Summary of Interagency Working Comments Received on Draft Rule under EO 12866 and EO 13563

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### Below is a summary of interagency comments received during EO 12866 and EO 13563 review of the draft final rule establishing GHG emissions standards and fuel efficiency standards for medium and heavy duty trucks. They are for yo ur consideration and su bject to further policy
review.

1) Probabilistic Uncertainty Analysis OMB Circular A-4 states, “For major rules involving annual economic effects of $1 billion or more , you should present a formal quantitative analysis of the relevant uncerta inties about benefits and costs. In other words, you should try to provide some estimate of the probability dist ribution of regulatory benefits and costs. In summarizing the probability distributions, you sh ould provide some estimates of the central tendency (e.g., mean and median) along with a ny other information you think will be useful such as ranges, variances, specified low-end and high-end percentile estimates, and other characteristics of the distribution.”

The RIA does not include a formal probabilistic uncertainty analysis. Please provide this analysis.

2) Estimates of costs and benefits

Several reviewers had concerns about the timel ine used to estimate the rule’s costs and benefits. Costs and benefits of model year 2014 to 2018 standards have been estimated for every year from 2012 to 2050 as if the 2018 stan dards remain in place for model years through 2050. This results in th e aggregate estimates of cost s and benefits being largely driven by long-term values (i.e., beyond 2020) a ssociated with the impa cts of the standards on trucks manufactured decades in the future . However, both costs and benefits are measured against a baseline fuel economy asso ciated with MY 2010 vehicles that is assumed to remain constant through 2050. The selection of a constant baseline is problematic for estimating long-term costs and benefits, particularly given assumptions about declining technology costs and increasing fuel prices. For example, if hist orical trends in fuel economy improvements continue into the future, there shou ld be a point at which, even in the baseline, vehicles would exceed the standards proposed he re. In such a case, the standards would become non-binding, and, beyond that point in time, the program would neither impose costs nor produce benefits.

More generally, given that the question at hand relates to the merits of standards for MY 2014 to MY 2018, and the standards will almost cer tainly be revisited in response to new information in future years, the results of anal ysis of these standards should not be driven, as they currently are, by estimates of the standard s’ effects on trucks manufactured decades into the future.

In light of the above, commenters suggest th at EPA and NHSTA re-evaluate the approach taken to presenting estimates of costs and benefits , and shift the focus of this analysis to theSummary of Interagency Working Comments Received on Draft Rule under EO 12866 and EO 13563

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### near- and medium-term costs and benefits of the rule. Commenters recommend that agencies estimate costs and benefits for only MY 2014 to MY 2018 trucks, over their estimated useful lifetimes. Presumably, this would not require new analysis, but rather simply altering what is drawn from the existing analysis to present in the preamble and RIA.

This rule’s primary direct effect will be on the emissions and fuel economy of MY2014 to MY2018 vehicles, and the standards can be ad justed for subsequent model years. Consequently, as a matter of good regulator y analysis, commenters recommend that the agencies focus their analysis of the rule’s costs and benefits on its implications for MY2014-
2018 vehicles alone. Given that most of the trucks contributing to the 2030-2050 net benefit results will presumably be post-2018 model year trucks, a discussion of the rule’s overall
net benefits from 2030 onward seems to be an unnecessary distraction. Commenters note that the agencies selected the standard s based on their implications for MY2014-MY2018 trucks, not based on the implications of the standards if they we re to remain in place through 2050. The regulatory analysis should th erefore reflect this focus.

3) Annualized Estimates of Costs and Benefits using Model Year 2014-2018 analysis. Commenters also recommend that agencies in clude summary tables of annualized costs and benefits using 3 and 7% disc ount rates using model year 201 4-2018 analysis. Please include these tables in the summary of the Preamble and the RIA.

4) Averaging, Banking, and Trading Provisions

Regarding the averaging, banki ng, and trading provisions (Sec tion IV. A of the preamble), EPA/NHTSA have increased the flexibility of th ese provisions relative to the proposed rule. However, the agencies are maintaining so me restrictions on averaging and trading, specifically those between vehicl e weight classes and between engine subcategories. In explaining their rationale for restricting av eraging and trading between vehicle weight classes and engine subcat egories, the agencies ma ke two key arguments.

The first of these two arguments is economic in nature (pp. 255 – 256):

“a manufacturer that produces both engines and heavy-duty highway vehicles could mix credits across engine and vehicle categories to gain an advantage over competitors that are not integrated. Limiting credit ABT to within each engine averaging set and not allowing it between engines and vehicles wi ll help prevent a competitive advantage dueSummary of Interagency Working Comments Received on Draft Rule under EO 12866 and EO 13563

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### solely to the regulatory structure. Si milarly, large volume manufacturers of engines could shift credits between heavy heavy-duty diesel engines and li ght heavy-duty diesel engines to gain an advantage in one sub category over other manuf acturers that may not have multiple engine offerings over several regulatory engine subcategories.”

a) Interagency commenters have c oncerns about this language on several levels, and raised concerns about similar language in early versio ns of the draft proposed rule before that language was rephrased to make clear that it re flected views of industry participants and not necessarily views of the USG. Commenters request clarity on why the agencies are endorsing this view and request that age ncies provide basis for this concern. Commenters note that not all industry participants raised this concern.

b) Further, the agencies’ concern about not creati ng “a competitive advantage due solely to the regulatory structure” coul d actually argue strongly against limiting trading as the agencies have proposed. Specifically, relative to allo wing more flexibility, limiting averaging and trading necessarily increases the cost of compliance for cer tain high-cost manufacturers within an “averaging set”. Therefore, by for eclosing averaging and trading across averaging sets, to the extent that ther e are particular manufacturers th at are technology leaders in a particular averaging set, the proposed restric tions will effectively raise the compliance costs
of those manufacturers’ rivals to a greater extent than would occur if broader trading were allowed. In turn, this will provide a great er, regulatory-induced competitive advantage to such manufacturers, and will a dversely affect consumers too. In light of this concern that the proposed approach could work at cro ss purposes with the agencies’ goal of avoiding adverse effects on competitio n and consumer welfare, commenters recommend that the agencies give further cons ideration to the ultimate effects of their proposed restrictions on averaging and trading.

c) The second argument that the agencies ma ke to support their position is that: “[trading/averaging] credits between averag ing sets of engines would be problematic because of the differences in regulatory usef ul lives. The agencies want to avoid having credits from longer useful life categories fl ood shorter useful life categories, adversely impacting compliance with the final CO 2 

### and fuel consumption standards in the shorter useful life category.” (p. 256) Can the agencies clarify why this concern about trading of credits associated with different regulator y useful lives could not be addressed bySummary of Interagency Working Comments Received on Draft Rule under EO 12866 and EO 13563

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### simply incorporating informat ion on regulatory useful life in determining how many credits are awarded for each regul ated engine or vehicle type?

5) Upstream emissions.

Commenter notes that if the obj ective of the rule is to redu ce national GHG emissions as the agencies claim in this Preamble and RIA, th en commenters strongly recommend that future
EVs or other related electric technologies etc be responsible for the national average GHG emissions from electric power generation. Pleas e revise rule and discussion accordingly.

6) Advanced Technology Credits

Both for its direct implications in this rule and for its precedential implications, commenters would appreciate additional clarity from the agencies regarding how they settled on the chosen crediting multiplier and limits on credit use for advanced technology credits.

7) Analysis of Alternatives

Regarding the analysis of alternatives, the ag encies have partially responded to previous interagency comments during proposed rule phas e and have added to the RIA and preamble
tables that summarize the monetized net bene fits of each alternativ e for the lifetime of MY2014-2018 vehicles (Tables 6-22 and 6-23 on page s 6-16 and 6-17 of the RIA, and tables IX-4 and IX-5 in the preamble). Commenters ar e pleased that the agencies have added this information. However, commenters are concer ned that the numbers presented may not have been calculated correctly, given some puzzli ng results contained in those tables.

In particular, one table presents results with monetized net benefits calculated at a 3%
discount rate while the other tabl e uses a 7% discount rate. In comparing the two tables, and focusing only on the first two lines of results fo r truck program costs and fuel savings, it can be seen that the change from a 3% discount rate to a 7% discount rate reduces monetized program costs by about 60%, whereas monetized fuel savings decline by only about 30%. This result is counterintuitive, given that the program costs for MY2014-2018 trucks will be almost entirely near-term capita l costs whose monetized NPV should not be significantly affected by a change in discount rate. On th e other hand, fuel savings accrue over a longer timeframe and so should be more (not less) a ffected by the choice of discount rate. The numbers also appear to be inconsistent with similar es timates for only the preferred alternative that appear in preamble tables VIII-34 and VIII-35.Summary of Interagency Working Comments Received on Draft Rule under EO 12866 and EO 13563

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### Commenters recommend that the agencies check the data underlying tables 6-22 and 6-23 of the RIA (IX-4 and IX-5 of the preamble), and provide the interagency reviewers with updated, corrected versions. If possible, plea se provide more detailed data underlying the

table to ensure that the numbers are accurate.

8) Also regarding the analysis of alternatives, while tables 6-22 and 6-23 (once corrected) will allow for a comparison of the monetized net benefits of an overall alternative in aggregate across all model years, the tables present aggregate information on the entire set of regulatory subcategories (e.g., ve hicle weight classes) and for all model years included in the rulemaking. However, the RIA does not cu rrently present net benefit calculations for the alternatives with respect to individual su bcategories or model years, which would allow
reviewers to establish that the selected regulatory alternative was the one that maximizes net benefits for each subcategory (e.g., pickups a nd vans, vocational vehicles, and combination tractors) and model year. During review of th e proposed rule, agencies requested that this information be added to the RIA, given that the agencies have flexibility with respect to the choice of standards for each model year and for each regulatory subcategory.

Commenters request that the agencies provide versions of Tables 6-22 and 6-23 for each subcategory and model year (2014-2018).

9) Accounting for Uncertainty in An alysis of the Alternatives

The agencies note that, whereas Alternatives 2 and 3 (the preferred al ternative) are believed to be achievable in the proposed timeframe, Alternative 4 (the next most stringent alternative) could have far higher costs b ecause agencies “do not believe that these technologies can be developed and introduced in the timeframe of this rulemaking.” Effectively, the agencies are arguing that there is a “knee” in the cost curve and that they have chosen the stringency just to the left of that knee.

Commenters request agencies to provide a full probabilistic uncerta inty analysis. In addition, to the extent that the agencies beli eve that a knee in the cost curv e exists just beyond the preferred alternative, as they have sugge sted, commenters suggest that the agencies at least provide some discussion of the implications of cost uncerta inty for the expected value of its preferred alternative, versus Alternative 2, the less stringent alternative.Summary of Interagency Working Comments Received on Draft Rule under EO 12866 and EO 13563

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### Specifically, if the exact location of the knee in the cost curve is unknown, then the expected cost of the preferred alternative (A lternative 3), taking into acc ount this uncertainty, could be considerably higher than the most likely cost, as forecasted by the agencies. By contrast, as Alternative 2 is further to the left from that knee, this cost uncertainty will have less of an effect on the expected cost of Alternative 2, relative to its most likely cost as projected by the agencies. This has important implications for not only the net benefits of Alternative 3, but also for the
relative merits of Alternatives 2 and 3. Comm enters would appreciate th e agencies’ views on the implications of cost uncertainty for the expect ed cost of, and their choice of, the preferred alternative, given the apparent knee in the cost curve just beyond Alternative 3. Further, commenters recommend that the agencies include a discussion of the im plications of cost uncertainty, in light of this knee in the cost curve, in the preamble and RIA.

10) The text in preamble section IX, p. 491, incorrec tly references Table 2.35 in the RIA. The
correct table is 2.36 in the RIA. Several table references in th e text in Chapter 2 of the RIA are incorrectly numbered.

11) The RIA defines the No-Action Option as an alte rnative. The presentation would be clearer (and more accurate) if this discussion was framed as a discussion of the choice of baseline for analysis. This might be particularly true given that the section di scusses two alternative baselines. If the exposition followed this form at, it would facilitate la ter analysis of the alternatives considered in comparison with these baselines. Commenters hence suggest removing lines for Alternative 1 (and 1a) from Tables 6-19 through 6-23.

12) Commenters recommend that the costs and emi ssions for the proposal and the alternatives be presented relative to each of the baseli nes. Commenters recommend that the agencies analyze the costs and benefits of the AEO 2011 Baseline as well. Please include these in the RIA and preamble. s

13) Commenters recommend a fuller explanation of why agencies cannot rely upon market effects to solve this problem when fuel savings of the program are estimated to be five times the cost of the program.

14) Commenters recommend that the agencies incl ude fuel savings in the benefits category throughout the entire Preamble and RIA tables and discussion. Please make this change.

15) RPE and Learning curve : Please discuss the rationale for deviating from the NAS recommendation on RPE. Also, please provide evidence for the time learning curve used inSummary of Interagency Working Comments Received on Draft Rule under EO 12866 and EO 13563

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### the analysis. Given that the regulation doesn’t appear to be very technology forcing, please provide evidence for taking 2 learning curve disc ounts, which serves to lower the cost of the rule and is in total is a more aggressive learning curve then the agencies have used in the past. Please clearly present the costs with and without lear ning discounts (probably in a tabular form would be the best). Also, how we re the fixed costs spread over the relevant trucks/trailers?

16) Tires: How does this NPRM affect the retreading of tires? Is ther e any weather-related safety concern with reduced tire rolling resistance?

17) Time value associated with reduced refueling: How many refills in th e baseline? What is the assumed time saved per refill?

18) Many commenters request that agencies remove reference to the GDP analysis (memo to docket on “economy-wide modeling..”) from the Preamble and the RIA.

19) The RIA does not include a market failure disc ussion. Without this discussion, the agency has no compelling reason to characterize private fuel savings that accrue to firms as social
benefit.

20) Baseline

 Commenters request a better unde rstanding of how SmartWay is projected to affect the baseline? The current discussion states that SmartWay has “saved 1.5 billion gallons of diesel fuel as well as $3.6 bill ion in fuel costs” (p. 1-34).

 What is the baseline fuel consumption assumed?

 What is the fleet make-up assumed?

 Commenter recommends that the “No action” alternative be moved to the baseline discussion.

21) Effect of the rule

 Will this rule and standards established affect the fleet make-up? If so, how does this affect the benefit and cost estimates?

o NAS Report makes three findings regarding fleet make-up:

 Finding 6-12. Standards that differen tially affect the capital and operating costs of individual vehicle classes can cause purchase of vehicles that are not optimized for particular operating conditions. The complexity of truck use and the variability of duty cycles increase the probability of these unintended consequences.

 Finding 6-16. Some fuel efficien cy improving technologies will add weight to vehicles and push those ve hicles over federal threshold weights, thereby triggering new operational c onditions and affecting, in turn,Summary of Interagency Working Comments Received on Draft Rule under EO 12866 and EO 13563

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### vehicle purchase decisions. More re search is needed to assess the significance of this potential impact.

 Finding 6-17. Some fuel efficien cy improving technologies will reduce cargo capacity for trucks that are currently “weighed-out” and will therefore force additional trucks on the road. More research is needed to assess the significance of this potential impact. 22) Tire market discussion

 Commenter requests reference to discu ssion or including new discussion on the difference between rolling resistance vs. trac tion, and how this ru le will affect both.

 Commenter requests that the agencies pr ovide basis (e.g., cita tion, etc.) for the following: i. Baseline tires are assumed to have RRc=7.8 (steer) and 8.2 (drive) for combination tractors and RRc=9.0 for vocational vehicle. (Table 2-1) ii. The cost estimate of $7 (e.g., $1.75/tire) for Class 2b trucks and $10 (e.g., $2.5/tire) per Class 3 tr ucks/vans (p. 2-21). iii. EPA and NHTSA project a cost of $68 ($2009$) for low rolling resistance steer tires (2 per truck) for both Cl ass 7 and 8 tractor including a low complexity ICM of 1.18. For low rol ling resistance tires, the agencies estimate truck-based costs of $63 (2009$) and $126 (2009$) for Class 7 and 8 tractors, respectively, incl uding a low complexity of ICM of 1.18. (p. 2-51) What is the length of time for these cost estimates? Yearly? iv. Please explain the retread cost savings of $1600 to $2000 per tractor. (p. 2-54)

23) Alternatives: It looks like Alternative 4 (20% more stringent than preferred alternative) maximizes net benefits. Duri ng the EPA/NHTSA briefing, the ag encies explained that this Alternative is based on a bench-scale technology that is not commercially available. Given this technology constraint, commenters suggests that the agency provide an assessment of likelihood of fuel savings instead of the curr ently provided point esti mate. Same comment applies to the most stringent alternative. Al so, are the estimates provided incremental in
nature?

24) Please provide summary of all public comments to this rule. The Preamble does not include this and it must be part of the Preamble, not as a separate document as stated in Preamble. Please provide this full summary of comments.

25) How does learning affect the total cost estimate ? What is the projec ted cost without any learning?

26) Interagency commenters suggest that the ag encies remove the employment impacts discussion from the Preamble and the RIA. The discussion does not seem to add any value, and because it is speculative, commenters suggest it be removed.Summary of Interagency Working Comments Received on Draft Rule under EO 12866 and EO 13563

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### 27) Market Failure discussion from Preamble currently states:

“It is often asserted that there are cost-e ffective fuel-saving te chnologies that truck companies are not taking advantage of. This is commonly known as the “energy gap” or “energy paradox.” ”

The energy paradox is more broad than ju st for truck companies, so commenters recommend that the agencies phrase this as:

“It is often asserted that there are co st-effective fuel-savi ng technologies that markets do not

take advantage of. This is commonly known as the “energy gap” or “energy paradox.” “

Or,

“It is often asserted that there are cost-effective fuel-saving technologies that consumers fail to recognize, or that producers fail to incorporate into their products. This is commonly known as the “energy gap” or “energy paradox.” ”

28) Has EPA considered creating an incentive progr am so that consumers fully internalize the benefits of investing in fuel saving technology?

29) Commenter recommends deleting the following sentence on page 368 of the Preamble “The
NRC assessment is a clear affirmation th at the scientific underpinnings of the Administrator’s Endangerment Finding are robust, credible, a nd appropriately characterized by EPA. Commenters request this deletion b ecusae NAS did not review underpinnings and
do not mention these.

30) Commenters request the agencies to provide full citations of the discussion found from page 369 through 376. There are no citations provided and it is very unclear whether this language is pulled verbatim from a particular document or if it is original agency text. Unless they are direct quotes, citations are alwa ys needed for all stat ements of scientific
facts.

31) Commenter requests that the next to last sentence on page 373 read : “Thus, the potential impacts of climate change raise potential environmental justice issues, depending on direction of potential impact.”

32) Commenter recommends deletion of footnote 3 on page 5 because it is not necessary for rulemaking at hand.Summary of Interagency Working Comments Received on Draft Rule under EO 12866 and EO 13563

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### 33) Commenter requests evidence for the claim on pa ge 9 that “world crude oil production is highly concentrated, exacerbati ng the risks of supply disrupti ons and price shocks as the recent unrest in North Africa and the Persian Gulf highlights.”

34) 

### page 13. Commenter requests clarity from agen cies on why the following section is included in the Preamble. Please provide clarity on the relevance of these bene fits to the rulemaking
under current review: “As a result of these programs, new vehicles meeting current emission

standards will emit 98% less NO X and 99% less PM than new trucks 20 years ago. The resulting

emission reductions provide significant public health and welfare benefits. The most recent EPA regulations which were fully phased

‐ in in 2010, the monetized health and welfare benefits alone

are projected to be greater than $70 billion in 2030

– benefits far exceeding compliance costs and

not including the unmonetized benefits resulting from reductions in air toxics and ozone precursors (66 FR 5002, January 18, 2001).”



### 35) Are tons in g/ton-mile measured (and tested) at vehicle max capacity?

36) Page 23 table 1-2. Why is the high roof sleep er cab standard lower than the mid-roof?

37) Is maximum feasible the only condition in EISA or are there other cond itions to be met in setting standards?

38) It is not clear from Preamble what comments were received on safety impacts from tire rolling resistance assessment. Please summarize comments on this topic.

39) Page 88 regarding vehicle speed limiters. Are there any safety be nefits or time costs from vehicle speed limiters?

40) The agencies don’t seem to have responded to this point in the Preamble on page 124. Please provide response to this comment:

“That supplier also indicated that a correlation of a 20 percent reduction in rolling resistance

achieved through tread depth reduction could lead to a 30 percent decrease in tread

‐ life and 15

percent reduction in wet traction. The agencies note that when they inquired about potential ‘safety’ related tradeoffs, such as traction (braking and handling) and tread wear when applying

low rolling resistance technologies, tire suppliers consistently responded that they would not produce a tire that compromises safety when fitted in its proper application.”



### 41) Commenters recommend that the agencies either delete this section on page 327 or provide
basis for this claim. It seems to indicate that market works after regulation but not before. Is
it because of in-use standards? What is the basis for this? Commenters recommend it be
deleted:Summary of Interagency Working Comments Received on Draft Rule under EO 12866 and EO 13563

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11 “We believe that as LRR tires become more common on new equipment, the aftermarket prices of

these tires will also decrease. Along with decreasing tire prices, the fuel savings realized through

use of LRR tires will ideally provide enough incentive for owner/operators to continue purchasing

these tires. The inventory modeling in this final action reflects the continued use of LRR tires through the life of the vehicle.”



### 42) Commenters request further clarity on what th is means. Please elaborate from page 126 in
Preamble:

“The agencies concluded that although laboratory

‐ to

‐ laboratory and test machine

‐ to

‐ test machine

measurement variability exists, the level observed is not excessive relative to the distribution of

absolute measured RR C performance values and relative to the proposed standards. Based on this,

the agencies concluded that the test protocol and the proposed standards are reasonable for this program.”



### 43) Could EPA describe for the reviewer the proc ess for reviewing and vetting manufacturers’ submissions for extra credit under the provision for “innovative technologies?” How will the agency make use of public comment? Is there a threshold (in terms of potential GHG reductions) for awarding a manuf acturer credit for developi ng an innovative technology? This approach, while seemingly well-intentioned, would appear to run the risk of requiring an extremely large amount of manufacturer and EPA effort just to determine whether a new technological advance qualifies for credit unde r the program. Is there no simpler way to reward technological innovation?

44) 2. In several subsections th roughout Section V, the rule attempts to describe the requirements for final reports (pp. 298- 299, 317-319, 340-342, 356). The reader found these sections confusing because they did not clearly state whether EPA has acceded to commenters’ requests to modify the require ments for final reports. Are manufacturers allowed to combine EOY and final reports? Or is the NPRM propos al left unchanged?
Please describe the need for both of these re ports, and how manufacturers are supposed to comply.

Also, the subsection “Compliance Reports” a nd Table V-5 on pp. 356-357 appears to be out of place. It could be moved to p. 351, just before Section F on “General Regulatory
Provisions.”

45) What is EPA’s current thinking for when a nd how to update certification and compliance testing fees, given the additio nal demands as a result of this HD and MD trucks GHG rulemaking?Summary of Interagency Working Comments Received on Draft Rule under EO 12866 and EO 13563

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### 46) Page 281: In the first sentence of the paragraph that begins with, “Furthermore...” the verb
is recommended to be “ adopted .”

47) Page 316: The first sentence of the last paragraph could say, “EPA is requiring finalizing that engines...”

48) Page 317: The second sentence of the fourth paragraph could say, “These alternative
standards are defined as 65 percent below...”

49) Page 341: The first sentence in the third pa ragraph could say, “One commenter (Volvo) requested that the agencies simply simplify the reporting...”

50) Page 417: The first sentence of the third paragraph could say, “...however, that the gap between actual investment in fuel efficiency...”

51) Page 484: This sentence appear s twice in the firs t paragraph: “The petroleum refinery industry employed about 65,000 people in the U.S. in 2009, the most recent year that employment estimates are available for this sector.”

52) Page 489: Commenter suggests removing: “Given job creation as a resu lt of the $1.2 billion ($2009) in fuel savings...”

53) Commenter notes that the language in the pr eamble at p.34 (“Each declaration must be submitted in writing to EPA as prescribed in Section V below, and a manufacturer would not be considered exempt until EPA and NHTSA have made a formal determination as to their status in writing.”) is inconsistent with the plain reading of the text of the rule (“Manufacturers meeting the small business crit eria specified for “Gasoline Engine and Engine Parts Manufacturing” or “Other Engine Equipment Manufacturers” in 13 CFR 121.201 are not subject to the greenhouse gas emission standards in § 1036.108. Qualifying manufacturers must notify the Designated Compliance Officer before importing or introducing into U.S. commerce excluded engi nes. This notification must include a description of the manufactur er’s qualification as a sma ll business under 13 CFR 121.201. You must label your excluded vehicles with the statement: “THIS ENGINE IS EXCLUDED UNDER 40 CFR 1037.150(c).” in order for this excl usion to be valid.”) or language in other places in the preamble. This seems not to be a “clarification” but a substantive change to the requirements. Interagency commenter r ecommends allowing the exemption to operate by notice. If formal determinations are to be required, commenters recommend that the agencies allow exemption by notice to operate while formal determination is pending, and the agencies commit to a timeframe for res ponse and a process for appeal to SBA for aSummary of Interagency Working Comments Received on Draft Rule under EO 12866 and EO 13563

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### determination (since it is an SBA regulation being applied). In any case, interagency commenter believes that a single mention of this new requirement is not sufficient notice to small businesses, particularly given the number of other places in the preamble and the rule where the small business exemption is discusse d without mentioning su ch a requirement.

54) Interagency commenter also has concerns about the indirect effects of this rule on small entities that purchase HD vehicles. Small busin esses have asserted that the increase in the price of HD vehicles will lead to delays in purchasing replacement vehicles, which would reduce the expected benefits of GHG emission st andards in any particular year. Logically, delay makes sense. Small entities will experi ence an increase in the immediate purchase price. If funded on credit, lenders do not n ecessarily increase credit availability based on future fuel savings. (The anal ogy is that a bank did not increase the amount it was willing to lend someone for a mortgage simply becau se the homeowner was going to buy a house
close to the Metro or because the house had double-paned wi ndows.) If self-financed, investments would be delayed if on a fixed budget for capital outlays. Only firms large enough to have a continuous capital investment cycle will be able to monetize the fuel savings and incorporate the fuel savings into their investment stream . In addition, firms that buy new and re-sell after a few years can m onetize fuel savings thro ugh the sale price of
the used vehicle. Firms that use the vehicl e through its useful life don’t have that option. Since small firms cannot easily monetize future fuel savings, the increased cost of HD
vehicles should lead to a reduction in sales. Incorporating this reduc tion in sales into the analysis would reduce the projected benefits of th e rule. This is a separate effect from the
“rebound” effect. There is a furt her disincentive to purchase new vehicles if they have VSLs implemented or have other technologies installe d that may limit the useful life or carrying load. However, the RIA asserts that there will be an increase in sales. What is the agencies’
basis and evidence for claim that rule will increase sales?

55) Commenter requests supporting analysis for incr ease in sales. What portion of the costs
and benefits of this rule are dr iven by this increase in sales? Have the agencies responded to the assertion by independent truckers that fleet turnover will be delayed by this rule? If so, please provide specific page numbers? If not , commenter requests clarity on why it is missing.

56) Commenters request clarity on whether the eff ect of human drivers has been incorporated into the expected benefits. Industry and the agencies readil y acknowledges that the mostSummary of Interagency Working Comments Received on Draft Rule under EO 12866 and EO 13563

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### effective fuel efficiency technology is driver training, and that a well- trained driver can be more fuel efficient than any one of the technolo gies alone. Presumably, that also means that
a well-trained driver will be able to use a ve hicle in a way that negates the fuel economy benefits of this rule in favor of power, spee d, or both. Similarly, if a choice of tires can improve fuel economy, replacement with a differe nt set of tires will reduce fuel economy. Do the agencies incorporate a hum an factor into their analysis?

57) Commenter suggests that the agenci es clarify in the rule summary when these standards apply during the lifetime of HD vehicles. In other words, an explanation that the EPA standards apply to both new and “in use” ve hicles and how this works. Commenters recommend that agencies also clarity on pg. 50 (“What Vehicles Would be Affected?”)

58) Commenters recommend that Pg. 8 clarify th at, while NHTSA’s standard will not cover RVs, EPA’s will cover them.

59) When California is mentioned on pg. 9-10, it would be helpful to provide a quick explanation of the fact that Ca lifornia has unique authority to se t emission standards. Also, if the agencies consulted with other states besi de California, it may be worth mentioning this outreach here as well.

60) Pg. 12 – This may be confusing: “While we are deferring action toda y on setting trailer standards, the agencies are committed to m oving forward in a timely manner to create a complementary regulatory program for trailers.” To the extent possible, the agencies are recommended by commenters to clarify what is meant by moving forward on a complementary regulatory program for trailers.

61) Clarifying question: Do the agencies have a timeline in mind for setting standards for trailers? Will the industry and other stakehol ders be surprised by what seems to be a commitment to set trailer standards before th e next phase of the national HD program (pgs. 12 and 500)?

62) Pages 25-29 summarizing the standards for heavy-duty pickup trucks and vans do not include a chart or paragraph that lists the actual standards. For consis tency with the sections that precede and follow on tractor trailers and vocational vehicles, commenter suggests adding this missing piece.Summary of Interagency Working Comments Received on Draft Rule under EO 12866 and EO 13563

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### 63) The summary of costs and benefits (pgs. 35-38) would benefit from greater up-front clarity about what is and is not include d in the overall estimates of co sts and benefits. Also, Table I-4 could explain more clearly what is incl uded in “benefits” (why is fuel savings not included, for example). Table I-4 is also conf using, because “net bene fits” cannot be easily derived from the benefit and cost nu mbers listed within that column.

64) The summary section on “Program Flexibilit ies” (beginning on pg 38) does not clearly discuss the rule’s provisions that would allow manufacturers to carry forward credit deficits (the flip side of banking) a nd would benefit from additional discussion. Please include this discussion.

65) Pg. 115-116: Commenter suggest s revising the explanation fo r the agency’s selected approach to account for FFVs. The current explanation that the light duty program’s 2012- 2015approach is not appropriate because “the HD sector doe s not have the incentives mandated in EISA for light-duty FFVs, and so ha s not relied on the exis tence of such credits in devising compliance strategies for the ear ly model years of this program” is not particularly powerful and is somewhat confusin g. Commenters instead recommend that the agencies simply explain how the chosen accounting approach demonstrate fuel use and associated GHG emissions is logi cal and benefits low-GHG fuels.

66) Clarifying questions : Pg. 116 explains that NHTSA will determine fuel consumption of dedicated alternative fuel vehicles using th e DOE petroleum equivalency factor. How will EPA determine GHG emissions of dedicated al t fuel vehicles? Why did NHTSA opt for using the PEF rather than methodology similar to the approach used for natural gas vehicles (deriving a fuel equivalency based on CO2 em issions)? Does the DOE-derived PEF include the 0.15 conversion factor incentive that the agencies reject using for NGVs on pg. 264?

67) Pg. 264. The discussion of NGVs (first full paragraph on pg. 264) includes a reference to FFVs, which seems to be a typo.

68) The description of early credits (beginning on pg. 265) touches a few times on the concerns about providing windfall cred its to companies with low baseline emissions/consumption levels. Commenter suggests that the agencies explain more clearly a nd succinctly here why the early credit program being finalized will not provide windfall credits.

69) Clarifying question: Did the agencies do any analysis or rough calculations as the basis for concluding that providing a 1.5 multiplier for early credits would generate enoughSummary of Interagency Working Comments Received on Draft Rule under EO 12866 and EO 13563

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16 

### additional early reductions (be yond BAU) to outweigh the loss of GHG/efficiency benefits that will be created by adding extra credits to the program?

70) Pg. 269-270 – On the issue of how electricity-rel ated emissions of EVs should be treated, commenters strongly reco mmend that the agencies includ e non-tailpipe emissions for the purpose of setting standard and for compliance as well.

At the very least, commenter believes it is important to preserve options for future rulemakings and to avoid the impression th at EPA/NHTSA have already made up their minds about how non-tailpipe emissions should be treated going forward. While the last sentence in the paragraph at the top of pg. 270 (“We also recognize that the ongoing EPA/NHTSA rulemaking...”) accomplishes this goal, the preceding sentence seems to go too far in signaling the agencies inclinati on to deal only with tailpipe emissions by referencing “consistency with past practice...whereby we treat all vehicles equally.” Commenter suggest revising this sentence to a void signaling that any other approach would not be viewed as treating all ve hicles equally (and to clarify th at counting EVs as 0 g/mile is to provide an incentive for advanced technologies, which th e agencies have said previously in the light duty context).

52) Page 10 (and in RIA where appropriate): commenters provide suggested edits in red:

“...As in the light-duty vehicle rule establ ishing CAFE and GHG standards for MYs 2012-2016
light-duty vehicles, EPA’s and NHTSA’s final st andards for the heavy-duty sector are largely

harmonized with one another due to the close and direct relations hip between improving the fuel
efficiency of these vehicles and reducing their CO 2 

### tailpipe emissions. For all vehicles that

consume carbon-based fuels, the amount of CO 2 

### emitted from the tailpipe is essentially constant
per gallon for a given type of fuel that is consumed. T he more efficient a h eavy-duty truck is in
completing its work, the lower its environmental impact will be, because the less fuel consumed
to move cargo a given distance, the less CO 2 

### emitted from the tailpipe into the air. T he
technologies available for improving fuel e fficiency, and therefore for reducing both CO 2 

### emissions and fuel consumption, are one and the same. [1] 

### Because of this close technical
relationship, NHTSA and EPA have been able to rely on jointly-developed assumptions,

[1] However, as discu ssed below, in addition to addressing CO 2 , the EPA’s final standards also include provisions to address other GHGs (nitrous oxide, methane, and air conditioning refrigerant emissions).), as required by the Endangerment Finding under the CAA. See Section II.Summary of Interagency Working Comments Received on Draft Rule under EO 12866 and EO 13563

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17 

### analyses, and analytical conclu sions to support the standards a nd other provisions that NHTSA
and EPA are adopting under our se parate legal authorities.

The agencies recognize that the ongoing EPA/ NHTSA rulemaking to reduce GHGs and fuel
consumption in MY 2017 and later light-duty vehicles is also further examining this issue, and
may yield information and policy direction releva nt to the planned follow-on rulemaking for the
heavy-duty sector. The agencies re cognize that biofuels, such as bi odiesel and ethanol, will play
an important role in reducing the nation‘s depend ence on foreign oil, thereby increasing domestic
energy security. The agencies r ecognize that biofuels have un ique GHG emission characteristics.
When considered on a lifecycle basis (includi ng both tailpipe and upstream emissions), the net
GHG emission impact of individual biofuels can vary significantly from both petroleum-based

fuels and from one biofuel to another. EPA‘s Re newable Fuel Standard program, as modified by
EISA, examined these differences in lifecycle em issions in detail. For example, EPA found that
with respect to aggregate lifecycle emissions including non-tailpipe GHG emissions (such as
feedstock growth, transportati on, fuel production, and land use) , lifecycle GHG emissions in
2022 for biodiesel from soy, using certain a dvanced production technologies, are about 50
percent less than diesel from oil. The agen cies recognize that in the case of biofuels,

― upstream
emissions include not only GHG emissions, but also any biological se questration that takes
place. For purposes of this discussion, the term

― upstream emissions, when considered in the

case of biofuels, should be construed to en compass both GHG emissions and sequestration. The
agencies note that to the extent future policy decisions involve upstream emissions, the agencies
will need to consider not only upstream emissi ons from electricity production, but also the
unique emission characteristics a ssociated with biofuels...”

53) Page 23:Summary of Interagency Working Comments Received on Draft Rule under EO 12866 and EO 13563

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18 

### Table I-2: Heavy-duty Co mbination Tractor EPA TAILPIPE-ONLY Emissions Standards (g

CO 2 

### /ton-mile) and NHTSA Fuel Consump tion Standards (gal/1,000 ton-mile)

54) Page 23:

“...EPA’s engine-based CO 2 

### standards for tailpipe emissions and NHTSA’s engine-based fuel
consumption standards are based on EPA’s existi ng test procedures and regulatory structure for
criteria pollutant emissions from medium- and heavy-duty engines...”

55) Page 50:

“...technologies th at would reduce CO 2 

### tailpipe emissions and fuel consumption and that are
judged to be feasible and appropriate for th ese vehicles and engine s through the 2018 model

year...”

56) Page 63: Table II-1, replace “CO2 grams” with Tailpipe CO2 grams”

57) Page 114:

“... FFVs, and so has not relied on the existence of such credits in devising compliance strategies
for the early model years of this program. See 74 FR at 49531. In fact, manufacturers have not
in the past produced FFV heavy-duty vehicles. On the other hand, we did seek comment on how
to properly recognize the impact of the use of a lternative fuels, and E85 in particular, in HD
pickups and vans, including the proper accounting fo r alternative fuel use in FFVs in the realSummary of Interagency Working Comments Received on Draft Rule under EO 12866 and EO 13563

Review. Subject to Further Policy Review

19 

### world. [2] 

### See 75 FR at 74198. FFV performance will be determined in the same way as for
light-duty vehicles, with a 50-50 weighting of al ternative and conventional fuel test results
through MY 2015, and a manufacturer-determined weighti ng based on estimated fuel use over

the useful life of the vehicle after MY 2015 (defaulting to an assumption of 100 percent
conventional fuel use). See 75 FR at 25339 . For dedicated alternative fueled vehicles, NHTSA
will require that vehicles be tested with the a lternative fuel, and a petroleum equivalent fuel
consumption level be calculated based on the Petroleum Equivalency Factor (PEF) that is
determined by the Department of Energy.

58) Page 128: Table II-14, replace CO2 emissions with Tailpipe CO2 emissions.

59) Page 202: Table III-6, replace “CO2 grams” with Tailpipe CO2 grams”

60) Page 269-270:

“...The proposal also solicited comment on the handling of upstream GHG emissions. Some
commenters argued that EPA should maintain its traditional focus in mobile source rulemakings
on vehicle tailpipe emissions and leave the cons ideration of GHG emissions from upstream fuel
production and distribution-related sources such as refineries a nd powerplants to EPA regulatory
programs that focus specifically on those source s. Others argued that, since EPA accounts for
upstream GHG emissions in its benefits assessme nts, the agency should reflect upstream GHG
emissions impacts in vehicle compliance values as well. After considering these comments, we
have decided to maintain consistency with past practice for setting vehi cle emissions standards
under Clean Air Act section 202(a)(1), whereby we treat all vehicles equally, based on tailpipeonly emissions performance.

[2] E85 is a blended fuel consisting of nominally 15 percent gasoline and 85 percent ethanol.Summary of Interagency Working Comments Received on Draft Rule under EO 12866 and EO 13563

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20 

### We also recognize that the ongoing EPA/NHT SA rulemaking to reduce GHGs and fuel
consumption in MY 2017 and later light

- duty vehicles is also further examining this issue, and
may yield information and policy direc tion relevant to the planned follow

- on rulemaking for the
heavy

- duty sector.

The agencies also recognize that the ongoing EPA/NHTSA rulemaking to reduce GHGs and fuel
consumption in MY 2017 and later light-duty vehicles is also further examining this issue, and
may yield information and policy direction releva nt to the planned follow-on rulemaking for the
heavy-duty sector. The agencies re cognize that biofuels, such as bi odiesel and ethanol, will play
an important role in reducing the nation‘s depend ence on foreign oil, thereby increasing domestic
energy security. The agencies r ecognize that biofuels have un ique GHG emission characteristics.
When considered on a lifecycle basis (includi ng both tailpipe and upstream emissions), the net
GHG emission impact of individual biofuels can vary significantly from both petroleum-based

fuels and from one biofuel to another. EPA‘s Re newable Fuel Standard program, as modified by
EISA, examined these differences in lifecycle em issions in detail. For example, EPA found that
with respect to aggregate lifecycle emissions including non-tailpipe GHG emissions (such as
feedstock growth, transportati on, fuel production, and land use) , lifecycle GHG emissions in
2022 for biodiesel from soy, using certain a dvanced production technologies, are about 50
percent less than diesel from oil. The agen cies recognize that in the case of biofuels,

― upstream
emissions include not only GHG emissions, but also any biological se questration that takes
place. For purposes of this discussion, the term

― upstream emissions, when considered in the

case of biofuels, should be construed to en compass both GHG emissions and sequestration. The
agencies note that to the extent future policy decisions involve upstream emissions, the agencies
will need to consider not only upstream emissi ons from electricity production, but also the
unique emission characteristics a ssociated with biofuels.

61) Page 357:

“...All electric vehicles ar e deemed to have zero tailpipe emissions of CO 2 

### , CH 4 

### , and N 2 

### O...”Summary of Interagency Working Comments Received on Draft Rule under EO 12866 and EO 13563

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21 

### 62) In summarizing the quantified climate ch ange impacts of the rule on page 377, commenter suggests that the agencies pr ovide context about how the HD program addresses climate change.

63) Page 1-39. The document incorrectly describes Plug-in Hybrids as “T he third type of HD hybrid vehicle is a ‘plug-in’”. Hybrids can be electric or hydraulic as correctly mentioned. PHEVs simply mean that the battery can be recharged from a plug. They are in fact electric hybrids.

New DRIA Chapter 1.8 text:

The third type of HD hybrid design is a ‘plu g-in’ which operates on the same principle as the electric hybrid only adds the capability to recharge the hybr id battery using an external power source. These trucks can us e electric power for auxiliary system power and operations and can have range-extended batteries as they can switch propulsive power to the diesel engine when the battery runs low. Typical applications for this type of vehicle include utility (power ing the grid), small pickup and delivery trucks, and shuttle
buses.

Interagency commenter notes that this section has been removed from the DRIA, and the Table of Contents needs to be modified to reflect this . The draft final Regulation (pg 237) has not been changed to reflect agency response.

64) Page 3-9, last paragraph. Commenter recommen ds that agencies incl ude text to clarify
that Acceptable uncertainty refers to the reduction in coastdown uncertainty that yielded a drag coefficient with approximately 5% sta ndard error. Commenter notes that “achieve and acceptable” should be “achieve acceptable”

65) Commenters recommend that agencies include the following clarification in RIA:

For subsequent testing conducted off-site, the following methods were used to develop the
frontal area.

• SAE J2263 analysis process requires the vehicl e frontal area be measured for each tested configuration.

• The process of measurement evolved through three phases for this program. Early HD vehicles were photographed in a parking lot and analyzed using a grid overlay method.

• In an attempt to improve the process and results, LHD vehicles were photographed in front of a “green screen” with a high resolution digital camera with a long telephoto lens.Summary of Interagency Working Comments Received on Draft Rule under EO 12866 and EO 13563

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22 

### • Finally, all additional HD vehicles were photographed against this green screen backdrop, inside of the shop with studio light ing and the camera placement outside in an open field on adjacent. (all subsequent vehi cles were measured using this method)

• Photogrammetric computer software was us ed for the measurements for vehicles photographed using the “green screen method.”

• The contractor sought to larg ely comply with the methods described in EPA advisory Circular No. 73.

Measurement of the frontal area of a tractor can be considered to be fairly accurate because it is based upon simple measurement of tractor geometry. More specifically, the area is comprised of a series of length measur ements of a static object (i.e. a tractor). However, the most important aspect of accura te Cd comparison is the consistent use of standard area. This importance arises from th e fact that the area is used to convert the measured drag forces to a normalized Cd a nd then used by the simulation to convert the Cd back to the drag force experienced by the ve hicle. For comparisons of frontal areas, accuracy is dependent upon a clear, detailed protocol for which measurements to take. Examples can include which components to include (e.g., fender mirrors), factors that affect the ride height (e.g., tire inflati on), and whether it is based upon the tractor’s geometry or a combination of the tractor a nd trailer geometry (in instances where the trailer may extend slightly beyond th e dimensions of the tractor).