[Federal Register Volume 85, Number 79 (Thursday, April 23, 2020)]
[Rules and Regulations]
[Pages 22609-22622]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-07098]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 86

[EPA-HQ-OAR-2017-0755; FRL_10007-54-OAR]
RIN 2060-AT75


Light-Duty Vehicle Greenhouse Gas Program Technical Amendments

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: EPA is finalizing two technical corrections to the light-duty 
vehicle greenhouse gas (GHG) emissions standards regulations which were 
first promulgated in the 2012 rulemaking that established standards for 
model years 2017-2025 light-duty vehicles. First, EPA is correcting 
regulations pertaining to how auto manufacturers calculate credits for 
the GHG program's optional advanced technology incentives. This final 
rule corrects an error to ensure that auto manufacturers receive the 
appropriate amount of credits for electric vehicles, plug-in hybrid 
electric vehicles, fuel cell electric vehicles, and natural gas fueled 
vehicles. Second, this rule corrects an error in the regulations 
regarding how manufacturers must calculate certain types of off-cycle 
credits. Both of these corrections allow the program to be implemented 
as originally intended. The corrections are not expected to result in 
any additional regulatory burdens or costs.

DATES: This final rule is effective April 23, 2020.

ADDRESSES: The EPA has established a docket for this action under 
Docket ID No. EPA-HQ-OAR-2017-0755. All documents in the docket are 
listed on the http://www.regulations.gov website. Although listed in 
the index, some information is not publicly available, e.g., CBI or 
other information whose disclosure is restricted by statute. Certain 
other material, such as copyrighted material, is not placed on the 
internet and will be publicly available only in hard copy form. 
Publicly available docket materials are available electronically 
through http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Christopher Lieske, Office of 
Transportation and Air Quality (OTAQ), Assessment and Standards 
Division (ASD), Environmental Protection Agency, 2000 Traverwood Drive, 
Ann Arbor MI 48105; telephone number: (734) 214-4584; email address: 
lieske.christopher@epa.gov fax number: 734-214-4816.

SUPPLEMENTARY INFORMATION:

I. General Information

A. Does this action apply to me?

    This action affects companies that manufacture or sell new light-
duty vehicles, light-duty trucks, and medium-duty passenger vehicles, 
as defined under EPA's Clean Air Act (CAA) regulations.\1\ Regulated 
categories and entities include:
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    \1\ ``Light-duty vehicle,'' ``light-duty truck,'' and ``medium-
duty passenger vehicle'' are defined in 40 CFR 86.1803-01. 
Generally, the term ``light-duty vehicle'' means a passenger car, 
the term ``light-duty truck'' means a pick-up truck, sport-utility 
vehicle, or minivan of up to 8,500 lbs gross vehicle weight rating, 
and ``medium-duty passenger vehicle'' means a sport-utility vehicle 
or passenger van from 8,500 to 10,000 lbs gross vehicle weight 
rating. Medium-duty passenger vehicles do not include pick-up 
trucks.

------------------------------------------------------------------------
                                        NAICS    Examples of potentially
              Category                codes \A\     regulated entities
------------------------------------------------------------------------
Industry............................     336111  Motor Vehicle
                                         336112   Manufacturers.
Industry............................     811111  Commercial Importers of
                                         811112   Vehicles and Vehicle
                                         811198   Components.
                                         423110
Industry............................     335312  Alternative Fuel
                                         811198   Vehicle Converters.
------------------------------------------------------------------------
\A\ North American Industry Classification System (NAICS).

B. What action is the agency taking?

    EPA is finalizing two technical corrections to the light-duty 
vehicle greenhouse gas (GHG) emissions standards regulations first 
promulgated in the 2012 rulemaking that established standards for model 
years 2017-2025 light-duty vehicles. First, EPA is correcting an error 
in the regulations pertaining to how auto manufacturers must calculate 
credits for the GHG program's optional advanced technology incentives. 
The regulations previously in place resulted in some auto manufacturers 
receiving fewer credits than the agency intended for electric vehicles, 
plug-in hybrid electric vehicles, fuel cell electric vehicles, and 
natural gas fueled vehicles. Auto manufacturers requested through a 
petition letter submitted jointly by the Auto Alliance and Global 
Automakers in June 2016 that EPA correct the regulations to provide the 
intended level of credits for these technologies. Second, the 
regulations regarding how manufacturers must calculate certain types of 
off-cycle credits contained an error and were inconsistent with the 
2012 final rule preamble, which raised implementation concerns for some 
manufacturers. The amendments finalized in this action correct and 
clarify the calculation methodologies in the regulations. Both of these 
corrections allow the program to be implemented as originally intended. 
EPA issued a proposal to correct the errors on October 1, 2018.\2\ The 
corrections are described in detail in Section II below and EPA 
response to comments is provided in additional detail in Section III.
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    \2\ 83 FR 49344, October 1, 2018.
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Effective Date
    This final rule is effective immediately on publication. This rule 
constitutes the revision of a regulation under section 202 of the Clean 
Air Act (CAA) and as such it is covered by the rulemaking procedures in 
section 307(d) of the CAA. See CAA section 307(d)(1)(I). Section 
307(d)(1) of the CAA states that: ``The provisions of section 553 
through 557 . . . of Title 5 shall not, except as expressly provided in 
this section, apply to actions to which this subsection applies.'' 
Thus, section 553(d) of the APA does not apply to this rule. The EPA is 
nevertheless acting consistently with the policies underlying APA 
section 553(d) in making this rule effective April 23, 2020.
    Section 553(d)(1) of the Administrative Procedure Act, 5 U.S.C. 
553(d)(1), provides that final rules shall not become effective until 
30 days after publication in the Federal Register ``except . . . a 
substantive rule which grants or recognizes an exemption or relieves a 
restriction.'' The purpose of this provision is to ``give affected 
parties a reasonable time to adjust their behavior before the final 
rule takes effect.'' Omnipoint Corp. v. Fed. Commc'n Comm'n, 78 F.3d 
620, 630 (D.C. Cir. 1996); see also United States v. Gavrilovic, 551 
F.2d 1099, 1104 (8th Cir. 1977) (quoting legislative history). However, 
when the agency grants or recognizes an exemption or relieves a 
restriction, affected parties do not need a reasonable time to adjust 
because the effect is not adverse. EPA has

[[Page 22610]]

determined that this rule relieves a restriction because it corrects a 
calculation error that does not allow manufacturers to claim the 
appropriate number of credits. Finalization of this rule would provide 
manufacturers the flexibility EPA intended when the credits program was 
originally promulgated.
    In addition, section 553(d)(3) of the Administrative Procedure Act 
(``APA''), 5 U.S.C. 553(d), provides that final rules shall not become 
effective until 30 days after publication in the Federal Register 
``except . . . as otherwise provided by the agency for good cause.'' In 
determining whether good cause exists to waive the 30-day delay, an 
agency should ``balance the necessity for immediate implementation 
against principles of fundamental fairness which require that all 
affected persons be afforded a reasonable amount of time to prepare for 
the effective date of its ruling.'' Gavrilovic, 551 F.2d at 1105. EPA 
has determined that there is good cause for making this final rule 
effective immediately because Model Year 2019 credit information is due 
on May 1, 2020, and manufacturers may need to purchase or use the 
additional credits generated by the corrected methodology to 
demonstrate their performance with the 2019 standards. As described 
above, the effect of this rule is not adverse and manufacturers likely 
do not need additional time to prepare for the effective date of this 
action's revisions, so a delayed effective date is not necessary for 
reasonable notice. In addition, the corrections to the calculations 
align with the preamble language in the 2012 rulemaking, so affected 
parties have had sufficient notice that the corrected methodology is 
how the program was meant to function. On balance, the potential short-
term need for the additional credits generated by the corrected 
methodology outweighs any unanticipated need for further notice.
    Accordingly, EPA is making this rule effective immediately upon 
publication.

C. What is the agency's authority for taking this action?

    EPA is finalizing technical amendments to provisions of the light-
duty vehicle GHG regulations under section 202 (a) of the Clean Air Act 
(CAA) ((42 U.S.C. 7521 (a)).

D. What are the incremental costs and benefits of this action?

    EPA does not expect the corrections finalized in this action to 
result in any significant changes in regulatory burdens, costs, or 
benefits.

II. Technical Corrections

    This rule corrects two technical provisions in the regulations for 
the model year (MY) 2017-2026 greenhouse gas (GHG) emissions standards. 
The first correction addresses how manufacturers apply advanced 
technology vehicle multipliers during credit calculations to ensure 
that credits are calculated as EPA intended in the 2012 final rule. The 
second correction addresses how manufacturers must calculate off-cycle 
credits under the program's 5-cycle credit calculation methodology.
    EPA views these items as technical amendments that correct and 
clarify the regulations and are not changes in how the program 
functions. Therefore, neither of these technical amendments introduce 
or remove any requirements on automobile manufacturers, nor do these 
changes impose additional regulatory costs. We describe each of these 
changes in the following sections.
    This final rule corrects the application of advanced technology 
vehicle multipliers, and an off-cycle credit calculation methodology 
for MY 2012 and later vehicles. We note that in the ``Safer Affordable 
Fuel-Efficient (SAFE) Vehicles Rule for Model Years 2021-2026 Passenger 
Cars and Light Trucks'' Part 2 Final Rule issued by EPA and the 
National Highway Traffic Safety Administration (NHTSA) regarding GHG 
and Corporate Average Fuel Economy (CAFE) standards for Model Years 
(MY) 2021 to 2026, EPA extended multipliers for dedicated and dual-fuel 
natural gas vehicles (NGVs) for model years 2022-2026. As discussed 
below, EPA has modified the regulations to ensure that credits 
attributable to this new multiplier are calculated correctly, 
consistent with the proposal, as well as for the multipliers 
established for various alternative fueled vehicles previously for MYs 
2017-2021.

A. Correction of the Advanced Technology Multiplier Regulations

1. Multiplier Credit Calculation Methodology
    As part of the 2012 rule, EPA adopted temporary incentive 
multipliers for certain advanced technology vehicles, including battery 
electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs), 
fuel cell vehicles (FCVs), and compressed natural gas (CNG) 
vehicles.\3\ The multipliers allow manufacturers to count these lower 
CO2 emitting vehicles as more than one vehicle in their 
fleet average compliance calculations. For example, the 2.0 multiplier 
for MY 2017 BEVs would allow a manufacturer to count every MY 2017 BEV 
produced as two vehicles produced. As part of the finalized SAFE Part 2 
rule, EPA extended the availability of multipliers for dedicated and 
dual-fuel NGVs to MY 2022-2026. The multipliers are shown for reference 
in Tables 1 and 2 below.
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    \3\ 77 FR 62812-62816 (October 15, 2012) and 40 CFR 86.1866-
12(b).
    \4\ 40 CFR 86.1866-12(b)(1).
    \5\ 40 CFR 86.1866-12(b)(2).

    Table 1--The Production Multipliers, by Model Year, for Electric
                   Vehicles and Fuel Cell Vehicles \4\
------------------------------------------------------------------------
                                                            Production
                       Model year                           multiplier
------------------------------------------------------------------------
2017....................................................             2.0
2018....................................................             2.0
2019....................................................             2.0
2020....................................................            1.75
2021....................................................             1.5
------------------------------------------------------------------------


 Table 2--The Production Multipliers, by Model Year, for Plug-In Hybrid
Electric Vehicles, Dedicated Natural Gas Vehicles, and Dual-Fuel Natural
                            Gas Vehicles \5\
------------------------------------------------------------------------
                                                            Production
                       Model year                           multiplier
------------------------------------------------------------------------
2017....................................................             1.6
2018....................................................             1.6
2019....................................................             1.6
2020....................................................            1.45
2021....................................................             1.3
2022-2026 (dedicated and dual-fuel natural gas vehicles              2.0
 only)..................................................
------------------------------------------------------------------------

    In 2016, EPA and NHTSA received a joint petition from the Alliance 
of Automobile Manufacturers and the Association of Global Automakers 
regarding various aspects of the CAFE and GHG programs.\6\ Item 8 of 
the petition, titled ``Correct the Multiplier for BEVs, PHEVs, FCVs, 
and CNGs,'' correctly notes that ``the equation through which the 
number of earned credits is calculated is inaccurately stated in the 
regulations'' and that credits would be inadvertently lost due to the 
error. As proposed, EPA is modifying the regulations so that the 
credits are calculated correctly in all cases such that no 
manufacturers would inadvertently lose credits. These advanced vehicle 
technology

[[Page 22611]]

multipliers do not apply to the NHTSA CAFE program.
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    \6\ ``Petition for Direct Final Rule with Regard to Various 
Aspects of the Corporate Average Fuel Economy Program and the 
Greenhouse Gas Program,'' Alliance of Automobile Manufacturers and 
the Association of Global Automakers, June 20, 2016.
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    The uncorrected regulations regarding the application of the 
multipliers stated that ``[T]the actual production of qualifying 
vehicles may be multiplied by the applicable value according to the 
model year, and the result, rounded to the nearest whole number, may be 
used to represent the production of qualifying vehicles when 
calculating average carbon-related exhaust emissions under Sec.  
600.512 of this chapter.'' \7\ The calculations are done separately for 
the passenger car and light truck fleets. The following shows the 
application of this regulatory text in equation form: \8\
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    \7\ See 40 CFR 86.1866-12(b)(3) (2018).
    \8\ The descriptions of the terms in the above equations have 
been simplified somewhat for illustrative purposes compared to the 
regulations being finalized in this rule. See the language at 40 CFR 
86.1866-12(b) for the detailed regulatory provisions.
[GRAPHIC] [TIFF OMITTED] TR23AP20.021


Where:
S = Production weighted fleet average standard
Eadj = Production weighted fleet average carbon related 
exhaust emissions (CREE) \9\ with the multiplier(s) applied to the 
advanced technology production in the CREE average value calculation
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    \9\ Vehicle and fleet average compliance is based on a 
combination of CO2, hydrocarbon (HC), and carbon monoxide 
(CO) emissions. This is consistent with the carbon balance 
methodology used to determine fuel consumption for the labeling and 
CAFE programs. The GHG regulations account for these total carbon 
emissions appropriately and refer to the sum of these emissions as 
the ``carbon related exhaust emissions'' (CREE).
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VLM = Vehicle lifetime miles (195,264 for cars and 225,865 for light 
trucks)
P = Annual total vehicle production (for either cars or light 
trucks)
Target = Model type footprint target
Volume = Model type vehicle production
Volumeadj = Model type vehicle production with 
multiplier(s) applied to advanced technology vehicle production

    Under the uncorrected regulations at 40 CFR 86.1865-12(k)(4), the 
multiplier for advanced technology production is applied by modifying 
the way the CREE (Eadj in the equation above) is calculated. 
The petitioners noted that applying the multiplier only to 
Eadj does not produce the intended credit. The petitioners 
provided an example of the incorrect calculation for a manufacturer 
producing 5,000 battery electric vehicles (BEVs), which have a CREE of 
zero, showing that such a manufacturer would not receive any additional 
credits from the multiplier because the Eadj term would 
remain zero (regardless of the multiplier or how many vehicles were 
produced) and the fleet average standard term (i.e., the footprint-
based standard) remains unchanged because the multiplier does not 
affect the fleet average standard calculation.
    Example 1a below shows the calculation of credits without the 
multiplier and Example 1b shows the calculation with the uncorrected 
application of the multiplier using the 5,000 BEV example, assuming a 
footprint-based standard of 210 g/mile and a multiplier of 2.0.
Example 1a: Calculation of Credits Without the Multiplier
C02 Credits = (210 - 0) x 195,264 x 5,000 / 1,000,000 = 
205,027 Megagrams
Example 1b: Uncorrected Application of the Multiplier
C02 Credits = (210 - 0) x 195,264 x 1,000,000 = 205,027 
Megagrams

    Where the production weighted fleet average carbon related exhaust 
emissions, or Eadj, with the multiplier applied is 
calculated as follows:
[GRAPHIC] [TIFF OMITTED] TR23AP20.022

    In order for the calculation to produce the correct result, the 
multiplier must be applied not only to the advanced technology vehicle 
production in the CREE average value, Eadj, calculation but 
also to the advanced technology vehicle production in the average 
standard calculation and the advanced technology vehicle production 
portions of the total production. The calculation of credits in 
megagrams with the multiplier correctly applied, and as EPA is 
finalizing today, is represented by the following equations:
[GRAPHIC] [TIFF OMITTED] TR23AP20.023



[[Page 22612]]


Where:
Sadj = Production weighted fleet average standard with 
the multiplier(s) applied to the advanced technology vehicle 
production in the footprint target calculation
Eadj = Production weighted fleet average CREE with the 
multiplier(s) applied to the advanced technology production in the 
CREE value calculation
VLM = Vehicle lifetime miles (195,264 for cars and 225,865 for light 
trucks)
Padj = Annual vehicle production with the multiplier(s) 
applied to the advanced technology vehicle production
Target = Model type footprint target
Volumeadj = Model type vehicle production with 
multiplier(s) applied to advanced technology vehicle production

    Using the corrected methodology, manufacturers would determine the 
additional credits associated with using the multiplier(s) by 
calculating fleet credits with and without the multiplier applied (the 
credits without the multiplier applied are shown below as term C). The 
credits calculated without the multiplier would be subtracted from the 
credits calculated with the multiplier with the difference reflecting 
the additional credits attributable to the multiplier.

Credits due to multiplier = (Sadj - Eadj x VLM x Padj / 1,000,000 - C 
[Megagrams]

    Applying the above corrected equation to Example 1a produces the 
expected credits due to the multiplier. As shown using Example 1a from 
above, the correct application of the 2.0 multiplier doubles the 
resulting credit in this example, which is what EPA intended and 
manufacturers expected when the program was established in the 2012 
rule.
Example 1a: Calculation of Credits Without the Multiplier
CO2 Credits(C) = (210 - 0) x 195,264 x 5,000 / 1,000,000 = 205,027 
Megagrams
Example 1c: Correct Application of the Multiplier
CO2 CreditsM = (210 - 0) x 195,264 x (5,000 x 2.0) / 1,000,000 = 
410,054 Megagrams

    Where the production weighted fleet average standard and fleet 
average carbon related exhaust emissions, or Eadj, are calculated with 
the multiplier as follows:
[GRAPHIC] [TIFF OMITTED] TR23AP20.024

    And finally, the credits due to application of the multiplier are:


Credits due to multiplier = 410,054 - 205,027 = 205,027

    Example 2 below provides an example calculation for a fleet that 
consists of both conventional and advanced technology vehicles. The 
example consists of a fleet mix of two conventional vehicle models, one 
plug-in hybrid electric (PHEV) model, and one battery electric vehicle 
(BEV) model, where the PHEV multiplier is 1.6 and the EV multiplier is 
2.0.

                                          Table 3--Example 2 Fleet Mix
----------------------------------------------------------------------------------------------------------------
                                                                     Footprint
                  Vehicle model                     Production    target  (CO2 g/  CREE  (CO2 g/    Multiplier
                                                                        mi)             mi)
----------------------------------------------------------------------------------------------------------------
Conventional 1..................................          10,000             300             320             N/A
Conventional 2..................................           8,000             210             210             N/A
PHEV............................................           5,000             210              50             1.6
BEV.............................................           5,000             210               0             2.0
                                                 ---------------------------------------------------------------
    Total.......................................          28,000  ..............  ..............  ..............
----------------------------------------------------------------------------------------------------------------

Example 2a: Calculation of Credits for Mixed Fleet With No Multiplier
CO2 Credits(C) = (242 - 183) x 195,264 x 28,000 / 1,000,000 = 322,576 
Megagrams

    Where the production weighted fleet average standard (S) and fleet 
average CREE (E) terms are calculated as follows:

[[Page 22613]]

[GRAPHIC] [TIFF OMITTED] TR23AP20.025

Example 2b: Uncorrected Application of the Multiplier
CO2 Credits = (242 - 147) x 195,264 x 28,000 / 1,000,000 = 519,402 
Megagrams

    Where the production weighted fleet average Standard (S) and 
adjusted CREE with the multiplier applied (Eadj) are calculated as 
follows:
[GRAPHIC] [TIFF OMITTED] TR23AP20.026

Example 2c: Calculation of Credits for Mixed Fleet Using Corrected 
Multiplier Methodology
CO2 Credits with multiplier = (235 - 147) x 195,264 x 36,000 / 
1,000,000 = 618,596 Megagrams

    Where the production weighted fleet average Sadj and Eadj terms and 
the Padj terms, are calculated using the multiplier as follows:
[GRAPHIC] [TIFF OMITTED] TR23AP20.027

    Under the corrected methodology, manufacturers would use the above 
approach to calculate Megagrams of credits with and without the 
multipliers applied and report the difference to EPA as the credits 
attributed to the use of the advanced technology multipliers. In the 
above Example 2, the credits attributable to the multipliers are 
618,596 - 322,576 = 296,020. The previously established incorrect 
methodology, which applied the multiplier only to the CREE term, would 
provide fewer credits (519,402 - 322,576 = 196,826 Mg) for this 
example.
    The descriptions of the terms in the above equations have been 
simplified somewhat for illustrative purposes

[[Page 22614]]

compared to the regulations. See the language at 40 CFR 86.1866-12(b) 
finalized in this action for the detailed regulatory provisions. 
Previously, Sec.  86.1866-12(b)(3) simply modified the CREE term in the 
equation in Sec.  86.1865-12(k)(4) to incorporate the multiplier. Now, 
since the multiplier should have been applied as discussed above, the 
revised regulations add additional steps to the calculation process. 
First, manufacturers will use the new equation to calculate the total 
number of credits generated with multipliers included. Then, 
manufacturers will subtract from that calculation the credits 
calculated without the multipliers applied, using the equation that 
already exists in Sec.  86.1865-12(k)(4). The result provides the 
credit attributable to the multipliers to be reported to EPA as part of 
the credits portion of the year end compliance report.
    EPA received comments from the Alliance of Automobile Manufacturers 
(the Alliance) and Fiat Chrysler Automobiles (FCA) that while they 
agree with the corrections, for some manufacturers the uncorrected 
methodology provides more credits than the corrected methodology. The 
commenters requested that EPA allow automakers to optionally retain 
usage of the uncorrected formula because the possibility that the 
corrected methodology could in certain cases lessen the credits due to 
multipliers is counter to the premise of the proposal and would cause 
harm to automakers who have made compliance plans in reliance on the 
uncorrected formula.
    EPA believes these comments have merit. After reviewing actual 
MY2017 fleet data, it is clear that for several manufacturers, the 
correction would in fact reduce credits associated with the multiplier, 
which would be contrary to EPA's stated intent in the proposal. EPA 
also agrees that retroactively reducing credits associated with the 
multiplier for some manufacturers would be problematic and inconsistent 
with the 2012 rule's stated desire to incentivize production of 
advanced technology vehicles. MYs 2017-2019 are completed, and MY 2020 
is well underway and MY2021 has begun for some manufacturers. 
Manufacturers may be counting on credit levels based on the uncorrected 
methodology for their product planning out to MY 2021, the last year 
the multiplier credits are available (aside from the additional NGV 
multipliers discussed below). Accordingly, EPA is allowing the 
continued use of the original, uncorrected methodology through MY 2021 
to ensure that this rulemaking maintains the incentive anticipated by 
the 2012 rule and also the incentive anticipated by manufacturers in 
their product planning. EPA will grant manufacturers the higher of the 
two credit values. These and other comments regarding the advanced 
technology multiplier calculations are discussed in more detail in 
section III.A., below.
    For the extension of NGV multiplier for MYs 2022-2026 contained in 
the SAFE Part 2 final rule, the regulations finalized today require the 
use of the corrected methodology. These multipliers will function 
precisely the same as the multipliers for MYs 2017-2021, and require 
use of the corrected formula for the same reasons. Moreover, the 
potential product planning issues noted above for MYs 2017-2021 do not 
exist for these recently adopted multipliers since manufacturers would 
not yet have had the opportunity to incorporate them into product plans 
and because manufacturers knew of EPA's proposal to fix the multiplier 
calculations and could anticipate this correction.
    The advanced technology multiplier incentive was available starting 
with the 2017 model year. Manufacturers are required to report all 
credit information by May 1 of the year following the end of the model 
year, which, for model year 2017, was May 1, 2018. EPA recognizes that 
the timing of this rulemaking precluded the ability to finalize the 
multiplier-based credits by the deadline, and, given this, the 
submissions made by manufacturers by May 1, 2018 were evaluated using 
the then-existing incorrect multiplier. For the 2017 model year 
reporting, EPA asked that manufacturers enter all their test data as 
they normally would (which needed to be done for CAFE calculations 
anyway), and that reports be submitted on time, with fleet credits 
calculated from the values as determined by EPA's then-existing 
regulatory calculation. Manufacturers followed this same reporting 
convention for MY 2018 as well. In March 2019, EPA released its 2018 
EPA Automotive Trends Report where EPA estimated MY 2017 multiplier 
credits for manufacturers using the corrected methodology being 
finalized today.\10\ The recently released 2019 EPA Trends Report 
provides an estimate of credits using the corrected methodology for MY 
2018.\11\
---------------------------------------------------------------------------

    \10\ The 2018 EPA Automotive Trends Report: Greenhouse Gas 
Emissions, Fuel Economy, and Technology since 1975, EPA-420-R-19-
002, March 2019.
    \11\ The 2019 EPA Automotive Trends Report: Greenhouse Gas 
Emissions, Fuel Economy, and Technology since 1975, EPA-420-R-20-
006, March 2020.
---------------------------------------------------------------------------

    The regulations adopted in this rule provide that manufacturers 
will calculate credits using both methodologies and report the higher 
of the two resulting credit values for model years 2017-2021. For ease 
of implementation, for MYs 2017-2021, EPA intends to also incorporate 
the new corrected calculation methodology in the compliance system and 
retain the uncorrected methodology such that manufacturers will be 
granted automatically the higher of the two calculated credit levels, 
as discussed above. Manufacturers will enter their test data into the 
compliance system as usual and the compliance system will calculate the 
credit values using the two methodologies and EPA will provide 
manufacturers with the higher of the two credit levels. EPA expects 
that there would be no reason for a manufacturer to select the 
methodology that provides fewer credits and this approach for 
implementation will simplify the compliance system for both EPA and the 
manufacturers. For model years 2017 through 2019, where manufacturers 
have already submitted fleet data, EPA would already have the data 
within its compliance system necessary to calculate credits associated 
with the multiplier. As discussed in Section III.A. below, while 
individual manufacturers may have relied on these credits for 
compliance, EPA estimates that allowing manufacturers to use either 
methodology would add less than 0.5 g/mile overall to the fleetwide 
credit level associated with the multiplier for MY 2017 compared to a 
fleetwide average standard of 258 g/mile and we expect that difference 
to decline over time. For MYs 2022-2026, EPA intends to incorporate the 
new corrected calculation methodology in its compliance reporting 
system as the only calculation methodology.
2. Rounding in the Multiplier Credit Calculations
    EPA also received comments from the Association of Global 
Automakers (Global Automakers) concerning how rounding is done in the 
calculations. They pointed out that how EPA specifies rounding of 
values in the regulation can make a nontrivial difference in the 
resulting Megagrams of credits. They suggested either of two 
approaches: (1) No rounding of any interim results, including of the 
inputs to the term labeled ``C'' above, or (2) an alternate approach 
that they specified as follows:

Credits[Mg] = [Sgr]{(Target - CREE) x (Multiplier - 1) x Volume{time}  
x VLM / 1,000,000


[[Page 22615]]


    EPA finds that this alternate calculation approach in theory 
results in values that are correct and are consistent with the goals of 
the program; however, in practice it cannot be implemented using the 
data that is currently reported to EPA by manufacturers. This is 
because the approach requires target values (which are derived from 
vehicle footprint values) to be aligned with CREE values (which are 
tied to model types), as shown in the equation above. Footprint data is 
collected by EPA for the purpose of calculating the unique fleet-wide 
GHG standards for each manufacturer, and CREE values are collected for 
the purpose of calculating the fleet average GHG emissions for each 
manufacturer. These sets of data, with their two distinct purposes, are 
not currently linked at the vehicle level in a way that allows 
footprint target values to be compared to model type CREE values. For 
example, the 2017 Honda Civic sedan had three footprints (thus three 
CO2 targets) reflecting 16-, 17-, and 18-inch wheels, and 
production of these three was spread across five unique model types. 
Because each set of data (footprint and model type) is used for 
different and specific purposes, each set contains what is needed for 
that purpose and little more. Thus, the footprint data is not reported 
by model type, and the model type data is not reported by footprint, 
and EPA has no direct way to determine, for example, how many 2.0-liter 
manual transmission Civic sedans were produced with each wheel size. 
Some manufacturers may be able to do this, but others may segregate the 
data similar to EPA's approach. EPA is thus not adopting the Global 
Automakers' suggested approach in favor of one that does not require 
changing or complicating the data collection process for manufacturers.
    EPA agrees that rounding can make a difference. The example shown 
by Global Automakers demonstrated a case where rounding caused the 
``loss'' of credits relative to not using any rounding, but the nature 
of rounding is that it can--and will--go both ways. There is an equal 
number of scenarios where rounding will give a manufacturer more 
credits than the unrounded case.
    The commenter did not suggest and EPA is not changing the existing 
rules for rounding a manufacturer's fleet CO2 standard or 
fleet average GHG value in the base program. These values, and the 
fleet credits (in Megagrams) calculated from these values will continue 
to be rounded to the whole number, as has been the case since the first 
year of EPA's GHG program. Using the Example 2 fleet from above (this 
example fleet was used in the NPRM and also used by the Global 
Automakers' in its comments), the fleet standard is 242 g/mi, the fleet 
average is 183 g/mi, and from these values the fleet generates 322,576 
Megagrams of credits. This was the case prior to the 2017 model year 
when multipliers were not used, and EPA intends to maintain this 
calculation in the 2017 and later model years to determine the credits 
earned by the ``base'' fleet, before multipliers are considered. The 
example fleet is repeated below in Table 4 for reference followed by 
the base fleet calculation of credits with no multiplier for the 
example fleet (also shown above in Example 2a).

                           Table 4--Example of Rounding in the Multiplier Calculations
----------------------------------------------------------------------------------------------------------------
                                                                     Footprint
                  Vehicle model                     Production    target (CO2 g/   CREE (CO2 g/     Multiplier
                                                                        mi)             mi)
----------------------------------------------------------------------------------------------------------------
Conventional 1..................................          10,000             300             320               1
Conventional 2..................................           8,000             210             210               1
PHEV............................................           5,000             210              50             1.6
BEV.............................................           5,000             210               0             2.0
                                                 ---------------------------------------------------------------
    Total.......................................          28,000
----------------------------------------------------------------------------------------------------------------

    Calculation of base fleet credits before multipliers are 
considered, including rounding the fleet average and fleet standard to 
the nearest whole number:

CO2 Credits (C) = (242 - 183) x 195,264 x 28,000 / 1,000,000 = 322,576 
Megagrams

    In response to the comments from Global Automakers, EPA is 
specifying that calculation of the multiplier-based credits is to be 
done without rounding, except that the resulting Megagrams of 
multiplier-based credits for a fleet will be rounded to the whole 
number (as is the case for all other types of credits). EPA believes 
this approach provides additional accuracy in the multiplier credit 
calculations, addressing the concerns raised by the commenter, in a way 
that is implementable within the structure of the existing GHG program.
    Fundamentally, there are three steps to determining multiplier-
based credits (separate from calculating base fleet credits, as shown 
above), including the rounding convention for the multiplier 
calculation being adopted in this rule, as follows:
    1. Calculate fleet credits from the fleet with no multipliers 
applied, using unrounded intermediate values. Then round the resulting 
Megagrams to the whole number. In the example, the result will be 
322,186 Megagrams.

CO2 Credits (C) = (242.142857142857 - 183.214285714286) x 195,264 x 
28,000 / 1,000,000 = 322,186 Megagrams

    2. Calculate fleet credits with the multipliers applied using 
unrounded intermediate values. In other words, apply the multiplier to 
the calculation of a standard and a fleet average value, and in the 
equation for Megagrams of credits, use these values (unrounded) as well 
as a production volume value that includes the unrounded impact of the 
multiplier. Then round the resulting Megagrams to the whole number. 
Note that the example above does not illustrate the possible prevalence 
of the multiplier impact because of the even numbers that were selected 
for the example. The production volume becomes 36,000, the calculated 
standard becomes 235 g/mi, and the fleet average--the only fractional 
value resulting from the multiplier--becomes 146.667 (shown to three 
digits). The result of this calculation is 620,940 Megagrams of 
credits.

CO2 Credits (C) = (183.913043478261 - 114.782608695652) x 195,264 x 
36,000 / 1,000,000 = 620,940 Megagrams

    3. Subtract the credits determined in #1 (322,186) from the credits 
determined in #2 (620,940), and the result is 298,754 Megagrams of 
credits due to the multiplier impact. These credits, like other 
credits, get added to the manufacturers base fleet deficit or

[[Page 22616]]

credits (in this case 322,576 Megagrams) to determine the 
manufacturer's model year credit position.

B. Correction of Error in the Off-Cycle Technology Credit Calculation 
Provision

    EPA's GHG emissions standards allow manufacturers to generate 
credits toward compliance through the application of off-cycle 
technologies. In model years 2017 and later, fuel economy off-cycle 
credits equivalent to EPA CO2 credits are also available in 
the CAFE program. Off-cycle technologies are those that result in real-
world emissions reductions that are not fully captured on the 2-cycle 
emissions tests used for compliance with the GHG standards (i.e., the 
city and highway test cycles). EPA originally adopted the off-cycle 
credits program as part of the 2010 rulemaking establishing the MY 
2012-2016 standards.\12\ EPA later modified the off-cycle program in 
2012 as part of the MY 2017-2025 standards rule.\13\ One of the 
methodologies for manufacturers to demonstrate off-cycle emissions 
reductions is by conducting 5-cycle testing \14\ with and without the 
off-cycle technology applied (i.e., A/B testing).\15\ The original 
program established in 2010 did not allow off-cycle credits for 
technologies that showed significant benefits on the 2-cycle segment of 
the 5-cycle test. The regulations established by the MY 2012-2016 rule 
stated that the ``CO2-reducing impact of the technology must 
not be significantly measurable over the Federal Test Procedure and the 
Highway Fuel Economy Test.'' \16\ As such, the regulations did not 
require manufacturers to subtract 2-cycle reductions from the 5-cycle 
benefits when deriving the off-cycle credit because the 2-cycle benefit 
would necessarily be negligible.
---------------------------------------------------------------------------

    \12\ 75 FR 25438-25440 (May 7, 2010) and 75 FR 25697-25698.
    \13\ 77 FR 62726-62738, 77 FR 62832-62840, and 40 CFR 86.1869-
12.
    \14\ The 5-cycle methodology is currently used to determine fuel 
economy label values. EPA established the 5-cycle test methods to 
better represent real-world factors impacting fuel economy, 
including higher speeds and more aggressive driving, colder 
temperature operation, and the use of air conditioning.
    \15\ 77 FR 62837.
    \16\ 75 FR 25698.
---------------------------------------------------------------------------

    The program as revised by the MY 2017-2025 rule allows for the 
possibility that some qualifying technologies could have a small 2-
cycle benefit but a larger off-cycle benefit. The 2012 rule stated 
``EPA is removing the ``not significantly measurable over the 2-cycle 
test'' criteria'' allowing for credits for qualifying off-cycle 
technologies ``providing small reductions on the 2-cycle tests but 
additional significant reductions off-cycle.'' \17\ EPA stated ``[t]he 
intent of the off-cycle provisions is to provide an incentive for 
CO2 and fuel consumption reducing off-cycle technologies 
that would otherwise not be developed because they do not offer a 
significant 2- cycle benefit and that the program would ``encourage 
innovative strategies for reducing CO2 emissions beyond 
those measured by the 2-cycle test procedures.'' \18\ It is plain from 
the proposed and final rules that the revised off-cycle credit program 
was intended to provide credits for the incremental benefit of the off-
cycle technology that was not captured on the 2-cycle test. For 
example, EPA provided extensive discussion of how it developed the 
standards based on its evaluation of various technologies and their 
effectiveness as demonstrated on the 2-cycle test.\19\ EPA further 
stated that the off-cycle credits were intended to recognize GHG 
reductions in excess of the benefits already reflected in the 
standards.\20\ For example, for the menu credits for waste heat 
recovery and active aerodynamics, two technologies that do have some 
emission reduction benefit over the 2-cycle tests, EPA derived the 
credits by estimating the 5-cycle benefit and then subtracting out the 
2-cycle benefit.\21\
---------------------------------------------------------------------------

    \17\ 77 FR 62835.
    \18\ 77 FR 62832.
    \19\ 76 FR 74942 (December 1, 2011) & 77 FR 62726
    \20\ 77 FR 62650 and 77 FR 62836.
    \21\ Joint Technical Support Document: Final Rulemaking for 
2017-2025 Light-Duty Vehicle Greenhouse Gas Emission Standards and 
Corporate Average Fuel Economy Standards, August 2012, EPA-420-R-12-
901 pp. 5-65 and 5-82.
---------------------------------------------------------------------------

    However, EPA inadvertently did not make the associated change in 
the regulations to require that the 2-cycle benefit be subtracted from 
the 5-cycle benefit for those off-cycle credits which are based on a 
manufacturer-specific 5-cycle technology demonstration. This could lead 
to double counting of the 2-cycle benefit of the technology, which is 
also included in the 2-cycle tailpipe emissions results of the vehicle 
used to determine compliance with the standards. EPA made clear in the 
2012 final rule that such ``windfall credits'' would be 
inappropriate.\22\ Accordingly, manufacturers have not formally 
requested, and EPA has not granted, new 5-cycle-based credits since 
identifying this issue. When the regulations are corrected this credit 
pathway will resume for manufacturers. This issue has been raised by 
manufacturers seeking clarification from the agency. EPA is addressing 
this oversight and the potential double-counting issue by correcting 
the regulations as proposed such that the 2-cycle benefit is subtracted 
from the 5-cycle benefit of the off-cycle technology. EPA is adding to 
the regulations the equation below to ensure that credits derived from 
the 5-cycle methodology are calculated properly. See the revised 
regulatory language in 40 CFR 86.1869-12(c) for the complete regulatory 
text. EPA received only supportive comments regarding the proposed 
correction. Comments regarding the off-cycle credit calculation are 
discussed in Section III.B., below.
---------------------------------------------------------------------------

    \22\ 77 FR 62836.
---------------------------------------------------------------------------

    Under the regulatory correction, manufacturers would calculate the 
off-cycle credit in grams per mile using the following formula, 
rounding the result to the nearest 0.1 grams/mile:

Credit = (A - B) - (C - D)

Where:

Credit = the off-cycle benefit of the technology or technologies 
being evaluated, subject to EPA approval
A = the 5-cycle adjusted combined city/highway carbon-related 
exhaust emission value for the vehicle without the off-cycle 
technology;
B = 5-cycle adjusted combined city/highway carbon-related exhaust 
emission value for the vehicle with the off-cycle technology;
C = 2-cycle unadjusted combined city/highway carbon-related exhaust 
emissions value for the vehicle without the off-cycle technology; 
and
D = 2-cycle unadjusted combined city/highway carbon-related exhaust 
emissions value for the vehicle with the off-cycle technology.

    Through this new regulatory equation, the ``C'' and ``D'' terms 
make clear that the 2-cycle emissions value of the off-cycle technology 
is subtracted from the 5-cycle emissions value (``A'' and ``B'' terms), 
which was the intent of the program.

III. Public Comments

    EPA received comments on the proposed rule from several entities. 
In this section, we summarize these comments and present our responses 
to each.

A. Comments on EPA's Proposed Corrections to the Advanced Technology 
Incentive Multiplier

1. Support for Proposed Revisions
    The Alliance, Global Automakers, FCA, Tesla, and Edison Electric 
Institute provided comments fully supportive of the corrected 
calculation methodology proposed by EPA. Global Automakers commented 
with suggestions regarding how rounding is handled in the credit

[[Page 22617]]

calculations, as discussed below in Section III.A.3.
2. Optional Use of Uncorrected Multiplier Calculation Methodology
    EPA received comments from the Alliance and FCA that while they 
agree with the corrections, for some manufacturers the uncorrected 
methodology provides more credits in some cases than the corrected 
methodology. The commenters requested that EPA allow automakers to 
optionally retain usage of the uncorrected formula because the 
corrected methodology could lessen the credits due to multipliers. They 
commented that providing fewer credits would be counter to the intent 
of the proposal and would cause harm to automakers who have made 
compliance plans in reliance on the uncorrected formula.
    EPA believes these comments have merit and, as noted in Section 
II.A above, is allowing for the continued use of the uncorrected 
methodology in addition to the corrected methodology and EPA will grant 
manufacturers the higher of the two credit values. The regulations 
adopted in this rule provide that manufacturers will calculate credits 
using both methodologies and report the higher of the two resulting 
credit values for model years 2017-2021. As discussed above in Section 
II.A.1, while the regulations specify that manufacturers will calculate 
credits using both methodologies, for ease of implementation, EPA's 
compliance system will also calculate the credits using both 
methodologies. Model years 2017 and 2018 are completed and model year 
2019, and for many manufacturers 2020, are underway. EPA agrees that 
retroactively reducing credits associated with the multiplier for some 
manufacturers would be problematic, as that was not the intent of the 
proposal or the 2012 rule. Manufacturers may be counting on credit 
levels based on the uncorrected methodology for their product planning 
out to MY 2021, the last year the multiplier credits are available. EPA 
recently released its 2018 EPA Automotive Trends Report where EPA 
estimated that the corrected methodology provides manufacturers with 
about 2 g/mile of advanced technology multiplier credits on a fleet 
average basis for model year 2017 compared to a fleet average standard 
of 258 g/mile.\23\ EPA estimates that allowing manufacturers to use 
either methodology would add less than 0.5 g/mile to the fleetwide 
credits level associated with the multiplier for MY 2017. As production 
volumes of advanced technology vehicles increase and diversify across 
vehicle footprints from primarily small footprint vehicles to include 
larger footprint vehicles, EPA expects the difference in credits 
calculated with the two methodologies to diminish.
---------------------------------------------------------------------------

    \23\ The 2018 EPA Automotive Trends Report: Greenhouse Gas 
Emissions, Fuel Economy, and Technology since 1975, EPA-420-R-19-
002, March 2019.
---------------------------------------------------------------------------

3. Rounding in Multiplier Credit Calculations
    Global Automakers commented that depending on total volume, 
CO2 level and EV/PHEV penetration rate, the end credit value 
can nontrivially vary due to rounding effects. Global Automakers 
recommended that the multiplier credits be calculated either without 
rounding or in a separate calculation, following a similar precedent 
for calculating A/C credits and off-cycle credits. Global Automakers 
provided a suggested equation they believed would best address the 
rounding issue based on applying the multiplier on a model-by-model 
basis.
    In response to the comments from Global Automakers, EPA is 
specifying that calculation of the multiplier-based credits is to be 
done without rounding, except that the resulting Megagrams of 
multiplier-based credits for a fleet will be rounded to the whole 
number (as is the case for all other types of credits) as discussed in 
Section II.A. above.
4. Need for a Technical Correction
    The Union of Concerned Scientists (UCS) commented that the 
uncorrected regulations reflect EPA's original intent and that the 
proposal is not a ``correction'' but rather a change in policy. UCS 
points to text from the MY 2012-2016 NPRM which states ``[t]hese 
proposed advanced technology credits are in the form of a multiplier 
that would be applied to the number of vehicles sold, such that each 
eligible vehicle counts as more than one vehicle in the manufacturer's 
fleet average.''
    EPA does not agree with UCS that the proposal represented a change 
in policy and maintains that it is a technical correction. EPA notes 
that although EPA proposed multiplier incentives in the MY2012-2016 
rule, EPA did not finalize those incentives. Nevertheless, the intent 
of the policy was clear in the MY2012-2016 final rule which stated 
``For example, combining a multiplier of 2.0 with a zero grams/mile 
compliance value for an EV would allow that EV to be counted as two 
vehicles, each with a zero grams/mile compliance value, in the 
manufacturer's fleet average calculations. In effect, a multiplier of 
2.0 would double the overall credit associated with an EV, PHEV, or 
FCV'' for a manufacturer with these fleet characteristics. 75 FR 25435. 
This intended outcome is not consistent with the credits calculated 
with the incorrect calculation methodology but is consistent with the 
corrected methodology being finalized today.
    EPA's intent is also clear in the 2012 rulemaking where in multiple 
places the preamble consistently states, ``This multiplier approach 
means that each EV/PHEV/FCV/CNG vehicle would count as more than one 
vehicle in the manufacturer's compliance calculation.'' 77 FR 62650 and 
repeated at 62778, 62811, 62812. These statements are consistent with 
the clarifications adopted in this rulemaking. At no point did the 
rulemaking contemplate limiting or restricting multiplier credits for 
some manufacturers.
    UCS also commented that EPA used the uncorrected calculation in the 
MY2017-2025 rule analysis estimating the impact of the multipliers and 
that this provides further evidence of EPA's intent in the MY2017-2025 
rulemaking establishing the multipliers. UCS comments that they were 
not able to assess how EPA calculated the impacts of the multipliers 
but believes that the estimates are based on the uncorrected 
methodology, providing further evidence of EPA's intent. In response, 
the methodology used to estimate the impact of the multipliers is 
provided in the Regulatory Impact Analysis for the MY2012-2017 final 
rule.\24\ The impacts analysis provided in the RIA for the MY2012-2017 
final rule did not use either the corrected or uncorrected equations 
directly to estimate potential impacts. The estimate was based on a 
fleetwide scenario using several simplifying assumptions. However, EPA 
did base the projected impacts on an estimate that included applying 
the multiplier to a projection of the total number of EVs in the fleet 
which is consistent with the corrected methodology.
---------------------------------------------------------------------------

    \24\ Regulatory Impact Analysis: Final Rulemaking for 2017-2025 
Light-duty Vehicle Greenhouse Gas Emission Standards and Corporate 
Average Fuel Economy Standards, p. 4-132, EPA-420-R-12-016, August 
2012.
---------------------------------------------------------------------------

    UCS commented that EPA significantly underestimated the impacts of 
the multipliers in the MY 2012-2017 Final Rule and that compliance with 
state ZEV regulations would result in significantly more EV sales than 
EPA originally projected. UCS further commented that the proposed 
change to the program would result in significant erosion of program

[[Page 22618]]

benefits. In response, EPA clearly acknowledged in the MY 2017-2025 
final rule that the multipliers would decrease the program benefits to 
the extent that manufacturers produced the advanced technology 
vehicles. The final rule states ``The agency recognizes that the 
temporary regulatory incentives will reduce the short-term benefits of 
the program.'' \25\ EPA's 2012 RIA estimate of the impact of the 
multipliers was meant to be illustrative, but its policy intent was 
clear and the correction included in this rulemaking is consistent with 
that policy intent. EPA does not believe that it would be appropriate 
to maintain an error in the regulations to effectively deny some 
manufacturers the level of credits that both EPA and the manufacturers 
believed would be available since the policy was adopted by EPA in the 
2012 final rule. Any change in the program to change policy, for 
example to reduce credits associated the multipliers, would need to be 
considered through rulemaking where EPA would provide a full assessment 
of such a proposal and an opportunity for public comment.
---------------------------------------------------------------------------

    \25\ 77 FR 62812.
---------------------------------------------------------------------------

5. Opposition to the Multiplier Provisions
    The American Fuel & Petrochemical Manufacturers (AFPM) commented 
opposing multipliers in their entirety, calling on EPA to not finalize 
proposed changes and to eliminate the multipliers. AFPM noted that it 
also opposed the use of multipliers in their comments on the 2017 and 
Later Model Year Light-Duty Vehicle Greenhouse Gas Emissions and 
Corporate Average Fuel Economy Standards. AFPM commented that the 
multiplier credits are not based on sound science because EPA is 
arbitrarily ignoring the numerous GHG emissions from the production, 
transmission, and distribution of electricity and the production of 
EVs. AFPM also commented that the proposed correction would have costs 
associated with it because the additional credits associated with the 
correction have a market value and could be traded (sold) to other 
manufacturers. AFPM commented that the multipliers are subsidies not 
based on any emission reductions, nor did EPA consider the existing 
local, state, federal, and utility policies that already subsidize EVs. 
AFPM commented that EPA should conduct a Regulatory Impact Analysis for 
the rulemaking.
    In response, EPA believes AFPM comments regarding eliminating 
multiplier credits are outside the scope of this rulemaking. EPA did 
not propose or request comments on eliminating multiplier credits or 
otherwise make any policy changes regarding the availability of 
multiplier credits. EPA only proposed a regulatory correction to allow 
credits to be calculated as intended by the 2012 final rule that 
established the multipliers. EPA therefore does not believe it must 
revisit the issues raised by AFPM. EPA fully considered all comments in 
the 2012 final rule establishing the multiplier credits which were 
established through a full notice and comment rulemaking. EPA did not 
propose in the technical amendments rule to reopen the basic question 
of whether or not multiplier credits should be part of the GHG program. 
EPA fully considered program costs in the 2012 rule that included the 
multiplier credits. AFPM argues that the multiplier technical amendment 
has costs associated with the correction due to the market value of the 
credits attributable to the correction. However, EPA does not agree 
that there are costs associated with the technical amendments rule as 
EPA did not propose and is not adopting any significant change to its 
policy regarding those credits. Therefore, EPA has not conducted a new 
Regulatory Impact Analysis for this technical amendments rulemaking. 
EPA acknowledged in the 2012 final rule that the multiplier credits 
were incentives to promote the production of advanced technology 
vehicles, that the incentives were not based on real-world emissions 
reductions, and that the incentives would result in a loss of emissions 
reductions to the extent that vehicle manufacturers produced advanced 
technology vehicles, and EPA provided an estimate of the additional 
emissions that would occur from the use of the multipliers.
6. Process Concerns About Extension of Comment Period
    Minnesota Pollution Control Agency and Minnesota Department of 
Transportation provided joint comments that they continue to have 
concerns about the U.S. Environmental Protection Agency's (EPA) process 
for reviewing, amending, and revising its vehicle GHG emissions 
standards and that the process does not live up to the standards set by 
the Administrative Procedure Act to provide the public with adequate 
time and information to participate meaningfully in the rulemaking 
process. Specifically, on the technical amendments proposal, the 
organizations commented ``While we appreciate the additional time the 
EPA provided to review this proposal, it is inappropriate to provide a 
comment period extension after the close of the comment period. It 
wastes commenter resources trying to develop comments during the stated 
period. Reopening the comment period does little or no good because the 
commenters' resources have already been spent attempting to meet the 
original deadline.''
    In response, EPA initially provided a 30-day comment period for the 
technical amendments rule. The comment period opened on October 1, 2018 
and initially closed on October 31, 2018. In response to a request for 
a comment period extension received on October 18, 2018, EPA reopened 
the comment period to in effect extend the comment period by an 
additional 30 days.\26\ EPA released the pre-publication version of the 
Federal Register document re-opening the comment period on October 30, 
2018, the last day of the initial comment period, on its website and 
the document was published in the Federal Register on November 8, 2018. 
EPA strives to respond to requests for comment period extensions as 
quickly as possible, because we recognize that commenters often plan to 
file comments on the last day. In this case, while EPA acknowledges the 
Federal Register document re-opening the comment period was published 
after the initial comment period ended, the extension was announced on 
EPA's website less than two weeks after the request was received, and 
EPA's intention was to be responsive to a request for an extension of 
the comment period. While the timing of the Federal Register notice may 
have limited the usefulness of the additional time for public comment 
for this commenter, EPA does not agree that the original comment 
period, or the re-opening of the comment period, was inconsistent with 
the Administrative Procedure Act. EPA notes that Minnesota Pollution 
Control Agency and Minnesota Department of Transportation did not raise 
any substantive issues concerning the proposed technical corrections. 
The commenter raised concerns with how the technical corrections could 
affect the analyses in the SAFE vehicles NPRM, as discussed below.
---------------------------------------------------------------------------

    \26\ 83 FR 55837, November 8, 2018.
---------------------------------------------------------------------------

7. Relationship of This Rule to the SAFE Vehicles Rule
    Minnesota Pollution Control Agency and Minnesota Department of 
Transportation commented ``It is also unclear how this proposed 
amendment to the existing GHG standards would affect the analysis 
conducted for the proposed Safer Affordable Fuel Efficient

[[Page 22619]]

(SAFE) Vehicles rule (83 FR 42986). While the SAFE rule proposed to 
eliminate incentives and flexibilities in the GHG standards for 2020-
2026, the updates proposed in these technical amendments could 
potentially affect the cost-benefit analyses conducted for the SAFE 
rule.''
    UCS similarly commented that ``While the two amendments proposed by 
the Agency may seem minor, they cannot simply be viewed in isolation--
rather, they must be considered in context with other changes to the 
program, including the notice of proposed rulemaking (NPRM) to freeze 
standards at model year (MY) 2021 levels through MY2026.'' UCS 
commented further that ``The agencies are seeking comment on these 
flexibilities explicitly as part of the 2021-2026 NPRM, including the 
petition to which the technical amendments are responding (83 FR 
42998). Any impacts of these proposed amendments will have affect not 
only [sic] the current rules, but also those under consideration, 
potentially leading to significant reductions in emissions which the 
Agency has not yet considered under either rulemaking.'' UCS provides 
comments on the overall potential impacts of some of the expanded 
flexibilities and that the environmental impacts of the proposed 
amendments have not been considered by the Agency under either 
rulemaking.
    In response, as described in the proposal, there are no significant 
costs or environmental impacts because the technical amendments 
rulemaking does not change the intended policy, it only makes a 
technical correction to the regulations to allow manufacturers to 
generate the appropriate level of credits. These corrections do not 
affect any analyses that would be conducted for the SAFE vehicles rule 
because they do not represent a policy change to the program, they only 
allow the program to operate as originally intended. EPA also notes 
that the original multiplier incentives (i.e., those established in the 
2012 rule) are temporary and only apply to model years 2017-2021, 
whereas the SAFE vehicles proposal affects model years 2021-2026. 
Therefore, any potential overlap is limited to model year 2021. For the 
MY 2022-2026 NGV multiplier, the SAFE rule did not project the use of 
NGVs to meet the 2022-2026 standards, so the new NGV multiplier had no 
impact on any analysis in the SAFE Rule. EPA does not believe that UCS' 
comments on possible program changes considered in the SAFE vehicles 
rule are relevant to this technical amendments rule. UCS noted that it 
also submitted its comments to the docket for the SAFE vehicles rule in 
addition to the docket for the technical amendments rule.

B. Comments on EPA's Proposed Correction to Off-Cycle Technology 
Credits Provisions

    The Alliance, Global Automakers, FCA, and UCS supported the 
correction to the 5-cycle calculation methodology as proposed. The 
Alliance, Global Automakers, and FCA commented that EPA needs to 
further address two areas in the technical correction. They commented 
that EPA should specify that it will award all technologies that have a 
difference between 5-cycle and 2-cycle testing methodology as long as 
the off-cycle credit value is equal to or greater than 0.05 g/mile, 
regardless of the observed benefit using the 2-cycle method and that 
EPA should clearly define the term ``baseline technology (item and 
efficiency).'' Commenters believe that clarifying this term will help 
manufacturers determine what a baseline technology is and the 
associated baseline off-cycle credit value.
    UCS commented that EPA should ``clarify a threshold for `not in 
widespread use' to ensure that the newly streamlined off-cycle credit 
process does not result in unwarranted credits for baseline 
technologies while providing the certainty requested by industry to 
encourage deployment of new and novel non-safety off-cycle 
technologies. Such clarification could also respond to automaker 
request for clarity on the definition of a `baseline' technology.''
    In response to the above comments, the NPRM did not propose or 
request comments on establishing new thresholds or baselines in the 
regulations to determine what technologies are eligible for off-cycle 
credits; and therefore, EPA believes the comments are outside the scope 
of the technical amendments rulemaking. Given the diversity of views on 
this topic, as expressed by the commenters noted above, and the 
potential complexity of the policy issues involved, EPA believes such 
regulatory changes would need to be done through a notice and comment 
rulemaking that includes a full discussion and technical assessment of 
the topic and opportunity for public comment. EPA will continue to use 
the current regulations as well as the detailed discussion in the 2012 
final rule preamble to determine what technologies are eligible for 
off-cycle credits on a case-by-case basis.\27\
---------------------------------------------------------------------------

    \27\ See 40 CFR 86.1869-12 and preamble discussion at 77 FR 
62835-62837 and 77 FR 62726-62736.
---------------------------------------------------------------------------

IV. Statutory and Executive Order Reviews

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

    This action is a significant regulatory action that was submitted 
to the Office of Management and Budget (OMB) for review. Any changes 
made in response to OMB recommendations have been documented in the 
docket.
    This final action merely clarifies and corrects existing regulatory 
language. EPA does not believe there will be costs associated with this 
rule. Also, EPA does not anticipate that this rule will create 
additional burdens to the existing requirements. As such, a regulatory 
impact evaluation or analysis is unnecessary.

B. Executive Order 13771: Reducing Regulations and Controlling 
Regulatory Costs

    This action is not subject to Executive Order 13771 because it 
merely clarifies and corrects existing regulatory language and is not 
expected to result in costs or additional burdens.

C. Paperwork Reduction Act (PRA)

    This action does not impose any new information collection burden 
under the PRA. OMB has previously approved the information collection 
activities contained in the existing regulations and has assigned OMB 
control number 2060-0104. This action will not impose any new 
information collection burden under the PRA, since it merely clarifies 
and corrects existing regulatory language.

D. Regulatory Flexibility Act (RFA)

    I certify that this action would not have a significant economic 
impact on a substantial number of small entities under the RFA. In 
making this determination, the impact of concern is any significant 
adverse economic impact on small entities. An agency may certify that a 
rule will not have a significant economic impact on a substantial 
number of small entities if the rule relieves regulatory burden, has no 
net burden or otherwise has a positive economic effect on the small 
entities subject to the rule. This rule merely clarifies and corrects 
existing regulatory language. We therefore anticipate no costs and 
therefore no

[[Page 22620]]

regulatory burden associated with this rule. Further, small entities 
are generally exempt from the light-duty vehicles greenhouse gas 
standards unless the small entity voluntarily opts into the program. 
See 40 CFR 86.1801-12(j). For MY 2017 to present, no small entities 
have opted into the program. We have therefore concluded that this 
action will have no net regulatory burden for all directly regulated 
small entities.

E. Unfunded Mandates Reform Act (UMRA)

    This action does not contain any unfunded mandate as described in 
UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect 
small governments. The action imposes no enforceable duty on any state, 
local or tribal governments. Requirements for the private sector do not 
exceed $100 million in any one year.

F. Executive Order 13132: Federalism

    This action does not have federalism implications. It will not have 
substantial direct effects on the states, on the relationship between 
the national government and the states, or on the distribution of power 
and responsibilities among the various levels of government.

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

    This action does not have tribal implications as specified in 
Executive Order 13175. This rule only corrects and clarifies regulatory 
provisions that apply to light-duty vehicle manufacturers. Tribal 
governments would be affected only to the extent they purchase and use 
regulated vehicles. Thus, Executive Order 13175 does not apply to this 
action.

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

    This action is not subject to Executive Order 13045 because it is 
not economically significant as defined in Executive Order 12866, and 
because EPA does not believe the environmental health or safety risks 
addressed by this action present a disproportionate risk to children. 
This rule merely corrects and clarifies previously established 
regulatory provisions.

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

    This action is not a ``significant energy action'' because it is 
not likely to have a significant adverse effect on the supply, 
distribution or use of energy. This final action merely clarifies and 
corrects existing regulatory language.

J. National Technology Transfer and Advancement Act (NTTAA)

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (``NTTAA''), Public Law 104-113, 12(d) (15 U.S.C. 272 note) 
directs EPA to use voluntary consensus standards in its regulatory 
activities unless to do so would be inconsistent with applicable law or 
otherwise impractical. Voluntary consensus standards are technical 
standards (e.g., materials specifications, test methods, sampling 
procedures, and business practices) that are developed or adopted by 
voluntary consensus standards bodies. NTTAA directs agencies to provide 
Congress, through OMB, explanations when the Agency decides not to use 
available and applicable voluntary consensus standards.
    This action modifies existing regulations to correct errors in the 
regulations and therefore involves technical standards previously 
established by EPA. The amendments to the regulations do not involve 
the application of new technical standards. EPA is continuing to use 
the technical standards previously established in its rules regarding 
the light-duty vehicle GHG standards for MYs 2017-2025. See 77 FR 
62960.

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

    The EPA believes that this action is not subject to Executive Order 
12898 (59 FR 7629, February 16, 1994) because it does not establish an 
environmental health or safety standard. This regulatory action makes 
technical corrections to a previously established regulatory action and 
as such does not have any impact on human health or the environment.

List of Subjects in 40 CFR Part 86

    Administrative practice and procedure, Confidential business 
information, Labeling, Motor vehicle pollution, Reporting and 
recordkeeping requirements.

Andrew Wheeler,
Administrator.

Environmental Protection Agency

40 CFR Chapter I

    For the reasons set forth in the preamble, the Environmental 
Protection Agency is amending part 86 of title 40, Chapter I of the 
Code of Federal Regulations as follows:

PART 86--CONTROL OF EMISSIONS FROM NEW AND IN-USE HIGHWAY VEHICLES 
AND ENGINES

0
1. The authority citation for part 86 continues to read as follows:

    Authority:  42 U.S.C. 7401-7671q.


0
2. Section 86.1865-12 is amended by redesignating paragraph (k)(5)(v) 
as paragraph (k)(5)(vi) and by adding a new paragraph (k)(5)(v) to read 
as follows:


Sec.  86.1865-12   How to comply with the fleet average CO2 standards.

* * * * *
    (k) * * *
    (5) * * *
    (v) Advanced technology vehicle credits earned according to the 
provisions of Sec.  86.1866-12(b)(3).
* * * * *

0
3. Section 86.1866-12 is amended by revising paragraphs (b) 
introductory text and adding paragraph (c) to read as follows:


Sec.  86.1866-12   CO2 credits for advanced technology vehicles.

* * * * *
    (b) For electric vehicles, plug-in hybrid electric vehicles, fuel 
cell vehicles, dedicated natural gas vehicles, and dual-fuel natural 
gas vehicles as those terms are defined in Sec.  86.1803-01, that are 
certified and produced for U.S. sale in the specified model years and 
that meet the additional specifications in this section, the 
manufacturer may use the production multipliers in this paragraph (b) 
when determining additional credits for advanced technology vehicles. 
Full size pickup trucks eligible for and using a production multiplier 
are not eligible for the performance-based credits described in Sec.  
86.1870-12(b).
* * * * *
    (c) Calculating multiplier-based credits for advanced technology 
vehicles: This paragraph (c) describes the method for calculating 
credits using the production multipliers in paragraph (b) of this 
section. Production multipliers must be used according to this 
paragraph (c) and must not be used in calculating fleet average carbon-
related exhaust emissions under 40 CFR part 600 or Sec.  86.1865-12(i), 
or in any elements of the equation used for the calculation of 
CO2 credits or debits in Sec.  86.1865-12(k)(4). Calculate 
credits for advanced technology vehicles for a given model year, and 
separately for passenger automobiles and light trucks,

[[Page 22621]]

using the following equation, subtracting the credits calculated for 
the base fleet from the credits calculated for the fleet with 
multipliers applied. No credits are earned if the result is a negative 
value. All values expressed in megagrams shall be rounded to the 
nearest whole number.

Credits [Mg] = [Creditsadj]-[Creditsbase]

    (1) For model year 2017-2021 multipliers, determine adjusted fleet 
credits (Creditsadj) in megagrams using one of the following 
methods, where the resulting Creditsadj is rounded to the 
nearest whole number. Use the method that returns the highest total 
megagrams. For 2022 and later model years, determine adjusted fleet 
credits (Creditsadj) in megagrams using only Method 1 in 
paragraph (c)(1)(i) of this section, where the resulting 
Creditsadj is rounded to the nearest whole number. Note that 
the adjusted CO2 standard (Sadj) and the adjusted 
fleet average carbon-related exhaust emissions (Eadj) are 
determined solely for the purpose of calculating advanced technology 
vehicle credits in this section; the official CO2 standard 
applicable to the fleet will continue to be the value calculated and 
rounded according to Sec.  86.1818-12(c), and the official fleet 
average carbon-related exhaust emissions applicable to the fleet will 
continue to be the value calculated and rounded according to 40 CFR 
600.510-12(j). In addition, note that the rounding requirements in this 
section differ from those specified for the official fleet standards 
calculated under Sec.  86.1818-12 and for the official fleet average 
carbon-related exhaust emissions calculated under 40 CFR 600.510-12.
    (i) Method 1: All values that determine fleet credits are adjusted 
using the applicable multipliers.
[GRAPHIC] [TIFF OMITTED] TR23AP20.028

Where:

Sadj = adjusted CO2 standard calculated 
according to the method described in Sec.  86.1818-12(c), except 
that the actual production of qualifying vehicles under this section 
shall be multiplied by the applicable production multiplier, and no 
rounding shall be applied to the result.
Eadj = adjusted production-weighted fleet average carbon-
related exhaust emissions calculated according to the method 
described in 40 CFR 600.510-12(j), except that the actual production 
of qualifying vehicles under this section shall be multiplied by the 
applicable production multiplier, and no rounding shall be applied 
to the result.
Padj = total adjusted production of passenger automobiles 
or light trucks, except that the actual production of qualifying 
vehicles under this section shall be multiplied by the applicable 
production multiplier, and no rounding shall be applied to the 
result.
VLM = vehicle lifetime miles, which for passenger automobiles shall 
be 195,264 and for light trucks shall be 225,865.

    (ii) Method 2: Multipliers are applied only to calculation of the 
fleet average carbon-related exhaust emissions.
[GRAPHIC] [TIFF OMITTED] TR23AP20.029

Sbase = CO2 standard calculated according to 
the method described in Sec.  86.1818-12(c), except that no rounding 
shall be applied to the result.
Eadj = adjusted production-weighted fleet average carbon-
related exhaust emissions calculated according to the method 
described in 40 CFR 600.510-12(j), except that the actual production 
of qualifying vehicles under this section shall be multiplied by the 
applicable production multiplier, and no rounding shall be applied 
to the result.
Pbase = total production of passenger automobiles or 
light trucks.
VLM = vehicle lifetime miles, which for passenger automobiles shall 
be 195,264 and for light trucks shall be 225,865.

    (2) Determine base fleet credits in megagrams using the following 
equation and rounding the result to the nearest whole number. Do not 
adjust any production volume values with a multiplier. Note that the 
CO2 standard (Sbase) and the fleet average 
carbon-related exhaust emissions (Ebase) are determined 
solely for the purpose of calculating advanced technology vehicle 
credits in this section and do not replace the official fleet values; 
the official CO2 standard applicable to the fleet will 
continue to be the value calculated and rounded according to Sec.  
86.1818-12(c), and the official fleet average carbon-related exhaust 
emissions applicable to the fleet will continue to be the value 
calculated and rounded according to 40 CFR 600.510-12(j). In addition, 
note that the rounding requirements in this section differ from those 
specified for the official fleet standards calculated under Sec.  
86.1818-12 and for the official fleet average carbon-related exhaust 
emissions calculated under 40 CFR 600.510-12.
[GRAPHIC] [TIFF OMITTED] TR23AP20.030

Sbase = CO2 standard calculated according to 
the method described in Sec.  86.1818-12(c), except that no rounding 
shall be applied to the result.
Ebase = production-weighted fleet average carbon-related 
exhaust emissions calculated according to the method described in 40 
CFR 600.510-12(j), except that no rounding shall be applied to the 
result.
Pbase = total production of passenger automobiles or 
light trucks.
VLM = vehicle lifetime miles, which for passenger automobiles shall 
be 195,264 and for light trucks shall be 225,865.

0
4. Section 86.1869-12 is amended by revising paragraphs (c)(1) through 
(3) to read as follows:


Sec.  86.1869-12  CO2 credits for off-cycle CO2-reducing technologies.

* * * * *

[[Page 22622]]

    (c) * * *
    (1) Testing without the off-cycle technology installed and/or 
operating.
    (i) Determine carbon-related exhaust emissions over the FTP, the 
HFET, the US06, the SC03, and the cold temperature FTP test procedures 
according to the test procedure provisions specified in 40 CFR part 600 
subpart B and using the calculation procedures specified in 40 CFR 
600.113-12. Run each of these tests a minimum of three times without 
the off-cycle technology installed and operating and average the per 
phase (bag) results for each test procedure.
    (ii) Calculate the FTP and HFET carbon-related exhaust emissions 
from the FTP and HFET averaged per phase results.
    (iii) Calculate the combined city/highway carbon-related exhaust 
emission value from the FTP and HFET values determined in paragraph 
(c)(1)(ii) of this section, where the FTP value is weighted 55% and the 
HFET value is weighted 45%. The resulting value is the 2-cycle 
unadjusted combined city/highway carbon-related exhaust emissions value 
for the vehicle without the off-cycle technology.
    (iv) Calculate the 5-cycle weighted city/highway combined carbon-
related exhaust emissions from the averaged per phase results, where 
the 5-cycle city value is weighted 55% and the 5-cycle highway value is 
weighted 45%. The resulting value is the 5-cycle adjusted combined 
city/highway carbon-related exhaust emission value for the vehicle 
without the off-cycle technology.
    (2) Testing with the off-cycle technology installed and/or 
operating.
    (i) Determine carbon-related exhaust emissions over the FTP, the 
HFET, the US06, the SC03, and the cold temperature FTP test procedures 
according to the test procedure provisions specified in 40 CFR part 600 
subpart B and using the calculation procedures specified in 40 CFR 
600.113-12. Run each of these tests a minimum of three times with the 
off-cycle technology installed and operating and average the per phase 
(bag) results for each test procedure.
    (ii) Calculate the FTP and HFET carbon-related exhaust emissions 
from the FTP and HFET averaged per phase results.
    (iii) Calculate the combined city/highway carbon-related exhaust 
emission value from the FTP and HFET values determined in paragraph 
(c)(2)(ii) of this section, where the FTP value is weighted 55% and the 
HFET value is weighted 45%. The resulting value is the 2-cycle 
unadjusted combined city/highway carbon-related exhaust emissions value 
for the vehicle with the off-cycle technology.
    (iv) Calculate the 5-cycle weighted city/highway combined carbon-
related exhaust emissions from the averaged per phase results, where 
the 5-cycle city value is weighted 55% and the 5-cycle highway value is 
weighted 45%. The resulting value is the 5-cycle adjusted combined 
city/highway carbon-related exhaust emission value for the vehicle with 
the off-cycle technology.
    (3) Calculate the off-cycle credit in grams per mile using the 
following formula, rounding the result to the nearest 0.1 grams/mile:

Credit = (A-B)-(C-D)

Where:

Credit = the off-cycle benefit of the technology or technologies 
being evaluated, subject to EPA approval;
A = the 5-cycle adjusted combined city/highway carbon-related 
exhaust emission value for the vehicle without the off-cycle 
technology, as calculated in paragraph (c)(1)(iv) of this section;
B = 5-cycle adjusted combined city/highway carbon-related exhaust 
emission value for the vehicle with the off-cycle technology, as 
calculated in paragraph (c)(2)(iv) of this section;
C = 2-cycle unadjusted combined city/highway carbon-related exhaust 
emissions value for the vehicle without the off-cycle technology, as 
calculated in paragraph (c)(1)(iii) of this section; and
D = 2-cycle unadjusted combined city/highway carbon-related exhaust 
emissions value for the vehicle with the off-cycle technology, as 
calculated in paragraph (c)(2)(iii) of this section.
* * * * *
[FR Doc. 2020-07098 Filed 4-22-20; 8:45 am]
 BILLING CODE 6560-50-P


