Response to Comments Received 7/19/11:

I., p. 419 of Preamble: edits adopted with some modifications.

II., p. 421 of Preamble, on positional goods: This was one of two additional hypotheses provided 

to the agencies. Because we sought comment and additional suggestions in the NPRM on the 

conceptual framework, we want to report the flavor of those comments. 

We agree that this argument is less relevant in the HD market than in the LD market, 

though it may play some role in some segments (e.g., medium-duty trucks, which are close 

enough to the light-duty market that some may buy them as statements of status). 

The paragraph currently states: “In a competitive business, cost reduction provides a 

major opportunity cost to investing in status rather than in fuel-saving technology; thus, this 

argument may play less of a role in the heavy-duty market than in the consumer market for 

vehicles.” We think this statement makes the same point that the comment raises. 

III., p. 422 of Preamble: The argument in the text raises a condition (limited capital markets) 

that might lead to “crowding-out” of the purchase of fuel-saving technology. We have no 

evidence, though, that limits on capital markets are an issue in this sector. We have added a 

sentence: “ The agencies received no comments indicating that constrained access to capital 

might explain the efficiency gap in this market.”

IV., moving the Employment Impacts to Chapter 10: Because of the attention that employment 

impacts receive in the current economic context, we prefer to keep the employment analysis in 

the preamble as well as the RIA.

We also prefer to keep the employment analysis in Chapter 9 of the RIA, which is titled 

“Economic and Social Impacts.” Employment analysis is generally considered an economic 

impact; separating it from other economic inputs may cause confusion or difficulties in finding 

the analysis. If the underlying concern is separating the employment analysis from the benefitcost analysis, we have already sought to accomplish this goal, by (a) putting it after the benefitcost analysis summary in the chapter, and (b) starting the employment analysis with the 

statement, “Although analysis of employment impacts is not part of a cost-benefit analysis 

(except to the extent that labor costs contribute to costs). . . .”

p. 3, proposed footnote: we added it, but to the paragraph dealing with full employment (where 

transition costs without notable effects on employment levels are more relevant). We added to 

the note that employment would not change “substantially”: if there are effects on the overall 

wage level, then workers may voluntarily enter or exit the workforce, affecting employment 

levels while not changing the full employment status. In addition, in response to suggested 

language received on 7/20, we reordered the language to put more emphasis on the transition 

costs than on labor market equilibrium.

p. 3 and subsequent comments to remove “second order effects”: we plan to keep the discussion 

of other impacts in the rule. 

We have sought to identify the sectors that are most likely to be significantly affected by

the rule. Our support for this notion is that the sectors we have discussed show up in some way

in the benefit-cost analysis: fuel suppliers and fuel savings because of the changes in fuel use, 
and effects on the transport and shipping sectors as the sources of emissions (and thus emissions 

reductions). In addition, stakeholder organizations associated with these sectors have 

commented on the rule, thus showing their interest in its effects.

Because there may be sectors that face significant impacts that we have not identified, we 

have added the following statement to highlight this concern, in the paragraph following the 

heading, “Overview of Affected Sectors”: “We acknowledge that there may be impacts in other 

sectors that are not discussed here, but we have sought to include the sectors where we think the 

impacts are most direct.”

We think more information is generally preferable to less information. We have sought 

to provide balanced assessments of effects in the sectors where we believe the impacts will be 

most significant. An advantage of providing a qualitative perspective on these sectors is that we 

can generally be reasonably confident of the direction of the effects that we will impose in these 

sectors, even if we do not have estimates of the magnitudes.

Thus, we maintain the language highlighted in the comments on p. 3.

p. 4. deleting discussion of UCS/Calstart study: Our intent in including reference to this study

was to be responsive to comments. In addition, not discussing existing studies provides an 

incomplete picture of the context that drives our own employment analysis. Finally, reviewing 

existing studies provides an opportunity to critique the ways that employment analysis is often 

done in policy debates. In this paragraph, we point out the high estimates, but also point out why

the I/O model that produced these results is likely to have exaggerated them. 

At the same time, we recognize that including numbers in what is otherwise a qualitative 

analysis may unduly focus readers on those numbers. We have edited the text to say, “tens of 

thousands of jobs between 2020 and 2030,” rather than the specific numbers.

p. 5, reorganizing to follow the Morgenstern et al. framework: this suggestion is adopted.

p. 7, comment on dropping discussion of profitability is adopted.

p. 8, concluding paragraph: we have maintained the language on other sectors. We have added a 

(slightly modified) version of the sentence on possible crowding out of other investment.

Response to Comments Received 7/20/11:

1. “Although analysis of employment impacts is not a standard part of a cost-benefit analysis. . . 

.” This addition implies that it could be part of a BCA. We are unaware of any guidelines for 

BCA that suggest including employment impacts. We think it is more appropriate to maintain a 

separation between BCA and employment analysis: they are different analyses for different 

purposes.

Further edits in the lead paragraph adopted.

2. Suggested additional paragraph in the introduction to this section: We have modified the 

proposed language in the new second paragraph to summarize the effects that we provide here:

“Our general conclusion is that employment impacts in the regulated sector (truck and 

engine manufacturing) and the parts sectors are likely to be positive; effects on employment in 

the transport and shipping sectors are ambiguous; the fuel supplying sectors may face reduced 
employment; and there may be increased general employment due to reduction in costs that may

be passed along to the transport industry and thus to the public. Because we did not include 

employment analysis in the NPRM and provide opportunity for public comment on the methods, 

we here present a qualitative discussion. Because the discussion is qualitative, we do not sum 

the net effects on employment in the economy.”

3. Language associated with Jacobson et al. cite: combined with footnote recommended on 7/19 

(see above, p. 3, proposed footnote).

4. edits in next paragraph adopted.

5., p. 3: We did not add “(and not merely the magnitude) because magnitudes are more difficult 

than (and implicitly include) directions.

The remaining edits in that paragraph were adopted, with minor editing.