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## 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 str ike

- 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	edi t s imp rove	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. 

### I **nteragency	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 anal ys is because the agencies recognize that there are a 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 pay back 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 anal yz ed tw o different baselines for our centeral anal ys is. We seek comment and data on whether there is empirical evidence the agencies should consider on this topic for our anal ys is for use in the final rule. Due to a current lack of empirical evidence and the associated uncertainty , the agencies have al so performed sensitivity anal ys is with alternative baseline scenarios for HD pickup and vans . T his sensitivity anal ys is 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 pay back periods, and which c ould affect the baseline ; such as unaccounted benefits, costs and operational complexities and risks borne b y vehicle builders, purchasers, and/or operators. To the extent any of these ar e factors that impact the projection of the baseline, the agencies specificall y s eek 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. Heav y- dut y vehicle manufacturers have reported that their customers’ purchasing decisions are*** E.O. 12866 Review

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influenced b y their customers’ own determinations of min imum total cost of ownership, which can be unique to a particular customer’s circumstances. For example, some customers (e.g., less

than

- truckload or package delivery operators) operate their vehicles within a limited geographic region and typicall y own th eir 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 b y their ability to b etter control their own maintenance costs, and thus they can afford to consider fuel efficiency technologies that have longer pay back periods, outside of the vehicle manufacturer’s warranty period. Other customers (e.g. truckload or long

- haul operators) te nd 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 ye ars, so that they t ypically do not have to pay

for repair and maint enance 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

pay back 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 manufacturer s , p urchasers of HD pickups and vans wanting better fuel efficiency tend to demand that fuel consumption improvements pay back within approximately one to three years . Pay

back periods vary

across purchasers of HD pickups and vans for a variet y of reasons, including the fact that, but some HD pickup and van owner s accrue relatively few vehicle miles traveled per ye ar, 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 imp rovements. Regardless of the type of customer, their determination of minimum total cost of ownership involves the customer balancing their own unique circumstances with a heav y- dut y vehicle’s initial purchase price, availability of credit and lease option s, expectations of vehicle reliability , resale value and fuel efficiency technology

pay back periods. The degree of the incentive to adopt additional fuel efficiency technologies also depends on customer expectations of future fuel prices, which directl y i mpacts customer pay back periods. There is anecdotal evidence that p P urchasing decisions are not based exclusively on pay back period, but also include the considerations discussed above and in Section X.A.1. For the baseline analysis, the agencies use pay

bac k period as a proxy

for all of these considerations, and therefore the pay back period for the baseline anal ys is is shorter than the pay back 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.