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Statement of Need: EPA recently proposed to find that emissions of greenhouse gases from new motor vehicles and engines cause or contribute to air pollution that may reasonably be anticipated to endanger public health and welfare. Therefore, there is a need to reduce GHG emissions from light-duty vehicles to protect public health and welfare. The light-duty vehicle sector, which includes passenger cars, light-duty trucks, and medium-duty passenger vehicles, accounts for approximately 60% of all U.S. transportation sector GHG emissions. This rulemaking would significantly reduce GHG emissions from model year 2012 through 2016 light-duty vehicles. This rulemaking is also consistent with the National Fuel Efficiency Policy announced by President Obama on May 19, 2009, responding to the country's critical need to address global climate change and reduce oil consumption.

Summary of the Legal Basis: Section 202(a)(1) provides broad authority to regulate new “motor vehicles,” which include light duty vehicles, light-duty trucks, and medium-duty passenger vehicles (hereafter light vehicles). While other provisions of Title II address specific model years and emissions of motor vehicles, section 202(a)(1) provides the authority that EPA would use to regulate GHGs from new light vehicles. Section 202(a)(1) states “the Administrator shall by regulation prescribe (and from time to time revise)…standards applicable to the emission of any air pollutant from any class or classes of new motor vehicles …, which in his judgment cause, or contribute to, air pollution which may reasonably be anticipated to endanger public health or welfare.” Any such standards “shall be applicable to such vehicles … for their useful life.” Finalizing the light vehicle regulations would be contingent upon EPA finalizing both the endangerment finding and cause or contribute finding that emissions of GHGs from new motor vehicles and motor vehicle engines cause or contribute to air pollution that may reasonably be anticipated to endanger public health and welfare.

Alternatives: The rulemaking proposal will include an evaluation of regulatory alternatives that can be considered in addition to the Agency's primary proposal. In addition, the proposal is expected to include tools such as averaging, banking and trading of emissions credits as alternative approaches for compliance with the proposed program.

Anticipated Costs and Benefits: According to EPA's preliminary analysis, the standards under consideration are projected to reduce GHGs by approximately 900 million metric tons and save 1.8 billion barrels of oil over the life of the program for MY 2012 – 2016 vehicles. The program would reduce GHG emissions from the U.S. light-duty fleet by 19 percent by 2030. EPA estimates an average increased cost of about $1,300 per vehicle in 2016 compared to today's vehicles. However, the typical driver would save enough in lower fuel costs over the first three years to offset the higher vehicle cost. Over the life of a vehicle, drivers would save about $2,800 through the fuel savings that come from controlling GHG emissions. Detailed analysis of economy-wide cost impacts, greenhouse gas emission reductions, and societal benefits will be performed during the rulemaking process.

Risks: GHG emissions from light-duty vehicles are responsible for almost 60 percent of all U.S. transportation-related GHGs, and increase the risk of unacceptable climate change impacts.