Summary of Interagency Working Comments Received on Draft Rule under EO 

12866 Review. Subject to Further Policy Review 

Below is a summary of interagency comments received during EO 12866 review 

of the draft proposed rule establishing GHG emissions standards and fuel efficiency 

standards for medium and heavy duty trucks. They are for your consideration and subject 

to further policy review. 

1) Interagency commenter suggests including the following language in the 

Preamble and RIA: 

“The agencies request comment on the methods and assumptions used to estimate 

costs, benefits, and technology cost-effectiveness for the main proposal and all of 

the alternatives. The agencies also seek comment on whether finalizing a 

different alternative stringency level for certain regulatory classes would be 

appropriate given agency estimates of costs and benefits.” 

2) Commenters note that the statement made in the “welfare impacts” section -- that 

the technologies do not change anything except fuel efficiency -- is potentially 

contradictory to the statements made in the “Conceptual Framework” section. 

a. P. 6 of 9: Regarding single-wide tires “drivers may not like the slightly 

different “feel” of wheel torque needed.” 

b. P. 5 of 9: “As a result, capital investments by truck owners may be 

channels into equipment that improves vehicles’ durability or reduces their 

maintenance costs.” 

Commenter requests clarification as to whether this implies a tradeoff between the 

two? 

3) Please find below suggested interagency edits in red to the Alternatives discussion 

which would apply to both the RIA and Preamble discussion. 

The heavy-duty truck segment is very complex. The sector consists of a diverse 

group of impacted parties, including engine manufacturers, chassis manufacturers, truck 

manufacturers, trailer manufacturers, truck fleet owners and the air breathing public. The 

proposal the agencies have laid out today is largely shaped to maximize the 

environmental and fuel savings benefits of the program respecting the unique and varied 

nature of the regulated industries. In developing this proposal, we considered a number 

of alternatives that could have resulted in fewer or potentially greater GHG and fuel 

consumption reductions than the program we are proposing. This section summarizes the 

alternatives we considered and presents assessments of technology costs, CO2 reductions, 

and fuel savings associated with each alternative. The agencies request comments on all 

of these alternatives, including whether a specific alternative could achieve greater net 
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benefits than the preferred alternative, either for all regulatory classes, or for any 

individual regulatory class. The agencies also request comments on whether any specific 

additional analyses could provide information that could further inform the selection 

among alternatives for the final rule.

How Do These Alternatives Compare in Overall GHG Emissions Reductions and 

Fuel Efficiency and Cost? 

The agencies analyzed all nine alternatives through MOVES to evaluate the 

impact of each proposed alternative, as shown in Error! Reference source not found.. 

The table contains the annual CO2 and fuel savings in 2030 and 2050 for each alternative 

(relative to the reference scenario of Alternative 1), presenting both the total savings 

across all regulatory classes, and for each regulatory class. Error! Reference source not 

found. presents the annual technology costs associated with each alternative (relative to 

the reference scenario of Alternative 1) in 2030 and 2050 for each regulatory class. 

Finally, the total annual downstream impacts of NOx, CO, PM, and VOC emissions in 

2030 for each of the primary alternatives are included in Error! Reference source not 

found.. The agencies request comment on whether any of these alternatives could 

achieve greater net benefits than the preferred alternative, either for all regulatory classes, 

or for any individual regulatory class. 

In analyzing the marginal economic impact of each of the alternatives relative to 

one another, or relative to the preferred Alternative 6, various potentially relevant 

timeframes and frames of reference for analysis could be employed. For example, it may 

be relevant to consider the impacts of an alternative not only in 2030 and 2050, but also 

in 2020. Likewise, it may be relevant to consider not just total annual impacts on the 

entire fleet in a given year, but also the net present value (NPV) impacts on the specific 

model year vehicles that are to be directly regulated in this rulemaking (i.e., MY2014 

through MY2018). For the preferred Alternative 6, the agencies presented such an 

analysis of NPV impacts on each model year in Section VIII.K of the Regulatory Impact 

Analysis. However, such an analysis has not yet been performed for each regulatory 

class or for the other alternatives. In the final rulemaking, the agencies will add to the 

economic analyses of alternatives presented in this NPRM by including, for each 

regulatory class, annualized impacts in 2020, as well as NPV lifetime impacts on the 

model year vehicles directly regulated by this rulemaking (i.e., MY2014 to MY2018). 

The agencies also request comments on the timeframes of, and frames of reference for, 

economic analyses of alternatives that commenters believe are relevant in evaluating the 

incremental impact of the agencies preferred Alternative 6, relative to the other 

alternatives examined. 
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4) Please find below suggested interagency edits to the conceptual framework 

discussion. 

A. Conceptual Framework for Evaluating Impacts 

This regulation is motivated primarily by the goals of reducing emissions of 

greenhouse gases and promoting U.S. energy security by reducing consumption and 

imports of petroleum-based fuels. These motivations involve classic externalities, 

meaning that private decisions do not incorporate all of the costs associated with these 

problems; these costs are not borne completely by the households or businesses whose 

actions are responsible for them. In the absence of some mechanism to “internalize” 

these costs – that is, to transfer their burden to individuals or firms whose decisions 

impose them – individuals and firms will consume more petroleum-based fuels than is 

socially optimal. Externalities are a classic motivation for government intervention in 

markets. These externalities, as well as effects due to changes in emissions of other 

pollutants and other impacts, are discussed in Sections VIII.H – VIII.J. 

In many (but not all)some cases, these classic externalities are by themselves 

enough to justify the costs of requiring these fuel-saving technologiesimposing fuel 

efficiency standards. For some discount rates and some projected social costs of carbon, 

however, the reductions in these external costs are less than the costs of the new fuel 

saving technologies needed to meet the standards. (See table 9-10 and 9-11 in the 

DRIA.)Nevertheless, this regulation reduces trucking companies’ fuel costs; according to 

our estimates, these savings in fuel costs are by themselves sufficient to pay for the 

technologies over periods of time considerably shorter than vehicles’ expected lifetimes 

under the assumptions used for this analysis (e.g., AEO 2010 projected fuel prices). If 

these estimates are correct, then the entire value of the reductions in external costs 

represents additional net benefits of the rule, beyond those resulting from the fact that the 

value of fuel savings exceeds the costs of technologies necessary to achieve them. 

The fact that we can identifyIt is often asserted that there are cost-effective fuelsaving technologies that truck companies are not taking advantage of. This is a puzzle 

commonly known as the “energy gap” or “energy paradox.” Standard economic theory 

suggests that in normally functioning competitive markets, interactions between vehicle 

buyers and producers would lead producers to incorporate all cost-effective technology 

into the vehicles that they offer, without government intervention. Unlike in the lightduty vehicle market, the vast majority of vehicles in the medium- and heavy-duty truck 

market are purchased and operated by businesses with narrow profit margins, and for 

which fuel costs represent a substantial operating expense. 

Even in the presence of uncertainty and imperfect information – conditions that 

hold to some degree in every market – we generally expect firms to attempt to minimize 

their costs in an effort to survive in a competitive marketplace, and therefore to make 

decisions that are in the best interest of the company and its owners and/or shareholders. 
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In this case, the benefits of the rules would be due exclusively to reducing the economic 

costs of externalities resulting from fuel production and consumption. However, as 

discussed below in Section VIII.E, the agencies have estimated that the application of 

fuel-saving technologies in response to the proposed standards would, on average, yield 

private returns to truck owners of 140% to 420% (see Table VIII-21 below). The 

agencies have also estimated that the application of these technologies would be 

significantly lower in the absence of the proposed standards (i.e., under the “no action” 

regulatory alternative), meaning that truck buyers and operators ignore opportunities to 

make investments in higher fuel economy that appear to offer significant cost savings. 

There are several possible explanations in the economics literature for why 

trucking companies do not adopt technologies that would be expected to increase their 

profits: there is could be a classic market failure in the trucking industry – market power, 

externalities, or asymmetric or incomplete (i.e., missing market) information; there are 

could be institutional or behavioral rigidities in the industry (union rules, standard 

operating procedures, statutory requirements, loss aversion, etc.), whereby participants 

collectively do not minimize costs; or the engineering estimates of fuel savings and costs 

for these technologies might overstate their benefits or understate their costs in real-world 

applications. To try to understand why trucking companies have not adopted these 

seemingly cost-effective fuel-saving technologies, the agencies have surveyed published 

literature about the energy paradox, and held discussions with numerous truck market 

participants. Below, we have listed five categories of possible explanations derived from 

these sources. Collectively, these five hypotheses may explain the apparent inconsistency 

between the engineering analysis, which finds a number of cost-effective methods of 

improving fuel economy, and the observation that many of these technologies are not 

widely adopted. 

These hypotheses include imperfect information in the original and resale 

markets, split incentives, uncertainty about future fuel prices, and adjustment and 

transactions costs. As the discussion will indicate, some of these explanations suggest 

failures in the private market for fuel-saving technology, in addition to the externalities 

caused by producing and consuming fuel that are the primary motivation for the rules. 

Other explanations suggest market-based behaviors that may imply additional costs of 

regulating truck fuel efficiency that are not accounted for in this analysis. Anecdotal 

evidence from various segments of the trucking industry suggests that many of these 

hypotheses may play a role in explaining the puzzle of why truck purchasers appear to 

under-invest in fuel economy, although different explanations may apply to different 

segments, or even different companies. The published literature does not appear to 

include empirical analysis or data related to this question. 

The agencies invite comment on these explanations, and on any data or 

information that could be used to investigate the role of any or all of these five 

hypotheses in explaining this energy paradox as it applies specifically to trucks. The 

agencies also request comment and information regarding any other hypotheses that 
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could explain the appearance that cost-effective fuel-saving technologies have not been 

widely incorporated into trucks. 

(1) Information Issues in the Original Sale Markets 

One potential hypothesis for why the trucking industry does not adopt what 

appear to be inexpensive fuel saving technologies is that there is inadequate or unreliable 

information available about the effectiveness of many fuel-saving technologies for new 

vehicles. As the NAS report notes, “Reliable, peer-reviewed data on fuel saving 

performance is available only for a few technologies in a few applications. As a result, 

the committee had to rely on information from a wide range of sources, ... including 

many results that have not been duplicated by other researchers or verified over a range 

of duty cycles.” If reliable information on the effectiveness of many new technologies is 

absent, truck buyers will understandably be reluctant to spend additional money to 

purchase vehicles equipped with unproven technologies. 

This lack of information can manifest itself in multiple ways. For instance, the 

problem may arise purely because collecting reliable information on technologies is 

costly (also see Section VIII.A.5 on transaction costs). Moreover, information has 

aspects of a public good, in that no single firm has the incentive to do the costly 

experimentation to determine whether or not particular technologies are cost-effective, 

while all firms benefit from the knowledge that would be gained from that 

experimentation. Similarly, if multiple firms must conduct the same tests to get the same 

information, costs could be reduced by some form of coordination of information 

gathering. 

There are several possible reasons why trucking firms may experience difficulty 

gathering or interpreting information about fuel saving technologies. It may be difficult 

for truck drivers and fleet operators to separate the individual effects of various 

technologies and operating strategies from one another, particularly when they tend to be 

used in conjunction. It may also be difficult for truck operators to assess the applicability 

of even objective and reliable test results to their own specific vehicle configurations and 

operating practices; at the same time, the effects of specific technologies or operating 

practices may vary with geography, season of the year, or other factors. In highly 

competitive markets, any firm that conducts tests of fuel efficiency is unlikely to share 

results with other firms. If so, then cost-effective technological improvements may not 

be adopted because they cannot be reliably distinguished from inefficient technologies. 

To some extent, information about the effectiveness of some selected 

technologies does exist, and it suggests that some technologies appear to be very costeffective in some situations. The SmartWay Transport Partnership is a complementary 

partnership between EPA and the freight goods industry (shippers, truck and rail carriers, 

and logistics companies) whose aim is to provide better information on fuel-efficient, 

low-carbon technologies and operational practices to help accelerate their deployment. 
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SmartWay initially focused on evaluating and testing technologies for use in over-theroad class 8 tractor-trailers, commonly operated by the large, national trucking fleets. For 

this reason, more information is available about the configuration and operation of these 

types of trucks. Many of the technologies that SmartWay selected for evaluation can also 

save fuel and reduce greenhouse gas emissions in other types of trucks and trucking 

operations. 

However, due to the wide diversity among other types of trucks and truck 

operations, and lack of precise information about the effectiveness of technologies in 

each one of these types of truck and trucking operations, it is difficult for the program to 

provide good information that is specific to each company. This makes it much more 

challenging to improve market confidence in fuel-saving technologies for these other 

truck types in the same way that SmartWay has done with its existing partners. 

SmartWay will continue to serve as a test bed for emerging technologies and as a conduit 

for technical information by developing and sharing information on other types of 

medium and heavy duty vehicles, helping to build market confidence in innovative 

financial, technical and operational solutions for medium- and heavy-duty vehicles across 

the freight goods industry, and promoting retrofit fuel-saving technologies within the 

existing legacy fleet. Information provision, such as the efforts of the SmartWay 

program, is a direct, non-regulatory approach to addressing the problem of the 

availability and reliability of results, as long as truck purchasers are able and willing to 

act on the information. 

While its effect on information is indirect, we expect the requirement for the use 

of new technologies included in this proposal will encourage circumvent these information

issues, resulting in their adoptiontheir adoption, thus providing more readily available 

information about their benefits. The agencies appreciate, however, that the diversity of 

truck uses, driving situations, and driver behavior may stillwill lead to variation in the 

fuel savings that individual trucks or fleets experience from using specific technologies

and some fleets or trucks may be made worse off by the imposition of fuel efficiency 

standards. 

(2) Information Issues in the Resale Market 

In addition to issues in the new vehicle market, a second hypothesis for why 

trucking companies may not adopt what appear to be cost-effective technologies to save 

fuel is that the resale market may not reward the addition of fuel-saving technology to 

vehicles adequately to ensure their original purchase by new truck buyers. This 

inadequate payback for users beyond the original owner may contribute to the short 

payback period that new purchasers appear to expect.1

 The agencies seek data and 

information on the extent to which costs of fuel saving equipment can be recovered in the 

resale truck market. 

 1 See NAS 2010, Note Error! Bookmark not defined., at p. 188. 
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Some of this unwillingness to pay for fuel-saving technology may be due to the 

extension of the information problems in the new vehicle market into resale markets. 

Buyers in the resale market have no more reason to trust information on fuel-saving 

technologies than buyers in the original market. Because actual fuel economy of trucks 

on the road depends on many factors, including geography and driving styles or habits, 

even objective sources such as logs of truck performance for used vehicles may not 

provide reliable information about the fuel economy that potential purchasers of used 

trucks will experience. 

A related possibility is that vehicles will be used for different purposes by their 

second owners than those for which they were originally designed. For instance, a 

vehicle originally purchased for long hauls might be used by its second owner instead for 

regional or intrastate trips, in which case some of the fuel-saving measures that proved 

effective in its original use may not be equally effective in these new uses. If information 

were more widely available and reliable, then purchasers in the resale market would seek 

vehicles with technologies that best suited their purposes, and buyers would be matched 

with sellers so that used vehicles would be used primarily for purposes in which their 

fuel-saving technologies were most valuable. 

It is also possible, though, that the fuel savings experienced by the secondary 

purchasers may not match those experienced by their original owners if the optimal 

secondary new use of the vehicle does not earn as many benefits from the technologies. 

In that case, the premium for fuel-saving technology in the secondary market should 

accurately reflect its value to potential buyers participating in that market, even if it is 

lower than its value in the original market, and the market has not failed. Because the 

information necessary to optimize use in the secondary market may not be readily 

available or reliable, however, buyers in the resale market may have less ability than 

purchasers of new vehicles to identify and gain the advantages of new fuel-saving 

technologies, and may thus be even less likely to pay a premium for them. 

For these reasons, purchasers’ willingness to pay for fuel‐economy technologies may

be even lower in the resale market than in the original equipment market technology diffusion 

is likely to be even lower in the resale market than in the original market. Even when 

fuel-saving technologies will provide benefits in the resale markets, purchasers of used 

vehicles may not be willing to compensate their original owners fully for their remaining 

value. As a result, the purchasers of original equipment may expect the resale market to 

provide inadequate appropriate compensation for the new technologies, even when those 

technologies would reduce costs for the new buyers. This information issue may partially 

explain what appear to be the very short payback periods required for new technologies 

in the new vehicle market. 
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(3) Split incentives in the medium- and heavy-duty truck industry 

A third hypothesis explaining the energy paradox as applied to trucking involves 

split incentives. When markets work effectively, signals provided by transactions in one 

market are quickly transmitted to related markets and influence the decisions of buyers 

and sellers in those related markets. For instance, in a well-functioning market system, 

changes in the expected future price of fuel should be transmitted rapidly to those who 

purchase trucks, who will then reevaluate the amount of fuel-saving technology to 

purchase for new vehicles. If for some reason a truck purchaser will not be directly 

responsible for future fuel costs, or the individual who will be responsible for fuel costs 

does not decide which truck characteristics to purchase, then those price signals may not 

be transmitted effectively, and incentives can be described as “split.” 

One place where such a split may occur is between the owners and operators of 

trucks. Because they are generally responsible for purchasing fuel, truck operators have 

strong incentives to economize on its use, and are thus likely to support the use of fuelsaving technology. However, the owners of trucks or trailers are often different from 

their operators, and, when purchasing vehicles, may be more concerned about their 

longevity or maintenance costs than about their fuel efficiency. As a result, capital 

investments by truck owners may be channeled into equipment that improves vehicles’ 

durability or reduces their maintenance costs, rather than into fuel-saving technology. If 

operators can choose freely among the trucks they drive, competition among truck 

owners to employ operators would encourage owners to invest in fuel-saving technology. 

However, if truck owners have more ability to choose among operators, then market 

signals for improved fuel savings that would normally be transmitted to truck owners 

may be muted. 

Anecdotal information about large truck fleets suggests that, even within a 

company, the office or department responsible for truck purchases is often different from 

that responsible for purchasing fuel. Therefore, the employees who purchase trucks may 

have strong incentives to lower their initial capital cost, but not equally strong incentives 

to lower operating costs. 

Single-wide tires, which save fuel and allow more payload (thus increasing 

revenue), offer another example of split incentives. They require a different driving 

style; those concerned about retaining drivers may resist their purchase, because drivers 

may not like the slightly different "feel" of wheel torque needed. Maintenance and repair 

staff may resist them because the tires may not be as available as they would like on the 

road, or they may need to change road service providers. Finally, those who resell the 

trucks may believe that the resale market will not value the tires. While financial 

pressures should provide incentives for greater coordination, especially when fuel costs 

are a large share of operating costs, it may be difficult institutionally to change budgeting 

procedures and to coordinate across offices. Thus, even within a company incentives for 

fuel savings may not be fully transmitted to those responsible for purchasing decisions. 
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In addition, the NAS report notes that split incentives can arise between tractor 

and trailer operators.2

 Trailers affect the fuel efficiency of shipping, but trailer owners do 

not face strong incentives to coordinate with truck owners. Although some trucking 

fleets own or lease their own trailers, a significant part of the trucking business is “drop 

and hook” service, in which trucking fleets pick up and drop off trailers and containers. 

These trailers and containers can belong to shippers, other trucking companies, leasing 

companies, or ocean-going vessel lines, in which cases their owners may not face strong 

incentives to economize on fuel consumption by tractor operators. Though tractor 

operators should, in principle, have some ability to arrange tractor-trailer combinations 

that provide increased fuel efficiency, the value of the resulting fuel savings may be small 

relative to the complexity and cost involved. EPA and NHTSA are not proposing to 

regulate trailers in this proposal. 

By itself, information provision may be inadequate to address the potential 

underinvestment in fuel economy resulting from such split incentives. In this setting, 

regulation may contribute to fuel savings that otherwise may be difficult to achieve. 

The agencies seek evidence and data on the extent to which split incentives affect 

purchasing choices in truck markets. For example, are trailer buyers that do not own their 

own tractors less likely to purchase aerodynamic trailers than those that purchase and 

drive both tractors and trailers? 

(4) Uncertainty about Future Cost Savings 

Another hypothesis for the lack of adoption of seemingly fuel saving technologies 

may be uncertainty about future fuel prices or truck maintenance costs. When purchasers 

have less than perfect foresight about future operating expenses, they may implicitly 

discount future savings in those costs due to uncertainty about potential returns from 

investments that reduce future costs. In contrast, the immediate costs of the fuel-saving 

or maintenance-reducing technologies are certain and immediate, and thus not subject to 

discounting. In this situation, both the expected return on capital investments in higher 

fuel economy and potential variance about its expected rate may play a role in a firm’s 

calculation of its payback period on such investments. 

In the context of energy efficiency investments for the home, Metcalf and 

Rosenthal (1995) and Metcalf and Hassett (1995) observe that households weigh known, 

up-front costs that are essentially irreversible against an unknown stream of future fuel 

savings.3

 Uncertainty about the value of future energy savings may make risk-averse 

 2 See NAS 2010, Note Error! Bookmark not defined., at p. 182. 3

 Metcalf, G., and D. Rosenthal (1995). “The ‘New’ View of Investment Decisions and Public Policy 

Analysis: An Application to Green Lights and Cold Refrigerators,” Journal of Policy Analysis and 

Management 14: 517–531. Hassett and Metcalf (1995). “Energy Tax Credits and Residential Conservation 

Investment: Evidence from Panel Data” Journal of Public Economics 57 (1995): 201-217. Metcalf, G., and 
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households reluctant to invest in energy-saving technologies that appear to offer 

attractive economic returns. These authors find that it is possible to replicate the 

observed adoption rates for household energy efficiency improvements by incorporating 

the effect of uncertainty about the value of future energy savings into an empirical model. 

Notably, in this situation, requiring households to adopt technologies more quickly may 

make them worse off, by imposing additional risk on them. 

Greene et al. (2009) also find support for this explanation in the context of lightduty fuel economy decisions: a loss-averse consumer’s expected net present value of 

increasing the fuel economy of a passenger car can be very close to zero, even if a riskneutral expected value calculation shows that its buyer can expect significant net benefits 

from purchasing a more fuel-efficient car.4

 These authors note that uncertainty regarding 

the future price of gasoline is a less important source of this result than is uncertainty 

about the lifetime, expected use, and reliability of the vehicle. Supporting this hypothesis 

is a finding by Dasgupta et. al (2007) that consumers are more likely to lease than buy a 

vehicle with higher maintenance costs because it provides them with the option to return 

it before those costs become too high.5

 However, the agencies know of no studies that 

have estimated the impact of uncertainty on perceived future savings for medium- and 

heavy-duty vehicles. 

Purchasers’ uncertainty about future fuel prices implies that mandating 

improvements in fuel efficiency can reduce the expected utility associated with truck 

purchases. This is because adopting such regulation requires purchasers to assume a 

greater level of risk than they would in its absence, even if the future fuel savings 

predicted by a risk-neutral calculation actually materialize. Thus the mere existence of 

uncertainty about future savings in fuel costs does not by itself assure that regulations 

requiring improved fuel efficiency will necessarily provide economic benefits for truck 

purchasers and operators. On the other hand, because risk aversion reduces expected 

returns for businesses, competitive pressures can reduce risk aversion: risk-neutral 

companies can make higher average profits over time. Thus, significant risk aversion is 

unlikely to survive competitive pressures. 

(5) Adjustment and Transactions Costs 

Another hypothesis is that transactions costs of changing to new technologies 

(how easily drivers will adapt to the changes, e.g.) may slow or prevent their adoption. 

Because of the diversity in the trucking industry, truck owners and fleets may like to see 

how a new technology works in the field, when applied to their specific operations, 

 K. Hassett (1999). “Measuring the Energy Savings from Home Improvement Investments: Evidence from 

Monthly Billing Data.” The Review of Economics and Statistics 81(3): 516-528. 

4

 Greene, D., J. German, and M. Delucchi (2009). “Fuel Economy: The Case for Market Failure” in 

Reducing Climate Impacts in the Transportation Sector, Sperling, D., and J. Cannon, eds. Springer Science. 5

 Dasgupta, S., S. Siddarth, and J. Silva-Risso (2007). “To Lease or to Buy? A Structural Model of a 

Consumer’s Vehicle and Contract Choice Decisions.” Journal of Marketing Research 44: 490 – 502. 
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before they adopt it. A If a conservative approach to new technologies may leads truck 

buyers to adopt new technologies slowly, then successful new technologies are likely to 

be adopted over time without market intervention, but with delays in achieving fuel 

saving, environment, and energy security benefits. or not at all.. 

In addition, there may be costs associated with training drivers to realize the 

potential fuel savings enabled by new technologies, or with accelerating fleet operators’ 

scheduled fleet turnover and replacement to hasten their acquisition of vehicles equipped 

with new fuel-saving technologies. Here, again, there may be no market failure requiring 

the widespread use of these technologies may impose adjustment and transactions costs 

not included in this analysis. As in the discussion of the role of risk, these adjustment 

and transactions costs are typically immediate and undiscounted, while their benefits are 

future and uncertain; risk or loss aversion may further discourage companies from 

adopting new technologies. 

To the extent that there may be transactions costs associated with the new 

technologies, then regulation gives all new truck purchasers a level playing field, because 

it will require all of them to adjust on approximately the same time schedule. If 

experience with the new technologies serves to reduce uncertainty and risk, the industry 

as a whole may become more accepting of new technologies. This could increase 

demand for future new technologies and induce additional benefits in the legacy fleet 

through complementary efforts such as SmartWay. 

(6) Summary 

On the one hand, commercial vehicle operators are under competitive pressure to 

reduce operating costs, and thus their purchasers would be expected to pursue and rapidly 

adopt cost-effective fuel-saving technologies. On the other hand, the short payback 

period required by buyers of new trucks is a symptom that suggests some combination of 

uncertainty about future cost savings, transactions costs, and imperfectly functioning 

markets. In addition, widespread use of tractor-trailer combinations introduces the 

possibility that owners of trailers may have weaker incentives than truck owners or 

operators to adopt fuel-saving technology for their trailers. The market for medium- and 

heavy-duty trucks may face these problems, both in the new vehicle market and in the 

resale market.. 

Provision of information about fuel-saving technologies through voluntary 

programs such as SmartWay will assist in the adoption of new cost-saving technologies, 

but diffusion of new technologies can still be obstructed. Those who are willing to 

experiment with new technologies expect to find cost savings, but those may be difficult 

to prove. As noted above, because individual results of new technologies vary, new truck 

purchasers may find it difficult to identify or verify the effects of fuel-saving 

technologies. Those who are risk-averse are likely to avoid new technologies out of 

concerns over the possibility of inadequate returns on the investment, or with other 
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adverse impacts. Competitive pressures in the freight transport industry can provide a 

strong incentive to reduce fuel consumption and improve environmental performance. 

However, not every driver or trucking fleet operating today has the requisite ability or 

interest to access the technical information, some of which is already provided by 

SmartWay, nor the resources necessary to evaluate this information within the context of 

his or her own freight operation. 

As noted at the beginning of this section, the agencies seek comments on all these 

hypotheses, as well as any data that could inform our understanding of what appears to be 

slow adoption of cost-effective fuel-saving technologies in these industries.