final Rule
larger vehicles with lower fuel Unreformed standards to be establishing light truck CAFE standards
economy. economically practicable. The Reformed for MYs 2005–2007.36 The Volpe
NRDC provided citizens with a letter standards spread the cost burden across analysis uses a technology application
requesting that the agency increase the the industry to a greater extent. As such, algorithm to systematically apply
light truck standard by 1 mpg a year equalizing the cost between the consistent cost and performance
over five years. These letters raised Unreformed and the Reformed CAFE assumptions to the entire industry, as
concern that the fuel economy standards systems ensures that the costs well as consistent assumptions
as proposed would not adequately associated with the transition period do regarding economic decision-making by
address the nation’s need to conserve not result in economically severe manufacturers. The resultant computer
fuel. compliance requirements. Further, this model (the CAFE Compliance and
The Union of Concerned Scientists approach promotes an orderly and Effects Model), developed by technical
also provided citizens with form letters effective transition to the Reformed staff of the DOT Volpe National
that requested the agency to regulate CAFE system since experience will be Transportation Systems Center in
vehicles with a GVWR greater than gained prior to MY 2011. In this section, consultation with NHTSA staff, is used
8,500 lbs, to consider ‘‘cost-efficient we describe how we developed the to help estimate the overall economic
technologies’’ for ‘‘mid-size SUVs,’’ and Unreformed CAFE standards. impact of the Unreformed CAFE
to provide a mechanism to ensure that In arriving at the Unreformed CAFE standards. The Volpe analysis shows the
manufacturers do not ‘‘up-size’’ standards, we used the same type of economic impact of the standards in
vehicles. Other similar documents were analyses as in the NPRM and as we terms of increases in new vehicle prices
also submitted to the docket. employed in establishing light truck on a manufacturer-wide, industry-wide,
Some expressed belief that sufficient CAFE standards for MYs 2005–2007. and average per-vehicle basis. Based on
technology is available that would First, we analyzed the confidential these estimates and corresponding
enable the manufacturers to exceed the product planning data submitted by the estimates of net economic and other
proposed CAFE standards. manufacturers to ascertain the benefits, the agency is able to set the
While the above discussion very ‘‘baseline’’ capabilities and fuel standards that are economically
briefly describes the comments economy of each manufacturer that has practicable and technologically feasible.
submitted by the various interested a significant share of the light truck The Stage Analysis and the Volpe
parties, more detailed discussions of the market. Second, we conducted a three- Analysis rely on the same product plan
comments and the agency’s responses stage manual engineering analysis (the information from manufacturers,
are embedded in the analysis and Stage Analysis), in conjunction with a consider many of the same technologies
discussion which follow. computer-based engineering analysis (the Stage Analysis considers some
(the Volpe Analysis), to determine what manufacturer-specific technologies not
V. The Unreformed CAFE Standards for
technologies each company with a represented in the Volpe Analysis), and
MYs 2008–2010 significant share of the market could use apply similar conditions regarding the
The agency is establishing to enhance its overall fleet fuel economy applicability of those technologies.
Unreformed CAFE standards of 22.5 average. In order to perform the two We note that the Volpe model has
miles per gallon (mpg) for model year analyses, the agency relied on the been updated and refined with respect
(MY) 2008, 23.1 mpg for MY 2009, and National Academy of Sciences (NAS) to its representation of some fuel-saving
23.5 mpg for MY 2010. We estimate that report entitled, ‘‘Effectiveness and technologies, but remains
these standards will save 4.4 billion Impact of Corporate Average Fuel fundamentally the same. The updated
gallons of fuel over the lifetime of Economy (CAFE) Standards,’’ which model has also been peer reviewed.37
vehicles sold during those model years, contains costs and effectiveness The model documentation, including a
compared to the savings that would estimates for various technologies that description of the input assumptions
occur if the standards remained at the could be used to enhance vehicle fuel and process, as well as peer review
MY 2007 level of 22.2 mpg. We have economy. reports and the agency’s response to
determined that these requirements As explained in the August 2005 reviewers, were made available in the
represent the maximum feasible fuel NPRM,35 the Stage Analysis involves rulemaking docket for the August 2005
economy levels achievable by industry application of the agency’s engineering NPRM.38
in those model years. expertise and judgment about possible We received a significant number of
Consistent with the NPRM, the adjustments to the detailed product comments in response to the proposed
Unreformed CAFE standards in MYs plans submitted by individual
2008–2010 are one option for manufacturers. More specifically, Stage 36 See 67 FR 77015 (December 16, 2002) and 68
compliance during a transition period in I analysis involves the application of FR 16868 at 16871 (April 7, 2003). Docket Nos.
NHTSA–2002–11419–55 and NHTSA–2002–11419–
which manufacturers may comply with technologies which are deemed to be 18361.
either the Reformed or Unreformed available for use by MY 2008 and which 37 The agency’s response to the peer review is
CAFE systems. During the transition provided in the docket at NHTSA–2005–22223–52.
period, the requirements under the 35 70 FR 51414 (August 30, 2005). 38 See Docket Nos. NHTSA–20005–22223–3, 4, 5.
Unreformed CAFE standards, expressing emerges from the enumerated factors need for the nation to conserve energy
a wide range of views. While some of and the court-sanctioned practice of and the effect of other regulations
those commenting argued that considering safety and links them (including motor vehicle safety and
technology is available to set the together is that CAFE standards should emissions regulations) and other public
standards higher, others argued that be set at a level that will achieve the policy objectives.
insufficient lead time, as well as greatest amount of fuel savings without The agency has historically assessed
technological and monetary constraints, leading to significant adverse societal whether a potential CAFE standard is
make it unlikely that the proposed consequences. economically practicable in terms of
standards would be attainable. We have We have set the Unreformed whether the standard is one ‘‘within the
reviewed these comments and adjusted standards with particular regard to the financial capability of the industry, but
many aspects of the analyses used to ‘‘least capable manufacturer with a not so stringent as to threaten
determine the Unreformed CAFE significant share of the market,’’ in substantial economic hardship for the
standards in order to account for issues response to the direction in the industry.’’ 42 See, e.g., Public Citizen,
brought to our attention. Responses to conference report on the CAFE statute 848 F.2d at 264. In essence, in
comments that raised specific language to consider industry-wide determining the maximum feasible level
technology and economic assumptions considerations, but not necessarily base of CAFE, the agency assesses what is
issues are discussed in detail below in the standards on the manufacturer with technologically feasible for
sections VIII. Technology issues, and IX. the greatest compliance difficulties.41 manufacturers to achieve without
This approach is consistent with the leading to significant adverse economic
Economic Assumptions consequences, such as a significant loss
Conference Report on the legislation
In the balance of this section, we enacting the CAFE statute: of jobs or the unreasonable elimination
describe in further detail how we of consumer choice.
Such determination [of maximum feasible At the same time, the law does not
developed the Unreformed CAFE average fuel economy level] should take
standards. After considering the industry-wide considerations into account.
preclude a CAFE standard that poses
foregoing and taking into consideration For example, a determination of maximum considerable challenges to any
the statutory criteria specified in 49 feasible average fuel economy should not be individual manufacturer. The
U.S.C. 32092(f) 39, we are adopting the keyed to the single manufacturer that might Conference Report makes clear, and the
Unreformed CAFE standards specified have the most difficulty achieving a given case law affirms: ‘‘(A) determination of
above, having concluded that they level of average fuel economy. Rather, the maximum feasible average fuel economy
Secretary must weigh the benefits to the should not be keyed to the single
constitute the maximum feasible
nation of a higher average fuel economy manufacturer which might have the
standards for MYs 2008–2010. standard against the difficulties of individual most difficulty achieving a given level
A. Legal Authority and Requirements manufacturers. Such difficulties, however, of average fuel economy.’’ CAS, 793
Under EPCA should be given appropriate weight in setting
the standard in light of the small number of
F.2d at 1338–39. Instead, the agency is
As previously stated, EPCA requires domestic manufacturers that currently exist compelled ‘‘to weigh the benefits to the
that the CAFE standards set a minimum and the possible implications for the national nation of a higher fuel economy
performance standard at a level economy and for reduced competition standard against the difficulties of
determined by the Secretary of association [sic] with a severe strain on any individual automobile manufacturers.’’
Transportation to be the ‘‘maximum manufacturer. Id. The statute permits the imposition of
feasible’’ average fuel economy S. Rep. No. 94–516, 94th Congress, 1st reasonable, ‘‘technology forcing’’
achievable by manufacturers in a given Sess. 154–155 (1975). The agency must challenges on any individual
model year (49 U.S.C. 32902). To guide consider the industry’s ability to manufacturer, but does not contemplate
determinations of the maximum feasible improve fuel economy, but with standards that will result in ‘‘severe’’
fuel economy level, Congress specified appropriate consideration given to the economic hardship by forcing
four statutory criteria that must be difficulties of individual manufacturers. reductions in employment affecting the
considered: technological feasibility, In response to this congressional overall motor vehicle industry.43
economic practicability, the effect of direction, we have traditionally given 42 In adopting this interpretation in the final rule
other Federal motor vehicle standards particular regard to the ‘‘least capable establishing the MY 1981–1984 fuel economy
on fuel economy, and the need of the manufacturer with a substantial share of standards for passenger cars (June 30, 1977; 42 FR
United States to conserve energy. The the market.’’ The agency must take 33534, at 33536–7), the Department rejected several
agency is permitted to consider particular care in considering the more restrictive interpretations. One was that the
phrase means that the standards are statutorily
additional societal considerations and statutory factors with regard to these required to be set at levels solely on a cost-benefit
historically has considered the potential manufacturers— weighing their asserted basis. The Department pointed out that Congress
for adverse safety consequences when capabilities, product plans and had rejected a manufacturer-sponsored amendment
deciding upon a maximum feasible economic conditions against agency to the Act that would have required standards to be
set at a level at which benefits were commensurate
level.40 The overarching principle that projections of their capabilities, the with costs. It also dismissed the idea that economic
practicability should limit standards to free market
39 The statutory criteria, which are addressed policies). As the United States Court of Appeals levels that would be achieved with no regulation.
elsewhere in this document, are: (1) The nation’s pointed out in upholding NHTSA’s exercise of 43 In the past, the agency has set CAFE standards
need to conserve energy; (2) technological judgment in setting the 1987–1989 passenger car above its estimate of the capabilities of a
feasibility; (3) economic practicability (including standards, ‘‘NHTSA has always examined the safety manufacturer with less than a substantial, but more
employment consequences); and the impact of other consequences of the CAFE standards in its overall than a de minimis, share of the market. See, e.g.,
regulations on fuel economy. consideration of relevant factors since its earliest CAS, 793 F.2d at 1326 (noting that the agency set
40 See, e.g., Center for Auto Safety v. NHTSA rulemaking under the CAFE program.’’ Competitive the MY 1982 light truck standard at a level that
(CAS), 793 F. 2d 1322 (D.C. Cir. 1986) Enterprise Institute v. NHTSA (CEI I), 901 F.2d 107, might be above the capabilities of Chrysler, based
(Administrator’s consideration of market demand as 120 at n.11 (D.C. Cir. 1990). on the conclusion that the energy benefits
component of economic practicability found to be 41 ‘‘Least capable manufacturer’’ is something of associated with the higher standard would
reasonable); Public Citizen 848 F.2d 256 (Congress a misnomer as a major manufacturer could install outweigh the harm to Chrysler, and further noting
established broad guidelines in the fuel economy substantial amounts of fuel saving technologies and that Chrysler had 10–15 percent market share while
statute; agency’s decision to set lower standard was still be the major manufacturer with lowest Ford had 35 percent market share). On other
a reasonable accommodation of conflicting projected CAFE due to its mix of vehicles. occasions, the agency reduced an established CAFE
By focusing primarily on the least MY 1986 one, NHTSA considered the CAFE standards were based upon
capable manufacturer with a significant impacts of different levels of standards information submitted by manufacturers
share of the market, this approach has on the least capable manufacturer. The in response to the December 29, 2003
ensured that the standards are Court noted the conference report for request for product plans 47, and any
technologically feasible and EPCA ‘‘states that the fuel economy additional manufacturer updates. In
economically practicable for standards delegated to NHTSA are to be conjunction with the August 2005
manufacturers with a significant share the product of balancing the benefits of NPRM, we issued a RFC seeking
of the market. If a standard is higher fuel economy levels against the updated product plans to enable
technologically feasible and difficulties individual manufacturers NHTSA to use the most accurate and
economically practicable for the ‘‘least would face in achieving those levels,’’45 up-to-date product plan information in
capable’’ manufacturer, it can be Then it quoted language to that effect establishing the Reformed and
presumed to be so for the ‘‘more from the conference report. In the end, Unreformed CAFE standards.48
capable’’ manufacturers. Together, the the Court upheld the standards In response to the RFC, we received
manufacturers with a significant share established through consideration of the product plans from DaimlerChrysler,
of the market represented a very least capable manufacturer with a
Ford, General Motors, Honda, Hyundai,
substantial majority of the light trucks significant share of the market, stating
Mitsubishi, Nissan, Subaru and Toyota.
manufactured and thus were deemed to that ‘‘a standard with harsh economic
To supplement the data provided in
represent ‘‘industry-wide consequences for the auto[mobile]
response to the RFC, we also relied on
considerations.’’ industry * * * would represent an
product data available from public
unreasonable balancing of EPCA’s
B. Establishing Unreformed Standards sources. Taken together, it was this
policies.’’46
According to EPCA—Process for As a first step toward ensuring that updated information that the agency
Determining Maximum Feasible Levels the CAFE levels selected as the used in development of the standards
In establishing the Unreformed maximum feasible levels under for today’s final rule.
standards for MYs 2008–2010, the Unreformed CAFE will not lead to We note that BMW, Porsche, and
agency relied upon its historical significant adverse consequences, we Volkswagen previously paid fines in
standard setting process, which reviewed in detail the confidential lieu of complying with the MY 2002 and
includes consideration of the ‘‘least product plans provided by the 2003 light truck CAFE standards. The
capable manufacturer with a significant manufacturers with a substantial share agency assumes that because of that past
share of the market.’’ of the light truck market (General history and their low light truck
NRDC, Environmental Defense and Motors, Ford and DaimlerChrysler) and production volumes Porsche and
the Union of Concerned Scientists all other manufacturers that submitted Volkswagen will continue to pay fines
stated that the ‘‘least capable confidential product plan data and instead of bringing their fleets into
manufacturer’’ approach applied by the assessed their technological capabilities compliance. For purpose of the NPRM,
agency in setting standards under the to go beyond those plans. By doing so, we also assumed that BMW would
Unreformed CAFE standards violates we are able to determine the extent to continue to pay fines. However, BMW
EPCA and Congress’ expressed intent. which each can enhance their fuel has indicated that it does not intend to
NRDC argued that ‘‘while the agency is economy performance using technology. pay fines in the model years subject to
permitted to consider the single, least this rulemaking. We have adjusted our
capable manufacturer in assessing C. Baseline for Determining
Manufacturer Capabilities in MYs 2008– analysis accordingly.
economic practicability, it simply may
not allow that manufacturer’s 2010 Finally, in response to a comment
capabilities to drive the standard setting In order to determine the maximum from DaimlerChrysler, we removed
process,’’ and referred to CAS. feasible fuel economy levels for MYs Mitsubishi’s information from
In CAS, the petitioners alleged that 2008–2010 under the Unreformed CAFE DaimlerChrysler’s product plans due to
the agency had given ‘‘impermissible system, we first determined each DaimlerChrysler’s recent sale of its
weight to shifts in consumer demand manufacturer’s fuel economy baselines entire share of Mitsubishi stock and
toward larger, less fuel-efficient for MYs 2008–2010. That is, we adjusted DaimlerChrysler’s baseline
trucks’’44 in reducing the MY 1985 determined the fuel economy levels that capabilities accordingly.
standard for light trucks and in manufacturers were planning to achieve Based on the updated manufacturer’s
establishing the MY 1986 standard for in those years. responses and the available public data,
light trucks. In reducing the MY 1985 The manufacturer baselines relied we determined the baseline capabilities
standard as well as in establishing the upon for the proposed Unreformed as follows:
TABLE 1.—ESTIMATED MARKET SHARES AND PLANNED CAFE LEVELS (WITHOUT CREDITS)
Market MY 2008 MY 2009 MY 2010
Manufacturer share* (mpg) (mpg) (mpg)
General Motors ........................................................................................................ 25.8 21.36 21.43 21.59

Ford .......................................................................................................................... 19.4 21.53 21.79 22.65
DaimlerChrysler ....................................................................................................... 23.0 21.96 22.01 22.42
Toyota ...................................................................................................................... 11.6 22.51 22.44 22.65
Honda ...................................................................................................................... 6.5 24.56 24.56 24.56
Nissan ...................................................................................................................... 5.7 21.01 20.70 21.13
standard to address unanticipated market 49 FR 41250, 50 FR 40528, 53 FR 39275; see Public 46 Id.at 1340.
conditions that rendered the standard unreasonable Citizen, 848 F.2d at 264. 47 See 68 FR 74931; see also Docket No. NHTSA–
and likely to lead to severe economic consequences. 44 Id. at 1323–4. 2003–16709–1.
45 Id. at 1338. 48 See Docket No. NHTSA–2005–22144.
TABLE 1.—ESTIMATED MARKET SHARES AND PLANNED CAFE LEVELS (WITHOUT CREDITS)—Continued
Market MY 2008 MY 2009 MY 2010
Manufacturer share* (mpg) (mpg) (mpg)
Hyundai .................................................................................................................... 3.6 23.22 23.49 23.36

Subaru ..................................................................................................................... 1.1 25.87 27.15 27.05
BMW ........................................................................................................................ 0.8 21.29 21.29 21.29
Porsche .................................................................................................................... 0.2 16.80 16.80 16.80
Isuzu ........................................................................................................................ 0.4 20.38 20.24 20.14
Suzuki ...................................................................................................................... 0.3 21.93 21.93 21.93
Volkswagen .............................................................................................................. 0.3 18.78 18.78 18.78
Mitsubishi ................................................................................................................. 1.3 24.33 24.41 24.70
*Based on 2005 production data.
After ascertaining the baseline economy performance by placing these until a vehicle is refreshed or
capabilities of individual vehicles into the market through MY redesigned to account for product
manufacturers, the agency applied the 2012.50 However, 49 U.S.C. 32902(h) cycles. As such, the price of fuel does
Stage analysis to analyze the potential prohibits us from taking such benefits not directly factor into the application
technological improvements to the into consideration in determining the of technology under the Unreformed
product offerings for each manufacturer maximum feasible fuel economy CAFE system to the degree that it does
with a substantial share of the light standard. Accordingly, the baseline under the Reformed CAFE system.
truck market, as well as for the projections cannot reflect those New product plan data in response to
remaining light truck manufacturers.49 credits.51 the NPRM indicated that manufacturers
The Alliance and Ford argued that in had shifted the fleet mix and improved
establishing manufacturer baselines for D. Technologically Feasible Additions to the fuel economy of some vehicles.
our analysis, the agency erroneously Product Plans These changes reduced the amount of
assumed that each manufacturer’s fleet As explained in the August 2005 technology available to be applied. For
average would be at 22.2 mpg for Model NPRM, we performed a Stage analysis to this reason, more costly technologies
Year 2007. These commenters stated determine what fuel-saving technologies (diesel and hybrids) were projected onto
that this assumption is incorrect, could be applied to a manufacturer’s the fleet. The agency feels justified in
because some manufacturers did not baseline. At each of the three stages, we doing so because higher gasoline prices
submit product plan information to add technologies based on our will increase the demand for these types
support this assumption and other engineering judgment and expertise of technologies.
manufacturers achieve compliance with about possible adjustments to the In evaluating which technologies to
the CAFE requirements through the use detailed product plans submitted by the apply, and the sequence in which to
of credits and payment of fines. The manufacturers. Our decision on whether apply them, we follow closely the NAS
Alliance and Ford also stated that some and when to add a technology reflects report. The NAS report estimated the
manufacturers (in anticipation of future our consideration of the practicability of incremental benefits and the
CAFE increases) might have taken steps applying a specific technology and the incremental costs of technologies that
in support of higher fleet averages and necessity for sufficient lead-time in its may be applicable to actual vehicles of
might have already incorporated fuel application. In addition to considering different classes and intended uses.52
saving technologies. lead time and practicability, the agency The NAS report also identified what it
In response, we note that the agency adds technologies in a cost-minimizing called ‘‘cost-efficient technology
did not assume that each manufacturer’s fashion. That is, we add technologies in packages’’ (i.e., combinations of
fleet average would be 22.2 mpg for MY order of lower to higher costs as technologies that would result in fuel
2007. We used the manufacturer’s plans explained in the FRIA (see FRIA p. VI– economy improvements sufficient to
to determine the fleet average. When a 13). cover the purchase price increases that
manufacturer’s plans were below 22.2 While technologies are applied in such technologies would require).53
mpg, we estimated the technologies and order of ‘‘effective cost,’’ the level of The Stage I analysis includes
costs necessary to bring their fleet technology added to a manufacturer’s technologies that are available for use by
average up to a 22.2 mpg baseline. fleet is based on the agency’s MY 2008, but that some manufacturers
These costs were assigned to the MY engineering expertise. Technologies are are not currently choosing to use in
2007 standards, and such costs were not not added until net benefits are their product plans or are using in a
included in the costs for MY 2008. maximized as under the Reformed limited manner. However, many of
With respect to alternative fuel CAFE system. Instead, the agency uses these technologies are currently being
vehicles, we note that manufacturers engineering expertise to apply used in today’s light truck fleet. They
may improve their calculated fuel technology. We impose phase-in caps include non-powertrain applications
for applications of technology over time such as low-rolling-resistance tires, low-
49 A more detailed discussion of these issues is
and do not make significant changes friction lubricants, aerodynamic drag
contained in the Chapter VI of the FRIA, which has reduction, and electric-power steering
been placed in the docket for this notice. Some of
the information included in the FRIA, including the
50 The applicability of the alternative fuel pumps.
details of manufacturers’ future product plans, has provision in § 32905 was extended in the Energy
been determined by the Agency to be confidential Policy Act of 2005 (Pub. L. 109–58). 52 See NAS Report at p. 40. See also Docket No.
51 Sec. 32902(h) states that when establishing fuel

business information, the release of which could 2005–22223–10, ‘‘Fuel Economy Potential of 2010
cause competitive harm. The public version of the economy standards, the agency: Light Duty Trucks.’’ This document was prepared
FRIA omits the confidential information. The FRIA (1) May not consider the fuel economy of under the auspices of the U.S. Department of
also discusses in detail the fuel-economy-enhancing dedicated automobiles; and Energy for NHTSA, in order to update the estimates
technologies expected to be available during the (2) Shall consider dual fueled automobiles to be provided by the 2001 NAS Report.
MY 2008–2011 time period. operated only on gasoline or diesel fuel. 53 See NAS Report at p. 64.
The Stage II analysis includes two 2005 NPRM. Specifically, the agency is steering. However, for larger vehicles it
major categories of technological aware that vehicle manufacturers appears that a 42-volt system is required
improvements to the manufacturers’ require sufficient lead time to to accommodate electric power steering,
fleets. The first category is transmission incorporate changes and new features and adding a 42-volt system was
improvements, which includes the into their vehicles. The agency is also deemed a technology that can be only
introduction and expanded use of 5- aware that the vehicle manufacturers are introduced in conjunction with model
speed and 6-speed transmissions and unable to deploy new technologies changes or product introductions.
continuously variable transmissions throughout their entire light truck fleet In all cases, electric power steering
(CVTs). The second category is engine in one model year. Similarly, NHTSA was added to the Stage Analysis to
improvements, which includes also recognizes that vehicle coincide with model changes. By MY
gradually upgrading light truck engines manufacturers follow design cycles 2008, electrical power steering was
to include multi-valve overhead when introducing or significantly included on some of the lighter vehicles
camshafts; introducing engines with modifying a product. In revising and undergoing model changes. By MYs
more than 2 valves per cylinder; applying the Stage Analysis, NHTSA 2009 and 2010, this technology was
applying variable valve timing or took these concerns into consideration. gradually added to heavier vehicles at
variable valve lift and timing to multi- For each of the largest manufacturers the beginning of their respective
valve overhead camshaft engines; and that provided product plans with product cycles. That way, installation of
applying cylinder deactivation to 6- and baselines below our proposed levels for electrical power steering can coincide
8-cylinder engines. at least one model year, the agency with the necessary conversion of these
The Stage III analysis includes projected the use of several Stage I heavier vehicles to a 42-volt electrical
projections of the potential CAFE technologies, beginning with MY 2008, system.
increase that could result from the and several more technologies, Low-friction lubricants—This
application of diesel engines and hybrid beginning with MY 2009. We note that technology does not require engineering
powertrains to select products. Both in performing the Stage Analysis, the changes to vehicle engines. Therefore, it
diesel engines and hybrid powertrains agency relied on product plans was implemented in MYs 2008 and
appear in several manufacturers plans submitted by the manufacturers as well 2009 on a large percentage of the
within the MY 2008–2010 timeframe, as comments received in response to the eligible fleet without ‘‘staggering’’ the
and other manufacturers have publicly August 2005 NPRM. The agency implementation. That is, the agency
indicated that they are looking seriously removed incompatible technologies and believes that this technology can be
into both technologies. technologies already incorporated into implemented within a relatively short
The Stage analysis also includes the manufacturers’ product plans from the lead time. The agency did not apply
possibility that manufacturers could Stage Analysis. More importantly, the low-friction lubricants to vehicles with
utilize some vehicle weight reduction as agency delayed and ‘‘staggered’’ engines that require higher-friction
a fuel economy improvement applications of technologies such that lubricants.
technology on light trucks with curb they are not implemented across the Aerodynamic drag reduction—This
weights over 5,000 pounds.54 However, entire fleet in one model year. Most new technology was applied to certain
the weight reduction was only applied technologies were added in conjunction vehicles to coincide with a major
in conjunction with a planned vehicle with model changes or vehicle vehicle redesign or a vehicle
redesign, and sometimes in concert with introductions. That is, instead of adding introduction. Because aerodynamic drag
a reduction in aerodynamic drag. technologies to existing vehicles in the reduction typically involves actual
The agency again relied on the NAS middle of their product cycle, we added vehicle body changes, we were
report, which contains costs and technologies to vehicles at the time the especially careful not to attribute any
effectiveness estimates for various vehicles were undergoing major aerodynamic drag reduction, except at
technologies that could be used to engineering changes or when they were the beginning of a new product cycle.
enhance a vehicle’s fuel economy. In introduced. Low-rolling-resistance tires—This
most instances, NHTSA used the NAS Aside from reliance on the NAS technology was added to lighter,
report’s mid-range estimate of the report, we also relied to a limited extent passenger-car-based (unibody
potential fuel economy benefits of on technologies present in the construction) light trucks that were
specific technologies. However, if manufacturers’ confidential product deemed compatible with passenger-car-
NHTSA projected the use of a plans. If a technology was present in a like tires. Due to compatibility concerns
technology specific to a manufacturer, manufacturer’s product plans, we expressed by several manufacturers,
NHTSA relied on effectiveness evaluated the opportunity for additional these tires were not applied to light
estimates provided by that manufacturer application of the technology within trucks intended for significant off-road
when applying that technology to that that manufacturer’s fleet, and if duty or pickup trucks with substantial
manufacturer and if appropriate, to appropriate, other manufacturers’ fleets. cargo carrying capabilities. Because this
other manufacturers. The following are examples of non- technology does not require vehicle
In arriving at the Unreformed CAFE confidential technologies used in the engineering resources, we implemented
standard, the agency took into account Stage Analysis. this technology such that it does not
the concerns raised by the necessarily coincide with a planned
manufacturers in response to the August Stage 1 vehicle introduction or redesign. We
Electrical power steering—We first believe that in this case, the lead time
54 Based on the results of Dr. Kahane’s revised
applied this technology to lighter is sufficient for the manufacturers to
weight and safety analysis, the net weight-safety vehicles that do not require a
effect of removing 100 lbs. from a light truck—if
make arrangements to purchase
footprint is held constant—is zero for all light conversion to a 42-volt electrical sufficient quantities.
trucks with curb weights above 3,900 lbs. However, system. The agency avoided using this Engine accessory improvement—The
the Stage analysis only considered weight reduction technology for heavier vehicles in the agency projected the use of this
for vehicles with a curb weight in excess of 5,000
lbs. given the statistical uncertainty with the 3,900
near term. The power demands for technology for several manufacturers.
lbs. figure. Further discussion of the application of lighter vehicles do not require a 42-volt This technology category encompasses a
weight reduction is provided below. system for operation of electric power variety of engine accessory
improvement technologies that several this technology in vehicles that share upon in the analysis for the NPRM. The
manufacturers are currently major mechanical components with agency did not apply CVTs in the final
incorporating, such as improved fuel vehicles already equipped with 5- or 6- rule. The updated product plans
and oil pumps. If a manufacturer speed transmissions. For example, we reflected that manufacturers had
provided NHTSA with descriptions for project this technology on certain applied CVTs or 6-speeds instead to all
these specific technologies, they were pickup trucks that share their platforms of those vehicles to which the agency’s
applied to that manufacturer’s vehicles and engines with multipurpose analysis applied CVTs in the NPRM.
where appropriate. If manufacturers passenger motor vehicles already Front Axle Disconnect—Where this
provided no information regarding their equipped with 6-speed transmissions, technology was implemented, it was
incorporation of engine accessory knowing that these transmissions were timed to coincide with planned vehicle
improvement technologies, NHTSA readily available to the manufacturer redesign. In addition, in response to
applied a potential engine accessory and were compatible with the basic comments regarding the general
improvement to vehicles that had an vehicle architecture. effectiveness of this technology vis-á-vis
engine and engine technologies that Cylinder deactivation—In response to its effectiveness in specific vehicle
would benefit from and be compatible comments, the agency did not apply this applications, we revised downward the
with specific engine accessory technology to vehicles with projected fuel economy benefits
improvements. The agency believes that incompatible existing engine attributed to this technology.
this technology is cost-effective. This architecture. The agency applied this
technology to select vehicles. In doing Variable Valve Lift and Timing—
technology generally affects the
so, the agency took into account Based on comments, this technology
operation of the engine, thus this
whether this technology was already was not used on certain vehicles
technology was added in conjunction
available to the manufacturers. In some because the basic engine architecture
with a planned introduction of new
instances, this technology was already was incompatible. According to
models.
utilized by vehicle manufacturers on commenters, this technology is
Stoichiometric Spark Ignition Direct
some of their light trucks, and the incompatible with overhead valve
Injection—This technology was added
agency believes that adopting this engines. Instead, this technology was
to select vehicles, i.e., those vehicles
technology to other light trucks would applied to certain vehicles already
produced by manufacturers that have
save costs, especially if the technology equipped with overhead cam engines
product plans which reflect a familiarity
is implemented at the time of vehicle featuring variable valve timing.
with the technology. This technology
was applied in conjunction with a redesign. Stage III
planned vehicle redesign. Dual overhead cam (DOHC)—The
Implementation of this technology was agency did not use, or delayed the Stage III technologies were not
delayed in response to comments and in implementation of this technology in included in the Stage Analysis for all
recognition of cost issues associated vehicles where the comments indicated manufacturers because some
with insufficient lead time. that the change from single overhead manufacturers can meet the Unreformed
Weight reduction—As explained cam (SOHC) would be too complicated CAFE standards without the need to use
below, this fuel economy improvement and would not produce significant fuel any diesel or hybrid technology. For
method was used sparingly on vehicles economy improvements because of some vehicle manufacturers, we
with a curb weights in excess of 5,000 incompatibility with the existing engine estimated higher sales of light trucks
pounds and was applied in conjunction architecture. In other vehicles, equipped with hybrid engines compared
with a planned vehicle redesign. implementation of DOHC was timed to to the manufacturer’s product plans.
coincide with a planned vehicle or This revised estimate is based on
Stage 2 engine redesign. In applying this continuing strong demand and
5-speed and 6-speed automatic technology, the agency examined the increased popularity of hybrid vehicles.
transmissions—These technologies were manufacturers’ current vehicles. In For other manufacturers, we projected
added to some vehicles that, based on some instances the manufacturers carry the use of direct-injection diesel engines
the manufacturers’ product plans, were both DOHC engines and SOHC engines in place of large displacement gasoline
projected to continue using 4-speed of the same displacement and basic V8 engines.
automatic transmissions. As with Stage architecture. In these instances, the E. Improved Product Plans
I technologies, when a transmission agency projected a gradual switch to
upgrade is used in the Stage Analysis, only the DOHC engines. The agency’s revised Stage Analysis
it is timed to coincide with model Continuous Variable Transmission produced the following individual
changes. Further, we first implemented (CVT)—CVT technology was relied projections:
TABLE 2.—MANUFACTURERS’ FUEL ECONOMY CAPABILITIES AS PROJECTED UNDER THE STAGE ANALYSIS
Model year Model year Model year
Manufacturer 2008 2009 2010
DaimlerChrysler ........................................................................................................................... *22.475 23.059 23.599

Ford .............................................................................................................................................. 22.455 23.060 23.935
General Motors ............................................................................................................................ 22.506 23.060 23.450
Nissan .......................................................................................................................................... 22.452 23.091 23.470
Toyota .......................................................................................................................................... 22.506 23.054 24.044
*While compliance is calculated with the standard is in tenths of a mile per gallon, our initial analysis projects fuel economy capabilities to
thousandths of mpg.
The technologically-feasible fuel performed the Stage analysis on economic benefits from reduced
economy levels determined under the updated product plans as provided by petroleum use. The baselines provided
Stage Analysis provide the basis for the the manufacturers. This result is largely by Honda and Hyundai for MYs 2008–
Unreformed CAFE standards. The Volpe due to the fact that there is a limited 2010 exceeded the standards in each of
model is then used to estimate benefits pool of technology that can be applied those model years. In regard to
and costs of these standards. The Volpe to the manufacturers’ fleets in the time economic impacts on manufacturers and
model analyzes what technologies can period subject to this rulemaking. societal benefits, we have relied on the
be added to meet the standard The updated product plans reflected Volpe model to determine a probable
determined by the Stage Analysis. More that some technologies previously range of costs and benefits.
specifically, the Volpe model uses a applied by the agency in the Stage The Volpe model is used to evaluate
technology application algorithm analysis were now applied by the the standards initially produced under
developed by Volpe Center staff in manufacturers in their product plans, the Stage Analysis in order to estimate
consultation with NHTSA staff to apply which meant that these technologies their overall economic impact as
technologies to manufacturers’ baselines were no longer available for the Stage measured in terms of increases in new
in order to achieve the fuel economy analysis. Because the pool of feasible vehicle prices on a manufacturer-wide,
levels produced under the Stage technologies that can be applied in the industry-wide, and average per-vehicle
Analysis. This algorithm systematically lead time provided is limited, the basis. Like the Stage Analysis, the Volpe
applies consistent cost and performance agency projected fewer additional model relies on the detailed product
assumptions to the entire industry, as technologies for the updated product plans submitted by manufacturers, as
well as consistent assumptions plans beyond the improvements made well as available data relating to
regarding economic decision-making by by the manufacturers. manufacturers that had not submitted
manufacturers. Technologies are As a result of having limited detailed information. The Volpe model
selected and applied in order of technologies and practical constraints is used to trace the incremental steps
‘‘effective cost,’’ (total cost ¥ fine on how and when those technologies (and their associated costs) that a
reduction ¥ fuel savings value) ÷ can be applied, the difference between manufacturer would take toward
(number of affected vehicles).55 This the NPRM improved fleet and the final achieving the standards initially
formula is a private cost concept (i.e., it rule improved fleet is largely a matter of suggested by the Stage Analysis. In
looks at costs to the manufacturer). It is the level of technology voluntarily applying technologies, the Volpe model
used to predict how a manufacturer added by manufacturers in their revised is programmed to be as consistent as
would sequence the addition of product plans submitted in response to practical with the technology
technologies to meet a given standard. the NPRM. Consequently, the two application method and constraints of
Although similar, the two analyses do improved fleets provide similar fuel the Stage analysis.
not apply exactly the same technologies. economies. Based on the Stage and Volpe
Both are merely technologically feasible analyses, we have concluded that these
F. Economic Practicability and Other
ways of achieving the given standard, standards would not significantly affect
Economic Issues
not predictions of how manufacturers employment or competition, and that—
will actually meet it. As discussed As explained above, the agency has while challenging—they are achievable
below, additional analysis was historically viewed the question of and that they will benefit society
performed to ensure that the whether a CAFE standard is considerably. For this analysis, we have,
Unreformed CAFE standards are economically practicable in terms of where possible, translated the benefits
economically practicable for the whether the standard is ‘‘within the into dollar values and compared those
financial capability of the industry, but values to our estimated costs for this
industry.
We note that the standards adopted not so stringent as to threaten proposed rule.
today are the same as those proposed in substantial economic hardship for the In estimating the costs and benefits of
the NPRM, even though the agency industry.’’ See, e.g., Public Citizen, 848 this rulemaking, the agency employed a
F.2d at 264. In the Stage analysis, variety of cost estimates (e.g., the cost of
55 In the current model year, the system begins by technologies are applied to project fuel technology, lead-time) and economic
carrying over any technologies applied in the economy levels that would be assumptions (e.g., price of fuel, rebound
preceding model year, based on commonality of technologically feasible for a effect). As the cost estimates and
engines and transmissions, as well as any identified manufacturer. When considering
predecessor/successor relationships among vehicle
economic assumptions apply, in many
models. At each subsequent step toward economic practicability, the agency cases, equally to the Unreformed and
compliance by a given manufacturer in the current assesses whether technologically- Reformed CAFE system analyses, we
model year, the system considers all engines, feasible levels may lead to adverse have addressed these comments below
transmissions, and vehicles produced by the economic consequences, such as a
manufacturer and all technologies that may be
in Section VIII. Technology issues, and
applied to those engines, transmissions, and significant loss of sales or the Section IX. Economic assumptions. The
vehicles, where the applicability of technologies is unreasonable elimination of consumer discussion that follows provides our
governed by a number of constraints related to choice. The agency must ‘‘weigh the estimates for the costs and benefits of
engineering and product planning. The system benefits to the nation of a higher fuel
selects the specific application of a technology (i.e.,
the Unreformed CAFE standards
the application of a given technology to a given economy standard against the adopted today.
engine, transmission, vehicle model, or group of difficulties of individual automobile
vehicle models) that yields the lowest ‘‘effective manufacturers.’’ CAS, 793 F.2d at 1332. 1. Costs
cost’’, which the system calculates by taking (1) the The agency has estimated not only the In terms of vehicle costs for
cost (retail price equivalent) to apply the technology
times the number of affected vehicles, and
anticipated costs that would be borne by complying with the Unreformed CAFE
subtracting (2) the reduction of civil penalties General Motors, Ford, DaimlerChrysler, standards, we estimate the average
achieved by applying the technology, and Nissan and Toyota to comply with the incremental cost per vehicle to be $64
subtracting (3) the estimated value to vehicle buyers standards under the Unreformed CAFE for MY 2008, $185 for MY 2009, and
of the reduction in fuel outlays achieved by
applying the technology, and dividing the sum of
system, but also the significance of the $195 for MY 2010. The total incremental
these components by the number of affected societal benefits anticipated to be costs (the cost necessary to bring the
vehicles. achieved through fuel savings and other corporate average fuel economy for light
trucks from 22.2 mpg (the standard for present fuel economy performance 2. Benefits
MY 2007) to the final rule levels are indicates that some manufacturers will,
In Chapter VIII of the FRIA, the
estimated to be $536 million for MY if their planned fleets remain
agency analyzes the economic and
2008, $1,621 million for MY 2009, and unchanged, be able to meet the environmental benefits of the
$1,752 million for MY 2010. proposed standards without significant
Our cost estimates for the Unreformed Unreformed CAFE standards by
expenditures. In contrast, other estimating fuel savings over the lifetime
CAFE system are based on the manufacturers will need to expend
application of technologies and the of each model year (approximately 36
significantly more effort than they were years). Benefit estimates include both
resulting costs to individual planning to meet the final Unreformed
manufacturers. We assumed that the benefits to consumers in terms of
CAFE standards. reduced fuel usage and other savings,
manufacturers would apply
technologies on a cost-effectiveness Some manufacturers might achieve such as the reduced externalities
basis (as described above). More more fuel savings than others using generated by the importing, refining,
specifically, within the range of values similar technologies on a vehicle-by- and consuming of petroleum products.
anticipated for each technology, as vehicle basis due to differences in The total benefits of the increases in
estimated by the NAS study, we vehicle weight and other technologies the levels of the Unreformed CAFE
selected the mid-point for cost and fuel present. However, this analysis assumes standards are estimated to be $577
consumption impacts during the model an equal impact from specific million for MY 2008, $1,876 million for
years under consideration. technologies for all manufacturers and MY 2009 and $2,109 million for MY
Using the estimated costs and fuel vehicles. The technologies were ranked 2010, based on fuel prices ranging from
savings for the different technologies, based on the cost per percentage point $1.96 to $2.39 in 2003 dollars per gallon
the agency then examined the improvement in fuel consumption and and a discount rate of seven percent.
projections provided by different applied where available and appropriate
3. Comparison of Estimated Costs to
manufacturers for their light truck fleet to each manufacturer’s fleet in their
Estimated Benefits
fuel economy for MYs 2008–2010. order of rank. The complete list of the
Although the details of the projections technologies and the agency’s estimates Table 3 compares the incremental
by individual manufacturers are of cost and associated fuel savings can costs and benefits for the Unreformed
confidential, we generally observed that be found in Table VI–4 of the FRIA. CAFE standards.
TABLE 3.—COMPARISON OF INCREMENTAL COSTS AND BENEFITS FOR THE UNREFORMED CAFE STANDARDS
[In millions]
MY 2008 MY 2009 MY 2010
Total Incremental Costs* ............................................................................................................. $536 $1,621 $1,752

Total Incremental Benefits* ......................................................................................................... 577 1,876 2,109
* Relative to the 22.2 mpg standard for MY 2007.
These estimates are provided as approximately 8.6 million light trucks respond to increases in fuel economy in
present values determined by applying affected by this final rule would be sold the same manner as they respond to
a 7 percent discount rate to the future in MY 2008. For MYs 2009 and 2010, decreases in fuel prices, i.e., by driving
impacts.56 The discount rate is intended we estimated 8.9 million and 9.0 more),58 divided by the higher fuel
to measure the reduction in the value to million light truck sales, respectively. economy they would achieve as a result
society of benefits when they are We calculated the reduced fuel of that standard. The fuel savings during
deferred until some future date rather consumption of MY 2008–2010 light each future year that will result from the
than received immediately. The benefits trucks by comparing their consumption higher CAFE standard is the difference
are discounted to provide an under the final rule for those years to between each model year’s fuel use and
appropriate comparison of costs to the either the manufacturers’ plans if they
the fuel use that would occur under
value of future benefits. To the extent were above 22.2 mpg, or the
either the manufacturer’s plans or if the
possible, we translated impacts other consumption they would have if the MY
MY 2007 standard remained in effect.
than direct fuel savings into dollar 2007 CAFE standard of 22.2 mpg
remained in effect during those years. This analysis results in estimated
values and then factored them into our
First, the estimated fuel consumption of lifetime fuel savings of 555 million,
cumulative estimates. We obtained
MY 2008–2010 light trucks was 1,813 million, and 2,023 million gallons
forecasts of light truck sales for future
years from AEO 2005.57 Based on these determined by dividing the total for MYs 2008, 2009, and 2010,
forecasts, NHTSA estimated that number of miles driven during the respectively.
vehicles’ remaining lifetime by the fuel A more detailed explanation of our
56 In the FRIA, we also evaluated the final rule economy level they were projected to analysis is provided in Chapter VIII of
using a 3 percent discount rate for discounting achieve under the 22.2 mpg standard. the FRIA and the final EA (see EA p.
benefits. Then, we assumed that if these same 26).
57 The agency relied on AEO 2005 projections for
light trucks were produced to comply
the total sales figures. The manufacturers provided
us with projected sales for passenger cars and light
with higher CAFE standards for those
58 As described in detail in the FRIA, we use a
trucks. However, taken together, the sales years, their total fuel consumption
20 percent rebound effect based on a thorough

projections provided by the individual companies during each future calendar year would
to NHTSA yielded unrealistically high industry- review of the literature (FRIA p. VIII–45). We are
equal the total number of miles driven nonetheless aware that there is ongoing research in
wide sales volumes. Percentage of total sales per
manufacturer was based on past sales data. A
(including the increased number of this area, and will continue to assess this
complete discussion of light truck sales projections miles driven because of the ‘‘rebound assumption in future rulemakings in light of new
is provided in the FRIA (FRIA p. VIII–8). effect,’’ the tendency of drivers to evidence.
4. Uncertainty (1) a function that sets the target fuel a manner that preserves manufacturer
economy levels for each value of vehicle flexibility and consumer choice. (H. Rpt.
The agency recognizes that the data footprint; 59 and 94–340, p. 87; S. Rpt. 94–179, p. 6.)
and assumptions relied upon in our (2) a Reformed CAFE standard based The discretion provided to the agency
analysis have inherent limitations that on each manufacturer’s production- by Congress to determine whether to
do not permit precise estimates of weighted harmonic average of the fuel establish a single fuel economy level
benefits and costs. NHTSA performed a economy targets for footprint value. applicable to all manufacturers or to set
probabilistic uncertainty analysis to Unlike the proposed Reformed CAFE a series of fuel economy levels
examine the degree of uncertainty in its system, which relied on a step function applicable to individual manufacturers
costs and benefits estimates. Factors and associated categories, the final equally supports using a step function
examined included technology costs, Reformed CAFE system relies on a or a continuous function to establish
technology effectiveness in improving continuous mathematical function fuel economy targets for vehicles of
fuel economy, fuel prices, the value of relating fuel economy targets to vehicle different sizes.62 Under either type of
oil import externalities, and the rebound footprint. function, a manufacturer’s required fuel
The required level of CAFE for a economy level is dependent on the
effect. This analysis employed Monte
particular manufacturer for a given manufacturer’s fleet mix. Moreover, just
Carlo simulation techniques to examine
model year is calculated using the as the category targets described in the
the range of possible variation in these
target-setting function for that model NPRM are equally applicable to all
factors. As a result of this analysis, the year in conjunction with that
agency thinks it very likely that the manufacturers, the fuel economy targets
manufacturer’s actual total production defined by a continuous function are
benefits of the Unreformed CAFE and its production at each footprint
standards will exceed their costs for all equally applicable to all manufacturers
value for that model year.60 The for a given model year.
three model years. A detailed discussion manufacturer’s required CAFE level is
of the uncertainty analysis is provided calculated by dividing its total A continuous function standard is
in Chapter X of the FRIA. production for the model year by the based on similar technological and
sum of the values obtained by dividing economic considerations employed in
G. Unreformed Standards for MYs establishing the proposed step function
2008–2010 the manufacturer’s production of each
vehicle model included in its fleet by standard, and which we believe ensure
the fuel economy target for that model. the technological feasibility and
We believe the standards established
economic practicability of the proposed
today are challenging enough to B. Authority for Reformed CAFE MY 2011 standard. Moreover, a
encourage the further development and
In the same manner as we explained continuous function is defined based on
implementation of fuel-efficient the modeled capabilities of the same
technologies and are achievable within the step function proposal to be
consistent with EPCA,61 the continuous percentage of the fleet as in the step
the applicable timeframe. Accordingly, function proposal (i.e., 97 percent of the
we have concluded that the standards function Reformed CAFE standard
similarly conforms to the mandate to light truck fleet). Reliance on 97 percent
for the Unreformed CAFE system are of the fleet better reflects industry-wide
establish maximum feasible fuel
technologically feasible and considerations than the primary focus
economy standards. The continuous
economically practicable for those on the ‘‘least capable manufacturer with
function standard is applicable on a
manufacturers with a substantial share fleet average basis and reflects the a substantial share of the market’’ in the
of the light truck market (General agency’s balancing of the nation’s need Unreformed CAFE structure.
Motors, Ford, and DaimlerChrysler), and to conserve energy, the effect of other In the NPRM we recognized the
are capable of being met without standards on fuel economy, financial challenges facing the motor
substantial product restrictions, and technological feasibility, economic vehicle industry and that a substantial
will enhance the ability of the nation to practicability and other public policy number of job losses had been
conserve fuel and reduce its considerations. Further, like the announced by large full-line
dependence on foreign oil. As noted proposed step function standard, the manufacturers. Since publication of the
above, we have concluded that the continuous function achieves the NPRM, two manufacturers of light
standards set through this final rule congressional policy objectives trucks, each with a significant share of
represent the best overall balance of the embedded in EPCA. the market, have continued to report
statutory factors, and in addition, are The continuous function standard financial difficulties. The financial risks
consistent with the protection of motor retains the fleetwide compliance aspect faced by these companies, including
vehicle safety and American jobs. mandated by the CAFE statute. By their workers and suppliers,
The Unreformed CAFE light truck maintaining reliance on harmonic underscored the importance to full-line
standards for MYs 2008–2010 are as averaging, the continuous function vehicle manufacturers of establishing an
follows: standard promotes the CAFE statute’s equitable CAFE regulatory framework.
overriding goal of conserving energy in Compared to Unreformed CAFE, the
MY 2008: 22.5 mpg Reformed CAFE will enhance overall
MY 2009: 23.1 mpg
59 Footprint is an aspect of vehicle size—the
fuel savings while providing
product of multiplying a vehicle’s wheelbase by its manufacturers the flexibility they need
MY 2010: 23.5 mpg average track width
60 Since the calculation of a manufacturer’s to respond to changing market
VI. The Reformed CAFE Standards for required level of average fuel economy for a conditions. The reforms adopted today
MYs 2008–2011 particular model year would require knowing the will provide a more equitable regulatory
final production figures for that model year, the framework by creating a level playing
A. Overview of Reformed CAFE final formal calculation of that level would not
field for manufacturers, regardless of
occur until after those figures are submitted by the
The structure of Reformed CAFE for manufacturer to EPA. That submission would not,
of course, be made until after the end of that model 63 For a discussion of the technology costs and
each model year, as adopted in today’s year. determination of the social benefits of improved
final rule, has two basic elements— 61 See 70 FR 51415, 51445. fuel economy, refer to the FRIA.
whether they are full-line or limited-line the agency must continue to consider to vehicle footprint; these targets are
manufacturers. the ‘‘least capable manufacturer’’ to higher for smaller light trucks and lower
ensure that standards set under the for large ones. It uses these targets to
C. Legal Issues Related to Reformed
Reformed CAFE system do not result in determine a required CAFE level for
CAFE
adverse economic impacts on any each manufacturer that reflects the size
1. Maximum feasible individual manufacturer. General distribution and production volumes of
EPCA requires that the light truck Motors and Ford argued that NHTSA’s its light truck models. By setting each
CAFE levels be established at the proposed methodology does not manufacturer’s required fleet-wide
‘‘maximum feasible average fuel sufficiently consider the capabilities of CAFE level to reflect its size mix, the
economy level’’ achievable by the the ‘‘least capable manufacturer,’’ and Reformed system requires some effort by
manufacturers in that model year (49 thus violates its statutory duty to set each manufacturer to improve the fuel
U.S.C. 32902(a)). When deciding on the standards that are ‘‘economically efficiency of its individual models,
practicable.’’ regardless of their size distribution.
maximum feasible level, the agency
We noted in the NPRM that the term As stated above, the Volpe model
must consider technological feasibility,
‘‘least capable’’ manufacturer is applies technologies to a manufacturer’s
economic practicability, the effect of something of a misnomer under the fleet until the cost of an additional
other motor vehicle standards of the Reformed system, since each technology application equals the
Federal government on fuel economy, manufacturer’s projected level of CAFE benefits of the resulting improvement in
and the need of the nation to conserve is determined by two factors: (1) The fuel economy. Because these benefits
energy (49 U.S.C. 32902(f)). The agency extent to which small or large vehicles include the value of reducing economic
must balance these considerations, predominate in its planned production and environmental externalities from
along with other factors such as safety, mix, and (2) the type and amount of producing fuel, this process results in a
when determining the level of CAFE fuel-saving technologies the ‘‘socially optimal’’ level of fuel
standards. manufacturer is deemed capable of economy. Before we arrive at the level
As indicated above, and described in applying. Two manufacturers may apply of optimal economic efficiency, it is
greater detail below, the Reformed the same type and amount of fuel-saving important to understand the
CAFE system uses incremental cost- technologies to their fleets, yet have assumptions relied on by the model
benefit analysis (as implemented within differing CAFE levels, if their fleet when applying technology.
the Volpe model) to establish standards. mixes are not identical. Thus, a full-line As with the Stage analysis, the Volpe
The technology cost and benefit manufacturer could have a lower overall model’s assumptions about technology
assumptions employed by the model are CAFE than a manufacturer cost and effectiveness are based on
based on those presented in the NAS concentrating its production in the estimates provided in the NAS report,
report. However, consideration is given smaller footprint range, even though the and incorporate information provided
to manufacturers’ critiques of the former manufacturer has applied as by manufacturers. The agency continues
technology assumptions employed by much (or more) technology to the to rely on the NAS report to determine
NAS. The agency also relies on the models it produces as has the latter technology costs and effectiveness
product plans provided by manufacturer. The manufacturer because the estimates developed in the
manufacturers when projecting concentrating its production in smaller NAS study were developed by
potential technology applications. The vehicles would have a higher CAFE recognized experts in vehicle
standard arrived at through this process level due to the higher fuel economies technology, and were widely peer
is then evaluated to determine potential of smaller vehicles. Thus, ‘‘large reviewed. This study is the most up to
sales and employment impacts. As manufacturer with the lowest fuel date peer reviewed study available.
explained in the following discussion, economy average’’ might better describe While the agency is working to update
the totality of this analysis results in a the former than ‘‘least capable the NAS data, in a study conducted
standard that is both technologically manufacturer.’’ through an interagency agreement with
feasible and economically practicable. The Reformed CAFE system the Department of Energy, this update
As discussed elsewhere in this notice, establishes standards with regard to the requires additional work. To that end,
the standard reflects consideration of capabilities of a wider range of the agency continues to rely on the NAS
the impact of other Federal motor manufacturers than just the ‘‘least report.
vehicle standards on fuel economy, and capable manufacturer.’’ The fuel Because the alternative estimates
as evidenced by our estimates that the economy capabilities of an individual submitted by vehicle manufacturers and
resulting standard for MY 2011 will manufacturer are projected based on others as part of their comments on the
save approximately 2.8 billion gallons of each of the seven largest manufacturers’ NPRM have not been subjected to the
fuel, also addresses the nation’s need to specific product plans. Consideration of same review process, the agency
conserve energy. what specific technologies each continues to view those reported in the
Vehicle manufacturers and the manufacturer can apply and at what rate NAS study as the most reliable
Alliance expressed concern that the each technology can be applied is also estimates available. Further, because the
agency’s new methodology for setting made at the individual manufacturer Volpe model applies these technologies
CAFE standards (i.e., using cost-benefit level. Further, a manufacturer’s required to individual vehicle models described
analysis to identify the pattern and fuel economy level reflects that in the product plans provided by
stringency of fuel economy targets) manufacturer’s actual fleet mix. manufacturers, this ensures that
risked losing the key economic Instead of requiring a uniform level of technologies are not added to vehicles
practicability check that was previously CAFE—which is inherently more already employing them, and that the
provided by assessing a proposed challenging for manufacturers whose model reliably projects potential fuel
standard’s effect on the least capable fleets have high percentages of larger economy improvements for actual
manufacturer, an approach that had vehicles to meet than for those whose vehicle models that manufacturers plan
proven reasonable and workable in product lines emphasize smaller to produce during each future model
many prior CAFE rulemakings. In models—the Reformed system specifies year. As such, the standard is based on
general, these commenters argued that fuel economy targets that vary according actual characteristics of specific vehicle
models and fleet mixes from The agency did identify and consider other benefits that result from higher
manufacturers’ product plans. a variety of benefits and costs that either fuel economy using a 7 percent discount
The agency has also responded to could not be monetized or could not be rate.
information provided by manufacturers quantified. On the benefit side, for The agency is relying on a 7 percent
concerning the practicability of example, there is a significant reduction discount rate partly because this rate
applying various technologies. As in carbon dioxide emissions, which can reflects the economy-wide opportunity
explained in greater detail below in not be monetized. There is no agreement cost of capital. The agency believes that
Section XIII. Comparison of the final in the literature on values or range of a substantial portion of the cost of this
and proposed standards, the revised values for monetizing such a benefit to regulation may come at the expense of
assumptions and constraints include: the United States. On the cost side, for other investments the auto
extending lead times provided for example, there is a risk of adverse safety manufacturers might otherwise make.
implementing certain technologies, impacts from downweighting, which Several large manufacturers are
reducing annual phase-in percentages cannot be quantified. This is because resource-constrained with respect to
for certain technologies, and reducing the agency is unable to predict to what their engineering and product-
instances of mid-product cycle extent manufacturers may rely on development capabilities. As a result,
technology applications. The model downweighting, and therefore cannot other uses of these resources will be
then relies on these revised assumptions quantify the number of additional foregone while they are required to be
in conjunction with the NAS study’s deaths and injuries that may occur as a applied to technologies that improve
original estimates of technology costs result. Overall, the agency determined fuel economy.
and effectiveness, to determine the that there is no compelling evidence If a manufacturer were able to capture
‘‘socially optimal’’ fuel economy level. that these unmonetized benefits and all of the benefits to both vehicle buyers
costs would, taken together, alter its and society as a whole that result from
Ford stated that by focusing on assessment of the level of the standard
‘‘optimal economic efficiency,’’ NHTSA improved fuel savings, it would apply
for MY 2011 that would maximize net technology to the level where the
has adopted a surrogate measure of benefits. Thus, the agency determined
economic practicability that (as present value of increased future
the stringency of that standard on the benefits when discounted at 7 percent
contrasted with its traditional basis of monetized net benefits.
assessment whose starting point is the just equaled the costs of applying
Standards set at a level more stringent additional technology.64 Applying
‘‘least capable manufacturer’’) does not than those set at the socially optimal
consider many of the effects that the technology to improve fuel economy
level would not be economically beyond this level would entail costs—
higher standards would have on efficient for society. Standards more
individual manufacturers. including the opportunity cost of the
stringent than those established under additional capital resources devoted to
DaimlerChrysler noted that Congress the Reformed CAFE system adopted in
specifically directed NHTSA to consider improving fuel economy—that would
this document would require the exceed the resulting benefits. Failing to
industry-wide capabilities in setting industry to continue applying
CAFE standards, not just cost- improve fuel economy to this level
technology past the point at which would leave opportunities to obtain fuel
effectiveness for consumers. As such, doing so increases net social benefits.
DaimlerChrysler argued that retaining a savings and related benefits that
Standards set at a level less stringent exceeded the associated costs of the
‘‘least capable manufacturer’’ analysis than those set at the socially optimal
would help ensure that the standard technologies necessary to obtain them.
level would result in a lost opportunity In commenting on the Reformed
continues to be within the industry’s for applying cost-beneficial CAFE system, the Alliance stated that
ability to afford in terms of capital costs technologies. Under less stringent standards should not be set so high as
and annual expenditures. standards, technologies that provide the cost of the added technology
In response to these comments, the benefits at least equal to their costs outweighs the societal benefits of the
agency notes that determining the would not be projected onto
improved fuel economy. Because the
socially optimal level of fuel economy manufacturers’ product plans. As such,
social optimal level of fuel economy
targets under the assumptions inputted the standards would not capture fuel
ensures that the marginal benefit (either
into the Volpe model provides a savings that are cost-effective to achieve.
In considering manufacturers’ costs to the consumer or to society) of an
benchmark for assessing the economic increase in fuel economy is equal to cost
practicability of the resulting standard. for applying technology, the agency’s
analysis accounts for the opportunity of the technology producing the
Because these socially optimal targets additional benefit, the social optimum
are determined by equalizing the costs associated with investing in that
technology. When a manufacturer level is economically practicable for
monetized social benefits of improved society.
fuel economy further to the costs of the invests its capital in additional
technology, those resources are Ford suggested NHTSA’s cost-benefit
technologies that would produce such analysis has not properly considered
benefits,63 this process avoids the unavailable for other investment
opportunities, and the returns the costs to manufacturers for making
application of technologies whose
benefits are insufficient to justify their manufacturer could have earned on 64 The main benefit of improving fuel economy is
costs when the agency determines a alternative investments or other uses of the savings in fuel costs experienced by vehicle
manufacturer’s capability. In other its capital resources (such as application buyers, since as a light truck’s fuel economy
words, this approach ensures that each to safety or performance attributes of a increases, the amount and cost of the fuel required
vehicle, or retiring existing debt) to operate it decreases. At the same time, reducing
identified private technology the amount of fuel light trucks consume also
investment projected by the model represent an additional cost of generates benefits to society and the economy as a
produces marginal benefits at least improving fuel economy. To ensure that whole, including reduced emissions of some
equal to marginal cost. this additional cost of using capital criteria pollutants that occur during fuel refining
resources is reflected in its assessment and reduced economic costs from importing and
consuming petroleum. Because these benefits
63 For a discussion of the technology costs and of the economic practicability of accrue to individuals and firms other than those
determination of the social benefits of improved improving fuel economy, the agency who purchase new vehicles, they are referred to as
fuel economy, refer to the FRIA. discounts the future fuel savings and external benefits.
necessary investments and for model also takes into account other NHTSA, 901 F.2d 107, 121 (DC Cir.
increasing employment levels, or factors closely associated with economic 1990)). Further, the agency conducts an
competitive forces that may cause practicability, such as lead time and analysis of the estimated sales and
domestic manufacturers to absorb phase-in rates. While higher fuel prices employment impacts on individual
CAFE-related costs rather than passing increase the benefits associated with manufacturers from a standard set at the
them on to buyers. Ford argued that the improved fuel economy, the marginal level derived from the analysis applied
potential inability of producers to cost-benefit analysis is still bounded by through the Volpe model to ensure the
recoup such costs from buyers (in the the technological and economic economic practicability of that standard.
form of higher prices) must be taken assumptions employed by the model. We recognize the financial difficulties
into account explicitly, not solely The agency has relied on technologies facing several light truck manufacturers.
through its effect on sales. determined by the NAS report to be It has been widely reported that General
DaimlerChrysler also argued that not all ‘‘currently in the production, product Motors and Ford are facing financial
of the costs associated with improved planning, or continued development difficulties. In 2005, gasoline prices
fuel economy can be passed on to stage, or are planned for introduction. rapidly increased, causing a shift in
consumers in the form of higher vehicle * * * The feasibility of production is consumer demand away from larger,
prices. therefore well known, as are the more profitable SUVs and toward
As stated above, a cost-benefit estimated production costs’’ (NAS p. smaller, more fuel-efficient cars and
analysis is not the sole factor in the 40).65 light trucks, a segment of the market
agency’s consideration of economic Additionally, the model relies on long dominated by Asian automobile
practicability. The agency also performs assumptions that reflect manufacturers’ manufacturers. Sales of sport utility
a sales impact analysis. In determining comments regarding the applicability of vehicles have fallen slightly in each of
the sales impact of higher prices from technology. Manufacturers provided the last few years, with the trend
improved fuel economy, the agency detailed critiques of the agency’s accelerated by a jump in gas prices late
assumes that consumers will value application of technology in the NPRM, in 2005. The increase in gasoline prices
improved fuel economy. However, the most of which were provided particularly curbed sales of the biggest
analysis does not rely on the value of confidentially. Manufacturers provided
SUVs. In response, U.S. automakers
fuel savings realized over the life of the alternative assumptions that they
increased sales during the 2005 summer
vehicle. Our analysis considers the deemed more reasonable. Presumably,
with discounts that let consumers pay
value of fuel savings realized in the first in providing comment on what were
what was called the ‘‘employee’’ price.
4.5 years of the vehicle’s life. The 4.5 reasonable assumptions for the agency
While this marketing led to near-record
year period is the average ownership to apply, the manufacturers’
sales, sales again dropped off in October
period for new cars. We determined that recommendations inherently accounted
when the incentives ended. By
the fuel savings during this period will for their capabilities, both technological
December of 2005, General Motors and
be recognized and valued by light truck and economic.
Many of these assumptions are closely Ford sales were down 10.2 percent and
purchasers. Based on our analysis,
which assumes that consumers value tied to the economic capabilities of the 8.7 percent respectively.
fuel savings over 4.5 years, there are net manufacturers. For example, in Aside from the recent sales losses,
benefits for the average light truck response to commenters, the agency General Motors and Ford have
purchasers. Thus, the average consumer employed longer lead time and longer experienced erosion in their respective
will be willing to pay higher prices for phase-ins for various technologies. market shares. General Motors, and to a
improved fuel economy, and These adjustments reduce the economic lesser extent Ford, have seen their
manufacturers will be able to raise impact of applying technology by market share fall drastically over the last
prices to recoup their investments. providing greater flexibility as to when several years in the last year, which has
DaimlerChrysler further argued that fuel economy improvements are resulted in operating losses. General
the agency must explain how it will expected. Additionally, we limited the Motors’ market share dropped from 28.1
decide whether a standard set at a number of mid-product cycle percent in 2003 to 26.9 in 2004, and to
‘‘maximum net benefits’’ level would applications. Mid-product cycle changes 24.7 percent in 2005. This is compared
exceed the level that is economically typically are more costly than changes to General Motors’ market share of 35
practicable if it does not take into at the beginning of a product cycle, as percent in the early 1990’s. Ford has
account the capabilities of the ‘‘least mid-product cycle changes may experienced a drop from 19.3 percent in
capable manufacturer’’ with a necessitate changes to an established 2003 to 17.8 in 2005.66
substantial market share. manufacturing line. By limiting the These losses in market share have
DaimlerChrysler argued that the agency availability of technologies using these coupled with operating losses. General
has not provided sufficient detail as to assumptions, the cost-benefit does not Motors had an operating loss of $11.5
its methodology, as would permit assume that manufacturers will make billion for its North American
informed public comment. This improvements that would be operations in calendar year 2005, with
commenter stated that in certain unjustifiably costly. automotive cash flows related to
situations, economic practicability The socially optimum level of fuel operations at a negative $7.9 billion.67
might require the agency to set a lower economy, as determined under the During that same year, Ford Motor
standard than the maximum net benefits Volpe analysis, is thus indicative of the Company experienced an operating loss
methodology might otherwise dictate. fuel economy level that is economically of $1.5 billion, with negative cash flows
For example, DaimlerChrysler, along practical for both individual
with the Alliance and Ford, stated that manufacturers and the light truck 66 The market share values are from
if gas prices were to rise high enough, industry as a whole, and provides a wardssuto.com. The 2005 values are estimates.
every technology would theoretically be process for careful balancing of the 67 Source: SEC FORM 8–K submitted to the SEC
‘‘cost-beneficial.’’ on January 26, 2006, and General Motors’ March 16,

‘‘competing factors of EPCA’’ (CEI v. 2006 press release as reported by Automotive
Gas prices are but one factor relied on Business Review (http://www.automotive-business-
in the agency’s analysis for setting fuel 65 Complete documentation of the Volpe fuel review.com/article_news.asp?guid=FE50808D–
economy targets. As stated, the Volpe economy model is available in the CAFE docket. 4915-4A6F-949F-7532C6F5CE75).
from operations at $4.1 billion.68 In unless its statute prohibits doing so. was unable to achieve a level of total
November 2005, General Motors EPCA neither requires nor prohibits the cost equaling total benefit before
announced that it would cut 30,000 jobs consideration of the fuel economy level running out of technologies to apply.
and close 12 manufacturing facilities by at which net benefits are maximized. While the Union of Concerned
2008. In January 2006, Ford announced Additionally, EPCA does not require the Scientists stated that it performed a
that it would cut up to 30,000 jobs by agency to rely on the ‘‘least capable ‘‘break-even’’ analysis, it did not explain
closing 14 manufacturing facilities over manufacturer’’ analysis as we have the technologies it relied upon in its
the next six years. The financial traditionally used. Reliance on the analysis. In any event, the ‘‘break even’’
difficulties facing these manufacturers ‘‘least capable’’ manufacturer analysis approach necessitates adding
was given due consideration. was in response to the direction in the technologies that cost more than the
In their comments to the NPRM, conference report on the CAFE statute benefit they provide.
several commenters, including General language to consider industry-wide ACEEE commented that NHTSA’s
Motors and Ford, expressed concern considerations, but not necessarily base approach of setting CAFE standards that
that the marginal cost-benefit analysis the standards on the manufacturer with maximize net benefits is flawed because
would not appropriately consider the the greatest compliance difficulties. it is inconsistent with the requirements
capabilities of individual manufacturers Moreover, the very structure of of EPCA. ACEEE stated that under the
and may result in standards that impose Reformed CAFE standards makes it statute, NHTSA must set ‘‘maximum
harsh economic impacts on an unnecessary to continue to use the feasible’’ fuel economy standards after
individual manufacturer. Ford ‘‘least capable manufacturer’’ approach considering the ‘‘technological
specifically noted that if standards in order to be responsive to guidance feasibility, economic practicability, the
increased further then the costs may be contained in the EPCA conference effect of other motor vehicle standards
too high and unrecoverable, further report. Instead of specifying a common of the Government on fuel economy,
compounding the current economic level of CAFE, a Reformed CAFE and the need of the United States to
hardship facing the industry. According standard specifies a variable level of conserve energy.’’ 69 According to
to Ford, when determining the CAFE that varies based on the ACEEE, there is a range of fuel economy
economic practicability of its CAFE production mix of each manufacturer. values that are technologically feasible
standards, the agency must determine By basing the level required for an and another range of values that are
whether technologically-feasible levels individual manufacturer on that economically practicable, and the
would lead to adverse economic manufacturer’s own mix, a Reformed statute requires NHTSA to set the CAFE
consequences, such as a significant loss CAFE standard in effect recognizes and standard at the highest value within the
of sales or the unreasonable elimination accommodates differences in intersection of those ranges. ACEEE
of consumer choice, a determination production mix between full- and part- stated that NHTSA’s proposed
that Ford claimed the agency has not line manufacturers, and between maximum benefits approach would not
made in selecting its proposed manufacturers that concentrate on small yield the same level of fuel economy, so
Reformed CAFE targets. vehicles and those that concentrate on the agency’s current methodology is
The agency recognizes that we must large ones. A Reformed standard is also therefore impermissible. Accordingly,
consider the potential economic and responsive to changes in fleet-mix that ACEEE urged NHTSA to adopt an
financial impacts of the CAFE standards result from changes in the market. approach whereby CAFE standards
on individual manufacturers. Aside In contrast to comments from the would be set at the maximum
from incorporating manufacturers’ manufacturers, environmental technically-feasible level that has
comments regarding the feasibility of commenters argued that the marginal positive net total economic benefits,
technology applications, the agency has cost-benefit analysis is contrary to EPCA rather than a level at which the added
also performed a sales and employment because it results in a standard that is benefits from improving fuel economy
impact analysis. The sales analysis lower than what they deemed to be further are offset by the costs for doing
looks at a purchasing decision from the ‘‘maximum feasible.’’ The Union of so.
eyes of a knowledgeable and rational Concerned Scientists stated that the NRDC similarly stated that the
consumer, comparing the estimated cost social optimum level is below agency’s methodology ‘‘falls short of
increases versus the payback in fuel ‘‘maximum feasible’’ because of the statutory compliance’’ and argued that a
savings over 4.5 years (the average new uncertainty surrounding many of the cost-benefit analysis is inappropriate
vehicle loan) for each manufacturer. assumptions relied on in the model. The because key benefits of the fuel
This relationship depends on the cost Union of Concerned Scientists stated economy standards are ‘‘impossible to
effectiveness of technologies available to that the model undervalues the benefits reduce to monetized quantities,’’ such
each manufacturer. Some manufacturers because not all externalities are as ‘‘the national security benefits of
are estimated to increase sales and monetized (e.g., reduction in CO2 reduced oil dependence and
others to lose sales. Overall, based on a emissions). The Union of Concerned environmental and societal benefits of
7 percent discount rate for future fuel Scientists recommends the agency rely reducing the severity of global
savings, the maximum sales loss is less on a break-even approach, i.e., set fuel warming.’’ NRDC stated that the
than 11,000 vehicles per year for the economy levels at the point at which agency’s rationale for relying on a cost-
industry. We believe this will have a total costs equal total benefits. This benefit methodology was ‘‘arbitrary and
minor impact on employment. commenter stated that the break-even insupportable,’’ in part because EPCA
Further, we note that the regulatory approach would result in targets an provides for NHTSA to engage in
philosophy set forth in Executive Order average of 6 mpg higher than those in ‘‘technology-forcing.’’ The Union of
12866, ‘‘Regulatory Planning and the proposed rule. Concerned Scientists argued that to
Review,’’ is that a rulemaking agency The agency considered an approach account for undervaluing of societal
should set its regulatory requirements at under which technology was applied to benefits, fuel economy targets should be
the level that maximizes net benefits the point of total cost equaling total established at the level where total
benefit, but determined that such a benefits exceed total costs.
68 Source: Ford’s SEC Form 8–K submitted to the standard would violate the maximum
SEC January 23, 2006. feasible requirement. The Volpe model 69 49 U.S.C. 32902.
As suggested by ACEEE, the agency ACEEE, NHTSA does not agree that the 2. Backstop
establishes the standard at the EPCA requires it to set CAFE standards Consistent with our proposal, the
maximum feasible fuel economy level at the highest technically feasible level Reformed CAFE system adopted today
that is economically practicable. The that would result in positive net does not include a backstop or similar
agency is not permitted to establish economic benefits. Although EPCA does such mechanism. Several commenters,
higher standards simply because they not specify a method for identifying ACEE, NRDC, the Union of Concerned
might be technologically feasible. When standards that are economically Scientists, and Environmental Defense,
such standards would impose cost practicable, Executive Order No. 12866 argued that EPCA requires the agency to
burdens on certain manufacturers that establishes an overall goal of achieving incorporate such measures under the
are not economically practicable, such the highest net benefits, which occurs at Reformed CAFE system. However, a
standards would violate EPCA. the point where the additional benefits backstop or similar mechanism as
Conversely, our statutory responsibility from further increasing the standards recommended by commenters would
does not allow us to set lower standards (marginal benefits) just equal the not be consistent with the objectives of
than those it has established using this increase in costs for complying with a EPCA, and in some instances could
process, because the standards adopted stricter standard (marginal costs).72 violate the statute.
today are demonstrably technologically NRDC also stated that the agency
feasible, and more lenient standards ‘‘Backstop’’ refers to a required fuel
should use its authority to set standards economy level that would be applicable
would not represent the maximum to be ‘‘technology forcing.’’ While NRDC
feasible levels that could be attained to an individual manufacturer (or to the
did not define ‘‘technology forcing’’ we industry) if the required fuel economy
while remaining economically took their comment to mean that the
practicable. level calculated under the Reformed
agency should establish standards that CAFE system for a manufacturer (or
NRDC commented that the marginal require investment in developing new
cost-benefit analysis is inconsistent with industry) was below a predetermined
technologies. However, the agency minimum. The concept of a backstop is
a ‘‘technology forcing standard’’ 70 and, would not be able to ensure that
further that it is inappropriate for the to prevent or minimize the loss of fuel
standards set at such a level would be savings from one model year to the next.
purposes of CAFE because the benefits technologically feasible, as these levels
are ‘‘impossible to reduce to monetized Such a requirement would essentially
would require the use of technologies be the same as an Unreformed CAFE
quantities.’’ NRDC stated that the not yet proven.
enhancement of national security and standard. Stated another way, the
The standards that result from the Reformed CAFE standard with a
the reduction of potential effects from
continuous function CAFE system are backstop would require compliance
reduced CO2 emissions may not fully be
technology-forcing in that the standards with the greater of the following fleet-
quantifiable and monetizable.
We disagree with NRDC with regard require manufacturers to employ wide requirements: (1) An average fuel
to the degree of technology forcing technologies beyond those in their economy level calculated under the
permitted under EPCA. The statute product plans, to the extent practicable Reformed CAFE standard, or (2) an
permits the imposition of reasonable, within the lead time available. This is equal-cost fuel economy level calculated
‘‘technology forcing’’ challenges on any evidenced by the fact that both the Stage under the Unreformed CAFE standard.
individual manufacturer, but does not and benefit-cost analyses for Under the Reformed CAFE system a
contemplate standards that will result in determining the level of standards manufacturer’s required fuel economy is
severe economic hardship by forcing envision extensive application of fuel reflective of that manufacturer’s product
reductions in employment affecting the economy technologies that are currently mix. Fuel economy targets are based on
overall motor vehicle industry.71 A fuel in their early stages of deployment, but vehicle footprint; vehicles with a larger
economy standard ‘‘with harsh are not already included in footprint are compared to less stringent
economic consequences for the auto manufacturers’ product plans for the targets than vehicles with a smaller
industry * * * would represent an model years to which the adopted footprint. As such, commenters stated
unreasonable balancing of EPCA’s standards apply. that upsizing 73 of manufacturers’ fleets
policies’’ (CAS, 793 F.2d at 1340). Moreover, our cost-benefit analysis through increased sales of larger
In response to arguments by the carefully considers and weighs all of the vehicles would reduce required fuel
Union of Concerned Scientists and benefits of improved fuel savings. The levels and fuel savings would decrease.
main source of benefits from the It is this potential for reduced fuel
70 We assume NRDC is using the phrase standards is the fuel savings savings that these commenters assert
‘‘technology forcing’’ to indicate a level of a experienced by consumers. With regard necessitates a backstop or fuel economy
standard that would require manufacturers to apply to the value of increased energy ratcheting mechanism.74
technologies beyond that assumed technologically
feasible under the Volpe model.
security, the agency has estimated a As previously explained, EPCA
71 In the past, the agency has set CAFE standards monetized value of this security requires the agency to establish fuel
above its estimate of the capabilities of a associated with improved fuel savings. economy standards with consideration
manufacturer with less than a substantial, but more We have also determined that there is given to four statutory criteria, one of
than a de minimus, share of the market. See, e.g., no compelling evidence that the
CAS, 793 F.2d at 1326 (noting that the agency set
which is the Nation’s need to conserve
the MY 1982 light truck standard at a level that unmonetized benefits would alter our
might be above the capabilities of Chrysler, based assessment of the level of the standard 73 ‘‘Upsizing’’ of a fleet refers to the increase in
on the conclusion that the energy benefits for MY 2011. A discussion of the benefit average footprint that occurs through either an
associated with the higher standard would increase to the footprint value of individual
assumptions is provided in Chapter VIII vehicles, an increase in the production of vehicles
outweigh the harm to Chrysler, and further noting
that Chrysler had 10–15 percent market share while of the FRIA. Further, the marginal cost- with larger footprint values, or a combination of
Ford had 35 percent market share). On other benefit analysis ensures that we do not both.
occasions, the agency reduced an established CAFE set standards beyond what is 74 As described by commenters, a ‘‘ratcheting
standard to address unanticipated market economically optimal for society. mechanism’’ is a regulatory mechanism that would
conditions that rendered the standard unreasonable automatically increase the stringency of the
and likely to lead to severe economic consequences. required fuel economy level for a manufacturer or
49 FR 41250, 50 FR 40528, 53 FR 39275; see Public 72 White House Office of Management and the industry if fuel savings dropped below a
Citizen, 848 F.2d at 264. Budget, Circular A–4, September 17, 2003, p. 10. predetermined level.
energy. However, the agency has in the [A]ny regulatory program must be carefully experienced by a manufacturer as the
past reduced established fuel economy drafted so as to require of the industry what result of shifting to a new regulatory
standards because the previous balance is attainable without either imposing structure. The transition period is
impossible burdens on it or unduly limiting
of the four criteria no longer gave critical given that this is the first
consumer choice as to the capacity and
sufficient consideration to the criteria of performance of motor vehicles. comprehensive reform of the light truck
economic practicability. This course of CAFE program since its inception.
action was upheld by the U.S. Circuit H. Rep. 94–340 (p. 87). The Court’s The transition period is consistent
Court of Appeals for the District of determination in CAS reflects this with the recommendation of the NAS
Columbia, once with respect to light congressional directive. These report. The NAS report stated that a
trucks, and the other time with respect comments, on the other hand, seem restructuring of the CAFE system should
to passenger cars. See, CAS, 793 F.2d unaware of it. Consideration of include a phase-in period in order to
1322; Public Citizen, 848 F.2d 256. With consumer demand is a permissible one provide manufacturers an opportunity
regard to the reduction of the light truck under EPCA. to analyze the implications of the new
standard, the agency determined that A backstop could also have the standards and to redo their product
manufacturers had made reasonable unintended consequence of resulting in plans (see NAS Report at 108). The
efforts to comply with the standard, but downsizing by manufacturers, which Reformed CAFE standard will require
it was a shift in market demand that was could have negative safety implications. certain manufacturers to improve their
hindering compliance. Consumers were A manufacturer facing the potential of fleets, when in the past these
demanding larger vehicles with lower failing to comply with a backstop might manufacturers did not need to be
fuel economy performance than shift its production to smaller, lighter concerned with the light truck CAFE
manufacturers or the agency had vehicles. program. These manufacturers are those
projected. The Court in CAS specifically Furthermore, a ratcheting mechanism that produce fleets predominately
held that EPCA permits the agency to could result in a manufacturer required comprised of small light trucks, which
consider consumer demand and the to comply with a fuel economy level by virtue of their small size have high
resulting market shifts in setting fuel that violates EPCA. Under the Reformed fuel economies. These manufacturers
economy standards. See, CAS at 1323. CAFE system, a manufacturer’s required traditionally had high fleet wide fuel
This precedent is contrary to the fuel economy level is based on targets economies that were above the standard.
commenters’ assertion that a backstop or that represent the fuel savings However, the Reformed CAFE system,
ratcheting mechanism is statutorily capabilities of vehicles with a given by comparing vehicles to footprint
required. The Courts have said that footprint value. Targets are set with specific targets will require more
none of the four criteria are preeminent. consideration of the technological manufacturers to improve their fleets’
Instead the agency must balance the feasibility of improving the fuel fuel economy performance beyond the
four criteria in establishing fuel economy of vehicles given their baseline of the manufacturers’ product
economy standards. footprint. As such, the Reformed CAFE plans.
NRDC and the Union of Concerned system encourages manufacturers to Furthermore, the structure of the
Scientists stated that historic rates of undertake reasonable efforts to improve Reformed CAFE might require some
vehicle upsizing and the potential for the fuel economy of all its light trucks. manufacturers to revise their
fleet upsizing through shifts in If the stringency of targets were compliance strategies. For example and
production towards vehicles with larger automatically increased due to a as explained below, the Reformed CAFE
footprints necessitate a backstop or predetermined trigger, the resulting system minimizes the ability of
ratcheting mechanism. These changes to required fuel economy levels manufacturers to offset the low fuel
commenters stated that historic would be beyond what was established economy performance of larger vehicles
increases in light truck foot print and a after careful consideration of the by increasing the production of smaller
shift in production of nameplates statutory criteria, including the vehicles with higher fuel economies.
offered with longer wheelbases could technological and economic capabilities Manufacturers that relied on such a
result in a 30 percent and one percent of the industry. This result would compliance strategy in the past might
reduction in the projected fuel savings, violate EPCA. need to revise their product plans in
respectively. As such, commenters Commenters also presented additional order to comply with the Reformed
suggested that the agency adopt a scenarios (i.e., upsizing at category CAFE standard. The transition period is
backstop or ratcheting mechanism that boundaries and upweighting to remove an opportunity for manufacturers to
would apply if the light truck fleet vehicles from the light truck CAFE gain experience with how the Reformed
increased in size beyond some program) that they argued would likely CAFE system impact their fleets and
threshold, but did not identify what result in some loss of fuel savings. compliance strategies, while still
such a threshold should be. These additional scenarios are providing manufacturers the option to
The regulatory mechanisms suggested addressed below. As discussed further comply under the more familiar
by commenters would essentially limit below, concerns raised by these Unreformed CAFE system.
the ability of manufacturers to respond additional scenarios are addressed Several commenters questioned
to market shifts arising from changes in through the Reformed CAFE system whether the agency had authority to
consumer demand. If consumer demand adopted today. establish a transition period during
shifted towards larger vehicles, a which manufacturers could choose to
manufacturer potentially could be faced 3. Transition Period comply with one of two standards. The
with a situation in which it must choose The agency is providing a transition Union of Concerned Scientists stated
between limiting its production of the period during MYs 2008–2010, during that the transition period would lead to
demanded vehicles, and failing to which manufacturers may choose to a ‘‘worst of both worlds’’ scenario; each
comply with the CAFE light truck comply with the Unreformed CAFE manufacturer would comply with the
standard. Forcing such a choice would standard or the Reformed CAFE CAFE system that provided the lower of
be contrary to the congressional intent standard. This transition period will the two required fuel economy levels.
for establishing EPCA. minimize the potential for unintended The Union of Concerned Scientists
Congress directed that: compliance burdens that may be estimated that under this scenario, the
actual light truck fuel economy in the years of lead-time is the minimum the costs between the two systems
transition years would be as much as 0.4 necessary to comply with the required provides the agency with confidence
mpg lower than it would be under either fuel economy levels under the Reformed that the Reformed CAFE standards are
the Reformed CAFE system or the CAFE structure. Nissan stated that the also economically practicable.75
Unreformed CAFE system. stringency of the required fuel economy Further, this approach promotes an
First, we are unable to predict how levels that results from the Reformed orderly and effective transition to the
manufacturers will choose to comply CAFE system will be extremely Reformed CAFE system since
during the transition period. Some challenging, given the significant experience with the new system will be
manufacturers might choose to continue changes to the CAFE system that must gained prior to full implementation in
to comply under the Unreformed CAFE be incorporated into a manufacturer’s MY 2011.
system, given that it is a regulatory product planning process. Nissan Several commenters questioned
structure with which they are familiar. suggested that because the proposed whether the agency had the authority to
Some manufacturers might plan to regulatory changes are so much more equalize compliance costs during the
comply with the Unreformed CAFE extensive than merely setting new CAFE transition period. The Union of
program, but determine that they levels, which Nissan claims the agency Concerned Scientists and ACEEE stated
comply with the Reformed CAFE, and has stated requires at least 30–36 that equalizing costs during the
therefore to gain experience with the months lead time, an even longer phase- transition years and not setting them at
new system switch to the Reformed in may be appropriate. a level at which marginal costs equaled
system. Other manufacturers may General Motors stated that the marginal benefits, resulted in Reformed
choose to gain early experience with the availability of the traditional standards CAFE standards are not set at the
Reformed CAFE system and choose to during MY 2008–2010 would provide a ‘‘maximum feasible’’ level. Therefore,
comply with the Reformed CAFE system safety net against unintended these commenters concluded that the
for all 3 years of the transition. We have consequences from the reform process. Reformed CAFE standards during the
concluded that it is prudent to provide However, General Motors stated that the transition period would not comply
manufacturers this flexibility in order to agency need not establish the MY 2011 with EPCA.76
provide for a more orderly transition to Reformed CAFE standards in the current With regard to the agency’s authority
Reformed CAFE. rulemaking. Instead, General Motors for establishing standards under EPCA,
Second, this is not the first time that urged, NHTSA should await the the agency is not limited to the
the CAFE program provided experience and data that the transition considerations provided for in the
manufacturers a choice of standards period will produce. General Motors statute when determining what fuel
under which to comply. In 1979, expressed concern that if the Reformed economy levels will be maximum
manufacturers were given the option of CAFE targets begin to increase feasible. For example, the agency also
complying with the 4x4 and 4x2 significantly because of new analytical considers the effect that the CAFE
standards separately or combining all methodologies, time to fully address all standards will have on safety.77 Just as
their trucks into one fleet and of the relevant issues may not be safety is an appropriate consideration in
complying with the 4x2 numerical level. available due to statutory deadlines. In determining maximum feasible fuel
In 1983–1991, manufacturers were such an instance, General Motors economy levels, so is the need for an
provided the option of complying with commented that a standard grounded in orderly transition to a CAFE system that
standards applicable to their 4x4 light the ‘‘least capable manufacturer’’ might provides greater fuel savings than the
truck fleet and 4x2 light truck fleet be preferable. current system.
separately, or complying with a single Manufacturers develop product plans Because we equalized aggregate
combined standard applicable to their for their fleets at least 5 years in industry costs between Reformed and
entire fleet. In establishing the later advance, plans which incorporate Unreformed CAFE, the costs are not
option, we stated that it provides consideration of CAFE compliance. As borne by manufacturers in the same way
manufacturers additional flexibility in such, manufacturers have already begun and costs for individual manufacturers
complying (45 FR 81593, 81594 investing in their fleets for some of the may differ between the two systems.
(December 11, 1980)). We also noted model years that are subject to today’s Therefore, some manufacturers may
that such a compliance mechanism final rule. Some manufacturers may have a cost incentive to comply under
provides a degree of stability in the determine that it will be necessary to the Reformed CAFE system beginning in
standard setting structure of CAFE (see, adjust their product plans based on the MY 2008. This will provide both the
id.). Although the substance of the new CAFE structure. Given the industry and the agency with
compliance options adopted in this uncertainty associated with how a
document differs from those that gave manufacturer will perform under 75 We equalized aggregate industry costs between
rise to compliance options in previous Reformed CAFE, we are providing a Reformed and Unreformed CAFE. The costs are not
borne by manufacturers in the same way and costs
model years, the rationale is the same. transition period. for individual manufacturers may differ between
Manufacturers commented that the In addition to providing the two systems.
flexibility of a transition period is manufacturers the option of complying 76 Additionally, the ACEEE recommended that
necessary for manufacturers to under either CAFE system during the the transition period be structured so that all
manufacturers pay compliance costs equal to the
understand the new system and avoid transition period, we adjusted the least capable manufacturer, but did not provide
unintended consequences when Reformed CAFE standard such that the details as to how the standards would be set, or
revising compliance strategies and industry wide compliance costs are whether such standards would be technologically
product plans. Toyota noted that the approximately equal between the two feasible.
77 The United States Court of Appeals pointed out
current system has been in place for systems. Cost equalization has an
in upholding NHTSA’s exercise of judgment in
over 25 years, and therefore, a 3-year important advantage. Since the setting the 1987–1989 passenger car standards,
transition is appropriate for Unreformed CAFE standards were ‘‘NHTSA has always examined the safety
manufacturers to better understand how judged to be economically practicable consequences of the CAFE standards in its overall
consideration of relevant factors since its earliest
to plan for and implement the Reformed and since the Reformed CAFE standards rulemaking under the CAFE program.’’ Competitive
CAFE system. The Alliance, General spread the cost burden across the Enterprise Institute v. NHTSA (CEI I), 901 F.2d 107,
Motors, and Mitsubishi stated that 3 industry to a greater extent, equalizing 120 at n.11 (D.C. Cir. 1990).
experience in compliance with and the centerlines. The proposed track width inside the wheel area, but not relevant
administration of the new system. definition was based on the Society of to issues such as wear and dynamic
Further, some manufacturers may chose Automotive Engineers (SAE) definition performance. Honda stated that the
to comply under the Reformed CAFE in in W101 of SAE J1100, Surface Vehicle W113 measurement could be increased
order to gain a familiarity with the new Recommended Practice, revised July without any change to vehicle size or
system. As such, the cost equalization 2002, which reads as follows: dynamic performance by using wheels
will promote an orderly and effective The lateral distance between the with a larger positive offset.
transition to the Reformed system. centerlines of the base tires at ground, Nissan recommended using SAE
The equalization of costs provides the including the camber angle.79 However, J1100 W101, which is based on the
industry greater flexibility in adjusting the agency was concerned that a centerline of a vehicle’s tires at the
to the Reformed CAFE system. The vehicle’s track width could be increased ground. Nissan stated that it relies on
three-year transition period as adopted by off-setting its wheels,80 at minimal the W101 measurement for handling
encourages experimentation by expense, and thus subjecting the vehicle performance design considerations as
manufacturers, which we conclude will to a less stringent target. Therefore, the well as safety performance design.
effect a quicker transition than would agency modified the W101 definition for Nissan stated that there is little
result by either implementing an abrupt the proposal to read as follows: incentive to manipulate the W101
change after providing appropriate lead [T]rack width is the lateral distance measurement because even minor
time or maintaining the status quo. The between the centerlines of the tires at ground adjustments affect handling. Honda
Reformed CAFE program provides for when the tires are mounted on rims with zero added that use of the tire centerline has
greater fuel savings. By effecting a offset. more relevance to rollover risk.
quicker transition period, greater fuel Commenters generally supported the The definition of footprint adopted in
savings will be realized over time, use of footprint as a metric to categorize today’s final rule incorporates the
thereby furthering EPCA’s goal of light trucks. However, manufacturers definition of track width as defined in
improving fuel savings. raised a variety of concerns with the W101. The agency has reviewed the
D. Structure of Reformed CAFE proposed definition of track width. The three different definitions of track width
Alliance disagreed with the agency’s and has determined that there is the
1. Footprint Based Function concern regarding the potential for potential to affect the measurements
The proposed Reformed CAFE system changes made to wheel offset. The under each definition. The definition
was premised on using vehicle footprint Alliance stated that manufacturers proposed by the agency can be affected
to establish fuel economy targets for determine wheel offsets based on through changes to a wheel’s camber
light trucks of different sizes. We noted suspension geometry, ride, and angle and the thickness of the wheel
that vehicle weight and shadow 78 were handling characteristics, weight and mounting face (e.g., through the
discussed in the ANPRM, but along vehicle drivability. As such, the addition of washers). The measurement
with commenters to the ANPRM, we Alliance asserted that it would be under W113 could be affected by the
had concerns that weight and shadow unlikely for a manufacturer would alter thickness of the wheel mounting face.
could more easily be tailored for the a vehicle’s wheel offset in response to The measurement under W101 can be
sole purpose of subjecting a vehicle to the light truck CAFE program. affected by changes to wheel offset
a less stringent target (70 FR 51440). As The Alliance, Ford, General Motors, (positive or negative offset), camber
a result, both of those attributes, if used and BMW suggested that the agency angle, and the thickness of the wheel
as the foundation of our program, could should define track width in accordance mounting face.
fail to achieve our goal of enhancing with W113 in SAE J1100, which defines However, W101 is most directly
fuel economy with a Reformed CAFE track width as: linked to safety in terms of rollover risk,
program, and use of weight could fail to [T]he lateral distance between the wheel as stated by Honda. The W101
achieve our goal of improving the safety mounting faces,81 measured along the measurement is taken where a vehicle’s
of the program. spindle axis.82 tires touch the ground and is used by
Vehicle footprint is more integral to a Conversely, Honda opposed use of NHTSA in calculating a vehicle’s Static
vehicle’s design than either vehicle W113, stating that W113 and wheel Stability Factor. If a manufacturer were
weight or shadow and cannot easily be offset are related to packaging issues to increase a vehicle’s footprint through
altered between model years in order to increasing its track width, there likely
move a vehicle into a different category 79 Camber angle is the angle between the vertical
would be a positive safety effect.
with a lower fuel economy target. axis of the wheel of an automobile and the vertical
axis of the vehicle when viewed from the front or
We also believe that use of the vehicle
Footprint is dictated by the vehicle rear. It is used in the design of steering and footprint attribute helps us achieve
platform, which is typically used for a suspension. greater fuel economy without having a
multi-year model lifecycle. Short-term 80 Wheel offset is the distance from where a wheel
potential negative impact on safety.
changes to a vehicle’s platform would is mounted to an axis to the centerline of the wheel. While past analytic work 83 focused on
be expensive and difficult to accomplish The offset can be one of three types.
Zero Offset—The hub mounting surface is even
the relationship between vehicle weight
without disrupting multi-year product with the centerline of the wheel. and safety, weight was understood to
planning. In some cases, several models Positive—The hub mounting surface is toward the encompass a constellation of size-
share a common platform, thus adding front or wheel side of the wheel. Positive offset related factors, not just weight. More
to the cost, difficulty, and, therefore, wheels are generally found on front wheel drive recent studies 84 have begun to consider
unlikelihood of short-term changes. cars and newer rear drive cars.
Vehicle footprint is the area defined Negative—The hub mounting surface is toward 83 See, Kahane (2003) and Van Auken, R.M. and
the back or brake side of the wheels centerline.
by vehicle wheelbase multiplied by ‘‘Deep dish’’ wheels are typically a negative offset. J.W. Zellner, An Assessment of the Effects of
vehicle track width. The proposal Vehicle Weight on Fatality Risk in Model Year
81 A spindle axis is the rotating arm, or axis, unto 1985–98 Passenger Cars and 1985–97 Light Trucks,
defined wheelbase as the longitudinal which the wheels are attached. Dynamic Research, Inc. February 2002. Docket No.
distance between front- and rear-wheel 82 W113 was added to SAE J1100 in September NHTSA 2003–16318–2.
of 2005, after the agency published the NPRM. (A 84 See, Van Auken, R.M. and J.W. Zellner,
78 ‘‘Shadow’’ is the area defined as the vehicle’s spindle axis is the rotating arm, or axis, unto which Supplemental Results on the Independent Effects of
length multiplied by the vehicle’s width. the wheels are attached.) Continued
whether the relationship between lightweight materials can be economy further just equals the
vehicle size and safety differs. To the incorporated into vehicle design incremental value of fuel savings and
extent that mass reduction has without moving a vehicle into a other benefits from doing so. This is
historically been associated with footprint category with a more stringent done for each of the seven largest
reductions in many other size attributes average fuel economy target. manufacturers. Data points representing
and given the construct of the current each vehicle’s size and ‘‘optimized’’ fuel
2. Continuous Function
fleet, we believe that the relationship economy from the light truck fleets of
between size or weight (on the one In the NPRM, we proposed a those manufacturers are then plotted on
hand) and safety (on the other) has been Reformed CAFE structure utilizing a a graph.
similar, except for rollover risks. step function that established fuel In ‘‘phase two,’’ a preliminary
Developing CAFE standards based on economy targets for vehicles within continuous function is statistically fitted
vehicle footprint encourages compliance specified ranges of footprint values. We through these data points, subject to
strategies that decrease rollover risk. also discussed and sought comments on constraints at the upper and lower ends
Manufacturers are encouraged to an alternative structure that would use of the footprint range. This contrasts
maintain track width because reducing a continuous function to establish a with the proposed step function
it would subject the vehicle to a more different fuel economy target for each standard, in which the vehicle models
stringent fuel economy target. discrete footprint value. In today’s final of the improved fleets were placed in
Maintaining track width potentially rule, we are adopting a Reformed CAFE the pre-defined footprint categories and
would allow some degree of weight structure that employs such a the harmonic average fuel economy of
reduction without a decrease in overall continuous function. the models assigned to each category
safety. Moreover, by setting fuel The process for establishing a was used to determine the preliminary
economy targets for light trucks with the continuous function is similar to that for target for that category. With a
smallest footprints that approach (or establishing a step function, which was continuous function, the agency sets
exceed) 27.5 mpg, the agency is described in detail in the NPRM. different fuel economy targets for each
providing little incentive, or even a Moreover, a CAFE system based on a increment or value of vehicle footprint,
disincentive, to design vehicles to be continuous function will provide fuel- rather than setting targets, that would
classified as light trucks in order to saving benefits equivalent to those of each apply to a range of footprint
comply or offset the fuel economy of the proposed step function. By varying values.
larger light trucks. a vehicle’s fuel economy target However, establishing fuel economy
The influence of Reformed CAFE on continuously but gradually as its targets that vary gradually by vehicle
track width is reinforced by our New footprint changes, a continuous function footprint does not differ fundamentally
Car Assessment Program (NCAP) will reduce the incentive created by a from the proposal to set different targets
rollover ratings. As stated above, track step function to upsize a vehicle whose for specific footprint ranges. If the
width as defined by SAE J100 W101 is footprint is near a category boundary. number of footprint categories in a step
one of the elements of our Static By comparison, the proposed step function were steadily increased, the
Stability Factor, which constitutes a function would have relaxed fuel relationship of fuel economy targets to
significant part of our NCAP rollover economy targets significantly for any vehicle footprint would increasingly
ratings and which correlates closely vehicle that could be upsized so that it resemble that under a continuous
with real world rollover risk. The moves from one category up to the next. function. In fact, as the number of
rollover NCAP program (as well as real At the same time, the continuous footprint categories in a step function
world rollover risk) reinforces Reformed function will also minimize the increased, the fuel economy targets it
CAFE by a separate disincentive to incentive to downsize a vehicle to established would apply to
decrease track width. improve its fuel economy since, unlike progressively smaller footprint ranges,
Overall, use of vehicle footprint is under the proposed category system, until each category consisted of a single
‘‘weight-neutral’’ and thus does not any reduction of footprint will raise a value of footprint just as under the
exacerbate the vehicle compatibility vehicle’s fuel economy target. A continuous function.
problem. A footprint-based system does continuous function also provides Once a preliminary continuous
not encourage manufacturers to add manufacturers with greater regulatory function has been statistically fitted to
weight to move vehicles to a higher certainty because there are no category the data for a model year, the level of
footprint category. Nor would the boundaries that could be redefined in the function is then adjusted just as the
system penalize manufacturers for future rulemaking. These points are step function is adjusted in ‘‘phase
making limited weight reductions. By discussed in greater detail below. three’’ of the proposed rule. That is, the
using vehicle footprint in lieu of a preliminary continuous function is then
a. Overview of Establishing the raised or lowered until industry-wide
weight-based metric, we are facilitating Continuous Function Standard
the use of promising lightweight net benefits are maximized.
materials that, although perhaps not The continuous function standard is Maximization occurs when the
cost-effective in mass production today, developed using a three-phrase process incremental change in industry-wide
may ultimately achieve wider use in the substantially similar to that used to compliance costs from adjusting it
fleet, become less expensive, and develop the step function standard further would be exactly offset by the
enhance both vehicle safety and fuel described in the NPRM. In ‘‘phase one,’’ resulting incremental change in
economy.85 In Reformed CAFE, the agency adds fuel saving technologies benefits.
to each manufacturer’s fleet until the Under a continuous function, the
Curb Weight, Wheelbase, and Track on Fatality Risk incremental cost of improving its fuel level of CAFE required for each
in 1985–1997 Model Year LTVs, Dynamic Research, manufacturer (and its compliance with
Inc. May 2005. Docket No. NHTSA 2003–16318–17. lighter than a comparable steel vehicle. It also that level) is determined in exactly the
85 The Aluminum Association commented that provided data to demonstrate that all aluminum same fashion as under the proposed step
using aluminum to decrease a vehicle’s weight by vehicles have comparable performance in frontal
10 percent could improve its fuel economy by 5– barrier crash tests as comparable steel vehicles. See
function. Each manufacturer’s required
8 percent. The commenter noted that the Honda comments provided by the Aluminum Association, CAFE level is the sales-weighted
Insight, an all aluminum vehicle, is 40 percent Inc. (Docket No. 2003–16128–1120, pp. 5 and 12). harmonic average of the fuel economy
targets corresponding to the footprint of manufacturers whose fleets have Reformed CAFE system, the degree to
each of its light truck models. Its relatively high percentages of larger which the standard would be depressed
compliance with that CAFE level is vehicles to meet than for those whose by including the remaining very small
assessed by comparing the sales- product lines emphasize smaller manufacturers likely would not be more
weighted harmonic average of each of models—the Reformed system specifies than 0.1 mpg on any given target.
its model’s actual fuel economy to this fuel economy targets that vary according However, this reduction would result in
required level. The key difference is that to vehicle footprint. These targets are a reduction in fuel savings. Balancing
under the continuous function, any higher for smaller light trucks and lower the need of the Nation to conserve
change in a vehicle’s footprint subjects for large ones. By setting each energy, we have concluded to rely on
it to a slightly different fuel economy manufacturer’s required fleet-wide the largest seven manufacturers as
target, thus changing a manufacturer’s CAFE level to reflect its size mix, the discussed.
required CAFE level slightly. Reformed system requires each
c. Improving the Light Truck Fleet
Conversely, under the step function, manufacturer to ensure the fuel
changing a vehicle’s footprint would efficiency of its individual models, The first phase in determining the
subject it to a new target—and thus regardless of their size distribution. footprint targets was to determine
change a manufacturer’s required CAFE Porsche expressed disagreement with separately for each of the seven largest
level—only if that change moved it to a NHTSA’s decision to consider only the manufacturers the overall level of CAFE
smaller or larger footprint category. performance and capabilities of the that would maximize the net benefits for
seven largest manufacturers, while not that manufacturer’s vehicles.
B. Industry-Wide Considerations in considering the other four To find the socially optimal point for
Defining the Stringency of the Standard manufacturers of light trucks each of these seven manufacturers (i.e.,
In setting standards under the (Volkswagen, BMW, Porsche, and the point at which the incremental or
proposed Reformed CAFE system, we Subaru). Porsche stated that the marginal change in costs equals the
focused on the seven largest Reformed CAFE standards do not truly incremental or marginal change in
manufacturers of light trucks in represent industry-wide considerations benefits for that manufacturer), we used
selecting the targets. This differs from if they do not consider this remaining the Volpe model to compute the total
the traditional focus on the several percent of the light truck market, costs and total benefits of exceeding the
manufacturer with the lowest projected particularly where many of these baseline 86 CAFE by progressively larger
level of CAFE that also has a significant manufacturers serve niche markets not increments. We began by exceeding the
share of the market (i.e., the ‘‘least served by the seven largest baseline by 0.1 mpg. We then used the
capable’’ manufacturer). We have manufacturers. model to calculate the total costs and
traditionally set the Unreformed CAFE With regard to Porsche’s suggestion total benefits of exceeding the baseline
standards with particular regard to the that the agency consider all by 0.2 mpg. The marginal costs and
‘‘least capable’’ manufacturer with a manufacturers in setting the targets, we benefits were then computed as the
significant market share in response to previously have addressed the degree to difference between the total costs and
language in the conference report on the which we consider manufacturers with total benefits resulting from exceeding
CAFE statute directing the agency to small shares of the light truck market. In the baseline by 0.1 mpg and the total
consider industry-wide factors, but not our 1996 rulemaking setting light truck costs and benefits resulting from
necessarily to base the standards on the CAFE standard for MY 1998, NHTSA exceeding the baseline by 0.2 mpg. We
manufacturer with the greatest faced a substantially similar argument then used the Volpe model to calculate
compliance difficulties. As the NPRM from Mercedes-Benz asserting that there the total costs and total benefits of
indicated, this ‘‘least capable’’ is a need to set the CAFE standards at exceeding the baseline by 0.3 mpg and
manufacturer approach was simply a a level achievable by all light truck computed the difference between the
way of implementing the guidance in manufacturers (i.e., even those total costs and benefits between 0.2 mpg
the conference report in the specific manufacturers with a very small market and 0.3 mpg to determine the marginal
context of Unreformed CAFE. While this share). In rejecting that suggestion, we costs and benefits.
approach has ensured that the standards cited the language from the Conference We continued making similar
are technologically feasible and Report accompanying EPCA that directs iterations until marginal costs equaled
economically practicable for all us to consider industry-wide marginal benefits for that manufacturer.
manufacturers with significant market considerations and to not base the Performing this iterative process
shares, it limits the amount of fuel standards on the manufacturer with the individually for each manufacturer
saving possible under Unreformed greatest difficulties. Even under pushed each of the seven largest
CAFE. Reformed CAFE, this aspect of CAFE
As previously explained, by basing a standard-setting has not changed since 86 An important distinction needs to be made
manufacturer’s required fuel economy between the baseline and the manufacturer’s
that time. product plan mpg. As discussed earlier, ‘‘baseline’’
level on that manufacturer’s individual The target setting process in this is defined as the fuel economy that would exist
product mix, the Reformed CAFE rulemaking focuses on roughly 97 absent of the rulemaking (i.e., the model year 2007
system provides for a more percent of the light truck market, a standard of 22.2 mpg). The 22.2 mpg baseline
individualized assessment of the figure that reflects industry-wide differs from the mpg level reported in a
manufacturer’s product plan. Some manufacturers
capabilities of each of the considerations. Inclusion of all report fuel economy levels that are below 22.2 mpg.
manufacturers. Thus, Reformed CAFE manufacturers, even those with a very In that case, the cost and benefits of going from the
permits the agency to carefully assess small market share, has the potential to product plan mpg to the baseline (22.2) mpg are not
counted as costs and benefits of the rulemaking, as
the capabilities of the ‘‘least capable skew the resulting CAFE targets so as to they were already counted in the MY 2005–2007
manufacturer,’’ as well as the decrease the overall stringency of the final rule. Only costs and benefits associated with
capabilities of the other manufacturers standards. Such an approach would going from baseline mpg to a higher standard are
that comprise nearly all of the light depress the CAFE levels below the counted. It is important to note that since
technology is applied on a cost effective basis, the
truck market. Instead of requiring a maximum feasible capability of the rest most cost effective technologies will be used to get
uniform level of CAFE—which is of the industry and reduce overall fuel a manufacturer from the product plan mpg to the
inherently more challenging for savings. We recognize that under the baseline mpg.
manufacturers to a point at which net economic practicability. However, the would apply to model years beyond
benefits are maximized for each Alliance provided no ‘‘tool’’ to those covered by the current rule.
manufacturer’s vehicles. determine economic practicability or an Environmental Defense raised specific
As a general concept, Toyota individual manufacturer’s capability. objections to some of the assumptions
expressed support for the agency’s use The Alliance argued that the proposed relied upon in the agency’s analysis, but
of cost-benefit analysis in establishing CAFE standards pose significant stated that the Reformed CAFE
proposed CAFE standards, although it technical challenges and may be beyond standard-setting methodology itself is
asserted that NHTSA may have manufacturers’ capabilities, and thus reasonable. Environmental Defense
underestimated costs and overestimated that NHTSA should not finalize stated that the Reformed CAFE
potential benefits in developing its standards any higher than those approach provides greater transparency
proposal. Toyota also suggested that the proposed in the NPRM, because higher than the Stage analysis relied upon in
agency had relied too heavily on its targets would be unlikely to comply the Unreformed CAFE system.
approach of using cost-benefit analysis with the statutory criteria of In response to the manufacturers’
to determine a maximum feasible technological feasibility and economic reservations about equating ‘‘maximum
standard, and in doing so had not practicability.87 The Alliance also noted feasible’’ fuel economy standards with
considered other relevant factors. Thus, that the fuel economy improvements those that produce maximum net
Toyota recommended that NHTSA required by the proposed standard benefits, the agency is aware of its
carefully review the assumptions in its would come at a time when vehicles are continuing statutory responsibility to
model in order to ensure that the already significantly more fuel-efficient establish maximum feasible fuel
economically efficient fuel economy than in recent years, thereby making economy standards at levels that
targets it identifies nevertheless fall such fuel economy improvement much simultaneously reflect consideration of
within the practical constraints and more difficult and costly to achieve. technological feasibility, economic
limitations of technology deployment. Finally, the Alliance also commented practicability, the effects of other
Finally, Toyota also urged caution in that use of cost-benefit analysis makes Federal vehicle standards, and the need
assessing any potential changes to the the agency’s estimates of the costs, of the nation to conserve energy. The
CAFE targets resulting from increased benefits, and applicability of certain approach for determining the
fuel prices. technologies more important than in continuous function sets the fuel
As discussed previously, setting previous rules, and these economy targets just below the level
DaimlerChrysler argued that in order to assumptions should therefore be fully where the increased cost of technologies
ensure the economic practicability of explained and documented. that could be adopted by manufacturers
CAFE standards, NHTSA’s procedure of Similarly, NADA commented that the to improve fuel economy would first
establishing standards that maximize success of NHTSA’s CAFE reform
outweigh the added benefits that would
net benefits must always be tempered by result from such technology.
hinges upon the application of
considering the industry’s ability to These targets translate into required
appropriate information and levels of average fuel economy that are
afford the required technologies.
assumptions. For example, NADA stated technologically feasible because
DaimlerChrysler also argued that the
that because the cost-benefit analysis is manufacturers can achieve them using
agency’s methodology for determining
so critical to the establishment of CAFE available technologies. Those levels also
‘‘maximum feasible’’ fuel economy
targets under the agency’s proposal, reflect the need of the nation to
levels overestimates the potential of
there must be an accurate assessment of conserve energy because they reflect the
technology to improve fuel economy,
real costs and real benefits. NADA economic value of the savings in
while underestimating its costs. The
argued that applying cost-benefit resources, as well as of the reductions
commenter suggested that setting
standards based upon ‘‘maximum analysis to determine the level of CAFE in economic and environmental
feasible’’ and ‘‘maximum net benefits’’ standards should be only one step in a externalities that result from producing
approaches will not necessarily yield rigorous examination of their economic and using less fuel. We note that our
identical results in all cases. practicability. assumptions for each technology, its
As discussed above, the marginal Honda requested confirmation that cost, and its effectiveness are in the
cost-benefit analysis is part of the once CAFE standards are set using FRIA (see FRIA Table VI–4). (However,
agency’s consideration of economic NHTSA’s proposed benefit-cost the application to each manufacturer is
practicability. Our analysis also approach, they will not be revised confidential and therefore not included
considered the financial condition of simply because updated information in the docketed FRIA.)
the industry in determining technology affecting the benefit or cost estimates In answer to comments from various
applications. The marginal cost-benefit becomes available (e.g., new fuel prices commenters that NHTSA’s process for
analysis, taken in conjunction with estimates), unless overwhelming need establishing fuel economy targets
these technology considerations, can be demonstrated. According to overstates the fuel economy
provided fuel economy requirements Honda, such changes would be improvements likely to result from
that were then subject to a sales and job extremely disruptive to manufacturers’ specific technologies and
impact analysis. The totality of this product planning. Thus, Honda argued underestimates manufacturers’ costs for
process, in conjunction with that updated data should be considered adopting those fuel economy
consideration of the nation’s need to only for setting CAFE requirements that technologies, the agency again notes
conserve energy, the impacts of other that we have relied on the technology
87 According to the Alliance, once finalized, the
Federal standards, and societal impacts cost and effectiveness estimates from
CAFE rule would mark seven consecutive years of
such as safety, provides us with a light truck fuel economy increases. The Alliance
the NAS report. The estimates of fuel
determination of ‘‘maximum feasible.’’ argued that combined with previous increases for economy technology effectiveness and
The Alliance cautioned that while it MY 2005–2007, the current proposal would match costs developed by NAS represent the
is probably permissible for NHTSA to the highest seven-year rate of increase (2.2 percent most reliable estimates that are
per year, the average from 1982–1989) in the history
use cost-benefit analysis in setting CAFE of the light truck CAFE program, and it would be
available. The alternative estimates of
standards, the agency should not rely more than 1.5 times the historical trend of fuel technology costs and effectiveness
solely on this tool in determining their efficiency improvements. recommended by some commenters
have not been subjected to the same d. Defining the Function and the (on a gallon-per-mile basis) between the
level of expert review and public Preliminary Shape of the Curve targets are unaffected by those
scrutiny as those developed by NAS, adjustments.
and are thus not suitable for use by In the second phase, we plotted the In its report, NAS illustrated a
NHTSA in establishing fuel economy results of phase one (i.e., the light truck function that set fuel economy targets
standards. fleets of the seven largest manufacturers, for vehicle based on weight. See Figure
In response to Honda’s request for each separately ‘‘socially optimized’’). 2 below. Under the NAS function, fuel
clarification regarding our position on Then, we calculated a statistical consumption increased in a linear
updating the standards when new data relationship through the plotted data manner as vehicle weight increased up
become available, new data will be points (using production-weighted to 4,000 lbs. At 4,000 lbs, the function
relied upon for consideration of nonlinear least squares regression). This leveled-off. The leveling of the function
standards beyond MY 2011. If the relationship defines a preliminary at 4,000 lbs represented a ‘‘safety
agency were to consider increasing the continuous function (a ‘‘curve’’) that, threshold,’’ i.e., the NAS report
established standards for MY 2008- upon being adjusted, determines the determined that there was a safety
2011, we would need to be mindful of fuel economy targets for light trucks benefit in minimizing the incentive to
lead time constraints and the need for based on vehicle footprint. Although up-weight vehicles beyond 4,000 lbs.
regulatory certainty (i.e., the need for adjusted, the shape of the curve remains Under the NAS function, increasing a
manufacturers to be able to rely on unchanged throughout the equal- vehicles weight beyond 4,000 lbs did
today’s final rule to adjust their product increment adjustments in phase three not subject a vehicle to a less stringent
plans). below, because the absolute differences fuel consumption value.
The agency considered relying on a vehicles located near the threshold and could extrapolate to unreasonably high
function as illustrated by NAS, but encourage manufacturers to potentially levels for small vehicles.
determined that the NAS function downsize some vehicles to the threshold As discussed below, the agency has
presented several problems. First, the point. Second, it is not clear whether decided to use a constrained logistic
flattening of the function would be and, if so, where, in terms of footprint, function to set the targets. We have
expected to produce a milder form of a true ‘‘safety threshold’’ occurs. determined that a constrained logistic
the ‘‘edge effects’’ that are of concern Without a ‘‘safety threshold’’ the NAS function provides a good fit to the
under the step function. At the ‘‘safety function would be a simple linear optimized light truck fleet data, while
threshold’’ there would be an abrupt function, which as discussed below not resulting in potentially
change in the rate at which size introduces several potential problems. impracticable high targets for very small
increases are rewarded. This abrupt Finally, there is a possibility that a vehicles, or unreasonably low targets for
change could distort the production of function based on the NAS illustration very large vehicles.
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The agency evaluated a variety of mpg) results in higher fuel savings than functions. Therefore, we plotted the
mathematical forms to estimate the if the change occurs in a vehicle with ‘‘socially optimized’’ fleets in terms of
relationship between vehicle footprint high fuel economy (e.g., 30 mpg to 31 footprint versus gpm. Once a shape of
and fuel economy. The agency mpg). Increasing fuel economy by equal a function was determined in terms of
considered a simple linear function, a increments of gallons per mile provides ‘‘gallons per mile,’’ the agency then
quadratic function, an exponential equal fuel savings regardless of the fuel converted the function to mpg for the
function, and an unconstrained logistic economy of a vehicle. Increasing the purpose of evaluating the potential
function. Each of these relationships fuel economy of a vehicle from 0.06 target values. Figures 3A through 6B
was estimated in gallons per mile (gpm) gpm to 0.05 gpm saves exactly the same below illustrate each of the functions as
rather than miles per gallon (mpg). As amount of fuel as increasing the fuel sales weighted estimates of the
explained in the NPRM, the relationship economy of a vehicle from 0.03 gpm to relationship between fuel economy of
between fuel economy measured in mpg 0.02 gpm.88 the ‘‘socially optimized’’ fleets and foot
and fuel savings is not linear. An Given that the agency is concerned print, which were considered by the
increase in one mpg in a vehicle with with fuel savings, gpm is a more agency.
low fuel economy (e.g., 20 mpg to 21 appropriate metric for evaluating the BILLING CODE 4910–59–U
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88 Lower fuel consumption represents a more
stringent value (i.e., a low gpm value equates to a

high mpg value)
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BILLING CODE 4910–59–C mpg, for those vehicles. These low occurs under a logistic function,
After evaluating the functions above, target values would reduce fuel savings although not to the extent as with an
we determined that none of the and provide a fuel economy incentive exponential function (see Figure 6B).
functions as presented would be for upsizing. Additionally, depending
appropriate for the CAFE program. Each Under either an unconstrained
on the distribution of the fleet, a simple
of the four forms fit the data relatively exponential or an unconstrained logistic
linear relationship could also produce
well within the footprint range observed function, if a manufacturer were to
targets for very small vehicles well
in the manufacturers’ product plans above the corresponding data points. introduce a vehicle with a footprint
(from about 40 square feet to about 85 Polynomial relationships between smaller than that considered in the
square feet). However, at slightly footprint and fuel economy, such as a optimized fleet, that vehicle would be
beyond the endpoints of the observed quadratic function, result in fuel compared to a fuel economy target
range, the functional forms tended consumption values that deviate potentially beyond the level that would
towards excessively high stringency substantially from the data points at be achieved had the agency ‘‘optimized’’
levels at the smaller end of the footprint either end of the footprint range. that vehicle. Such a target likely would
range, excessively low stringency levels Further, because of their inherent be difficult to achieve using available
at the higher end of the footprint end, curvature, polynomial functions often technology. If a market demand were to
or both. Excessively high stringency result in less stringent mpg targets for develop for light trucks smaller than the
levels at the smaller end of the footprint the smallest models than for slightly smallest light truck currently planned
range potentially could result in target larger vehicles, or mpg targets for the by manufacturers, targets based on an
values beyond the technological largest models that are more stringent exponential relationship or a logistic
capabilities of manufacturers. than those for slightly smaller models. relationship could be technologically
Excessively low stringency levels at the As illustrated in Figure 4B, the convex infeasible and limit consumer choice.
higher end of the footprint range curvature of the function results in
standards would reduce fuel savings To address this issue the agency
increases in stringency for vehicles with
below that of the socially optimized a footprint larger than about 70 square determined that it is necessary to
fleet. feet. This increase is contrary to the data constrain the chosen function at the end
As Figure 3A shows, a simple linear points of the socially optimized fleet. points of the footprint range. However,
functional form provides a reasonably Under an exponential relationship, imposing a constraint on an exponential
good fit for small vehicles, but results in the fuel economy targets tend towards function prevents the curve from closely
very low stringency for vehicles above very high levels of stringency as fitting the actual relationship between
80 square feet would correspond to fuel footprint declines below 40 square feet vehicle footprint and fuel economy
consumption values for very large (see Figure 5B). Under the exponential across much of the size spectrum. In
vehicles greater than the fuel function for footprint values smaller addition, exponential functions
consumption for those vehicles under than the smallest vehicle in the planned constrained to reach a maximum mpg
the optimized fleet. Reliance on a linear fleet are more a characteristic of the value tended to have inconsistent
function would result in targets for large function, as opposed to representing the shapes when fitted to light truck data for
light trucks that are well below the technological capabilities of such
optimized fuel economy, in terms of vehicles. A similar increase in targets
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different model years.89 Therefore, the the data points. The constrained logistic per mile and inverted in miles per
agency decided to use a constrained function is illustrated below in gallons gallon:
logistic function to fit the target curve to
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89 That is, the targets they established for models
for some footprint values declined rather than

increased between successive model years.
The constrained logistic function or near this footprint value causes between the upper (at low footprint) and
provides a relatively good fit to the data associated fuel consumption values to lower (at high footprint) boundaries.
points without creating excessively high sharply decrease. This translates to The agency determined the values of
targets for small vehicles, excessively rapidly increasing targets as footprint the parameters establishing the
low targets for large vehicles, or regions decreases below 40 square feet.
function’s upper and lower bounds by
in which targets for large vehicles Constraining the function also
calculating the sales-weighted harmonic
exceed those for small vehicles. The minimizes the potential for a
constrained logistic function also disproportionate influence from a single average values of optimized fuel
produces a curve that provides an vehicle model on the curve, the agency economy levels for light trucks with
acceptable fit to the light truck data has constrained the target values at the footprints below 43 square feet and
across all four model years. ends of the range. above 65 square feet, respectively.
Further, by constraining the function Constraining the upper and lower Because these ranges respectively
at the ends of the footprint range, we bounds in this manner has the include the smallest and largest models
limit the potential for the curve to be additional benefit of generating a curve represented in the current light truck
disproportionately influenced by a that closely tracks the shape of the fleet, the agency determined that these
single vehicle model located at either proposed step-function. We have two segments of the light truck fleet are
end of the range. The vehicle population constrained this function so that the appropriate for establishing the upper
decreases as the curve moves away from smallest/largest vehicles face similar and lower fuel economy bounds of a
the middle of the footprint range. The stringency that was found in the continuous function.
low vehicle population levels provide smallest/largest categories in the step
for a single vehicle model located at function. The remaining two parameters (i.e.,
either end of the range to have a greater The constrained logistic function the ‘‘midpoint’’ and ‘‘curvature’’
influence on its target, than a vehicle selected by the agency is defined by four parameters) were estimated using
with comparable production numbers parameters. Two parameters establish production-weighted nonlinear least-
located in the middle of the range. This the function’s upper and lower bounds squares regression to achieve the closest
greater influence translates to greater (i.e., asymptotes), respectively. A third fit to data on footprint and optimized
influence on the shape of the curve. As parameter specifies the footprint at fuel economy for all light truck models
demonstrated in the unconstrained which the function is halfway between expected to be produced during each of
logistic function, at a footprint value of the upper and lower bounds. The last model years 2008–2011.90 Described
40 square feet a single model produced parameter establishes the rate or mathematically, the logistic function is
in larger numbers than other vehicles at ‘‘steepness’’ of the function’s transition as follows:
90 More precisely, these two parameters where the upper and lower limits of fuel economy the value of fuel economy is midway between its
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determine the range between the vehicle footprints are reached, and the value of footprint for which upper and lower bounds.
Where, complying with their respective CAFE curve to the optimal level. Instead, we
T = the fuel economy target (in mpg) requirements (the sales-weighted adjusted the curve until the total
a = the maximum fuel economy target harmonic averages of the mpg targets for industry costs under the Reformed
(in mpg) their individual models specified by the CAFE program approximately equaled
b = the minimum fuel economy target function) from a further adjustment the total industry costs under the
(in mpg) equals (within precision limits of the Unreformed CAFE program. Cost
c = the footprint value (in square feet) analysis) the incremental change in the equalization has several important
at which the fuel economy target is benefits. Each light truck model’s final advantages, as explained above in the
midway between a and b fuel economy target can be determined discussion of the transition period.
d = the parameter (in square feet) by entering its footprint (in square feet) Since the Unreformed CAFE standards
defining the rate at which the value into the function with these revised were judged to be economically
of targets decline from the largest to parameter values appropriate for its practicable and since the Reformed
smallest values model year, and calculating the CAFE standards spread the cost burden
e = 2.718 91 resulting value of fuel economy in miles across the industry to a greater extent,
x = footprint (in square feet, rounded to per gallon. equalizing the costs between the two
the nearest tenth) of the vehicle Once targets are calculated for each systems ensures that the Reformed
model vehicle in a manufacturer’s fleet under CAFE standards are within the realm of
The resulting curve is an elongated ‘‘S’’- the continuous function, the corporate economic practicability.93 Also, cost
shape, with fuel economy targets average fuel economy level required of equalization promotes an orderly and
decreasing as footprint increases. the manufacturer is calculated using a effective transition to the Reformed
harmonic average, as under the CAFE system by minimizing the cost
e. Final Level of the Curve (and Targets) proposed step function. A differences between the two choices.
The final step in the target setting manufacturer’s actual fuel economy is
process is to adjust the level of the calculated according to the procedure MY 2011. The Reformed CAFE
preliminary curve defined in step two to used in the current CAFE system, and standard for MY 2011 is set at the social
a level ‘‘optimized’’ for the entire fleet compared to its required CAFE level in optimal level as described above, and is
produced by the seven largest order to assess whether it has complied not constrained by the costs of an
manufacturers. The preliminary curve is with the standard. Penalties and credits Unreformed standard. As previously
gradually adjusted, by changing the are also determined and applied as stated, all manufacturers are required to
values of parameters (a) and (b) by equal under the current and proposed CAFE comply with the Reformed CAFE
increments of fuel savings 92 until the systems. standard in MY 2011.
incremental change in total costs MYs 2008–2010. In each of the The parameter values for MYs 2008–
incurred by all manufacturers for transition years, we did not adjust the 2011 are as follows:
TABLE 4.—PARAMETER VALUES FOR LOGISTIC FUNCTION

Model year
Parameter
2008 2009 2010 2011
a ....................................................................................................................... 28.56 30.07 29.96 30.42

b ....................................................................................................................... 19.99 20.87 21.20 21.79
c ....................................................................................................................... 49.30 48.00 48.49 47.74
d ....................................................................................................................... 5.58 5.81 5.50 4.65
3. Application of the Continuous that proposed in the NPRM, in which year. While individual manufacturers
Function Based Standard each footprint value is its own category, may face different requirements for their
and has an associated fuel economy overall CAFE levels depending on the
The Reformed CAFE standard target. distribution of footprint values for the
establishes a relationship between The required level of CAFE for each models making up their respective
vehicle footprint and the fuel economy manufacturer during a model year is the product lines, each manufacturer is
target for light trucks with different production-weighted harmonic average subject to identical fuel economy target
footprint values. In effect, today’s final of the fuel economy targets for each for light truck models with the same
rule establishes a category system like model in its product line for that model footprint value. Moreover, the same
91 For the purpose of the Reformed CAFE with a higher mpg performance will have a lower 93 We equalized aggregate industry costs between
standard, we are carrying e out to only three fuel savings value than an equal mpg increment Reformed and Unreformed CAFE. The costs are not
decimal places. added to a vehicle with a lower mpg performance. borne by manufacturers in the same way and costs
92 Equal increments of mpg have differing energy As such, we adjust the curve by equal increments for individual manufacturers may differ between
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values. A 0.1 mpg increment added to a vehicle of fuel savings as opposed to mpg. the two systems.
formula is used to determine each harmonic average of the actual fuel in any of the three preceding or
manufacturer’s required level of CAFE economy levels for each model in its following model years.
using the fuel economy targets for entire product line is compared to this More specifically, the manner in
different footprint values, footprint required CAFE level. If the weighted
which a manufacturer’s required overall
values for its individual models, and the average of its models’ actual fuel
CAFE for a model year under the
production levels of each of its models. economy levels is at least equal to the
Individual manufacturers face different manufacturer’s required level of average Reformed system is computed is similar
required CAFE levels only to the extent fuel economy, then it has complied with to the way in which its actual CAFE for
that they produce different size mixes of the Reformed CAFE standard. If its a model year has always been
vehicle models. actual fleet-wide average fuel economy calculated. Its required CAFE level is
To determine whether it has achieved level is greater than its required CAFE computed on the basis of the production
its required overall CAFE level, each level, the manufacturer earns credits and the footprint target as follows:
manufacturer’s production-weighted equal to that difference that can be used
Manufacturer X’s Total Production of Light Trucks

= X’s required level of CAFE
X’s producction at footprint m X’s production at footprint n
+ + etc
Target for footprint m Target for footprint n
This formula can be restated as

follows:
Where: mpgj is the fuel economy of the ith

N is the total number (sum) of light model light truck.
trucks produced by a manufacturer, A manufacturer is in compliance if
Ni is the number (sum) of the ith model the actual CAFE meets or exceeds the
light truck produced by the required CAFE.
manufacturer, and Where, The method of assessing compliance
under Reformed CAFE can be further
Ti is fuel economy target of the ith model N is the total number (sum) of light explained using an illustrative example
light truck. trucks produced by the of a manufacturer that produces four
The required level is then compared manufacturer, models in two footprint categories with
to the CAFE that the manufacturer Ni is the number (sum) of the ith model fuel economy targets assumed for the
actually achieves in the model year in light trucks produced by the purposes of the example shown in Table
question: manufacturer, 3:
TABLE 5.—ILLUSTRATIVE EXAMPLE OF METHOD OF ASSESSING COMPLIANCE UNDER A CONTINUOUS FUNCTION APPROACH
Fuel economy Production Footprint Footprint
Model (mpg) (units) (sq. ft.) (mpg)
A ....................................................................................................................... 27.0 100,000 43.00 27.5

B ....................................................................................................................... 24.0 100,000 42.00 27.8
C ...................................................................................................................... 22.0 100,000 52.00 23.7
D ...................................................................................................................... 19.0 100,000 54.00 23.2
Under Reformed CAFE, the achieve an average fuel economy level

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manufacturer would be required to of:

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This fuel economy figure would be actual CAFE for its entire fleet (i.e., the fuel economy level for four models in its
compared with the manufacturer’s production-weighted harmonic mean fleet):
In the illustrative example, the some important advantages over a In the NPRM, we prescribed a method
manufacturer’s actual CAFE (22.6 mpg) stepwise function. However, we did not for determining category boundaries.
is less than the required level (25.4 propose a specific mathematical form The method was intended to reduce the
mpg), indicating that the manufacturer for a continuous function. potential for ‘‘edge effects.’’ We noted
is not in compliance. As explained above, the agency has that when the distribution of light
elected to adopt a Reformed CAFE trucks was graphed such that footprint
4. Why This Approach To Reform and
system that employs a continuous increased from left to right, vehicles just
Not Another?
function to set fuel economy targets. Use to the left of a boundary faced the
a. Continuous Function vs. the Proposed of a continuous function addresses three greatest incentive for upsizing. These
Step-Function (Categories) major concerns raised by commenters vehicles could be moved into a less
The NPRM proposed a Reformed with regard to the proposed Reformed stringent category with relatively minor
CAFE system that would establish a CAFE structure. Reliance on a
increases in size.
system of six size categories based on continuous function (1) eliminates
vehicle footprint, and specify a target potential problems associated with the In order to minimize this potential,
fuel economy level for the vehicles in need to redefine category boundaries in we defined the proposed boundaries
each category. The categories and their future rulemakings; (2) substantially generally at points on the graph where
respective targets were incorporated reduces the incentive for manufacturers there was relatively low vehicle volume
into a step function (see Figure 1, to ‘‘upsize’’ vehicles; and (3) immediately to the left and high vehicle
above). The CAFE level required of each substantially reduces the incentive for volume immediately to the right.
manufacturer then would be determined manufacturers to respond to the CAFE Identification of points between low and
by computing the sales-weighted requirements through downsizing, a high volume was based on the
harmonic average of the fuel economy compliance option that can reduce a distribution of vehicles from the
targets for each light truck category in vehicle’s safety. The following explains product plans provided to the agency in
which it produces light trucks. these three benefits in detail. response to the 2003 ANPRM. Based on
The NPRM also discussed and sought First, reliance on a continuous this distribution, the agency was able to
comment upon the alternative of function eliminates the footprint based readily identify appropriate boundary
incorporating the fuel economy targets categories. By eliminating categories, we locations, as illustrated in Figure 9
into a continuous function based on eliminate the need to redefine categories below.
vehicle footprint, which could have as the light truck distribution changes.
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A variety of commenters also that both the number and the location and RFC. The new product plans
recognized the potential for ‘‘edge of the boundaries for the footprint reflected a new distribution of vehicles.
effects.’’ The Alliance asserted that the categories would likely minimize any When the proposed boundaries were
agency’s selection of boundaries under such edge effects.’’ applied to the updated manufacturer
the step function effectively addressed As previously indicated, plans, the boundaries did not align with
this potential problem, noting that it manufacturers provided updated low and high volume points, as in the
‘‘agrees with the agency’s assessment product plans in response to the NPRM NPRM.
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As illustrated in Figure 10 above, the updated fleet has a more uniform opportunity to find boundaries that
distribution of the updated light truck distribution of vehicles across the would minimize ‘‘edge effects’’ to the
fleet does not provide clear points of footprint range, there are multiple same extent as in the NPRM. Figures 11
low volume adjacent to high volume as potential boundary assignments that and 12 illustrate potential ways by
was the case with the older fleet that would segment the light truck fleet into which the agency might have attempted
was the basis for the NPRM. Because the six categories, and there is less to redefine the boundaries.
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However, it was clear that because of not the opportunity to provide category NPRM. Moreover, Toyota was
the distribution of the light truck fleet divisions that similarly minimize ‘‘edge concerned that changes to boundaries
in the revised product plans, there was effects’’ to the same degree as in the could significantly alter a
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manufacturer’s compliance As recognized by Toyota, the required illustrates the required fuel economy for
responsibility, and urged the agency to fuel economy level of individual a sampling of manufacturers if
rely on the proposed boundaries for the manufacturers is highly influenced by boundaries were set according to the
final rule. boundary location. Table 6 below figures above.
TABLE 6.—REQUIRED FUEL ECONOMY LEVELS UNDER VARIOUS BOUNDARY LOCATIONS

Required fuel econ- Required fuel econ-
omy (mpg)—bound- omy (mpg)—bound-
Manufacturer aries set according aries set according
to figure 11 to figure 12
General Motors ........................................................................................................................................ 23.3 23.2

Toyota ...................................................................................................................................................... 23.8 23.8
Nissan ...................................................................................................................................................... 24.2 23.7
The potential need to redefine Trailblazer as an example, IIHS noted decrease a vehicle’s fuel economy,
category boundaries from one model that in order to gain a 1.5 mpg further reducing the incentive to upsize.
year to the next and one rulemaking to difference in its fuel economy target, Under the step function approach,
the next would create uncertainty for ‘‘the Trailblazer’s footprint would have some vehicles were located near the
manufacturers. Manufacturers would to change by about the entire range of upper boundaries of the categories
face not only the potential of a vehicle one of the proposed footprint despite agency efforts to minimize the
facing a higher target resulting from categories.’’ Natural Resources Canada number. Under the step function
shifts in the function, but would also stated that although any erosion of fuel approach, a small change to the
face the potential of a vehicle being savings resulting from upsizing is footprint of these vehicles would result
compared to a much more stringent unlikely to be significant under a in a substantial decrease in their targets,
target as the result of a boundary shift. stepwise function, ‘‘it is our opinion as much as 1.2 mpg. The continuous
By utilizing a continuous function, the that setting fuel economy targets using function approach does not provide an
agency eliminates boundaries and thus a continuous function, based on opportunity for substantial decreases in
the potential difficulties associated with footprint, would eliminate any concern a vehicle’s target based on slight
defining and redefining category in this regard.’’ increases to footprint.
boundaries. In contrast to IIHS’s assertions, Toyota
Second, reliance on a continuous argued that because a continuous This point can be illustrated by
function substantially reduces the function relaxes a vehicle’s fuel comparing the proposed boundaries and
incentive for manufacturers to respond economy target for any increase in size, the adopted continuous function. When
to Reformed CAFE by ‘‘upsizing’’ a continuous function provides a greater the agency plotted the revised product
vehicles. IIHS said that although the incentive for vehicle ‘‘upsizing.’’ Toyota plans against the proposed boundaries,
boundaries in the proposed categorical stated that under a continuous function, we found that there were approximately
system were carefully chosen to manufacturers have a small incentive to 1.25 million vehicles that could move to
minimize the number of models that increase the size of every vehicle model a less stringent category with changes in
were just below them, the differences they produce, instead of a stronger footprint of less than one square foot.
between fuel economy targets for some incentive to upsize only a few models. These minor changes would reduce
adjacent categories were nevertheless The agency disagrees with Toyota. applicable target values by 1.0–3.3 mpg.
large enough to make upsizing an While the agency acknowledges Under a continuous function, footprint
important potential concern. For Toyota’s argument that a continuous increases of similar magnitude would
vehicles just below boundaries, small function reduces a model’s fuel reduce applicable targets by no more
increases in footprint could produce a economy target in response to any than 0.2 mpg.
significant reduction in fuel economy increase in its size, this feature need not Third, reliance on a continuous
target. As an example, IIHS stated that provide an incentive for manufacturers function substantially reduces an
based on the proposed categories, to upsize their vehicles if the form of the incentive present in the proposed step-
General Motors could reduce the fuel function reflects the underlying function standard for manufacturers to
economy target applicable to the 2005 engineering relationship between size ‘‘downsize’’ vehicles. IIHS raised
Chevrolet Trailblazer EXT by 1.5 mpg and fuel economy. concern that under the proposed step
by increasing that model’s track width Under the continuous function, as a function system, manufacturers might
by 1.5 inches. The Mercatus Center vehicle’s footprint increases, its reduce the sizes of models within the
echoed this concern, citing calculations applicable target decreases. However, limits of the footprint range for a
showing that 14 of 55 light truck models the rate at which target levels decrease category to make it easier to comply
could be moved to the next larger is gradual. Further, an increase in a with their required fuel economy levels.
footprint category with an increase in vehicle’s footprint is not without cost. The IIHS commented that there ‘‘is
footprint of less than 2 percent. Generally, as vehicle size increases, its room within NHTSA’s proposed system
Conversely, under a continuous fuel economy performance decreases. of footprint categories to retain the same
function, significant reductions in fuel The decrease in fuel economy fuel economy target but reduce size
economy targets cannot be achieved performance can result from additional * * *’’ and that ‘‘the safety of the
through small increases in footprint. weight added to achieve increased size resulting vehicle would be
Fuel economy targets decrease gradually or result from design implications of compromised.’’ General Motors also
as vehicle size increases, as compared to upsizing the vehicle (e.g., an increase acknowledged this possibility, stating
the punctuated changes under a step- drag resistance from increased frontal that the category structure of the
function. Again, using the Chevrolet area). As such, increasing footprint can Reformed CAFE system:
[S]till may incentivize manufacturers to manufacturer’s compliance is performed use of a harmonic average with a
use reductions in track width and/or in exactly the same manner. continuous function.
wheelbase (to create a smaller and/or lighter While manufacturers may not be able The standard adopted in this
vehicle) to meet CAFE targets within a document retains the flexibility
category or overall. While changes in vehicle
to advertise ‘‘best in CAFE category’’
dimensions may not be the first choice for under a continuous function, the provided by use of a harmonic average
manufacturers, they remain an option-one Reformed CAFE does not prevent such to determine a manufacturer’s
that can adversely affect safety. comparisons from being made under compliance requirement and a
non-CAFE classifications. manufacturer’s actual fuel economy
In contrast, IIHS stated that any Manufacturers currently promote ‘‘best level. Additional flexibility is provided
downsizing under a continuous in class’’ claims based on industry and by the fact that fuel economy targets are
function would subject a vehicle to a marketing classifications. For example, more specific to a vehicle. As opposed
more stringent target. As such, IIHS Honda advertises that its Ridgeline is to being compared to a target
stated that a continuous function would the ‘‘only 4-door pickup to achieve the representative of the capabilities of
better minimize the potential for highest government crash test rating (5 vehicles within a range of footprint
manufacturers to respond to the CAFE stars) for both frontal and side-impact values, the final rule compares a vehicle
program through unsafe downsizing. tests.’’94 Under the current CAFE to the potential fuel economy achievable
With respect to minimizing the program, light trucks are all within a by vehicles of equal size. A
incentive to downsize, the agency agrees single fleet, yet manufacturers still manufacturer still has the ability to
with IIHS. We concur with IIHS’s advertise ‘‘best in class.’’ Presumably, compensate for a vehicle that performs
concern over the potential to downsize such claims could continue to be made below its set fuel economy target by
within a step function category, under Reformed CAFE. exceeding the target for one or more of
particularly within the smallest size Nissan asserted that compliance its other models.
categories, where reducing vehicles’ size calculations would be ‘‘unduly Toyota argued that because the NPRM
or weight likely would have the largest cumbersome’’ under a continuous did not propose a specific continuous
impact on occupant safety. function. Nissan also stated that the function for review, ‘‘additional notice
Commenters raised a variety of other agency’s administration and and comment would be necessary
procedural and administrative concerns enforcement process would be more should NHTSA wish to pursue a
that the agency should take into account burdensome under a continuous continuous line function in place of
in choosing between stepwise and function than under a stepwise function size-based targets, since it is simply not
continuous functions. General Motors because NHTSA would need to review possible for manufacturers or the public
and Nissan expressed concern that complex compliance calculations to determine the implications of such a
setting fuel economy targets using a submitted by each manufacturer. system in the context of new standards
continuous function could present an In the NPRM, we proposed requiring for model years 2008 through 2011.’’ In
even greater challenge to public manufacturers to submit a vehicle’s contrast, Nissan asserted that switching
understanding of the Reformed CAFE footprint along with the CAFE data to a continuous function would ‘‘result
program than relying on a category currently collected. Manufacturers and in little to no difference in fuel economy
system to set vehicles’ fuel economy the agency would rely on this data to compliance levels,’’ suggesting that the
targets. Neither commenter explained determine required fuel economy levels NPRM’s discussion of a continuous
why they believed a stepwise function and compliance. An additional function was sufficiently detailed to
would be more readily understood. calculation would be required to allow a manufacturer to assess the costs
Honda commented that it would be determine a vehicle’s target, as opposed and other challenges of complying with
easier for manufacturers of high fuel to determining the appropriate category a Reformed CAFE standard that uses a
economy vehicles to demonstrate the and corresponding target. However, we continuous function.
‘‘superiority of their products’’ to do not believe that the additional Although the agency is not adopting
potential buyers under a stepwise calculation—one easily performed using the category system as proposed, the
function than under a continuous a programmable hand calculator or targets under today’s final rule are
function. spreadsheet program—will be overly consistent with the category targets
We do not believe that a standard cumbersome. proposed in the NPRM. Figure 13 below
based on a continuous function is Ford indicated that the use of a shows the resulting relationship
harder to understand than one based on harmonic average to calculate a between vehicle footprint and target fuel
a step function. The main difference is manufacturer’s compliance obligation, economy level for 2011 described by the
that instead of identifying an combined with the use of categories, logistic function with parameter values
appropriate category to determine a would provide manufacturers the statistically calibrated for that model
vehicle’s target, a target under a greater flexibility to make improvements year and subsequently optimized. The
continuous function standard is located in an appropriate manner as opposed to figure also compares its curved shape to
along a curve. Calculating a that stair step shape of the fuel economy
manufacturer’s required fuel economy is 94 http://automobiles.honda.com/models/ targets established in the previously
done in a similar manner under both model_overview.asp?ModelName=Ridgeline (last proposed category system for that model
systems and calculating a visited January 15, 2006). year.
RMI favored a step-function, because fairly fuel-efficient unibody SUVs and vehicles within the light truck fleet.
its ‘‘size neutrality’’ provides a better minivans. Toyota also noted that the Differences in increases in stringency
foundation for replacing fuel economy proposed Category 3 target experienced between vehicles of different sizes
standards with a ‘‘feebate’’ system. In a 5.4 percent increase between 2008 and reflect differences in the potential
context of fuel economy, ‘‘feebate’’ 2009, while the target for Category 6 improvements for those vehicles, and
refers to a transportation initiative in actually went down from 2009 to 2010. the costs and benefits of those
which consumers of low-fuel economy Toyota suggested that the agency improvements. While larger vehicles
vehicles would pay into a fund from consider ‘‘smoothing’’ the target levels typically have low fuel economy
which payments would be made to for the interim model years by linearly performance, that does not mean that
purchasers of high-fuel economy increasing the target levels between such vehicles are not equipped with
vehicles. In response to RMI’s comment, 2008 and 2011. Similarly, Honda fuel saving technologies. Conversely,
we note that EPCA does not provide for questioned the increases in stringency the higher fuel economy performance of
a feebate system, but instead requires proposed for the smaller footprint smaller vehicles is not necessarily
the agency to establish average fuel vehicles. Honda stated that, at least in reflective of fuel savings technologies,
economy standards. However, as theory, the agency’s methodology (i.e., but may be more indicative of the
discussed above, the continuous adding technology to each vehicle until vehicles small size. The reformed CAFE
function adopted today provides greater the marginal cost exceeds the marginal system recognizes variations in the
‘‘size neutrality’’ than a step function benefits) should result in more stringent baseline fuel economy levels between
(i.e., a continuous function reduces standards for larger vehicles, since the vehicles, in the costs of improving fuel
incentives to downsize or upsize a higher baseline fuel consumption would economy, and in the resulting fuel
vehicle). justify the addition of more technology. savings and related benefits.
Although the continuous function Honda observed that under the Manufacturers’ efforts to improve fuel
standard adopted in today’s final rule proposed step function light trucks in economy are reflected in the degree of
eliminates the abrupt changes in fuel the smallest footprint category were projected improvement across the range
economy targets present in a step- projected to achieve an increase in fuel of footprint values. Increases in
function standard, it is important to economy of 22 percent, while the stringency above a manufacturer’s
recognize that the function does not increase for light trucks in the largest baseline are consequences of the
‘‘smooth’’ the targets as requested by footprint category was only 16 percent. agency’s improving the overall fuel
some commenters. Toyota, Porsche, Honda questioned whether technologies efficiency of the light truck fleet to a
maximum feasible level.95
BMW, and the Alliance questioned why have been applied uniformly and fairly
the stringency in Category 3 increased at to all vehicles.
95 Additionally with regard to Honda’s comment,
a higher rate than the stringency levels As explained above, the stringency of it is also important to distinguish between
of other categories. Toyota stated that the targets is based on the opportunity improvements in fuel economy (which is measured
ER06AP06.023</GPH>
vehicles in this size category tend to be to apply fuel savings technology to Continued
b. Continuous Function and Targets vs. any of the three model years following of additional attributes (General Motors,
Classes and Standards that model year (49 U.S.C. 32903(a)). Nissan, DaimlerChrysler, Ford, Alliance,
As explained in the NPRM, we They may not, however, be used within Sierra Research, NADA, and SUVOA)
considered an approach under which the model year in which they were stated that such consideration is
we would establish separate classes earned (Id.). necessary to account for the varying
based on footprint and establish a Second, establishing separate degrees of utility among vehicles with
standard for each class. However, there standards for each class would similar footprint values. Commenters
needlessly restrict manufacturer opposed to including additional
were two primary shortcomings that led
flexibility in complying with the CAFE attributes (NRDC, Environmental
us to evaluate other approaches for our
program. A requirement for Defense, ACEEE, NESCAUM, and Rocky
Reformed CAFE. Nothing provided by
manufacturers to comply with separate Mountain Institute) stressed the
the commenters caused us to re-evaluate
standards, combined with the inability potential of using these attributes to
our decision not to establish a multi-
either to apply credits within the same manipulate vehicles into categories with
class system based on footprint.
First, transfers of credits earned in a model year or to average performance less stringent targets.
footprint class in a model year to a across the classes during a model year, The most frequently mentioned
could increase costs without saving fuel. attribute was towing capability.
different footprint class in a different
This would happen by forcing the use However, Nissan stated that NHTSA
model year would have required a
of technologies that might not be cost- should incorporate a mechanism
complicated process of adjustments to
effective. Further, Congressional providing fuel economy credits for all
ensure that fuel savings are
dialogue when considering the optional safety and utility features. The
maintained.96 This is because credits
enactment of the EPCA and Alliance suggested 4WD/AWD
(denominated in mpg) earned under the
amendments to it has repeatedly capability in addition to towing.
multiple classes and standards approach Among the commenters supporting a
expressed the view that manufacturers
would have differing energy value. modification for towing ability, the
should have flexibility in complying
Credits earned for exceeding the higher criteria for that classification differed.
with a CAFE program so that they can
fuel economy standard for the smaller ensure fuel savings, while still General Motors defined ‘‘heavy-tow
footprint vehicles would have less responding to other external factors. capable’’ vehicles as a vehicle with a
energy value than exceeding the lower Reliance on a continuous function maximum towing capacity that is equal
fuel economy standard for the larger avoids these shortcomings just as the to or greater than 8,000 pounds. The
footprint vehicles by an equal proposed step function would have Alliance suggested that the definition
increment. In fact, if credits were avoided these shortcomings. Instead of should be based on towing capacity
generated in a class with relatively high establishing distinct standards for equal to or greater than a set percentage
CAFE standards and transferred to multiple classes, our proposal of the vehicle’s curb weight. That
another class with relatively low CAFE establishes targets across the range of association argued that extra towing
standards, total fuel use by all vehicles footprint values and applies them capacity means different things for
in the two classes might increase. That through a harmonically weighted different size vehicles.
result would undermine the entire formula to derive regulatory obligations. Among those supporting
reform effort by producing lessened Credits are earned and applied under consideration of additional attributes,
energy security. today’s final rule in the same way as the means suggested for providing credit
One can calculate the appropriate they are earned and applied under for those attributes also differed. Nissan
adjustments for such a credit transfer Unreformed CAFE and in a manner presented a method for calculating
system to ensure no loss of fuel savings. fully consistent with the statute. Thus, credits based on weight differences
This would ensure equivalent energy no complicated new provisions for between a vehicle’s base model and
savings. However, instituting a credits are needed. Further, the use of versions with optional safety and utility
complicated new process of credit targets instead of standards allows us to enhancing equipment, such that each
adjustments would detract from the retain the benefits of a harmonically additional 3 pounds of weight would
benefits of reforming the CAFE program weighted fleet average for compliance. provide a 0.01 mpg credit. Some
by making it more difficult to plan for This ensures that manufacturers must commenters suggested a set percentage
and determine compliance. Further, provide the requisite fuel economy in reduction; 5 percent with respect to
taking this step would not cure another their light truck fleet, while giving the towing capacity or 10 percent for 4WD/
problem associated with credits. Credits manufacturers the ability to average AWD. DaimlerChrysler suggested a
earned by exceeding a standard in a performance across their entire fleet and provision which essentially created a
model year may be used in any of the thus the flexibility to provide that level second category for any MY 2005
three model years preceding that model of fuel economy in the most appropriate product that is at least 25 percent below
year and, to the extent not so used, in manner. the 2008 MY target for its size class,
rather than considering specific
in miles per gallon) and reductions in fuel c. Consideration of Additional attributes. Under DaimlerChrysler’s
consumption (which is measured in gallons per Attributes provision, the fuel economy target for
mile). Because of differences between their initial
fuel economy levels, the improvements in fuel In the NPRM, the agency sought such a vehicle would be set at its 2005
economy that would be required by the proposed comment on whether Reformed CAFE level plus 5 percent and would then
targets for the smallest and largest categories of light should be based on vehicle size increase 1.5 percent per year.
trucks cited by Honda (22 and 16 percent, (footprint) alone, or whether other NRDC, Environmental Defense,
respectively) actually correspond to reductions in
fuel consumption of 18% and 14% percent, attributes, such as towing capability ACEEE, NESCAUM, and Rocky
respectively. and/or cargo-hauling capability, should Mountain Institute opposed
96 The 2003 ANPRM on reforming CAFE noted be considered. The comments received consideration of additional attributes in
that the agency had previously concluded that the in response to our request were either determining a vehicle’s target fuel
credits earned in one class could not be transferred
to another class, but re-examined the legislative
strongly supportive or strongly opposed economy. These commenters, along
history of the CAFE statute and called that to including additional attributes. with Honda and Toyota, were
interpretation into question. Commenters supporting consideration concerned with the potential for
manufacturers to ‘‘game’’ such that the SAE is working on a uniform upsizing vehicles and their fleets for the
considerations. These commenters metric to rate towing capacity, and this sole purpose of reducing the stringency
argued that manufacturers might find it may provide at least some of the of their light truck CAFE requirement.
more cost-effective to include whatever information NHTSA would need to First, the structure of the Reformed
attribute was relied upon for reconsider this issue with regard to CAFE system minimizes the incentive
adjustment, even if not requested or towing capacity in the future. for manufacturers to upsize vehicles,
required by customers, rather than more so under the continuous function
d. Backstop and ‘‘Fuel Saving’’ approach. Second, manufacturers are
redesigning the vehicle for increase fuel
Mechanisms limited in their ability to increase the
efficiency.
Toyota raised specific concern with The agency is not establishing a size of their vehicles beyond that extent
the attribute of tow rating, stating that backstop or fuel economy ‘‘ratcheting’’ demanded by consumers. Finally,
there is not an objective method for mechanism under the Reformed CAFE making vehicles larger for CAFE
quantifying this metric. Toyota also system. As explained above, compliance purposes is not cost-free.
opposed adjustments for attributes, incorporating a backstop or fuel Market forces or fuel price increases
arguing that the targets already reflect economy ratcheting system would be will restrain consumer demand for large
the presence of such designs in the contrary to the intent of EPCA. The light trucks with low fuel economy.
vehicles. Toyota stated that if these intent of the CAFE program is not to These reasons lead us to the conclusion,
vehicles were permitted adjustments, preclude future mix shifts and design more so given the structure of the
the agency would essentially be ‘‘double changes in response to consumer adopted reform, not to establish a
counting’’ the effect of the attribute demand. A backstop would likely have backstop. These points apply equally to
considered. Toyota further stated that this influence. As discussed, a backstop determination not to adopt a fuel
depending on the attribute relied upon or a ratcheting mechanism would limit economy ‘‘ratcheting’’ mechanism as
for adjustment, some manufacturers the ability of a manufacturer to respond recommended by several commenters.
might be provided a competitive to market shifts arising from changes With regard to the first point, reliance
advantage based on their current fleet consumer demand. Such a system on a continuous function minimizes the
mix. would be in opposition to congressional incentive for manufacturers to increase
After reviewing these comments, intent to establish a regulatory system vehicle size solely for the purpose of
NHTSA has decided not to consider any that does not unduly limit consumer subjecting that vehicle to a less stringent
additional attributes for MYs 2008– choice. target. As explained in the discussion of
2011. First, NHTSA notes that even Additionally, supplementing the continuous function versus step
some manufacturers noted the potential Reformed CAFE standards with a function above, we explained that
for abuse of a system that provided backstop would negate the value of increases in vehicle size will more
credits or lower targets for vehicles with establishing the attribute-based likely be accompanied by a decrease in
certain attributes. Second, NHTSA standards for some manufacturers and fuel economy performance that offsets
believes the ‘‘list of eligible features’’ perpetuate the shortcomings of the reduction in target stringency. This
suggested by Nissan would be very Unreformed CAFE. A backstop would is a result of targets decreasing gradually
confusing for both manufacturers and essentially be a required fuel economy as vehicle size increases across the
the agency. level akin to the Unreformed CAFE footprint continuum. This offset reduces
With regard to the suggestion that the standard that would apply to a the incentive for manufacturers to
agency consider 4WD/AWD capability, manufacturer if the required fuel increase vehicle size solely in response
the agency notes that it discontinued the economy for that manufacturer as to the CAFE program. The decrease in
option of a separate standard for 2WD determined under the Reformed CAFE a vehicle’s fuel economy performance
vs. 4WD light trucks beginning with the system was below some determined from increasing its footprint will offset,
standard for the 1992 model year.97 The threshold. For example, if consumer to a degree, the advantage of the lower
agency noted that separate standards demand shifted to larger light trucks target.
were originally intended to provide an such that a manufacturer’s required fuel With regard to the second point,
alternative means of compliance for economy level under the Reformed manufacturers are limited in what
manufacturers that manufactured CAFE system was below the backstop changes they can make based on what
primarily 4WD vehicles, and that these fuel economy level, that manufacturer will be accepted by the market. Changes
intended beneficiaries had disappeared. would be required to comply with the in footprint result in perceptible
The agency noted that most backstop. By requiring such a changes in performance and design (e.g.,
manufacturers were choosing to comply manufacturer to comply with the a longer and/or wider vehicle). As noted
with the combined standard. The backstop, there would be a risk that the above, the track-width component of
agency also expressed concerns that backstop would not be economically footprint, as defined in today’s final
separate standards could decrease fuel practicable given the change in the rule, directly affects vehicle handling
economy by encouraging the production market, as occurred under the and stability. The connection between
of less fuel-efficient 4WD vehicles. Unreformed CAFE standards in the mid- footprint and vehicle performance limits
Since there are no specialized 1980s. With regard to a ‘‘ratcheting’’ the ability of manufacturers to increase
manufacturers that need relief to mechanism, an ‘‘automatic’’ increase in footprint in a manner not perceptible to
comply with the standard, NHTSA is the stringency of targets or requirements the consumer. As stated by IIHS, under
not reversing this decision. could potentially subject manufacturers a continuous based function, customers
With regard to towing capacity, in to required levels of average fuel would be more likely to notice any
addition to the above concerns the economy level that are not design changes that achieved a
agency notes that manufacturers technologically feasible. substantial CAFE benefit, as opposed to
suggested different approaches on how Furthermore, the structure of the small changes that would move a
to define vehicles which would qualify Reformed CAFE system addresses vehicle into a less stringent category
for consideration. The agency is aware concerns commenters cited as the under the step-function approach.
rationale for establishing a backstop, Finally, making vehicles larger for
97 55 FR 12487, April 4, 1990. i.e., concerns with manufacturers’ CAFE compliance purposes is not cost-
free. All else being equal, larger vehicles concerns, which they stated program. As explained in greater detail
are more costly to build and operate. necessitated a back stop or ratcheting below, the agency is extending the
Market forces or fuel price increases mechanism. These concerns can be definition of light truck to MDPVs. By
will restrain consumer demand for large categorized into three areas: (1) including MDPVs, we are capturing
light trucks with low fuel economy, Increases in fleet size based on historic essentially all SUVs with a GVWR less
unless the need for utility justifies the trends and potential market shift, (2) than 10,000 lbs.98
expense to the manufacturers of increases in a vehicle’s footprint to take
Aside from our concerns with the
producing and to the consumers of advantage of a less stringent category,
legality of a backstop, the agency has
operating large trucks. and (3) upweighting of a vehicle to
The agency did a preliminary remove it form the light truck CAFE concluded that the potential for fuel loss
evaluation of the cost associated with program. from manufacturers increasing the
increasing a vehicle’s footprint. We With regard to the environmental footprint values of vehicles or through
relied on the databases provided by organizations’ first concern, we shifting their fleet mix has been
manufacturers in which the explained above that the light truck substantially reduced by the structure of
manufacturers included a vehicle’s CAFE program is not intended to the final rule. By gradually decreasing
manufacturer’s suggested retail price constrain consumer choice. Any historic the value of targets as footprint increase,
(MSRP). We identified 22 nameplate upsizing of manufacturers’ fleets minor increases to footprint do not
vehicles that had data indicating more occurred under Unreformed CAFE in result in significant decreases in
than one footprint value, either from a response to market demands, and applicable target values. Further,
manufacturer offering different market demands will continue to increases to footprint come at a cost in
configurations of a nameplate or as a influence the size of the light truck fleet. terms of fuel economy performance,
result of changes between model years. Moreover, the agency established the vehicle handling, and consumer
We then separated out the 22 MYs 2008–2011 standards after acceptance.
nameplates into 44 pairs and compared evaluating the product plans provided
MSRP. Some of the price differences 5. Benefits of reform
by manufacturers. Planned shifts in fleet
within the pairs appeared to represent mix have been taken into consideration a. Increased Energy Savings
differences in levels of options as well in establishing the final rule. Future
as footprint. The costs per square foot standards will also rely, in part, on The Reformed CAFE system increases
for these changes were in excess of product plans provided by the energy savings of the CAFE program
$1000. These data point pairs were manufacturers. As such, projected over the longer term because fuel saving
excluded. trends in fleet mix and fleet size will technologies will be required to be
The remaining pairs were evaluated. continue to be a consideration in applied to light trucks throughout the
The average cost per square foot establishing future CAFE standards. entire industry, not just by a limited
increase of the remaining 25 pairs was With regard to the second concern, number of manufacturers. The energy-
$119; the median cost was $46. Deleting both NRDC and Union of Concerned saving potential of Unreformed CAFE is
the 5 percent highest and lowest costs Scientists stated that a number of limited because it requires only a few
resulted in a mean cost per square foot vehicles would need only changes full-line manufacturers to make
increase of $85. We note that this is a ranging from one-tenth of an inch to 1.5 improvements. In effect, the capabilities
preliminary evaluation and that these inches in wheelbase and track width to of these full-line manufacturers, whose
costs represent those associated with become subject to a less stringent offerings include larger and heavier
increases in footprint that occur as part category. The Union of Concerned light trucks, constrain the stringency of
of a planned model redesign. We expect Scientists stated that an increase in the uniform, industry-wide standard.
that the costs associated outside a vehicle size of 1–10 percent would be The Unreformed CAFE standard is
planned redesign would be substantially equivalent to a 0.05 to 1.18 mpg generally set below the capabilities of
higher. decrease in the fleet wide average fuel limited-line manufacturers, who sell
We believe that the costs associated economy, respectively. This concern predominantly lighter and smaller light
with increasing a vehicle’s wheelbase was also echoed by IIHS. trucks. Under Reformed CAFE, which
would be even greater than those Again, as explained above, the agency accounts for fuel economy potential of
associated with an increase in track is adopting a standard based on a the fleets of individual manufacturers,
width. Based on a review of confidential continuous function as opposed to the virtually all light-truck manufacturers
information provided by a step function. Under the continuous will be required to improve the fuel
manufacturer, we estimate that the cost function small changes in vehicle economy of their vehicles. Thus,
of redesigning a vehicle mid-product footprint are not rewarded with large Reformed CAFE continues to require
cycle such that the vehicle has a longer decreases in target values. Target values full-line manufacturers to improve the
wheelbase would be at least equal to 50 decrease gradually, as opposed the overall fuel economy of their fleets,
percent of the costs associated with larger decreases that occur as a vehicle
while also requiring limited-line
introducing the original vehicle design. moves between categories under the
manufacturers to enhance the fuel
Given this high estimate, it would be proposed system. As such, the incentive
economy of the vehicles they sell.
unlikely that a manufacturer would for upsizing has been further minimized
extend a vehicle’s wheelbase solely in by adopting a continuous function Our estimates indicate that the
response to the CAFE program. The approach. Reformed CAFE system will result in
agency intends to further explore the Environmental groups’ third major greater fuel savings than the
costs associated with changes in concern was that of uprating, i.e., Unreformed CAFE system during the
footprint. manufacturers increasing the GVWR of transition period, even though the
Comments from the environmental vehicles beyond the 8,500 lbs GVWR industry-wide compliance costs were
organizations raised a number of boundary for the light truck CAFE equalized for those model years:
98 With MDPVs included in the definition of light removed from the light truck CAFE program with
truck, only approximately 50,000 vehicles could be an uprating of 1,000 lbs or less.
TABLE 7.—ESTIMATED FUEL SAVINGS FROM REFORMED AND UNREFORMED CAFE SYSTEMS FOR MYS 2008–2010
[in billions of gallons]
MY 2008 MY 2009 MY 2010
Reformed CAFE system .............................................................................................................. 0.7 1.9 2.2

Unreformed CAFE system ........................................................................................................... 0.6 1.8 2.0
The improvement in fuel savings $2.5 billion, this cost is distributed impact on overall fuel economy, but the
made possible by the switch to the across a greater number of proposed reliance on footprint is
Reformed CAFE system will be even manufacturers. Additional discussion of reasonable.
greater beginning MY 2011. By requiring the Reformed CAFE costs is provided The Alliance also supported the size-
improvements across the entire below. safety correlation and stated that use of
industry, the Reformed CAFE system b. Reduced Incentive To Respond to the footprint and the structure of Reformed
produces greater fuel savings at levels CAFE Program in Ways Harmful to CAFE would reduce the incentive to
that remain economically practicable. Safety produce small vehicles in order to offset
For comparison, the agency performed a larger light trucks. However, the
cursory Stage analysis for MY 2011. On In the NPRM, we noted the key trends Alliance stated that the agency did not
the basis of that cursory analysis, the in the light vehicle population and in acknowledge improvements made by
agency determined that, under the the crashes that produce serious and manufacturers in the static stability
Unreformed CAFE system, the fleet fatal injuries to highlight the safety factor and industry’s commitment to
wide (including MDPVs) fuel economy impacts of reforming CAFE. address the compatibility issue.
standard would be 23.3 mpg. We note Specifically, we identified rollovers and The Rocky Mountain Institute
that the Stage Analysis for MY 2011 crash compatibility. Both are related to supported the use of footprint, stating
results in a lower Unreformed standard reforming CAFE. that the proposal would create an
for that year than the Unreformed Pickups and SUVs have a higher incentive for decoupling size from
standard for MY 2010. This is due to the center of gravity than passenger cars and
weight by adopting lighter-but-stronger
inclusion of MDPVs in MY 2011. thus are more susceptible to rolling
materials and would encourage
MDPVs, which have low fuel over, if all other variables are identical.
manufacturers to make vehicles that are
economies, are produced primarily by Their rate of involvement in fatal
‘‘big, hence protective and comfortable,
rollovers is higher than that for
General Motors. Under the Unreformed without also making them heavy, hence
passenger cars—the rate of fatal
CAFE system, General Motors would be hostile and inefficient.’’ The Aluminum
rollovers for pickups and SUVs is twice
the least capable manufacturer. Because Association stated that use of footprint
that for passenger cars. Rollovers are a
of this, and because including the would provide opportunities to increase
particularly dangerous type of crash.
MDPVs lowers the CAFE level projected safety while saving fuel by substituting
Overall, rollover affects about three
for General Motors, the inclusion of aluminum for steel.
percent of light vehicles involved in
MDPVs would depress the Unreformed The agency continues to believe that
crashes, but accounts for 33 percent of
CAFE standard. Table 8 below the manner in which fuel economy is
light vehicle occupant fatalities. Single
illustrates the difference in fuel savings regulated can have substantial effects on
vehicle rollover crashes account for
between the Unreformed CAFE system nearly 8,500 fatalities annually. Rollover vehicle design and the composition of
and the fully implemented Reformed crashes involving more than one vehicle the light vehicle fleet. Reforming CAFE
CAFE system in MY 2011. account for another 1,900 fatalities, is important for vehicle safety because
bringing the total annual rollover the current structure of the CAFE
TABLE 8.—COMPARISON OF THE ESTI- fatality count to more than 10,000. system provides an incentive to
MATED FUEL SAVINGS FROM RE- Crash compatibility is the other manufacturers to reduce the weight and
FORMED IN MY 2011 AND AN prominent issue. Light trucks are size of vehicles, and to increase the
UNREFORMED STANDARD OF 23.3 involved in about half of all fatal two- production of vehicle types (particularly
MPG IN MY 2011 vehicle crashes involving passenger pickup trucks and SUVs) that are more
cars. In the crashes between light trucks susceptible to rollover crashes and are
[in billions of gallons]
and passenger cars, over 80 percent of less compatible with other light
MY the fatally injured people are occupants vehicles. For these reasons, reforming
2011 of the passenger cars. CAFE is a critical part of the agency’s
In regard to reducing regulatory effort to address the vehicle rollover and
Reformed CAFE system ................. 2.8 incentives for design changes adversely compatibility problems.
Unreformed CAFE system ............. 2.1 affecting safety, commenters generally The final rule based on footprint
supported the proposed reliance on substantially reduces the incentive to
As illustrated above, the Reformed footprint, recognizing the safety introduce smaller vehicles or to reduce
CAFE system saves an additional 700 concerns that led the agency to base the vehicle size to offset the lower fuel
million gallons of fuel over the Reformed CAFE system on a size metric. economy of larger vehicles. Adding the
Unreformed CAFE system over the Both General Motors and Nissan stated continuous function concept to
lifetime of the vehicles in the MY 2011 that weight provides the best correlation footprint eliminates the opportunity that
fleet. Further, we estimate that the fuel to fuel economy, but given the safety existed under the proposal to
savings under a 23.3 mpg Unreformed concerns about downsizing and the downweight by reducing vehicle size to
standard in MY 2011 would have come concerns about creating a potential for the lower edge of a category (which
at a cost of approximately $ 1.9 billion. upsizing, these commenters support the would have increased vehicle fuel
While the cost of the Reformed fuel use of footprint. RVIA stated that economy without subjecting the vehicle
savings in MY 2011 is approximately vehicle weight does have a direct to a higher target). It does this by
eliminating the categories that covered a Several commenters raised concern size and weight of light-duty vehicles
range of footprint sizes. Thus, under the that the structure as proposed (i.e., a have been so highly correlated that it
final rule, each change in footprint category-based system) would still has not been technically feasible to fully
results in a different target. reward downsizing. IIHS stated that a disentangle their independent effects on
manufacturer could rely on limited safety.101 The agency remains
i. Reduces Incentive To Reduce Vehicle reduction in size as a method to reduce concerned about compliance strategies
Size and To Offer Smaller Vehicles weight, without moving a vehicle into a that might have adverse safety
Without CAFE reform, significant different category. consequences.
increases in Unreformed light truck The agency recognizes the potential As explained in more detail below in
CAFE standards, especially if for limited downsizing being rewarded Section VIII, Technology issues, in
accompanied by high fuel prices, would in a category based system. However, determining the fuel saving potential of
likely induce a wave of shifting this potential reward is substantially a manufacturer’s fleet, the agency
production mix toward smaller light reduced and possibly eliminated under employed weight reduction as a
trucks and reducing the size and/or the continuous function adopted today. compliance strategy only in limited
weight of light trucks. Such a shift Under the continuous function, any instances. The agency only considered
occurred in the 1970’s and early 1980’s reduction in size will result in a vehicle weight reduction for vehicles with a
when fuel price increases and becoming subject to higher target. curb weight greater than 5,000 lbs. This
competitive pressures induced vehicle Where a step-function would permit limitation was based on the Kahane
manufacturers to shift their production limited reduction in footprint within a study, which indicated that weight
mix toward their smaller and lighter category, under a continuous function reduction of the heaviest vehicles would
vehicles to offset the lower fuel any reduction in footprint will subject a not negatively impact safety. If
economy of larger and heavier vehicles vehicle to a more stringent target. downweighting were concentrated
and to redesign their vehicles by IIHS further stated that even if a among the heaviest of the light trucks,
reducing their size and/or weight.99 The manufacturer maintained a vehicle’s any extra risk to the occupants of those
need for manufacturers to make rapid size, the manufacturer still could reduce vehicles might be more than offset by
and substantial increases in passenger a vehicle’s weight in order to improve lessened risk in multi-vehicle crashes to
car and light truck CAFE in response to the vehicle’s fuel economy. IIHS occupants of smaller light trucks and
the CAFE standards in late 1970’s and cautioned that such weight reduction cars. IIHS agreed with the agency that
early 1980’s provided an added would likely reduce a vehicle’s downweighting of the heaviest vehicles
incentive for them to take those actions. crashworthiness because decreased size would likely not harm safety.
and weight have separate effects on a Additionally, it is possible that some
The shift in production mix and
vehicle’s ability to protect its occupants. of the lightweight materials used in a
reduction in vehicle size/weight that
IIHS, citing the NAS report and Kahane downweighting strategy may have the
occurred in the 1970’s and early 1980’s
study, stated that although the potential strength and flexibility to retain or even
contributed to many additional deaths
safety cost is greater when both improve the crashworthiness of vehicles
and injuries.100 While the adoption of decrease, a decrease in mass alone will, and the safety of occupants. General
additional safety performance on average, reduce the crashworthiness Motors expressed some concern with
requirements for those vehicles has of the light truck fleet. the practicality of using lightweight
saved lives, even more lives would have The potential for downweighting materials, stating that it does not
been saved if the shifting of production through limited reductions in footprint intentionally reduce mass by replacing
mix toward smaller vehicles and the is minimized under the Reformed CAFE it with advanced materials. However,
reduction in size and/or weight had not structure adopted in this document. General Motors did state that it seeks to
occurred. Reliance on a continuous function use advanced materials and
By relying on vehicle size to further discourages footprint reduction technologies in new generation vehicles.
determine required fuel economy levels, because as a vehicle model’s footprint is As stated above, the agency used limited
the agency will minimize the incentive reduced, the vehicle is subject to a weight reduction in our modeling;
for manufacturers to comply through higher target. Reformed CAFE, as
downsizing vehicles or by increasing adopted today, links the level of the 101 Kahane, C.J., Response to Docket Comments
the production of smaller vehicles average fuel economy targets to the size on NHTSA Technical Report, Vehicle Weight,
solely to offset the sales of larger of footprint so that there is an incentive Fatality Risk and Crash Compatibility of Model
vehicles. These compliance strategies Year 1991–99 Passenger Cars and Light Trucks,
to reduce weight only to the extent one Docket No. NHTSA–2003–16318–16, 2004
reduce safety by reducing the can do so while also preserving size. discusses the historic correlation and difficulty of
crashworthiness of individual vehicles, Thus, we have minimized the incentive disaggregating weight and ‘‘size.’’ Except for a
and compound the problem of fleet for a compliance strategy that could strong correlation of track width with rollover risk,
compatibility. it shows weak and inconsistent relationships
increase rollover propensity and cause between fatality risk and two specific ‘‘size’’
Reforming CAFE such that required further divergence in the size of the measures, track width and wheelbase, when these
fuel levels are determined through the light truck fleet. are included with weight in the analyses. See also
use of footprint-based fuel economy By basing Reformed CAFE on a Kahane, C.J., Vehicle Weight, Fatality Risk and
Crash Compatibility of Model Year 1991–99
targets discourages reductions in vehicle measure of vehicle size (footprint) Passenger Cars and Light Trucks, NHTSA Technical
size. As a vehicle decreases in size, the instead of weight, the agency is aware Report No. DOT HS 809 662, Washington, 2003, pp.
fuel economy target against which that that the CAFE program will continue to 2–6. Evans, L. and Frick, M.C., Car Size or Car
vehicle is compared increases. permit and to some extent reward Mass—Which Has Greater Influence on Fatality
Risk? American Journal of Public Health 82:1009–
weight reduction as a compliance 1112, 1992, discusses the intense historical
99 Shifting production mix down toward smaller strategy. The safety ramifications of correlation of mass and wheelbase and finds that
vehicles involves decreasing the production downweighting—especially relative mass, not relative wheelbase is the
volumes of vehicles that are heavier or larger and downweighting that is not achieved principal determinant of relative fatality risk in
thus have relatively low fuel economy and two-car collisions. See also, Evans, L. ‘‘Causal
increasing the production volumes of lighter or through downsizing—will need to be Influence of Car Mass and Size on Driver Fatality
smaller vehicles. examined on a case-by-case basis in Risk,’’ American Journal of Public Health, 91:1076–
100 NAS Report, p. 3. future rulemakings. Historically, the 81, 2001.
however, we cannot dictate which Both of those actions would increase a trucks are generally heavier than
technologies a manufacturer must manufacturer’s actual CAFE without passenger cars, which add to their
employ in order to comply with the changing its required CAFE. compatibility problems with cars.
standards. The stringency of today’s Nevertheless, since a change in a Both NRDC and the Union of
standards should not make it necessary vehicle’s footprint will result in a Concerned Scientists questioned the
for any manufacturers to rely on unsafe change in both actual and required effectiveness of the proposed Reformed
or unproven compliance strategies. CAFE, manufacturers will have more CAFE system in limiting the incentive
Reformed CAFE also reduces the flexibility to respond to consumer to produce light trucks as opposed to
incentive for manufacturers to comply demand for vehicles with different passenger cars. The Union of Concerned
through increasing the number of footprint values without harming their Scientists stated that not all passenger
smaller vehicles, with higher fuel ability to comply with CAFE standards car-like light trucks would be in the first
economies, to offset larger vehicles, or adversely affecting safety. two of the proposed categories. The
with lower fuel economies. The way in Union of Concerned Scientists listed the
which Reformed CAFE dilutes the effect ii. Reduces the Difference Between Car Ford Freestyle and the Dodge Magnum
of this action as compliance strategy can and Light Truck CAFE Standards as examples of passenger car-like light
be seen by looking at a Reformed CAFE In discussing the proposed step- trucks that have footprint values larger
standard. The fuel economy targets, as function CAFE standard, we stated that than proposed categories one and two,
determined by the continuous function, the Reformed CAFE system would and thus would be subject to fuel
are constants. Regardless of what reduce the disparity between car and economy targets lower that the
compliance strategy is chosen by a light truck standards—the so called passenger car standard. NRDC cited a
manufacturer, nothing that the ‘‘SUV loophole’’—which in turn would forecast from The Planning Edge
manufacturer does will change those promote increased safety because the forecast which suggested that 27 new
values. disparity has created an incentive models of small and crossover vehicles
The distribution of vehicle models (beyond that provided by the market by would be added to the light truck fleet
along the continuous function and the itself) to design vehicles to be classified between MY 2005 and MY 2010, some
production volume of each model, as light trucks instead of cars.102 The of which would not be in the first
however, are variables under the control continuous function standard adopted category of the proposed CAFE
of the manufacturers. Further, they are today will operate in the same manner. structure. NRDC stated that the
variables not only in the formula for The fuel economy targets along the Reformed CAFE structure would still
calculating a manufacturer’s actual level continuous function for the smaller provide an incentive for automakers to
of CAFE for a model year, but also in the footprint categories of light trucks classify vehicles as light trucks.
formula for calculating a manufacturer’s would, by MY 2011, be at or near (and As stated above, the Reformed CAFE
required level of CAFE for that model for the smallest light trucks above) the system will compare smaller light trucks
year. level of the current 27.5 mpg CAFE to fuel economy levels more comparable
Thus, by changing the distribution of standard for cars. to the passenger car standard. A vehicle
its production across the footprint One way to design vehicles so that such as the Ford Escape, with a
based-function, a manufacturer will they are classified as light trucks instead footprint of 43.5 square feet, will be
change not only its actual level of CAFE, of passenger cars is to design them so compared to a fuel economy target of
but also its required level of CAFE. For that they have higher ground clearance 27.3 mpg in MY 2011. This significantly
example, all other things being equal, if and higher approach angles.103 minimizes the incentive to
a manufacturer were to increase the Designing vehicles so that they have manufacturer a vehicle as a light truck
production of one of its higher fuel higher ground clearance results in their as opposed to a passenger car, solely for
economy models and decrease the also having a higher center of gravity. CAFE purposes.
production of one of its lower fuel Generally speaking, light trucks have a
economy models, both its actual level of higher center of gravity than cars, and c. More Equitable Regulatory
CAFE and its required level of CAFE thus are more likely than cars to Framework
would increase. rollover. Moreover, in order to create a The Reformed CAFE system adopted
Likewise, again all other things being higher approach angle, it is necessary to today provides a more equitable
equal, if a manufacturer were to raise or minimize the front structure regulatory framework for full-line
redesign a model so as to decrease its below the front bumper, which vehicle manufacturers and creates a
footprint (thereby presumably also increases the likelihood that a light level playing field for all manufacturers.
decreasing its weight), the model will truck will override a car’s body in a The Unreformed CAFE system cannot
become subject to a higher target. Again, front or rear end crash. It also increases match the Reformed CAFE system in
as a result, both the manufacturer’s the likelihood that when a light truck terms of providing an equitable
actual CAFE and required CAFE would crashes into the side of a car, its front regulatory framework for different
increase. Thus, we have substantially end will pass over the car’s door sill and vehicle manufacturers. Under
reduced the incentive for a compliance intrude farther into the car’s occupant Unreformed CAFE, all vehicle
strategy that could cause further compartment. In addition to not being manufacturers are required to comply
divergence in the size of the light truck structurally aligned with cars, light with the same fleet-wide average CAFE
fleet and increase rollover propensity. requirement, regardless of their product
The reduced effectiveness of those 102 NAS Report (p. 88) noted that that gap created
mix. For full-line manufacturers, this
actions as compliance strategies under an incentive to design vehicles as light trucks creates an especially burdensome task.
instead of cars.
Reformed CAFE increase the likelihood 103 The term ‘‘approach angle’’ is defined by We note that these manufacturers often
that manufacturers will choose two NHTSA in 49 CFR 523.2 as meaning ‘‘the smallest offer vehicles that have high fuel
other actions as the primary means of angle, in a plane side view of an automobile, economy performance relative to others
closing the gap between those two formed by the level surface on which the in the same size class, yet because they
automobile is standing and a line tangent to the
levels: (1) Reducing vehicle weight front tire static loaded radius arc and touching the
sell many vehicles in the larger end of
while keeping footprint constant, and underside of the automobile forward of the front the light truck market, their overall
(2) adding fuel-saving technologies. tire.’’ CAFE is low relative to those
manufacturers that concentrate in d. More Responsive to Market Changes E. Comparison of Estimated Costs To
offering smaller light trucks. As a result, Estimated Benefits
Unreformed CAFE is binding for such Reformed CAFE is more market-
oriented because it respects economic 1. Costs
full-line manufacturers, but not for
limited-line manufacturers who sell conditions and consumer choice. In order to comply with the Reformed
predominantly smaller light trucks. The Reformed CAFE does not force vehicle CAFE standards, we estimate the
full-line vehicle manufacturers have manufacturers to adjust fleet mix toward average incremental cost per vehicle to
expressed a legitimate competitive smaller vehicles unless that is what be $66 for MY 2008, $201 for MY 2009,
concern that the part-line vehicle consumers are demanding. As the $213 for MY 2010, and $271 for MY
industry’s sales volume and product 2011. Under the Reformed CAFE
manufacturers are entering the larger
mix changes in response to economic system, a greater number of
end of the light-truck market with an
conditions (e.g., gasoline prices and manufacturers will be required to
accumulation of CAFE credits. While
household income) and consumer improve their fleets and make
this concern has merit, it is also the case additional expenditures than under the
that some part-line manufacturers (e.g., preferences (e.g., desire for seating
capacity or hauling capability), the Unreformed CAFE system. The level of
Toyota and Honda) have been industry additional expenditure that would be
innovators in certain technological expectations of manufacturers under
Reformed CAFE will, at least partially, necessary beyond already planned
aspects of fuel-economy improvement. investment varies for each individual
adjust automatically to these changes.
As with the proposed step-function, manufacturer. These individual
Accordingly, Reformed CAFE may
the Reformed CAFE program adopted expenditures are discussed in more
reduce the need for the agency to revisit
today requires manufacturers to comply detail in Chapter VII of the FRIA. As
previously established standards in light
with a fuel economy level that is stated above, these costs are distributed
of changed market conditions, a difficult across a greater share of the industry.
representative of that manufacturer’s process that undermines regulatory
actual production mix. Under both The total incremental costs (the costs
certainty for the industry. In the mid- necessary to bring industry from 22.2
functions, vehicles are compared to fuel 1980’s, for example, the agency relaxed
economy targets more representative of mpg, the level required by the standard
several Unreformed CAFE standards for MY 2007, to the final rule levels) are
a vehicle’s fuel saving capabilities than because fuel prices fell more than
comparison to a single flat standard. In estimated to be $553 million for MY
expected when those standards were 2008, $1,724 million for MY 2009,
fact, a required fuel economy level established and, as a result, consumer $1,903 million for MY 2010, and $2,531
under the continuous function is more demand for small vehicles with high million for MY 2011. A comparison
representative of a manufacturer’s fuel economy did not materialize as between the Reformed and Unreformed
capabilities, because a target is expected. By moving to a market- CAFE system costs is shown in Table 9.
established for each specific vehicle oriented system, the agency may also be By policy design, the mpg levels under
footprint, as opposed to the proposed able to pursue more multi-year Reformed CAFE were set so that the
step function for which a target would rulemakings that span larger time industry-wide costs of Reformed CAFE
have been established for a range of frames than the agency has attempted in are roughly equal to the industry-wide
footprint values. the past. costs of Unreformed CAFE for MY
2008–2010.
TABLE 9.—ESTIMATED COST FROM REFORMED AND UNREFORMED CAFE SYSTEMS FOR MYS 2008–2010
[in millions of year 2003 dollars]
MY 2008 MY 2009 MY 2010
Reformed CAFE system .............................................................................................................. 553 1,724 1,903

Unreformed CAFE system ........................................................................................................... 536 1,621 1,752
2. Benefits The total value of these benefits is wide fuel economy level if the MY 2007
The benefits analysis applied to the estimated to be $782 million for MY standard were to remain in effect), we
final standards under the Unreformed 2008, $2,015 million for MY 2009, estimated the fuel savings from the
CAFE system was also applied to the $2,336 million for MY 2010, and $2,992 Reformed CAFE program. This analysis
standards under the final Reformed million for MY 2011, based on fuel resulted in estimated lifetime fuel
CAFE system. Benefit estimates include prices ranging from $1.96 to $2.39 per savings of 746 million, 1,940 million,
both the benefits from fuel savings and gallon. These estimates are provided as 2,230 million, and 2,834 million gallons
other economic benefits from reduced present values determined by applying under the Reformed CAFE standards for
petroleum use. A more detailed a 7 percent discount rate to the future MY 2008, 2009, 2010, and 2011
discussion of the application of this impacts. We translated impacts other respectively.
analysis to the required fuel economy than fuel savings into dollar values, NHTSA estimates that the direct fuel-
levels under the Reformed CAFE system where possible, and then factored them savings to consumers account for the
can be located in Chapter VIII of the into our total benefit estimates. The majority of the total benefits, and by
FRIA. benefits analysis for Reformed CAFE is themselves exceed the estimated costs
Adding benefits from fuel savings to based on the same assumptions as the of adopting more fuel-efficient
other economic benefits from reduced benefits analysis for Unreformed CAFE. technologies. In sum, the total
petroleum use as a result of the Based on the forecasted light truck incremental costs by model year
Reformed CAFE standards produced an sales from AEO 2005 and an assumed compared to the incremental societal
estimated incremental benefit to society. baseline fuel economy (i.e., the industry benefits by model year are as follows:
TABLE 10.—COMPARISON OF INCREMENTAL COSTS AND BENEFITS FOR THE REFORMED CAFE STANDARDS
[In millions]
MY 2008 MY 2009 MY 2010 MY 2011
Total Incremental Costs* ................................................................................. $553 $1,724 $1,903 $2,531

Total Incremental Benefits* ............................................................................. 782 2,015 2,336 2,992
* Relative to the 22.2 mpg standard for MY 2007
These estimates are provided as present 3. Uncertainty agency thinks it very likely that the
values determined by applying a 7 benefits of the Reformed CAFE
percent discount rate to the future As with the Unreformed CAFE standards will exceed their costs for all
impacts. standards, the agency recognizes that four model years. A detailed discussion
In light of these figures, we have the data and assumptions relied upon in of the uncertainty analysis is provided
concluded that the standards our analysis have inherent limitations in Chapter X of the FRIA.
established under the Reformed CAFE that do not permit precise estimates of
system serve the overall interests of the benefits and costs. NHTSA performed a F. MY 2008–2011 Reformed CAFE
American people and are consistent probabilistic uncertainty analysis on the standards
with the balancing that Congress has Reformed CAFE standards to examine
directed us to do when establishing the degree of uncertainty in its costs and The manner in which a
CAFE standards. For all the reasons benefits estimates. Factors examined manufacturer’s required overall CAFE
stated above, we believe the Reformed included technology costs, technology for a model year under the Reformed
CAFE standards represent fuel economy effectiveness in improving fuel system is computed is similar to the
levels that are economically practicable economy, fuel prices, the value of oil way in which its actual CAFE for a
and, independently, that are a cost import externalities, and the rebound model year has always been calculated.
beneficial advancement for American effect. This analysis employed Monte Its required CAFE level is computed on
society. A more detailed explanation of Carlo simulation techniques to examine the basis of the production and the
our analysis is provided in Chapter IX the range of possible variation in these footprint target as follows.
of the FRIA. factors. As a result of this analysis, the
Where: Ni is the number (sum) of the ith model determined according to the
light truck produced by the following formula, rounded to the
N is the total number (sum) of light
manufacturer, and nearest hundredth: where,
trucks produced by a manufacturer, Ti is fuel economy target of the ith
model light truck, which is
a = the maximum fuel economy target c = the footprint value (in square feet) of targets decline from the largest to
(in mpg) at which the fuel economy target is smallest values
b = the minimum fuel economy target midway between a and b e = 2.718
(in mpg) d = the parameter (in square feet) x = footprint (in square feet, rounded to
defining the rate at which the value the nearest tenth) of the vehicle
model
TABLE 11.—CALIBRATED PARAMETER VALUES FOR TARGET
ER06AP06.025</GPH>
Model year
Parameter
2008 2009 2010 2011
a ....................................................................................................................... 28.56 30.07 29.96 30.42

ER06AP06.024</GPH>
b ....................................................................................................................... 19.99 20.87 21.20 21.79
TABLE 11.—CALIBRATED PARAMETER VALUES FOR TARGET—Continued

Model year
Parameter
2008 2009 2010 2011
c ....................................................................................................................... 49.30 48.00 48.49 47.74

d ....................................................................................................................... 5.58 5.81 5.50 4.65
The following is a representative light trucks and their associated targets

sample of footprint values for MY 2005 for MY 2011:
TABLE 12.—REPRESENTATIVE VEHICLES AND THEIR APPLICABLE FUEL ECONOMY TARGETS FOR MY 2011
Footprint
Representative vehicle(s) Target (mpg)
(square feet)
Ford F–150 Super Cab ............................................................................................................................................ 75.8 21.81

GM Silverado Extended Cab ................................................................................................................................... 65.3 21.93
Lincoln Navigator ..................................................................................................................................................... 55.4 22.84
Honda Odyssey ....................................................................................................................................................... 54.7 22.98
Hummer H3 ............................................................................................................................................................. 50.7 24.16
GM Equinox ............................................................................................................................................................. 48.2 25.19
Saturn Vue ............................................................................................................................................................... 45.2 26.56
Ford Escape ............................................................................................................................................................ 43.5 27.32
Based on the product plans provided manufacturers will be required to MYs 2008–2011 under the Reformed
by the manufacturers, we project that comply with fuel economy levels in CAFE system as follows:
TABLE 13.—PROJECTED REQUIRED FUEL ECONOMY LEVELS BY MANUFACTURER

MY 2008 MY 2009 MY 2010 MY 2011
Manufacturer (mpg) (mpg) (mpg) (mpg)
General Motors ................................................................................................ 21.9 22.6 22.9 23.2

Ford .................................................................................................................. 22.7 23.2 23.8 23.9
DaimlerChrysler ............................................................................................... 23.2 23.7 24.1 24.3
Nissan .............................................................................................................. 22.3 23.3 23.7 23.9
Mitsubishi ......................................................................................................... 25.1 25.8 26.3 27.0
Subaru ............................................................................................................. 25.4 26.4 26.3 26.8
Toyota .............................................................................................................. 22.6 23.0 23.2 23.8
Hyundai ............................................................................................................ 23.9 25.0 25.0 25.4
BMW ................................................................................................................ 24.5 25.1 25.5 25.8
Porsche ............................................................................................................ 23.0 23.7 24.0 24.2
VW ................................................................................................................... 23.1 23.7 24.1 24.2
Isuzu ................................................................................................................ 22.2 22.9 23.2 23.4
Honda .............................................................................................................. 23.3 24.0 24.4 24.6
Suzuki .............................................................................................................. 25.5 26.3 26.6 27.1
The projected required industry wide improvement technologies. As a result, ANPRM, we estimated that
fleet fuel economy levels for MY 2008– the Stage analysis applies technologies manufacturers intended to achieve an
2010 are 22.7 mpg, 23.4 mpg, and 23.7 with higher costs in order to achieve the industry wide fuel economy level of
mpg, respectively. These levels are more same fuel economy level under the approximately 22.0 mpg. In the NPRM
stringent than those in the NPRM. The proposed Unreformed CAFE system. the proposed Reformed standard for MY
projected required fleet wide required Because the Reformed CAFE system is 2011 would have been 23.9 mpg, with
fuel economy levels in the NPRM for constrained by costs of the Unreformed MDPVs remaining unregulated. As a
MYs 2008–2010 were 22.6 mpg, 23.1 CAFE system in the transition period, result of today’s final rule, we project a
mpg, and 23.4 mpg, respectively. The the Volpe model has more to ‘‘spend’’ required industry wide fuel economy of
increase in stringency is a result of (and spend more efficiently than under 24.0 in MY 2011, with MDPVs included
higher compliance costs associated with an Unreformed standard) when in the light truck fleet.
the Unreformed CAFE standards. Even applying technologies in the Reformed While the reformed standards adopted
though the Unreformed CAFE standards CAFE system. The result is Reformed today are more stringent than those
are the same as those proposed in the CAFE standards with higher stringency proposed, and we are regulating a larger
than in the NPRM.
NPRM, the associated compliance costs fleet in MY 2011, we have determined

have increased because the updated We estimate that the industry wide that the Reformed CAFE system and
product plans reflect the fact that fleet fuel economy average in MY 2011 associated target levels for MYs 2008–
manufacturers have already planned to will be 24.0 mpg. Based on the product 2011 will result in required fuel
apply several of the lower cost fuel plans submitted in response to the economy levels that are both
technologically feasible and technologies that were already featured period of time. Toyota stressed that the
economically practicable for on certain vehicles or already lead time is not how long it takes to
manufacturers. incorporated into the manufacturers’ develop a given technology, but how
baseline product plans were removed long it takes to incorporate this
VII. Technology issues
from the Stage Analysis. We note that technology into different vehicle
A. Reliance on the NAS Report the detailed description of the configurations. The manufacturers
The agency affirms our reliance on the adjustments made to the Stage Analysis stated that product cycles are typically
cost and fuel saving estimates provided contains confidential information and is staggered so that not all light trucks
in the NAS report for the technologies discussed in general terms in the FRIA. undergo changes in the same timeframe.
However, this final rule provides a These commenters argued that in order
relied upon in our analysis. The NAS
description of the steps taken in order to realistically reflect the manufacturers’
cost and effectiveness numbers are the
to address comments and discrepancies capabilities, the Stage Analysis should
best available estimates at this time.
between the product plan information stagger technology application and
They were determined by a panel of
available to NHTSA in preparing the avoid projecting fleet-wide application
experts formed by the National
August 2005 NPRM and this final rule. of any one technology within a single
Academy of Sciences. The report has
been reviewed by individuals chosen for C. Lead Time model year.
their diverse perspectives and technical With respect to the actual duration of
In developing the proposal, the product cycles, different manufacturers
expertise, in accordance with agency relied on lead time assumptions
procedures approved by the Report argued that for light trucks, they last
for the introduction of technologies from at least 5 to more that 8 years.
Review Committee of the National based on technology availability and its
Research Council. The purpose of the Further, they argued that the product
fuel saving benefits. The Alliance, Sierra and technology plans for each model are
independent review was to provide Research, and most vehicle
candid and critical comments that usually finalized several years prior to
manufacturers argued that our their introduction. Manufacturers stated
assisted the authors and the NAS in application rates and timing did not
making the published report as sound as that after design decisions affecting the
adequately consider technology powertrain are ‘‘frozen,’’ it is nearly
possible and to ensure that the report readiness and the typical automotive
met institutional standards for impossible to implement any major
product lifecycle in proposing the changes to address fuel economy.
objectivity, evidence and Unreformed CAFE standards. Honda
responsiveness to the study charge. The Incorporating ‘‘off-the-shelf’’
and Toyota cited the NAS report, which
agency has reviewed other studies of technologies. The Alliance and vehicle
stated that ‘‘the widespread penetration
technologies available to improve fuel manufacturers argued that even readily
of even existing technologies will
economy and have concluded that the available ‘‘off-the-shelf’’ technology
probably require 4 to 8 years.’’ 104
estimates of fuel economy technology cannot be simply bolted onto an existing
Honda and Toyota supported the NAS vehicle because integrating any
effectiveness and costs developed by the findings with regard to lead time
NAS are the most reliable available. technology into the vehicle is a complex
assumptions. task requiring advance preparations, not
Alternative estimates recommended by Underscoring the importance of lead
some commenters have not been subject just with respect to vehicle integration,
time, Toyota asked NHTSA to propose
to the same level of expert and public but also with respect to the automated
CAFE standards for model years beyond
review, and thus are not suitable for use assembly lines. They also argued that
2011 as soon as possible in order to
by NHTSA in establishing fuel economy the manufacturers need time to ensure
afford the manufacturers an opportunity
standards. that the new technology is optimized
for timely product development and
not just for vehicle integration and
B. Technologies Included in the planning. Toyota argued that in Japan
assembly, but also for serviceability and
Manufacturers’ Product Plans and Europe, fuel economy targets for the
customer satisfaction in-use. The
2008 to 2010 model years have been in
The Alliance, DaimlerChrysler, Ford, manufacturers also argued that NHTSA
place since 1999 and 2000 respectively.
General Motors, Nissan, Toyota, and Manufacturers offered the following should not assume that manufacturers
Sierra Research argued that the agency’s specific arguments in favor of reduced can readily adopt ‘‘off-the-shelf’’
analyses incorrectly projected the use of phase-in rates and extending lead time. technologies from one vehicle
certain technologies that were either Product cycles and finite engineering application to another.
already featured on vehicles or were resources. The commenters argued that Customer acceptance. The Alliance
included in the manufacturer’s product technologies cannot be incorporated in and vehicle manufacturers argued that
plans. Because the benefits of these every vehicle at the same time due to incorporation of specific technologies is
technologies are already incorporated capital costs, differing vehicle and also dependent upon customer
into the manufacturer’s baseline powertrain planning cycles, and acceptance. For example,
capabilities, any further projected fuel engineering resource constraints, both at DaimlerChrysler argued that a
economy improvements were the manufacturer level as well as at the premature fleet-wide application of new
incorrectly attributed. The commenters supplier level. As DaimlerChrysler technology could result in widespread
urged the agency to revise our analyses explained, resource constraints dictate customer rejection, which can be
to account for technologies that were that a new technology is first integrated avoided if a given technology is slowly
already on vehicles or in the product into a single product and later deployed phased in and allowed to mature. Many
plans submitted to the agency. fleet-wide. Similarly, Ford argued that commenters also argued that
In performing the Stage Analysis and there are not enough resources available simultaneous fleet-wide incorporation
the Reformed CAFE analysis to to develop and implement multiple of new technology raises product
determine the final CAFE standards, the technologies simultaneously across the quality and durability concerns that
agency relied on manufacturers’ entire product lineup within a short could affect customer acceptance. For
comments and confidential product example, Honda argued that new
plan information to adjust our 104 Honda comment p. 6, and Toyota comment p. technologies need to be ‘‘piloted’’ on a
calculations. Accordingly, the 3, quoting the NAS report. limited number of vehicles, to ensure
adequate quality before being spread to sliding components required for a 2-step We note that the hybrid numbers
a wider number of sales. lift system, and by increased oil pump cited by the Union of Concerned
The agency recognizes that vehicle losses due to the need for more oil Scientists refer to Ford’s goal for
manufacturers must have sufficient lead pump capacity. Further, these introducing hybrids in both its light
time to incorporate changes and new commenters stated that application of truck fleet and its passenger car fleet.
features into their vehicles. In making this technology to a multi-valve base With respect to the study cited by Sierra
its lead time determinations, the agency engine will not result in sufficient Club et al., the technology applications
considered the fact that vehicle incremental performance improvement applied to the Ford Explorer have not
manufacturers follow design cycles to allow downsizing the engine; all been proven to be feasible through
when introducing or significantly • Hybrids and Diesels— application in a production vehicle.
modifying a product. For the final rule, Manufacturers asserted that the fuel With respect to ‘‘systems effects,’’
the agency based our lead time economy benefit of hybrids varies NHTSA’s analysis used fuel economy
assumptions more closely on the depending on the type of hybrid, the benefit values that account for the
findings of the NAS report, typically application, and the driving cycle. With diminished effectiveness that one
relying on the mid-point of the NAS respect to diesels, manufacturers stated technology may have when used in
range for full market penetration, i.e., 6 that widespread customer acceptance is concert with other similar technologies.
years or approximately a 17 percent still to be determined due to higher For instance, a number of technologies
phase-in rate. As illustrated in costs, past experience with older diesel reduce an engine’s pumping losses. For
Appendix B of this document, and as technology, and challenges faced by these technologies, NAS offers two fuel
discussed further below, the agency manufacturers regarding Tier 2 and LEV economy benefit values—a higher value
made numerous adjustments to timing II emissions compliance. for a ‘‘baseline’’ engine, with no such
when applying technologies in order to technologies applied, and a lower value
address lead time concerns. The manufacturers also argued that for a ‘‘reference’’ engine with pumping
some estimates did not account for loss partially reduced. The difference
D. Technology Effectiveness and synergy or ‘‘system effects.’’ That is, between the ‘‘reference’’ and ‘‘baseline’’
Practical Limitations when multiple technologies that address values is an estimate of the synergistic
The Alliance, General Motors, the same opportunity for improvement effect that results from applying similar
DaimlerChrysler, Ford, Toyota, and (e.g., pumping losses) are combined, technologies to the same vehicle.
Sierra Research argued that the agency their effectiveness is diminished Whenever an additional technology is
overstated potential fuel economy because they address the same type of selected for a vehicle that already has
benefits of certain technologies in its loss. Thus, the manufacturers argued one or more similar technologies,
analyses. The manufacturers argued that that the lack of a full examination of NHTSA always chooses the lower value
benefits assigned to a given technology ‘‘system effects’’ has resulted in a set of to account for these synergies.
are not the same for every vehicle. projected fuel economy improvements
Instead, these commenters asserted, that overestimate the technologies’ E. Technology Incompatibility
actual fuel economy benefits depend on combined capabilities. With respect to The Alliance, DaimlerChrysler, Ford,
vehicle characteristics. Additionally, the hybrid engines, several manufacturers General Motors, Nissan, and Toyota
Alliance, Toyota, DaimlerChrysler, argued that the fuel economy benefit of argued that certain technologies
Ford, and General Motors argued that hybrid vehicles varies depending on the projected in the agency analyses are
the agency’s analyses incorporate a type of hybrid, the application, and the incompatible with their vehicle or
number of technologies that have not driving cycle. engine architecture. While their specific
yet been fully developed or have In contrast, environmental comments regarding NHTSA’s
implementation issues that limit their organizations generally stated that the technology projections are confidential,
wide-spread availability. Manufacturers agency underestimated the availability we are able to provide some generic
provided the following examples of of fuel saving technologies. These examples.
instances in which they believe the Manufacturers argued that not all
commenters generally held that existing
agency overestimated fuel saving engines are readily compatible with
technologies could be applied to
potentials or applied technologies in an cylinder deactivation. For some,
manufacturers’ fleets and result in fuel
overly aggressive manner: incorporation of this technology would
economy performances in excess of 26
• Aerodynamic Drag Reduction— mpg. The Union of Concerned Scientists
require substantial investment and
Manufacturers stated that some engineering resources. Similarly,
stated that the agency underestimated
aerodynamic changes could impact manufacturers argued that switching
the availability of hybrids, and noted
vehicle compatibility and result in from a single overhead cam design to a
that Toyota has stated that it plans for
styling constraints that could affect dual overhead cam design would, in
hybrids to account for 25 percent of its
consumer demand; some instances, require a complete
sales by early next decade. The Union
• Improved Rolling Resistance— of Concerned Scientists also cited Ford’s
engine redesign. Manufacturers also
These commenters stated that recently argued that because of greater torque,
goal of having the capacity to produce
improved Federal tire safety standards CVTs are not compatible with heavier
250,000 hybrids by 2010. The comment
are so stringent they limit the vehicles equipped with large V8
provided by Sierra Club, U.S. PIRG, and
availability of low rolling resistance engines. Instead, they work best on
NET described a study in which
tires. Further, these commenters stated lighter light trucks based on passenger
‘‘existing fuel saving and safety
that consumers demand all-season tires car platforms. Similarly, manufacturers
technology’’ applied to a Ford Explorer
that perform well in winter weather argued that electrical power steering is
would result in a 71 percent
conditions but sacrifice rolling compatible with only smaller light
improvement in fuel economy.105
resistance. trucks, unless the heavier vehicles were

• Variable Valve Lift and Timing— 105 Friedman et al., Building a Better SUV: A
also switched to 42-volt electrical
Manufacturers stated that benefits of Blueprint for Saving Lives, Money and Gasoline.
systems. At least one manufacturer
this technology must be offset by Union of Concerned Scientists and the Center for asserted that low friction oil might be
friction due to the increased number of Auto Safety. September 2003. incompatible with some engine designs
and expressed concerns about the lbs. as the threshold for considering Concerned Scientists did not cite any
availability of low friction oil in some weight reduction.108 specific study. Further, Environmental
markets. Finally, the manufacturers Several commenters supported our Defense stated that the Kahane study on
argued that because of the consumer assumption that manufacturers could which the agency relied for determining
demand and expectations for off-road respond to the CAFE standards with the weight reduction limitations was
capabilities, all-season traction, and limited weight reductions that would flawed. Environmental Defense stated
greater stopping performance, low not reduce safety. Conversely, several that the Kahane study 109 does not
rolling resistance tires are incompatible commenters stated that any weight adequately distinguish between the
with some light truck models. reduction will lead to a reduction in effects of size and weight on motor
safety. These comments are discussed vehicle accident mortality, despite the
In applying technology in the Stage
below. large body of evidence suggesting that
Analysis and the Reformed CAFE
Before discussing the comments, we other factors besides vehicle weight,
analysis to determine the final would like to clarify that our analysis such as vehicle size and design, have
standards, the agency carefully does not mandate weight reduction, or critical implications for vehicle safety.
considered the manufacturers’ any specific technology application for While NHTSA agrees that limited
comments and confidential product that matter. We performed the analysis weight reduction to heavier vehicles
plan information to adjust our for the NPRM and the final rule on the will not reduce safety, we continue to
calculations. In some instances, the assumption that manufacturers would disagree with DRI’s overall conclusion,
manufacturers’ comments reflected find it cost-effective to cut some weight cited by Honda, that weight reductions
strategies already employed in the out of light trucks that have a curb while holding footprint constant would
agency’s analysis. For example, the weight greater than 5,000 lbs. Our significantly benefit safety in lighter
NPRM analysis did not apply CVTs to analysis relied exclusively on other fuel- vehicles. NHTSA’s analyses of the
larger light trucks equipped with V8 saving technologies for lighter light relationships between fatality risk,
engines. Further, the technologies that trucks to demonstrate that mass, track width and wheelbase in 4-
turned out to be incompatible with manufacturers can comply with the door 1991–1999 passenger cars (Docket
certain vehicles were removed from the required fuel economy levels No. 2003–16318–16) found a strong
Stage Analysis. When it was practicable established today without the need for relationship between track width and
to do so, the agency substituted different unsafe compliance measures. the rollover fatality rate, but only a
technology applications that were Honda cited several reports, which it modest (although significant)
compatible with those vehicles. As asserted demonstrated that limited relationship between track width and
explained above, the detailed weight reductions would not reduce fatality rate in non-rollover crashes.
description of the adjustments made to safety and could possibly decrease Even controlling for track width and
the Stage Analysis contains confidential overall fatalities. Honda stated that the wheelbase—e.g., by holding footprint
information and is not publicly 2003 study by DRI found that reducing constant—weight reduction in the
available. However, Appendix A of this weight without reducing size slightly lighter cars is strongly, significantly
document and the FRIA provide a decreased fatalities, and that this was associated with higher non-rollover
description of the steps taken in order confirmed in a 2004 study by DRI that fatality rates in the NHTSA analysis. By
to address the issue of incompatible assessed new data and methodology contrast, the DRI study of May 20, 2005
technologies (see FRIA p. VI–10). changes in the 2003 Kahane Safety analyzed 4-door cars and found a strong
Study. Honda asserted that the DRI relationship between track width and
F. Weight Reduction fatality risk, and non-significant
results tend to confirm ‘‘that curb
weight reduction would be expected to associations of mass and wheelbase
In the analyses for the NPRM, we
decrease the overall number of with fatality risk (Docket No. 2005–
included the possibility of limited
fatalities.’’ 22223–78, p. 31). In other words, when
vehicle weight reduction for vehicles
DRI submitted an additional study, DRI analyzed the same group of vehicles
over 5,000 lbs. curb weight where we
Supplemental Results on the as NHTSA, they did not get the same
determined that weight reduction would
Independent Effects of Curb Weight, results. This difference indicates that
not reduce overall safety and would be
Wheelbase, and Track Width on Fatality DRI’s analytical method and/or database
a cost effective choice.106 Use of the
Risk in 1985–1998 Model Year are not the same as NHTSA’s.
5,000 lbs cut-off point was based on The agency continues to stand by our
analysis in the Kahane study. The Passenger Cars and 1985–1997 Model
Year LTVs, Van Auken, R.M. and J. W. analytical method and database and we
Kahane study found that the net safety continue to believe that weight
effect of removing 100 pounds from a Zellner, May 20, 2005. This DRI study
concluded that reductions in footprint reduction in lighter vehicles would
light truck is zero for light trucks with reduce safety. We also continue to
a curb weight greater than 3,900 lbs.107 are harmful to safety, whereas
reductions in mass while holding believe that weight reductions in the
However, given the significant statistical heavier light trucks, while holding
uncertainty around that figure, we footprint constant would benefit safety.
The DRI study disagreed with NHTSA’s footprint constant, will not likely result
assumed a confidence bound of in net reduction in safety.
approximately 1,000 lbs. and used 5,000 finding that mass had greater influence
IIHS expressed similar concern with
than track width or wheelbase on the
weight reduction as the agency, stating
106 The amount of projected weight reduction was fatality risk of passenger cars in non-
that the safety cost of reduced mass
two percent for light trucks with a curb weight rollover crashes.
between 5,000 and 6,000 lbs and up to four percent The Union of Concerned Scientists would be most apparent if the weight
for light trucks with a curb weight over 6,000 lbs. stated that recent studies indicate that reductions were to occur among the
107 Kahane, Charles J., PhD, Vehicle Weight,
increases in weight have very little smallest and lightest vehicles.
Fatality Risk and Crash Compatibility of Model

impact. However, the Union of Referencing the 2003 Kahane report,
Year 1991–99 Passenger Cars and Light Trucks, IIHS indicated that decreases in mass
October 2003. DOT HS 809 662. Page 161. Docket
No. NHTSA–2003–16318 (http:// 108 See the discussion of ‘‘Effect of Weight and among vehicles weighing more than
www.nhtsa.dot.gov/cars/rules/regrev/evaluate/pdf/ Performance Reductions on Light Truck Fuel
809662.pdf) Economy’’ in Chapter V of the PRIA. 109 See footnote 90.
5,000 pounds could result in a net safety the point where the total effect of commenter stated concluded that in
benefit. However, IIHS continued to reducing all vehicles heavier than the each vehicle group, ‘‘the heavier
caution that reducing mass reduces, on breakeven weight by an equal amount is vehicles, like bigger ones, generally had
average, a vehicle’s ability to protect its zero. NHTSA estimated that the lower death rates.’’
occupants, noting that the effects of breakeven point as described in the The weight safety analysis performed
mass on vehicle crashworthiness have NPRM is 3,900 lbs., if footprint is held by the agency for this rulemaking
been observed and documented constant. accounted for not only the occupant
(Kahane, 1997; Partyka, 1996; O’Neill et If the 3,900 lbs. estimate were safety (crashworthiness) of the vehicle,
al., 1974). perfectly accurate, we would be but also the rollover propensity of the
General Motors and the Alliance were confident that weight reductions in vehicle, and the safety of the occupants
more explicit in their concerns over the vehicles down to 3,900 pounds would of other vehicles it strikes. While in
safety impact associated with weight not result in net harm to safety. some instances, the crashworthiness of
reduction. The Alliance stated that the However, we agree with commenters a vehicle can be improved through
fundamental laws of physics dictate that that there is considerable uncertainty design changes that add weight to a
smaller and/or lighter vehicles are less about the crossover weight and also the vehicle, design changes can also reduce
safe than larger/heavier counterparts breakeven point. Therefore, in our a vehicle’s weight without reducing
with equivalent safety designs and analysis, we limited weight reduction to crashworthiness, and may in some
equipment. vehicles with a curb weight greater than instances improve the safety of a vehicle
General Motors agreed that 5,000 pounds. We believe that the 5,000 (e.g., reduce rollover propensity).
improvements in material strength, lbs. limit is sufficient so that we can be Environmental Defense commented
flexibility, and vehicle design have confident that such weight reductions that by limiting the use of weight
helped improve overall vehicle and will not have net harm on safety. reduction to heavier vehicles, the
highway safety. But, General Motors SUVOA encouraged NHTSA to agency disregarded the likelihood that
added, for a given vehicle, reducing emphasize the importance of making manufacturers would rely on weight
mass generally reduces net safety. sure that CAFE requirements do not reduction in smaller, lighter vehicles.
Further, General Motors stated that it encourage vehicle downsizing ‘‘or any Environmental Defense suggested that
does not intentionally reduce mass by other action that might have an adverse the improved baselines should reflect
replacing it with advanced materials, effect on safety.’’ SUVOA cited several this weight reduction strategy.
presuming that such action alone will reports in support of its assertion that Environmental Defense asserted that
result in improved protection for the downsizing harms safety.110. As weight reduction is among the most
occupants in a lighter vehicle: vehicles explained above, the agency has applied common and cost-effective options
with larger mass will provide better weight reduction only to those vehicles available to manufacturers for
protection to occupants involved in a for which we are confident that such improving vehicle fuel economy across
crash than a vehicle of the same design reduction will not negatively impact the light truck fleet. However,
with less mass, given equivalent safety. Environmental Defense referenced
crashes. The Competitive Enterprise Institute estimates presented in DeCicco (2005)
General Motors also questioned the stated that the agency’s own rulemaking that suggest that the cost per pound of
agency’s reliance on a 5,000 lbs. demonstrates the safety of weight, weight reduced through use of high-
minimum vehicle weight for specifically the FMVSS No. 216, Roof strength steel and advanced engineering
considering weight reduction, which crush, rulemaking. The Competitive techniques has been as low as, or lower
was based on the finding of the 2003 Enterprise Institute noted that in that than, 31 cents per pound reduced.
Kahane report that reducing curb weight rulemaking, NHTSA determined that Moreover, Environmental Defense
negatively impacts safety only at curb the proposed requirement of more stated, the exclusion of mass reduction
weights under 3,900 pounds. General protective roofs would ‘‘add both cost in NHTSA’s analysis bears no relation to
Motors stated that the agency’s and weight’’ to the vehicles. This what will actually happen in the
conclusion is inconsistent with the commenter also stated that NHTSA marketplace when standards are
sensitivity analysis performed by found that the stronger the roof crush implemented. Environmental Defense
William E. Wecker Associates, Inc. and standard, the more added weight it argued that absent safety regulations
submitted to the ANPRM docket. would entail. The Competitive prohibiting the use of mass reductions,
General Motors stated that the inflection Enterprise Institute also cited the IIHS, manufacturers are likely to choose this
point on the Wecker report’s graph for March 19, 2005 Status Report on fatality compliance alternative in vehicles of all
General Motors light trucks in both the risks in different vehicles, which the weights as a cost effective way to
periods of MYs 1991–1995 and MYs comply with CAFE. Environmental
1996–1999 is higher than 5,000 pounds. 110 SUVOA provided the following cites in Defense stated that NHTSA should
Additionally, General Motors stated support of its assertion: include mass reduction among its
that the NPRM did not acknowledge or • 2001, the National Academy of Sciences compliance alternatives for all light
rationally respond to the main point of affirmed that earlier downsizing of vehicles trucks.
following the imposition of CAFE regulations
the Wecker report, which was that Dr. resulted in an additional 1,300 to 2,600 deaths and
As stated above, the agency does not
Kahane’s ‘‘analysis alone does not an additional 20,000 serious injuries per year. dictate which fuel savings technologies
support the proposition that a crossover • A Harvard School of Public Health-Brookings must be applied to vehicles. Mass
weight at or near 5,085 pounds is a Institution study in the 1990s found that vehicle reduction is a compliance alternative for
downsizing due to federal fuel economy mandates all light trucks. However, one of the
robust, accurate description of the field increased occupant deaths by 14 to 27 percent.
performance of the [light truck] fleet[.]’’ • An in-depth analysis by USA Today in 1999,
considerations in setting fuel economy
We believe that General Motors is using NHTSA and automobile insurance industry standards is to set standards that will
confusing the 5,085 lbs. crossover data, found that since 1975, 7,700 additional deaths not lead to a reduction in the safety of
weight (where the safety effect of mass occurred for every mile per gallon gained. By 1999, the light truck fleet. The standards
vehicle downsizing had killed more than 46,000
reduction in a vehicle weighing exactly Americans. Factoring in the ensuing six years
established by the agency are those
5,085 lbs., is zero) with the breakeven through 2005, the total conservatively eclipses capable of being achieved by the
point described in the NPRM, which is 55,000 deaths. manufacturers without the need to
reduce safety. If the agency were to electrical system, and probably to any type of vehicle, the sets of
consider weight reduction as a increased battery maintenance costs. technologies available to passenger cars
compliance option for all light trucks, General Motors argued that the are not the same as the sets of
we are concerned that the resulting additional costs associated with technologies available to light trucks.
increased stringency would force unsafe integrating technologies available on Thus, the costs assigned to passenger
downweighting. light vehicles into heavier vehicles was cars are not being used for light trucks
one of the primary reasons for the because the technologies differ and each
VIII. Economic Assumptions
discrepancy between their internal costs set of technologies has a unique cost
A number of commenters raised estimates and NHTSA’s costs estimates estimate. Further, the cost estimates in
global issues related to the agency’s in the PRIA. General Motors further the NAS report include consideration of
proposed CAFE standards, questioning argued that both NAS and the estimates costs for light trucks (NAS, p. 40).
everything from how costs and benefits of Energy and Environmental Analysis Second, commenters argued that the
were calculated to whether the standard (a consulting firm), inadequately agency did not consider ‘‘stranded’’
is necessary or beneficial at all. Aside document sources for the costs they costs (General Motors, Sierra Research).
from raising issues with specific include. For example, the stringency of the
economic assumptions relied upon by The Alliance, Ford, Honda, Nissan Unreformed CAFE standard may force a
the agency, commenters also more and DaimlerChrysler reiterated that manufacturer to begin purchasing 6-
broadly questioned the rationale of the technologies are not simply bolted onto speed transmissions from an external
light truck CAFE program in general. the vehicle. Instead, extensive supplier immediately. Consequently, in-
The Competitive Enterprise Institute modifications are often required. These house manufacturing efforts for which
(CEI) argued that NHTSA’s proposed modifications involve a substantial considerable resources may have
CAFE standards are unnecessary and investment. For example, the cost already been spent would be abandoned
that they could potentially increase the estimates of a given piece of engine without any return on that investment.
nation’s dependence on foreign oil. CEI technology do not include the costs of Sierra Research also argued that NHTSA
argued that particularly since the 2005 redesigning the engine, testing has not properly accounted for costs
hurricane season dramatically drove up prototypes, mapping the engine, associated with the premature
fuel prices at the pump, vehicle sales of developing new vehicle calibrations, retirement of existing technology before
large SUVs and other relatively and integrating the technology with the its costs have been fully amortized.
inefficient vehicles have plummeted. vehicle. For this reason, Sierra Research Thus, commenters argued that NHTSA
According to CEI, market forces have and at least one vehicle manufacturer incorrectly assumed costs of
acted to improve the overall fuel disagreed with the NAS cost multiplier technologies introduced during normal
economy of new vehicles without the of 1.4 and argued that it should be product cycle turnover even when the
need for regulatory intervention. substantially greater.
technologies were actually attributed to
(General Motors made a similar For this rulemaking, the agency has
vehicles mid-cycle.
argument, as to how fuel economy decided to use the cost and effectiveness
standards are less efficient than market numbers that appear in the NAS report. Stranded costs are essentially one
forces in terms of achieving The NAS committee reviewed many time write-offs that would be difficult to
economically optimal levels of fuel sources of information including identify and even more difficult to
economy.) presentations at public meetings, and quantify, especially in light of their
Although the effect of market forces available studies and reports. It also met offsetting tax savings implications.
on fuel economy levels is a matter of with automotive suppliers and industry Write-offs of stranded costs are likely to
debate, NHTSA does not have the consultants including Sierra Research. occur occasionally during the routine
option of leaving fuel economy to the The committee then used its expertise course of business as manufacturers
markets. The agency is required by and engineering judgment aided by the periodically find it necessary to curtail
Congress to set light truck fuel economy information described above to derive production plans in response to
standards for every model year at the its own estimates of costs and unplanned regulatory or market
maximum feasible level considering the effectiveness. After the prepublication impacts. These write-offs will thus
need of the nation to conserve fuel, copy was released in July 2001, the influence the long run cost of doing
technological feasibility and economic committee reexamined its analysis. business. Although manufacturers
practicability. Representatives from the industry and typically attempt to price vehicles to
other stakeholders were invited to maximize their profits, the impact of
A. Costs of Technology critique the findings. Several minor stranded costs on vehicle prices will be
The Alliance, Sierra Research and errors were discovered and corrected constrained by market conditions, and
most vehicle manufacturers argued that before publication of the final report. measuring their impact would be
NHTSA has underestimated the costs of The NAS cost and effectiveness problematic.
certain technologies. Specific comments numbers are presented as ranges that As explained above in the technology
are set forth below. reflect estimates for passenger cars, discussion, the agency has constrained
First, General Motors stated that the pickup trucks, and SUVs/minivans. its fuel economy model to give
costs relied upon by the agency were However, under the NAS report, the deference to manufacturers’ production
derived from technologies designed for availability of these technologies differs plans. In determining manufacturer
application to passenger cars, but which for various segments of the vehicle fleet. capabilities, significant design changes
are being applied to light-duty trucks The NAS report breaks down the are initiated in conjunction with
without consideration of the necessary availability of technology for two classes redesigns and vehicle introductions
adjustments for integrating such of pickups (small and large) and four stipulated in production plans provided
technologies while maintaining the classes of SUVs/minivans (small SUV, to NHTSA by vehicle manufacturers.
truck’s utility and function. For midsize SUV, large SUV, and minivan). The potential for stranded costs is thus
example, for heavier light trucks, Each class has a unique set of minimized. Overall, NHTSA does not
installation of electric power steering technologies available to it. While some believe that the revised phase-in
would also require a switch to a 42-volt individual technologies can be applied schedule of technologies assumed in its
model would force manufacturers to taxes). The Commission recommended model years to reflect shifts in sales
incur significant stranded costs. using this forecast, which it argued is patterns toward more fuel-efficient
more consistent with current fuel prices. models resulting from current high fuel
B. Fuel Prices
According to the commenter, recent EIA prices and buyer concerns about
Many commenters stated that the fuel forecasts (at least since 1996) have continued fuel price volatility. It also
price estimates used in the agency’s significantly underestimated actual urged NHTSA to include a separate
analysis and modeling were too low and future fuel prices. estimate of the economic value of
should be revised to reflect the best The Alliance stated that while higher reduced fuel price volatility expected to
current projections of market prices gasoline price forecasts may appear to result from lower fuel use.
(SUVOA, NADA, Mercatus Center, justify further increases in fuel economy Several commenters also noted that
Union of Concerned Scientists, and levels, ‘‘NHTSA must proceed carefully the State gasoline taxes in some states
California State Energy Commission). and consider all of the ramifications of were changing as of January 1, 2006 and
Environmental organizations, citing the moving to higher levels than those that the agency should update their
record prices for fuel at the pump, went proposed.’’ Along the same lines, gasoline tax estimates accordingly.
further, arguing that more stringent General Motors commented that The agency will continue to rely on
standards are justified (Environmental increased fuel prices could lead to the most recent fuel price projections
Defense, NRDC, ACEEE). significantly higher CAFE standards from the EIA from the Department of
In contrast, vehicle manufacturers under NHTSA’s model; according to Energy. We consider the EIA projections
requested that the agency not rely solely General Motors, a recent study by to be the most reliable long-range
on higher fuel price forecasts to Resources for the Future (RFF) found projections. No one can predict the
automatically increase the stringency of that increasing the price per barrel of oil impact of hurricanes and other external
the CAFE standards (the Alliance, by $20 would lead to a CAFE target as factors that could affect the price of
General Motors, Mitsubishi). Such much as 4 mpg higher. gasoline at particular points in time or
commenters urged the agency to not In its comments, General Motors also
allow CAFE standards to rise in the short term. However, what we
compared the American light truck fleet
precipitously based upon a spike in oil need are long range projections for 2008
with the European light truck fleet,
commodity prices, thereby disregarding to 2011, when this CAFE standard takes
stating that Europeans pay
technology costs and other limitations. effect. In addition, the EIA’s AEO2006
approximately $5 per gallon for
Specific comments related to fuel prices Early Release is the most recent
gasoline, yet their vehicles do not use
follow below. projection available, and considers the
technologies beyond those present in
Environmental Defense argued that most recent events.
the U.S. fleet. An appendix to General
NHTSA’s fuel prices estimates in its Motors’ comments further analyzed the Further, while commenters
CAFE proposal, based upon AEO2005, differences in fuel economy between recommended that the agency rely on
are too low. While Environmental American and European vehicles, higher fuel prices, no commenter
Defense acknowledged NHTSA’s stated suggesting that the fuel economy of provided an alternative forecast that the
intention to revise its fuel prices vehicles on both side of the Atlantic is agency believes to be more reliable than
estimates in light of AEO2006 roughly comparable, once other relevant those published by EIA as part of its
projections, it argued that even this factors are taken into account (e.g., Annual Energy Outlook (AEO). NRDC
forecast may be too low, particularly in vehicle weight, transmission type, did recommend that the agency rely on
light of private oil prices estimates of engine power, engine type, and fuel price forecasts consistent with the
$42 to $100 per barrel over the analysis premium gas usage). General Motors world oil price forecasts reported in
period. Accordingly, Environmental asked the agency to explain this EIA’s AEO 2005 ‘‘High B Oil Price
Defense urged NHTSA to utilize the best apparent discrepancy between real Scenario’’ or the International Energy
available fuel price forecasts in revising world experience in Europe and Agency’s World Energy Outlook 2005.
the level of the standards in the final NHTSA’s analysis. The ‘‘Reference Case Scenario’’
rule. General Motors also stated that presented in AEO 2006, which is relied
NRDC made a similar argument NHTSA’s analysis did use the proper upon by the agency in the final rule, is
regarding the proposal’s fuel prices value for the tax on gasoline, which the on average almost 14 cents per gallon
estimates, which it perceives to be too American Petroleum Institute (API) higher than the scenario suggested by
low. To remedy this problem, NRDC currently reports to be $0.46 per gallon. NRDC.
recommended that the agency use fuel Mitsubishi stated that fuel prices are The latest fuel price projections are
price forecasts consistent with the world currently in a state of flux and taken from the EIA’s Annual Energy
oil price forecasts reported in EIA’s recommended using AEO2006 in the Outlook 2006 (AEO2006 Early Release)
‘‘High B Oil Price Scenario’’ or the final rule. However, Mitsubishi reference case, which is the most recent
International Energy Agency’s World cautioned that raising the fuel economy projection available, translated into
Energy Outlook 2005 ‘‘Deferred target levels, based upon higher fuel 2003 economics to match other cost
Investment Scenario,’’ forecasts which prices, might not be economically estimates in the analysis, and are
NRDC suggested are more consistent practicable and could force extended until 2047 to match the 36
with recent world oil prices and current manufacturers to completely reanalyze year lifetime for light trucks produced
petroleum futures market prices. their business strategies. for MY 2011. The estimated gasoline
As another suggestion for revising the The Mercatus Center commented that price per gallon in 2003 economics
NPRM’s fuel prices estimates, the as part of the final rule, the agency varies over the time period, starting at
California State Energy Commission should increase its fuel price forecasts $2.16 in 2008, reducing to $1.96 in
stated that future fuel prices are likely and take steps to adequately address 2014, and then increasing to $2.39 by
to be at least as high as the ‘‘Base Case’’ likely future volatility on fuel prices. 2047.
scenario adopted in the 2005 Integrated Specifically, the Mercatus Center The agency will consider additional
Energy Policy Report for California, recommended adjusting the baseline fuel price projections (higher and lower
which forecasts retail fuel prices sale mix and fuel economy levels from than the reference case) from EIA in its
(including Federal and California State manufacturer product plans for future uncertainty analysis; however, there is
no way to adequately predict or analyze informed and extremely rational, they will pay the full increased cost
the volatility of fuel prices. arguing that car buyers are less when the vehicle is purchased.
Since gasoline taxes are a transfer concerned with fuel economy Moreover, owners will realize these
payment and not a societal cost, the improvements when gasoline cost $1.50 savings throughout the entire on-road
value of gasoline taxes is subtracted per gallon, as compared to marginal life of each vehicle. While initial
from the estimated gasoline price to improvements when gasoline costs purchasers will only experience fuel
estimate the value of gasoline to society. $2.50 per gallon. savings for the limited time they
The agency has updated its estimates of According to the NADA, recent new typically own a new vehicle (4.5 years),
gasoline taxes, using the January 1, light truck sales data suggest that, subsequent (used vehicle) purchasers
2006, update in State gasoline taxes. In despite higher fuel prices, consumers will continue to experience savings
2003 economics, Federal taxes are continue to rank fuel economy below throughout the vehicle’s useful life. The
$0.176 and State and local taxes average other purchase considerations, such as agency does restrict its analysis of sales
$0.262 for a total of $0.438. capacity, convenience, utility, impacts to the initial 4.5 year period
As will be discussed in this performance, and durability. Thus, under the assumption that initial
document, the agency has carefully NADA suggested that NHTSA’s fuel buyer’s purchase behavior will be
considered the broad ramifications of economy standards should not be influenced only by their perception of
the final rule and alternative stringency permitted to result in undue constraints benefits they will receive while owning
levels, and has not increased the fuel on light truck product availability or in the vehicle, as opposed to benefits
economy levels solely on the basis of a significant price increases, which could flowing to subsequent owners. However,
projection of higher gasoline prices. in turn result in reduced sales, profits, the agency believes that the lifetime
The agency does not see the value of and workforces, and the retention of value of impacts from CAFE
trying to explain the difference in fuel older vehicles with poorer fuel improvements should be fully reflected
prices and technology between Europe efficiency. in its analysis of societal impacts.
and the United States, as requested by The California State Energy
General Motors. As General Motors Commission commented that stringency D. Opportunity Costs
points out in its comments, there are a levels of fuel economy targets should be The Alliance commented that, in
variety of factors which differentiate the established by considering the value of proposing its fuel economy standards,
U.S. and Europe. These jurisdictions fuel savings from vehicle owners’ NHTSA did not consider the
have different legal/regulatory perspective over the first few years of opportunity costs to consumers who
frameworks, and their driving publics each model year’s lifetime, rather than may be forced to forego incremental
have different expectations, all of which from a society-wide perspective. For improvements in vehicle performance,
vehicle manufacturers endeavor to example, the California State Energy safety, capacity, comfort, and aesthetics
accommodate. Thus, the fuel economy Commission argued that consumers (citing a 2003 study by the
situations in Europe and the U.S. are not appear to attach some value to owning Congressional Budget Office (CBO)
directly comparable and any such effort hybrid vehicles beyond the fuel savings titled, ‘‘The Economic Costs of Fuel
would entail an extensive analysis, they produce, sometimes paying large Economy Standards Versus a Gasoline
which is likely to generate inconclusive price premiums (up to $3,500 compared Tax,’’ Chapter 2, pages 1–5). The
results and which is well beyond the to equivalent gasoline-powered models) Alliance also cited a recent study which
scope of this rulemaking. and waiting extended periods of time found that a CAFE increase of 3 mpg
for such vehicles to become available. results in a hidden tax of $0.78 per
C. Consumer Valuation of Fuel
The commenter stated that the size of gallon of fuel conserved.111 General
Economy and Payback Period
the hybrid vehicle market is expected to
Commenters differed in terms of their Motors added that to the extent the
grow significantly by MY 2010.
recommended approach for properly CAFE standards force trade-offs between
According to the California State Energy
assessing consumer valuation of fuel fuel economy and other vehicle
Commission, such consumer valuation
economy and the payback period for attributes that consumers value,
considerations should be taken into
fuel-saving technologies. As discussed consumer welfare will be reduced and
account as part of the CAFE standards.
below, some commenters favored Conversely, Environmental Defense ‘‘lost opportunity costs’’ will be
focusing on the preferences of argued that technology application imposed on vehicle manufacturers.
individual consumers using a short-term should be based on societal costs, not Further, General Motors argued that
perspective, while others recommended private costs, and that the agency needs NHTSA’s engineering and economic
focusing on the societal benefits to all to consider benefits over the lifetime of analyses are incomplete because they do
consumers over the long term. the vehicle, as opposed to the consumer not account for the potential economic
General Motors requested that the time horizon of 4.5 years. harm to automobile companies (which
agency compare consumer preference The CAFE program’s most immediate are already facing difficult financial
for fuel economy versus vehicle utility, impacts are on individual consumers, challenges) and their employees, and
in order to determine consumer but regulating fuel economy also has a the analyses do not include producer
valuation of improved fuel economy. broader societal effect that must be and consumer welfare losses. General
General Motors also asked NHTSA to considered. The agency believes that Motors stated the Congressional Budget
consider how many vehicle sales would CAFE standards should reflect the true Office estimated a consumer welfare
be deferred due to CAFE-related price economic value of resources that are loss of $230 per vehicle.
increases. According to General Motors, saved when less fuel is produced and In response, the agency notes that the
history has shown that consumers value consumed, higher vehicle prices, and, to CBO report cited by General Motors and
fuel economy increases of up to 1.2 the extent possible, any externalities the Alliance is based on estimates of
consumer’s preferences over a period
percent per year, so any higher standard that impact the broader society.
forces consumers to accept a lower level Consumer’s perceptions of these values 111 The Alliance cited this study as: Andrew N.
of performance utility than they would may differ from their actual impacts, but Kleit, ‘‘Impacts of Long-Range Increases in Fuel
otherwise choose. However, General they will nonetheless experience the Economy (CAFE) Standard,’’ Economic Inquiry
Motors did state that consumers are well full value of actual fuel savings just as (April 2004), pages 279–294.
from roughly 1980 through 2001. The consumers’ selection of vehicles should using vehicles whose fuel economy is
CBO report states that ‘‘Consumers’ still reflect their judgments of the improved. According to the Alliance, an
preferences over the past 15 or 20 years relative value of fuel economy versus independent analysis by the Small and
have led automakers to increase horsepower at the margin. Van Dender data found that despite
vehicles’ size and horsepower, while those authors’ claim that the rebound
E. Rebound Effect
holding gasoline mileage more or less effect had declined during the period
constant.’’ The CBO report also The ‘‘rebound effect’’ refers to the they studied, the rebound effect
acknowledges that if consumers’ tastes tendency for vehicle owners to increase remained at 24.6 percent at the end of
change significantly, the report’s the number of miles they drive a vehicle this period.113 The Alliance opined that
conclusions would be affected. The in response to an increase in its fuel the rebound effect is probably on the
period examined by CBO corresponds to economy, such as would result from order of 35 percent, although it did not
the period when automakers created more stringent CAFE standards. The supply any data to substantiate this
and successfully marketed SUVs as an rebound effect occurs because an estimate.
alternative to passenger cars for routine increase in fuel economy reduces According to General Motors,
driving. For most of this period, vehicle owners’ fuel cost per mile previous studies of changes in
gasoline prices were stable and low by driven, which is the typically largest household motor vehicle and appliance
historical standards. Near the end of the component of the cost of operating a use in response to improvements in
period, prices began to rise, but since vehicle. Because even with improved their energy efficiency (which is
that time they have reached levels that fuel economy this additional driving measured by fuel economy in the case
are more than double the typical price uses some fuel, the rebound effect of vehicles) have shown that the
during the period. In response, somewhat reduces the fuel savings (and rebound effect lowers energy savings by
consumers have shown a dramatic shift related benefits) that result when fuel 20–50 percent. General Motors agreed
in their purchase preferences. Sales of economy increases. The rebound effect with the agency that the increased
small passenger cars and fuel-efficient is usually expressed as the percentage driving resulting from the rebound
hybrids have increased, while sales of by which vehicle use increases when effect also imposes various external
large SUVs have dropped. the cost of driving decreases due to an costs, including increased collisions and
Circumstances have, thus, already increase in fuel economy and/or a traffic congestion. General Motors stated
overtaken the assumptions regarding decrease in the price of fuel. that it commissioned four studies of the
Commenters expressed a variety of rebound effect, each of which
consumer preferences used in the CBO
views regarding the agency’s estimate of concluded that the rebound effect
analysis. Moreover, the CBO analysis is
the rebound effect that would be would be approximately 25 percent.
based on a CAFE regulation that
anticipated in response to the new However, it did not provide copies of
achieves an assumed 10 percent
CAFE standards. While some reviewers the referenced studies. As General
reduction in gasoline consumption, a
suggested that the estimate of the Motors did not provide these studies,
greater reduction than that which would
rebound effect the agency used is too the agency was unable to evaluate them.
be accomplished by this regulation.
low (Alliance, General Motors), others Nevertheless, General Motors stated that
Thus, the agency does not believe that
suggested that it is too high 20 percent is adequate for calculations
the $230 loss in consumer welfare
(Environmental Defense, NRDC, ACEEE, related to rebound effect. No other
estimated in the CBO report is an
Union of Concerned Scientists, vehicle manufacturers commented on
appropriate measure of the impact of
California State Energy Commission). this issue.
CAFE reform.
Specific comments related to the The National Automobile Dealers’
NHTSA acknowledges that there are rebound effect are set forth below.
potential shifts in consumer welfare Association commented that fuel
In general, manufacturers and their savings should clearly be adjusted to
which are not reflected in its model associations deemed the 20-percent
(e.g., if a manufacturer reduced reflect the rebound effect, but did not
rebound rate relied upon by the agency recommend a specific value of the
horsepower as a strategy to improve fuel to be conservative. For example, the
economy, some consumers would value rebound effect.
Alliance argued that a 20-percent In contrast to the above commenters,
that horsepower loss more than the fuel rebound effect is overly conservative,
economy gain). However, it believes that Environmental Defense argued that the
based upon recent studies. Specifically, agency has overestimated the rebound
measuring these impacts is problematic, the Alliance stated that a recent study
especially in light of the recent dramatic effect because it relies upon earlier
of variation in U.S. light-duty vehicle studies in the literature that tended to
shift in gasoline prices and geopolitical use among different states over the
events surrounding the world oil miss significant effects of variables such
period from 1966 to 2001 by Small and as income growth, and that did not have
supply. Moreover, the agency is using Van Dender estimated a long-term
its model, not as an absolute standard, sufficiently large datasets to capture
rebound effect of 24 percent over the long-term changes in vehicle use. Citing
but rather as an initial measure to entire period covered by the study.112
consider in setting standards. The the same 2004 study by Small and Van
This estimate implies that a 10-percent Dender referred to in the Alliance
agency is cognizant of the financial increase in fuel economy, which
difficulty facing automobile comments,114 which combined data for
translates into a 10-percent decrease in each of the 50 states over a 36-year
manufacturers and is striving to fuel cost-per-mile driven, would
minimize costs by scheduling period, Environmental Defense noted
ultimately stimulate a 2.4-percent the authors’ finding that the rebound
improvements in such a way that they increase in average annual miles driven
would coincide with normal design effect had declined to 12.1 percent
cycles. Further, the agency believes that when measured over the period from
112 Kenneth A. Small and Kurt Van Dender, ‘‘The
1997–2001, primarily as a consequence
incrementally improving fuel economy Effect of Improved Fuel Economy on Vehicle Miles
across the vehicle fleet will not deprive Traveled: Estimating the Rebound Effect Using U.S.
113 Robert Crawford, ‘‘Review and Assessment of
State Data, 1996–2001, Paper EPE–014, University
consumers of their choice of vehicles. A of California Energy Institute, 2005; item #1702 in VMT Rebound Effect in California,’’ RW Crawford
wide variety of vehicle types will NHTSA Docket 22223. An earlier version of the Energy Systems, Sept. 2004.
continue to be available, and study is item 15 in the same docket. 114 See footnote 95.
of the higher income levels that relied exclusively upon the recent study the reduction in the value to society of
prevailed during those years than over by Small and Van Dender as evidence these benefits when they are deferred
the entire period covered by the study. supporting a smaller rebound effect. until some future date rather than
Environmental Defense argued further While the agency regards the Small and received immediately. The discount rate
that if income growth continues during Van Dender study as an important expresses the percent decline in the
the period analyzed under the CAFE contribution to the extensive literature value of these benefits—as viewed from
proposal, Small and Van Dender’s on the magnitude of the rebound effect, today’s perspective—for each year they
analysis indicates that the rebound it does not regard the very low values are deferred into the future. The agency
effect would continue to decline. The for the rebound effect reported in that used a discount rate of 7 percent per
analyses Environmental Defense study as persuasive for several reasons. year to discount the value of future fuel
presented in its comments used an Unlike the studies relied upon by the savings and other benefits when it
estimate of 5 percent for rebound effect, agency in developing its estimate of the analyzed the CAFE standards proposed
and it also urged NHTSA to adopt a rebound effect, the Small and Van in the NPRM.
similarly low estimate of the rebound Dender analysis remains an The Alliance, General Motors, the
effect, which Environmental Defense unpublished working paper that has not Mercatus Center, and Criterion
argued is in keeping with the most been subjected to formal peer review, so Economics all argued that in assessing
recent research in this area. the agency does not yet consider the benefits and costs associated with the
Other commenters also urged NHTSA estimates it provides to have the same CAFE standards, the agency should rely
to adopt a lower rate for the rebound credibility as the published and widely- on a discount rate greater than 7
effect, and they generally referred to the cited estimates it relied upon.116 The percent. The Alliance stated that the
study by Small and Van Dender to agency’s interpretation of previously Congressional Budget Office discounts
support their positions. For example, published estimates is that they support consumers’ fuel savings at a rate of 12
NRDC suggested using a 6-percent rate a range of 10–30 percent for the rebound percent per year and that other recent
for the rebound effect over the lifetime effect in vehicle use. The agency elected studies of CAFE standards have also
of MY 2008–2011 vehicles, which it to use the midpoint of that range in its used that rate. According to the
argued would correctly recognize the analysis for the NPRM. If a peer- Alliance, that rate is slightly higher than
effect of anticipated future income reviewed version of the Small and Van the average interest rate that consumers
growth. ACEEE urged the agency to use Dender study is subsequently reported paying to finance used car
a 10-percent rate, a change which it published, the agency will consider it in purchases in the most recent Consumer
suggested would increase the monetized developing its own estimate of the Expenditure Survey.117 The Alliance
social benefits of Reformed CAFÉ for rebound effect for use in subsequent argued further that consumers can be
MY 2011 vehicles by about $1.3 billion, CAFE rulemakings. expected to discount the value of future
or approximately 30 percent. After reviewing the various comments fuel savings at a rate at least as high as
Again, relying on results from the on the NPRM, the agency has elected to their cost for financing the purchase of
Small and Van Dender study, the Union continue using a value of 20 percent for a vehicle whose higher price was
of Concerned Scientists recommended the rebound effect in its analysis of justified by its higher fuel economy.
that NHTSA reduce the rebound effect potential fuel savings from stricter The Alliance based its assertion for
rate to not more than 10 percent. The CAFE standards for MY 2008–2011 light use of 12 percent because, as it stated,
commenter stated that NHTSA offered trucks. The agency will continue to this value was used in the NAS report
no justification for choosing the upper monitor newly published research on and approximates the used car loan rate
end of its discussed range (10–20 the rebound effect (as well as on other published in the Consumer Expenditure
percent), arguing that results for the last critical parameters affecting fuel savings Survey. However, we note that the NAS
years of the period analyzed in the from CAFE regulation), and it will
report did not use a single discount rate.
study supported a long-run rebound revise the estimates of the rebound
Instead, the NAS used both 12 percent
effect of 6.8 percent or lower. effect it employs in future analyses of
and 0 percent discount rates due to the
Accordingly, the Union of Concerned fuel savings if it concludes that new
assumption that the proper discount
Scientists stated that NHTSA should evidence points persuasively toward a
rate was ‘‘subjective.’’ Therefore, NAS
adopt 10 percent as a reasonable and different value.
did not advocate a discount rate. As
conservative estimate of the rebound
F. Discount Rate explained below, the vehicle loan rate
effect, and asserted that doing so would
Discounting future fuel savings and faced by consumers is an appropriate
increase the ‘‘social optimum’’ fuel
other benefits is intended to measure measure of the discount rate.
economy targets for 2011 by 1.4–1.9 General Motors suggested a discount
mpg. rate of 9 percent, based on its assertions
116 These include, among others, David L. Greene,
The California State Energy
‘‘Vehicle Use and Fuel Economy: How Big is the that new vehicles are financed at 8
Commission called for a rebound effect Rebound Effect?’’ The Energy Journal, 13:1 (1992), percent and used vehicles at 10 percent.
of 12 percent, which it believes is 117–143; David L. Greene, James R. Kahn, and
Essentially, General Motors is
reflective of the long-term rebound Robert C. Gibson, ‘‘Fuel Economy Rebound Effect
for Household Vehicles,’’ The Energy Journal, 20:3 recommending that the agency rely on
effect of 12.1 percent for California
(1999), 1–21; Jonathan Haughton and Soumodip the interest for a car loan as the discount
estimated by Small and Van Dender.115 Sarkar, ‘‘Gasoline Tax as a Corrective Tax: Estimates
NHTSA notes that all commenters rate. General Motors also argued that
for the United States,’’ The Energy Journal, 17:2, pp.
who recommended a lower value for the 103–126; S.L. Puller and L.A. Greening,
fuel economy is not the only thing
rebound effect than the 20 percent ‘‘Household Adjustment to Gasoline Price Changes:
An Analysis Using Nine Years of U.S. Survey Data,’’ 117 The Consumer Expenditure Survey (CE)
estimate used in the NPRM analysis Energy Economics, 21:1, pp. 37–52; Jones, Clifton program consists of two surveys collected for the
T., ‘‘Another Look at U.S. Passenger Vehicle Use Bureau of Labor Statistics by the Census Bureau—
115 Kenneth A. Small and Kurt Van Dender, ‘‘The and the ‘Rebound’ Effect from Improved Fuel the quarterly Interview survey and the Diary
Effect of Improved Fuel Economy on Vehicle Miles Efficiency, The Energy Journal, 14:4 (1993), 99–110; survey—that provide information on the buying
Traveled: Estimating the Rebound Effect Using U.S. and Goldberg, Pinelopi Koujianou, ‘‘The Effects of habits of American consumers, including data on
State Data, 1996–2001, Paper EPE–014, University the Corporate Average Fuel Efficiency Standards in their expenditures, income, and consumer unit
of California Energy Institute, 2005, Docket 22223– the U.S.,’’ The Journal of Industrial Economics, 46:1 (families and single consumers) characteristics.
1702, Table 5, p. 19. (1998), 1–33. http://www.bls.gov/cex/home.htm.
which consumers value and that the instead a rate of 3 percent. agency believes a car loan rate is an
agency should take efforts to separate Environmental Defense and NRDC appropriate discount rate because it
private benefits from public stated that OMB Circular A–4, reflects the opportunity cost faced by
externalities. While we are uncertain as Regulatory analysis (2003), recommends consumers when buying vehicles with
to what General Motors is a discount rate of 3 percent when the greater fuel economy and a higher
recommending, we assume that its regulation directly affects private purchase price. The agency assumed
comment suggests that a higher discount consumption. These commenters that a majority of both new and used
rate, based on car loan rates, is asserted that the proposed CAFE vehicles is financed and since the vast
appropriate for discounting private regulation primarily and directly affects majority of the benefits of higher fuel
benefits (those to buyers), while a lower private consumption (i.e., by affecting economy standards accrue to vehicle
rate is appropriate for social benefits the sales price of new vehicles and purchasers in the form of fuel savings,
(such as reductions in externalities). reducing the per-mile cost of driving). the appropriate discount rate is the car
Criterion Economics also recommended NRDC also argued that OMB Circular A– loan interest rate paid by consumers.120
use of a 9 percent discount rate in its 4 further indicates that lower rates may According to the Federal Reserve, the
comments, which it suggested is a be appropriate for rules that produce interest rate on new car loans made
conservative rate between the average benefits over multiple generations. through commercial banks has closely
real rates for new and used cars that Thus, these commenters recommended tracked the rate on 10-year treasury
adequately accounts for volatility in that a discount rate reflecting the social notes, but exceeded it by about 3
future energy prices. rate of time preference (i.e., a 3 percent percent.121 The official Administration
As discussed further below, we agree real rate) should be used. forecast is that real interest rates on 10-
in that loan rates for new and used cars In response to Environmental year treasury notes will average about 3
should be considered when determining Defense, the Union of Concerned percent through 2016, implying that 6
the appropriate discount rate. However, Scientists, and NRDC, the guidelines in percent is a reasonable forecast for the
loan estimates made by both General OMB circular A–4, New Guidelines for real interest rate on new car loans.122
Motors and Criterion Economics are the Conduct of Regulatory Analysis, During the last five years, the interest
considerably higher than data provided state that the agency should analyze the rate on used car loans made through
by the Federal Reserve Board, which costs and benefits of a regulation at 3 automobile financing companies has
estimates new loan rates (as of October percent and 7 percent discount rates, as closely tracked the rate on new car loans
2005) of 6 percent for new cars and 9 suggested by guidance issued by the made through commercial banks, but
percent for used cars.118 federal OMB.119 The 3 percent and 7 exceeded it by about 3 percent.123
The Mercatus Center stated that the 7 percent rates reflect two potential Consideration is given to the loan rate
percent discount rate selected by the evaluations of impacts: Foregone private of used cars because some of the fuel
agency is too low, and as a result, it consumption and foregone capital savings resulting from improved fuel
results in the setting of standards that investment, respectively. In accordance economy accrue to used car buyers.
are inequitable, particularly to low- with these guidelines, the agency Given the 6 percent estimate for new car
income households. According to analyzes the impacts of costs and loans, a reasonable forecast for used car
published academic research referenced benefits using both discount rates. loans is 9 percent. Since the benefits of
by the Mercatus Center, most However, this guidance does not state fuel economy accrue to both new and
households have discount rates higher what discount rate should be used to used car owners, a discount rate
than 7 percent, with low-income determine the standards. between 6 percent and 9 percent is
households having particularly high There are several reasons for the appropriate. Assuming that new car
discount rates. Therefore, the Mercatus agency’s choice of 7 percent as the buyers discount fuel savings at 6
Center urged NHTSA to rely on appropriate discount rate to determine percent for 5 years (the average duration
discount rates of 12 percent for all the standards. First, OMB Circular A–4 of a new car loan) 124 and that used car
households and as high as 20 percent indicates that this rate reflects the buyers discount fuel savings at 9
for low-income households in economy-wide opportunity cost of percent for 5 years (the average duration
evaluating proposed standards. capital. The agency believes that a of a used car loan),125 the single
However, the studies cited by Mercatus substantial portion of the cost of this constant discount rate that yields
Center to justify these discount rates regulation may come at the expense of equivalent present value fuel savings is
examine the implied discount rate for other investments the auto very close to 7 percent.
future energy savings that result when manufacturers might otherwise make. Further, reliance on the consumer
households purchase more energy- Several large manufacturers are borrowing rate is consistent with that of
efficient appliances such as furnaces resource-constrained with respect to the Department of Energy (DOE)
and air conditioners. These studies were their engineering and product- program for energy efficient appliances.
generally conducted in the late 1970’s development capabilities. As a result, For more than a decade, the Department
and early 1980’s and may not be other uses of these resources will be of Energy has used consumer borrowing
representative of the discount rates for foregone while they are required to be interest rates or ‘‘finance cost’’ to
motor vehicles of the economic applied to technologies that improve discount the value of future energy
conditions 20–25 years later. fuel economy.
Environmental Defense, NRDC, and Second, 7 percent is also an 120 Empirical evidence also demonstrates that
the Union of Concerned Scientists used car purchasers do pay for greater fuel economy
appropriate rate to the extent that the (Kahn, Quarterly Journal of Economics, 1986).
provided comments endorsing use of a costs of the regulation come at the 121 See, http://www.federalreserve.gov/releases/
lower discount rate. These organizations expense of consumption as opposed to g20/hist/fc_hist_tc.txt.
expressed their belief that a 7-percent investment. As explained below, the
122 See, http://www.federalreserve.gov/releases/
discount rate is too high, proposing h15/data/Monthly/H15_TCMNOM_Y10.txt.

119 White House Office of Management and 123 See, http://www.federalreserve.gov/releases/
118 FederalReserve Board, Statistical Release Budget, Circular A–4, September 17, 2003, p. 34, g20/hist/fc_hist_tc.txt.
124 Id.
G.19: Consumer Credit, http://www.federalreserve. http://www.whitehouse.gov/omb/inforeg/
gov/releases/g19/. circular_a4.pdf. 125 Id.
savings in establishing minimum energy reflect this relationship. However, economic and environmental
efficiency standards for household benefits resulting from lower emissions externalities from fuel production and
appliances. This includes (1) the of the pollutants PM and SOX (which use to be $0.26 per gallon, and if this
financial cost of any debt incurred to occur during petroleum refining) also estimate is correct, consumers are
purchase appliances, principally depend partly on the fraction of fuel already paying fuel taxes (which it
interest charges on debt, or (2) the savings that is reflected in reduced estimated at $0.46 per gallon) that
opportunity cost of any equity used to domestic fuel refining (rather than exceed the cost of these externalities.
purchase appliances, principally reduced imports of refined gasoline), General Motors also asked the agency to
interest earnings on household equity. and in turn on the fractions of domestic address the research finding by Dr. Kleit
For example, for appliances purchased refining that utilize domestically- purporting to show negative net benefits
in conjunction with a new home, DOE produced and imported crude (i.e., it will have net costs) for the MY
uses real mortgage interest rates to petroleum.128 Similarly, the external 2005–2007 CAFE standards.129
discount future energy savings.126 This costs of congestion, accidents, and noise In addition, General Motors argued
approach is analogous to NHTSA’s use resulting from added vehicle use that higher steady-state oil prices reduce
of real auto loan rates to discount future depend on the magnitude of the any demand costs or monopsony power,
gasoline savings in establishing CAFE rebound effect as well as on lifetime fuel and energy demand from China and
standards. savings. Thus these three categories of other emerging economies will only
The Union of Concerned Scientists benefits would be expected to bear strengthen this trend. The company
also commented that NHTSA’s different relationships to total fuel disagreed with the monopsony estimate
methodology for calculating the savings, as confirmed by the Union of of $0.061 per gallon relied upon by the
discounted present value of certain Concerned Scientists’ comments. agency. General Motors further argued
external costs and benefits appears to be that the agency relied upon the
inconsistent. Specifically, the G. Import Externalities (Monopsony, Oil
monopsony value reported in a 1997
commenter stated that the benefits of Disruption Effects, Costs of Maintaining
study by Lieby et al., but stated that this
petroleum market effects U.S. Presence and Strategic Petroleum
study assumes no cartel of producers
(monopsony 127 and disruption cost Reserve)
such as OPEC. According to General
reductions) and reduced emissions of General Motors commented Motors, in light of the potential for
particulate matter (PM) and sulphur extensively on the issue of externalities OPEC to respond to U.S. efforts to
oxides (SOX) and the external costs of associated with the agency’s CAFE decrease demand, the monopsony value
increased congestion, noise, and proposal. As a general observation, of $0.061 is too high. General Motors
crashes, appear to be discounted General Motors stated that the CAFE stated that like Resources for the Future,
differently from the fuel cost savings, proposal would result in a net it believes that using U.S. monopsony
driving time, and refueling time savings. externality cost on consumer welfare, power has marginal benefits at best, and
The Union of Concerned Scientists because the externality costs (e.g., that at worst, attempting to use it could
urged NHTSA to utilize the same congestion, noise, highway fatalities/ actually provoke retaliatory pricing or
methodology for calculating the injuries) exceed the externality benefits supply responses by OPEC that would
discounted present value of all such (e.g., reduction in oil import harm the U.S. economy.
CAFE-related elements. dependence, reduction in pollution). General Motors also challenged the oil
In response to the Union of General Motors stated that the agency’s disruption cost of $0.045 per gallon
Concerned Scientists comment that the proposal did not identify any specific included in the proposal. According to
agency appears to have discounted market failures that would justify its General Motors, the agency has not
different categories of benefits fuel economy regulation. The addressed Congressional Research
inconsistently, the agency notes that the commenter asked the agency to present Service and the Bohi and Toman studies
three different categories identified in empirical estimates of reduced which reported that the only reason for
its comment each bear a different economic and environmental oil disruption is an increase in price
relationship to total fuel savings. As the externalities resulting from the (i.e., an oil price ‘‘shock’’), so because
commenter notes, fuel cost savings, the proposed CAFE standards, along with the CAFE standards do not affect the
value of increased driving range supporting analyses demonstrating how price of gasoline, there should be no
(identified incorrectly as ‘‘driving time’’ these benefits were estimated. disruption effect.
in the PRIA), and the value of refueling In its comments, General Motors also General Motors expressed skepticism
time savings are directly related to challenged certain specific figures regarding the externality costs related to
lifetime vehicle use, and the agency’s related to externalities incorporated by pollution contained in the CAFE
estimates of the values of these benefits the agency as part of the CAFE proposal. proposal. According to General Motors,
126 See, Residential Furnaces and Boilers ANOPR
For example, General Motors expressed because U.S. refineries operate at 95
Technical Support Document, Chapter 8, at
disagreement with the proposal’s percent of capacity and routinely
http://www.eere.energy.gov/buildings/ externality estimate of $0.106 per
appliance_standards/residential/ gallon, as well as the estimate of costs 129 Dr. Kleit’s analysis simply assumes that
furnaces_boilers_1113_r.html. related to pollution. The commenter manufacturers have already made all applications
127 Demand costs for imported oil (often termed of fuel economy technology to their models for
stated that the National Research which the value of the resulting fuel savings
market power or ‘‘monopsony’’ costs) arise because
the world oil price appears to be partly determined Council estimates the total cost of exceeds the cost of installing the technology.
through the exercise of market power by the OPEC Andrew N. Kleit, ‘‘Short- and Long-Range Impacts
cartel, and because the U.S. is a sufficiently large 128 In the NPRM, benefits from reduced petroleum of Increases in the Corporate Average Fuel Economy
purchaser of foreign oil supplies that its purchases market externalities were also incorrectly assumed (CAFE) Standard,’’ February 7, 2002, Docket
can affect the world price. The combination of to depend on the fraction of fuel savings that is #11419–168159.
OPEC market power and U.S. ‘‘monopsony’’ power reflected in lower imports of crude petroleum and Under this assumption, any increase in the
means that increasing domestic petroleum demand refined gasoline (rather than on total U.S. petroleum stringency of CAFE will always produce negative
that is met through higher oil imports can cause the consumption). In response to comments by the net benefits (i.e., net costs), because the technology
world price of oil to rise, and conversely that Union of Concerned Scientists and other reviewers, applications necessary to comply with the more
declining U.S. imports can reduce the world price this error has been corrected in the Final Regulatory stringent standard will each have costs that exceed
of oil. Impact Analysis accompanying this Rule. the value of fuel savings they produce.
purchase pollution permits (credits) recommendation upon values reported reduces the monopsony costs associated
from others, any reduction in demand in a 2003 report titled ‘‘Benefits of with variation in U.S. oil demand.130
for fuel would likely result in these Reducing Demand for Gasoline and Thus, the value of the monopsony effect
refineries simply purchasing fewer Diesel.’’ used in the FRIA analysis reflects the
permits, rather than reducing emissions The agency believes that assessing the Energy Information Administration’s
or capacity. General Motors stated that economic case for increasing the recent Annual Energy Outlook 2006
the only pollution cost externality stringency of the light truck CAFE forecast of future world oil prices,
resulting from the CAFE standards is standard requires a comprehensive which is significantly higher than
likely to be increased tailpipe emissions analysis of the resulting benefits and previously projected by EIA (see FRIA
from the rebound effect. costs to the U.S. economy, rather than p. VIII–31). The FRIA continues to use
Criterion Economics commented that simply comparing the external costs the midpoint of the range of values for
NHTSA’s CAFE proposal ‘‘argued the associated with petroleum use and fuel the elasticity of oil imports suggested in
wrong case,’’ in that externalities alone production to current fuel taxes. The the study by Leiby et al. to estimate the
should be the determinant of socially benefits of more stringent CAFE monopsony cost of increased U.S.
optimal CAFE levels (i.e., allowing the standards include the market value of petroleum use (see FRIA p. VIII–33).
marketplace to determine privately the savings in resources from producing However, the agency also notes that
optimized CAFE targets). According to less fuel, together with the resulting only a fraction of the monopsony cost of
Criterion Economics, mandatory reductions in the costs of economic increased U.S. oil consumption is
increases in fuel economy above market- externalities associated with petroleum imposed on domestic purchasers of
determined levels would generate consumption, and of environmental petroleum and refined products, since
marginal private costs that exceed externalities caused by fuel production. part of the burden of higher world oil
marginal private benefits. In support of The costs imposed on the U.S. economy prices is borne by foreign purchasers. As
its position that only externalities by more stringent CAFE regulation a result, that same fraction of any
should be considered in setting CAFE include those costs for manufacturing reduction in monopsony costs resulting
standards, Criterion Economics more fuel-efficient vehicles, as well as from lower U.S. oil purchases is exactly
provided a figure illustrating the the increased external costs of offset by revenue losses to domestic
interaction of marginal social benefits, congestion, accidents, and noise from petroleum producers, so it does not
marginal social costs, marginal private added driving caused by the rebound represent a net savings to the U.S.
benefits, and marginal private costs to effect. economy. Thus, in order to include only
argue that the market automatically Vehicle buyers value improved fuel the fraction that represents a net savings
determines the optimal level for private economy using retail fuel prices and to U.S. purchasers, the savings in
benefits. Criterion Economics miles per gallon, but may consider fuel monopsony costs from reduced fuel use
recommended that the agency revise the savings only over the time they expect must be adjusted by the percent of U.S.
CAFE standards to reflect socially to own a vehicle, while the value to the petroleum consumption that is
optimal levels based on externality costs U.S. economy of saving fuel is measured imported. This results in a monopsony
and benefits. by its pre-tax price, and includes fuel value of $0.044 per gallon.
In contrast, NRDC and Environmental savings over the entire lifetime of In contrast, the entire reduction in
Defense argued that monopsony costs vehicles. Thus it cannot simply be total U.S. petroleum demand that results
are underestimated in the proposal. assumed that the interaction of from more stringent CAFE standards
Environmental Defense stated that manufacturers’ costs and vehicle buyers’ reduces potential costs to the U.S.
monopsony costs should range from demands in the private marketplace will economy from rapid increases in world
$0.083 (under the EIA reference determine optimal fuel economy levels, oil prices, because (as the studies cited
scenario) to $0.198 per gallon (under a and that these levels should only be
by reviewers of the NPRM point out)
$65 per barrel oil price scenario). adjusted by Federal regulation if the
these costs depend on total U.S.
Environmental Defense also commented external costs of fuel production and
petroleum consumption rather than on
that there is an arithmetic error in use exceed current fuel taxes.
The analysis reported in the FRIA the fraction that is imported. The agency
NHTSA’s application of disruption and
estimates the value of each category of agrees that petroleum buyers’ use of
adjustment costs (which are otherwise
benefits and costs separately, and it hedging strategies and private oil
conceptually correct), and it argued that
compares the total benefits resulting inventories can reduce these costs, but
in setting final CAFE standards, the
from each alternative CAFE level to its the significant costs of adopting these
agency should address non-quantified
total costs in order to assess its strategies will also be reduced as
externalities such as strategic petroleum
reserve and national security costs, at desirability. This more complete declines in U.S. petroleum demand
least qualitatively if not quantitatively. accounting of benefits and costs to the moderate the potential effect of rapid
The California State Energy U.S. economy from reducing fuel use is fluctuations in world oil prices. Thus
Commission argued that the agency’s necessary to assess the case for CAFE the analysis presented in the FRIA
estimate of $0.106 for oil import regulation generally, and for increasing continues to employ the agency’s
externalities is too low and should be the stringency of the current light truck previous estimate ($0.045 per gallon) of
increased to $0.33 per gallon of CAFE standard in particular. the reduction in the price shock
gasoline. The California State Energy In response to comments on the component of U.S. oil consumption
Commission broke down this estimate specific values of certain externalities externalities that is likely to result from
as follows: $0.12 per gallon for oil employed in the NPRM analysis, the more stringent CAFE regulation (see
import externalities; $0.01 to reflect agency agrees that higher world oil FRIA VIII–34).
costs of gasoline spill remediation; prices increase the monopsony or Finally, the agency believes that while
costs for U.S. military security in oil-
$0.02 to reflect damage from criteria demand costs imposed by U.S.

pollutant emissions resulting from fuel petroleum purchases, while greater 130 For the exact relationship among monopsony
delivery volumes, and $0.18 to reflect sensitivity of the supply of oil imported costs, oil prices, and the elasticity of supply of
damage costs of greenhouse gas by the U.S. to variation in its price (a imported oil, see Leiby et al., p. 26 Docket No.
emissions. The Commission based its higher elasticity of petroleum supply) NHTSA–2005–22223–27.
producing regions and for maintaining information of academic interest but the agency will consider new
the Strategic Petroleum Reserve will would not alter the agency’s reliance on regulations as issued by the EPA.
vary in response to long-term changes in the most probable outcome for setting
J. Pollution and Greenhouse Gas
U.S. oil imports, these costs are unlikely standards. It is also not clear that
Valuation
to decline significantly in response to uncertainty surrounding the price of
the modest reduction in the level of U.S. gasoline is greater than that surrounding In its comments, General Motors
oil imports that would result from the other variables used in the NHTSA maintained that increases in emissions
proposed CAFE standard for MY 2008– model. In fact, the range of uncertainty of criteria pollutant resulting from the
2011 light trucks. The U.S. military for both the effectiveness and cost of rebound effect are not likely to be offset
presence in world regions that represent technologies includes more potential by reduced refinery emissions, as
vital sources of oil imports also serves variation than the three fuel price assumed in the agency’s analysis. As
a range of security and foreign policy scenarios examined in the uncertainty noted earlier, General Motors argued
objectives that is considerably broader analysis. Since each of these factors that domestic refineries are subject to
than simply protecting oil supplies. As influences the calculation of optimized strict emission caps, and they must buy
a consequence, no savings in social benefits, the agency does not permits (credits) in order to support
government outlays for maintaining the believe it would be useful to isolate only current production. It concluded that a
Strategic Petroleum Reserve or a U.S. the uncertainty in fuel prices. small reduction in overall ‘‘demand for
military presence are included among fuel would allow domestic refineries to
I. The 15 Percent Gap simply buy fewer pollution permits
the benefits of the light truck CAFE
standard adopted for MY 2008–2011. The agency assumes that there is a 15 without changing the emissions at the
Combined, the externalities cost per percent difference between the EPA fuel refineries.’’
gallon added to the pre-tax price per economy rating and the actual fuel General Motors also asserted that
gallon in the FRIA is $0.088.131 This economy achieved by vehicles on the domestic refineries produce at over 95
compares to the PRIA estimate of $0.106 road. For example, if the overall EPA percent of capacity, and that all
per gallon. fuel economy rating of a light truck is increases in demand for refined
20 mpg, the actual on-road fuel products must be met by imports.
H. Uncertainty Analysis economy achieved by the average driver Therefore, General Motors concluded
The California State Energy of that vehicle is expected to be 17 mpg that a reduction in demand for fuel
Commission stated NHTSA’s proposal (20*.85). NRDC and the Union of would not reduce domestic refinery
does not adequately deal with the Concerned Scientists commented that output and corresponding pollutants,
primary source of uncertainty in setting the 15-percent reduction the agency but instead would cause a reduction in
standards—the extent to which the applied to reported fuel economies to imports of refined products such as
application of additional technology adjust for in-use fuel economy gasoline.
could be justified by higher future fuel performance is too low, and both In response to General Motors’
prices. This commenter stated that the commenters recommended using an on- comments, the agency notes that there
agency’s uncertainty analysis should road gap of 20 percent. The Union of are currently two cap-and-trade
first examine the sensitivity of optimum Concerned Scientists stated that the programs governing emissions of criteria
standards to variation in retail fuel EPA is in the process of revising its pollutants by large stationary sources.
estimates of real-world fuel economy in The Acid Rain Program seeks to limit
prices only, and then analyze effect of
response to widespread consumer NOX and SO2 emissions, but applies
alternative stringency levels on social
dissatisfaction with the reliability of its only to electric generating facilities and
benefits.
present adjustment. In support of its thus will not affect refinery
In response, we note that the purpose
recommendation to use a 20-percent emissions.132 The NOX Budget Trading
of the uncertainty analysis is to examine
reduction, NRDC cited the range of 20 Program is also primarily intended to
uncertainty surrounding the impact of
to 23 percent relied upon by EIA’s reduce electric utility emissions, but
the proposed and final rules. OMB
National Energy Modeling System does include some other large industrial
Circular A–4 requires formal
(NEMS) over the expected lifetimes of sources such as refineries. However, as
probabilistic uncertainty analysis of
MY 2008–2011 vehicles (See AEO2005 of 2003, refineries participating in the
complex rules where there are large, Table 47). General Motors stated that it
multiple uncertainties whose analysis program accounted for less than 5% of
agrees with a 15 percent on-road fuel total NOX emissions by U.S.
raises technical challenges or where economy gap.
effects cascade and where the impacts of refineries.133 In addition, some
On February 1, 2006, the refineries could be included among the
the rule exceed $1 billion. CAFE meets Environmental Protection Agency
these criteria on all counts. However, sources of NOX emissions that will be
proposed test changes to their fuel controlled under the recently-adopted
the commenter appears to be concerned economy testing to bring them closer to
primarily with uncertainty surrounding Clean Air Interstate Rule, which is
on-road fuel economy (71 FR 5426). In scheduled to take effect beginning in
the CAFE standard selection process, its proposal, EPA estimated that the
rather than that surrounding the impacts 2009.134 However, refinery NOX
actual highway driving fuel economy
of the selected standards. The agency estimate would be 5 to 15 percent lower 132 See http://www.epa.gov/airmarkets/arp/
believes that its selection of CAFE levels than the EPA fuel economy rating and index.html.
should be based on its best estimates of that the actual city driving fuel economy 133 Estimated from EPA, NO Budget Trading
X
all input variables used to estimate estimate would be 10 to 20 percent Program (SIP Call) 2003 Progress Report, Appendix
optimized social benefits. An A, http://www.epa.gov/airmarkets/cmprpt/nox03/
lower than the EPA fuel economy rating NBP2003AppendixA.xls, and National Air Quality
examination of the uncertainty of for most vehicles. However, the EPA has and Emissions Trends Report 2003, Table A–4,
outcomes in this process would produce
not issued a final rule on this issue. http://www.epa.gov/air/airtrends/aqtrnd03/pdfs/

NHTSA will continue to rely on an a4.pdf.
131 The $0.088 value represents the value for 134 The Clean Air Interstate Rule also requires
reducing U.S. demand on the world market plus the

overall fuel economy adjustment factor reductions in SO2 emissions and establishes an
value for reducing the threat of supply disruptions. of 15 percent, consistent with current emissions trading program to achieve them, but
See Table X–3 in the FRIA. EPA regulations. In future rulemakings Continued
emissions could only be affected in published estimates of damage costs standards) until the vehicle is
states that specifically elect to include from greenhouse gas emissions, costs for redesigned. Thus, until redesign,
sources other than electric generating controlling or avoiding their emissions, increased fuel economy would result in
facilities in their plans to comply with and costs of sequestering emissions that increased driving range, and the value
the rule. The EPA has indicated that it do occur, the three major sources for of time for reduced refueling is real. If
expects states to achieve the emissions developing estimates of economic tank downsizing does occur, then there
reductions required by the Clean Air benefits from reducing emissions of is a cost savings to manufacturers which
Interstate Rule primarily from the greenhouse gases.136 Moreover, as stated could be subtracted from technology
electric power industry.135 Thus the above, commenters did not reliably costs. One way or another, there is a
agency continues to believe that any demonstrate that the unmonetized benefit. Thus, the agency is retaining its
reduction in domestic gasoline refining benefits, which include CO2, and costs, benefit estimates for increased driving
resulting from the adopted CAFE taken together, would alter the agency’s range.
standard will be reflected in reduced assessment of the level of the standard General Motors questioned whether
refinery emissions of criteria pollutants. for MY 2011. Thus, the agency NHTSA’s estimate of the average
Environmental organizations stated determined the stringency of that vehicle’s lifetime mileage (152,032
that the agency must attach some value standard on the basis of monetized net miles) was overstated. NADA also
to reducing greenhouse gas emissions, benefits. cautioned that the agency’s fuel
and adjust the benefits of more stringent Additionally, costs for remediating conservation predictions should reflect
CAFE standards accordingly. NRDC gasoline spills are highly variable an appropriate range of fuel price and
recommended a value of $10 to $25 per depending on the volume of fuel vehicle-miles-traveled assumptions.
ton of CO2 emissions reduced by fuel released, the environmental sensitivity In response to the comments by
savings from stricter CAFE, based on of the immediate environment, and the General Motors and NADA, the agency
values assigned by the California Public presence of specific fuel additives. As a notes that the lifetime mileage estimate
Utilities Commission, Idaho Power Co., consequence, the agency has elected to reported in the NPRM does not apply to
and the European Union emissions include no monetary value for reducing the average vehicle; instead, it
program. Environmental Defense stated greenhouse gas emissions or represents the average accumulated
that the agency should use a value of remediating fuel spills among the mileage of a vehicle that survives for a
$50 per ton of reduced CO2 emissions. benefits of reducing gasoline use via full 36 years. As the accompanying
The Union of Concerned Scientists more stringent fuel economy regulation. vehicle survival rates indicate, only a
similarly objected to the zero value small fraction of vehicles originally
K. Increased Driving Range and Vehicle
assigned to reduced emissions of produced in any model year are
Miles Traveled
greenhouse gases in the CAFE proposal, expected to survive to this age. The
and instead recommended using a value General Motors argued that the value
agency has recently updated its
of $50 per ton of carbon (corresponding of time spent refueling should be zero.
estimates of survival probabilities and
to approximately $0.15 per gallon of General Motors stated that during the
average annual mileage by vehicle age,
gasoline). fuel economy test EPA requires fuel
and these updated estimates are utilized
The estimated reductions in tanks to contain a fixed percentage of
to calculate the impacts of CAFE
emissions of criteria pollutants from gasoline compared to tank capacity and
standards reported in the FRIA
gasoline refining and distribution used that manufacturers have reduced
accompanying this final rule.137
in the PRIA analysis were adjusted to gasoline tank volume on average in
Further, as discussed below in Section
reflect only the fraction of fuel savings response to higher fuel efficiency.
Sierra Research added that range is a XII. Comparison of the final and
that is expected to reduce domestic proposed rule, the agency has adjusted
refining, rather than imports of refined design criterion and that there is no
basis for assuming that this criterion the vehicle miles traveled schedule to
gasoline. They were also adjusted to reflect increases in the fuel price
include only reductions in emissions will change in response to an increase
in CAFE standards. Sierra Research forecasts.
that occur during domestic extraction
and transportation of crude petroleum provided illustrations purported to L. Added costs from congestion, crashes
feedstocks. The estimates of these show the relationship between fuel and noise
reduced emissions from crude oil capacity and fuel economy standards,
and fuel economy and range for 2004 General Motors agreed with the
extraction and gasoline refining used in
light trucks, in order to demonstrate that agency’s cost estimates related to traffic
the FRIA continue to reflect these
increased fuel economy standards might congestion, crashes, and noise.
adjustments (see FRIA p. VIII–60).
The agency continues to view the not result in increased vehicle range. However, the commenter again stated its
value of reducing emissions of CO2 and The following reflects our belief that the proposed CAFE standards
understanding of vehicle driving range would result in a net externality cost—
other greenhouse gases as too uncertain
and tank size. Typically, the tank size not benefit—in terms of consumer
to support their explicit valuation and
for a model is determined when the welfare. Specifically, General Motors
inclusion among the savings in
model is designed, and the tank size stated that the costs associated with
environmental externalities from
does not change for small incremental increased congestion, noise, and
reducing gasoline production and use.
improvements in fuel economy (as highway fatalities and injury costs
There is extremely wide variation in
would occur by virtue of these resulting from increases in driving
only electric generating facilities are included in the
outweigh the benefits associated with
rule’s SO2 emissions trading program; see EPA, 136 Environmental Defense submitted studies
Clean Air Interstate Rule: Basic Information, http:// regarding the valuation of greenhouse gases. 137 The data sources and procedures used to
www.epa.gov/cair/basic.html#timeline. However, the studies were submitted over three develop these updated estimates of vehicle survival
135 See EPA, Clean Air Interstate Rule: Basic months after the close of the comment period and and usage are reported in NHTSA, ‘‘Vehicle
Information, http://www.epa.gov/cair/ less than one month before the agency’s statutory Survivability and Travel Mileage Schedules,’’
basic.html#timeline, and ‘‘Fact Sheet: Clean Air deadline for issuing a MY 2008 standard. These Report DOT HS 809 952, National Center for
Interstate Rule,’’ http://www.epa.gov/cair/pdfs/ studies have been docketed (NHTSA–2005–2223– Statistics and Analysis, January 2006, Docket
cair_final_fact.pdf. 2250, 2251). NHTSA–2005–22223–2218. See FRIA p. VIII–11.
decreased oil import dependence and agency estimates that higher prices will determining whether to elect
pollution reduction. result in a small loss of sales, which compliance under the Unreformed or
NHTSA agrees that this is a true negatively impacts employment. On the Reformed CAFE system. Within 45 days
observation made by General Motors on other hand, in a few limited cases, the following the end of the model year, a
the agency’s analysis, although we requirements could result in the use of manufacturer must submit to the agency
believe the commenter overstates its additional new technology, which a report indicating whether it has
significance. We say this because the would increase employment. Both of elected to comply with the Reformed or
savings in lifetime fuel expenditures these impacts on jobs are anticipated to Unreformed CAFE program for that
significantly outweigh the combined net be very minor, and the counterbalancing model year.
externalities costs and the costs of impacts will be near zero. Very few light
added technology, making this a cost- trucks are exported for sale and we B. Application of Credits Between
beneficial rule. believe that the proposed increases in Compliance Options
M. Employment Impacts fuel economy are unlikely to change The EPCA credit provisions operate
these sales volumes appreciably. Thus, under the Reformed CAFE system in the
The California State Energy we expect that there is little chance of same manner as they do under the
Commission commented that the agency improving the competitive position of Unreformed CAFE system. The
mentioned the potential for the CAFE the manufacturers in international harmonic averages used to determine
proposal to result in job losses, but it markets as a result of revised light truck compliance under the Reformed CAFE
did not discuss the issue of employment CAFE standards. system permit the amount, if any, of the
in detail. The Commission stated that The agency has not included changes credits earned to be calculated as under
increasing CAFE stringency may in vehicle performance as part of its the Unreformed CAFE system:
actually increase employment among strategy for the manufacturers to Credits = (Actual CAFE¥Required
automobile manufacturers and related improve fuel economy and changes in CAFE) * 10 * Total Production Credits
sectors, although union employment weight were not accompanied by earned in a model year can be carried
and employment in the petroleum changes in horsepower. Thus, our backward or forward as currently done
manufacturing industry might decline. assumptions include no changes that in the Unreformed CAFE system.
Without going into detail, the would affect the boating industry. Further, credits are transferable
commenter stated that several previous However, our assumptions do not between the two systems. Both
studies have concluded that increasing require a manufacturer to follow our Unreformed CAFE and Reformed CAFE
CAFE standards could increase U.S. predicted course of action. use harmonic averaging to determine
employment and economic output. The fuel economy performance of a
Commission also suggested that by IX. MY 2008–2010 Transition Period
manufacturer’s fleet. Under Reformed
requiring U.S. automakers to produce As stated above, the agency is CAFE, fuel savings from under- and
more fuel-efficient vehicles, stricter providing a transition period during over-performance with each category are
CAFE standards could enhance the MYs 2008–2010. During this period, generated and applied almost
competitive positions of those manufacturers have the option of identically to the way in which this
manufacturers in international markets complying under the standard occurs under the Unreformed CAFE
where fuel prices are typically higher, established under the Unreformed CAFE system. As a result, the two systems
thereby increasing total sales, system or the standard established generate credits with equal fuel savings
production volumes, and domestic under the Reformed CAFE system. value. Therefore, credits earned in a
employment. The Commission asked
A. Choosing the Reformed or model year under Unreformed CAFE are
the agency to address the issue of the
Unreformed CAFE System fully transferable forward to a model
employment impacts of its CAFE
As part of the transition to a fully year under the Reformed CAFE system,
standards more explicitly in the final
phased-in Reform CAFE system in MY up to the statutory limit of three years.
rule.
The Marine Retailers Association of 2011, during MYs 2008–2010, Likewise, credits under Reformed CAFE
America (MRAA) expressed concern manufacturers have the option of can be carried back to Unreformed
that increases in CAFE levels could lead complying under the Reformed CAFE CAFE.
to vehicle downsizing, which in turn system or the Unreformed CAFE system. X. Impact of Other Federal Motor
could have a negative impact upon the Manufacturers are required to announce Vehicle Standards
boating industry. According to the their selection for a model year, and that
MRAA, there are approximately 17 selection will be irrevocable for that A. Federal Motor Vehicle Safety
million recreational boats in the U.S., MY. However, a manufacturer is Standards
about 80 percent of which are pulled by permitted to select the alternate The EPCA specifically directs us to
a light truck or SUV. MRAA stated that compliance option in the following MY. consider the impact of other Federal
to the extent vehicle downsizing occurs, Beginning MY 2011, a manufacturer vehicle standards on fuel economy. This
manufacturers may find it more difficult must comply only under the Reformed statutory factor constitutes an express
to produce a vehicle with adequate CAFE system. recognition that fuel economy standards
horsepower and torque to tow a boat, In the NPRM, we proposed that a should not be set without due
and without an adequate vehicle to tow manufacturer would announce its consideration given to the effects of
a boat, many consumers may simply selection as part of its mid-model year efforts to address other regulatory
decide not to purchase a boat. report, as filed according to 49 CFR concerns, such as motor vehicle safety
Accordingly, the MRAA asked NHTSA 537.7. In order to provide manufacturers and emissions. The primary influence of
to carefully consider the employment, a greater level of flexibility, the final many of these regulations is the
sales, and other impacts of its CAFE rule does not require a manufacturer to addition of weight to the vehicle, with
proposal upon the boating industry. elect one of the two compliance options the commensurate reduction in fuel
The agency believes that the CAFE until the end of the model year. This economy.
impact on jobs is fairly minor and there will permit a manufacturer to determine Several manufacturers commented on
are counterbalancing impacts. The its actual fuel economy before the evaluation of Federal motor vehicle
standards, generally stating that the Thus, for MY 2008, an additional 30 3. FMVSS 208, Occupant Crash
agency’s estimated weight impacts were percent of the fleet will be required to Protection (Rear Center Seat Lap/
too low. Our response to these meet the standard as compared to MY Shoulder Belts)
comments and a summary of our 2007. We estimate from a cost teardown This final rule requires a lap/shoulder
evaluation are provided below. A study that the added weight for an belt in the center rear seat of light
detailed discussion of the evaluation is indirect system is about 0.156 lbs. and trucks. There are an estimated
provided for in the FRIA (see FRIA for a direct system is 0.275 to 0.425 lbs. 5,061,079 143 seating positions in light
p. IV–2). Initially, direct systems will be more trucks needing a shoulder belt, where
The agency has evaluated the impact prevalent, thus, the increased weight is they currently have a lap belt. This
of the Federal motor vehicle safety estimated to be average 0.35 lbs. (0.16 estimate of seating positions is a
standards (FMVSS) using MY 2007 kilograms). Beginning in MY 2008, the combination of light trucks, SUVs,
vehicles as a baseline. We have issued weight increase from FMVSS No. 138 is minivans and 15 passenger vans that
or proposed to issue a number of anticipated to be 0.11 pounds (0.05 have either no rear seat, or one to four
FMVSSs that become effective between kilograms).
the MY 2007 baseline and MY 2011. rear seats that need shoulder belts. This
As stated in the TPMS final rule,139 estimate was based on sales of 7,521,302
These have been analyzed for their by promoting proper tire inflation, the
potential impact on light truck fuel light trucks in MY 2000. Thus, the
installation of TPMS will result in better average light truck needs 0.67 shoulder
economy weights for MYs 2008–2011: fuel economy for vehicle owners that
The fuel economy impact, if any, of belts. The average weight of a rear seat
previously had operated their vehicles lap belt is 0.92 lbs. and the average
these new requirements will take the with under-inflated tires. However, this
form of increased vehicle weight weight of a manual lap/shoulder belt
will not impact a manufacturer’s with retractor is 3.56 lbs.144 Thus, the
resulting from the design changes compliance under the CAFE program.
needed to meet new FMVSSs. anticipated weight gain is 2.64 pounds
Under the CAFE program, a vehicle’s per shoulder belt. We estimate the
The average test weights (curb weight
fuel economy is calculated with the average weight gain per light truck for
plus 300 pounds) of the light truck fleet
vehicle’s tires at proper inflation. the shoulder belt would be 1.8 pounds
for General Motors, Ford, and
Therefore, the fuel economy benefits of (0.8 kilograms).
DaimlerChrysler in MY 2008, MY 2009,
MY 2010 and MY 2011 are 4,744, 4,800, TPMS have not been considered in this A second, potentially more important,
4,792, and 4,786,138 respectively. Thus, rulemaking. weight increase depends upon how the
overall, the three largest manufacturers 2. FMVSS 202, Head Restraints center seat lap/shoulder belt is
of light trucks expect weight to remain anchored. The agency has allowed a
almost unchanged during the time The final rule requires an increase in detachable shoulder belt in this seating
period addressed by this rulemaking. the height of front seat outboard head position, which could be anchored to
The changes in weight include all restraints in pickups, vans, and utility the ceiling or other position, without a
factors, such as changes in the fleet mix vehicles, effective September 1, 2008 large increase in weight. If the center
of vehicles, required safety (MY 2009). If the vehicle has a rear seat seat lap/shoulder belt were anchored to
improvements, voluntary safety head restraint, it is required to be at the seat itself, typically the seat would
improvements, and other changes for least a certain height.140 The initial head need to be strengthened to handle this
marketing purposes. These changes in restraint requirement, established in load. If the manufacturer decides to
weight over the three model years 1969, resulted in the average front seat change all of the seats to integral seats,
would have a negligible impact on fuel head restraints being 3 inches taller than having all three seating positions
economy. pre-standard head restraints and adding anchored through the seat, then both the
5.63 pounds 141 to the weight of a seat and flooring needs to be
1. FMVSS 138, Tire Pressure Monitoring passenger car. With the new final rule, strengthened. The agency requested
System we estimate the increase in height for information about manufacturer plans
As required by the Transportation the front seats to be 1.3 inches and for for complying with this requirement
Recall Enhancement, Accountability, the rear seat to be 0.26 inch, for a and after reviewing the confidential
and Documentation (TREAD) Act, combined average of 1.56 inches.142 submissions, NHTSA estimates that the
NHTSA is requiring a Tire Pressure Based on the relationship of pounds to average weight gain per light truck for
Monitoring System (TPMS) be installed inches from current head restraints, we the shoulder belt would be 0.36 lbs
in all passenger cars, multipurpose estimate the average weight gain across (0.16 kg) compared to MY 2007. For the
passenger vehicles, trucks and buses light trucks would be 2.9 pounds (1.3 anchorage, the average weight increase
that have a Gross Vehicle Weight Rating kilograms). would be 0.2 lbs (0.09 kg) or more.
of 10,000 pounds or less. The effective The effective dates are based on the
dates are based on the following phase- 139 70 FR 18136, 18139; April 8, 2005; Docket No. following phase-in schedule:
in schedule: 2005–28506. 50 percent of light vehicles produced
20 percent of light vehicles produced 140 The compliance date for the upgraded
between September 1, 2005 and
between September 1, 2005 and requirements applicable to head restraints
voluntarily installed at rear outboard seating
August 31, 2006,
August 31, 2006, positions recently was amended from September 1, 80 percent of light vehicles produced
70 percent of light vehicles produced 2008, to September 1, 2010 (see, 71 FR 12415; between September 1, 2006 and
between September 1, 2006 and March 9, 2006). August 31, 2007,
August 31, 2007, 141 Tarbet, Marcia J., ‘‘Cost and Weight Added by
100 percent of light vehicles produced
All light vehicles produced after Federal Motor Vehicle Safety Standards for Model
Years 1968–2001 in Passenger Cars and Light after September 1, 2007.
September 1, 2007 are required to Trucks’’, NHTSA, December 2004, DOT–HS–809–
comply.
834. Pg. 51. (http://www.nhtsa.dot.gov/cars/rules/ 143 ‘‘Final Economic Assessment and Regulatory
regrev/evaluate/809834.html). Flexibility Analysis, Cost and Benefits of Putting a

138 This figure is for the fleet not including 142 ‘‘Final Regulatory Impact Analysis, FMVSS Shoulder Belt in the Center Seats of Passenger Cars
MDPVs for a more accurate comparison to the fleet No. 202 Head Restraints for Passenger Vehicles’’, and Light Trucks’’, NHTSA, June 2004, Docket No.
numbers for MYs 2008 through 2010. The figure NHTSA, November 2004, Docket No. 19807–1, 18726–2, p. 33.
including MDPVs is 4,832 lbs. p. 74. 144 Tarbet 2004, p. 84.
Thus, for MY 2008, an additional 20 Thus, 60 percent of the fleet must ESC. Thus, if all light trucks added ESC,
percent of the fleet will be required to meet FMVSS 301 during the MY 2008– average light truck weight would
meet the standard. We estimate the 2010 time period. Thus, the average increase by 6.9 pounds. So, the total
average weight gain per light truck for weight gain during this period would be weight increase is 8.7 pounds (3.95 kg.).
the shoulder belt would be 0.36 lbs 0.14 lbs (0.07 kg).
2. Roof Crush, FMVSS 216
(0.16 kg) [1.8 pounds (0.8 kilograms) * B. Potential Future Safety Standards
0.2] compared to MY 2007. For the On August 23, 2005, NHTSA
and Voluntary Safety Improvements published an NPRM proposing to
anchorage, the average weight increase
would be 0.2 pounds (0.09 kg) or more. There are several safety standards that upgrade the agency’s safety standard on
have recently been proposed, or that the roof crush resistance. (70 FR 49223) The
4. FMVSS 208, Occupant Crash agency is required by Congress to NPRM proposed to extend the standard
Protection (35 mph Frontal Impact propose in the near future that could to vehicles with a GVWR of 10,000
Testing) impact some of the MY 2008–2011 pounds or less, increase the force
The advanced air bag rule requires 35 vehicles. In most cases, these proposals applied to 2.5 times each vehicle’s
mph belted testing with the 50th or future proposals are already being unloaded weight, and replace the
percentile male dummy with a phase-in met voluntarily by a part of the fleet. current limit on the amount of roof
schedule of: Additionally, the agency has crush with a requirement to maintain
35 percent of light vehicles produced historically considered the impact of enough headroom for a mid-size adult
between September 1, 2007 and August voluntary safety improvements. The male occupant.
31, 2008, agency has expressed concern that The Alliance, Ford, DaimlerChrysler
65 percent of light vehicles produced overly stringent CAFE standards might and Toyota commented that the agency
between September 1, 2008 and August discourage manufacturers from pursuing should have included the weight impact
31, 2009, voluntary improvements (53 FR 39275, of the FMVSS 216 amendments in its
100 percent of light vehicles produced 39296; October 6, 1988). Currently, analysis. The agency agrees.
after September 1, 2009.145 there are improvements that are being Manufacturers’ estimates of the weight
The impacts of this requirement were made voluntarily to meet market implications of compliance with the
not considered in the evaluation for the demand and/or to perform better on proposed FMVSS No. 216 ranged from
NPRM. Evaluation of the 35 mph belted government or insurance industry tests minimal to tens of pounds.
test has been added in response to involving vehicle ratings. In our As estimated at the time of the
comment from General Motors that analysis for this final rule, the potential FMVSS 216 NPRM, the proposed
raised the issue. About 85 percent of the future safety standards and voluntary upgrade was estimated to increase
fleet already meets the test based on improvements have been combined average vehicle weight by 6.07 pounds.
NCAP results. It is assumed that without regard to effective date, even The proposed effective date was the first
pretensioners and load limiters would though the final effective dates for the September 1 occurring three years after
be the countermeasures used to pass the potential future safety standards may be publication of the final rule.
later than MY 2011. In addition to the comments on the
test. The estimated combined weight of
CAFE NPRM, NHTSA received a
these features is 2.4 pounds for the two 1. Anti-Lock Brakes and Electronic number of comments on the weight
front outboard seats. Thus, the average Stability Control (ESC) estimates in response to the Roof Crush
incremental weight would be 0.36 lbs Many manufacturers are planning to NPRM. Other manufacturers
(0.16 kg). install ESC on all their light vehicles. commented on the Roof Crush NPRM
5. FMVSS 301, Fuel System Integrity Recent congressional legislation that the agency’s weight estimates were
contained in section 10301 of the Safe, too low. However, other commenters
This final rule amends the testing
Accountable, Flexible, Efficient indicated that weight estimates were too
standards for rear end crashes and
Transportation Equity Act: A Legacy for high because they said that the agency
resulting fuel leaks. Many vehicles
Users of 2005 (SAFETEA–LU)146 did not consider alternative, lighter,
already pass the more stringent
requires the Secretary of Transportation materials that manufacturers could use
standards, and those affected are not
to ‘‘establish performance criteria to to comply with the standard. The
likely to be pick-up trucks or vans. It is
reduce the occurrence of rollovers agency is still evaluating all of the
estimated that weight added will be
consistent with stability enhancing comments to the Roof Crush NPRM and
only lightweight items such as a flexible
technologies’’ and to ‘‘issue a proposed estimates that, if a final rule were
filler neck. We estimate the average
rule * * * by October 1, 2006, and a issued, it would be in 2007. Therefore,
weight gain across this vehicle class
final rule by April 1, 2009.’’ A for purposes of this CAFE rule, the
would be 0.24 lbs (0.11 kg).
requirement by NHTSA in this area agency is using the estimates made at
The effective dates are based on the
could potentially be effective with MY the time of the Roof Crush NPRM and
following phase-in schedule:
2011. assuming an effective date of September
40 percent of light vehicles produced
The ESC system needs anti-lock 1, 2010.
between September 1, 2006 and August
brakes to work appropriately. Anti-lock
31, 2007, 3. Side Impact and Ejection Mitigation
brakes add about 20 pounds to the
70 percent of light vehicles produced Air Bags (Thorax and Head Air Bags)
weight of a light truck. Currently, about
between September 1, 2007 and August Many manufacturers are installing
91 percent of all light trucks have anti-
31, 2008, side impact air bags (thorax bags,
lock brakes. Thus, if all light trucks
100 percent of light vehicles produced combination head/thorax bags, or
added anti-lock brakes, average light
after September 1, 2008 are required to window curtains). NHTSA proposed an
truck weight would increase by 1.8
comply.
pounds. ESC is estimated to add about oblique pole test as part of FMVSS 214
145 The standard will be fully effective on
9 pounds to a vehicle. In 2005, an on May 17, 2004 (69 FR 27990). Based
September 1, 2010 when it includes small estimated 23 percent of light trucks have on current technology, this NPRM
manufacturers, multi-stage manufacturers and would result in head protection by
alterers. 146 Pub. L. 109–59, 119 Stat. 1144 (2005). either a combination head/thorax side
air bag or window curtains. SAFETEA– combined average weight for these 4. Offset Frontal Crash Testing
LU also requires the use of window systems in MY 2005 was 3.49 pounds
curtain air bags for ejection mitigation, (1.59 kg). Thus, the future increase in IIHS has been testing and rating
which would result in taller and wider weight for side impact air bags and vehicles using an offset deformable
window curtains that would be tethered window curtains compare to MY 2005 barrier crash test at 64 km/h. Many
or anchored low to keep occupants in installations is 8.06 pounds (11.55–3.49) manufacturers have redesigned their
the vehicle. or 3.66 kg (5.25–1.59). vehicles to do better in these tests and
Assuming in the future that the Another area that could result in an have increased the weight of their
typical system will be thorax bags with increase in weight is if the vehicles. Four light trucks that the
a window curtain, the average weight manufacturers include structure to get a agency has tested, which improved from
increase would be 11.55 pounds (4.77 + higher score in the IIHS higher side a poor rating to a marginal or good
6.78) or 5.25 kg (2.07 + 3.08). In MY impact barrier test. Public data is not rating in the IIHS testing, increased their
2005, about 31 percent of the fleet had available to estimate what voluntary weights, some with other redesigns, as
thorax air bags, 7 percent had weight increases have been added or follows:
combination air bags and, and 25 will be added to get a better score in this
percent had window curtains. The test.
TABLE 14.—INCREASES IN WEIGHT TO IMPROVE OFFSET FRONTAL TESTING

Increase in
Before After redesign weight
SUV ...................... 1997 Chevrolet Blazer (4,686 lbs.) ........................... 2002 Trailblazer (5,181 lbs.) ..................................... 147 495 lbs.
SUV ...................... 1999 Mitsubishi Montero Sport (4,646 lbs.) ............. 2001 Mitsubishi Montero Sport (4,715 lbs.) ............. 69 lbs.
Pickup ................... 2001 Dodge Ram 1500 (4,930 lbs.) ......................... 2002 Dodge Ram 1500 (4,969 lbs.) ......................... 39 lbs.
Minivan ................. 1996 Toyota Previa (3,810 lbs.) ............................... 1998 Toyota Sienna (3,937 lbs.) .............................. 127 lbs.
147 Part of the explanation for the weight increase between the Blazer and Trailblazer is an increase of approximately 1,070 sq. in. in footprint.
These weight increases have an affect less than NHTSA’s, but often they are published a final rule establishing new
on the vehicle’s fuel economy. However, more than NHTSA’s. The agency’s Federal emission standards for
many vehicles have already been estimates are based on cost and weight passenger cars and light trucks (see 65
redesigned with this offset frontal test in tear down studies of a few vehicles and FR 6698). Known as the ‘‘Tier 2’’
mind. Whether increases in weight like cannot possibly cover all the variations Program, the new emissions standards
this will continue for other vehicles in in the manufacturers’ fleets. The in EPA’s final rule cover both light-duty
the future is unknown. manufacturer’s estimates of the fuel vehicles (i.e., passenger cars and light
economy impact of added weight on trucks with a GVWR of 6,000 pounds or
C. Cumulative Weight Impacts of the
mpg have typically been less than less) and medium-duty passenger
Safety Standards and Voluntary
NHTSA’s estimates. NHTSA estimated vehicles (MDPVs) (i.e., vehicles with
Improvements
that an increase of 3–4 pounds 148 either a curb weight of more than 6,000
After making the changes in response results in a decrease of 0.01 mpg, the pounds or a GVWR of more than 8,500
to comments discussed above, NHTSA manufacturers’ data show that an pounds and which otherwise meet the
estimates that weight additions required increase of up to 7 pounds results in a EPA definition (as discussed previously
by FMVSS regulations that will be decrease of 0.01 mpg. The combination in this notice)).
effective in MYs 2008–2011, compared of the manufacturers estimating more The ‘‘Tier 2’’ standards are designed
to the MY 2007 fleet will increase light safety weight impacts, but that weight to focus on reducing the emissions most
truck weight by an average of 4.07 having less impact on miles-per-gallon, responsible for the ozone and
pounds or more (1.83 kg or more). has resulted in similar impacts being particulate matter (PM) impact from
Likely weight increases from future estimated by NHTSA and the these vehicles (e.g., NOX and non-
safety standards or voluntary safety manufacturers. The agency has not methane organic gases (NMOG),
improvements will add 22.83 pounds or questioned the manufacturers’ estimates consisting primarily of hydrocarbons
more (10.37 kg or more) compared to closely because the differences in the (HC)) and contributing to ambient
MY 2005 installations. overall fuel economy impact due to volatile organic compounds (VOC). In
The Alliance, DaimlerChrysler, Ford, required safety standards as estimated addition to establishing new emissions
General Motors and Toyota argued that by Ford, General Motors, and NHTSA is standards for vehicles, the Tier 2
the weight additions projected by small. A more detailed discussion of the standards also establish standards for
NHTSA for FMVSS regulations that will impact of safety improvements is the sulfur content of gasoline.
be effective in MYS 2008–2011 is too provided in the FRIA (see FRIA p. IV– For new passenger cars and lighter
low. NHTSA projected an average of 2). light trucks (rated at less than 6,000
15.46 pounds (including both FMVSS D. Federal Motor Vehicle Emissions pounds GVWR), the Tier 2 standards’
requirements and voluntary safety Standards phase-in began in 2004, and the
improvements) and a CAFE impact of standards are to be fully phased in by
0.04 mpg. Only Ford provided a total 1. Tier 2 Requirements 2007. For MDPVs, the phase-in schedule
estimate which could be compared to Pursuant to its authority under the under the Tier 2 Program requires that
this number, and their estimate was Clean Air Act, on February 10, 2000, the 50 percent of the MDPV fleet must
significantly higher. Environmental Protection Agency (EPA) comply in MY 2008 and that 100
In some instances the manufacturers’ percent comply by MY 2009.
weight estimates are similar to 148 In reality, the fuel economy impact depends Prior to model year 2008, EPA also
NHTSA’s, in some instances they are on the baseline weight of the vehicle. regulates MDPVs under ‘‘Interim-Non-
Tier 2’’ standards, applicable to MDPVs atmosphere through evaporation, the statute provides that the State of
in accordance with a phase-in schedule ORVR requirements do not have a California may issue such standards
beginning with MY 2004. The phase-in negative impact on fuel economy, upon obtaining a waiver from the EPA
schedule requires compliance at the despite the associated weight increase. (CAA section 209(b); 42 U.S.C. 7543(b)).
following levels: 25 percent in 2004, 50 In its comments, Honda disagreed The State of California has established
percent in 2005, 75 percent in 2006, and with the agency’s assertion that ORVR several emission requirements under
100 percent in 2007. Thus, beginning in systems do not have a negative impact section 209(b) of CAA as part of its Low
2008, half of new MDPVs are expected on fuel economy because the systems Emission Vehicle (LEV) program.
to comply with Tier 2 and the other half make available for combustion vapors California initially promulgated these
with ‘‘Interim Non-Tier 2 Standards.’’ that would otherwise be lost to the
section 209(b) standards in its LEV I
(Once the Tier 2 standards for MDPVs environment. Honda stated that the
standards, and it has subsequently
are fully implemented, the Interim-Non- agency’s assertion is correct for ‘‘in-use
fuel economy,’’ but it is not true for the adopted more stringent requirements
Tier 2 standards will be eliminated.)
When issuing the Tier 2 standards, test procedures used to determine fuel under section 209(b) of the CAA in its
EPA responded to comments regarding economy under CAFE, because the fuel LEV II regulations. The relevant LEV II
the Tier 2 standard and its impact on economy test procedures rely on a regulations are being phased in for
CAFE by indicating that it believed that carbon balance equation. Honda stated passenger cars and light trucks during
the Tier 2 standards would not have an that the measured fuel economy of a the 2004–2007 model years.149
adverse effect on fuel economy. vehicle under the fuel economy test The LEV II amendments restructure
In their confidential product plan procedures is exactly the same, whether the light-duty truck category so that
submissions, several manufacturers or not the ORVR system makes fuel trucks with a GVWR rating of 8,500
stated that the Tier 2 requirements have vapors available to the engine for pounds or less are subject to the same
an effect on fuel economy through combustion. low-emission vehicle standards as
additional weight and design NHTSA reiterates that ORVR provides passenger cars. The LEV II Program also
requirements. However, after careful a slight fuel economy benefit with includes more stringent (than LEV I)
consideration, we have concluded that respect to in-use fuel economy. NHTSA
emission standards for passenger car
the impacts of the Tier 2 standards on acknowledges that Honda’s point is also
and light-duty truck LEVs and
fuel economy would not be significant correct—that this fuel economy benefit
establishes standards for ‘‘ultra low
for the following reasons. First, is not distinguishable in the Federal test
manufacturers themselves have procedure (FTP) or highway test cycle emission vehicles’’ (ULEVs).
estimated that the resulting reduction in measurements. However, ORVR is not The LEV II Program also has
fuel economy during MYs 2008–2010, expected to have a significant effect on requirements for ‘‘zero emission
in comparison to MY 2007, would be no the fuel economy values measured on vehicles’’ (ZEVs) that apply to passenger
greater than 0.04 mpg. Furthermore, the FTP and highway tests. Further, the cars and light trucks up to 3,750 lbs.
with the exception of MDPVs, the Tier slight on-road fuel economy benefit loaded vehicle weight (LVW), beginning
2 requirements will be fully realized is not utilized by NHTSA to set in MY 2005. Trucks between 3,750 lbs.
implemented in MY 2007, prior to the fuel economy standards. LVW and 8,500 lbs. GVWR are phased
MYs that are the subject of this In its rulemaking proceedings for in to the ZEV regulation from 2007–
rulemaking for CAFE. ORVR, EPA conducted an extensive 2012. The ZEV requirements begin at 10
analysis on increases in vehicle weight percent in 2005 and ramp up to 16
2. Onboard Vapor Recovery due to the addition of ORVR hardware percent for 2018 under different paths.
On April 6, 1994, EPA published a and software. A discussion of the ORVR
final rule controlling vehicle-refueling weight penalty is contained in EPA’s Compliance with more stringent
emissions through the use of onboard ‘‘Final Regulatory Impact Analysis: emission requirements of the section
refueling vapor recovery (ORVR) Refueling Emission Regulations for 209 CAA requirements in the LEV II
vehicle-based systems (see 59 FR Light-Duty Vehicles and Trucks and program is most often achieved through
16262). These requirements applied to Heavy-Duty Vehicles,’’ January 1994; more sophisticated combustion
light-duty vehicles (cars) beginning in Chapter 5 Economic Impact, section management. The associated
the 1998 model year, and were phased 5.3.2.1. If mechanical seal ORVR improvements and refinement in engine
in over three model years. The ORVR systems are more widely used in the controls generally improve fuel
requirements also apply to light-duty future than liquid seal ORVR systems efficiency and have a positive impact on
trucks with a GVWR of 6,000 pounds or (which represent approximately 95–98 fuel economy.150 However, such gains
less beginning in model year 2001, percent of today’s vehicles), the weight may be diminished because the
being phased in over three model years. penalty could increase above that advanced technologies required by the
For light-duty trucks with a GVWR of discussed in EPA’s RIA. However, any program can affect the impact of other
6,001–8,500 lbs, the ORVR requirements increase in vehicle weight due to more fuel-economy improvements (primarily
first applied in the 2004 model year and widespread use of mechanical seal due to increased weight). The agency
were phased in over three model years. ORVR systems would be negligible and has considered this potential impact in
The ORVR requirements impose a not be expected to be a major fuel our evaluation of manufacturers’
weight penalty on vehicles, as they economy design consideration. product plans.
necessitate the installation of vapor
recovery canisters and associated tubing 3. California Air Resources Board—
149 As of the end of 2005, ten states have adopted
and hardware. However, the operation Clean Air Act Section 209 Standards
the LEV II program, including Connecticut, Maine,
of the ORVR system results in fuel The Clean Air Act (CAA) generally Massachusetts, New Jersey, New York, Oregon,
vapors being made available to the prohibits States or any other political Pennsylvania, Rhode Island, Vermont, and
engine for combustion while the vehicle subdivision from adopting any standard Washington.
150 Northeast States for Coordinated Air Use
is being operated. As these vapors relating to the control of emissions from Management, ‘‘White Paper: Comparing the
provide an additional source of energy new motor vehicles (CAA section Emissions Reductions of the LEV II Program to the
that would otherwise be lost to the 209(a); 42 U.S.C. 7543(a)). However, the Tier 2 Program,’’ October 2003.
XI. Need of the Nation To Conserve would have to increase by more than 36 conservation and the comprehensive
Energy million barrels per day over current energy program set forth in the NEP. In
EPCA specifically directs the levels. OPEC producers are expected to assessing the impact of the standards,
Department to balance the technological supply 40 percent of the increased we accounted for the increased vehicle
and economic challenges related to fuel production. In contrast, U.S. crude oil mileage that accompanies reduced costs
economy with the nation’s need to production is projected to increase from to consumers associated with greater
conserve energy. While EPCA grew out 8.4 million barrels per day in 2004 to fuel economy and have concluded that
of the energy crisis of the 1970s, the 9.62 million in 2015, and then begin the final rule will lead to considerable
United States still faces considerable declining, falling to 8.9 million barrels fuel savings. While increasing fuel
energy challenges today. U.S. energy per day in 2025. By 2025, 60 percent of economy without increasing the cost of
consumption has been outstripping U.S. the oil consumed in the U.S. would be fuel will lead to some additional vehicle
energy production at an increasing rate. imported oil. 152 travel, the overall impact on fuel
This imbalance, if allowed to continue, Energy is an essential input to the conservation remains decidedly
will undermine our economy, our U.S. economy, and having a strong positive.
standard of living, and our national economy is essential to maintaining and We acknowledge that, despite the
security. (May 2001 National Energy strengthening our national security. CAFE program, the United States’
Policy (NEP) Overview, p. viii) Secure, reliable, and affordable energy dependence on foreign oil and
As was made clear in the first chapter sources are fundamental to economic petroleum consumption has increased
of the NEP, efficient energy use and stability and development. Rising in recent years. Nonetheless, data
conservation are important elements of energy demand poses a challenge to suggest that past fuel economy increases
a comprehensive program to address the energy security, given increased reliance have had a major impact on U.S.
nation’s current energy challenges: on global energy markets. As noted petroleum use. The NAS determined
above, U.S. energy consumption has that if the fuel economy of the vehicle
America’s current energy challenges can be increasingly been outstripping U.S. fleet had not improved since the 1970s,
met with rapidly improving technology,
dedicated leadership, and a comprehensive
energy production. U.S. gasoline consumption and oil
approach to our energy needs. Our challenge Conserving energy, especially imports would be about 2.8 million
is clear—we must use technology to reduce reducing the nation’s dependence on barrels per day higher than they are
demand for energy, repair and maintain our petroleum, benefits the U.S. in several today. Increasing fuel economy by 10
energy infrastructure, and increase energy ways. Improving energy efficiency has percent would produce an estimated 8
supply. Today, the United States remains the benefits for economic growth and the percent reduction in fuel consumption.
world’s undisputed technological leader: but environment, as well as other benefits, Increases in the fuel economy of new
recent events have demonstrated that we such as reducing pollution and vehicles eventually raise the fuel
have yet to integrate 21st-century technology
into an energy plan that is focused on wise
improving security of energy supply. economy of all vehicles as older cars
energy use, production, efficiency, and More specifically, reducing total and trucks are scrapped.
conservation. petroleum use decreases our economy’s Our analysis in the EA indicates that
(Page 1–1) vulnerability to oil price shocks. Reformed CAFE standards will result in
Reducing dependence on oil imports an estimated 73 million metric tons of
The concerns about energy security
from regions with uncertain conditions CO2 over the lifetime of the vehicles (see
and the effects of energy prices and
enhances our energy security and can EA p. 31). They will further reduce the
supply on national economic well-being
reduce the flow of oil profits to certain intensity of the greenhouse gas
that led to the enactment of EPCA
states now hostile to the U.S. Reducing emissions generated by the
persist today. The demand for
the growth rate of oil use will help transportation sector of the national
petroleum is steadily growing in the
relieve pressures on already strained economy, consistent with the
U.S. and around the world.
The Energy Information domestic refinery capacity, decreasing President’s overall climate change
Administration’s International Energy the likelihood of product price policies. However, NHTSA has not
Outlook 2005 (IEO2005)151 and Annual volatility. monetized greenhouse gas reduction
Energy Outlook 2006 (Early Release) We believe that the continued benefits in this rule, given the scientific
(AEO2006) indicate growing demand for development of advanced technology, and economic uncertainties associated
petroleum in the U.S. and around the such as fuel cell technology, and an with developing a proper estimation of
world. U.S. demand for oil is expected infrastructure to support it, may help in avoided costs due to climate change.
to increase from 21 million barrels per the long term to achieve reductions in XII. Comparison of the Final and
day in 2004 to 28 million barrels per foreign oil dependence and stability in Proposed Standards
day in 2030. In the AEO2006 reference the world oil market. The continued
infusion of advanced diesels and hybrid The standards established in today’s
case, world oil demand increases
propulsion vehicles into the U.S. light final rule are more stringent than those
through 2030 at a rate of 1.4 percent
truck fleet may also contribute to proposed in the NPRM. Moreover, the
annually, from 82 million barrels per
reduced dependence on petroleum. In Final Rule subjects MDPVs to the light
day in 2004 to 118 million barrels per
the shorter term, our Reformed CAFE truck CAFE program beginning in MY
day in 2030 (AEO2006). Approximately
final rule will encourage broader use of 2011, where as the NPRM did not
67 percent of the increase in world
fuel saving technologies, resulting in include the regulation of these vehicles.
demand is projected to occur in North
more fuel-efficient vehicles and greater By applying more stringent standards to
America and emerging Asia. Energy use
overall fuel economy. a more encompassing definition of light
in the transportation sector is projected
to increase at an annual rate of 1.8 We have concluded that the increases trucks, the final rule requires higher fuel
percent through 2025 (AEO2006). in the light truck CAFE standards that efficiency from more vehicles than was
To meet this projected increase in will result from today’s final rule will proposed in the NPRM. The fuel savings
demand, worldwide productive capacity contribute appropriately to energy estimated to result from the standards
adopted today are 4.4 billion gallons
151 See http://www.eia.doe.gov/oiaf/ieo/pdf/ 152 AEO2006, Table A20, International Petroleum from the MYs 2008–2010 Unreformed
0484(2005).pdf. Supply and Disposition Summary. standards, 4.9 billion gallons from the
MYs 2008–2010 Reformed standards, Reformed CAFE standards by 0.2 billion friction lubricants could be fully
and an additional fuel savings of over gallons. implemented in a period of four years,
2.8 billion gallons from the MY 2011 The second change to the Volpe CAFE with equal rates of implementation in
Reformed standard. model was a revision to the way it each year. This translates to a ‘‘phase-
applied technology to achieve increased in’’ cap of 25 percent (100 percent
TABLE 15.—INDUSTRY-WIDE FUEL fuel economy. The Reformed CAFE phase-in divided by 4 years).
ECONOMY LEVELS REQUIRED BY system establishes required fuel The agency has decreased the
PROPOSED AND FINAL REFORMED economy levels, in part, by setting fuel implementation rate for most
economy targets through a marginal technologies to provide implementation
CAFE STANDARDS
cost-benefit analysis. As noted above, rates consistent with the NAS estimate
MY Proposed Final Increase this analysis applies technologies until of 4 to 8 years. This resulted in
the marginal cost of the technology decreasing phase-in caps, with many
2008 22.6 22.7 +0.1 equals the marginal benefits of that ranging from 25 percent (4 year
2009 23.1 23.4 +0.3 technology. The higher fuel prices introduction) to 17 percent
2010 23.4 23.7 +0.3 projected by EIA after the NPRM might (approximately 6 years, the midpoint of
2011 23.9 24.0 +0.1 be expected to cause the model to apply the NAS estimate). The agency assumed
a greater amount of fuel saving shorter implementation rates for
The total fuel saving estimated to technology in the final rule than in the technologies that did not require
result from the Reformed CAFE NPRM, and potentially result in final changes to the manufacturing line. For
standards for MYs 2008–2011 is standards that are more stringent than other technologies (e.g., hybrid and
approximately 7.8 billion gallons. those adopted today. This did not occur, diesel powertrains) we employed phase-
However, in the NPRM the agency in part, because of the revised in caps as low as 3 percent, to reflect the
estimated that the Reformed CAFE technology assumptions incorporated in major redesign efforts and capital
standards as proposed would the Volpe model, as explained below. investments required to implement
potentially save 10.2 billion gallons of The agency revised its technology these technologies. A detailed
fuel over the lifetimes of light trucks assumptions to be more consistent with comparison of the phase-in caps used in
manufactured during these same model the estimates in the NAS report about the NPRM analysis and the final rule
years. The lower estimated fuel savings the number of years needed to analysis is provided in Appendix B of
of the final rule despite adopting more implement each of the various this document.
stringent standards can be explained by technologies and in response to In addition to revisions based on the
a number of factors that affected the comments from manufacturers. To NAS report, the agency also made
agency’s analysis. These include: achieve consistency with the NAS revisions to the Volpe model in
changes in the Volpe model, higher fuel report, we reduced the projected rates of response to specific manufacturers’
price forecasts, revisions to the technology implementation employed comments. Changes to the Volpe model
Reformed CAFE standard, and changes by the model. In their comments, include deleting the use of some
to manufacturers’ product plans. several manufacturers stated that greater technologies for specific manufacturers
leadtime than that provided in the and delaying implementation of some
Some of these factors increased the NPRM is needed for the introduction of technologies to coincide with product
estimated fuel savings for the final rule technologies across a manufacturer’s redesigns/model introduction. The
compared to the level reported in the fleet of vehicles and that some changes instituted by the agency involve
NPRM, while others reduces the rule’s technologies would only be introduced technology phase-in schedules and
estimated fuel savings. These factors are or added to vehicles in conjunction with deleting some technologies from
each discussed below. a major vehicle redesign or a vehicle consideration. For the NPRM, the Volpe
A. Changes in the Volpe Model introduction. Honda stated that it can analysis excluded additional
take 10 years from the point of initial application of automatic transmissions
There were two changes made to the introduction of a technology until the with aggressive shift logic. In
Volpe model between the analysis point at which that technology is consideration of the extremely limited
reported in the NPRM and the analysis employed throughout a manufacturer’s planned use of automatically-shifted
conducted for the final rule, a revision fleet. Honda and Toyota cite the NAS manual (i.e., clutch) transmissions
to the maximum lifetime of light trucks report which concluded that application (ASMTs) the revised Volpe analysis also
and a revision to how the model applied of existing technologies will ‘‘probably excludes additional applications of
technologies. First, the maximum require 4 to 8 years.’’ Honda further ASMTs. Although these technologies
lifetime of light trucks was extended stated that phase-in rates have a critical may eventually appear on vehicles
from 25 to 36 years, and the fraction of impact on lead time requirements. during the MY 2011 timeframe, the
vehicles originally produced during a Nissan, citing the NAS report, stated agency is aware of technical and
model year that remain in service at that overly aggressive implementation of regulatory burdens that likely will be
each age was increased to reflect this technologies has the potential to difficult to overcome during MYs 2008–
longer lifetime. These changes were ‘‘adversely affect manufacturers, their 2011.
made in response to NHTSA’s detailed suppliers, their employees, and Manufacturers’ updated 2005 product
analysis of R.L. Polk registration data for consumers.’’ These concerns were data showed that they plan to include
recent model year light trucks. These echoed by Ford and the Alliance. some technologies on their MY 2008–11
changes increase fuel savings resulting In response to these comments, the light trucks that had previously been
from any increase in CAFE standards agency re-evaluated the ‘‘phase-in’’ utilized in the agency’s NPRM analysis
because they increase the number of assumptions used in the Volpe model. to increase fuel economy from its
miles driven (and the amount of fuel ‘‘Phase-in’’ caps represent the maximum baseline level originally specified in
consumed under the Baseline standard) fraction of a manufacturer’s model line manufacturers’ 2004 product plans.
during a vehicle’s expected lifetime. or fleet to which a technology can be Manufacturers claimed that because
This change increased the total fuel applied when it is initially introduced. they added these technologies after
savings estimated to result from the For example, we assumed that low submitting product plan data to the
agency in 2004, that the agency was application of automatic transmissions combined impact of less driving over
double counting the effect of these with aggressive shift logic. For the final the 4 model years combined.
technologies. The agency disagrees. The rule the Volpe analysis also excluded
C. Revisions to the Reformed CAFE
analysis for the NPRM was based on the application of automatically-shifted
System
product plans submitted in 2004. The manual (i.e., clutch) transmissions in
analysis for the final rule is based on the consideration of its limit planned The fuel savings estimates for the
updated product plans manufacturers application. Reformed CAFE system reported in the
provided the agency in response to the The changes to the technology NPRM and final rule also differ because
August 2005 RFC. If a technology was assumptions relied upon by the Volpe the Reformed CAFE system adopted by
applied to a vehicle model in the model reduced the estimated fuel the final rule differs in certain details
NPRM, and that same technology was savings for the final Reformed CAFE from the Reformed CAFE system
utilized by manufacturers on the same standards, in comparison to the described in the NPRM. First, the
vehicle in their updated product plans, proposed Reformed CAFE standards, by Reformed CAFE system adopted in the
the agency did not apply that 1.5 billion gallons of fuel. Considered final rule replaces the footprint category
technology to that vehicle in the together, the changes to the Volpe system for setting fuel economy targets
analysis it conducted for the final rule. with a continuous function. While the
model reduced the fuel savings
In other words, the agency did not continuous function closely follows the
estimated for the Reformed CAFE
project the use of a technology on a shape of the step function of the
standards, again in comparison with the
model that a manufacturer stated was category system, slight differences
proposed standards, by 1.3 billion
already equipped with that technology. reduced the fuel savings estimate for the
gallons of fuel.
Manufacturers also provided Reformed CAFE standard reported in
information stating that certain B. Higher Fuel Price Forecasts the NPRM by less than 0.1 billion
technologies, which the agency had gallons.
As stated above, the agency is relying Second, as stated above, the Reformed
projected in its NPRM analysis, were
on the most recent EIA forecasts for fuel CAFE standards adopted in the final
incompatible with their products. In
prices for the final rule. In the NPRM, rule set fuel economy targets for MY
response, the agency hasn’t projected
the agency relied on gasoline prices 2008–10 that are more stringent than
the use of certain technologies on
ranging from $1.51–1.58 a gallon. In the those proposed in the NPRM. This
specific products for specific
final rule, the agency is relying on the occurs because the targets for those
manufacturers that claimed technology
updated fuel price forecast, which model years are set by equalizing total
incompatibility. In almost all cases,
provides a range of gasoline prices of industry-wide compliance costs with
these technologies were classified as
$1.96–2.39 a gallon. These higher fuel those of the Unreformed CAFE
being available for use on other
products, both for the specific prices had the effect of raising the standards. Estimated compliance costs
manufacturers that claimed optimized fuel economy targets for MY for the Unreformed standards are higher
incompatibility with some products and 2011 under the Reformed CAFE in the final rule than in the NPRM
for other manufacturers’ products. The standard.153 This, in turn, raised the because manufacturers’ updated
computer model used to implement the estimate of fuel savings resulting from product plans already include several of
Volpe Analysis, as well as the Stage the Reformed standard by 0.7 billion the lower cost fuel improvement
analysis, used ‘‘engineering constraints’’ gallons. technologies, and therefore, the analysis
to apply general (i.e., industry-wide) However, as discussed in Chapter applies technologies with higher costs
limits on the application of some VIII, higher fuel prices increase the per- in order to achieve the same fuel
technologies in consideration of mile cost of driving and therefore are economy level under the proposed
technical issues (as opposed to product expected to reduce the average number Unreformed CAFE system. Setting fuel
planning or lead time considerations, of miles driven each year by light trucks economy targets under the Reformed
which are addressed separately). (an impact of the ‘‘rebound effect,’’ CAFE system to equal these higher
Further, the agency constrained the discussed above). The effect of the Unreformed CAFE compliance costs
introduction of two technologies resulting reduction in lifetime use of therefore results in more stringent
(aerodynamic drag reduction and MY 2008–11 light trucks is to reduce targets. This change increased the
materials substitution) to coincide with fuel savings resulting from the Reformed estimated fuel savings resulting from the
a major vehicle redesign or a vehicle CAFE standard by 0.7 billion gallons, Reformed standard described in the
introduction. Constraining these offsetting the gain that occurred due to NPRM by 1.6 billion gallons.
technologies to major redesigns is higher fuel prices. However, this 0.7 Finally, the Reformed CAFE system
consistent with manufacturer practice, billion gallon reduction results from the adopted in the final rule includes
given that applying such technologies effect of higher fuel prices on usage of MDPVs beginning in MY 2011, while
requires changes to integral design all four model years of light trucks the NPRM excluded MDPVs in all
components such as paneling. These affected by the Reformed CAFE standard model years. Including MDPVs under
constraints are in addition to the (2008–11), while the 0.7 billion increase the Reformed standard in MY 2011
‘‘engineering constraints’’ discussed in fuel savings resulting from higher increased the estimate of fuel savings by
above. fuel prices resulted from higher fuel 0.3 billion gallons.
Additionally, the agency itself has economy targets for only MY 2011 light The net effect of changes to the
removed technologies included in the trucks. The impact of higher standards Reformed CAFE system in the final rule,
NAS report from consideration due to for MY 2011 was thus offset by the as opposed to the Reformed CAFE
indications that these technologies will system in the NPRM, accounts for 1.8
not be available for implementation nor 153 Because the fuel economy targets for MY billion more gallons of fuel saved.
are any manufacturers planning to 2008–10 are set by equating industry-wide

incorporate these technologies in their compliance costs for the Reformed CAFE standard D. Updated Product Plans
to those under the Unreformed standard (rather
vehicles during the MYs 2008–2011 than by the optimization process used in MY 2011),
The most important factor
time frame. For the NPRM, the Volpe higher fuel prices do not affect the targets for those contributing to the difference between
analysis excluded additional years. the fuel savings estimated for the
proposed and final rules is changes in publication of the RFC in association typically have higher fuel economies,
the product plans supplied by the with the 2005 NPRM, manufacturers and to utilize more fuel-saving
manufacturers between the NPRM and provided updated product plans. These technologies across their fleets.
final rule. In developing the NPRM, the updated product plans indicate that in Table 16 below illustrates a sampling
agency relied upon manufacturer comparison to their previous plans, of the fuel-economy baselines relied on
product plans provided in response to several manufacturers intend to increase in the NPRM and the baselines relied
the 2003 ANPRM. Following production of smaller vehicles, which upon for the final rule.
TABLE 16.—BASELINE FUEL ECONOMIES RELIED UPON IN THE NPRM AND FINAL RULE
MY 2008 (mpg) MY 2009 (mpg) MY 2010 (mpg)
Manufacturer
NPRM Final NPRM Final NPRM Final
General Motors .................................................................................................... 21.2 21.3 21.4 21.4 21.4 21.6

Ford ...................................................................................................................... 21.7 21.7 22.1 21.9 22.4 22.9
DaimlerChrysler ................................................................................................... 21.9 22.0 22.3 22.0 22.3 22.4
Toyota .................................................................................................................. 22.9 22.5 22.9 22.4 22.9 22.9
Honda ................................................................................................................... 24.5 24.5 24.5 24.5 24.5 24.5
Nissan .................................................................................................................. 20.7 21.0 20.8 21.0 21.3 21.2
The changes to product plans reflect manufacturer’s updated product plan E. Evaluating the Adopted Reformed
a decrease in the planned production of indicated that it now planned to utilize CAFE System
larger light trucks, which typically have the same technology on that model, that The variety of factors that contributed
lower fuel economy performances. The technology was then unavailable to the to the revised fuel savings estimate for
product plans indicate that agency in its analysis of how the Reformed CAFE standard adopted in
manufacturers are planningto produce manufacturers could improve fleet fuel the final rule make it difficult to
less of the ladder-frame type of SUVs economy to meet the standards compare the fuel savings estimate
and more unibody crossover vehicles, considered in the final rule. While the reported in the final rule with the
which typically have higher fuel effect of that technology is still reflected estimate reported in the NPRM for the
economy. This shift in the mix of in the vehicle’s lower lifetime fuel proposed Reformed CAFE standards.
vehicle sizes results in a higher overall consumption, that effect now appears to The combination of changes to
average CAFE requirement for the entire result from its manufacturer’s decision manufacturers’ product plans with
vehicle fleet, which increases lifetime to utilize it even in the absence of any revisions to the Volpe model and its
fuel savings for MY 2008–2011 light action by the agency to increase CAFE assumptions account for a decrease in
trucks by 2.4 billion gallons. standards, rather than from its efforts to the agency’s estimate of fuel savings that
At the same time, many of the comply with the standard established by will result from the Reformed CAFE
technology improvements that the the final rule. standards from the 10.2 billion gallons
agency applied in setting standards for Thus the limited availability of reported in the NPRM to 7.8 billion
the NPRM are thus no longer available technologies during the period subject gallons in this rule. Had these changes
to increase fuel economy, because they to this rulemaking, in part, has resulted not been made, the adopted Reformed
are now being utilized to achieve the in the final standards being set at the CAFE standards would likely have
higher baseline fuel economy levels same or similar levels as those initially saved significantly more fuel than the
reflected in manufacturers’ revised proposed. The fuel savings attributable 10.2 billion gallons reported in the
product plans. These technologies directly to the rule is the reduction in NPRM.
include a variety of engine fuel consumption from the level that In a broader sense, the fuel efficiency
improvements and upgraded would occur with a manufacturer’s of the light truck fleets that will be
transmissions, many of which were planned baseline. Because the level of produced in MYs 2008–2011 will be
applied by the agency to increase the final standards is close to what was significantly higher than that of the
baseline fuel economy to the level of the proposed, but the fuel economy levels fleets that were originally planned when
standards proposed in the NPRM, and represented in manufacturers’ baselines manufacturers submitted their initial
others that represent changes in have generally improved, the amount of product plans to NHTSA in 2004. This
manufacturers’ plans for technology fuel savings directly attributable to the improvement in fuel efficiency reflects
introduction. Other changes in the final standards appears to be less than manufacturers’ response to the higher
revised product plans include an that projected in the NPRM. fuel prices through fuel economy
increase in the projected number of The increase in baseline fuel economy improvements to their fleets and a shift
hybrid vehicles that manufacturers plan of resulting from additional towards smaller vehicles, as well as the
to produce. Not only do manufacturers technologies accounts for a lifetime fuel improvements in fuel economy required
plan to increase their production of savings of 5.3 billion gallons for MY by the CAFE standards adopted in this
current hybrid models, but they also are 2008–2011 light trucks, which are no rule. Because current and forecasted
planning to introduce hybrid versions of longer included in the fuel savings gasoline prices have risen dramatically
both existing and new vehicles. As to be estimated for the Final Rule. Thus the since manufacturers submitted their
expected, the additional hybrid vehicles net effect of revised manufacturer initial plans, consumer preferences have
had a beneficial effect on manufacturers’ product plans is to reduce the fuel shifted away from the largest models
baseline CAFE levels. savings attributed to the Reformed toward more modestly-sized and fuel
If the agency’s analysis for the NPRM CAFE standard in the NPRM by 2.9 efficient light trucks. Some of the fuel
applied a technology to improve the fuel billion gallons (5.3 minus 2.4 billion savings previously attributed to the
economy of a light truck model but its gallons). proposed CAFE standards now appear
to result from manufacturers’ responses finds that standards for these vehicles a portion of the testing necessary to
to changed market conditions. are feasible, and that these vehicles are determine fuel economy performance
In addition, the Reformed CAFE used for substantially the same purpose under the CAFE program (See 40 CFR
proposal announced in the NPRM put as vehicles rated at not more than 6,000 Part 600 Subpart F), the agency
manufacturers on notice that fuel lbs. GVWR. Further, the inclusion of expressed its belief that meeting the
efficiency standards for light trucks these vehicles in MY 2011 will result in additional testing requirements would
would increase, and that future a savings of 251 million gallons of fuel not be unreasonably burdensome.
standards would challenge over the lifetime of those vehicles. The Moreover, the agency’s preliminary
manufacturers to improve fuel regulation of these vehicles under the estimate was that inclusion of MDPVs in
efficiency for all light truck models, CAFE program will begin with the 2011 the MY 2011 Reformed CAFE standard
regardless of their size. The revised MY. could save additional fuel. The agency
product plans that manufacturers In the NPRM, the agency requested stated that we were not considering
submitted in response to the NPRM comment on extending the applicability inclusion of the heavier rated vehicles
responded to these factors, and the of the CAFE program to include MDPVs. in MYs 2008–2010, as our estimates
changes to model assumptions The EPA defines ‘‘MDPV’’as a ‘‘heavy indicated that their inclusion would
discussed above, in conjunction with duty vehicle’’ 154 with a GVWR less than lead to a loss in overall fuel savings. The
the more stringent Reformed CAFE 10,000 lbs. that is designed primarily for agency sought comment on whether
standards adopted by the final rule, will the transportation of persons. The MDPVs should be included in the final
significantly improve the fuel efficiency MDPV definition excludes any vehicle rule for MY 2011.
of light trucks produced in MY 2008– which: Commenters were divided as to
2011. The revised product plans that whether MDPVs should be included in
(1) Is an ‘‘incomplete truck’’ as defined in
manufacturers submitted following this subpart; or
the CAFE definition of light trucks.
publication of the NPRM responded to (2) Has a seating capacity of more than 12 Although the NPRM requested comment
these changed conditions, and together persons; or on the inclusion of MDPVs, most
with the more stringent standards (3) Is designed for more than 9 persons in responses addressed all vehicles up to
adopted by this rule, the more fuel seating rearward of the driver’s seat; or 10,000 lbs. GVWR. Manufacturers and
efficient vehicles that will be produced (4) Is equipped with an open cargo area (for their trade associations were opposed to
example, a pick-up truck box or bed) of 72.0 including these heavier vehicles in the
in MYs 2008–2011 will consume inches in interior length or more. A covered
approximately 11 billion fewer gallons CAFE program, stating that subjecting
box not readily accessible from the passenger these vehicles to CAFE standards was
of fuel over their lifetimes than they compartment will be considered an open
would have based on the manufacturers’ cargo area for purposes of this definition.155
not feasible and that these vehicles are
initial product plans. used for substantially different purposes
The agency is incorporating the EPA than vehicles with a GVWR under 6,000
A more meaningful comparison can
MDPV definition into the definition of lbs. Environmental organizations,
be made between the fuel savings
‘‘automobile’’ in 49 U.S.C. 523.3, such States, and state organizations
estimates for the adopted Reformed
that these vehicles will be regulated as supported the inclusion of these
CAFE standard and the NPRM Reformed
light trucks. The MDPV definition vehicles, stating that including these
CAFE standard when both are
essentially includes SUVs, short bed vehicles is feasible, will result in
calculated using the modeling
pick-up trucks, and passenger vans, significant fuel savings, and is
assumptions and manufacturer product
which are within the specified weight appropriate as the primary use of most
plan data that were used in the analysis
and weight-rated ranges. of these vehicles is to transport
conducted for the Final Rule. We re- Under EPCA, the agency can regulate
estimated fuel savings for the NPRM passengers. No commenter addressed
vehicles with a GVWR between 6,000 lb. the questions concerning alternate ways
Reformed CAFE standards using the and 10,000 lb. under CAFE if we
revised Final Rule modeling to encourage improving fuel economy of
determine that (1) standards are feasible these vehicles.
assumptions and product plans, and for these vehicles, and (2) either that The Alliance, Ford, Nissan, General
found that the Reformed standard these vehicles are used for the same Motors, and the Recreational Vehicle
presented in the NPRM would save 5.5 purpose as vehicles rated at not more Industry Association (RVIA) opposed
billion gallons under these revised than 6,000 lbs. GVWR, or that their establishing standards applicable to any
assumptions. This contrasts with the regulation will result in significant vehicle with a gross vehicle weight
previously-reported fuel savings energy conservation. rating (GVWR) greater than 8,500 lbs.
estimate of 7.8 billion gallons for the In the NPRM, the agency discussed its (heavier light trucks). Manufacturers
adopted Reformed CAFE standard. Thus preliminary analysis of the feasibility of stated that subjecting such vehicles to
increasing the stringency of the final including MDPVs and the impact of the CAFE program was not feasible and
rule and including MDPVs in 2011 their inclusion on the fuel savings of the that these vehicles are used for a
together increased lifetime fuel savings CAFE standards. The agency expressed substantively different purpose than
projected to result from the rule by 2.3 its belief that fuel economy technologies vehicles with a GVWR less than 6,000
billion gallons (equal to 7.8 billion applicable to vehicles with a GVWR lbs. (lighter light trucks). Additionally,
minus 5.5 billion gallons). below 8,500 lbs. might be applicable to compared to the 120 billion gallons of
XIII. Applicability of the CAFE MDPVs, e.g., low-friction lubricants, 6- fuel used by light trucks per year,
Standards speed transmissions and cylinder General Motors stated that the estimated
deactivation. In addition, since MDPVs fuel savings cannot be considered
A. Inclusion of MDPVs in MY 2011 are already required by EPA to undergo significant. Moreover, the Alliance and
The agency is extending the Ford stated that inclusion of these
applicability of the light truck CAFE 154 The EPA defines ‘‘heavy duty vehicle’’ as a
vehicles would primarily impact only
program to include vehicles defined by motor vehicle that is rated at more than 8,500 lbs. one manufacturer (a domestic
GVWR; or that has a vehicle curb weight of more
the EPA as ‘‘medium duty passenger than 6,000 lbs.; or that has a basic vehicle frontal manufacturer) and therefore would
vehicles’’ (MDPVs) beginning in MY area in excess of 45 square feet. undercut the agency’s goal of
2011. As explained below, the agency 155 40 CFR 86.1803–01. establishing a more equitable regulatory
framework. Therefore, these effect of including MDPVs in the MY 600). Vehicles classified as ‘‘light
commenters argued, inclusion of such 2008–2010 Reformed CAFE standards trucks’’ under the current CAFE
vehicles in the CAFE program is would be a reduction in overall fuel definition are required to undergo this
impermissible under EPCA. savings of almost 1.1 billion gallons. testing for the EPA emissions
The Union of Concerned Scientists, The agency has determined that requirements. Because both the fuel
NRDC, NESCAUM, Environmental regulation of the MDPV fuel economy economy and emissions requirements
Defense, U.S. PIRG, Sierra Club, beginning MY 2011 is consistent with rely on the same tests, the test burden
National Environmental Trust, Rocky the criteria set forth in EPCA for to manufacturers is minimized.
Mountain Institute, SUN DAY, expanding the applicability of the light Under the EPA’s Tier 2 requirements,
Connecticut Department of truck CAFE program. First, regulation of requirements for MDPVs to undergo city
Environmental Protection, AAA, these vehicles is feasible. Second, in chassis dynamometer emission testing
Representatives Baldwin et al., establishing the MDPV definition, the under Tier 2 are being phased-in
Pennsylvania Department of EPA determined that these vehicles are starting in MY 2008 (50 percent) with
Environmental Protection, ACEEE and used primarily to transport all MDPVs subject to the testing in MY
STAPPA and ALAPCO supported passengers,157 a use substantially 2009 (40 CFR 86.1811–04(j)). The Tier 2
expanding the definition of light truck similar to vehicles with a GVWR less regulation exempts MDPVs from
to include all vehicles with a GVWR than 6,000 lbs. GVWR. Moreover, the highway chassis dynamometer testing.
between 8,500 lbs. and 10,000 lbs. analysis performed for the final rule Therefore, MDPVs are not subject under
NRDC and Environmental Defense indicates that inclusion of MDPVs in the Tier 2 to the complete set of tests
stated EPCA not only permitted the light truck CAFE program for MY 2011 necessary for the fuel economy
expansion of the light truck definition, will lead to a savings of 251 million requirements. However, we have
but that the statute’s directive to gallons of fuel. determined that this additional testing
consider the Nation’s need to conserve In 1977, the agency extended the will not be burdensome for the
energy mandated an expansion. First, definition of ‘‘automobile’’ under CAFE manufacturers.
NRDC stated that many of the to include certain light trucks with a The EPA estimates that regulating
technologies evaluated in the NAS GVWR greater than 6,000 lbs. The MDPVs under the fuel economy
report could be applied to all vehicles agency stated that for regulation of these standards would require approximately
with a GVWR between 8,500 lbs. and vehicles to be feasible the expanded 50–100 city/highway paired tests at a
10,000 lbs. Second, NRDC stated the definition of ‘‘automobile’’ must be cost of $2,000 per pair, plus an
fuel savings from including MDPVs consistent with that adopted by the EPA additional $50,000–100,000 per test
would be significant. However, NRDC for emissions purposes (42 FR 63184, vehicle for test preparation (i.e., a coast-
did not provide any discussion as to 63185–6; December 15, 1977). In 1976, down analysis 158 and appropriate
why the savings would be considered the EPA established maximum curb mileage accumulation). Based on these
significant. Third, NRDC stated that the weight (6,000 lbs.) and maximum estimates, the industry-wide compliance
EPA and CARB already recognize a frontal area (45 ft3) limitations on the test costs for MDPVs range from $2.1
segment of these vehicles as primarily trucks subject to emissions testing. The million to $8.2 million. The EPA noted
passenger-carrying vehicles through the agency noted that the EPA concluded that this cost could potentially be
MDPV classification. UCS and that vehicles that exceed those further reduced due to carry-over tests
limitations are not used for the same and the fact that a manufacturer is
Environmental Defense cited a Polk
type of service as those with smaller cab permitted to certify up to 20 percent of
survey to support the proposition that
areas and curb weights (42 FR 63186). its fleet through an analytical process
the heavier light trucks are used for
Consistent with the EPA regulations we that does not require vehicle testing.
substantially the same purposes as the
amended the definition of automobile to The Alliance and Ford stated that the
lighter light trucks.
include light trucks with a GVWR up to fuel economy of the heavier light trucks
Environmental Defense stated that a
and including 8,500 lbs., that have a is currently not known; therefore the
separate class could be established for
curb weight of less than 6,000 lbs. and agency has no baseline from which to
all vehicles with a GVWR between 8,500
a frontal compartment space less than set standards. As MDPVs are not
lbs. and 10,000 lbs., so as not to detract
45 ft2 (49 CFR 523.3). As General Motors currently required to undergo chassis
from the fuel savings of the fleet
noted in its comments, the agency dynamometer testing, several
currently regulated. NESCAUM stated
linked the feasibility of regulating manufacturers asserted that the agency
that by not including all vehicles with
vehicles to the existence of EPA did not have adequate information to
a GVWR less than 10,000 lbs in the
emission test procedures and data. determine a baseline fuel economy for
CAFE program, the structure would To generate data necessary to
maintain an incentive for manufacturers these vehicles from which potential fuel
determine compliance with the fuel savings could be projected. The EPA
to ‘‘upweight’’ vehicles in order to economy requirements, vehicles
remove vehicles from the standards. and several manufacturers provided the
representative of manufacturer’s model agency with data that has allowed us to
The agency concludes that inclusion
lines are subject to city and highway estimate a fuel economy baseline for
of MDPVs in MYs 2008–2010 would
chassis dynamometer tests (40 CFR Part MDPVs. These data predominately
lower the fleet-wide required fuel
economy level for those years by cover MDPVs with gasoline power
less by the other manufacturers. This would occur
approximately 0.3 mpg.156 The net because the addition of the low fuel economy
trains. NHTSA has developed additional
MDPVs in MYs 2008–2010 would depress the level data for MDPVs, including diesels, by
156 Under the Unreformed CAFE structure, of General Motors’ CAFE and therefore depress the extrapolating from the performance of
maximum feasible standards are set with particular level of the Unreformed CAFE standards. Since the sister vehicles with a GVWR less than
consideration given to the least capable MY 2008–2010 Reformed CAFE standards are set so
8,500 lbs. Since the data supplied by the
manufacturer, which has been determined to be as to roughly equalize industry-wide costs with the
General Motors for this proposed rule. A large MY 2008–2010 Unreformed CAFE standards, EPA was based on emission testing
percentage of the MDPVs are produced by General depressing the Unreformed CAFE standards for
Motors and, due to their weight, have very low fuel MYs 2008–2010 would also depress the Reformed 158 A coast-down analysis is used to determine a
economy. The inclusion of these vehicles would CAFE standards for those years. vehicle’s horsepower for running the chassis
lead to greater fuel savings by General Motors, but 157 65 FR 6698; February 10, 2000. dynamometer tests.
conducted on ‘‘worst case’’ vehicles, use, the agency must focus on ‘‘peak’’ a less stringent target. On the other
rather than best sellers as would be use. hand, Environmental Defense stated that
done for fuel economy, the baseline The Union of Concerned Scientists a separate class could be created for
derived from this data is conservative. and Environmental Defense cited a Polk heavier vehicles so as to not reduce the
Vehicles with a GVWR greater than survey to support the proposition that target for vehicles which are already
8,500 lbs that are not defined as MDPVs the heavier light trucks are used for regulated.
(e.g., heavier rated long bed pick-up substantially the same purpose as the After considering these comments, the
trucks) are not subject to EPA testing lighter light trucks. According to the agency has decided not to regulate
that provides the data necessary to Polk survey, the daily use light trucks, MDPVs as a separate class of light truck.
determine compliance with the CAFE broken down by percentage, is as First, we note that issues regarding the
program. Inclusion of the heavier-rated- follows: Commuting (53.8 percent), impact of MDPVs on the largest vehicle
non-MDPVs would increase the test personal trips (33.6 percent), carrying category are no longer applicable. Under
burden for manufacturers. These passengers (29.6 percent), hauling (4.3 the continuous function, vehicles will
vehicles would be subject to a whole percent), towing (4.0 percent), and off- be compared to targets assigned to each
new testing regime. Moreover, because road use (3.7 percent). Union of vehicle’s footprint value. Further, as the
these vehicles are not subject to Concerned Scientists stated that the agency has stated previously when
comparable testing requirements, there Polk study found that use patterns of deciding whether to establish separate
is not sufficient data to estimate a fuel light, medium, and heavy pickup trucks standards for 2WD and 4WD vehicles,
economy baseline. Without a reliable are substantially the same overall, with ‘‘the fact that standards must be average
baseline, the agency is unable to a few notable exceptions. The Union of fuel economy standards indicates that
determine fuel economy targets that Concerned Scientists and the manufacturers should be given some
would result in required fuel economy Environmental Defense stated that this opportunity to balance vehicles with
levels that are economically practicable data demonstrate that vehicles with a different fuel economies to ensure,
and technologically feasible. GVWR greater than 8,500 lbs. and less consistent with the need to conserve
Aside from the ability to obtain test 10,000 lbs are used for substantially energy, that a reasonable variety of
data and the determination of a similar purposes. vehicle types can be produced to satisfy
baseline, technologies are available that As stated above, the EPA determined consumer demand.’’ (42 FR 13807,
can be applied to MDPVs in order to that MDPVs are used primarily to 13811; March 14, 1977)
improve fuel economy performance. transport passengers. In establishing the Since the manufacturers of MDPVs
The agency recognizes that not all definition, the EPA stated: are all full-line manufacturers, the
technologies that are applied to vehicles agency has decided that on balance it is
with lighter weight ratings are We are defining medium-duty passenger advantageous to regulate these vehicles
vehicles as any complete heavy duty vehicle
applicable to MDPVs. However, we have with all light trucks in order to provide
less than 10,000 pounds GVWR designed
identified several technologies that primarily for the transportation of persons. manufacturers the flexibility of either
could be applied, for example, 6-speed (65 FR 6698, 6849; February 10, 2000; improving the fuel economy of these
transmissions, multiple valves per emphasis added). vehicles, relying on improvements in
cylinder, variable valve timing, and other vehicles to offset the fuel economy
cylinder deactivation. Additionally, the EPA noted that that
of these vehicles, or some combination
Commenters provided a variety of in crafting the definition, it made a
of these two strategies.
survey data on the use of vehicles with distinction based on bed length, Finally, we have determined that
a GVWR greater than 8,500 lbs and less [B]ecause a vehicle introduced with a inclusion of MDPVs in MY 2011 will
than 10,000 lbs. The Alliance, General shorter bed would have reduced cargo result in an additional fuel savings of
Motors, Ford, and Nissan stated that the capacity and would likely have increased 251 million gallons of fuel.
heavier light trucks are used for seating capacity relative to current pick-ups,
commercial, agricultural and utility making it more likely to be used primarily as B. ‘‘Flat-Floor’’ Provision
a passenger vehicle. Id. In the NPRM, the agency tentatively
reasons distinct from the uses of
vehicles with a GVWR less than 6,000 In establishing the final rule, the EPA decided to amend the ‘‘flat floor
lbs. Ford cited recent Ford New Vehicle demonstrated an effort to distinguish provision’’ in the light truck definition
Customer Studies (NVCS) that vehicles that are used primarily to (49 CFR 523.5) so that the definition
determined that SUVs in the MDPV transport people from vehicles used for expressly includes vehicles with seats
category are used for towing 80 percent more ‘‘work-like’’ functions. The that fold and stow in a vehicle’s floor
more often than midsize SUVs. In transportation of passengers is a use that pan. The agency stated that we
addition, Ford stated that for the 2004 is substantially similar to the use of tentatively determined that these seats
MY, commercial and fleet users made vehicles with a GVWR less than 6,000 are functionally equivalent to removable
up 63 percent of Ford Excursion buyers. lbs. As in the 1977 final rule, we are seats and minimize safety concerns that
However, Ford did not indicate as to amending the definition of automobile arise from the potential to improperly
whether the use of the Excursions in consistent with the EPA’s re-installed seats. The agency said that
these fleets was primarily to transport determination. its goal was treating passenger vans and
people, or to perform more ‘‘work-like’’ The agency also considered Ford’s mini vans in a similar fashion.
functions. Ford also stated that full size comment that inclusion of MDPVs In response to commenters, the
vans in the MDPV category are used for would result in disparate impacts under agency is amending the flat-floor
significantly different purposes; of all Reform CAFE. Ford specifically stated provision to accommodate certain
the E-Series trucks sold, 84 percent are that the target for a category containing folding seats, but also to restrict the
purchased for commercial purposes, MDPVs would have to be lowered to group of vehicles relying on the flat
and as commercial use of these full size account for the reduction in the overall floor provision to qualify as a light truck
vans increases, consumer use of these capability of the category fleet. to those vehicles having at least 3 rows
vehicles as passenger or conversion Therefore, manufacturers that do not of designated seating positions as
vans is decreasing. General Motors produce MDPVs, but that have other standard equipment. That is, a vehicle
asserted that when considering vehicle vehicles in that category, would receive would qualify only if it had at least 3
rows of seats, the 2nd and 3rd of which seatback fold (e.g., station wagons). language eliminates the need to define
are capable of creating a flat cargo DaimlerChrysler, Mitsubishi, and ‘‘floor pan’’ and does not require seat
surface through either folding or Johnson Controls raised concern that the designs to store in any particular
detachment. proposed amendment would not manner.
The current regulation classifies as a capture all minivans, given that the Several commenters raised concern
light truck any vehicle with readily design of folding seats is not limited to with revising the flat-floor provision.
removable seats that, once removed, those that stow under the floor pan. The Union of Concerned Scientists,
leave a flat floor level surface. In DaimlerChrysler and Johnson Controls Environmental Defense, and the New
pertinent part, the current regulatory recommended that the agency adopt a York Department of Environmental
text reads as follows: flat loading surface requirement in Conservation opposed the proposed
Permit expanded use of the automobile for conjunction with a minimum volume revision, stating that it would widen the
cargo-carrying purposes or other criterion. existing light truck ‘‘loophole.’’
nonpassenger-carrying purposes through the As discussed in the NPRM, minivans
Furthermore, the Union of Concerned
removal of seats by means installed for that traditionally subject to light truck CAFE
Scientists stated that the original
purpose by the manufacturer or with simple standards began offering various seat
justification for the flat floor provision
tools, such as screwdrivers and wrenches, so designs that are intended to be
as to create a flat, floor level, surface no longer applies. The Union of
functionally similar to removable seats,
extending from the forwardmost point of Concerned Scientists stated that the flat
while remaining attached at some point
installation of those seats to the rear of the floor provision was established to reflect
to the vehicle. In the NPRM we
automobile’s interior.159
recognized seats that fold and stow in a that passenger vans were derived from
This definition is only one of several vehicle’s floor pan; i.e., flush with the cargo vans, but that this is no longer
classifying light trucks, and historically, vehicle’s floor, thereby creating a flat true. (In the July 28, 1977 rulemaking,
it has operated, as originally intended, surface that is dimensionally the agency stated that station wagons
to bring only minivans and full size indistinguishable from the surface floor should not be classified as light trucks
passenger vans into the light truck that would exist if the same seats were because, in part, they are built on a car
category. Sport utility vehicles qualify removed instead of being stowed.161 chassis rather than a truck chassis (see
as light trucks because they have the There are still other minivans that offer 42 FR 38362, 38367). The Union of
indices of off-road capability: a 4-wheel seats that fold so as to create a different/ Concerned Scientists stated that while
drive system and certain dimensional new continuous flat cargo surface that is cargo vans and pickup trucks currently
characteristics.160 While the criteria located above the floor level. The share the same platform, minivans do
used for SUVs remain viable, the current definition of light trucks has the not.
definition pertaining to minivans has potential of subjecting minivans that First, the agency continues to
become outdated in that it does not offer stowable seats to passenger vehicle conclude that in general, minivans are
bring all minivans and passenger vans CAFE standards, while subjecting very appropriately classified as light trucks.
into the light truck category. similar minivans featuring removable Minivans offer fuel economy
The Alliance, Ford, Nissan, AIAM, seats to light truck standards. compromising utility features normally
and General Motors stated that the In response to comments, we are associated with light trucks.
proposed revision to the flat floor adopting a revision to the flat-floor Specifically, unlike the smaller
provision reflects current market provision that recognizes the various passenger cars, all minivans feature
conditions and that the agency properly designs that permit seats to fold and three rows of seats, thus offering greater
acknowledged the risks of improperly stow. The provision adopted today passenger carrying capability.162
re-installed seats. However, Ford, replaces the ‘‘flat, floor level surface’’ Further, data from http://
Nissan, and General Motors, requested language with a requirement that www.Edmunds.com, NHTSA CAFE
that the agency clarify the term removal or stowing of seats creates a Database, and the Automotive News
‘‘stowing of foldable seats in the vehicle ‘‘flat, leveled surface extending from the Data Center indicate that minivans offer
floor pan’’ to appropriately capture forwardmost point of installation of significantly larger cargo carrying
minivans and exclude passenger those seats to the rear of the capacity compared to passenger cars
vehicles with seats that have only the automobile’s interior.’’ This new (see Table 17 below).
TABLE 17.—MAXIMUM CARGO CAPACITY OF MINIVANS

Vehicle Type Maximum cargo capacity
DCX R-class .................................................................................................... Minivan ............................................... 85 cu. ft.

DCX Pacifica ................................................................................................... Minivan ............................................... 80 cu. ft.
DCX Caravan/Town & Country SWB .............................................................. Minivan ............................................... 147 cu. ft.
Honda Odyssey ............................................................................................... Minivan ............................................... 147 cu. ft.
Toyota Sienna ................................................................................................. Minivan ............................................... 149 cu. ft.
Ford Freestar/Mercury Monterey ..................................................................... Minivan ............................................... 137 cu. ft.
GM Uplander/Terraza/Montana ....................................................................... Minivan ............................................... 120 to 137 cu. ft.
Nissan Quest ................................................................................................... Minivan ............................................... 149 cu. ft.
Mazda MPV ..................................................................................................... Minivan ............................................... 127 cu. ft.
Chevy HHR ...................................................................................................... Wagon ................................................ 56 cu. ft.
Audi A4 ............................................................................................................ Wagon ................................................ 59 cu. ft.
DCX E-class .................................................................................................... Wagon ................................................ 69 cu. ft.
Saab 9–5 ......................................................................................................... Wagon ................................................ 73 cu. ft.
159 See 49 CFR 523.5(a)(5). ground clearance and steeper approach and 162 Only one minivan, the Chrysler Pacifica, does
160 Sport Utility Vehicles of different sizes qualify departure angles. not offer a third row as standard equipment.
as light trucks because they are equipped with a 4- 161 For example, Chrysler Town and Country and
wheel drive system and because they have higher Dodge Caravan feature ‘‘Stow ‘n Go’’ seating.
TABLE 17.—MAXIMUM CARGO CAPACITY OF MINIVANS—Continued

Vehicle Type Maximum cargo capacity
Volvo V70 ........................................................................................................ Wagon ................................................ 71 cu. ft.

Volvo V50 ........................................................................................................ Wagon ................................................ 63 cu. ft.
Jaguar X-type .................................................................................................. Wagon ................................................ 50 cu. ft.
BMW 530 ix ..................................................................................................... Wagon ................................................ 58 cu. ft.
Dodge Magnum ............................................................................................... Wagon ................................................ 72 cu. ft.
Pontiac Vibe/Toyota Matrix ............................................................................. 5-door hatchback ............................... 54 cu. ft.
Mazda 3 ........................................................................................................... 5-door hatchback ............................... 31 cu. ft.
Both of these capabilities affect fuel depending on whether they have folding a flat floor. However, the PT cruiser
economy because in order to seats or removable seats. Second, an does not have a 3rd row of seats. Also,
accommodate additional seats and obvious advantage of this approach is one minivan, the Chrysler Pacifica does
provide greater cargo carrying capacity, simplicity and objectivity. For example, not offer a third row as standard
Minivans are made larger and heavier this definition would not require equipment. To provide manufacturers
than passenger cars. The seats complicated cargo capacity adequate time to adjust their product
themselves add significant weight to measurements in order to determine plans to the new provision we are
these vehicles. In addition to fuel whether a vehicle is a light truck, as making the new definition effective
economy compromising utility features, would be required under beginning in MY 2012, the change will
we previously explained that continued DaimlerChrysler’s suggestion. Third, not have any immediate impact on MYs
inclusion of minivans in the light truck compared to geometric criteria, such as 2008–2011 vehicles.
standard is justified, in part, based on a minimum cargo volume, this approach In order to provide additional
their good performance in crash tests.163 is less susceptible to gaming, as it is flexibility we are permitting
The same cannot be readily said for a unlikely that smaller vehicles that the manufacturers to rely on either the old
diverse population of station wagons agency believes should not be subject to or the revised definition of light trucks
and hatchbacks that may have flat- the light truck standards would be until MY 2012. This will ensure that a
folding seats, because some of them are equipped with 3rd row seats. Finally, vehicle previously subject to light truck
very small and potentially less safe. the 3rd row seat criterion ensures that CAFE standards would not immediately
However, the agency recognizes the vehicles classified as light trucks become subject to the pasenger car
risk of expanding the light truck continue to include those that offer standard thus upsetting the
definition to include vehicles not added utility features contemplated by manufacturers’ compliance plans. At the
intended to be in that class, i.e., station Congress when it created a separate same time, those manufacturers
wagons and hatchbacks. In order to CAFE standard for light trucks. currently offering minivans with folding
focus the definition only on those In addition to furthering our goal of seats would be able to take advantage of
vehicles that the agency believes should subjecting all minivans to the CAFE the new definition immediately.
be included in the light truck category, standard for light trucks, the provision We do not anticipate that the
we believe it is appropriate to restrict adopted today limits the number of provision adopted today will result in
the group of vehicles relying on the flat vehicles that will be reclassified as light manufacturers installing third row
floor provision to qualify as a light truck trucks. After examining http:// seating for the sole purpose of
to those also having at least 3 rows of www.Edmunds.com, NHTSA CAFE compliance with the light truck CAFE
designated seating positions as standard Database, and the Automotive News program. Installing third row seats
equipment. That is, a vehicle could Data Center, we found that only a Volvo presents practical difficulties (e.g.,
qualify only if it had at least 3 rows of V70 (≤ 10,000 annual sales) has a flat- limited headroom) and costs associated
seats, the 2nd and 3rd of which are folding 3rd row seat, and would thus with making this change in vehicles
capable of creating a flat cargo surface qualify as a light truck. By contrast, with smaller interior volume.
through either folding or detachment. other alternatives considered by the Specifically, we believe the costs of
The regulatory text would read as agency would not necessarily bring all redesigning small vehicles to feature 3rd
follows: minivans under one standard, and could row seats will outweigh potential
For vehicles equipped with at least 3 rows also have the unintended effect of benefits of subjecting these vehicles to
of designated seating positions as standard reclassifying a more substantial number the light truck standard. Further, small
equipment, permit expanded use of the of passenger cars as light trucks. vehicles such as hatchbacks, will likely
automobile for cargo-carrying purposes or We note that small sport utility be compared to fuel economy targets
other nonpassenger-carrying purposes comparable to that of the passenger car
vehicles without 3rd row seats would
through the removal or stowing of seats so as CAFE standard, thus further reducing
to create a flat, leveled surface extending nevertheless qualify as light trucks
based on other existing criteria; i.e., the incentive to make major design
from the forwardmost point of installation of
those seats to the rear of the automobile’s availability of 4-wheel drive or changes for the purpose of classifying
interior. approach angles and minimum such vehicle as a light truck.
The agency has chosen to adopt the clearance. Thus, our approach is XIV. Additional Issues
‘‘third row’’ criterion for four reasons. expected to have few unintended
consequences. Nevertheless, some A. Limited-Line Manufacturer Standard
First, this definition best advances our
goal of subjecting all minivans to one vehicles previously classified as light Porsche requested that the agency
CAFE standard, and eliminates an trucks would no longer be subject to the establish a separate standard for limited-
artificial distinction between minivans light truck CAFE standard. One such line manufacturers, stating that
vehicle is a Chrysler PT Cruiser, which manufacturers that produce only one or
163 See August 2005 NPRM (70 FR 51414 at qualifies now as a light truck because it two light trucks are not afforded the
51456). has a removable rear seat which creates flexibility provided through fleet-wide
averaging. Porsche noted that it opportunity to comply, and that characteristics, as opposed to vehicle
manufacturers only a single model of compliance is made more difficult by characteristics.
light truck that Porsche stated is the reforms established today. Although When the agency established CAFE
designed to ‘‘satisfy a specific consumer some manufacturers have chosen to standards for limited product line light
demand.’’ Porsche argued that it would participate in market segments that trucks, that class included only vehicles
have even greater difficulty in make it easier for them to meet CAFE, with a specific engine type. While the
complying under the Reformed CAFE we note that all manufacturers must reform established today results in
system, as its light truck would fall meet particular challenges when different required fuel economy
within a category that has a target more complying with a standard. standards for different manufacturers
stringent than the Unreformed CAFE Porsche is correct in that in the very based on product mix, the standard still
standard. Porsche stated that the agency first years in which CAFE standards relies on differentiating vehicles based
had authority to establish a limited-line were in effect, the agency established a on a vehicle characteristic, i.e.,
manufacturer standard, and had separate light truck standard for light footprint.
previously done so for ‘‘limited product truck manufacturers who did not use
line trucks’’ for MYs 1980 and 1981. passenger car engines in their trucks. B. Credit Trading
When the agency first established the This separate standard, promulgated in Nissan recommended that the agency
light truck CAFE program, we 1978, offered a degree of relief to implement a credit trading program that
established a separate standard for International Harvester, a company permits manufacturers to buy and sell
limited product line light trucks. This struggling to meet both CAFE and credits. Nissan stated that such a
standard was to accommodate light emissions standards with limited program would allow manufacturers to
trucks manufactured by companies resources. As indicated above, the earn credits for exceeding their fleet-
which did not produce passenger separate standard was not intended to wide fuel economy target, and sell or
automobiles and thus did not have provide International Harvester permit trade those credits to other
access to passenger automobile engine relief, but to provide it with additional manufacturers. Nissan believes that
and emission control technology (43 FR time to gain the expertise necessary to such a program is consistent with the
11995, 11996; March 23, 1978). The comply with the standards. goals of the EPCA statute and would
limited product line light truck standard NHTSA finds it difficult to equate improve overall fuel economy by
was established primarily to address the Porsche’s present position with that of providing added incentives for the
unique compliance issues facing International Harvester in 1978. Unlike achievement of greater fuel economy
International Harvester, as International International Harvester, which had been improvements. Nissan asserted that
Harvester’s engines were derivatives of producing a family of larger light trucks such a program also would allow greater
medium duty trucks (above 10,000 lbs whose basic design remained flexibility in CAFE compliance without
GVWR). We noted that International unchanged from the early 1960’s, causing a negative overall impact on
Harvester did not have experience with Porsche began the design process fuel economy, and in fact, it could
‘‘state-of-the-art’’ emission controls, knowing that CAFE standards would successfully benefit the environment.
which other manufacturers had apply to its product. Porsche Nissan provided an analysis in support
obtained in the passenger car market, presumably entered the light truck of the agency’s authority to establish
and that International Harvester would market after determining that the costs such a credit trading program.
be at a disadvantage attempting to of compliance or paying penalties were The agency is not adopting a credit
comply with both the emission and fuel offset by the benefits of doing so. While trading program as suggested by Nissan.
economy standards then being the increase in CAFE standards While the agency has not explored in
established (43 FR 11995, 11998). established by this final rule will detail a credit trading program, we
While the limited product line light require that Porsche increase its efforts question whether the agency has
truck standard was established to to build more fuel efficient light trucks, authority for such a program. A review
address compliance difficulties of a the company cannot state that its of 49 U.S.C. 32903—the specific
limited line light truck manufacturer, designs pre-date CAFE, that an increase provision addressing CAFE credits for
the light truck class was defined, in in CAFE standards was not foreseeable exceeding fuel economy standards—
part, by vehicle characteristic, i.e., it or that it is not technologically feasible does not appear to support credit
applied only to trucks with basic for Porsche to meet the standards. trading. That section persistently refers
engines, as that term was defined by the As indicated above, NHTSA does not only to ‘‘a manufacturer’’ or ‘‘the
EPA. The agency discontinued the believe that present market conditions manufacturer,’’ thereby suggesting to us
limited line truck classification dictate establishing a separate fuel that Congress intended that only the
beginning in MY 1982, stating that the economy standard for Porsche or other particular manufacturer who earned the
vehicle class was designated merely to limited-line manufacturers. We are also credits be permitted to use them. For
provide a transition period (45 FR not convinced by Porsche’s argument example, section 32903(a) provides that
20871, 20877; March 31, 1980). that doing so would be consistent with
The agency does not agree with Congressional intent. Porsche has When the average fuel economy of passenger
Porsche’s suggestion that the company’s correctly noted that the House Report automobiles manufactured by a manufacturer
. . . exceeds an applicable average fuel
particular circumstances support for EPCA stated that ‘‘the Secretary
economy standard . . . the manufacturer
establishment of a separate fuel could, in setting classes of non- earns credits. The credits may be applied
economy standard for limited-line passenger automobiles, establish to—(1) any of the 3 consecutive model years
manufacturers, or for vehicles of the separate classes for types of non- immediately before the model year for which
type manufactured by limited-line passenger automobiles manufactured by the credits are earned; and (2) to the extent
manufacturers as was previously done small manufacturers.’’ (H.R. Rep. No. not used under clause (1) of this subsection,
in response to issues faced by 94–340 at 90.) However, we point out any of the 3 consecutive model years
International Harvester. Porsche stated that the report refers to ‘‘types of immediately after the model year for which
that it faces a disadvantage because it vehicles.’’ We question whether the credits are earned.
makes only a single high performance Congress intended for the agency to set (Emphasis added.) Also, section
truck and has no ‘‘legitimate’’ standards based on manufacturer 32903(d) states that,
The Secretary of Transportation shall apply joint responsibilities under EPCA. improve fuel economy, a state regulation
credits to a model year on the basis of the However, the agency will work to seeking to reduce those emissions is a
number of tenths of a mile of gallon by which evaluate the necessity of the data ‘‘regulation related to fuel economy
the manufacturer involved was below the standards or average fuel economy
applicable average fuel economy standard.
currently required to be reported and
standards.’’
will consider potential revisions in Further, such a regulation would be
(Emphasis added.) Moreover, we believe future rulemakings. impliedly preempted, as it would interfere
that the Reformed CAFE program
D. Preemption [with] our implementation of the CAFE
adopted today provides manufacturers statute. For example, it would interfere the
with sufficient flexibility as to obviate Summary of NHTSA’s position careful balancing of various statutory factors
the need for a credit trading program. and other related considerations, as
In mandating federal fuel economy
C. Reporting Requirements contemplated in the conference report on
standards under EPCA, Congress has EPCA, we must do in order to establish
Today’s final rule requires expressly preempted any state laws or average fuel economy standards at the
manufacturers to report on a model and regulations relating to fuel economy maximum feasible level. It would also
configuration level, a vehicle’s footprint. standards. A State requirement limiting interfere with our effort to reform CAFE so
This information will be used to CO2 emissions is such a law or to achieve higher fuel savings, while
determine a vehicle’s applicable fuel regulation because it has the direct reducing the risk of adverse economic and
effect of regulating fuel consumption. safety consequences.164
economy target.
The Alliance opposed reporting CO2 emissions are directly linked to fuel During the comment period on the
footprint on at a vehicle-configuration consumption because CO2 is the NPRM, some commenters questioned
level. The Alliance suggested that ultimate end product of burning the correctness of NHTSA’s judgment as
footprint values should be reported by gasoline. Moreover, because there is but well as the appropriateness of
model on a body style and wheelbase one pool of technologies for reducing reaffirming it in the NPRM.
level along with associated projected tailpipe CO2 emissions and increasing
sales volumes. The Alliance stated that fuel economy available now and for the The appropriateness of our discussing
body-style and wheelbase level of detail foreseeable future, regulation of CO2 preemption in the NPRM
could be easily compiled and submitted. emissions and fuel consumption are We discussed our views about
Conversely, for some manufacturers, the inextricably linked. It is therefore preemption in the NPRM for several
Alliance stated, reporting on a NHTSA’s conclusion that such reasons. First, the agency was guided by
configuration level would require regulation is expressly preempted. Executive Order 13132, Federalism, and
programming changes in corporate A State requirement limiting CO2 by Section 3(b)(1)(B) of Executive Order
databases and reports. emissions is also impliedly preempted 12988, Civil Justice Reform. Second, we
The agency is maintaining the under EPCA. It would be inconsistent were guided by a desire to obtain
footprint reporting requirements as with the statutory scheme, as comments from State and local officials
proposed. If reporting were to be implemented by NHTSA, to allow and other members of the public in
required at the level suggested by the another governmental entity to make order to inform fully the agency’s
Alliance, models that are offered with inconsistent judgments made about how position on this important issue.
varying footprint values may not be quickly and how much of that single Third, we were also guided by
captured. For example, the Ford base pool of technology can and should be statements of the Supreme Court, which
F150, is offered with in several versions required to be installed, consistent with has encouraged agencies to consider the
with different body styles and the need to conserve energy, preemptive effects of their rulemakings
wheelbases. However, these versions are technological feasibility, economic during the rulemaking process, rather
each offered in with different engine, practicability, employment, vehicle than waiting until litigation ensues to
transmission, and drive type safety and other relevant concerns. do so.165 Finally, from time to time over
configurations. Each of these NHTSA’s statement in the NPRM about the years, NHTSA has raised the issue
configurations may have a different fuel preemption of preemption in its rulemaking notices
economy performance. Under the when the agency judged it appropriate
Alliance’s suggestion, these In the NPRM, NHTSA reaffirmed its to do so, as have other agencies within
configurations would not be captured. judgment that State regulation of motor the Department of Transportation. E.g.,
The Alliance also stated that the vehicle tailpipe emissions of CO2 is both 54 FR 11765 (March 1989); 58 FR 68274
agency should eliminate some of data expressly and impliedly preempted by (December 1993) and 70 FR 21844
required for the CAFE reports, statute: (April 2005).
specifically: Catalytic converter, SAE We reaffirm our view that a state may not
net rated power in kilowatts, total drive impose a legal requirement relating to fuel Public Comments About the Merits of
ratio, axle ratio, frontal area, optional economy, whether by statute, regulation or Our Views on Preemption
equipment, number of forward speeds otherwise, that conflicts with this rule. A The motor vehicle manufacturers and
state law that seeks to reduce motor vehicle
(already indicated by transmission carbon dioxide emissions is both expressly their associations agreed with the
class). The Alliance stated that this and impliedly preempted. agency’s position regarding federal
information is no longer relevant. Our statute contains a broad preemption preemption under § 32919(a) of EPCA.
The NPRM did not propose to revise provision making clear the need for a Nissan supported that position with a
the data reporting requirements aside uniform, federal system: ‘‘When an average detailed legal analysis. Conversely,
from requiring the footprint related data fuel economy standard prescribed under this several of the environmental groups and
and elimination of data currently chapter is in effect, a State or a political
required to be reported is outside the subdivision of a State may not adopt or 164 70 FR 51414, 51457.
enforce a law or regulation related to fuel
scope of this rulemaking. Moreover, economy standards or average fuel economy

165 See, e.g., Hillsborough County v. Automated
consideration of such revisions would Medical Laboratories, Inc., 471 U.S. 707, 718 (1985);
standards for automobiles covered by an Medtronic, Inc., v. Lohr, 518 U.S. 470, 506 (1996)
require coordination with the EPA to average fuel economy standard under this (Justice Breyer, in concurrence); and Geier v.
ensure consistency between the two chapter.’’ 49 U.S.C. 32919(a). Since the way American Honda Motor Co., 529 U.S. 861, 908
agencies’ regulatory programs, given the to reduce carbon dioxide emissions is to (2000) (Justice Stevens, in dissent).
States,166 and a number of U.S. Senators regulatory regime currently established standard. The opponents said the
and Representatives, disagreed with the by Congress under EPCA. Because, as decisionmaking factors provision
agency’s position that a State carbon noted above, the emission of CO2 is subordinates the CAFE standards to all
dioxide (CO2) standard is expressly and related to fuel economy and because the State emissions standards, not vice
impliedly preempted. only way to reduce CO2 is through fuel versa.
Nissan argued that California’s economy technologies, any effort to do In addition, the opponents of
proposed CO2 standard is expressly so by EPA or the States would interfere preemption appear to have argued that
preempted by EPCA’s broadly worded with Congressional objectives under there is no implied (conflict)
preemption provision. A State standard EPCA. preemption because State CO2 standards
is preempted even if it does not directly Taken together, the primary and CAFE standards have different
address fuel economy; it is sufficient if arguments of the opponents of objectives and because NHTSA did not
it simply relates to fuel economy. preemption were as follows: show how a State CO2 standard would
That commenter noted that the text of The opponents argued that the adversely affect the CAFE standards.
EPCA’s preemption provision is similar preemption waiver provision of the They argue further that, in the event of
to that of the preemption provision in Clean Air Act expressly recognizes the a conflict, CAFE standards must give
the Employee Retirement Income right of California to adopt and enforce way to the emissions standards per the
Security Act (ERISA). The Supreme its own standards for ‘‘air pollutants’’ decisionmaking factors provision.
Court has found that a state law is emitted by motor vehicles (i.e.,
emissions standards), and the right of NHTSA’s Response to Public Comments
‘‘related to’’ a benefits plan under on the Merits
ERISA and thus preempted by ERISA’s the other States to adopt and enforce
preemption provision ‘‘if it has a standards identical to California’s Background
connection with or reference to such a standards.167 They said that Congress Fuel Economy Provisions of the Energy
plan.’’ ratified and strengthened the Policy and Conservation Act
Nissan said that California’s preemption waiver provision in 1977,
two years after the enactment of EPCA EPCA established the CAFE program,
greenhouse gas standard is connected to
in 1975. Thus, they argue, Congress mandating the issuance and
fuel economy. California’s greenhouse
could not have intended EPCA to limit implementation of standards for
gas regulation is, in effect, a fuel
the rights they believe are recognized by passenger cars and light trucks. The
economy regulation. The emission of
the Clean Air Act. statute specifies that the passenger car
one greenhouse gas, CO2, is related to
The opponents believe further that a standard is 27.5 mpg unless the agency
fuel economy. The only means for
State CO2 standard, including finds that the maximum feasible level
vehicle manufacturers to reduce for a model year is different, and sets it
vehicular CO2 emissions is through California’s GHG/CO2 equivalent
emissions standard, is not preempted at that level. It directs NHTSA to
making improvements to fuel economy. establish light truck standards at the
This is evident from CARB’s report, under EPCA’s express preemption
provision, Section 32919(a). They maximum feasible level, subject to four
which discusses the maximum feasible statutorily specified factors.168
and cost effective technologies available offered two arguments in support of this
The Act specifies that the agency is to
and the identification of technologies belief.
First, they argued that EPCA does not determine the maximum feasible level
that are in fact fuel economy after considering technological
improvements. expressly preempt a State CO2 standard.
They believe that statute’s express feasibility, economic practicability, the
Nissan also said that California’s effect of other motor vehicle standards
standard also interferes with the preemption provision should be read
narrowly, preempting State standards on fuel economy, and the need of the
nationally uniform plan that CAFE Nation to conserve energy.169 The
establishes for governing the fuel that regulate fuel economy itself, but not
State standards that have a stated agency has historically included the
efficiency of the U.S. fleet and is potential for adverse safety
therefore impliedly preempted. A state purpose other than improving fuel
economy (i.e., reducing emissions) and consequences when deciding upon a
law or standard may be impliedly pre- maximum feasible level. The
empted because the federal interest is so merely have the effect of increasing fuel
economy. overarching principle that emerges from
dominant that Congress intends to the enumerated factors and the court-
occupy a regulatory field with no room Second, they argued that the intent of
Congress concerning the relationship sanctioned practice of considering
for state supplementation (field safety and links them together is that
preemption) or because the federal between State motor vehicle emissions
standards and CAFE standards under CAFE standards should be set at a level
government has enacted a complete that will achieve the greatest amount of
regulatory scheme in an area such that EPCA is expressed in the Act’s
provision setting out the factors to be fuel savings without leading to
any state action would be inconsistent significant adverse economic or other
with the federal legislation (conflict considered in setting CAFE standards
(‘‘decisionmaking factors provision’’), societal consequences.170
preemption). EPCA specifies that compliance with
Nissan concluded by arguing that Section 32902(f), not its express
preemption provision. The CAFE standards is to be determined in
individual state laws setting fuel accordance with test and calculation
economy standards would be impliedly decisionmaking factors provision
requires NHTSA to consider procedures established by EPA. 49
as well as expressly preempted. It U.S.C. 32904(c). Under the procedures
argued that those laws would conflict technological feasibility, economic
practicability, the effect of other established by EPA, compliance with
with EPCA, which authorizes DOT to the CAFE standards is based on the rates
develop and administer a national CAFE Government standards on fuel economy,
program. Neither the EPA, nor States are and the need of the nation to conserve
168 49 U.S.C. 32902(a).

permitted to interfere with the CAFE energy, in determining the level at 169 49 U.S.C. 32902(f).
which it should set each CAFE 170 Average Fuel Economy Standards for Light
166 California, Connecticut, Maine, Massachusetts, Trucks; Model Years 2008–2011, 70 FR 51414,
New York, New Jersey, Oregon, Pennsylvania, and 167 Clean Air Act §§ 209(b), 177, 42 U.S.C. 7543 51424 (August 30, 2005) (to be codified at 49 CFR
Vermont. and 7507. pt. 533).
of emission of CO2, CO, and • CO2, CH4 and N2O emissions because of a conflict with a congressional
hydrocarbons from covered vehicles, resulting directly from operation of the enactment.178
but primarily on the emission rates of vehicle, Discussion
CO2. In the measurement and • CO2 emissions resulting from
calculation of a given vehicle model’s operating the air conditioning system, In response to the public comments
and letters from members of Congress,
fuel economy for purposes of • HFC (refrigerant) emissions from
determining a manufacturer’s we have re-analyzed all issues carefully
the air conditioning system due to either
compliance with federal fuel economy as set forth below, and determined,
leakage, losses during recharging, or
based on existing and foreseeable
standards, the role of CO2 is release from scrappage of the vehicle at
technologies for reducing CO2 emissions
approximately 100 times greater than end of life, and
from motor vehicles, that the effect
the combined role of the other two • Upstream emissions associated with
under EPCA and the Supremacy Clause
relevant carbon exhaust gases. Given the production of the fuel used by the
of the U.S. Constitution is that State
that the amount of CO2, CO, and vehicle.176
regulation of those emissions is
hydrocarbons emitted by a vehicle As is shown later in the discussion of preempted.
varies directly with the amount of fuel preemption, compliance with the GHG
it consumes, EPA can reliably and standards will be based primarily on the Any Regulation Governing Carbon
accurately convert the amount of those CO2 emission rates of vehicles. The Dioxide Emissions From Motor Vehicles
gases emitted by that vehicle into the States will measure the amounts of Relates to Average Fuel Economy
miles per gallon achieved by that emissions of these four gases and then Standards and Is Expressly Preempted
vehicle. convert them into ‘‘CO2-equivalent’’ Under 49 U.S.C. Chapter 329
Congress explicitly and broadly emissions.177 This reflects the status of EPCA contains a broadly worded
preempted all state laws and standards CO2 as the reference gas for measuring provision expressly preempting any
relating to fuel economy standards: the global warming potential of State standard or regulation that is
[w]hen an average fuel economy standard greenhouse gases. ‘‘related to’’ a fuel economy standard:179
prescribed under this chapter [49 U.S.C.S.
Constitutional basis for preemption [49 U.S.C.] 32919. Preemption
§§ 32901 et seq.] is in effect, a State or a
political subdivision of a State may not adopt Preemption results from Article VI of (a) General. When an average fuel economy
or enforce a law or regulation related to fuel standard prescribed under this chapter [49
the U.S. Constitution, which provides U.S.C.S. §§ 32901 et seq.] is in effect, a State
economy standards or average fuel economy that federal law ‘‘shall be the supreme
standards for automobiles covered by an or a political subdivision of a State may not
Law of the Land; and the Judges in adopt or enforce a law or regulation related
average fuel economy standard under this
every State shall be bound thereby, any to fuel economy standards or average fuel
chapter.171
Thing in the Constitution or Laws of any economy standards for automobiles covered
Congress did not include a provision State to the Contrary notwithstanding.’’ by an average fuel economy standard under
authorizing any waivers of that this chapter.
preemption provision for any State for Principles of preemption
(Emphasis added.)
any reason. The Supreme Court has held that While the express preemption
preemption may be express or implied: provision on its face uses expansive
Clean Air Act
State law may be preempted by express language, any ambiguity regarding the
Congress has also preempted all state language in a congressional enactment,* * * appropriate reading of the provision,
standards relating to the control of by implication from the depth and breadth of particularly in relation to other statutory
motor vehicle emissions: a congressional scheme that occupies the provisions, must be resolved in light of
[n]o State or any political subdivision thereof legislative field * * *, or by implication the policy considerations embodied in
shall adopt or attempt to enforce any EPCA. In NHTSA’s judgment, this
standard relating to the control of emissions Connecticut, Rhode Island, Vermont, and Maine language includes, but is not limited to,
from new motor vehicles or new motor have adopted the California GHG emissions
standard. In addition, Washington State has explicit fuel economy standards issued
vehicle engines.172
adopted the standard contingent upon Oregon’s by States. Because the only
However, Congress has also expressly adoption of it. Oregon ‘‘has adopted temporary technologically feasible, practicable way
authorized EPA to waive the rules . . . and is scheduled to propose permanent for vehicle manufacturers to reduce CO2
preemption provision under the Clean rules in the summer of 2006.’’ State and Federal
Standards for Mobile Source Emissions, emissions is to improve fuel
Air Act for states that adopted emissions prepublication copy, 145 (2006). economy,180 NHTSA’s considered view
control standards before 1966.173 While This discussion of preemption focuses on the is that a State regulation that requires
California is the only State that meets details of the California standard in order to provide vehicle manufacturers to reduce those
that criterion, and thus is the only state the clearest possible expression of the underlying
technical rationale for why that standard is not
emissions is a ‘‘regulation related to fuel
that can obtain a waiver of the consistent with NHTSA’s authority to regulate fuel economy standards or average fuel
preemption provision, the Clean Air Act economy. This specific discussion should not be economy standards.’’ 181 This view is
permits other States to adopt California interpreted to mean that other standards would be consistent with the legislative history of
emission standards.174 acceptable.
176 Title 13, California Code of Regulations (CCR)
the preemption provision, and with the
Current State GHG Standards 175 § 1961.1(a)(1)(B)1.a. For vehicles certified on
178 Lorillard Tobacco Co. v. Reilly, 533 U.S. 525,
conventional fuels (e.g., gasoline), CARB’s
The GHG standard purports to regulation does not encompass upstream emissions 540 (2001).
regulate four motor vehicle climate (i.e., emissions associated with the production and 179 70 FR, at 51457 (August 30, 2005).
change emissions: transportation of the fuel used by the vehicle). 180 NHTSA recognizes that regulating the
California Environmental Protection Agency, Air producers of motor vehicle fuels can contribute to
Resources Board, Regulations To Control the reduction of CO2 emissions. The preemption
171 49 U.S.C. 32919(a). Greenhouse Gas Emissions From Motor Vehicles, provision of EPCA does not preempt State
172 42 U.S.C. 7543 (a). Final Statement Of Reasons (FSOR), at 6–7. regulation of those fuels. However, it does preempt
173 42 U.S.C. 7543 (b). 177 California Environmental Protection Agency, State regulation of the manufacturers of motor
174 42 U.S.C. 7507. vehicles directly related to fuel economy, including
Air Resources Board, Regulations To Control
175 According to the National Academy of Greenhouse Gas Emissions From Motor Vehicles, regulation of CO2 emissions of their vehicles.
Sciences, Massachusetts, New York, New Jersey, Initial Statement Of Reasons (ISOR), p. 48. 181 Id.
Supreme Court’s interpretation of well as to the nature of the effect of the consequences of the CAFE standards in
similar provisions. state law on ERISA plans. California its overall consideration of relevant
The legislative history of that Div. of Labor Standards Enforcement v. factors since its earliest rulemaking
provision confirms that Congress Dillingham Constr., N.A., Inc., 519 U.S. under the CAFE program.’’ 192
intended to be broadly preemptive in 316, 325 (1997), quoting Travelers, While the Court in Travelers said
the area of fuel economy regulation. The * * * , at 656 * * * ’’ (Emphasis State laws found to have ‘‘only a
Senate bill 182 would have preempted added.) (Internal quotations omitted.) 188 tenuous, remote, or peripheral
State laws only if they were Even under that sort of analysis, connection’’ to ERISA’s purposes,
‘‘inconsistent’’ with federal fuel however, the results would be especially in areas of traditional State
economy standards, labeling, or unchanged here. Congress had a variety regulation, are not preempted,193
advertising, while the House bill 183 of interrelated goals in enacting EPCA NHTSA has concluded that a State GHG
would have preempted State laws only and has charged NHTSA with balancing standard is not such a law. As explained
if they were not ‘‘identical to’’ a Federal and achieving them. Among them was at length below, to the extent that it
requirement. The express preemption the overarching one of improving motor regulates tailpipe CO2 emissions, a State
provision as enacted preempts all State vehicle fuel economy.189 To achieve GHG standard has a direct and very
laws that relate to fuel economy that goal, Congress did not simply substantial effect on EPCA’s objectives,
standards. No exception is made for mandate the issuance of fuel economy placing it virtually at the very center of
State laws on the ground that they are standards set at whatever level NHTSA the reach of EPCA’s express preemption
consistent with or identical to federal deemed appropriate. Nor did it simply provision, not at or even near its
requirements. say that levels must be set consistent periphery. Thus, there is no need here
In interpreting the express with the criteria it specified in Section to address issues about the definition or
preemption provisions of other statutes 32902(f). It went considerably further, location of the outer reaches of the
containing the identical ‘‘relates to’’ mandating the setting of standards at the provision’s application.
language found in EPCA, the Supreme maximum feasible level. As explained below, CO2 emissions
Court has found this language to be very Congress also sought national uniform account for over 90 percent of all CO2
expansive. A State law relates to a fuel economy standards ‘‘[i]n order to equivalent emissions from a motor
Federal law if the State law ‘‘has a avoid any manufacturer being required vehicle. Accordingly, a State standard
connection with or refers to’’ the subject to comply with differing State and local regulating GHG emissions expressed as
of the Federal law. The Court made the regulations with respect to automobile CO2 equivalent emissions is, to a very
latter finding first under ERISA 184 and or light-duty truck fuel economy.’’ 190 substantial extent, a State CO2 emissions
then, based on its ERISA cases and the To that end, it expressly preempted standard. To that extent, a State GHG
use of identical language, under the State and local laws and regulations standard is fuel economy standard in
Airline Deregulation Act (ADA).185 relating to fuel economy standards. almost all but name and stated purpose.
‘‘Since the relevant language of the ADA Other congressional objectives It would have virtually the same effects
is identical, we think it appropriate to underlying EPCA include avoiding as a fuel economy standard. Thus,
adopt the same standard here * * * ’’186 serious adverse economic effects on NHTSA has concluded that a State GHG
Particularly since the Airline manufacturers and maintaining a standard does not incidentally affect
Deregulation Act’s situation is a law reasonable amount of consumer choice vehicle manufacturers; it directly targets
involving transportation, we think its among a broad variety of vehicles. them.
interpretation of the phrase ‘‘relates to’’ Congress was explicitly concerned that Likewise, in NHTSA’s view, such a
is instructive here. the CAFE program be carefully drafted standard does not incidentally affect
In particular, the Court has provided decisions by manufacturers to add fuel
so as to require levels of average fuel
guidance on the ultimate limits of a saving technologies to their vehicles.
economy that do not have the effect of
strictly textual approach in interpreting Because the only currently practical
either ‘‘imposing impossible burdens or
either the phrase ‘‘relates to’’ or the way for vehicle manufacturers to reduce
unduly limiting consumer choice as to
phrase ‘‘has a connection with,’’ given CO2 tailpipe emissions is through
capacity and performance of motor
the existence of unending relationships application of fuel saving
vehicles.’’ 191 These concerns are
and ‘‘infinite connections’’ and the technologies 194 and no technologies are
equally applicable to the manner in
resulting potential for an overly even under development that would
which that program is implemented.
extensive application of ERISA’s make possible reduction of CO2
To guide the agency toward the
preemption provision, the Court emissions independent of reducing fuel
selection of standards meeting these
declined to take that approach in consumption,195 such a standard
competing objectives, Congress
interpreting that provision in Blue Cross directly targets manufacturers and
specified four factors that NHTSA must
& Blue Shield Plans v. Travelers Ins. compels the use of those technologies.
consider in determining which level is
Co.187 The Court said that to determine Therefore, the agency has concluded
the maximum feasible level of average
whether a State law has a forbidden fuel economy and thus the level at
connection, it would instead look ‘‘both which each standard must be set. 192 Competitive Enterprise Institute v. NHTSA,
to the objectives of the ERISA statute as These are technological feasibility, 901 F.2d 107, 120 at n.11 (D.C. Cir. 1990).
a guide to the scope of the state law that economic practicability, the effect of
193 Blue Cross & Blue Shield Plans v. Travelers
Congress understood would survive, as Ins. Co., 514 U.S. 645, 658–662 (1995).
other Government standards on fuel 194 Essentially all of the technologies identified by
182 S.
economy, and the need of the Nation to the California Air Resources Board for reducing CO2
1883, 94th Cong., 1st Sess., Section 509.
183 H.R. 7014, 94th Cong., 1st Sess., Section 507
conserve energy. In addition, ‘‘NHTSA emissions are among the technologies listed by the
has always examined the safety National Academy of Science in its 2002 report on
as introduced, Section 509 as reported. reforming the CAFE program and improving fuel
184 Shaw v. Delta Airlines, Inc., 463 U.S. 85, 97

economy. The essential identity of the two lists
(1983). 188 Egelhoff v. Egelhoff, 532 U.S. 141, 147 (2001). confirms the fact that, currently, the only method
185 Morales v. Trans World Airlines, Inc., 504 U.S. 189 Center for Auto Safety v. NHTSA, 793 F.2d for reducing CO2 emissions is to reduce fuel
374, 384 (1992). 1322, 1340 (D.C. Cir. 1986). consumption.
186 Ibid. 190 S. Rep. No. 94–179, 25 (1975). 195 EPA has reached a similar conclusion. See 68
187 514 U.S. 645, 656, 658–662 (1995), 191 H. Rep. No. 94–340, 87 (1975). FR 52922, 52929.
that the effect of a State GHG standard automobile manufacturers’ and dealers’ contains a broad preemption provision
on vehicle design and performance is motion for preliminary injunction and making clear the need for a uniform, federal
the same as that of fuel economy issuing a preliminary injunction in system: ‘‘When an average fuel economy
standard prescribed under this chapter is in
standards. Central Valley Chrysler-Plymouth v. effect, a State or a political subdivision of a
Commenters opposing preemption California Air Resources Bd., No. CV–F– State may not adopt or enforce a law or
suggested that the purpose of a State 02–5017 REC/SMS, 2002 U.S. Dist. regulation related to fuel economy standards
law, not its effects, should determine LEXIS 20403 (E.D. Cal. June 11, 2002) or average fuel economy standards for
whether there is preemption. Since the (enjoining California zero-emission- automobiles covered by an average fuel
purpose of a State GHG regulation for vehicle (ZEV) rule). The court found economy standard under this chapter.’’ 49
motor vehicles is regulating CO2 and that the plaintiffs had shown that the U.S.C. 32919(a).
other GHG emissions from motor ZEV rule was ‘‘related to’’ fuel economy The fact that NHTSA had not expressly
vehicles, not fuel economy, they suggest addressed this particular aspect of
standards because it had the purpose California’s requirements should not have
that there can be no preemption under and practical effect of regulating fuel been interpreted as tacit acceptance. Indeed,
EPCA’s express preemption provision. economy. The court also found that the United States has taken the express
This limited view regarding the extent ‘‘preemption cannot be avoided by position in the Kenny case that it has a
of preemption under that provision is intertwining preempted requirements substantial interest in enforcing the federal
inconsistent with NHTSA’s expert with nonpreempted requirements.’’ fuel economy standards and in ensuring that
analysis, which is guided by and In October 2002, the United States states adhere to the Congressional directive
comports with the Supreme Court’s filed an amicus curiae brief in support prohibiting them from adopting or enforcing
discussion of the similarly worded of affirming the June 2002 order in any law or regulation related to fuel economy
or average fuel economy standards.199
express preemption provisions in ERISA Central Valley Chrysler-Plymouth, Inc.
and the ADA. As noted above, in et al. v. Michael P. Kenny, No. 02– In its CAFE final rule for MY 2005–
resolving ambiguity regarding 16395, (9th Cir. 2002), pointing out that 07 light trucks, NHTSA stated that its
preemption under a Federal law, the EPCA contains a broadly stated ‘‘position with regard to the relationship
Court looks at the effects of a State law provision expressly preempting state between state laws and our federal fuel
on the subject addressed by the Federal regulations ‘‘related to’’ fuel economy economy responsibility was set forth in
law to aid in determining if there is standards. The government further the [December 2002] NPRM and has not
preemption.196 pointed out that, unlike the Clean Air changed. The EPCA statute contains a
A federal statute’s broadly worded Act, EPCA does not contain an preemption provision intended to
express preemption provision does not exception allowing a state law that ensure a unified federal program to
lose its preemptive effect because a regulates fuel economy, regardless of the address motor vehicle fuel economy.’’
State cites a purpose other than or in purpose of the law. Given that Congress In September 2003, the
addition to the purpose of that federal had included some exceptions, but not Environmental Protection Agency
statute.197 In Gade, the Supreme Court that particular one, the government said specifically discussed the relationship
said that ‘‘[i]n assessing the impact of a that it would be inappropriate to read in between CO2 standards and fuel
state law on the federal scheme, we or imply that exception. economy. In denying an October 1999
have refused to rely solely on the In December 2002, NHTSA published petition by the International Center for
legislature’s professed purpose and have a CAFE NPRM for MY 2005–2007 light Technology Assessment (ICTA) asking
looked as well to the effects of the trucks in which the agency addressed the EPA to regulate CO2 and other
law.’’ 198 certain court filings by the State of greenhouse gas emissions from motor
The agency’s conclusions here that California relating to CAFE preemption. vehicles under the Clean Air Act for the
the EPCA preemption provision is The agency noted that California had: purpose of addressing global climate
expansive and preempts State emissions change, the EPA included a discussion
[I]n recent court filings, asserted that
regulations that have the practical effect NHTSA has not treated the CAFE statute as of how regulating CO2 emissions would
of regulating fuel economy are fully in preempting state efforts to engage in CAFE cause ‘‘[i]nterference with Fuel
keeping with earlier views expressed by related regulation, stating that ‘‘time and time Economy Standards:’’
the government. Further, they are again, NHTSA in setting CAFE standards has Even if GHGs were air pollutants generally
consistent with views that EPA has commented on the fuel economy effects of subject to regulation under the CAA,
articulated. California’s emissions regulations, and not Congress has not authorized the Agency to
In June 2002, the U.S. District Court once has it even suggested that these were regulate CO2 emissions from motor vehicles
for the Eastern District of California preempted.’’ See Appellants Opening Brief to the extent such standards would
filed on behalf Michael P. Kenny in Central effectively regulate the fuel economy of
issued an order granting plaintiff Valley Chrysler-Plymouth, Inc. et. al. v. passenger cars and light duty trucks. No
Michael P. Kenny, No. 02–16395, at p. 33 technology currently exists or is under
196 Egelhoff, at 147. (9th Cir. 2002). As a result, the State suggests development that can capture and destroy or
197 Gade v. National Solid Wastes Management that it may, consistent with federal law, issue reduce emissions of CO2, unlike other
Ass’n., 505 U.S. 88, 105 (1992). regulations that relate to fuel economy.
198 Id., at 106; see also Morales, at 386: ‘‘petitioner emissions from motor vehicle tailpipes. At
The State misses the point. The agency present, the only practical way to reduce
advances the notion that only state laws specifically
addressed to the airline industry are pre-empted,
reviews emissions requirements to ensure tailpipe emissions of CO2 is to improve fuel
whereas the ADA imposes no constraints on laws that we do not establish a standard that is economy. Congress has already created a
of general applicability. Besides creating an utterly infeasible in light of other public policy detailed set of mandatory standards
irrational loophole (there is little reason why state considerations, including federal and state governing the fuel economy of cars and light
impairment of the federal scheme should be efforts to regulate emissions. Thus, we duty trucks, and has authorized DOT—not
deemed acceptable so long as it is effected by the consider potential fuel economy losses due to EPA—to implement those standards. The
particularized application of a general statute), this more stringent emissions requirements when only way for EPA to proceed with CO2
notion similarly ignores the sweep of the ‘relating we determine maximum feasible fuel
to’ language. We have consistently rejected this emissions standards without upsetting this
precise argument in our ERISA cases: ‘[A] state law
economy levels.
may ‘‘relate to’’ a benefit plan, and thereby be pre- This does not mean that a state may issue 199 Light Truck Average Fuel Economy Standards
empted, even if the law is not specifically designed a regulation that relates to fuel economy and Model Years 2005–2007, 67 FR 77015, at 77025
to affect such plans, or the effect is only indirect.’ ’’ which addresses the same public policy (Proposal to establish standards December 16,
(Citations omitted.) concern as the CAFE statute. Our statute 2002).
statutory scheme would be to set a standard Most light trucks are powered by burns or consumes, the more CO2 it
less stringent than CAFE for cars and light gasoline internal combustion engines. emits.206 Viewed another way, fuel
duty trucks. But such an approach would be The combustion of gasoline produces economy is directly related to emissions
meaningless in terms of reducing GHG CO2 in amounts that can be readily of greenhouse gases such as CO2.207
emissions from the U.S. motor vehicle
fleet.200
calculated. Based on its content (carbon Fuel consumption and CO2 emissions
and hydrogen), as a matter of basic from a vehicle are two ‘‘indissociable’’
EPA further explained this position in chemistry, the burning of a gallon of parameters.208
its brief filed in early 2005 in the Court gasoline produces about 20 pounds of
of Appeals for the D.C. Circuit in 2. The Most Significant Factor in
CO2.201 202
Commonwealth of Massachusetts v. In practice, the combustion process is Determining the Compliance of Motor
EPA, No. 03–1361, in which 12 states not 100 percent efficient and engines Vehicles With NHTSA’s Fuel Economy
and a number of environmental groups produce several types of emissions as Standards Is Their Rate of Carbon
filed a petition for review challenging combustion byproducts or as a result of Dioxide Emissions
EPA’s denial of ICTA’s petition: incomplete combustion. In an internal A manufacturer’s compliance with the
Further reinforcing both the legal and policy combustion engine, these include federal average fuel economy standards
rationales for the ICTA Petition Denial is the nitrogen oxides (NOX) (from nitrogen is based on the collective fuel
fact that at present, the only practical way of and oxygen in the atmosphere), carbon economies of its covered vehicles. For
making a meaningful reduction in motor monoxide (CO) and hydrocarbons (HC), purposes of determining compliance
vehicle emissions of CO2 (the most including methane. These emissions do with federal fuel economy standards,
significant greenhouse gas) is by increasing not alter the fact that combustion of EPA and manufacturers measure the
fuel economy. See 68 FR at 52929. gasoline produces CO2. Moreover, the amount of CO2, CO, and HC emitted
Consequently, even if EPA possessed CAA amounts of CO2 emitted per mile are far from the vehicle. The regulations
authority to regulate CO2 for climate change requiring this approach do so because of
greater than the amounts of HC, CO, and
purposes, any motor vehicle standard EPA the scientific relationship between fuel
might set under the Act that required NOX, singly or combined.203 204
meaningful reductions in CO2 emissions CO2 emissions are always and directly consumption and carbon emissions.
would effectively require a corresponding linked to fuel consumption because CO2 As noted above, gasoline is comprised
increase in fuel economy. However, in the is the ultimate end product of burning of carbon and hydrogen in the form of
Energy Policy and Conservation Act gasoline.205 The more fuel a vehicle HC compounds. Carbon and hydrogen
(’’EPCA’’), 49 U.S.C. 32901–18, Congress are basic elements that are not
established a detailed program for regulating 201 Most of that weight comes from the oxygen in converted to other elements in either
the fuel economy of passenger cars and light the air. A carbon atom has an atomic weight of 12, internal combustion engines or catalytic
trucks—the bulk of the motor vehicle fleet— and each oxygen atom has an atomic weight of 16,
giving each single molecule of CO2 an atomic
converters. As a component of the fuel,
and it authorized DOT, not EPA, to the carbon is conveyed to the engine,
weight of 12 + (16 × 2) or 44. Therefore, to calculate
implement that program. EPA thus the weight of the CO2 produced from a gallon of where combustion occurs. Thereafter,
reasonably concluded that it would be gasoline, the weight of the carbon in the gasoline the carbon, largely in different
inconsistent with EPCA for EPA to set CO2 is multiplied by 44/12 or 3.7. Since gasoline is
emission standards under the CAA that about 87% carbon and 13% hydrogen by weight,
compounds than in gasoline, is emitted
would effectively require significant and since a gallon of gasoline weighs about 6.3 through the tailpipe. Thus, if the carbon
increases in the fuel economy of vehicles pounds, the carbon in a gallon of gasoline weighs content of the fuel is known, the amount
(6.3 lbs. × .87) or 5.5 pounds. If the weight of the of fuel consumed by the engine can be
subject to EPCA. 68 FR at 52929. In arguing carbon (5.5 pounds) is then multiplied by 3.7, the
that EPCA does not expressly abrogate EPA’s answer is about 20 pounds. (Source: http:// determined by measuring tailpipe
authority under the CAA, see Pet. Br. at 38– www.fueleconomy.gov/feg/co2.shtml. The website, emissions of carbon-containing
43, Petitioners ignore those EPCA provisions http://www.fueleconomy.gov, is operated jointly by compounds.209 Fully combusted carbon
that clearly signal Congress’ intent that the Department of Energy and the Environmental
regulation of motor vehicle fuel economy be Protection Agency.)
202 In addition, CO emissions can be determined 52922, 52931, September 8, 2003; Center for
governed by EPCA alone. 2
Biological Diversity (November 22, 2005, NHTSA
from the carbon content of the fuel by using a
2005–22223–1382) (p. 2–3); RAND Europe,
carbon content coefficient that reflects the amount
NHTSA Has Concluded That Any Effort of carbon per unit of energy in each fuel. CO2 Preparation of Measures to Reduce CO2 Emissions
to Regulate Carbon Dioxide Emissions emissions = energy consumption [e.g., in Btu] × from N1 Vehicles, Final Report, at 4, prepared for
carbon content coefficient for the fuel × fraction of the European Commission, 11th April 2003.
From Motor Vehicles Is Related to 206 ‘‘Vehicles with lower fuel economy burn more
carbon oxidized [99% for petroleum] × 3.67
Average Fuel Economy Standards for [conversion of carbon to carbon dioxide (44/12) fuel, creating more CO2. Your vehicle creates about
Motor Vehicles Under 49 U.S.C. Chapter based on molecular weights]. T.J. Blasing, G. 20 pounds of CO2 (170 cu. ft.) per gallon of gasoline
329 Marland and C. Broniak, Estimates of Annual it consumes. Therefore, you can reduce your
Fossil-Fuel CO2 Emitted for Each State in the U.S.A. contribution to global climate change by choosing
1. Motor Vehicle Fuel Economy Is and the District of Columbia for Each Year from a vehicle with higher fuel economy. By choosing a
Directly Related to Emissions of Carbon 1960 through 2001, at http://cdiac.ornl.gov/trends/ vehicle that achieves 25 miles per gallon rather than
emis_mon/stateemis/emis_state.htm. The carbon 20, you can prevent the release of about 17 (260
Dioxide content coefficients for petroleum products have thousand cu. ft.) tons of greenhouse gases over the
varied very little over time—less than one percent lifetime of your vehicle.’’ Model Year 2006 Fuel
Fossil fuels such as petroleum contain Economy Guide, at 2, Department of Energy and
per year since 1990. Id. Reformulated gasoline
mostly hydrocarbons (compounds introduced in the 1990s pursuant to the Clean Air Environmental Protection Agency, DOE/EE–0309.
containing hydrogen and carbon). In the Act Amendments of 1990 has a carbon emissions 207 68 FR 52922, 52931; Light-Duty Automotive
combustion process, these fuels are coefficient approximately one percent smaller than Technology and Fuel Economy Trends: 1975
oxidized to produce heat. In perfect that of standard gasoline. through 2005—Executive Summary, EPA420–S–05–
203 U.S. EPA, Average Annual Emissions and Fuel 0001, July 2005, at http://www.epa.gov/otaq/cert/
combustion, the oxygen (O2) in the air Consumption for Passenger Cars and Light Trucks, mpg/fetrends/420s05001.htm.
combines with all of the carbon (C) in EPA420–F–00–013, April 2000. Available on the 208 P. Leduc, B. Dubar, A. Ranini and G. Monnier,
the fuel to form carbon dioxide (CO2) Internet at http://www.epa.gov/otaq/consumer/ Downsizing of Gasoline Engine: an Efficient Way to
and all of the hydrogen (H) in the fuel f00013.pdf. Reduce CO2 Emissions, at 2, Institut Français du
204 Good, David, U.S. EPA, 2006 test-car-list-and Pétrole, Division Techniques d’Applications
to form water (H2O). analysis for DD 206.xls, February 2006. Energétiques, 92852 Rueil-Malmaison Cedex—
(unpublished analysis of 2006 test car list available France).
200 Control of Emissions from New Highway at http://www.epa.gov/otaq/tcldata.htm). 209 DOT FHWA, Perspectives on Fuel
Vehicles and Engines, 68 FR 52922, 52929 (denial 205 See also EPA’s denial of petition to regulate Consumption and Air Contaminant Emission Rates
of petition September 8, 2003). CO2 tailpipe emissions from motor vehicles, 68 FR Continued
takes the form of CO2. Partially multipoint fuel injection, closed-loop equation) calculates fuel economy based
combusted carbon takes the form of CO computer-controlled mixture control, on carbonaceous emissions from the
or HC (generally unburned and close-coupled 3-way exhaust vehicle, taking into account the
hydrocarbons). Therefore, fuel catalysts). As a result, emissions of CO normalization of the fuel to a
consumption may be determined by and HC have fallen dramatically. standardized test fuel. Under the
measuring tailpipe emissions of CO2, Moreover, the technologies that produce formula, in determining fuel economy,
CO, and HC. these reductions in air pollution do so all carbon emissions—i.e., the CO2
As a result of incomplete combustion, by more completely converting CO and emission rate, HC emission rate, and CO
CO and HC are emitted from a vehicle’s HC to CO2 (and water).211 Over the same emission rate—are considered.
engine. However, in the years since time period, there has not been a
vehicle manufacturers were first Significantly, as demonstrated by the
corresponding decline in CO2
required to meet federal fuel economy example below, in determining fuel
emissions, which, as noted above, are
standards, the manufacturers have also economy the role of CO2 emissions
the necessary result of gasoline
been required under the Clean Air Act greatly outweighs that of these other
consumption. CO and HC play an
to meet increasingly stringent standards increasingly and extremely minor role exhaust gases. This is reflected by the
for emission of CO, HC, NOX, and in the measurement of fuel economy, relative magnitudes of the CO2 term and
particulates.210 They have been able to such that fuel economy has become non-CO2 terms in the equation. In other
meet these standards because fuels have virtually synonymous with CO2 words, calculating fuel economy is
been reformulated to burn cleaner, and emission rates. largely a function of CO2 emissions.
vehicle manufacturers have applied The fuel economy of a particular Under 40 CFR 600.113, fuel economy
many significant technological advances vehicle is determined by a formula (mpg) is calculated using the following
to the engines and vehicles (e.g., promulgated by EPA. That formula (an equation:
Where: Economy Test Procedure (i.e., highway the sample calculation in Appendix II to
HC = hydrocarbon emission rate (grams cycle) are required, with the resultant 40 CFR part 600:
per mile) city (mpgc) and highway (mpgh) fuel CWF = 0.868
CO = carbon monoxide emission rate economy values being harmonically NHV = 18,478 Btu per pound
(grams per mile) averaged using weights of 0.55 and 0.45, SG = 0.745
CO2 = carbon dioxide emission rate respectively.212 These values are within about 8
(grams per mile) Determining the characteristics of a percent of other values in the record
CWF = carbon weight fraction of test test fuel and inserting them into the (given relatively minor variations,
fuel above equation is a preliminary step particularly in heating value, in
NHV = net heating value (by mass) of toward assessing the relative importance gasolines) and are reasonable for the
test fuel purposes of this assessment, although
of CO2 emissions in determining
SG = specific gravity of test fuel very precise data would be collected for
compliance with the fuel economy
Under the regulation, separate standards. a test for compliance with the rule.213
measurements and calculations under Substituting these values into EPA’s
the Federal Test Procedure (i.e., city For this purpose, we will use the general equation for fuel economy
cycle) and Federal Highway Fuel characteristics of a test fuel set forth in shown above yields
which algebraically reduces to the

following: ER06AP06.028</GPH>
by Highway Vehicles. 211 Because carbon dioxide is, like water, an http://www.epa.gov/otaq/rfgecon.htm; Motor
Gasolines Technical Review, at http://
ER06AP06.027</GPH>
http:// www.tfhrc.gov/structur/pdf/01100.pdf. ultimate byproduct of combustion, it cannot be

210 As explained below in the final section of the further converted on the vehicle to some other www.chevron.com/products/prodserv/fuels/
discussion of preemption, NHTSA does not believe compound through any practical means. bulletin/motorgas/; Carbon Coefficients, at http://
www.eia.doe.gov/oiaf/1605/87-92rpt/appa.html;
that regulation of these emissions is preempted by 212 40 CFR 600.206–93.
and Specific Gravity—Liquids, at http://
EPCA since it is the agency’s judgment that such 213 See, e.g., Fuel economy impact of
www.engineeringtoolbox.com/specific-gravity-
regulation only tangentially affects fuel economy.
ER06AP06.026</GPH>
reformulated gasoline (energy (NHV) of fuel, at liquids-d_336.html.
Based on EPA data 214 averaged across the following city cycle emission rates CO2 = 471 g/mi
all MY 2006 truck test data available at as determined by testing by the Federal Substituting these values and the fuel
http://www.epa.gov/otaq/tcldata.htm Test Procedure: characteristics noted above into the
(which does not include production HC = 0.042 g/mi algebraically reduced equation shown
data), model year 2006 light trucks have CO = 0.056 g/mi above,
which produces the following city fuel

economy in miles per gallon:
The average model year 2006 light HC = 0.011 g/mi which, using the formula above, yields
truck emission rates on the highway CO = 0.17 g/mi the following highway fuel economy in
cycle were as follows: 215 CO2 = 316 g/mi miles per gallon:
For both the city and highway model’s fuel economy for purposes of judgment about the appropriate CAFE
calculations, the controlling federal fuel economy standards, the role standards for light trucks, as explained
independent variable is the large of CO2 is controlling and far greater than below.217
number (term) in the denominator, the combined role of the other two The CAFE standards promulgated by
given that the numerator is a fixed relevant exhaust gases (CO and HC). A NHTSA are performance standards. As
number. That number is the CO2 term manufacturer’s compliance with the
such, they do not require the
(86.268). The other numbers applicable CAFE standard is determined
employment of any particular
(denominated the HC term and the CO by averaging model-specific fuel
technology. But the standards are the
term) are not significant. More economy values. This demonstrates that
particularly, for the 2006 model year maximum feasible average fuel economy
compliance with federal fuel economy
light trucks, the typical city and standards is based primarily on CO2 level that NHTSA decides the
highway CO2 terms for light trucks are emission rates of covered vehicles.216 manufacturers can achieve in a
more than four hundred and one particular year. 218 They are based on
3. NHTSA Has Concluded That a various technologies. Those
thousand, respectively, times the
Reduction of CO2 Emissions From technologies are addressed in the
magnitude of the corresponding non-
CO2 terms. NHTSA has concluded that Motor Vehicles Is Possible Only NHTSA CAFE rulemaking record. In
this proportion will not change, Through the Incorporation of the same large measure, they are summarized in
especially in light of its conclusion that Technologies That Would Be Employed Table 3–2 of the 2002 National
emission limitations on the other types To Increase Fuel Economy Academy of Sciences (NAS) CAFE
of emissions are permissible under The technologies that would be study, which is reproduced below in
EPCA. employed to reduce CO2 emissions are, Tables 18 and 19 (numbered as Tables
As shown above, in the measurement in all relevant ways, the same 3–2 and 3–3, respectively, in the NAS
ER06AP06.031</GPH>
and calculation of a given vehicle technologies as underlie NHTSA’s study).
214 Good, David, op. cit. vehicles will have a minor effect on the average fuel manufacturer could make the vehicle much smaller
215 Ibid. economy of the overall fleet of new vehicles. or substantially reduce the size of its engine,
ER06AP06.030</GPH>
216 The vast majority of vehicles covered by 217 The agency has not identified any
depending on the stringency of the CO2 regulation.
NHTSA’s light truck CAFE standard are powered by technologies, let alone realistic ones, that could be P. Leduc et al., op cit. see fn above; see also, http://
gasoline fueled engines. Hybrids are expected to added to vehicle exhaust pipes to reduce CO2 www4.nationalacademies.org/news.nsf/isbn/
comprise from 1.7 to 2.9 percent of the fleet of new emissions. Above and beyond the application of the 0309076013?OpenDocument
vehicles, while diesels are expected to comprise technologies addressed in this discussion of 218 See 49 U.S.C. 32902(a).
ER06AP06.029</GPH>
from 0 to 2.6 percent. These non-gasoline fueled preemption, to meet CO2 standards, in theory the
ER06AP06.032</GPH>
If a state regulation required 2005, CARB adopted amendments to its manufacturers could be applied in order
manufacturers to reduce CO2 emissions regulations that it referred to as to achieve compliance with its CO2-
from motor vehicles, the state regulation ‘‘California Exhaust Emission Standards based standards.220 The technologies
would be predicated on the and Test Procedures for 2001 and identified in the State’s report with
manufacturers’ employment of the same Subsequent Model Passenger Cars, Light respect to large trucks are identified in
technologies they would employ to meet Duty Trucks and Medium Duty the second column of the table
federal fuel economy standards. As an Vehicles.’’219 In support of its reproduced below from its report, which
example, for discussion purposes, we regulations, CARB released a report that employs acronyms that are explained
will consider a California regulation. In listed more than 20 technologies that below.
219 See http://www.arb.ca.gov/regact/grnhsgas/ 220 California Environmental Protection Agency,
grnhsgas.htm. The regulations are codified at Title Air Resources Board, Regulations To Control
13 of the California Code of Regulations (CCR). See Greenhouse Gas Emissions From Motor Vehicles,
ER06AP06.033</GPH>
13 CCR § 1961.1 (2006). Initial Statement of Reasons.
TABLE 20.—CARB ‘‘TECHNOLOGY PACKAGES’’ TO REDUCE CO2 EMISSIONS FROM A LARGE TRUCK 221
Potential Potential
CO2 reduc- CO2 reduc-
Retail price Retail price
CO2 tion from tion from
Light truck Combined technology packages (g/mi) 2002 equivalent 2009 equivalent
2002 2009
baseline baseline
(percent) (percent)
Near ............................ CCP, A6, (2009 baseline) ............................... 484 ¥5.5 $126 0 0%
Term 2009–2012 ........ DVVL, DCP, A6 .............................................. 442 ¥13.6 549 ¥8.6 $423
CCP, DeAct, A6 .............................................. 433 ¥15.4 480 ¥10.5 354
DCP, DeAct, A6 .............................................. 430 ¥15.9 845 ¥11.0 931
DeAct, DVVL, CCP, A6, EHPS, ImpAlt .......... 418 ¥18.4 789 ¥13.6 663
DeAct, DVVL, CCP, AMT, EHPS, ImpAlt ....... 396 ¥22.6 677 ¥18.1 551
Mid Term 2013–2015 CCP, DeAct, GDI–S, AMT, EHPS, ImpAlt ...... 416 ¥18.6 827 ¥13.9 701
DeAct, DVVL, CCP, A6, ISG, EHPS, eACC .. 378 ¥26.2 1885 ¥21.9 1759
ehCVA, GDI–S, AMT, EHPS, ImpAlt .............. 381 ¥25.5 1621 ¥21.2 1495
Long Term 2015– ....... GDI–L, AMT, EHPS, ImpAlt ............................ 354 ¥24.4 1460 ¥20.0 1334
Mod HEV ......................................................... 372 ¥44.5 2630 ¥41.3 2504
dHCCI, AMT, ISG, EPS, eACC ...................... 362 ¥29.3 2705 ¥25.2 2579
GDI–L, AMT, ISG, EPS, ImpAlt ...................... 354 ¥30.7 2537 ¥26.7 2411
HSDI, AdvHEV ................................................ 244 ¥52.2 8363 ¥49.5 8237
AdvHEV ........................................................... 241 ¥52.5 5311 ¥49.8 5185
The acronyms in the table above refer with the excerpt from the CARB pounds. The other set applies to LDTs
to the following technologies: 222 statement of reasons above, nearly all of with a loaded vehicle weight of greater
A5: 5-speed automatic transmission the technologies relied upon by CARB than 3750 pounds and to MDPVs with
A6: 6-speed automatic transmission are technologies that NHTSA largely a gross vehicle weight of less than
AdvHEV: Advanced hybrid relies on in formulating the federal 10,000 pounds.
AMT: Automatic Manual Transmission average fuel economy standards. Thus, NHTSA’s CAFE rulemaking covers
CCP: Coupled cam phasing vehicle manufacturers would have to MY 2008–2011 light trucks. It also
CVVL: Continuous variable valve lift install many of the same types of includes MY 2011 MDPVs. Thus, the
DCP: Dual cam phasing technologies under the NHTSA CAFE CARB regulations cover vehicles
DeAct: Cylinder deactivation rule and under the CARB greenhouse covered by NHTSA’s rulemaking.
dHCCI: Diesel homogeneous charge gas rule.
compression ignition As noted above, CARB’s regulations
DVVL:Discrete variable valve lift California’s Regulation of Greenhouse govern the emission of greenhouse gases
eACC: Improved electric accessories Gas/Carbon Dioxide Equivalent from passenger cars, light duty trucks
ehCVA: Electrohydraulic camless valve Emissions From Motor Vehicles Is and medium duty passenger vehicles.
actuation Related to Average Fuel Economy Greenhouse gases (GHG) is defined to
EHPS: Electrohydraulic power steering Standards for Motor Vehicles Under 49 ‘‘mean[] the following gases: CO2,
EPS: Electric power steering U.S.C. Chapter 329 and Therefore methane, nitrous oxide, and
GDI–S: Stoichiometric gasoline direct Preempted hydrofluorocarbons.’’ 223
injection California’s GHG regulations include CARB’s GHG regulation states that the
GDI–L: Lean-burn gasoline direct new requirements on greenhouse gas fleet average greenhouse gas exhaust
injection emissions from motor vehicles emission values from passenger cars,
HSDI: High-speed (diesel) direct including model year 2009 and light-duty trucks and medium-duty
injection subsequent model year light duty trucks passenger vehicles that are produced
ImpAlt: Improved efficiency alternator (LDT) and medium duty passenger and delivered for sale in California shall
ISG: Integrated starter-generator systems vehicles (MDPV). The CARB greenhouse not exceed specified values.224 Table 21
ModHEV: Moderate hybrid gas rules include two sets of standards provides the following requirements for
Turbo: Turbocharging for motor vehicles. One set applies to all Fleet Average Greenhouse Gas Exhaust
As is evident from a comparison of passenger cars and to LDTs with a Emissions, specified in terms of grams
the excerpt from the NAS report above loaded vehicle weight (LVW) up to 3750 per mile CO2—equivalent:
TABLE 21.—CARB FLEET AVERAGE GREENHOUSE GAS EXHAUST EMISSION REQUIREMENTS

[In grams/mi CO2-equivalent]
LDTs 0–3750 lbs LDTs 3751 LVW–

Model LVW and pas- 8500 GVW and
year senger cars MDPVs
2009 ............................................................................................................................................................. 323 439

2010 ............................................................................................................................................................. 301 420
2011 ............................................................................................................................................................. 267 390
221 California Environmental Protection Agency, 222 The acronyms appear in the CARB ISOR 224 13 CCR § 1961.1(a)(1)(A).
Air Resources Board, Regulations To Control report at 205–06.
Greenhouse Gas Emissions From Motor Vehicles 223 13 CCR §§ 1961.1(d), (e)(4)
Initial Statement of Reasons (CARB ISOR) at 68.
TABLE 21.—CARB FLEET AVERAGE GREENHOUSE GAS EXHAUST EMISSION REQUIREMENTS—Continued

[In grams/mi CO2-equivalent]
LDTs 0–3750 lbs LDTs 3751 LVW–

Model LVW and pas- 8500 GVW and
year senger cars MDPVs
2012 ............................................................................................................................................................. 233 361

2013 ............................................................................................................................................................. 227 355
2014 ............................................................................................................................................................. 222 350
2015 ............................................................................................................................................................. 213 341
2016+ ........................................................................................................................................................... 205 332
As explained in CARB’s ‘‘Final production and transportation of the TABLE 22.—GWP VALUES FROM
Statement of Reasons’’ for its vehicular fuel used by the vehicle).226 CARB INITIAL STATEMENT OF REA-
GHG regulations, the following emission More particularly, under the CARB SONS, P. 48
sources are covered: regulation, for each GHG vehicle test
Vehicle climate change emissions comprise group, a manufacturer shall calculate Global
four main elements (1) CO2, CH4, and N2O Greenhouse gas compound warming
both a ‘‘city’’ grams per mile average of potential
emissions resulting directly from the CO2 equivalent value and a ‘‘highway’’
operation of the vehicle, (2) CO2 emissions
resulting from operating the air conditioning
grams per mile average of CO2 Carbon Dioxide ......................... 1
equivalent value.227 The use of CO2 Methane .................................... 23
system (indirect AC emissions), (3)
equivalence is an approximation that Nitrous Oxide ............................ 296
refrigerant emissions from the air
HFC 134a ................................. 1300
conditioning system due to either leakage, CARB used to place the gases included HFC 152a ................................. 120
losses during recharging, sudden releases due in CARB’s definition of greenhouse gas
to accidents, or release from scrappage of the on the same scale so that they could be
vehicle at the end of life (direct AC Under the CARB GHG regulation, the
added together. CARB based this on a basic calculation of a given vehicle
emissions), and (4) upstream emissions
associated with the production of the fuel
statement of global warming model’s GHG emission rate is as
used by the vehicle. The climate change potential: 228 follows: 229
emission standard incorporates all of these CO2 equivalent value = CO2 + 296 × N2O
elements.225 + 23 × CH4 ¥ A/C Direct Emissions
For vehicles certified on conventional Allowances ¥ A/C Indirect
fuels (e.g., gasoline), CARB’s regulation Emissions Allowances.
does not encompass upstream emissions This calculation may be expressed as
(i.e., emissions associated with the follows:
Where: system (refrigerant emissions from emissions would be a much larger

GHG = CO2-equivalent greenhouse gas the air conditioning system) component than CO2-equivalent
emission rate (per FTP and highway DACindirect = credit for reducing indirect baseline emission rates for all the other
tests) emissions from air conditioning components combined. The following
CO2 = tailpipe carbon dioxide emission system use CO2 emissions resulting table shows CARB’s estimates of the
rate from operating the air conditioning baseline emission rate for each covered
N2O = tailpipe nitrous oxide emission system, GHG component 230 (column 2) along
rate As detailed in its ‘‘Initial Statement of with the NHTSA’s arithmetic
CH4 = tailpipe methane emission rate Reasons,’’ CARB estimates calculation of corresponding shares of
DACdirect = credit for reducing direct demonstrated that of the total covered baseline emissions reported by CARB
emissions from air conditioning GHG emissions, vehicle tailpipe CO2 (column 3).
TABLE 23.—CARB ESTIMATES OF BASELINE GREENHOUSE GAS EMISSION RATES

Calculated
Rate (CO2-
GHG emissions component share (percent
equiv. g/mi) total)
CO2 emissions resulting directly from the operation of the vehicle ........................................................................ 291–512 92–95
CH4 emissions resulting directly from the operation of the vehicle ........................................................................ 0.1 0.02–0.03
N2O emissions resulting directly from the operation of the vehicle ........................................................................ 1.8 0.3–0.6
225 California Environmental Protection Agency, 226 CARB, FSOR at 8. emitted greenhouse gas, relative to an equal amount
Air Resources Board, Regulations To Control 227 13
CCR 1961.1(a)(1)(B)1.a. of carbon dioxide.
Greenhouse Gas Emissions From Motor Vehicles, 228 The global warming potential is a relative 229 Ibid.
ER06AP06.034</GPH>
Final Statement Of Reasons (FSOR), at 7–8. index used to compare the climate impact of an 230 CARB ISOR at 48, 59, 70–72, 75 and 79.
TABLE 23.—CARB ESTIMATES OF BASELINE GREENHOUSE GAS EMISSION RATES—Continued

Calculated
Rate (CO2-
GHG emissions component equiv. g/mi) share (percent
total)
CO2 emissions resulting from operating the air conditioning system ..................................................................... 13.5–19.0 4
Refrigerant emissions from the air conditioning system ......................................................................................... 8.5 2–3
As is evident from the above table, truck emits 471 g/mi and 316 g/mi of per mile for N2O in lieu of actually
CO2 emissions resulting directly from CO2 on the city and highway test cycles measuring emissions of that gas.234 Also
the operation of the vehicle account for respectively. Like federal fuel economy according to the regulation,
more than ninety two percent of the standards, CARB’s GHG regulation manufacturers could be granted as much
emissions potentially covered by weights these cycles at 55% and 45% as 9 and 11 grams per mile in direct and
CARB’s vehicular GHG regulation.231 respectively,232 such that representative indirect emissions allowances,
This demonstrates that CO2 emissions CO2 value would be 401 gr/mile for a respectively, for improvements to air
from the operation of the vehicle are the MY 2006 light truck. According to conditioners.235
predominant factor under CARB’s CARB’s ‘‘Initial Statement of Therefore, the CO2-equivalent GHG
greenhouse gas regulation. Reasons’’,233 a typical baseline vehicle emission rate for a typical light truck
This is corroborated by data in the emits 0.005 grams per mile of CH4. granted the maximum credit for air
record. As discussed above, a Under the regulation, manufacturers conditioner improvements might be
reasonably representative MY2006 light may use a default value of 0.006 grams computed as follows:
which reduces, with rounding, to: emissions resulting directly from GHG regulation primarily by applying
vehicle operation would be 285 and 408 technologies that increase fuel economy.
grams per mile, respectively: With only one exception—
improvements to air conditioning
Therefore, for a typical light truck, the systems—those technologies would
term representing CO2 emissions that have a parallel impact on fuel economy
are also subject to regulation under as measured for purposes of
federal CAFE standards (in the above determining compliance with federal
equation, the term labeled ‘‘CO2 term’’) fuel economy standards.237 For
would have a magnitude about 200 purposes of determining compliance
times that of the term representing its with federal CAFE standards, testing is
other emissions (‘‘non-CO2 term’’ in the Solving these two equations for CO2
yields values of 285 and 408 grams per run with the air conditioning turned off.
above), and about 20 times that of the Thus, the federal CAFE rules do not
term account for improvements to its air mile, respectively. At these rates, CO2
accounts for either 93% (1 ¥22/(285 + ‘‘credit’’ improved air conditioning
conditioning system (‘‘AC term’’ in the
2 + 20) = 0.93) or 95% (1¥22/(408 + 2 efficiency or reduced losses from air
above). Consistent with CARB’s
+ 20) = 0.95) of the emissions that enter conditioners. CARB has included
estimate, discussed above, that tailpipe
CO2 emissions dominate total GHG into the calculation of total GHG reductions in emissions associated with
emissions considered by CARB, this emissions under CARB’s regulation. air conditioning (direct and indirect) in
calculation indicates that CO2 emissions its GHG regulation, so the technologies
Just as in the case of compliance with it relies upon are in this one limited
account for on the order of 95 per cent federal fuel economy standards,
(1 ¥22/(401 + 2 + 20) = 0.95) of the respect broader than those NHTSA
compliance with CARB’s regulation is relies on. However, those technologies
emissions that enter into the calculation
largely a function of tailpipe CO2 are nevertheless fuel economy
of total GHG emissions under CARB’s
emissions.236 The same emissions technologies in that they reduce CO2
regulation.
provide the primary basis for emissions by reducing the load on a
Alternatively, using the MY2011 determining compliance with federal
values of CARB’s standards for total vehicle’s engine and in turn reduce fuel
fuel economy standards. In addition, consumption. Further, air conditioning
GHG emissions—267 and 390 grams per CARB’s own analysis anticipates that
mile for lighter and heavier vehicles, improvements are not the predominant
ER06AP06.037</GPH>
manufacturers would comply with its factor in reducing CO2-equivalent

respectively, corresponding CO2
231 A CARB memorandum recognizes that CO allowance of up to 9 grams per mile. Section Federal fuel economy regulation in terms of many
2
emissions are by far the largest amount of emissions 1961.1(a)(1)(B)(1)(c) allows an indirect emissions of the technologies that manufacturers likely would
produced by motor vehicles. http://www.arb.ca.gov/ allowance of up to 11 grams per mile. have to install to meet the requirements. In addition
ER06AP06.036</GPH>
msei/on-road/downloads/pubs/co2final.pdf. 236 This conclusion follows even if the CO

2 to covered large trucks, addressed above, CARB’s
232 13 CCR 1961.1.
emission rates in the examples are changed ISOR addressed the technologies that likely would
233 ISOR at 48. considerably, in line with the baseline estimates in be installed in small trucks and minivans. (ISOR,
234 13 CCR § 1961.1(a)(1)(B)1.a. CARB’s ISOR. pp. 66–7). In general, those technologies are the
235 California Code of Regulations, Title 13, 237 As demonstrated above, the CARB regulation
same as in the NAS report referred to above.
ER06AP06.035</GPH>
§ 1961.1(a)(1)(B)(1)(b) allows a direct emissions would have the substantially the same effect as the
emissions under the CARB express preemption provision in a Congress expected the agency to
regulation.238 statute neither precludes nor limits the balance these factors in a fashion that
CARB’s vehicle greenhouse gas ordinary working of conflict pre- ensures the standards are neither too
regulation is, therefore, clearly related to emption principles, particularly in the low, nor too high. The Conference
fuel economy standards 239 and thus absence of a saving clause.241 Therefore, Report for EPCA states that the fuel
subject to the preemption provision in NHTSA has concluded that these economy standards were to be the
EPCA. principles are also fully operative under product of balancing the benefits of
NHTSA Has Also Concluded That EPCA, in addition to its express higher fuel economy levels against the
Regulation of Carbon Dioxide Emissions preemption provision. difficulties individual manufacturers
From Motor Vehicles Conflicts With and NHTSA has concluded that the State would face in achieving those levels:
Is Impliedly Preempted Under 49 U.S.C. GHG standard, to the extent that it Such determination should take industry-
Chapter 329 regulates tailpipe CO2 emissions, would wide considerations into account. For
frustrate the objectives of Congress in example, a determination of maximum
Pre-emption principles also provide establishing the CAFE program and feasible average fuel economy should not be
that if a state law or regulation stands conflict with the efforts of NHTSA to keyed to the single manufacturer which
as an obstacle to the accomplishment implement the program in a manner might have the most difficulty achieving a
and execution of the full purposes and consistent with the commands of EPCA.
given level of average fuel economy. Rather,
objectives of Congress in enacting a the Secretary must weigh the benefits to the
Congress had a variety of interrelated nation of a higher average fuel economy
statute, that law or regulation may be objectives in enacting EPCA and has
preempted.240 The presence of an standard against the difficulties of individual
charged NHTSA with balancing and automobile manufacturers. Such difficulties,
238 Based on its own analysis of warming-
achieving them. Among them was however, should be given appropriate weight
improving motor vehicle fuel economy. in setting the standard in light of the small
potential weighted emissions, CARB estimates that
upgrading to a low-leak HFC–152a air conditioning To achieve that objective, Congress did number of domestic automobile
system or a CO2 system would reduce GHG not simply mandate the issuance of fuel manufacturers that currently exist, and the
emissions by ‘‘approximately 8.5 or 9 CO2- possible implications for the national
economy standards set at whatever level economy and for reduced competition
equivalent grams per mile, respectively.’’ (ISOR, p.
72). CARB further states that ‘‘upgrading to a VDC NHTSA deemed appropriate. Nor did it association [sic] with a severe strain on any
with external controls, air recirculation, and HFC– simply say that levels must be set manufacturer. However, it should also be
152a as the refrigerant, the estimated indirect consistent with the criteria it specified noted that provision has been made for
emission reduction is 7 CO2-equivalent grams per in Section 32902(f). It went considerably granting relief from penalties under Section
mile for a small car, 8 CO2-equivalent grams per 508(b) in situations where competition will
mile for a large car, and 9.8 CO2-equivalent grams further, mandating the setting of
per mile for minivans, small trucks, and large standards at the maximum feasible suffer significantly if penalties are
trucks.’’ (ISOR, p. 75). According to the regulation, level. imposed.244
combined direct and indirect emissions allowances NHTSA has concluded that were a
for air conditioners could total as much as CO2-
Other congressional objectives State to establish a fuel economy
equivalent 20 grams per mile. California Code of underlying EPCA include avoiding standard or de facto fuel economy
Regulations, Title 13, section 1961.1(a)(1)(B)(1)(b) serious adverse economic effects on standard, e.g., a CO2 emission standard,
allows a direct emissions allowance of up to 9 manufacturers and maintaining a
grams per mile. Section 1961.1(a)(1)(B)(1)(c) allows it would not choose one that has the
an indirect emissions allowance of up to 11 grams
reasonable amount of consumer choice effect of requiring lower levels of
per mile. among a broad variety of vehicles. average fuel economy than the CAFE
239 A CARB memorandum recognizes that CO
2 Congress was explicitly concerned that standards applicable under EPCA or
emissions are related to fuel economy. It points out the CAFE program be carefully drafted even one requiring the same level of
that CO2 emissions can be modeled to estimate fuel so as to require levels of average fuel
economy. It also noted in the context of CO2 that average fuel economy. Given that the
emission rates for vehicles from a certain period economy that do not have the effect of only practical way to reduce tailpipe
(MY 1990—MY 1997) were assumed to be the same either ‘‘imposing impossible burdens or emissions of CO2 is to improve fuel
as the preceding model year (1989) because CAFE unduly limiting consumer choice as to economy, such a State standard would
standards did not change dramatically after the capacity and performance of motor
initial model year (MY 1989). http:// be meaningless since it would not
www.arb.ca.gov/msei/on-road/downloads/pubs/ vehicles.’’ 242 These concerns are reduce CO2 emissions to an extent
co2final.pdf (this document apparently was equally applicable to the manner in greater than the CAFE standards.245
prepared in the late 1990s, based on its reference which that program is implemented. Instead, a State would establish a
to the EMFAC7G model, which was approved by
EPA on April 16, 1998.) Similarly, a National
To guide the agency toward the standard that has the effect of requiring
Academies Press (NAP) release on Automotive Fuel selection of standards meeting these a higher level of average fuel economy.
Economy, recognized the relationship between competing objectives, Congress Setting standards that are more
automotive fuel economy and CO2 emission rates: specified four factors that NHTSA must
‘‘Fuel economy improvements in new light-duty stringent than the fuel economy
vehicles will reduce carbon dioxide emissions per
consider in determining which level is standards promulgated under EPCA
mile because less fuel will be consumed per vehicle the maximum feasible level of average would upset the efforts of NHTSA to
mile driven.’’ http://www.nap.edu/openbook/ fuel economy and thus the level at balance and achieve Congress’s
0309045304/html/7html. (NAP was created by the which each standard must be set. These
National Academies to publish the reports issued competing goals. Setting a standard too
by the National Academy of Sciences, the National
are technological feasibility, economic high, above the level judged by NHTSA
Academy of Engineering, the Institute of Medicine, practicability, the effect of other to be consistent with the statutory
and the National Research Council.) See also NAP Government standards on fuel economy, consideration after careful consideration
report at http://www.nap.edu/books/0309076013/ and the need of the Nation to conserve
html/7.html. In addition, CARB recognized that the of these issues in a rulemaking
GHG (CO2-equivalent emission standards are
energy.243 In addition, the agency had proceeding, would negate the agency’s
related to fuel economy in another way. CARB traditionally considered the safety analysis and decisionmaking. NHTSA
recognized that the standards would result in consequences in selecting the level of makes its judgments only after
savings in reduced operating costs. Those lower future CAFE standards.

costs are based on lower costs for fuel based on considering extensive technical
improved fuel efficiency. (ISOR, p. 196; FSOR, pp.
241 Geierv. Honda, 529 U.S. 861, 869 (2000).
166, 168). 244 S.Rep. No. 94–516, 154–155 (1975).
240 Spriestma v. Mercury Marine, 537 U.S. 51, 64– 242 H. Rep. No. 94–340, 87 (1975). 245 Thisis also EPA’s conclusion. See 68 FR
5 (2002). 243 49 U.S.C. 32902(f). 52922, 52929.
information such as detailed product CO2 emissions, its issuance of standards not set actual or de facto fuel economy
information submitted by the vehicle for those emissions would ‘‘abrogate standards at any level.
manufacturers and NAS’ report on the EPCA’s regime,’’ 249 rendering NHTSA’s Second, as noted above, regulating
future of the CAFE program and careful balancing of consideration a fuel economy and regulating CO2
conducting analyses of potential nullity. This is equally true for State emissions are inextricably linked, given
impacts on employment and safety. standards for those emissions. current and foreseeable automotive
As noted above, manufacturers There appear to be two technology. There are not two different
confronted with requirements for the misconceptions that have clouded pools of technology, one for reducing
reduction of tailpipe CO2 emissions proper analysis of these implied tailpipe CO2 emissions, and the other
would look at the same pool of preemption issues. One is that since the for improving fuel economy. Thus, there
technology used to reduce fuel term ‘‘average fuel economy standard’’ is nothing to be gained by setting both
consumption. NHTSA concludes that it is defined in EPCA as meaning ‘‘a tailpipe CO2 standards and CAFE
is disruptive to the orderly performance standard specifying a standards.
implementation of the CAFE program, minimum level of average fuel economy If the technology does not improve
and to NHTSA’s reasonable balancing of applicable to a manufacturer in a model fuel economy, it does not reduce
competing concerns, to have two tailpipe CO2 emissions. The
year’’ 250 (emphasis added), there can be
different governmental entities assessing technologies listed in Part 5 of CARB’s
no conflict or incompatibility between
the need to conserve energy, Initial Statement of Reasons for its GHG
CO2 standards and CAFE standards.
technological feasibility, economic standard for reducing tailpipe CO2
Indeed, it has been suggested that in
practicability, employment, vehicle emissions reduce those emissions by
defining this term in this fashion,
safety and other concerns, and making improving fuel economy.
Congress endorsed the setting of other
inconsistent judgments made about how This dichotomy of perception or
standards having the effect of regulating
quickly and how much of that single characterization about fuel economy
fuel economy.251 NHTSA does not
pool of technology could and should be and CO2 emissions does not appear to
interpret the statute in this manner,
required to be installed consistent with exist in other countries. According to
those concerns. EPCA does not specify because EPCA requires that CAFE
the International Energy Agency:
how to weight each concern; thus, standards be set at the maximum
feasible level, consistent with the The existing approaches for achieving CO2
NHTSA determines the appropriate reduction through fuel economy
weighting based on the circumstances in agency’s assessment of impacts on the
nation, consumers and industry. improvement in new cars vary considerably,
each CAFE standard rulemaking. More with both regulatory approaches (China,
important, ignoring the judgments made An interpretation that allowed more Japan, US, CA) and voluntary approaches
by NHTSA at the direction of Congress stringent State fuel economy standards (EU). Some systems include financial
could result in setting standards at would nullify the statutory limits that incentives as well (Japanese tax credit for
levels higher than NHTSA can legally Congress placed in EPCA on the level of hybrids, U.S. gas guzzler tax, various EU
justify under EPCA, increasing the risk CAFE standards, and the efforts of member country differential taxation
NHTSA in its CAFE rulemaking to schemes based on fuel economy, such as in
of the harms that that body sought to
observe those limits. Congress expressly the UK and Denmark).252
avoid, e.g., serious adverse economic
consequences for motor vehicle listed four analytical, decision guiding Further, in Europe, the studies
manufacturers and unduly limited factors in EPCA because fuel economy conducted for the European
choices for consumers. was not the only value that Congress Commission in support of efforts to
Through EPCA, Congress committed sought to protect and promote in the provide public information on fuel
the reasonable accommodation of these mandating the setting of CAFE economy and CO2 emissions to induce
conflicting policies and concerns to standards. Congress did not want consumers to purchase vehicles with
NHTSA.246 ‘‘Congress did not prescribe improved fuel economy to come at the lower CO2 emissions uniformly reflect
a precise formula by which NHTSA price of adverse effects on sales, jobs, the view that fuel economy and CO2
should determine the maximally- and consumer choice. Further, in emissions are directly related.253
feasible fuel economy standard, but choosing the level of future CAFE
252 FUELING THE FUTURE: Workshop on
instead gave it broad guidelines within standards, NHTSA has traditionally
Automobile CO2 Reduction and Fuel Economy
which to exercise its discretion.’’ 247 A considered the potential impact on Improvement Policies, WORKSHOP REPORT, 13
state’s adoption and enforcement of a safety. October, 2004, Shanghai, China, http://
CO2 standard for motor vehicles would In selecting the maximum feasible www.iea.org/textbase/work/2004/shanghai/
infringe on NHTSA’s discretion to UNEP_IEA.PDF.
level, NHTSA strives to set the 253 RAND Europe, at 4; D. Elst, N. Gense, I.J.
establish CAFE standards consistent standards as high as it can without Riemersma, H.C. van de Burgwal, Z. Samaras, G.
with Congress’ guidance and threaten causing significant adverse Frontaras, I. Skinner, D. Haines, M. Fergusson, and
the goals that Congress directed NHTSA consequences for the manufacturers or P. ten Brink, Measuring and preparing reduction
to achieve. The process of achieving consumers. Since NHTSA should not, as measures for CO2-emissions from N1 vehicles-final
those goals involves great expertise and report the European Commission, Directorate-
a matter of sound public policy, and in General for Environment, at 90, TNO TPD, (part of
care. The fuel economy standards fact may not as a matter of law, set the Netherlands Organisation for Applied Scientific
delegated to NHTSA are to be the standards above the level it determines Research TNO), in partnership with Aristotle
product of balancing the benefits of to be the maximum feasible level, EPCA University of Thessaloniki and Institute for
higher fuel economy levels against the European Environmental Policy, Contract no. B4–
should not be interpreted as permitting 3040/2003/364181/MAR/C1, December 2004
difficulties individual manufacturers the States to do so. Indeed, NHTSA has (observing that ‘‘ * * * reduction of CO2 is
would face in achieving those levels.248 concluded that, under EPCA, States may equivalent to fuel economy improvement * * * ’’);
As EPA observed in its notice denying and A. Gartner, Study on the effectiveness of
the petition to regulate motor vehicle Directive 1999/94/EC relating to the availability of
249 Id.
consumer information on fuel economy and CO2
250 49
U.S.C. 32901(a)(6). emissions in respect of the marketing of new
246 901 F.2d 107, 120–21. 251 Thissuggestion cannot be reconciled with passenger cars, Final report to the European
247 901 F.2d 107, 120–21.
Congress’ decision to include an express Commission, Directorate-General for Environment,
248 793 F.2d 1322, 1338. preemption provision in EPCA. 49 U.S.C. 32919(a). Contract No.: 07010401/2004/377013/MAR/C1, at
Similarly, in 2001, one of the leading read the provision to imply a savings NHTSA does not interpret EPCA’s
U.S. environmental groups participating clause. This is particularly so given that express preemption provision as
in this rulemaking issued a report that Congress has considered and provided a preempting State emissions standards
identified a vehicle’s fuel consumption different saving clause, i.e., the one for that only incidentally or tangentially
rate as the single vehicle design factor a State law or regulation on disclosure affect fuel economy. These standards
determining the amount of a vehicle’s of fuel economy or fuel operating costs include, for example, given current and
CO2 emissions: for an automobile. foreseeable technology, the existing
The CO2 emitted by a motor vehicle is the
Moreover, even if EPCA did contain emissions standards for CO, HC, NOX,
product of three factors: the amount of the saving clause desired by those and particulates. They also include the
driving, the vehicle’s fuel consumption rate commenters, NHTSA would not give it limits on sulfur emissions that become
and the carbon intensity of the fuel effect here, as doing so ‘‘would upset effective in 2007. NHTSA considers
consumed. The fuel consumption rate (e.g., the careful regulatory scheme such standards under the
the number of gallons needed to drive 100 established by federal law.’’ 256 decisionmaking factors provision of
miles) is the inverse of fuel economy (miles First, and most important in this EPCA since, under applicable law, they
per gallon, or mpg).254 context, such a reading would upset the can be adopted and enforced and
Later, in the same report, it was carefully calibrated CAFE regulatory therefore can have an effect on fuel
observed in a footnote (#26) that ‘‘it is program under which NHTSA is with economy.
actual CAFE that determines fuel setting CAFE standards at the maximum However, two groups of State
consumption and CO2 emissions.’’ 255 feasible level, taking care neither to set emissions standards do not qualify
them too high nor too low. Because of under NHTSA’s interpretation of the
EPCA’s Provision Specifying Factors To the need to conserve energy, Congress decisionmaking factors provision, and
Be Considered in Setting Average Fuel did not simply mandate the setting of therefore would not be considered. One
Economy Standards Does Not Limit appropriate fuel economy standards. is State standards that cannot be
Preemption Under 49 U.S.C. Chapter Instead, it mandated the setting of adopted and enforced because there has
329 maximum feasible ones. At the same been no waiver for California under the
EPCA does not include any exception time, Congress was aware that setting preemption waiver provision of the
to its preemption provision that would overly stringent standards would Clean Air Act. The other is the State
cover State GHG and CO2 standards. excessively reduce consumer choice emissions standards that are expressly
Nevertheless, some commenters about vehicle design and performance or impliedly preempted under EPCA,
opposing preemption suggested that and threaten adverse economic regardless of whether or not they have
Section 32902(f), which lists the factors consequences. As noted by EPA in its received such a waiver. Preempted
that NHTSA must consider in Federal Register document denying standards include, for example:
determining the level at which to set ICTA’s petition to regulate CO2 (1) A fuel economy standard; and
fuel economy standards, prevents emissions from motor vehicles, the (2) A law or regulation that has
preemption by requiring consideration, setting of standards for CO2 tailpipe essentially all of the effects of a fuel
emissions would displace NHTSA and economy standard, but is not labeled as
by NHTSA, of the effect of other
upset EPCA’s regulatory regime for one (example: State tailpipe CO2
Government standards, including
CAFE. standard).
emissions standards, on fuel economy.
Second, the requirement to consider This reading of EPCA’s express
EPCA’s decisionmaking factor
these decisionmaking factors must be preemption provision allows that
provision is neither a saving clause nor
reconciled with the express preemption provision to function in a consistent
a waiver provision. Nor does NHTSA
provision. NHTSA has concluded that way, without irrational limitation, to
interpret it as saving state emissions
reading the express preemption protect the national CAFE program from
standards that effectively regulate fuel
provision in the manner suggested by interference by any State standard
economy from preemption. The agency
commenters opposing preemption effectively regulating fuel economy. It
interprets that provision only to direct
would irrationally limit that provision also simultaneously maximizes the
NHTSA to consider those State
and leave NHTSA’s role in ability of EPCA and the Clean Air Act
standards that can otherwise be validly
administering the CAFE program open to achieve their respective purposes.
adopted and enforced under State and NHTSA’s judgment is that the agency
Federal law. to a substantial risk of abrogation. By
the same token, in NHTSA’s view, it is should distinguish between motor
The decisionmaking factors provision vehicle emission standards for
does reflect an expectation by Congress equally important that the ‘‘relates to’’
language in the express preemption emissions other than CO2 (e.g., HC, CO,
that some state emissions standards NOX and PM) and motor vehicle
would not be preempted under the provision should not be given so broad
a reading that even State emissions emission standards for CO2. Those other
express preemption provision. However, emissions are not directly and
as an initial matter, NHTSA does not standards having only an incidental
effect on fuel economy standards are inextricably linked to fuel economy.
deemed to be preempted by it. NHTSA’s current view is that standards
45 and 70, Allgemeine Deutsche Automobil-Club
ADAC e.V., March 2005 (observing ‘‘ * * * that NHTSA has concluded that these two for emissions other than CO2 merely
most consumers are not aware of the correlation of extreme readings, with their affect the level of CAFE that is
fuel consumption and CO2 emissions of passenger unacceptable impacts on EPCA and on achievable and thus only incidentally
cars * * * ’’ and that ‘‘ * * * the CO2 emissions affect fuel economy standards.
(g/km) can be calculated from fuel consumption the Clean Air Act, including its waiving
* * * ’’). preemption provision, can be avoided Accordingly, we believe that regulation
254 J. DeCicco and A. Feng, Automakers’ under a carefully calibrated of these emissions is not rulemaking
Corporate Carbon Burden, Reframing Public Policy interpretation of EPCA’s express inconsistent with the operation of
on Automobiles, Oil and Climate, at 7–8, preemption principles under EPCA.

Environmental Defense, 2001. The article explained
preemption provision that harmonizes
the two acts to the extent possible. HC, CO, and PM all result from
that carbon intensity is how much CO2 is emitted
per unit of fuel consumed. For gasoline, this incomplete combustion. Therefore, the
amounts to 19.4 pounds per gallon. Id. at 8. 256 Geier v. American Honda Motor Co., 529 U.S. first step toward controlling emissions
255 Ibid, at 22–23. 861, 869 (2000). (Citations omitted.) of these pollutants involves improving
the combustion process. Doing so removal from the vehicle. Theoretically, relationship of the CAFE program to the
increases the production and emission on-board scrubbers could be used Clean Air Act. EPCA’s express
of carbon dioxide. All three pollutants separate carbon dioxide from the preemption provision cannot be
can also be substantially eliminated exhaust stream. Chemical processes for interpreted as preempting all State laws
from tailpipe emissions by placing removing carbon dioxide are currently relating to a fuel economy standard, no
catalytic converters between the engine used in underwater rebreathers and matter how tangential the relationship.
and the tailpipe. Catalytic converters space applications (e.g., the Such an interpretation would largely, if
reduce emissions of these pollutants international space station), and are not wholly, negate the Clean Air Act’s
through oxidation, which also increases contemplated for stationary applications preemption waiver provision and leave
the production and emission of carbon (e.g., electric utilities). (See, e.g., http:// few, if any, emission standards to be
dioxide. PM emissions can also be www.nas.nasa.gov/About/Education/ considered by NHTSA under EPCA’s
controlled using PM traps, which SpaceSettlement/teacher/course/ decisionmaking factor provision. Our
temporarily trap and store PM. PM traps co2.html, http://www.frogdiver.com, approach to reconciling EPCA and the
periodically regenerate by oxidizing and http://www.netl.doe.gov/ Clean Air Act appropriately
away the stored PM. Doing so increases publications/proceedings/01/ distinguishes between emissions other
the production and emission of carbon carbon_seq/5a5.pdf.) However, for a than CO2 and CO2. The Clean Air Act
dioxide. variety of reasons (e.g., size, cost, energy authorizes the States to regulate
NOX results from the oxidation of demands, use of dangerous reactants emissions other than CO2, but not CO2
nitrogen at the high peak temperatures such as calcium hydroxide), these itself, because of the nature of
that occur in an efficiently-operating processes would not be even remotely combustion and the availability of
engine. The exposure of nitrogen to practical for motor vehicles. different technologies for regulating
peak temperatures can be reduced by Even if a practical process to separate those other emissions.
increasing turbulence in the combustion carbon dioxide from the exhaust stream Our approach also avoids interpreting
chamber, changing ignition and/or were available, the carbon dioxide EPCA’s express preemption provision so
injection timing, and recirculating some would, to prevent its release, need to be narrowly as to produce the absurd and
exhaust gases through the engine. compressed or solidified for temporary destructive result of preempting State
Increased turbulence and changes to onboard storage, and frequently fuel economy standards, but not State
ignition and/or injection timing tend to removed for disposal (e.g., in standards that are fuel economy
increase the production and emission of underground facilities). For example if standards in effect, but not in name.
carbon dioxide. Catalytic converters can fifteen gallons of gasoline are added at Giving EPCA this degree of primacy is
substantially eliminate NOX from the each refueling of a vehicle, about 290 particularly appropriate given the
exhaust stream. However, doing so pounds of carbon dioxide (or, without regulatory authority in this statute is
requires chemical reduction—oxidation any separation of the carbon dioxide, quite narrow and specific: fuel economy
in reverse. Modern catalytic converters about 1,400 pounds of exhaust gases) standards, and their functional
perform both reduction and oxidation, would be produced through the equivalents, CO2 standards and GHG
reducing NOX to oxidize HC and CO, combustion of that fuel. (This example standards, to the extent that the latter
and further oxidizing HC and CO with assumes gasoline with a density of 6 regulate CO2 emissions.
oxygen available in the exhaust stream. pounds per gallon and a carbon content
These processes increase the production (by mass) of 87%. Each pound of carbon XV. Rulemaking Analyses and Notices
and emission of carbon dioxide. dioxide contains 0.273 pounds of A. Executive Order 12866 and DOT
Gasoline vehicles also emit HC elemental carbon. The combustion of 1 Regulatory Policies and Procedures
through the evaporation of fuel. These pound of gasoline requires about 14.7
emissions are controlled using canisters pounds of air.) At these rates of Executive Order 12866, ‘‘Regulatory
that temporarily store evaporated fuel. production, no practical means of Planning and Review’’ (58 FR 51735,
Periodically, these canisters are purged, onboard storage and periodic removal October 4, 1993), provides for making
releasing the stored fuel vapors to the are foreseeable. determinations whether a regulatory
engine to be combusted. Compared to For these reasons, a CO2 emissions action is ‘‘significant’’ and therefore
simply releasing evaporative emissions standard stands apart from those other subject to OMB review and to the
to the atmosphere, these processes emissions standards. NHTSA has requirements of the Executive Order.
increase the formation and emission of concluded that such a standard The Order defines a ‘‘significant
carbon dioxide. functions as a fuel economy standard, regulatory action’’ as one that is likely
To summarize, the processes used to given the direct relationship between a to result in a rule that may:
control HC, CO, NOX, and PM emissions vehicle’s fuel economy and the amount (1) Have an annual effect on the
increase the formation and emission of of CO2 it emits. In contrast, no such economy of $100 million or more or
carbon dioxide. Because carbon dioxide relationship exists between a vehicle’s adversely affect in a material way the
is, like water, an ultimate byproduct of fuel economy and the emissions economy, a sector of the economy,
combustion, it cannot be further currently regulated by EPA. productivity, competition, jobs, the
converted on the vehicle to some other Interpreting EPCA’s preemption environment, public health or safety, or
compound through any practical means. provision as preempting only those State, local or Tribal governments or
Plants use sunlight to convert carbon State regulations that directly regulate communities;
dioxide and water to biomass (and or have the effect of directly regulating (2) Create a serious inconsistency or
oxygen) through photosynthesis, but fuel economy gives, to the extent otherwise interfere with an action taken
vehicles produce far too much exhaust possible, maximum effect both to EPCA or planned by another agency;
to be consumed by plants that could and to the preemption waiver provision (3) Materially alter the budgetary
conceivably be sustained by the amount in the Clean Air Act. This is necessary impact of entitlements, grants, user fees,
of sunlight to which vehicles are and appropriate, especially considering or loan programs or the rights and
exposed. Even if enough sunlight were the importance of the goals of the Clean obligations of recipients thereof; or
available, biomass would be produced Air Act and the attention paid by (4) Raise novel legal or policy issues
at a rate requiring impractically frequent Congress in drafting EPCA to the arising out of legal mandates, the
President’s priorities, or the principles and a Finding of No Significant Impact projected impacts would be very small
set forth in the Executive Order. (FONSI) have been placed in the docket. and generally constitute improvements
The rulemaking adopted in this In comments on the draft EA, the compared to the baseline for this
document is economically significant. Attorneys General and the Center for rulemaking.261
Accordingly, OMB reviewed it under Biological Diversity challenged the The Attorneys General and the Center
Executive Order 12866. The rule is also adequacy of the environmental analysis for Biological Diversity stated that the
significant within the meaning of the performed by the agency. These agency did not consider a reasonable
commenters stated that the agency is number of alternatives, and therefore
Department of Transportation’s
required to prepare an EIS. did not take the requisite ‘‘hard look’’
Regulatory Policies and Procedures.
The agency disagrees that an EIS was when analyzing environmental
We estimate that the total benefits required. Although not required to do so impacts.262 In particular, they asserted
under the Unreformed CAFE standards under NEPA, the agency first published that Reformed CAFE creates incentives
for MYs 2008–2010 and the Reformed a draft EA for comment, and carefully for manufacturers to build larger
CAFE standard for MY 2011 will be reviewed all comments.260 Appropriate vehicles, ‘‘which will jeopardize air
approximately $7,554 million at a 7 adjustments have been made in the final quality and the climate’’ and that
percent discount rate and at fuel prices EA. NHTSA did not ‘‘consider the
(based on EIA long-term projections) Based on the analysis in the final EA, environmental impact of its choices or
ranging from $1.96 to $2.39 per gallon: which led to a determination that this the possibility of making other choices.’’
$577 million for MY 2008, $1,876 rulemaking action will not have a In determining the impacts of this
million for MY 2009, $2,109 million for significant effect on the quality of the rulemaking, the agency analyzed a
MY 2010, and $2,992 million for MY human environment, the agency reasonable number of alternative
2011. We estimate that the total costs determined that it was not required to actions, as required under NEPA. As the
under those standards, as compared to prepare an Environmental Impact Supreme Court has recognized, an
the MY 2007 standard of 22.2 mpg, will Statement (EIS). The function of an EA agency is required to examine only
be a total of $6,440 million: $536 is to present and analyze various reasonable alternatives, not those that
million for MY 2008, $1,621 million for alternatives so that an agency can might result in the worst-case scenario
MY 2009, $1,752 million for MY 2010, consider the environmental concerns and that are unlikely to occur. See
and $2,531 million for MY 2011. related to a particular action and other Robertson v. Methow Valley Citizens
Under the Reformed CAFE standards possible actions ‘‘while reserving Council, 490 U.S. 332, 354–55 (1989).
agency resources to prepare full EISs for The agency recognizes that numerous
for MYs 2008–2011, as compared to the
appropriate cases.’’ Sierra Club v. DOT, alternatives exist, including alternatives
MY 2007 standard of 22.2 mpg, we
753 F.2d 120, 126 (D.C. Cir. 1985). An with more stringent fuel economy
estimate the total benefits under the
EIS is required only when an agency has requirements.263 However, the agency
Reformed CAFE system for MYs 2008–
first determined that a major federal did not analyze these alternatives in the
2011 at $8,125 million: $782 million for
action will ‘‘significantly affect [] the final EA because we determined from
MY 2008, $2,015 million for MY 2009,
quality of the human environment.’’ 42 our analytical model that they would
$2,336 million for MY 2010, and $2,992
U.S.C. 4332(2)(C). See also Sierra Club, not be consistent with the statutory
million for MY 2011. We estimate the
753 F.2d at 126, Town of Cave Creek, criteria of EPCA. We note that the
total costs to be similar to the total costs
Arizona v. FAA, 325 F.3d 320, 327 (D.C. agency is required to set fuel economy
under the Unreformed CAFE system, standards at the ‘‘maximum feasible’’
$6,711 million: $553 million for MY Cir. 2003) and Fund for Animals v.
levels achievable by manufacturers in
2008, $1,724 million for MY 2009, Thomas, 127 F.3d 80, 83 (D.C. Cir.
the applicable model years, taking into
$1,903 million for MY 2010, and $2,531 1997). This limitation reflects the
consideration four statutory factors:
million for MY 2011. courts’ awareness of the time and
Technological feasibility; economic
Because the final rule is significant expense involved in the preparation of
practicability; the impact of other
under both the Department of an EIS. See River Road Alliance v. Corps
Federal standards on fuel economy; and
Transportation’s procedures and OMB’s of Engineers of the United States Army,
the need of the nation to conserve
guidelines, the agency has prepared a 764 F.2d 445, 449 (7th Cir. 1985) (the
Final Regulatory Impact Analysis and decision to prepare an EIS is based on 261 See Section 4 Environmental Consequences, in
placed it in the docket and on the ‘‘whether the time and expense of the final EA, which has been placed in the docket
agency’s Web site. preparing an environmental impact for this rulemaking.
statement are commensurate with the 262 The term ‘‘hard look’’ refers to whether the
B. National Environmental Policy Act likely benefits from a more searching agency fully evaluated, rather than cursorily
examined, a particular issue. See Marsh v. Oregon
evaluation than an environmental Natural Resources Council, 490 U.S. 360, 374
Consistent with the requirements of assessment provides’’) and Metropolitan (1989). Elements of a hard look include whether an
the National Environmental Policy Act Edison Co. v. People Against Nuclear agency demonstrated that ‘‘it had responded to
(NEPA),257 the regulations of the Energy, 460 U.S. at 766, 776 (1983) significant points made during the public comment
Council on Environmental Quality,258 period, had examined all relevant factors, and had
(noting scarcity of time and resources in considered significant alternatives to the course of
and relevant DOT regulations and limiting the scope of NEPA review). The action ultimately chosen.’’ Merrick B. Garland,
orders,259 the agency has prepared a agency conducted a careful inquiry and Deregulation and Judicial Review, 98 Harv. L. Rev.
final Environmental Assessment (EA) of assessed the potential environmental 505, 526 (1985). See also Home Box Office v. FCC,
this action and concludes that this 567 F.2d 9, 35 (D.C. Cir.) (requiring agencies to
impacts of a variety of alternatives consider all relevant factors and demonstrate a
rulemaking action will not have a including the action adopted in this ‘‘rational connection between the facts found and
significant effect on the quality of the final rule. With respect to each the choice made’’) (citing Burlington Truck Lines v.
human environment. Both the final EA alternative, the agency determined that
United States, 311 U.S. 156, 168 (1962)), cert.
denied, 434 U.S. 829 (1977).

263 Commenters suggested that the agency
257 42U.S.C. 4321 et seq. 260 None of the commenters provided specific consider more stringent standards, but provided no
258 40CFR part 1500. data to indicate that impacts from the proposed substantive data to support the general assertion
259 49 CFR part 520, DOT Order 5610.1C, and rule, final rule, or considered alternatives, would be that unspecified, but more stringent, standards be
NHTSA Order 560–1. significant. adopted.
energy. EPCA does not permit the Further, we considered, but did not for Biological Diversity also stated that
agency to establish fuel economy evaluate, an alternative that would the agency needs a full understanding of
standards at any chosen level, but incorporate a backstop or ratcheting how its proposed action impacts the
instead requires NHTSA to balance mechanism. There are several reasons overall ability of the U.S. to reduce its
these factors when setting an for not including such a mechanism greenhouse gas emissions.
appropriate standard. For example, a within the context of the Reformed In the final EA, the agency has
fuel economy standard ‘‘with harsh CAFE system that we are adopting provided a discussion of the greenhouse
economic consequences for the auto today. The suggestion that NHTSA must gas emissions in the U.S. transportation
industry * * * would represent an incorporate a backstop does not sector, as well as in the U.S. generally,
unreasonable balancing of EPCA’s consider the fact, noted above several based on available data (see EA pp. 21,
policies.’’ Center for Auto Safety v. times, that CAFE does not command 31). Although the commenters urge the
NHTSA, 793 F.2d 1322, 1340 (D.C. Cir. that NHTSA, in administering the CAFE agency to promulgate a standard that
1986). program, either to ignore or seek to results in larger reductions in CO2
The evaluated alternatives represent preclude mix shifts and design changes emissions, such a course of action
standards set under the traditional made due to consumer demand. NHTSA would not be consistent with the EPCA
Unreformed CAFE process and under has traditionally considered consumer constraints discussed earlier. The extent
the marginal cost-benefit analysis demand in setting new CAFE standards of NHTSA’s analysis is dictated by the
previously described. These alternatives and likewise has considered it as goals and requirements of EPCA.
analyzed by the agency, which are necessary and appropriate in amending Metropolitan Edison Co., 460 U.S. at 776
existing standards. The proponents of a (noting that ‘‘[t]he scope of the agency’s
described in greater detail in the final
backstop did not consider that the inquiries must remain manageable if
EA (see EA pp. 8–15), represent options
proposed Reformed CAFE system NEPA’s goal of ‘ensur[ing] a fully
that were reasonable, given the agency’s
minimized the incentive for informed and well considered decision’
authority under EPCA. All of these
manufacturers to upsize vehicles. The * * * is to be accomplished.’’)
options were projected to result
Reformed system adopted in this final (citations omitted). The agency
primarily in small emission reductions.
rule reduces that incentive even more. considered the impacts to greenhouse
We evaluated the selected alternatives
Further, manufacturers are limited in gas emissions from fuel economy
against a reasonable baseline and we
their ability to increase vehicle size by standards set according to the statutory
have evaluated the estimated
consumer demand and by other market directive of EPCA. Moreover, as
cumulative impacts resulting from the illustrated in the final EA, all of the
forces, such as potential fuel prices.
alternative ultimately adopted in the analyzed alternatives were projected to
Adoption of a backstop would also
final rule.264 The alternative adopted reduce CO2 emissions (see EA p. 30).
undermine the benefits of attribute-
today reflects the technological The commenters also contend that the
based standards for some manufacturers
capabilities of the industry within the agency has not taken into account
and perpetuate the shortcomings of the
applicable time frame and does not changed circumstances that have
Unreformed system.
result in harsh economic consequences The Attorneys General also expressed occurred since the last EIS was
for the industry. After carefully concern about the potential for vehicle completed. In addition to citing the
considering the statutory criteria, the upsizing and stated that the agency passage of time since the agency last
agency has determined that the should analyze the impact on fuel prepared an EIS for the CAFE program,
standards adopted today represent the savings that would occur if commenters said that higher gas prices,
‘‘maximum feasible’’ levels achievable manufacturers enlarged their vehicles, heightened concerns about foreign oil
by manufacturers.265 making them subject to a less stringent dependence, climate changes, and
requirement. As explained above, the advances in hybrid technologies
264 While a baseline typically represents the
agency chose footprint as the vehicle constitute ‘‘changed circumstances’’ that
impact that would occur if an agency took no action dictate a full evaluation of
(i.e., if NHTSA did not establish standards at all for
metric on which to base the standard
MYs 2008–2011), 49 U.S.C. § 32902(a) precludes because it would be difficult for environmental impacts in an EIS.
this possibility by affirmatively requiring the manufacturers to make short term While we appreciate that changes
Secretary of Transportation to prescribe, by rule, adjustments solely in response to the have occurred since the last EIS was
average fuel economy standards for light trucks— performed, we note that there must be
in other words, the agency must promulgate some
fuel economy levels. We based our
standard to apply to light trucks. For these analysis on manufacturer product plans, sufficient information to show that this
purposes, we chose to use the MY 2007 (22.2 mpg) which reflect vehicle designs through action will affect the quality of the
standard as the baseline to assess the impacts of the MY 2011. As also explained above, human environment ‘‘in a significant
various alternatives. footprint is closely tied to a vehicle’s manner or to a significant extent not
265 Separately, NRDC provided several scenarios
platform, which manufacturers typically already considered’’ to require an EIS.
purportedly demonstrating the impact of upsizing
on fleet-wide fuel economy. While the agency does rely upon without change for a multi- Further, as explained in the FRIA,
not agree that the scenarios presented by NRDC are year product cycle. higher gasoline prices were factored into
probable, we note that the fleet-wide fuel economy The Center for Biological Diversity the model relied on by the agency (see
estimates for each one remains within the range of argued that the agency did not properly FRIA p. VIII–26). The incorporation of
alternatives considered in the Environmental
Assessment. That is, under NRDC’s analysis, the analyze the cumulative impacts of the hybrid technology is addressed
fleet-wide fuel economy was not lower than the No light truck rule relative to greenhouse elsewhere in this notice and in the FRIA
Action Alternative evaluated in the final EA. gas emissions and global warming. The (see FRIA p. V–12). Consideration of the
Additionally, as discussed in the final EA, the range commenter asserts that past, present and nation’s dependence on foreign oil
of impacts from the considered alternatives is very
narrow and minimal. The projections for each of the
future actions must be adequately raises policy questions that lie outside
alternatives examined by the agency indicated that catalogued and considered, including a the scope of NEPA. We address that
none of them would result in a significant impact. list and description of ‘‘sources of matter elsewhere in this notice.
An agency is only required to examine reasonable United States [greenhouse gas] The setting of the MY 2005–2007 light
alternatives, not those that might result in the
worst-case scenario and that are unlikely to occur.
emissions by category and percent of the truck standards in April 2003 (68 FR
See Robertson v. Methow Valley Citizens Council, total to place the [greenhouse gas] 16868) was the agency’s first effort to set
490 U.S. 332, 354–55 (1989). emissions into perspective.’’ The Center CAFE standards since the lifting of prior
Congressional restrictions (other than that the action we are adopting today are small business for purposes of the
the ministerial setting of standards at will not have a significant impact on the Regulatory Flexibility Act, a regulatory
already prescribed levels during the environment. flexibility analysis was not prepared.
intervening years). Based on the EA for In addition to commenting on the EA,
the Center for Biological Diversity D. Executive Order 13132 Federalism
that action,266 the agency concluded
that no significant environmental asserted that the Global Change Executive Order 13132 requires
impact would result from the rule. As Research Act (GCRA) requires the NHTSA to develop an accountable
explained in the MY 2005–2007 EA, we agency to rely on specific research in process to ensure ‘‘meaningful and
believe that adopting that approach in our analysis. The agency disagrees. The timely input by State and local officials
that rulemaking action is consistent GCRA calls for the publication of a in the development of regulatory
with our prior evaluations assessing the study on the effects of global climate policies that have federalism
impacts of changes to CAFE. changes every four years and to make implications.’’ The Order defines the
The final EA in the current action also these research findings available to term ‘‘Policies that have federalism
considered the effects of the different agencies to use. It does not mandate, implications’’ to include regulations
alternatives on nonattainment areas as however, that Federal agencies rely on that have ‘‘substantial direct effects on
well as on those areas that could be at the research report. Instead, the statute the States, on the relationship between
risk of nonattainment status (see EA p. only imposes a requirement that the the national government and the States,
31). The agency determined that the report be made available to agencies. or on the distribution of power and
changes projected from the various See 15 U.S.C. 2938 (ensuring that responsibilities among the various
alternatives that were considered would research findings are made available for levels of government.’’ Under the Order,
not increase the risk of any geographic use by Federal agencies in formulating NHTSA may not issue a regulation that
areas incurring nonattainment status. As policies addressing human-induced and has federalism implications, that
the projections in the final EA show, the natural processes of global change). imposes substantial direct compliance
levels of criteria pollutants are expected costs, and that is not required by statute,
C. Regulatory Flexibility Act unless the Federal government provides
to decrease, with the exception of CO,
and the projected increases in CO are Pursuant to the Regulatory Flexibility the funds necessary to pay the direct
not sufficient to result in an increase in Act (5 U.S.C. 601 et seq., as amended by compliance costs incurred by State and
nonattainment areas (see EA p. 30). the Small Business Regulatory local governments, or NHTSA consults
NRDC and the Center for Biological Enforcement Fairness Act (SBREFA) of with State and local officials early in the
Diversity stated that the agency did not 1996), whenever an agency is required process of developing the proposed
consider the impacts of the regulation to publish a notice of rulemaking for regulation. The agency has complied
on human health and endangered any proposed or final rule, it must with Order’s requirements.
species. The final EA addresses human prepare and make available for public The issue of preemption of State
health issues. The final EA comment a regulatory flexibility emissions standard under EPCA is not
demonstrates that the changes in the analysis that describes the effect of the a new one; there is an ongoing dialogue
emissions of criteria pollutants are not rule on small entities (i.e., small regarding the preemptive impact of
projected to result in any additional businesses, small organizations, and CAFE standards whose beginning pre-
violations of the primary air standards, small governmental jurisdictions). The dates this rulemaking. This dialogue has
which are set at levels intended to Small Business Administration’s involved a variety of parties (i.e., the
protect against adverse effects on human regulations at 13 CFR part 121 define a States, the federal government and the
health (see EA p. 31). small business, in part, as a business public) and has taken place through a
With regard to endangered species, entity ‘‘which operates primarily within variety of means, including rulemaking.
the commenters expressed concern the United States.’’ (13 CFR 121.105(a)). This issue was explored in the litigation
about the potential impact of increased No regulatory flexibility analysis is over the California ZEV regulations in
greenhouse gas emissions and global required if the head of an agency 2002 (in which the federal government
warming on various species and their certifies the rule will not have a filed an amicus brief) and addressed at
habitat. We first note that the significant economic impact on a great length in California’s 2004–2005
Endangered Species Act does not substantial number of small entities. rulemaking proceeding on its GHG
require review in every instance that I certify that the final rule will not regulation.267 NHTSA first addressed
could have an impact on a particular have a significant economic impact on the issue in its rulemaking on CAFE
endangered or threatened species, a substantial number of small entities. standards for MY 2005–2007 light
however remote. 16 U.S.C. 1531 et seq. The following is the agency’s statement trucks.
Rather, review is triggered in instances providing the factual basis for the In the current rulemaking proceeding,
where it is likely that such an impact certification (5 U.S.C. 605(b)). we sought again to engage the public in
will occur. See Babbitt v. Sweet Home The final rule directly affects fourteen a discussion of the relationship between
Chapter of Communities for a Great single stage light truck manufacturers. CAFE standards and State CO2
Oregon, 515 U.S. 687, 703 (1995). As According to the Small Business standards and the applicability of
noted in the final EA, the agency Administration’s small business size EPCA’s preemption provision to the
projected that the final rule would standards (see 5 CFR 121.201), a single latter. In response to our discussion of
produce, compared to U.S. emissions of stage light truck manufacturer (NAICS preemption in the August 2005 NPRM,
CO2, a small decrease in emissions of code 336112, Light Truck and Utility the agency received communications
Vehicle Manufacturing) must have 1,000 from a variety of States and their
CO2, the primary component of
or fewer employees to qualify as a small representative organizations.
greenhouse gas emissions, under the
business. None of the affected single States objected generally to the
selected alternative (see EA p. 32).
stage light truck manufacturers are small preemption discussion in the NPRM.
Accordingly, the agency determined
businesses under this definition. All of CARB, New Jersey Department of
266 See Docket NHTSA–2002–11419–18360 (Final the manufacturers of light trucks have Environmental Protection, New York
Environmental Assessment for MY 2005–2007 Light thousands of employees. Given that
Truck CAFE Standards). none of the businesses directly affected 267 FSOR, pp. 358–68.
Department of Environmental February 7, 1996), the agency has OMB a request for approval of the
Conservation, STAPPA/ALAPCO, considered whether this rulemaking following collection of information.
NESCAUM, and the Attorneys General will have any retroactive effect. This In compliance with the Paperwork
(California et al.) each stated that the final rule does not have any retroactive Reduction Act, this notice announces
preemption discussion was irrelevant or effect. that the Information Collection Request
beyond the scope of the light truck (ICR) abstracted below has been
CAFE rulemaking. These commenters F. Unfunded Mandates Reform Act forwarded to the Office of Management
requested that the agency not address Section 202 of the Unfunded and Budget (OMB) for review and
this issue in the final rule. The Mandates Reform Act of 1995 (UMRA) comment. The ICR describes the nature
Connecticut Department of requires Federal agencies to prepare a of the information collections and their
Environmental Protection, Pennsylvania written assessment of the costs, benefits, expected burden. This is a request for an
Department of Environmental and other effects of proposed or final amendment of an existing collection.
Protection, and STAPPA/ALAPCO rules that include a Federal mandate Agency: National Highway Traffic
made similar requests. These likely to result in the expenditure by Safety Administration (NHTSA).
commenters also asserted that the issue State, local, or tribal governments, in the Title: 49 CFR Part 537, Automotive
of preemption should be left to the aggregate, or by the private sector, of Fuel Economy Reports (F.E.) Reports
courts. more than $100 million in any one year Type of Request: Amended collection.
The Attorneys General (California et (adjusted for inflation with base year of OMB Clearance Number: 2127–0019.
al.) stated that Executive Order 13132 Form Number: This collection of
1995 to $115 million for 2003). All cost
directs the agency to be ‘‘deferential to information will not use any standard
estimates in the FRIA are in 2003
States when taking action that affects forms.
economics. Before promulgating a rule
the policymaking discretion of the Requested Expiration Date of
for which a written statement is needed,
States and should act only with the Approval: Three years from the date of
NHTSA is generally required by section
greatest caution where State or local approval.
205 of the UMRA to identify and Summary of the Collection of
governments have identified consider a reasonable number of
uncertainties regarding the Information: So that NHTSA can ensure
regulatory alternatives and adopt the that light truck manufacturers are
constitutional or statutory authority of least costly, most cost-effective, or least
the national government.’’ complying with the CAFE requirements,
burdensome alternative that achieves NHTSA would require light truck
We have carefully considered these
the objectives of the rule. The manufacturers to provide information
comments, as well as closely examined
provisions of section 205 do not apply on their election of a compliance option
our authority and obligations under
when they are inconsistent with during model years 2008–2010, and
EPCA and that statute’s express
applicable law. Moreover, section 205 provide light truck footprint data
preemption provision. For those
allows NHTSA to adopt an alternative beginning model year 2008.
rulemaking actions undertaken at an
other than the least costly, most cost- NHTSA established a transition
agency’s discretion, Section 3(a) of
effective, or least burdensome period during MYs 2008–2010 during
Executive Order 13132 instructs
alternative if the agency publishes with which manufacturers may opt to comply
agencies to closely examine their
the final rule an explanation why that with light truck fuel economy standards
statutory authority supporting any
action that would limit the alternative was not adopted. established under the Reformed CAFE
policymaking discretion of the States This final rule will not result in the system. For each year of the transition
and assess the necessity for such action. expenditure by State, local, or tribal period, manufacturers must, within 45
This is not such a rulemaking action. governments, in the aggregate, of more days after the end of the model year,
NHTSA has no discretion not to issue than $115 million annually, but it will provide to NHTSA information
the CAFE standards established by this result in the expenditure of that identifying the light truck CAFE system
final rule. EPCA mandates that the magnitude by vehicle manufacturers with which the manufacturer chooses to
‘‘Secretary of Transportation * * * and/or their suppliers. In promulgating comply. The choice is irrevocable.
prescribe by regulation average fuel this proposal, NHTSA considered Further, the Reformed CAFE system
economy standards’’ for light trucks (49 whether average fuel economy relies on vehicle footprint to determine
U.S.C. 32902). Given that a State CO2 standards lower and higher than those a manufacturer’s required average fuel
regulation is the functional equivalent proposed would be appropriate. NHTSA economy level. Beginning in MY 2008,
of a CAFE standard, there is no way that is statutorily required to set standards at the agency would need to collect data
NHTSA can tailor a fuel economy the maximum feasible level achievable on vehicle footprint to determine
standard for light trucks so as to avoid by manufacturers and has tentatively manufacturers’ compliance with the
preemption. Further, EPCA itself concluded that the proposed standards Reformed CAFE system and to evaluate
precludes a State from adopting or are the maximum feasible standards for the new system.
enforcing a law or regulation related to the light truck fleet for MYs 2008–2011 Description of the Need for the
fuel economy (49 U.S.C. 32919(a)). in light of the statutory considerations. Information and Proposed Use of the
For these reasons and those stated at G. Paperwork Reduction Act Information: NHTSA need this
greater length in the section above on information to ensure that vehicle
preemption, we have not adopted the Under the procedures established by manufacturers are complying with the
views presented by the States. the Paperwork Reduction Act of 1995 light truck CAFE program and to
Nevertheless, the agency continues to (44 U.S.C. 3501 et seq.), a person is not evaluate the Reformed CAFE system.
examine these issues and welcomes required to respond to a collection of Description of the Likely Respondents
continued input. information by a Federal agency unless (Including Estimated Number, and
the collection displays a valid OMB Proposed Frequency of Response to the

E. Executive Order 12988 (Civil Justice control number. For the transition Collection of Information): NHTSA
Reform) period reporting requirements, and the estimates that 14 light truck
Pursuant to Executive Order 12988, additional pre-model year reporting manufacturers will be impacted by this
‘‘Civil Justice Reform’’ (61 FR 4729, requirements, NHTSA is submitting to amendment. The manufacturers are
makers of light trucks have gross vehicle Office of Management and Budget, 725 NHTSA’s vehicle safety authority) or
weight ratings of 4,536 kg (10,000 17th Street, NW., Washington, DC otherwise impractical.
pounds) or less. For each pre-model 20503, Attention NHTSA Desk Officer. Voluntary consensus standards are
report currently required under 49 CFR PRA comments are due within 30 days technical standards developed or
537.7, the manufacturer will provide following the publication of this adopted by voluntary consensus
data on vehicle footprint. Further, document in the Federal Register. standards bodies. Technical standards
during MYs 2008–2010, the The agency recognizes that the are defined by the NTTAA as
manufacturers will provide, in addition amendment to the existing collection of ‘‘performance-based or design-specific
to its identity, a statement as to which information contained in today’s final technical specification and related
light truck CAFE standard with which it rule may be subject to revision in management systems practices.’’ They
has chosen to comply, 49 CFR 533.5(f) response to public comments and the pertain to ‘‘products and processes,
or 49 CFR 533.5(g). OMB review. For additional information such as size, strength, or technical
During the transition period, each contact: Ken Katz, Lead Engineer, Fuel performance of a product, process or
manufacturer will provide 1 additional Economy Division, Office of material.’’
report per year for three years, for a total International Policy, Fuel Economy, and In meeting the requirement of the
of 3 additional reports over 3 years. Consumer Programs, National Highway NTTAA, we are required to consult with
Estimate of the Total Annual Traffic Safety Administration, 400 voluntary, private sector, consensus
Reporting and Recordkeeping Burden Seventh St., SW., Washington, DC standards bodies. Examples of
Resulting from the Collection of 20590. Mr. Katz can also be contacted organizations generally regarded as
Information: NHTSA estimates that each at: telephone number (202) 366–0846, voluntary consensus standards bodies
manufacturer will incur an additional facsimile (202) 493–2290, electronic include the American Society for
10 burden hours per year. This estimate Testing and Materials (ASTM), the
mail kkatz@nhtsa.dot.gov.
is based on the fact that data collection Society of Automotive Engineers (SAE),
will involve only computer tabulation. H. Regulation Identifier Number (RIN) and the American National Standards
Further, this is consistent with the range Institute (ANSI). If NHTSA does not use
The Department of Transportation
of burden hours suggested by the available and potentially applicable
assigns a regulation identifier number
Alliance in its comments. Thus, as a voluntary consensus standards, we are
(RIN) to each regulatory action listed in
result of this final rule each required by the Act to provide Congress,
the Unified Agenda of Federal
manufacturer will incur an additional through OMB, an explanation of the
Regulations. The Regulatory Information
burden of ten hours or a total on reasons for not using such standards.
Service Center publishes the Unified
industry of an additional 140 hours a The final rule incorporates a function
Agenda in April and October of each
year (assuming there are 14 based on light truck footprint (average
year. You may use the RIN contained in
manufacturers). track width X wheelbase). For the
the heading at the beginning of this
NHTSA estimates that the purpose of this calculation, the agency
document to find this action in the
recordkeeping burden resulting from the based these measurements on those by
Unified Agenda.
collection of information will be 0 hours the automotive industry. Determination
because the information will be retained I. Executive Order 13045 of wheelbase is consistent with L101-
on each manufacturer’s existing wheelbase, defined in SAE J1100
Executive Order 13045 (62 FR 19885,
computer systems for each SEP2005, Motor vehicle dimensions.
April 23, 1997) applies to any rule that:
manufacturer’s internal administrative The agency adopted a definition of track
(1) Is determined to be economically
purposes. width consistent with SAE J1100 W101
significant as defined under E.O. 12866,
NHTSA estimates that the total SEP2005.
and (2) concerns an environmental, There are no voluntary consensus
annual cost burden will be 0 dollars.
health or safety risk that NHTSA has standards on fuel economy
There would be no capital or start-up
reason to believe may have a performance.
costs as a result of this collection.
disproportionate effect on children. If
Manufacturers can collect and tabulate K. Executive Order 13211
the regulatory action meets both criteria,
the information by using existing
we must evaluate the environmental Executive Order 13211 (66 FR 28355,
equipment. Thus, there would be no
health or safety effects of the planned May 18, 2001) applies to any rule that:
additional costs to respondents or
rule on children, and explain why the (1) Is determined to be economically
recordkeepers.
Comments are invited on: planned regulation is preferable to other significant as defined under E.O. 12866,
• Whether the collection of potentially effective and reasonably and is likely to have a significant
information is necessary for the proper feasible alternatives considered by us. adverse effect on the supply,
performance of the functions of the This rule does not have a distribution, or use of energy; or (2) that
Department, including whether the disproportionate effect on children. The is designated by the Administrator of
information will have practical utility. primary effect of this rule is to conserve the Office of Information and Regulatory
• Whether the Department’s estimate energy resources by setting fuel Affairs as a significant energy action. If
for the burden of the information economy standards for light trucks. the regulatory action meets either
collection is accurate. J. National Technology Transfer and criterion, we must evaluate the adverse
• Ways to minimize the burden of the Advancement Act energy effects of the planned rule and
collection of information on explain why the planned regulation is
respondents, including the use of Section 12(d) of the National preferable to other potentially effective
automated collection techniques or Technology Transfer and Advancement and reasonably feasible alternatives
other forms of information technology. Act (NTTAA) requires NHTSA to considered by us.
A comment to OMB is most effective if evaluate and use existing voluntary The final rule establishes light truck
OMB receives it within 30 days of consensus standards in its regulatory fuel economy standards that will reduce
publication. activities unless doing so would be the consumption of petroleum and will
Send comments to the Office of inconsistent with applicable law (e.g., not have any adverse energy effects.
Information and Regulatory Affairs, the statutory provisions regarding Accordingly, this rulemaking action is
not designated as a significant energy longitudinal distance between front and by means installed for that purpose by
action. rear wheel centerlines. In case of the automobile’s manufacturer or with
multiple rear axles, wheelbase is simple tools, such as screwdrivers and
L. Department of Energy Review
measured to the midpoint of the wrenches, so as to create a flat, floor
In accordance with 49 U.S.C. 32902(j), centerlines of the wheels on the level, surface extending from the
we submitted this rule to the rearmost axle. forwardmost point of installation of
Department of Energy for review. That * * * * * those seats to the rear of the
Department did not make any comments Medium duty passenger vehicle automobile’s interior; or
that we have not addressed. means a vehicle which would satisfy the (ii) For light trucks manufactured in
M. Privacy Act criteria in § 523.5 (relating to light model year 2008 and beyond, for
Anyone is able to search the trucks) but for its gross vehicle weight vehicles equipped with at least 3 rows
electronic form of all comments rating or its curb weight, which is rated of designated seating positions as
received into any of our dockets by the at more than 8,500 lbs GVWR or has a standard equipment, permit expanded
name of the individual submitting the vehicle curb weight of more than 6,000 use of the automobile for cargo-carrying
comment (or signing the comment, if pounds or has a basic vehicle frontal purposes or other nonpassenger-
submitted on behalf of an association, area in excess of 45 square feet, and carrying purposes through the removal
business, labor union, etc.). You may which is designed primarily to transport or stowing of foldable or pivoting seats
review DOT’s complete Privacy Act passengers, but does not include a so as to create a flat-leveled cargo
Statement in the Federal Register vehicle that: surface extending from the forwardmost
published on April 11, 2000 (Volume (1) Is an ‘‘incomplete truck’’ as point of installation of those seats to the
65, Number 70; Pages 19477–78) or you defined in this subpart; or rear of the automobile’s interior.’’.
(2) Has a seating capacity of more
may visit http://dms.dot.gov. * * * * *
than 12 persons; or
Regulatory Text (3)Is designed for more than 9 persons PART 533—LIGHT TRUCK FUEL
in seating rearward of the driver’s seat; ECONOMY STANDARDS
List of Subjects in 49 CFR Parts 523,
or
533, and 537
(4) Is equipped with an open cargo
Fuel economy and Reporting and ■ 5. The authority citation for part 533
area (for example, a pick-up truck box
recordkeeping requirements. continues to read as follows:
or bed) of 72.0 inches in interior length
■ In consideration of the foregoing, 49 or more. A covered box not readily Authority: 49 U.S.C. 32902; delegation of
accessible from the passenger authority at 49 CFR 1.50.
CFR Chapter V is amended as follows:
compartment will be considered an
PART 523—VEHICLE CLASSIFICATION open cargo area for purposes of this ■ 6. Part 533.5 is amended by:
definition. ■ A. In paragraph (a) by revising Table
■ 1. The authority citation for part 523 IV and adding Figure I and Table V; and
continues to read as follows: * * * * *
■ 3. Section 523.3(b) is amended by ■ B. Adding paragraphs (g) and (h).
Authority: 49 U.S.C. 32902; delegation of
authority at 49 CFR 1.50. adding (b)(3) to read as follows: The revisions and additions read as
follows:
■ 2. Section 523.2 is amended by adding § 523.3 Automobile.
a definition of ‘‘footprint’’ and ‘‘medium * * * * * § 533.5 Requirements.
duty passenger vehicle’’ to read as (b) * * * (a) * * *
follows: (3) Vehicles that are defined as
medium duty passenger vehicles, and TABLE IV
§ 523.2 Definitions. which are manufactured during the
* * * * * 2011 model year or thereafter. Model year Standard
Footprint means the product, in ■ 4. Section 523.5(a)(5) is revised to
square feet rounded to the nearest tenth, read as follows: 2001 ............................................ 20.7
of multiplying a vehicle’s average track 2002 ............................................ 20.7
width (rounded to the nearest tenth) by § 523.5 Light Truck. 2003 ............................................ 20.7
its wheelbase (rounded to the nearest (a) * * * 2004 ............................................ 20.7
tenth). For purposes of this definition, (5) Permit expanded use of the 2005 ............................................ 21.0
track width is the lateral distance automobile for cargo-carrying purposes 2006 ............................................ 21.6
between the centerlines of the tires at or other nonpassenger-carrying 2007 ............................................ 22.2
ground when the tires are mounted on 2008 ............................................ 22.5
purposes through: 2009 ............................................ 23.1
rims with zero offset. For purposes of (i) For light trucks manufactured prior 2010 ............................................ 23.5
this definition, wheelbase is the to model year 2012, the removal of seats
Where: Ni is the number (sum) of the ith model Ti is fuel economy target of the ith model
light truck produced by the light truck, which is determined
N is the total number (sum) of light
manufacturer, and according to the following formula,
trucks produced by a manufacturer, rounded to the nearest hundredth:
ER06AP06.038</GPH>
Where: e = 2.718; and x = footprint (in square feet, rounded to

Parameters a, b, c, and d are defined in the nearest tenth) of the vehicle
§ 533.3 Table V; model
TABLE V.—PARAMETERS FOR THE REFORMED CAFE FUEL ECONOMY TARGETS

Parameters
Model year
a b c d
2008 ................................................................................................................. 28.56 19.99 49.30 5.58

2009 ................................................................................................................. 30.07 20.87 48.00 5.81
2010 ................................................................................................................. 29.96 21.20 48.49 5.50
2011 ................................................................................................................. 30.42 21.79 47.74 4.65
* * * * * Appendix A—Example of Calculating Appendix A Figure 1

(g) For model years 2008–2010, at a Compliance Under § 533.5 Paragraph
manufacturer’s option, a manufacturer’s (g) Footprint
MY 2008
Model fuel economy
light truck fleet may comply with the Assume a hypothetical manufacturer (ft 2) target (mpg)
fuel economy level calculated according (Manufacturer X) produces a fleet of
to Figure I and the appropriate values in light trucks in MY 2008 as follows: A ............... 42 26.2
Table V, with said option being B ............... 44 25.5
Fuel Footprint C ............... 46 24.8
irrevocably chosen for that model year Model economy Volume (ft 2)
and reported as specified in § 537.8. D ............... 50 23.3
A ........... 27.0 1,000 42 E ............... 55 21.7
(h) For model year 2011, a F ................ 66 20.3
B ........... 25.6 1,500 44
manufacturer’s light truck fleet shall
C ........... 25.4 1,000 46
comply with the fuel economy level, D ........... 22.1 2,000 50 Note to Appendix A Figure 1. Accordingly,
calculated according to Figure I and the E ........... 22.4 3,000 55
vehicle models A, B, C, D, E, and F would
appropriate values in Table V. F ............ 20.2 1,000 66
be compared to fuel economy values of 26.2,
■7. Part 533 is amended by adding 25.5, 24.8, 23.3, 21.7, and 20.3 mpg,
Appendix A to read as follows: Note to Appendix A Table 1. Manufacturer respectively. With the appropriate fuel
X’s required corporate average fuel economy economy targets calculated, Manufacturer X’s
level under § 533.5(g) would be calculated by
required fuel economy would be calculated
first determining the fuel economy targets
applicable to each vehicle as illustrated in as illustrated in Appendix A Figure 2.
Appendix A Figure 1.
ER06AP06.040</GPH>
ER06AP06.043</GPH>
Note to Appendix A Figure 2. level would be calculated as illustrated in

Manufacturer X’s required fuel economy Appendix A Figure 3.
level is 23.1 mpg. Its actual fuel economy
Note to Appendix A Figure 3. Since the (1) Interior volume index, determined installed on the vehicle configuration,
actual average fuel economy of Manufacturer in accordance with subpart D of 40 CFR or the weight of which must be included
X’s fleet is 23.2 mpg, as compared to its part 600, and in the curb weight computation for the
required fuel economy level of 23.1 mpg, (2) Body style; vehicle configuration, for fuel economy
Manufacturer X complies with the Reformed (B) In the case of light trucks:
CAFE standard for MY 2008 as set forth in
testing purposes.
(1) Passenger-carrying volume,
§ 533.7(g). * * * * *
(2) Cargo-carrying volume;
(3) Beginning model year 2008, track ■ 10. Section 537.8 is amended by
PART 537—AUTOMOTIVE FUEL width as defined in 49 CFR 523.2, adding paragraph (e) to read as follows:
ECONOMY REPORTS (4) Beginning model year 2008,
wheelbase as defined in 49 CFR 523.2, § 537.8 Supplementary reports.
■ 8. The authority citation for part 537 and * * * * *
reads as follows: (5) Beginning model year 2008,
(e) Reporting compliance option in
footprint as defined in 49 CFR 523.2
Authority: 49 U.S.C. 32907; 49 CFR 1.50. model years 2008–2010. For model
(xvii) Performance of the function
years 2008, 2009, and 2010, each
■ 9. Section 537.7 is amended by described in § 523.5(a)(5) of this chapter
manufacturer of light trucks, as that
revising paragraphs (c)(4)(xvi) through (indicate yes or no);
(xviii) Existence of temporary living term is defined in 49 CFR 523.5, shall
(xxi) to read as follows: submit a report, not later than 45 days
quarters (indicate yes or no);
§ 537.7 Pre-model year and mid-model (xix) Frontal area; following the end of the model year,
year reports. (xx) Road load power at 50 miles per indicating whether the manufacturer is
hour, if determined by the manufacturer opting to comply with 49 CFR 533.5(f)
* * * * *
for purposes other than compliance or 49 CFR 533.5(g).
(c) Model type and configuration fuel
with this part to differ from the road Note: The following Appendices will not
economy and technical information
load setting prescribed in 40 CFR appear in the Code of Federal Regulations
* * *
86.177–11(d);
(4) * * * (xxi) Optional equipment that the Appendix A—Comparison of
(xvi)(A) In the case of passenger manufacturer is required under 40 CFR Engineering Constraints Employed by
automobiles: parts 86 and 600 to have actually the NPRM and the Final Rule Analyses
Engineering constraint
Technology Reason for change
NPRM Final
Low-Friction Lubricants .................. Do not apply if engine oil is 5W30 Do not apply if engine oil is better Availability of lower friction (e.g.,
or better. than 5W30. 0W) oils.
Variable Valve Timing (VVT) ......... Do not apply to engines with dis- Do not apply to OHV engines ...... OHV engines more likely to use
placement greater than 4.7 l. cylinder deactivation.

Variable Valve Lift and Timing Do not apply to engines with dis- Do not apply to engines that do Next logical step from VVT.
(VVLT). placement greater than 3.0 l. not already have VVT.
ER06AP06.041</GPH>
Engineering constraint
Technology Reason for change
NPRM Final
Cylinder Deactivation ..................... Do not apply to engines with VVT, As a general rule, do not apply to Multivalve OHC engines more
VVLT, and/or fewer than 6 cyl- engines with VVT, VVLT, likely to use VVT or VVLT.
inders. multivalve OHC, and/or fewer
than 6 cylinders.
Continuously Variable Trans- Do not apply to frame vehicles or Apply only to FWD unibody vehi- Less likely to mistakenly apply
mission. 4WD SUVs. cles. CVT to some RWD SUVs.
Front Axle Disconnect .................... Apply only to 4WD vehicles ......... Apply only to 4WD vehicles with Expected to be more applicable to
cylinder count greater than six. large vehicles.
Electric Power Steering ................. No universal constraints ............... For vehicles with curb weights Higher power demands for large
over 4,000 pounds, do not vehicle steering.
apply unless 42-Volt systems
are already present.
Integrated Starter-Generator .......... No universal constraints ............... Start application with the largest Mild hybridization expected to be
vehicles, which have lower fuel more suitable for large vehicles
economy, prior to applying to due to packaging issues and
smaller, more fuel efficient vehi- fuel savings potential.
cles.
Weight Reduction .......................... Do not apply to vehicles with curb Do not apply to vehicles with curb Correction to placement of safety
weights below 3,900 pounds. weights below 5,000 pounds. threshold.
Appendix B—Changes to Technology

‘‘Phase-In Constraints’’ Employed by
the Volpe Model
NPRM Final
Technology (percent) (percent)
Low Friction Lubricants ............................................................................................................................................ 50 25

Improved Rolling Resistance ................................................................................................................................... 50 25
Low Drag Brakes ..................................................................................................................................................... 50 17
Engine Friction Reduction ....................................................................................................................................... 33 17
Front Axle Disconnect (for 4WD) ............................................................................................................................ 5 17
Cylinder Deactivation ............................................................................................................................................... 25 17
Multi-Valve, Overhead Camshaft ............................................................................................................................. 33 17
Variable Valve Timing .............................................................................................................................................. 33 17
Electric Power Steering ........................................................................................................................................... 33 17
Engine Accessory Improvement .............................................................................................................................. 33 25
5-Speed Automatic Transmission ............................................................................................................................ 33 17
6-Speed Automatic Transmission ............................................................................................................................ 25 17
Automatic Transmission w/Aggressive Shift Logic .................................................................................................. 33 17
Continuously Variable Transmission (CVT) ............................................................................................................ 33 17
Automatic Shift Manual Transmission (AST/AMT) .................................................................................................. 10 17
Aero Drag Reduction ............................................................................................................................................... 33 17
Variable Valve Lift & Timing .................................................................................................................................... 25 17
Spark Ignited Direct Injection (SIDI) ........................................................................................................................ 3 3
Engine Supercharging & Downsizing ...................................................................................................................... 25 17
42 Volt Electrical Systems ....................................................................................................................................... 33 17
Integrated Starter/Generator .................................................................................................................................... 33 5
Intake Valve Throttling ............................................................................................................................................. 25 17
Camless Valve Actuation ......................................................................................................................................... 25 10
Variable Compression Ratio .................................................................................................................................... 25 10
Advanced CVT ......................................................................................................................................................... 25 17
Dieselization ............................................................................................................................................................. 3 3
Material Substitution ................................................................................................................................................ 20 17
Midrange Hybrid Vehicle ......................................................................................................................................... 3 3
Issued: March 28, 2006.

Jacqueline Glassman,
Deputy Administrator.
[FR Doc. 06–3151 Filed 3–29–06; 1:29 pm]
BILLING CODE 4910–59–U

Rule: Fuel Economy Standards: Light Trucks 2008-2011 Model Years

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Thursday,

49 CFR Parts 523, 533 and 537

G. 2003 comprehensive plans for F. MY 2008–2011 Reformed CAFE C. Reporting requirements

(2)—a target level of average fuel economy for

Manufacturer X’s Total Production of Light Trucks

final formal claculation of that level would not

General Motors ........................................................................................................ 25.8 21.36 21.43 21.59

Hyundai .................................................................................................................... 3.6 23.22 23.49 23.36

51 Sec. 32902(h) states that when establishing fuel

DaimlerChrysler ........................................................................................................................... *22.475 23.059 23.599

MY 2008 MY 2009 MY 2010

Total Incremental Costs* ............................................................................................................. $536 $1,621 $1,752

20 percent rebound effect based on a thorough

‘‘cost-beneficial.’’ on January 26, 2006, and General Motors’ March 16,

88 Lower fuel consumption represents a more

stringent value (i.e., a low gpm value equates to a

89 That is, the targets they established for models

for some footprint values declined rather than

TABLE 4.—PARAMETER VALUES FOR LOGISTIC FUNCTION

a ....................................................................................................................... 28.56 30.07 29.96 30.42

Manufacturer X’s Total Production of Light Trucks

This formula can be restated as

Where: mpgj is the fuel economy of the ith

A ....................................................................................................................... 27.0 100,000 43.00 27.5

Under Reformed CAFE, the achieve an average fuel economy level

manufacturer would be required to of:

TABLE 6.—REQUIRED FUEL ECONOMY LEVELS UNDER VARIOUS BOUNDARY LOCATIONS

General Motors ........................................................................................................................................ 23.3 23.2

MY 2008 MY 2009 MY 2010

Reformed CAFE system .............................................................................................................. 0.7 1.9 2.2

MY 2008 MY 2009 MY 2010

Reformed CAFE system .............................................................................................................. 553 1,724 1,903

MY 2008 MY 2009 MY 2010 MY 2011

Total Incremental Costs* ................................................................................. $553 $1,724 $1,903 $2,531

a ....................................................................................................................... 28.56 30.07 29.96 30.42

b ....................................................................................................................... 19.99 20.87 21.20 21.79

TABLE 11.—CALIBRATED PARAMETER VALUES FOR TARGET—Continued

c ....................................................................................................................... 49.30 48.00 48.49 47.74

The following is a representative light trucks and their associated targets

Ford F–150 Super Cab ............................................................................................................................................ 75.8 21.81

TABLE 13.—PROJECTED REQUIRED FUEL ECONOMY LEVELS BY MANUFACTURER

General Motors ................................................................................................ 21.9 22.6 22.9 23.2

NPRM, the associated compliance costs fleet in MY 2011, we have determined

resistance. trucks, unless the heavier vehicles were

Fatality Risk and Crash Compatibility of Model

122 See, http://www.federalreserve.gov/releases/

discount rate is too high, proposing h15/data/Monthly/H15_TCMNOM_Y10.txt.

$0.02 to reflect damage from criteria demand costs imposed by U.S.

not issued a final rule on this issue. http://www.epa.gov/air/airtrends/aqtrnd03/pdfs/

reducing U.S. demand on the world market plus the

regrev/evaluate/809834.html). Flexibility Analysis, Cost and Benefits of Putting a

TABLE 14.—INCREASES IN WEIGHT TO IMPROVE OFFSET FRONTAL TESTING

are any manufacturers planning to 2008–10 are set by equating industry-wide

General Motors .................................................................................................... 21.2 21.3 21.4 21.4 21.4 21.6

TABLE 17.—MAXIMUM CARGO CAPACITY OF MINIVANS

DCX R-class .................................................................................................... Minivan ............................................... 85 cu. ft.

TABLE 17.—MAXIMUM CARGO CAPACITY OF MINIVANS—Continued

Volvo V70 ........................................................................................................ Wagon ................................................ 71 cu. ft.

scope of this rulemaking. Moreover, economy standards or average fuel economy

168 49 U.S.C. 32902(a).

184 Shaw v. Delta Airlines, Inc., 463 U.S. 85, 97

which algebraically reduces to the

http:// www.tfhrc.gov/structur/pdf/01100.pdf. ultimate byproduct of combustion, it cannot be