by Matt Viers
2011 Summer Associate with Graham & Dunn
The White House recently announced that, for the first time, the fuel efficiency of heavy- and medium-duty vehicles will be jointly regulated by the Environmental Protection Agency and the National Highway Transportation Safety Administration. Under the so-called “Heavy-Duty National Program,” EPA regulations will limit carbon dioxide emissions, while complementary NHTSA rules will require a significant increase in truck manufacturers’ mile-per-gallon averages. The program is part of a larger regulatory effort initiated by the President in May 2010, and follows similar EPA/NHTSA rules regulating passenger and light-duty vehicles. The HD National Program, which gradually phases in over a five-year period, will apply to truck model years 2014-2018. A second phase of joint regulations is planned for model years beyond 2018.
Notably, the proposed regulations published in November 2010 were received with approval by industry groups. In fact, President Obama stated last week that the regulations were implemented at the request of truck manufacturers and freight companies. While it may seem surprising that truck manufacturers would spearhead regulations that would cost their industry $8 billion, it certainly makes sense that truck operators would see the regulations as an opportunity to mitigate rising fuel costs. The flexibility of the new rules also points to significant industry involvement and cooperation in the regulatory process. The HD National Program provides for a sliding scale of CO2 emission and fuel consumption caps, depending upon truck class, exact truck size, and average load weight. Also, the regulations include an averaging, banking and trading (ABT) program, which creates a system of emission and fuel consumption credits. The inclusion of the ABT program effectively means that not every manufacturer is required to comply with all emission/consumption regulations for each truck class and model.
According to a summary report issued by the EPA, the five-year program will cost truck manufacturers approximately $8 billion, while saving vehicle owners approximately $50 billion in fuel costs (i.e., 530 million barrels of oil). Additionally, the Obama Administration predicts that the HD National Program will result in “monetized benefits from CO2 reductions,” improved energy security, and enhanced truck driver productivity resulting from reduced time spent refueling. Unfortunately, greener trucks may also result in increased driving accidents, greater traffic congestion, and increased highway noise. Still, the above intangible benefits are expected to outweigh these potential drawbacks, resulting in an additional (if largely intangible) $49 billion in “net benefits to society” (I’d love to see this model).
The program generally regulates all trucks with a gross vehicle weight of 8,500 pounds or more. Specifically, the regulations cover three classes of heavy trucks: (1) combination tractors (i.e., semis); (2) heavy-duty pickup trucks and vans (e.g., 3/4-ton and 1-ton pickup trucks); and (3) vocational vehicles (e.g., fire trucks, garbage trucks, buses, and concrete mixers). By 2018, the dual regulations will reduce emissions and consumption of tractors by up to 23 percent. Reductions for heavy duty pickups and vans and vocational trucks are somewhat more modest, at 10-15 percent and nine percent, respectively.