*** E.O. 12866 Review – Do Not Cite, Quote or Release During Review ***

EPA and NHTSA Responses to Interagency Comments on 

HDV Phase 2 NPRM Preamble Received on June 4, 2015

Agencies	Responses:		E.O	12866	suggested	edits	are	shown	in	red	type	and	red	strike-out.	The	

agenices	accept	the	changes	as	shown	below	and	will	incorporate	several	additional	text	changes	

which	are	shown	in	tracked	changes.	We	believe	the	additional	edits	improve	the	accuracy	and	

clarity	of	the	text.

Summary of working interagency draft comments on EO 12866 and EO 13653 review of EPA/DOT 

Heavy Duty GHG/fuel efficiency NPRM. Subject to further policy review.

Interagency	Working	Comments	on	U.S.	Environmental	Protection	Agency	(EPA)	and	

National	Highway	Traffic	Safety	Administration	(NHTSA)	draft	proposed	rule	titled,	

“Greenhouse	Gas	Emissions	and	Fuel	Efficiency	Standards	for	Medium- and	Heavy-Duty	

Engines	and	Vehicles	- Phase	2.”	RIN	2060-AS16;	RIN	2127-AL52	

Reference Case/ Baseline text in Chapter 1: 

*** 

The agencies chose to analyze these two different baselines for our central analysis because the 

agencies recognize that there area number of factors that create uncertainty in projecting a 

baseline against which to compare the future effects of the proposed action and the remaining

any alternatives. The chosen baselines range from assuming zero improvements across all 

vehicle categories except trailers to assuming that for certain truck categories manufacturers will 

adopt technologies that have a payback of 6 months or less. The discussion below and Section 

X.A.1 of this Preamble and Chapter 11 of the Draft RIA present the agencies’ reasons for 

selecting these baselines. The agencies note there is a lack of empeirical evidence in the literature 

on this topic, which in part is why we have analyzed two different baselines for our centeral 

analysis. We seek comment and data on whether there is empirical evidence the agencies should 

consider on this topic for our analysis for use in the final rule. Due to a current lack of empirical 

evidence and the associated uncertainty, the agencies have also performed sensitivity analysis 

with alternative baseline scenarios for HD pickup and vans. This sensitivity analysis is presented 

in Section VI.D.6 of the Preamble and Section 10.2.2.4 of the draft RIA. The agencies also seek 

comment on other factors that may not be included in calculations of payback periods, and which 

could affect the baseline; such as unaccounted benefits, costs and operational complexities and 

risks borne by vehicle builders, purchasers, and/or operators. To the extent any of these are 

factors that impact the projection of the baseline, the agencies specifically seek comment on how 

to account for these additional factors when developing the regulatory baseline for the final rule.

The composition of the future fleet—such as the relative position of individual manufacturers 

and the mix of products they each offer—cannot be predicted with certainty at this time. 

Additionally, the heavy-duty vehicle market is diverse, as is the range of vehicle purchasers. 

Heavy-duty vehicle manufacturers have reported that their customers’ purchasing decisions are 
*** E.O. 12866 Review – Do Not Cite, Quote or Release During Review ***

influenced by their customers’ own determinations of minimum total cost of ownership, which 

can be unique to a particular customer’s circumstances. For example, some customers (e.g., lessthan-truckload or package delivery operators) operate their vehicles within a limited geographic 

region and typically own their own vehicle maintenance and repair centers within that region. 

These operators tend to own their vehicles for long time periods, and sometimes for the entire 

service life of the vehicle. Their total cost of ownership is influenced by their ability to better 

control their own maintenance costs, and thus they can afford to consider fuel efficiency

technologies that have longer payback periods, outside of the vehicle manufacturer’s warranty

period. Other customers (e.g. truckload or long-haul operators) tend to operate cross-country, and 

thus must depend upon truck dealer service centers for repair and maintenance. Some of these 

customers tend to own their vehicles for about four to seven years, so that they typically do not 

have to pay for repair and maintenance costs outside of either the manufacturer’s warranty period 

or some other extended warranty period. Many of these customers tend to require seeing 

evidence of fuel efficiency technology payback periods on the order of 18 to 24 months before 

seriously considering evaluating a new technology for potential adoption within their fleet (NAS 

2010, Roeth et al. 2013, Klemick et al. 2014). Based on the agencies’ discussions with 

manufacturers, purchasers of HD pickups and vans wanting better fuel efficiency tend to demand 

that fuel consumption improvements pay back within approximately one to three years. Payback 

periods vary across purchasers of HD pickups and vans for a variety of reasons, including the 

fact that, but some HD pickup and van owners accrue relatively few vehicle miles traveled per 

year, such that they may be less likely to adopt new fuel efficiency technologies, while other 

owners who use their vehicle(s) with greater intensity may be even more willing to pay for fuel 

efficiency improvements. Regardless of the type of customer, their determination of minimum 

total cost of ownership involves the customer balancing their own unique circumstances with a 

heavy-duty vehicle’s initial purchase price, availability of credit and lease options, expectations 

of vehicle reliability, resale value and fuel efficiency technology payback periods. The degree of 

the incentive to adopt additional fuel efficiency technologies also depends on customer 

expectations of future fuel prices, which directly impacts customer payback periods. There is 

anecdotal evidence that pPurchasing decisions are not based exclusively on payback period, but 

also include the considerations discussed above and in Section X.A.1. For the baseline analysis, 

the agencies use payback period as a proxy for all of these considerations, and therefore the 

payback period for the baseline analysis is shorter than the payback period industry uses as a 

threshold for the further consideration of a technology. The agencies request comment on the 

appropriateness of these reference cases. See Section X.A.1of this Preamble and Chapter 11 of 

the draft RIA for a more detailed discussion of baselines.