Summary of Interagency Working Comments Received on Draft Rule under EO 12866 Review. Subject to

Further Policy Review

1 Below is a summary of interagency comments received during EO 12866 review of the draft
proposed rule establishing GHG emissions standard s and fuel efficiency standards for medium
and heavy duty trucks. They are for your cons ideration and subject to further policy review.

1) Cost-Benefit Analysis of Alternativ es to Proposed Stringency levels

Multiple commenters continue to request that the agencies conduct cost-benefit analysis of alternatives to the proposed stringency levels for all vehicle and engine classes. Similar to the 8 alternative stringencies analyzed in the li ght-duty CAFE rule, commenters request that the agencies fully discuss these regulatory alternat ive stringency levels and their estimates of

costs and benefits in the NPRM and RIA.

2) Restrictions on flexibilities

Commenters continue to request that the agen cies remove restricti ons on flexibilities from the main proposal. Changing the current proposal should not be difficult or time-consuming. Please clarify that averaging, banking, and tr ading is allowed acro ss vehicle classes and engine classes. If the agencies have reasons to believe these restricti ons are necessary, then they can add discussion of an a lternative scenario with these re strictions on flexibilities in place. The agencies could seek public comm ent on whether flexibilities across vehicle classes and engines without re strictions should be allowed (under the main proposal) or

whether the final rule should include restrictions on flexib ilities across classes (as an alternative to the main proposal).

3) Alternative compliance fee

Commenters request that the agencies seek public comment on whether the final rule should allow manufacturers to pay a fee if they are una ble to comply with the standards. The lightduty rule allows this noncompliance fee and if manufacturers don’t need to use this, then this provision will simply not be utilized. Adding language on an alternative compliance fee should not be time-consuming or difficult.

4) Means of Assessing Compliance wi th Standards: Simulation Model

Commenters recognize that EPA is proposing to use a new model, recently developed from scratch, that has not been published or peer reviewed to assess compliance with proposed standards regulating the fuel economy and GHG emissions of heavy duty and medium duty vehicles for the very first time. Commenters also note that there is another more fully developed model called PSAT/Autonomie which ha s compliance-aspect functions that haveSummary of Interagency Working Comments Received on Draft Rule under EO 12866 Review. Subject to

Further Policy Review

2 been validated multiple times over the past 3 years with underlying software that has been in existence for over 10 years. Commenters al so note that this model does not pose any problems regarding proprietary information and that industry is already using it. Are the agencies aware of this model’ s existence and extensive use by the industry? The agencies

should include a full discussion of PSAT/Au tonomie in the NPRM and seek public

comment on whether there are benefits to usi ng the PSAT/Autonomie mode l in the final rule

instead of TEST. Adding this language should not be difficult or time-consuming.

5) “Market Failure”

Based on agency responses, it is clear that two of the 5 arguments that the agencies use are
testable hypotheses. Commenter s request that the following 3 ar guments be completely dropped
from the NPRM and RIA because they are unfounde d and even contradictory to claims made in
other parts of the NPRM:

-Reason #1: Trucking companies do not have adequate information about technologies available or the fuel efficiency of various trucks.

-Reason #4: Uncertainty about future cost savings.

-Reason #5: Adjustment and transacti on costs: where new technologies are likely to be adopted over time w ithout market intervention.

For reasons # 2 (split incentives) and #3 (infor mation asymmetry)- please clearly state in the NPRM that these are testable hypotheses and th e agencies seek comment on whether there is any empirical evidence supporting them.

Making these changes should not be difficult or time-consuming.

6) Alternative Baselines

Commenters request that the agencies clarify in the NPRM that the assumption that no fuel economy improvements will occur absent this rule is not backed by empirical evidence or historical data. Commenters request the ag encies to seek comment on whether this assumption is accurate and whether alternativ e baseline scenarios that assume greater improvements in fuel economy is more approp riate for the final rule. These changes should be very easy to make.

7) Probabilistic Uncertainty AnalysisSummary of Interagency Working Comments Received on Draft Rule under EO 12866 Review. Subject to

Further Policy Review

3 Commenters request that agencies conduct this an alysis and include it in the RIA before it is published for public comment. The agencies al ready have experience doing this analysis since the light-duty CAFE rule incl uded an uncertainty analysis.

8) Learning curve s

The commenters request that the agencies co mpletely drop all time-based learning curves and use only one volume-based learning curve. Commenters request agencies to seek

comment on whether the volume-based lear ning curve is accurat e and appropriate, including whether it leads to unde restimation of costs that shoul d be revisited and adjusted for the final rule stage. This change should not be very time-consuming.

9) Welfare Impacts

Similar to NHTSA’s analysis of consumer we lfare impacts in the light-duty CAFE rule,
commenters request that the agencies incl ude 25% and 50% welfare loss scenarios
offsetting the benefits in this NPRM and RIA.

10) Treatment of Fuel Savings in RIA and NPRM

Commenters continue to request that the agen cies include fuel savings in the benefits
category throughout the RIA and NP RM instead of treating them as negative costs. Please
include this category only in the benefits section because fuel sa vings are benefits not costs.
Please make this change throughout the RIA a nd NPRM. This should be very simple and
easy to make throughout the documents.

11) Discussion of interactions with NAFTA.

Commenters request that the agencies incl ude language in the NPRM about possible
interactions with the NAFTA trucking disput e. Commenters request that the agencies
include background and context of possible interactions and al so state and seek comment
that this rule could cause truck assembly pl ants to move to Mexi co, to sell trucks to
Mexican trucking companies operating in the US.