From: david.kayes@daimler.com

To: Byron Bunker/AA/USEPA/US@EPA Cc: brian.burton@daimler.com, donald.keski - hynnila@daimler.com Date: 03/31/2011 07:48 PM Subject: EPA and NHTSA regulatory exemptions do not match

By ron: I know that the official tim e for submitting comments has passed, but I only recently noticed something that is definitely confusing and potentially a problem with the NPRM text: the NHTSA and EPA exemptions do not match. I do not know whom at NHTSA to contact (Coralie?), so per haps you can forward this on. Your regs and NHTSA differ in a significant way. In general, I recommend against any slight textual difference between the two agencies' regulations, even if the intended meanings of both regulations are the same. There wil l always be a chance of different interpretations or unintended consequences of textual between the regulations. But here, the regulations are quite different, to the point that the NHTSA regulation renders invalid the EPA exemption. NHTSA's regulation n eeds to change in order to allow proper industry functioning. The EPA regulations at 40 CFR §§1036.601 and 1037.601 provide for exemptions, including a test exemption like the one that we manufacturers currently use for criteria pollutant exemption on R&D vehicles. In many cases we build, import, or alter a vehicle for testing in conditions representative of our customer- fleets' operations. We sell the vehicle to the customer with a 85 CFR §85.1705 exemption covering the introduction into commerce, on co nditions including that the customer (1) test the vehicle in representative duty and (2) allow us to either (a) upgrade the vehicle and engine to full compliance at the end a year or year and a half (sometimes we need to extend the exemption) or (b) get ri d of the vehicle if we cannot bring it into compliance as a certified configuration. W e do this because in - use testing of a lim ited number of vehicles occurs in parallel with final development processes and associated certification testing. Stated anothe r way: testing and certifying development - stage hardware is not practical. The NHTSA regulations in the NPRM do not contain a test exemption for tractors or vocational vehicles. Those regulations contain exemptions for off- road vehicles, for small busin esses, and for a certain percentage of heavy- duty pickup and van sales but not for the types of test vehicles about which I am presently concerned. So, if we have a vehicle that is (say ) a one - off prototype test tractor or vocational vehicle, then we can exempt that vehicle from EPA regulations but not NHTSA's. Specifically, 49 CFR §535.8 provides for precertification and end - of- ye ar reports without exemptions for any vehicles. That section and §535.9, however, seem to indicate that NHTSA compliance is e quivalent to EPA compliance ( i.e. , compliance with 40 CFR §1037.730 reporting requirements and EPA AB&T limits). In turn, we have to report to NHTSA the fuel consumption of vehicles that EPA exempts, although those vehicles might not count toward NHTSA co mp liance. (I write "seem to" and "might" because, I admit, I am confused about this.) In any case, we still have to report. So there is the difference: NHTSA requires reporting (at the least) of fuel consumption of vehicles that EPA exempts. You m ight say : if we merely have to report on the vehicles, but we are not responsible for compliance (in the sense of AB&T limit compliance), then what is the problem with the difference? The problem is that reporting requires testing and/or calculation of Cd*A, and these are resource - intensive processes. Even if NTHSA is fine with manufacturers submitting "sand - bagged" Cd*A numbers ( i.e. , reporting all exempt vehicles as Classic - bin vehicles, knowing that the values do not count against AB&T limits), there is a problem with either (1) requiring manufacturers to expend resources on exempt vehicles or (2) requiring us to inaccurately report data under signature of a company official. The only way around this is for us tocertify

all vehicles, rendering the EPA ex em ptions invalid. These are valuable exemptions from our sake and (I think) yours, because they help us develop new vehicles on a reasonable time - fram e. In turn, I recommend that NHTSA adopt the EPA exemptions (either word - for- word or by saying "EPA exem ptions apply"). Sorry for the long email, but this was not an easy problem to describe. And, as we start preparing our test vehicles for 2012 (model year 2013), it is a problem we will need to address. Regards, Dave

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