From: William Charmley/AA/USEPA/US

To: "Achanta, Chandana L." <Chandana_L._Achanta@omb.eop.gov>

Cc: "'james.tamm@dot.gov'" <james.tamm@dot.gov>, "'Joanne.Petrie@dot.gov'" <Joanne.Petrie@dot.gov>, 

Maureen Delaney/DC/USEPA/US@EPA, "'Neil.Eisner@dot.gov'" <Neil.Eisner@dot.gov>, 

"'rebecca.yoon@dot.gov'" <rebecca.yoon@dot.gov>, Robin Moran/AA/USEPA/US@EPA, 

"'Steve.Wood@dot.gov'" <Steve.Wood@dot.gov>

Date: 09/29/2010 11:14 AM

Subject:RE: Summary of interagency working comments received on draft Notice and Technical Assessment under 

EO 12866 review

Chandana -

Here is EPA and NHTSA responses to the comments we heard during the Monday conference call. We 

are working through the interagency comments from last night right now and plan to provide you with a 

response as soon as we can.

Thanks

Bill

From: "Achanta, Chandana L." <Chandana_L._Achanta@omb.eop.gov>

To: William Charmley/AA/USEPA/US@EPA, "'Neil.Eisner@dot.gov'" <Neil.Eisner@dot.gov>, 

"'rebecca.yoon@dot.gov'" <rebecca.yoon@dot.gov>, "'james.tamm@dot.gov'" <james.tamm@dot.gov>, 

"'Steve.Wood@dot.gov'" <Steve.Wood@dot.gov>, "'Joanne.Petrie@dot.gov'" <Joanne.Petrie@dot.gov>, 

Maureen Delaney/DC/USEPA/US@EPA, Robin Moran/AA/USEPA/US@EPA

Date: 09/29/2010 10:12 AM

Subject:RE: Summary of interagency working comments received on draft Notice and Technical Assessment under 

EO 12866 review

What is the status of responses to these interagency comments?

From: Achanta, Chandana L. 

Sent: Tuesday, September 28, 2010 5:56 PM

To: Charmley.William@epamail.epa.gov; Neil.Eisner@dot.gov; rebecca.yoon@dot.gov; 

james.tamm@dot.gov; Steve.Wood@dot.gov; Joanne.Petrie@dot.gov; 

Delaney.Maureen@epamail.epa.gov; Moran.Robin@epamail.epa.gov
Subject: Summary of interagency working comments received on draft Notice and Technical Assessment 

under EO 12866 review

Please find attached additional interagency working comments we received under EO 12866 review of 

the draft notice and technical assessment. 

They are for your consideration and subject to further policy review.
EPA and NHTSA Document – Deliberative Process- Do Not Cite or Quote

List of Comments raised by OMB/CEQ/CEA Inter-agency during 27 Sept 2010 Conference Call on the 

NOI and TAR

This document contains a response to the action items EPA and NHTSA heard as a result of the Sept 27 

conference call.

1. Can the Agencies commit in the NOI to examining as one of the alternatives for an NPRM 

standards which maximize net social benefits?

Agencies Response: See suggested text insert for the NOI in response to request #2.

2. Could the Agencies in the NOI state for the NPRM, when a full rulemaking assessment is 

performed which is consistent with EISA statutory requirements the agencies will consider 

stringencies outside of the range of 3 to 6% per year, for passenger cars and/or truck standards.

Agencies Response: The agencies will add the following highlighted text to section II.A.4 of the 

NOI

“The agencies emphasize that the analysis presented in this notice, while reasonable for 

conducting an initial assessment, is a first step. Much more work must be completed for the 

upcoming NPRM. As noted above, we expect to issue updated assessments by November 30 of 

this year. The upcoming rulemaking to develop the next phase of the National Program will be 

based on a full analysis that is consistent with both the statutory framework that NHTSA must 

account for, and the flexibilities that EPA may account for, just as the detailed analysis for the 

MYs 2012-2016 was conducted.1 For purposes of this initial assessment, the agencies examined 

stringencies in the 3% to 6% per year range. However, the agencies have not reach any 

conclusions at this time regarding the appropriate level of stringency for MY 2017 and later, and 

the assessment presented in this Joint Notice does not preclude the agencies from considering 

standards outside of this range for the upcoming rulemaking. The future Joint NPRM will 

consider a number of alternative levels of stringency, including an alternative which is estimated 

to maximize net benefits While the single fleet analysis approach simplifies some aspects of 

the analysis and offers some advantages, there are also important limitations which will be 

addressed during the rulemaking process.”

3. In the NOI, can the agencies include language making it clear that the TAR assessment does not 

meet all of the EISA statutory requirements?

 

1

For further information on the kinds of comprehensive analyses performed for the MYs 2012-2016 rulemaking, see

75 Fed. Reg. at 25348-396.
EPA and NHTSA Document – Deliberative Process- Do Not Cite or Quote

Agencies Response: This issue is discussed in the last paragraph of Section II.A.1, the last two 

paragraphs of Section II.A.2, and the three paragraphs of Section II.A.4. To provide additional 

clarification, the agencies will add an additional statement in Section II.A.2:

“In the full analysis for the rulemaking, as required by EPCA/EISA and as permitted by the 

CAA, the agencies will make more refined assessments, including separate analyses for car and 

light truck vehicle fleets, year-by-year attribute-based standards, and manufacturer-specific 

estimates of potential attribute-based standard targets and costs, and other statutory 

requirements. The agencies note that consideration of these statutory factors may affect the 

potential range of standards. NHTSA and EPA also will perform a more thorough assessment of 

the impacts of proposed standards, as was done for the MY 2012-2016 rulemaking, including 

analysis of improved energy security, monetized benefits of CO2 reductions, co-pollutant 

impacts, an assessment of the societal costs and benefits of potential standards, an assessment 

of potential safety impacts, an assessment of impacts on automobile sales and related 

employment, and other relevant impacts.”

4. In Chapter 5 of the TAR, can the agencies identify which of the existing 2012-2016 flexibilities 

are considered in the Chapter 6 analysis, and which are not?

Agencies response: The Agencies will discuss with the California Air Resources Board (CARB)

adding the following text to the introduction to Chapter 5. EPA and NHTSA have no reason to 

believe CARB will not concur with this insert, but as a co-author of the TAR we need to check 

with them.

“This Chapter includes three sections. Chapter 5.1 provides an overview of the 

regulatory flexibilities and incentives contained in the MYs 2012-2016 final rule for the National 

Program. Chapter 5.2 includes a discussion of the potential regulatory flexibilities and incentives 

for MYs 2017 and later which the agencies received input on during our meetings with 

stakeholders. Chapter 5.3 contains a summary of the non-regulatory incentives which the 

agencies received input on during our meetings with stakeholders. We note that some of the 

flexibilities discussed in this Chapter were used in our analysis of future scenarios in Chapter 6, 

though not all. As a result, when EPA and NHTSA undertake analysis for the upcoming federal 

rulemaking, we would not project additional per-vehicle cost reduction potential attributable to 

the flexibilities that have already been used to the current analysis. Chapter 6 contains a 

detailed discussion of the flexibilities we considered in the analytical assessment.”
EPA and NHTSA Document – Deliberative Process- Do Not Cite or Quote

5. Regarding learning curves, is there a citation for the use of the “time-based learning”? If not, 

can the agencies revert to the use only of the volume-based learning?

Agencies Response: As discussed in the 2012-2016 final rule, “time-based” and “volume-based” 

learning are the phrases EPA and NHTSA have used to implement manufacturing learning-bydoing cost reductions. There is no separate economic theory which needs to be cited, they are 

the same observed phenomenon. In addition, the agencies note that the following language 

which is already in the TAR in Chapter 3.2.7

“3.2.7. Costs Effects due to Learning

The agencies have also reconsidered learning effects. For this assessment, we continue to 

employ both volume-based and time-based learning effects. Volume-based learning is 

estimated to result in 20 percent lower costs after two full years of implementation (i.e., a 2014 

MY cost would be 20 percent lower than the 2012 and 2013 model year costs for a new 

technology being implemented in 2012). Time-based learning is estimated to result in 3 percent 

lower costs in each year following first introduction of a given technology. Once two volumebased learning steps have occurred (for technologies having volume-based learning applied), 

time based learning would begin. For technologies to which time based learning is applied, 

learning would begin in year 2 at 3 percent per year for 5 years. Beyond 5 years of time-based 

learning at 3 percent per year, 5 years of time-based learning at 2 percent per year, then 5 at 1 

percent per year become effective. Going forward, the agencies intend to investigate industry 

learning curves in more detail and whether time based learning should continue to be applied 

indefinitely, or whether cost reductions due to learning should go to zero after some period of 

time. The learning curve used in this assessment may be modified for the rule making.”

6. In the NOI, can the agencies check to see if the use of the pathways as one means to consider 

uncertainties is identified?

Agencies response: This issue is discussed in Section II.A.1 of the NOI, in the paragraph above 

the bullet-listing of the four technical pathways.