impacts (emissions, air quality, costs and benefits) in the year in
which they occur; for the analysis of non-GHG ambient air quality and
health impacts, we selected 2030 as a representative future year since
resource and time constraints precluded EPA from considering multiple
calendar years. We refer to this analysis as the ``Calendar Year'' (CY)
analysis because the benefits of the program reflect impacts across all
regulated vehicles in a calendar year.
    EPA also conducted a separate analysis of the impacts over the
model year lifetimes of the 2014 through 2018 model year vehicles. We
refer to this analysis as the ``Model Year'' (MY) analysis (See Chapter
6 of the RIA that accompanies this preamble). In contrast to the CY
analysis, the MY analysis estimates the impacts of the program on each
MY fleet over the course of its lifetime. Due to analytical and
resource limitations, however, MY non-GHG emissions (direct PM, VOCs,
NO2 and SO2) were not estimated for this
analysis. Because MY impacts are measured in relation to only the
lifetime of a particular vehicle model year (2014, 2015, 2016, 2017,
and 2018), and assumes no additional controls to model year vehicles
beyond 2018, the impacts are smaller than if the impacts of all
regulated vehicles were considered. We therefore expect that the non-
GHG health-related benefits associated with the MY analysis will be
smaller than those estimated for the CY analysis, both in a given year
(such as 2030) and in present value terms across a given time period
(such as 2014-2050).

I. Energy Security Impacts

    The HD National Program is designed to reduce fuel consumption and
GHG emissions in medium and heavy-duty (HD) vehicles, which will result
in improved fuel efficiency and, in turn, help to reduce U.S. petroleum
imports. A reduction of U.S. petroleum imports reduces both financial
and strategic risks caused by potential sudden disruptions in the
supply of imported petroleum to the U.S. This reduction in risk is a
measure of improved U.S. energy security. This section summarizes the
agencies' estimates of U.S. oil import reductions and energy security
benefits of the final HD National Program. Additional discussion of
this issue can be found in Chapter 9.7 of the RIA.
(1) Implications of Reduced Petroleum Use on U.S. Imports
    In 2008, U.S. petroleum import expenditures represented 21 percent
of total U.S. imports of all goods and services.\531\ In 2008, the
United States imported 66 percent of the petroleum it consumed, and the
transportation sector accounted for 70 percent of total U.S. petroleum
consumption. This compares to approximately 37 percent of petroleum
from imports and 55 percent of consumption from petroleum in the
transportation sector in 1975.\532\ It is clear that petroleum imports
have a significant impact on the U.S. economy.
---------------------------------------------------------------------------

    \531\ Source: U.S. Bureau of Economic Analysis, U.S.
International Transactions Accounts Data, as shown on June 24, 2009.
    \532\ Source: U.S. Department of Energy, Annual Energy Review
2008, Report No. DOE/EIA-0384(2008), Tables 5.1 and 5.13c, June 26,
2009.
---------------------------------------------------------------------------

    Requiring lower GHG vehicle technology and fuel efficient
technology in HD vehicles in the U.S. is expected to lower U.S. oil
imports. EPA used the MOVES model to estimate the fuel savings due to
this program. A detailed explanation of the MOVES model can be found in
Chapter 5 of the RIA.
    Based on a detailed analysis of differences in fuel consumption,
petroleum imports, and imports of refined petroleum products and crude
oil using the Reference Case presented in the Energy Information
Administration's Annual Energy Outlook (AEO) 2011 Early Release, EPA
and NHTSA estimate that approximately 50 percent of the reduction in
fuel consumption resulting from adopting improved GHG emissions
standards and fuel efficiency standards is likely to be reflected in
reduced U.S. imports of refined fuel, while the remaining 50 percent is
expected to be reflected in reduced domestic fuel refining. Of this
latter figure, 90 percent is anticipated to reduce U.S. imports of
crude petroleum for use as a refinery feedstock, while the remaining 10
percent is expected to reduce U.S. domestic production of crude
petroleum. Thus, on balance, each gallon of fuel saved as a consequence
of the HD GHG and fuel efficiency standards is anticipated to reduce
total U.S. imports of petroleum by 0.95 gallons.\533\ The agencies'
estimates of the reduction in U.S. oil imports from this program for
selected years, in millions of barrels per day, are presented in Table
VIII-21 below. These estimates assume that the fuel efficiency of HD
vehicles remains constant in the baseline.
---------------------------------------------------------------------------

    \533\ This figure is calculated as 0.50 + 0.50*0.9 = 0.50 + 0.45
= 0.95.

 Table VIII-21--U.S. Oil Import Reductions From the HD National Program
                           for Selected Years
                   [Millions of barrels per day, mmbd]
------------------------------------------------------------------------
                             Year                                 mmbd
------------------------------------------------------------------------
2020.........................................................      0.202
2030.........................................................      0.393
2040.........................................................      0.489
2050.........................................................      0.566
------------------------------------------------------------------------

(2) Energy Security Implications
    In order to understand the energy security implications of reducing
U.S. petroleum imports, EPA worked with Oak Ridge National Laboratory
(ORNL), which has developed approaches for evaluating the economic
costs and energy security implications of oil use. The energy security
estimates provided below are based upon a methodology developed in a
peer-reviewed study entitled ``The Energy Security Benefits of Reduced
Oil Use, 2006-2015, '' completed in March 2008. This study is included
as part of the docket for this final action.534 535
---------------------------------------------------------------------------

    \534\ Leiby, Paul N., ``Estimating the Energy Security Benefits
of Reduced U.S. Oil Imports'' Oak Ridge National Laboratory, ORNL/
TM-2007/028, Final Report, 2008. (Docket EPA-HQ-OAR-2010-0162).
    \535\ The ORNL study ``The Energy Security Benefits of Reduced
Oil Use, 2006-2015,'' completed in March 2008, is an update version
of the approach used for estimating the energy security benefits of
U.S. oil import reductions developed in an ORNL 1997 Report by
Leiby, Paul N., Donald W. Jones, T. Randall Curlee, and Russell Lee,
entitled ``Oil Imports: An Assessment of Benefits and Costs.''
(Docket EPA-HQ-OAR-2010-0162).
---------------------------------------------------------------------------

    When conducting this analysis, ORNL considered the full economic
cost of importing petroleum into the United States. The economic cost
of importing petroleum into the U.S. is defined to include two
components in addition to the purchase price of petroleum itself. These
are: (1) The higher costs for oil imports resulting from the effect of
increasing U.S. import demand on the world oil price and on the market
power of the Organization of the Petroleum Exporting Countries (i.e.,
the ``demand'' or ``monopsony'' costs); and (2) the risk of reductions
in U.S. economic output and disruption of the U.S. economy caused by
sudden disruptions in the supply of imported petroleum to the U.S.
(i.e., macroeconomic disruption/adjustment costs). Maintaining a U.S.
military presence to help secure stable oil supply from potentially
vulnerable regions of the world was not included in this analysis
because its attribution to particular missions or activities is hard to
quantify.

    For this action, ORNL estimated energy security premiums by
incorporating the most recent available AEO 2011 Early Release oil
price forecasts and market trends. Energy security premiums for the
years 2020, 2030, 2040, and 2050 are presented in Table VIII-22, as
well as a breakdown of the components of the energy security premiums
for each of these years.\536\ The components of the energy security
premiums and their values are discussed in detail in Chapter 9.7 of the
RIA.
---------------------------------------------------------------------------

    \536\ AEO 2011 forecasts energy market trends and values only to
2035. The energy security premium estimates post-2035 were assumed
to be the 2035 estimate.

                            Table VIII-22--Energy Security Premiums in Selected Years
                                                 [2009$/Barrel]
----------------------------------------------------------------------------------------------------------------
                                                              Macroeconomic disruption/
           Year (range)                     Monopsony              adjustment costs          Total mid-point
----------------------------------------------------------------------------------------------------------------
2020..............................                   $11.29                     $7.11                    $18.41
                                             ($3.86-$21.32)            ($3.50-$11.40)            ($9.70-$28.94)
2030..............................                   $11.17                     $8.32                    $19.49
                                             ($3.92-$20.58)            ($4.04-$13.33)           ($10.49-$29.63)
2035..............................                   $10.56                     $8.71                    $19.27
                                             ($3.69-$19.62)            ($3.86-$14.35)           ($10.32-$29.13)
----------------------------------------------------------------------------------------------------------------

    The literature on the energy security for the last two decades has
routinely combined the monopsony and the macroeconomic disruption
components when calculating the total value of the energy security
premium. However, in the context of using a global SCC value, the
question arises: how should the energy security premium be determined
when a global perspective is taken? Monopsony benefits represent
avoided payments by the United States to oil producers in foreign
countries that result from a decrease in the world oil price as the
U.S. decreases its consumption of imported oil.
    Several commenters commented on the agencies' energy security
analysis of this program. The Conservative Law Foundation, Interfaith
Care for Creation, Environmental Defense Fund and American Lung
Association (EDF/ALA) and R. Desjardin noted that the standards in this
program will increase our national security by decreasing U.S.
dependence on foreign oil imports. The Competitive Enterprise Institute
(CEI) felt that there is no relationship between reduced U.S. oil
imports and U.S. energy security; the commenter sees no relationship
between reduced oil imports and, for example, the number of hijackings,
bombings, and other terrorist-related activities that have occurred
through time. CBD commented that the benefit of the reduction of
military costs associated with maintaining a secure oil supply should
be fully accounted for, and EDF recommended a more extensive analysis
of the external security costs of oil dependence.
    The agencies recognize that potential national and energy security
risks exist due to the possibility of tension over oil supplies. Much
of the world's oil and gas supplies are located in countries facing
social, economic, and demographic challenges, thus making them even
more vulnerable to potential local instability. For example, in 2010
just over 40 percent of world oil supply came from OPEC nations, and
this share is not expected to decline in the AEO 2011 projections
through 2030. Approximately 28 percent of global supply is from Persian
Gulf countries alone. As another measure of concentration, of the 137
countries/principalities that export either crude oil or refined
petroleum product, the top 12 have recently accounted for over 55
percent of exports.\537\ Eight of these countries are members of OPEC,
and a 9th is Russia.\538\ In a market where even a 1-2 percent supply
loss raises prices noticeably, and where a 10 percent supply loss could
lead to a significant price shock, this regional concentration is of
concern. Historically, the countries of the Middle East have been the
source of eight of the ten major world oil disruptions \539\ with the
9th originating in Venezuela, an OPEC member.
---------------------------------------------------------------------------

    \537\ Based on data from the CIA, combining various recent
years, https://www.cia.gov/library/publications/the-world-factbook/rankorder/2176rank.html.
    \538\ The other three are Norway, Canada, and the EU, an
exporter of product.
    \539\ IEA 2011 ``IEA Response System for Oil Supply
Emergencies''.
---------------------------------------------------------------------------

    Because of U.S. dependence on oil, the military could be called on
to protect energy resources through such measures as securing shipping
lanes from foreign oil fields. To maintain such military effectiveness
and flexibility, the Department of Defense identified in the
Quadrennial Defense Review that it is ``increasing its use of renewable
energy supplies and reducing energy demand to improve operational
effectiveness, reduce greenhouse gas emissions in support of U.S.
climate change initiatives, and protect the Department from energy
price fluctuations.'' \540\ The Department of the Navy has also stated
that the Navy and Marine Corps rely far too much on petroleum, which
``degrades the strategic position of our country and the tactical
performance of our forces. The global supply of oil is finite, it is
becoming increasingly difficult to find and exploit, and over time cost
continues to rise.'' \541\
---------------------------------------------------------------------------

    \540\ U.S. Department of Defense. 2010. Quadrennial Defense
Review Report. Secretary of Defense: Washington, DC 128 pages.
    \541\ The Department of the Navy's Energy Goals (http://www.navy.mil/features/Navy_EnergySecurity.pdf) (Last accessed May
31, 2011).
---------------------------------------------------------------------------

    In remarks given to the White House Energy Security Summit on April
26, 2011, Deputy Security of Defense William J. Lynn, III noted the
direct impact of energy security on military readiness and flexibility.
According to Deputy Security Lynn, ``Today, energy technology remains a
critical element of our military superiority. Addressing energy needs
must be a fundamental part of our military planning.'' \542\
---------------------------------------------------------------------------

    \542\ U.S. Department of Defense, Speech: Remarks at the White
House Energy Security Summit. Tuesday, April 26, 2011. (http://www.defense.gov/speeches/speech.aspx?speechid=1556) (Last accessed
May 31, 2011).
---------------------------------------------------------------------------

    Thus, to the degree to which the final rules reduce reliance upon
imported energy supplies or promotes the development of technologies
that can be deployed by either consumers or the nation's defense
forces, the United States could expect benefits related to national
security, reduced energy costs, and increased energy supply. These
benefits are why President Obama has identified this program as a key
component for improving energy efficiency and putting America on a

path to reducing oil imports in the Blueprint for a Secure Energy
Future.\543\
---------------------------------------------------------------------------

    \543\ The White House, Blueprint for a Secure Energy Future
(March 30, 2011) (http://www.whitehouse.gov/sites/default/files/blueprint_secure_energy_future.pdf) (Last accessed May 27, 2011).
---------------------------------------------------------------------------

    Although the agencies recognize that there clearly is a benefit to
the United States from reducing dependence on foreign oil, the agencies
have been unable to calculate the monetary benefit that the United
States will receive from the improvements in national security expected
to result from this program. In contrast, the other portion of the
energy security premium, the U.S. macroeconomic disruption and
adjustment cost that arises from U.S. petroleum imports, is included in
the energy security benefits estimated for this program. To summarize,
the agencies have included only the macroeconomic disruption portion of
the energy security benefits to estimate the monetary value of the
total energy security benefits of this program. The agencies have
calculated energy security in very specific terms, as the reduction of
both financial and strategic risks caused by potential sudden
disruptions in the supply of imported petroleum to the U.S. Reducing
the amount of oil imported reduces those risks, and thus increases the
nation's energy security.
    Another commenter, citing Administration guidelines (OMB Circular
A-4) for conducting economic analyses, felt that the agency should
include the monopsony benefit as part of its overall costs and benefits
analysis. After reviewing the guidelines cited by the commenter, the
agencies have concluded that excluding the monopsony benefit from its
overall costs and benefits analysis continues to be appropriate when a
global perspective is taken. However, the agencies recognize that the
monopsony benefit has distributional impacts for the U.S., and continue
to describe and discuss the monopsony benefit in this section of the
Preamble.
    The total annual energy security benefits for the final HD National
Program are reported in Table VIII-23 for the years 2020, 2030, 2040
and 2050.

    Table VIII-23--Total Annual Energy Security Benefits From the HD
              National Program in 2020, 2030, 2040 and 2050
                            [Millions, 2009$]
------------------------------------------------------------------------
                         Year                               Benefits
------------------------------------------------------------------------
2020..................................................              $499
2030..................................................             1,132
2040..................................................             1,477
2050..................................................             1,710
------------------------------------------------------------------------

J. Other Impacts

(i) Noise, Congestion and Accidents
    Increased vehicle use associated with a positive rebound effect
also contributes to increased traffic congestion, motor vehicle
accidents, and highway noise. Depending on how the additional travel is
distributed throughout the day and on where it takes place, additional
vehicle use can contribute to traffic congestion and delays by
increasing traffic volumes on facilities that are already heavily
traveled during peak periods. These added delays impose higher costs on
drivers and other vehicle occupants in the form of increased travel
time and operating expenses, increased costs associated with traffic
accidents, and increased traffic noise. Because drivers do not take
these added costs into account in deciding when and where to travel,
they must be accounted for separately as a cost of the added driving
associated with the rebound effect.
    EPA and NHTSA rely on estimates of congestion, accident, and noise
costs caused by pickup trucks and vans, single unit trucks, buses, and
combination tractors developed by the Federal Highway Administration to
estimate the increased external costs caused by added driving due to
the rebound effect.\544\ The Federal Highway Administration (FHWA)
estimates are intended to measure the increases in costs from added
congestion, property damages and injuries in traffic accidents, and
noise levels caused by various types of trucks that are borne by
persons other than their drivers (or ``marginal'' external costs). EPA
and NHTSA employed estimates from this source previously in the
analysis accompanying the light-Duty 2012-16 MY vehicle rule. The
agencies continue to find them appropriate for this analysis after
reviewing the procedures used by FHWA to develop them and considering
other available estimates of these values.
---------------------------------------------------------------------------

    \544\ These estimates were developed by FHWA for use in its 1997
Federal Highway Cost Allocation Study; See http://www.fhwa.dot.gov/policy/hcas/final/index.htm (last accessed July 21, 2010).
---------------------------------------------------------------------------

    FHWA's congestion cost estimates for trucks, which are weighted
averages based on the estimated fractions of peak and off-peak freeway
travel for each class of trucks, already account for the fact that
trucks make up a smaller fraction of peak period traffic on congested
roads because they try to avoid peak periods when possible. FHWA's
congestion cost estimates focus on freeways because non-freeway effects
are less serious due to lower traffic volumes and opportunities to re-
route around the congestion. The agencies, however, applied the
congestion cost to the overall VMT increase, though the fraction of VMT
on each road type used in MOVES range from 27 to 29 percent of the
vehicle miles on freeways for vocational vehicles and 53 percent for
combination tractors. The results of this analysis potentially
overestimate the costs and provide a conservative estimate.
    The agencies are using FHWA's ``Middle'' estimates for marginal
congestion, accident, and noise costs caused by increased travel from
trucks. This approach is consistent with the current methodology used
in the Light-Duty GHG rulemaking analysis. These costs are multiplied
by the annual increases in vehicle miles travelled from the positive
rebound effect to yield the estimated cost increases resulting from
increased congestion, accidents, and noise during each future year. The
values the agencies used to calculate these increased costs are
included in Table VIII-24.

                          Table VIII-24--Noise, Accident, and Congestion Costs per Mile
                                                     [2009$]
----------------------------------------------------------------------------------------------------------------
                                                              Pickup trucks      Vocational        Combination
                      External costs                          and vans  ($/     vehicles  ($/     tractors  ($/
                                                                  VMT)              VMT)              VMT)
----------------------------------------------------------------------------------------------------------------
Congestion................................................            $0.049            $0.111            $0.108

Accidents.................................................             0.027             0.019             0.022
Noise.....................................................             0.001             0.009             0.020
----------------------------------------------------------------------------------------------------------------

    In aggregate, the increased costs due to noise, accidents, and
congestion from the additional truck driving are presented in Table
VIII-25.

                              Table VIII-25: Accident, Noise, and Congestion Costs
                                                [Millions, 2009$]
----------------------------------------------------------------------------------------------------------------
                                            Pickup trucks      Vocational        Combination
                  Year                        and vans          vehicles          tractors         Total costs
----------------------------------------------------------------------------------------------------------------
2012....................................                $0                $0                $0                $0
2013....................................                 0                 0                 0                 0
2014....................................                 8                21                18                46
2015....................................                15                38                31                84
2016....................................                22                55                43               120
2017....................................                29                71                54               153
2018....................................                36                85                64               186
2020....................................                51               112                83               246
2030....................................               105               195               138               437
2040....................................               130               256               166               551
2050....................................               148               298               191               638
NPV, 3%.................................             1,818             3,620             2,492             7,929
NPV, 7%.................................               832             1,680             1,184             3,695
----------------------------------------------------------------------------------------------------------------

(2) Savings Due to Reduced Refueling Time
    Reducing the fuel consumption of heavy-duty trucks may either
increase their driving range before they require refueling, or motivate
truck purchasers to buy, and manufacturers to offer, smaller fuel
tanks. Keeping the fuel tank the same size allows truck operators to
reduce the frequency with which drivers typically refuel their
vehicles; it thus extends the upper limit of the range they can travel
before requiring refueling. Alternatively, if purchasers and
manufacturers respond to improved fuel efficiency by reducing the size
of fuel tanks to maintain a constant driving range, the smaller tank
will require less time in actual refueling.
    Because refueling time represents a time cost of truck operation,
these time savings should be incorporated into truck purchasers'
decisions over how much fuel-saving technology they want in their
vehicles. The savings calculated here thus raise the same questions
discussed in Preamble VIII.A and RIA Section 9.1 does the apparent
existence of these savings reflect failures in the market for fuel
efficiency, or does it reflect costs not addressed in this analysis?
The response to these questions could vary across truck segment. See
those sections for further analysis of this question.
    This analysis estimates the reduction in the annual time spent
filling the fuel tank; this reduced time could come either from fewer
refueling events, if the fuel tank stays the same size, or less time
spent during each refueling event, if the fuel tank is made
proportionately smaller. The refueling savings are calculated as the
savings in the amount of time that would have been necessary to pump
the fuel. The calculation does not include time spent searching for a
fuel station or other time spent at the station; it is assumed that the
time savings occur only during refueling. The value of the time saved
is estimated at the hourly rate recommended for truck operators ($22.36
in 2009 dollars) in DOT guidance for valuing time savings.\545\
---------------------------------------------------------------------------

    \545\ U.S. Department of Transportation, ``Revised Departmental
Guidance for Valuation of Travel Time in Economic Analysis,''
February 11, 2003, Table 4 (which shows a value of $18.10 in 2000
dollars); available at http://ostpxweb.dot.gov/policy/Data/VOTrevision1_2-11-03.pdf (last accessed September 9, 2010).
---------------------------------------------------------------------------

    The refueling savings include the increased fuel consumption
resulting from additional mileage associated with the rebound effect.
However, the estimate of the rebound effect does not account for any
reduction in net operating costs from lower refueling time. As
discussed earlier, the rebound effect should be a measure of the change
in VMT with respect to the net change in overall operating costs.
Ideally, changes in refueling time would factor into this calculation,
although the effect is expected to be minor because refueling time
savings are small relative to the value of reduced fuel expenditures.
    The details of this calculation are discussed in the RIA Chapter
9.3.2. The savings associated with reduced refueling time for a truck
of each type throughout its lifetime are shown in Table VIII-26. The
aggregate savings associated with reduced refueling time are shown in
Table VIII-27 for vehicles sold in 2014 through 2050.

                   Table VIII-26--Lifetime Refueling Savings for a 2018 MY Truck of Each Type
                                                     [2009$]
----------------------------------------------------------------------------------------------------------------
                                                              Pickup trucks      Vocational        Combination
                                                                and vans          vehicles           tractor
----------------------------------------------------------------------------------------------------------------
3% Discount Rate..........................................               $31               $34              $341
7% Discount Rate..........................................                19                22               223
----------------------------------------------------------------------------------------------------------------

                                     Table VIII-27--Annual Refueling Savings
                                                [Millions, 2009$]
----------------------------------------------------------------------------------------------------------------
                                            Pickup trucks      Vocational        Combination
                  Year                        and vans          vehicles           tractor            Total
----------------------------------------------------------------------------------------------------------------
2012....................................              $0.0              $0.0              $0.0              $0.0
2013....................................               0.0               0.0               0.0               0.0
2014....................................               0.2               1.4               8.0               9.6
2015....................................               0.5               2.6              14.3              17.3
2016....................................               1.3               3.8              19.6              24.6
2017....................................               2.7               6.2              26.7              35.6
2018....................................               5.2               8.5              33.8              47.5
2020....................................              10.5              12.7              46.2              69.3
2030....................................              32.6              25.8              82.9             141
2040....................................              43.4              35.1             100.5             179
2050....................................              50.1              41.3             116.1             207
NPV, 3%.................................             541               468             1,467             2,476
NPV, 7%.................................             231               210               685             1,126
----------------------------------------------------------------------------------------------------------------

K. The Effect of Safety Standards and Voluntary Safety Improvements on
Vehicle Weight

    Safety standards developed by NHTSA in previous rulemakings may
make compliance with the fuel efficiency and CO2 emissions
standards more difficult or may reduce the projected benefits of the
program. The primary way that safety regulations can impact fuel
efficiency and CO2 emissions is through increased vehicle
weight, which reduces the fuel efficiency (and thus increases the
CO2 emissions) of the vehicle. Using MY 2010 as a baseline,
this section discusses the effects of other government regulations on
MYs 2014-2016 medium and heavy-duty vehicle fuel efficiency and
CO2 emissions. At this time, no known safety standards will
affect new models in MY 2017 or 2018. NHTSA's estimates are based on
cost and weight tear-down studies of a few vehicles and cannot possibly
cover all the variations in the manufacturers' fleets. NHTSA also
requested, and various manufacturers provided, confidential estimates
of increases in weight resulting from safety improvements. Those
increases are shown in subsequent tables.
    We have broken down our analysis of the impact of safety standards
that might affect the MYs 2014-2016 fleets into three parts: (1) Those
NHTSA final rules with known effective dates, (2) proposed rules or
soon-to-be proposed rules by NHTSA with or without final effective
dates, and (3) currently voluntary safety improvements planned by the
manufacturers.
(1) Weight Impacts of Required Safety Standards
    NHTSA has undertaken several rulemakings in which several standards
would become effective for medium- and heavy-duty (MD/HD) vehicles
between MY 2014 and MY 2016. We will examine the potential impact on
MD/HD vehicle weights for MYs 2014-2016 using MY 2010 as a baseline.

 FMVSS 119, Heavy Truck Tires Endurance and High Speed Tests.
 FMVSS 121, Air Brake Systems Stopping Distance.
 FMVSS 214, Motor Coach Lap/Shoulder Belts.
 MD/HD Vehicle Electronic Stability Control Systems.
(a) FMVSS 119, Heavy Truck Tires Endurance and High Speed Tests
    NHTSA tentatively determined that the FMVSS No. 119 performance
tests developed in 1973 should be updated to reflect the increased
operational speeds and duration of truck tires in commercial service. A
Notice of Proposed Rulemaking (NPRM) was issued December 7, 2010 (75 FR
60036). It proposed to increase significantly the stringency of the
endurance test and to add a new high speed test. The data in the large
truck crash causation study (LTCCS) that preceded that NPRM found that
J and L load range tires were having proportionately more problems than
the other sizes and the agency's test results indicate that H, J, and L
load range tires are more likely to fail the proposed requirements
among the targeted F, G, H, J and L load range tires.\546\ To address
these problems, the H and J load range tires could potentially use
improved rubber compounds, which would add no weight to the tires, to
reduce heat retention and improve the durability of the tires. The L
load range tires, in contrast, appear to need to use high tensile
strength steel chords in the tire bead, carcass and belt areas, which
would enable a weight reduction with no strength penalties. Thus, if
the update to FMVSS No. 119 was finalized, we anticipate no change in
weight for H and J load range tires and a small reduction in weight for
L load range tires. This proposal could become a final rule with an
effective date of MY 2016.
---------------------------------------------------------------------------

    \546\ ``Preliminary Regulatory Impact Analysis, FMVSS No. 119,
New Pneumatic Tires for Motor Vehicles with a GVWR of More Than
4,536 kg (10,000 pounds), June 2010.
---------------------------------------------------------------------------

(b) FMVSS No. 121, Airbrake Systems Stopping Distance
    FMVSS No. 121 contains performance and equipment requirements for
braking systems on vehicles with air brake systems. The most recent
major final rule affecting FMVSS No. 121 was published on July 27,
2009, and became effective on November 24, 2009 (MY 2009). The final
rule requires the vast

majority of new heavy truck tractors (approximately 99 percent of the
fleet) to achieve a 30 percent reduction in stopping distance compared
to currently required levels. Three-axle tractors with a gross vehicle
weight rating (GVWR) of 59,600 pounds or less must meet the reduced
stopping distance requirements by August 1, 2011 (MY 2011), while two-
axle tractors and tractors with a GVWR above 59,600 pounds must meet
the reduced stopping distance requirements by the later date of August
1, 2013 (MY 2013). NHTSA determined that there are several brake
systems that can meet the requirements established in the final rule,
including installation of larger S-cam drum brakes or disc brake
systems at all positions, or hybrid disc and larger rear S-cam drum
brake systems.
    According to data provided by a manufacturer (Bendix) in response
to the NPRM, the heaviest drum brakes weigh more than the lightest disc
brakes, while the heaviest disc brakes weigh more than the lightest
drum brakes. For a three-axle tractor equipped with all disc brakes,
then, the total weight could increase by 212 pounds or could decrease
by 134 pounds compared to an all-drum-braked tractor, depending on
which disc or drum brakes are used for comparison. The improved brakes
may add a small amount of weight to the affected vehicles for MYs 2014-
2016, resulting in a slight increase in fuel consumption.
(c) FMVSS No. 208, Motorcoach Lap/Shoulder Belts
    NHTSA is proposing lap/shoulder belts for all motorcoach seats.
About 2,000 motorcoaches are sold per year in the United States. Based
on preliminary results from the agency's cost/weight teardown studies
of motor coach seats,\547\ NHTSA estimates that the weight added by 3-
point lap/shoulder belts ranges from 5.96 to 9.95 pounds per 2-person
seat. This is the weight only of the seat belt assembly itself, and
does not include changing the design of the seat, reinforcing the
floor, walls or other areas of the motor coach. Few current production
motor coaches have been installed with lap/shoulder belts on their
seats, and the number of vehicles with these belts already installed
could be negligible. Assuming a 54 passenger motor coach, the added
weight for the 3-point lap/shoulder belt assembly would be in the range
of 161 to 269 pounds (27 * (5.96 to 9.95)) per vehicle. This proposal
could become a final rule with an effective date of MY 2016.
---------------------------------------------------------------------------

    \547\ Cost and Weight Analysis of Two Motorcoach Seating
Systems: One With and One Without Three-Point Lap/Shoulder Belt
Restraints, Ludtke and Associates, July 2010.
---------------------------------------------------------------------------

(d) Electronic Stability Control Systems (ESC) for Medium- and Heavy-
Duty (MD/HD) Vehicles
    The purpose of an ESC system for MD/HD vehicles is to reduce
crashes caused by rollover or by directional loss-of-control. ESC
monitors a vehicle's rollover threshold and lateral stability using
vehicle speed, wheel speed, steering wheel angle, lateral acceleration,
side slip and yaw rate data and upon sensing an impending rollover or
loss of directional control situation automatically reduces engine
throttle and applies braking forces to individual wheels or sets of
wheel to slow the vehicle down and regain directional control. ESC is
not currently required in MD/HD vehicles, but could be proposed to be
required in these vehicles by NHTSA. FMVSS No. 105, Hydraulic and
electric brake systems, requires multipurpose passenger vehicles,
trucks and buses with a GVWR greater than 4,536 kg (10,000 pounds) to
be equipped with an antilock brake system (ABS). All MD/HD vehicles
having a GVWR of more than 10,000 pounds, are required to have ABS
installed by that standard.
    In addition to the existing ABS functionality, ESC requires sensors
including a yaw rate sensor, lateral acceleration sensor, steering
angle sensor and brake pressure sensor along with a brake solenoid
valve. According to data provided by Meritor WABCO, the weight of an
ESC system for the model 4S4M tractor is estimated to be around 55.5
pounds, and the weight of the ABS only is estimated to be 45.5 pounds.
Thus, we estimate the added weight for the ESC for the vehicle to be 10
(55.5-45.5) pounds.
(2) Summary--Overview of Anticipated Weight Increases
    Table VIII-28 summarizes estimates made by NHTSA regarding the
weight added by the above discussed standards or likely rulemakings.
NHTSA estimates that weight additions required by final rules and
likely NHTSA regulations effective in MY 2016 compared to the MY 2010
fleet will increase motor coach vehicle weight by 171 to 279 pounds and
will increase other heavy-duty truck weights by 10 pounds.

   Table VIII-28--Weight Additions Due to Final Rules or Likely NHTSA
      Regulations: Comparing MY 2016 to the MY 2010 Baseline Fleet
------------------------------------------------------------------------
                                       Added weight in   Added weight in
            Standard No.                pounds MD/HD     kilograms MD/HD
                                           vehicle           vehicle
------------------------------------------------------------------------
119.................................                 0                 0
121.................................             \a\ 0             \a\ 0
208 Motor coaches only..............           161-269            73-122
MD/HD Vehicle Electronic Stability                  10               4.5
 Control Systems....................
Total Motor coaches.................           171-279        77.5-126.5
Total All other MD/HD vehicles......                10               4.5
------------------------------------------------------------------------
Note:
\a\ NHTSA's final rule on Air Brakes, docket NHTSA-2009-0083, dated July
  27, 2009, concluded that a small amount of weight would be added to
  the brake systems but a weight value was not provided.

(3) Effects of Vehicle Mass Reduction on Safety
    NHTSA and EPA have been considering the effect of vehicle weight on
vehicle safety for the past several years in the context of our joint
rulemaking for light-duty vehicle CAFE and GHG standards, consistent
with NHTSA's long-standing consideration of safety effects in setting
CAFE standards. Combining all modes of impact, the latest analysis by
NHTSA for the light-duty 2012-2016 MY vehicle rule \548\ found that
reducing the weight of the heavier light trucks (LT > 3,870) had a
positive overall effect on safety, reducing societal fatalities.
---------------------------------------------------------------------------

    \548\ ``Final Regulatory Impact Analysis, Corporate Average Fuel
Economy for MY 2012--MY 2016 Passenger Cars and Light Trucks'',
NHTSA, March 2010, (Docket No. NHTSA-2009-0059-0344.1).
---------------------------------------------------------------------------

    In the context of the current rulemaking for HD fuel consumption
and GHG standards, one would expect that reducing the weight of medium-
duty trucks similarly would, if anything, have a positive impact on
safety. However, given the large difference in weight between light-
duty vehicles and medium-duty trucks, and even larger difference
between light-duty vehicles and heavy-duty vehicles with loads, the
agencies believe that the impact of weight reductions of medium- and
heavy-duty trucks would not have a noticeable impact on safety for any
of these classes of vehicles.
    However, the agencies recognize that it is important to conduct
further study and research into the interaction of mass, size and
safety to assist future rulemakings, and we expect that the
collaborative interagency work currently on-going to address this issue
for the light-duty vehicle context may also be able to inform our
evaluation of safety effects for the final HD program. We intend to
continue monitoring this issue going forward, and may take steps in a
future rulemaking if it appears that the MD/HD fuel efficiency and GHG
standards have unforeseen safety consequences. The American Chemistry
Council stated in comments to the agencies that plastics and plastic
composite materials provide a new way to lighten vehicles while
maintaining passenger safety. They added that properties of plastics
including strength to weight ratio, energy absorption, and flexible
design make these materials well suited for the manufacture of medium-
and heavy-duty vehicles. They submitted supporting analyses with their
comments. The National School Transportation Association stated that
added structural integrity requirements increase weight of school
buses, and thus decrease fuel economy. They asked that if there are
safety and fuel economy trade-offs, manufacturers should be able to
receive a waiver from the regulation's requirements. Since no weight
reduction is required for school buses--or any other vocational
vehicle--the agencies do not believe this is an issue with the current
regulation.

L. Summary of Costs and Benefits

    In this section, the agencies present a summary of costs, benefits,
and net benefits of the HD National program.
    Table VIII-29 shows the estimated annual monetized costs of the
final program for the indicated calendar years. The table also shows
the net present values of those costs for the calendar years 2012-2050
using both 3 percent and 7 percent discount rates.\549\ Table VIII-30
shows the estimated annual monetized fuel savings of the final program.
The table also shows the net present values of those fuel savings for
the same calendar years using both 3 percent and 7 percent discount
rates. In this table, the aggregate value of fuel savings is calculated
using pre-tax fuel prices since savings in fuel taxes do not represent
a reduction in the value of economic resources utilized in producing
and consuming fuel. Note that fuel savings shown here result from
reductions in fleet-wide fuel use. Thus, they grow over time as an
increasing fraction of the fleet meets the 2018 standards.
---------------------------------------------------------------------------

    \549\ For the estimation of the stream of costs and benefits, we
assume that after implementation of the final MY 2014-2017
standards, the 2017 standards apply to each year out to 2050.

                                              Table VIII-29--Estimated Monetized Costs of the Final Program
                                                                   [Millions, 2009$] a
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                NPV, Years 2012-   NPV, Years 2012-
                                                                       2020        2030        2040        2050     2050, 3% discount  2050, 7% discount
                                                                                rate               rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
Technology Costs..................................................     $2,000      $2,200      $2,700      $3,300            $47,400            $24,700
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note:
\a\ Technology costs for separate truck segments can be found in Section VIII.B.1.

                                               Table VIII-30--Estimated Fuel Savings of the Final Program
                                                                   [Millions, 2009$] a
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                NPV, Years 2012-   NPV, Years 2012-
                                                                       2020        2030        2040        2050     2050, 3% discount  2050, 7% discount
                                                                                rate               rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fuel Savings (pre-tax)............................................     $9,600     $20,600     $28,000     $36,500           $375,300           $166,500
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note:
\a\ Fuel savings for separate truck segments can be found in Section VIII.B.1.

    Table VIII-31 presents estimated annual monetized benefits for the
indicated calendar years. The table also shows the net present values
of those benefits for the calendar years 2012-2050 using both 3 percent
and 7 percent discount rates. The table shows the benefits of reduced
CO2 emissions--and consequently the annual quantified
benefits (i.e., total benefits)--for each of four SCC values estimated
by the interagency working group. As discussed in the RIA Section 9.4,
there are some limitations to the SCC analysis, including the
incomplete way in which the integrated assessment models capture
catastrophic and non-catastrophic impacts, their incomplete

treatment of adaptation and technological change, uncertainty in the
extrapolation of damages to high temperatures, and assumptions
regarding risk aversion.
    In addition, these monetized GHG benefits exclude the value of net
reductions in non-CO2 GHG emissions (CH4,
N2O, HFC) expected under this action. Although EPA has not
monetized the benefits of reductions in non-CO2 GHGs, the
value of these reductions should not be interpreted as zero. Rather,
the net reductions in non-CO2 GHGs will contribute to this
program's climate benefits, as explained in Section VI.D.

                       Table VIII-31--Monetized Benefits Associated With the Final Program
                                                [Millions, 2009$]
----------------------------------------------------------------------------------------------------------------
                                                                              NPV, Years 2012-  NPV, Years 2012-
                                                                                2050, 3%          2050, 7%
                                     2020       2030       2040       2050      discount rate     discount rate
                                                                                \a\               \a\
----------------------------------------------------------------------------------------------------------------
                               Reduced CO2 Emissions at each assumed SCC value \b\
----------------------------------------------------------------------------------------------------------------
5% (avg SCC)....................       $300       $700     $1,200     $1,700            $9,000            $9,000
3% (avg SCC)....................      1,000      2,500      3,600      4,800            46,100            46,100
2.5% (avg SCC)..................      1,600      3,800      5,400      7,000            78,000            78,000
3% (95th percentile)............      3,100      7,500     11,100     14,600           140,400           140,400
Energy Security Impacts (price          500      1,100      1,500      1,700            19,800             8,800
 shock).........................
Accidents, Congestion, Noise \f\       -200       -400       -600       -600            -7,900            -3,700
Refueling Savings...............        100        100        200        200             2,500             1,100
Non-GHG Impacts c d.............          B      2,800      2,800      2,800            25,300             9,100
Non-CO2 GHG Impacts \e\.........        n/a        n/a        n/a        n/a               n/a               n/a
----------------------------------------------------------------------------------------------------------------
                               Total Annual Benefits at each assumed SCC value \b\
----------------------------------------------------------------------------------------------------------------
5% (avg SCC)....................        700      4,300      5,100      5,800            48,700            24,300
3% (avg SCC)....................      1,400      6,100      7,500      8,900            85,800            61,400
2.5% (avg SCC)..................      2,000      7,400      9,300     11,100           117,700            93,300
3% (95th percentile)............      3,500     11,100     15,000     18,700           180,100           155,700
----------------------------------------------------------------------------------------------------------------
Notes:
\a\ Net present value of reduced CO2 emissions is calculated differently than other benefits. The same discount
  rate used to discount the value of damages from future emissions (SCC at 5, 3, 2.5 percent) is used to
  calculate net present value of SCC for internal consistency. Refer to the SCC TSD for more detail.
\b\ Section VIII.G notes that SCC increases over time. Corresponding to the years in this table, the SCC
  estimates range as follows: for Average SCC at 5%: $5-$16; for Average SCC at 3%: $22-$46; for Average SCC at
  2.5%: $36-$66; and for 95th percentile SCC at 3%: $66-$139. See Section VIII.F.
\c\ Note that ``B'' indicates unquantified criteria pollutant benefits in the year 2020. For the analysis of the
  final program, we only modeled the rule's PM2.5- and ozone-related impacts in the calendar year 2030. For the
  purposes of estimating a stream of future-year criteria pollutant benefits, we assume that the benefits out to
  2050 are equal to, and no less than, those modeled in 2030 as reflected by the stream of estimated future
  emission reductions. The NPV of criteria pollutant-related benefits should therefore be considered a
  conservative estimate of the potential benefits associated with the final program.
\d\ Non-GHG-related health and welfare impacts (related to PM2.5 and ozone exposure) range between $1,300 and
  $4,200 million in 2030, 2040, and 2050. $2,800 was chosen as the mid-point of this range for the purposes of
  estimating total benefits across all monetized categories.
\e\ The monetized GHG benefits presented in this analysis exclude the value of changes in non-CO2 GHG emissions
  expected under this program (See RIA Chapter 5). Although EPA has not monetized changes in non-CO2 GHGs, the
  value of any increases or reductions should not be interpreted as zero.
\f\ Negative sign represents an increase in Accidents, Congestion, and Noise.

    Table VIII-32 presents estimated annual net benefits for the
indicated calendar years. The table also shows the net present values
of those net benefits for the calendar years 2012-2050 using both 3
percent and 7 percent discount rates. The table includes the benefits
of reduced CO2 emissions (and consequently the annual net
benefits) for each of four SCC values considered by EPA.

                                         Table VIII-32--Monetized Net Benefits Associated With the Final Program
                                                                    [Millions, 2009$]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               2020            2030            2040            2050         NPV, 3% \a\     NPV, 7% \a\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Technology Costs........................................          $2,000          $2,200          $2,700          $3,300         $47,400         $24,700
Fuel Savings............................................           9,600          20,600          28,000          36,500         375,300         166,500
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                   Total Annual Benefits at each assumed SCC value \b\
--------------------------------------------------------------------------------------------------------------------------------------------------------
5% (avg SCC)............................................             700           4,300           5,100           5,800          48,700          24,300
3% (avg SCC)............................................           1,400           6,100           7,500           8,900          85,800          61,400
2.5% (avg SCC)..........................................           2,000           7,400           9,300          11,100         117,700          93,300
3% (95th percentile)....................................           3,500          11,100          15,000          18,700         180,100         155,700
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                  Monetized Net Benefits at each assumed SCC value \c\
--------------------------------------------------------------------------------------------------------------------------------------------------------
5% (avg SCC)............................................           8,300          22,700          30,400          39,000         376,600         166,100
3% (avg SCC)............................................           9,000          24,500          32,800          42,100         413,700         203,200

2.5% (avg SCC)..........................................           9,600          25,800          34,600          44,300         445,600         235,100
3% (95th percentile)....................................          11,100          29,500          40,300          51,900         508,000         297,500
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes:
\a\ Net present value of reduced CO2 emissions is calculated differently than other benefits. The same discount rate used to discount the value of
  damages from future emissions (SCC at 5, 3, 2.5 percent) is used to calculate net present value of SCC for internal consistency. Refer to the SCC TSD
  for more detail.
\b\ Section VIII.G notes that SCC increases over time. Corresponding to the years in this table, the SCC estimates range as follows: for Average SCC at
  5%: $5-$16; for Average SCC at 3%: $22-$46; for Average SCC at 2.5%: $36-$66; and for 95th percentile SCC at 3%: $66-$139. Section VIII.G also
  presents these SCC estimates.
\c\ Net Benefits equal Fuel Savings minus Technology Costs plus Benefits.

    EPA also conducted a separate analysis of the total benefits over
the model year lifetimes of the 2014 through 2018 model year trucks. In
contrast to the calendar year analysis presented above in Table VIII-29
through Table VIII-32, the model year lifetime analysis below shows the
impacts of the final program on vehicles produced during each of the
model years 2014 through 2018 over the course of their expected
lifetimes. The net societal benefits over the full lifetimes of
vehicles produced during each of the five model years from 2014 through
2018 are shown in Table VIII-33 and Table VIII-34 at both 3 percent and
7 percent discount rates, respectively.

    Table VIII-33--Monetized Technology Costs, Fuel Savings, Benefits, and Net Benefits Associated With the Lifetimes of 2014-2018 Model Year Trucks
                                                           [Millions, 2009$; 3% Discount Rate]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                         2014 MY         2015 MY         2016 MY         2017 MY         2018 MY     Sum
--------------------------------------------------------------------------------------------------------------------------------------------------------
Technology Costs...................................................          $1,600          $1,400          $1,500          $1,600          $2,000  $8,
                                                                                100
Fuel Savings (pre-tax).............................................           9,300           8,300           8,100          11,500          12,900  50,
                                                                                100
Energy Security Impacts (price shock)..............................             500             400             400             600             700  2,7
                                                                                00
Accidents, Congestion, Noise \e\...................................            -300            -300            -300            -300            -300  -1,
                                                                                500
Refueling Savings..................................................              60              60              60              80             100  400
Non-CO2 GHG Impacts and Non-GHG Impactsc d.........................             n/a             n/a             n/a             n/a             n/a  n/a
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                   Reduced CO2 Emissions at each assumed SCC value a b
--------------------------------------------------------------------------------------------------------------------------------------------------------
5% (avg SCC).......................................................             200             200             200             300             300  1,2
                                                                                00
3% (avg SCC).......................................................           1,100             900             900           1,300           1,500  5,7
                                                                                00
2.5% (avg SCC).....................................................           1,800           1,600           1,500           2,100           2,400  9,4
                                                                                00
3% (95th percentile)...............................................           3,300           2,900           2,800           4,000           4,500  17,
                                                                                000
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                  Monetized Net Benefits at each assumed SCC value a,b
--------------------------------------------------------------------------------------------------------------------------------------------------------
5% (avg SCC).......................................................           8,200           7,300           7,000          10,600          11,700  44,
                                                                                800
3% (avg SCC).......................................................           9,100           8,000           7,700          11,600          12,900  49,
                                                                                300
2.5% (avg SCC).....................................................           9,800           8,700           8,300          12,400          13,800  53,
                                                                                000
3% (95th percentile)...............................................          11,300          10,000           9,600          14,300          15,900  60,
                                                                                600
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes:
\a\ Net present value of reduced CO2 emissions is calculated differently than other benefits. The same discount rate used to discount the value of
  damages from future emissions (SCC at 5, 3, 2.5 percent) is used to calculate net present value of SCC for internal consistency. Refer to the SCC TSD
  for more detail.
\b\ Section VIII.G notes that SCC increases over time. Corresponding to the years in this table, the SCC estimates range as follows: for Average SCC at
  5%: $5-$16; for Average SCC at 3%: $22-$46; for Average SCC at 2.5%: $36-$66; and for 95th percentile SCC at 3%: $66-$139. Section VIII.G also
  presents these SCC estimates.
\c\ The monetized GHG benefits presented in this analysis exclude the value of changes in non-CO2 GHG emissions expected under this action (See RIA
  Chapter 5). Although EPA has not monetized changes in non-CO2 GHGs, the value of any increases or reductions should not be interpreted as zero.
\d\ Due to analytical and resource limitations, MY non-GHG emissions (direct PM, VOCs, NO2 and SO2) were not estimated for this analysis.
\e\ Negative sign represents an increase in Accidents, Congestion, and Noise.

    Table VIII-34--Monetized Technology Costs, Fuel Savings, Benefits, and Net Benefits Associated With the Lifetimes of 2014-2018 Model Year Trucks
                                                           [Millions, 2009$; 7% Discount Rate]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              2014 MY         2015 MY         2016 MY         2017 MY         2018 MY           Sum
--------------------------------------------------------------------------------------------------------------------------------------------------------
Technology Costs........................................          $1,600          $1,400          $1,500          $1,600          $2,000          $8,100
Fuel Savings (pre-tax)..................................           6,900           5,900           5,600           7,600           8,300          34,400
Energy Security Impacts (price shock)...................             400             300             300             400             400           1,800
Accidents, Congestion, Noise \e\........................            -200            -200            -200            -200            -200          -1,000

Refueling Savings.......................................              50              40              40              60              60             200
Non-CO2 GHG Impacts and Non-GHG Impacts c d.............             n/a             n/a             n/a             n/a             n/a             n/a
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                   Reduced CO2 Emissions at each assumed SCC value a b
--------------------------------------------------------------------------------------------------------------------------------------------------------
5% (avg SCC)............................................             200             200             200             300             300           1,200
3% (avg SCC)............................................           1,100             900             900           1,300           1,500           5,700
2.5% (avg SCC)..........................................           1,800           1,600           1,500           2,100           2,400           9,400
3% (95th percentile)....................................           3,300           2,900           2,800           4,000           4,500          17,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                   Monetized Net Benefits at each assumed SCC valuea b
--------------------------------------------------------------------------------------------------------------------------------------------------------
5% (avg SCC)............................................           5,800           4,800           4,400           6,600           6,900          28,500
3% (avg SCC)............................................           6,700           5,500           5,100           7,600           8,100          33,000
2.5% (avg SCC)..........................................           7,400           6,200           5,700           8,400           9,000          36,700
3% (95th percentile)....................................           8,900           7,500           7,000          10,300          11,100          44,300
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes:
\a\ Net present value of reduced CO2 emissions is calculated differently than other benefits. The same discount rate used to discount the value of
  damages from future emissions (SCC at 5, 3, 2.5 percent) is used to calculate net present value of SCC for internal consistency. Refer to the SCC TSD
  for more detail.
\b\ Section VIII.G notes that SCC increases over time. Corresponding to the years in this table, the SCC estimates range as follows: for Average SCC at
  5%: $5-$16; for Average SCC at 3%: $22-$46; for Average SCC at 2.5%: $36-$66; and for 95th percentile SCC at 3%: $66-$139. Section VIII.G also
  presents these SCC estimates.
\c\ The monetized GHG benefits presented in this analysis exclude the value of changes in non-CO2 GHG emissions expected under this action (See RIA
  chapter 5). Although EPA has not monetized changes in non-CO2 GHGs, the value of any increases or reductions should not be interpreted as zero.
\d\ Due to analytical and resource limitations, MY non-GHG emissions (direct PM, VOCs, NO2 and SO2) were not estimated for this analysis.
\e\ Negative sign represents an increase in Accidents, Congestion, and Noise.

    Table VIII-35 and Table VIII-36 show similar model year estimates
to those provided above in Table VIII-33 and Table VIII-34, but reflect
specific differences in the NHTSA HD program over the 3 mandatory model
years of that program. These include no HD diesel engine impacts prior
to MY 2017, assumption of the NHTSA phase-in schedule for HD pickup
trucks and vans which achieves 3 year phase-in stability (67%-67%-67%-
100% in MY 2016-2019 respectively), the inclusion of combination
tractors from MY 2016 forward, and the exclusion of RVs, which are not
regulated by NHTSA.

     Table VIII-35--Monetized Technology Costs, Fuel Savings, Benefits, and Net Benefits Associated With the
                                    Lifetimes of 2016-2018 Model Year Trucks
                                       [Millions, 2009$; 3% Discount Rate]
----------------------------------------------------------------------------------------------------------------
                                                      2016 MY         2017 MY         2018 MY           Sum
----------------------------------------------------------------------------------------------------------------
Technology Costs................................          $1,500          $1,600          $1,700          $5,200
Fuel Savings (pre-tax)..........................           5,500          10,900          11,500          27,900
Energy Security Impacts (price shock)...........             300             600             600           1,500
Accidents, Congestion, Noise \e\................            -300            -300            -300            -900
Refueling Savings...............................              40              80              80             200
Non-CO2 GHG Impacts and Non-GHG Impacts c d.....             n/a             n/a             n/a             n/a
----------------------------------------------------------------------------------------------------------------
                               Reduced CO2 Emissions at each assumed SCC value a b
----------------------------------------------------------------------------------------------------------------
5% (avg SCC)....................................             100             300             300             700
3% (avg SCC)....................................             600           1,200           1,300           3,100
2.5% (avg SCC)..................................           1,000           2,000           2,200           5,200
3% (95th percentile)............................           1,900           3,800           4,000           9,700
----------------------------------------------------------------------------------------------------------------
                              Monetized Net Benefits at each assumed SCC value a b
----------------------------------------------------------------------------------------------------------------
5% (avg SCC)....................................           4,100          10,000          10,500          24,200
3% (avg SCC)....................................           4,600          10,900          11,500          26,600
2.5% (avg SCC)..................................           5,000          11,700          12,400          28,700
3% (95th percentile)............................           5,900          13,500          14,200          33,200
----------------------------------------------------------------------------------------------------------------
Notes:
\a\ Net present value of reduced CO2 emissions is calculated differently than other benefits. The same discount
  rate used to discount the value of damages from future emissions (SCC at 5, 3, 2.5 percent) is used to
  calculate net present value of SCC for internal consistency. Refer to the SCC TSD for more detail.

\b\ Section VIII.G notes that SCC increases over time. Corresponding to the years in this table, the SCC
  estimates range as follows: for Average SCC at 5%: $5-$16; for Average SCC at 3%: $22-$46; for Average SCC at
  2.5%: $36-$66; and for 95th percentile SCC at 3%: $66-$139. Section VIII.G also presents these SCC estimates.
\c\ The monetized GHG benefits presented in this analysis exclude the value of changes in non-CO2 GHG emissions
  expected under this program (See RIA Chapter 5). Although EPA has not monetized changes in non-CO2 GHGs, the
  value of any increases or reductions should not be interpreted as zero.
\d\ Due to analytical and resource limitations, MY non-GHG emissions (direct PM, VOCs, NO2 and SO2) were not
  estimated for this analysis.
\e\ Negative sign represents an increase in Accidents, Congestion, and Noise.

     Table VIII-36--Monetized Technology Costs, Fuel Savings, Benefits, and Net Benefits Associated With the
                                    Lifetimes of 2016-2018 Model Year Trucks
                                       [Millions, 2009$; 7% Discount Rate]
----------------------------------------------------------------------------------------------------------------
                                                      2016 MY         2017 MY         2018 MY           Sum
----------------------------------------------------------------------------------------------------------------
Technology Costs................................          $1,500          $1,600          $1,700          $5,200
Fuel Savings (pre-tax)..........................           3,800           7,200           7,300          18,300
Energy Security Impacts (price shock)...........             200             400             400           1,000
Accidents, Congestion, Noise \e\................            -200            -200            -200            -600
Refueling Savings...............................              30              50              50             130
Non-CO2 GHG Impacts and Non-GHG Impacts c d.....             n/a             n/a             n/a             n/a
----------------------------------------------------------------------------------------------------------------
                               Reduced CO2 Emissions at each assumed SCC value a b
----------------------------------------------------------------------------------------------------------------
5% (avg SCC)....................................             100             300             300             700
3% (avg SCC)....................................             600           1,200           1,300           3,100
2.5% (avg SCC)..................................           1,000           2,000           2,200           5,200
3% (95th percentile)............................           1,900           3,800           4,000           9,700
----------------------------------------------------------------------------------------------------------------
                              Monetized Net Benefits at each assumed SCC value a b
----------------------------------------------------------------------------------------------------------------
5% (avg SCC)....................................           2,400           6,200           6,200          14,300
3% (avg SCC)....................................           2,900           7,100           7,200          16,700
2.5% (avg SCC)..................................           3,300           7,900           8,100          18,800
3% (95th percentile)............................           4,200           9,700           9,900          23,300
----------------------------------------------------------------------------------------------------------------
Notes:
\a\ Net present value of reduced CO2 emissions is calculated differently than other benefits. The same discount
  rate used to discount the value of damages from future emissions (SCC at 5, 3, 2.5 percent) is used to
  calculate net present value of SCC for internal consistency. Refer to the SCC TSD for more detail.
\b\ Section VIII.G notes that SCC increases over time. Corresponding to the years in this table, the SCC
  estimates range as follows: for Average SCC at 5%: $5-$16; for Average SCC at 3%: $22-$46; for Average SCC at
  2.5%: $36-$66; and for 95th percentile SCC at 3%: $66-$139. Section VIII.G also presents these SCC estimates.
\c\ The monetized GHG benefits presented in this analysis exclude the value of changes in non-CO2 GHG emissions
  expected under this program (See RIA Chapter 5). Although EPA has not monetized changes in non-CO2 GHGs, the
  value of any increases or reductions should not be interpreted as zero.
\d\ Due to analytical and resource limitations, MY non-GHG emissions (direct PM, VOCs, NO2 and SO2) were not
  estimated for this analysis.
\e\ Negative sign represents an increase in Accidents, Congestion, and Noise.

M. Employment Impacts

(1) Introduction
    Although analysis of employment impacts is not part of a cost-
benefit analysis (except to the extent that labor costs contribute to
costs), employment impacts of federal rules are of particular concern
in the current economic climate of sizeable unemployment. The recently
issued Executive Order 13563, ``Improving Regulation and Regulatory
Review'' (January 18, 2011), states, ``Our regulatory system must
protect public health, welfare, safety, and our environment while
promoting economic growth, innovation, competitiveness, and job
creation'' (emphasis added). Although EPA and NHTSA did not undertake
an employment analysis of the proposed rules, several commenters
suggested that we undertake an employment analysis for the final
rulemaking. Consistent with Executive order 13563, we have provided a
discussion of the potential employment impacts of the Heavy-Duty
National Program.
    In recent rulemakings, EPA has generally focused its employment
analysis on the regulated sector and the suppliers of pollution
abatement equipment. However, in this action, the agencies are offering
qualitative assessment for related industries of interest. For the
regulated sector, the agencies rely on Morgenstern et al. for
guidance.\550\ Our general conclusion is that employment impacts in the
regulated sector (truck and engine manufacturing) and the parts sectors
depend on a combination of factors, some of which are positive, and
some of which can be positive or negative. In the related industries,
the analysis concludes that effects on employment in the transport and
shipping sectors are ambiguous; the fuel supplying sectors may face
reduced employment; and there may be increased general employment due
to reduction in costs that may be passed along to the transport
industry and thus to the public. Because measuring employment effects
depends on a variety of inputs and assumptions, some of which are known
with more certainty than others, and because we did not include an
employment analysis in the NPRM and provide opportunity for public
comment on the methods, we here present a qualitative discussion.
Because the discussion is qualitative, we do not sum the net effects on
employment. We also note that the employment effects may be different
in the immediate implementation phase than in the ongoing compliance
phase; this analysis

focuses on the longer-term effects rather than the immediate effects.
---------------------------------------------------------------------------

    \550\ Morgenstern, Richard D., William A. Pizer, and Jhih-Shyang
Shih. ``Jobs Versus the Environment: An Industry-Level
Perspective.'' Journal of Environmental Economics and Management 43
(2002): 412-436.
---------------------------------------------------------------------------

    When the economy is at full employment, an environmental regulation
is unlikely to have much impact on net overall U.S. employment;
instead, labor would primarily be shifted from one sector to another.
These shifts in employment impose an opportunity cost on society,
approximated by the wages of the employees, as regulation diverts
workers from other activities in the economy.\551\ In this situation,
any effects on net employment are likely to be transitory as workers
change jobs. (For example, some workers may need to be retrained or
require time to search for new jobs, while shortages in some sectors or
regions could bid up wages to attract workers).\552\
---------------------------------------------------------------------------

    \551\ Schmalensee, Richard, and Robert N. Stavins. ``A Guide to
Economic and Policy Analysis of EPA's Transport Rule.'' White paper
commissioned by Excelon Corporation, March 2011.
    \552\ Although the employment level would not change
substantially, there would be costs to the workers associated with
shifting from one activity to another. Jacobson, Louis S., Robert J.
LaLonde, and Daniel G. Sullivan, ``Earnings Losses of Displaced
Workers.'' American Economic Review 83(4) (1993): 685-709.
---------------------------------------------------------------------------

    It is also true that, if a regulation comes into effect during a
period of high unemployment, a change in labor demand due to regulation
may affect net overall U.S. employment because the labor market is not
in equilibrium. Either negative or positive effects are possible.
Schmalansee and Stavins \553\ point out that net positive employment
effects are possible in the near term when the economy is at less than
full employment due to the potential hiring of idle labor resources by
the regulated sector to meet new requirements (e.g., to install new
equipment) and new economic activity in sectors related to the
regulated sector. In the longer run, the net effect on employment is
more difficult to predict and will depend on the way in which the
related industries respond to the regulatory requirements. As
Schmalansee and Stavins note, it is possible that the magnitude of the
effect on employment could vary over time, region, and sector, and
positive effects on employment in some regions or sectors could be
offset by negative effects in other regions or sectors. For this
reason, they urge caution in reporting partial employment effects since
it can ``paint an inaccurate picture of net employment impacts if not
placed in the broader economic context.''
---------------------------------------------------------------------------

    \553\ Ibid.
---------------------------------------------------------------------------

    This rulemaking is expected to have a relatively small effect on
net employment in the United States through the regulated sector--the
truck and engine manufacturer industry--and several related sectors,
specifically, industries that supply the truck and engine manufacturing
industry (e.g., truck parts), the trucking industry itself, other
industries involved in transporting goods (e.g., rail and shipping),
the petroleum refining sector, and the retail sector. According to the
U.S. Bureau of Labor Statistics, about 1.25 million people were
employed in the truck transportation industry and about 675,000 people
were employed in the motor vehicle parts industry between 2010 and
2011.\554\ Although heavy-duty vehicles (HD) account for approximately
4 percent of the vehicles on the road, these vehicles consume more than
20 percent of on-road gasoline and diesel fuel use. As discussed in
Chapter 5 of the RIA, this rulemaking is predicted to reduce the amount
of fuel these vehicles use, and thus affect the petroleum refinery
industry. 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.\555\ Finally, since the net reduction in
cost associated with these rules is expected to lead to lower
transportation and shipping costs, in a competitive market a
substantial portion of those cost savings will be passed along to
consumers, who then will have additional discretionary income (how much
of the cost is passed along to consumers depends on market structure
and the relative price elasticities).
---------------------------------------------------------------------------

    \554\ U.S. Bureau of Labor Statistics seasonally-adjusted
Current Employment Statistics Survey for the Truck Transportation
Industry (NAICS 484) and the Motor Vehicle Parts Manufacturing
Industry (NAICS 3363).
    \555\ U.S. Census Bureau, 2009 Annual Survey of Manufactures,
Published December 3, 2010.
---------------------------------------------------------------------------

    Several commenters suggested that the HD vehicle rules would lead
to an increase in employment in affected sectors by offering the
potential for new employment opportunities in the design and production
of new vehicle technologies. Also, these commenters suggested that
since the U.S. manufacturers and suppliers are leaders in certain
advanced truck technologies, this program has the potential to help
them consolidate their leadership and thrive in a global market. In
this context, several commenters referred to an assessment by the Union
of Concerned Scientists (UCS) and CalStart of the economic and
employment benefits of the improved efficiency in HD vehicles.\556\ The
study predicts an increase in tens of thousands of jobs between 2020
and 2030, as result of higher fuel efficiency for HD vehicles.
---------------------------------------------------------------------------

    \556\ Union of Concerned Scientists and CalStart, Delivering
Jobs: The Economic Costs and Benefits of Improving Fuel Economy of
Heavy Duty Vehicles, July, 2010. http://www.ucsusa.org/deliveringjobs.
---------------------------------------------------------------------------

    While the commenters find unambiguous employment increases as a
result of this program, we find employment impacts to involve some
complexity, as the discussion that follows shows. In addition, these
quantitative estimates were derived using a standard input-output
model, though the estimates themselves have not yet been peer reviewed.
Input-output (I/O) models do not account for opportunity costs of
labor--that is, all employment needs due to the regulatory change will
be met by unemployed workers. In addition, I/O models assume no changes
in the average use of labor per dollar of output in the affected
sectors. For these and other reasons, these may at best be considered
an imprecise upper bound on actual employment impacts.\557\
---------------------------------------------------------------------------

    \557\ Berck, Peter, and Sandra Hoffman. ``Assessing the
Employment Impacts of Environmental and Natural Resource Policy.''
Environmental and Resource Economics 22 (2002): 133-156.
---------------------------------------------------------------------------

    Other commenters suggested that the rulemaking could have a
negative impact on jobs if the rule was not appropriate, cost
effective, and technologically feasible. These comments focused on the
commenter's concern that the desirability, and therefore sales, of
certain vehicles could be diminished by a poorly designed rule, or that
customers of RVs in particular would not value fuel savings
technologies. The preceding discussion of the conceptual framework
suggests some potential reasons why consumers may not value fuel
savings technologies. If vehicle sales decrease as the comments suggest
such an impact could lead to job losses. Such comments were submitted
by the National RV Dealers Association (RVDA) and the National
Automobile Dealers Association (NADA).
    Determining the direction of employment effects even in the
regulated industry may be difficult due to the presence of competing
effects that lead to an ambiguous adjustment in employment as a result
of environmental regulation. Morgenstern, Pizer and Shih identify three
separate ways that employment levels may change in the regulated
industry in response to a new (or more stringent) regulation.\558\
---------------------------------------------------------------------------

    \558\ See Morgenstern et al (2002), Note 550, above.
---------------------------------------------------------------------------

     Demand effect: Higher production costs due to the
regulation will lead to higher market prices; higher prices in turn
reduce demand for the good, reducing the demand for labor to make

that good. In the authors' words, the ``extent of this effect depends
on the cost increase passed on to consumers as well as the demand
elasticity of industry output''.
     Cost effect: As costs go up, plants add more capital and
labor (holding other factors constant), with potentially positive
effects on employment; in the authors' words, as ``production costs
rise, more inputs, including labor, are used to produce the same amount
of output''.
     Factor-shift effect: Post-regulation production
technologies may be more or less labor-intensive (i.e., more/less labor
is required per dollar of output) (``factor-shift effect''). In the
authors' words, ``environmental activities may be more labor intensive
than conventional production,'' meaning that ``the amount of labor per
dollar of output will rise,'' though it is also possible that ``cleaner
operations could involve automation and less employment, for example''.

The ``demand effect'' is expected to have a negative effect on
employment, the ``cost effect'' to have a positive effect on
employment, and the ``factor-shift effect'' has an ambiguous effect on
employment. Without more information with respect to the magnitudes of
these competing effects, it is not possible to predict the total effect
environmental regulation will have on employment levels in a regulated
sector.
    Morgenstern et al. estimated the effects on employment of spending
on pollution abatement for four highly polluting/regulated industries
(pulp and paper, plastics, steel, and petroleum refining). They
conclude that increased abatement expenditures generally have not
caused a significant change in employment in those sectors. More
specifically, their results show that, on average across the industries
studied, each additional $1 million spent on pollution abatement
results in a (statistically insignificant) net increase of 1.5 jobs.
While the specific sectors Morgenstern et al. examined are different
than the sectors considered here, the methodology that Morgenstern et
al. developed is still useful in this context.
(2) Overview of Affected Sectors
    The above discussion focuses on employment changes in the regulated
sector, but the regulated sector is not the only source of changes in
employment. In these rules, the regulated sectors are truck and engine
manufacturers; they are responsible for meeting the standards set in
these rules. The effects of these rules are also likely to have impacts
beyond the directly regulated sector. Some of the related sectors which
these rules are also likely to impact include: motor vehicle parts
producers, to the extent that the truck and engine industries purchase
components rather than manufacture them in-house; shipping and
transport, because many companies in this sector purchase trucks and
their operating costs will be affected by both higher truck prices and
fuel savings; oil refineries due to reduced demand for petroleum-based
fuels; and the final retail market, which is where any net cost
reductions due to fuel savings are ultimately expected to be
experienced. We acknowledge that there may be impacts in other sectors
that are not discussed here, but we have sought to include the sectors
where we think the impacts are most direct. The following discussion
describes the direction of impacts on employment in these industries.
The effects of the HD National Program on net U.S. employment depend,
not only on their relative magnitudes, but also on employment levels in
the overall economy. As previously discussed, in a full-employment
economy these sector-specific impacts will be mostly offset by
employment changes elsewhere in the economy and would not be expected
to result in a net change in jobs. However, in an economy with
significant unemployment these changes may affect net employment in the
U.S.
(a) Truck and Engine Manufacturers
    The regulated sector consists of truck and engine manufacturers.
Employment associated with manufacturing trucks and engines may be
affected by the demand, cost, and factor-shift effects.
Demand Effect
    The demand effect depends on the effects of this rulemaking on HD
vehicle sales. If vehicle sales increase, then more people will be
required to assemble trucks and their components. If vehicle sales
decrease, employment associated with these activities will
unambiguously decrease. The effects of this rulemaking on HD vehicle
sales depend on the perceived desirability of the new vehicles. Unlike
in Morgenstern et al.'s study, where the demand effect decreased
employment, there are countervailing possibilities in the HD market due
to the fuel savings resulting from this program. On one hand, this
rulemaking will increase vehicle costs; by itself, this effect would
reduce vehicle sales. In addition, while decreases in vehicle
performance would also decrease sales, this program is not expected to
have any negative effect on vehicle performance. On the other hand,
this rulemaking will reduce the fuel costs of operating the vehicle; by
itself, this effect would increase vehicle sales, especially if
potential buyers have an expectation of higher fuel prices. The
agencies have not made an estimate of the potential change in vehicle
sales. However as discussed in Preamble Section VIII.E.5 the agencies
have estimated an increase in vehicle miles traveled (i.e., VMT
rebound) due to the reduced operating costs of trucks meeting these new
standards. Since increased VMT is most likely to be met with more
drivers and more trucks, our projection of VMT rebound is suggestive of
an increase in vehicle sales and truck driver employment (recognizing
that these increases may be partially offset by a decrease in
manufacturing and sales for equipment of other modes of transportation
such as rail cars or barges).
    As discussed above in Section VIII.A, the agencies find that the
reduction in fuel costs associated with this rulemaking outweigh the
increase in vehicle cost. This finding is puzzling: market forces
should lead truck manufacturers and buyers to install all cost-
effective fuel-saving technology, but the agencies find that they have
not. Section VIII.A discusses various hypotheses that have been
suggested to explain this phenomenon. Some of the explanations suggest
that vehicle manufacturers and buyers will benefit from the rulemaking,
and vehicle sales will increase; others suggest that the opposite might
occur. The agencies do not have strong evidence supporting one specific
explanation over another. However, some in the heavy-duty industry
indicate the potential for an increase in jobs. As stated by Tom
Linebarger (President and Chief Operating Officer of Cummins) and Fred
Krupp (President of the Environmental Defense Fund), ``Finally, strong
environmental standards play a crucial role in getting innovations to
market that will create economic opportunity for American companies and
jobs for American workers. * * * It helps that Cummins and other
forward-thinking businesses view this as an opportunity to innovate and
increase international market share.'' \559\
---------------------------------------------------------------------------

    \559\ Tom Linebarger (President and Chief Operating Officer of
Cummins) and Fred Krupp (President of the Environmental Defense
Fund), ``Clear rules can create better engines, clean air,''
Indianapolis Star, October 28, 2010, p. 19; included as part of
Cummins' comments on the rule, Docket Number EPA-HQ-OAR-2010-0162-
1765.1[1].
---------------------------------------------------------------------------

    One commenter raised the issue of whether there could be a loss of
recreation vehicle (RV) industry jobs due to a reduction in the sales
of motor homes and towable RVs. As mentioned

above, the effects of this rulemaking on HD vehicle sales depend on the
desirability of the new vehicles.
Cost Effect
    The truck and engine manufacturing sector has great flexibility in
how to respond to the requirement for reduced greenhouse gases and
increasing fuel efficiency, with a broad suite of technologies being
available to achieve the standards. These technologies are described in
detail in Chapter 2 of the RIA. Among these technologies, a distinction
can be made between technologies that can be ``added on'' to
conventional trucks versus those that replace features of a
conventional truck. ``Added on'' features, such as auxiliary power
units, require additional labor to install the technologies on trucks,
thus clearly increasing labor demand (the ``cost effect''). The pure
cost effect always increases employment, though the net effect on the
regulated industry depends on its effects in combination with the
demand and factor-shift effects.
Factor-Shift Effect
    For ``replacement'' technologies, the predicted impact on labor
demand from regulation depends on the change in the amount of labor
used to build and install one type of technology compared to another.
In some cases, the new technologies are predicted to be more complex
than the existing technologies and may therefore require additional
labor installation inputs. In other cases, the opposite may be true:
labor intensity may be lower for some replacement technologies.
    Most of the technologies that are expected to be used to meet these
standards are replacement technologies. For example, almost all of the
engine improvements involve replacement technologies that are not
expected to significantly change the labor requirements. Similarly,
regulations of the chassis on vocational vehicles will only require the
installation of a different type of tire, which is also not expected to
have large labor intensity impacts. Therefore, the potential magnitude
of the factor shift effect is expected to be relatively small, though
slightly positive due to the additional labor needed to install more
complex technologies.
Summary for the Truck and Engine Manufacturing Sector
    For the truck and engine manufacturing sector, the demand effect
may result in either increased or decreased employment; the cost effect
is expected to increase employment; and the factor-shift effect is
expected to have a small, possibly slightly positive effect on
employment in this sector. The net effect on employment in this sector
depends on the sum of these factors.
(b) Motor Vehicle Parts Manufacturing Sector
    Some vehicle parts are made in-house and would be included directly
in the regulated sector. Others are made by independent suppliers and
are not directly regulated, but they will be affected by the rules as
well. The parts manufacturing sector will be involved primarily in
providing ``add-on'' parts, or components for replacement parts built
internally. If demand for these parts increases due to the increased
use of these parts, employment effects in this sector are expected to
be positive. If the demand effect in the regulated sectors is
significantly negative enough, it is possible that demand for other
parts may decrease. As noted, the agencies do not predict a direction
for the demand effect.
(c) Transport and Shipping Sectors
    Although not directly regulated by these rules, employment effects
in the transport and shipping sector are likely to result from these
regulations. If the overall cost of shipping a ton of freight decreases
because of increased fuel efficiency (taking into account the increase
in upfront purchasing costs), in a perfectly competitive industry these
costs savings will be passed along to customers. With lower prices,
demand for shipping would lead to an increase in demand for truck
shipping services (consistent with the VMT rebound effect analysis) and
therefore an increase in employment in the truck shipping sector. In
addition, if the relative cost of shipping freight via trucks becomes
cheaper than shipping by other modes (e.g., rail or barge), then
employment in the truck transport industry is likely to increase. If
the trucking industry is more labor intensive than other modes, we
would expect this effect to lead to an overall increase in employment
in the transport and shipping sectors.560 561 Such a shift
would, however, be at the expense of employment in the sectors that are
losing business to trucking. The first effect--a gain due to lower
shipping costs--is likely to lead to a net increase in employment. The
second effect, due to mode-shifting, may increase employment in
trucking, but decreases in other shipping sectors.
---------------------------------------------------------------------------

    \560\ American Transportation Research Institute, ``An Analysis
of the Operational Costs of Trucking: 2011 Update.'' See http://www.atri-online.org/research/results/Op_Costs_2011_Update_one_page_summary.pdf.
    \561\ Association of American Railroads, ``All Inclusive Index
and Rail Adjustment Factor.'' June 3, 2011. See http://www.aar.org/
~/media/aar/RailCostIndexes/AAR-RCAF-2011-Q3.ashx.
---------------------------------------------------------------------------

(d) Fuel Suppliers
    In addition to the effects on the trucking industry and related
truck parts sector, these rules will result in reductions in fuel use
that lower GHG emissions. Fuel saving, principally reductions in liquid
fuels such as diesel and gasoline, will affect employment in the fuel
suppliers industry sectors, principally the Petroleum Refinery
sector.\562\
---------------------------------------------------------------------------

    \562\ North American Industry Classification System (NAICS) Code
32411.
---------------------------------------------------------------------------

    Expected fuel consumption reductions by fuel type, and by heavy-
duty vehicle type, can be found in Table VIII-7. These reductions
reflect impacts from the new fuel efficiency and GHG standards and
include increased consumption from the rebound effect. These fuel
savings are monetized in Table VIII-8 by multiplying the reduced fuel
consumption in each year by the corresponding estimated average fuel
price in that year, using the Reference Case from the AEO 2011. In
2014, the pre-tax fuel savings is $1.2 billion (2009$). While these
figures represent a level of fuel savings for purchasers of fuel, it
also represents a loss in value of output for the petroleum refinery
industry. Since 50 percent of the fuel would have been refined in the
U.S., the loss in output to the U.S. Petroleum Refinery sector is $600
million (2009$), which will result in reduced sectoral employment.\563\
Because this sector is very capital-intensive, the employment effect is
not expected to be large.
---------------------------------------------------------------------------

    \563\ EPA and NHTSA estimate that approximately 50 percent of
the reduction in fuel consumption resulting from adopting improved
fuel GHG standards and fuel efficiency standards is likely to be
reflected in reduced U.S. imports of refined fuel, while the
remaining 50 percent is expected to be reflected in reduced domestic
fuel refining. Of this latter figure, 90 percent is anticipated to
reduce U.S. imports of crude petroleum for use as a refinery
feedstock, while the remaining 10 percent is expected to reduce U.S.
domestic production of crude petroleum. Because we do not expect to
see a significant reduction in crude oil production in the U.S., we
do not expect this rule to have a significant impact on the Oil and
Gas Extraction industry sector in the U.S. (NAICS 211000). For more
information, refer to Section VIII-I on the energy security impacts
from the program.
---------------------------------------------------------------------------

(e) Fuel Savings
    As a result of this rulemaking, it is anticipated that trucking
firms will experience fuel savings. Fuel savings lower the costs of
transportation goods and services. In a competitive market, the fuel
savings that initially accrue to trucking firms are likely to be passed
along as lower transportation costs that, in turn, could result in
lower prices for

final goods and services. Alternatively, the savings could be kept
internally in firms for investments or for returns to firm owners. In
either case, the savings will accrue to some segment of consumers:
either owners of trucking firms or the general public. In both cases,
the effect will be increased spending by consumers in other sectors of
the economy, creating jobs in a diverse set of sectors, including
retail and service industries.
    As mentioned above, the value of fuel savings from this rulemaking
is projected to be $1.2 billion (2009$) in 2014, according to Table
VIII-8. If all those savings are spent, the fuel savings will stimulate
increased employment in the economy through those expenditures. If the
fuel savings accrue primarily to firm owners, they may either reinvest
the money or take it as profit. Reinvesting the money in firm
operations would increase employment directly. If they take the money
as profit, to the extent that these owners are wealthier than the
general public, they may spend less of the savings, and the resulting
employment impacts would be smaller than if the savings went to the
public. Thus, while fuel savings are expected to decrease employment in
the refinery sector, they are expected to increase employment through
increased consumer expenditures.
(3) Summary of Employment Impacts
    The net employment effects of this rulemaking are expected to be
found throughout several key sectors: truck and engine manufacturers,
the trucking industry, truck parts manufacturing, fuel production, and
consumers. For the regulated sector, the demand effect may result in
either increased or decreased employment, depending on the net effect
on HD vehicle sales; the cost effect is expected to increase employment
in the regulated sector; and the factor-shift effect is expected to
have a small, possibly slightly positive effect on employment, though
we cannot definitively say this is the case without quantification. The
net effect depends on the combination of these effects. Increased
expenditures by truck and engine parts manufacturers are expected to
require increased labor to build parts, though this effect also depends
on any changes in overall demand and on the labor intensity of
production of new parts; increased complexity of technologies may imply
increased labor inputs for some parts, though others might be less
labor-intensive. It is possible, if access to capital markets is
limited, that this rule might displace other HD sector investment,
which would reduce employment associated with those activities. Lower
prices for shipping are expected to lead to an increase in demand for
truck shipping services and, therefore, an increase in employment in
that sector, though this effect may be offset somewhat by changes in
employment in other shipping sectors. Reduced fuel production implies
less employment in the fuel provision sectors. Finally, any net cost
savings would be expected to be passed along to some segment of
consumers: either the general public or the owners of trucking firms,
who are expected then to increase employment through their
expenditures. Given the job creation as a result of the $1.2B (2009$)
in fuel savings in 2014 and the possible employment increases in the
manufacturing and parts sectors, we find it highly unlikely that there
would be significant net job losses related to this policy. Given the
current level of unemployment, net positive employment effects are
possible, especially in the near term, due to the potential hiring of
idle labor resources by the regulated sector to plan for and meet new
requirements. In the future, when full employment is expected to
return, any changes in employment levels in the regulated sector due to
this program are mostly expected to be offset by changes in employment
in other sectors.

IX. Analysis of the Alternatives

    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 public. The final standards that the
agencies have adopted today maximize the environmental and fuel savings
benefits of the program while taking into consideration the unique and
varied nature of the regulated industries. In developing this final
rulemaking, we considered a number of alternatives that could have
resulted in potentially fewer or greater GHG and fuel consumption
reductions than the program we are finalizing. This section summarizes
the alternatives we considered and presents assessments of technology
costs, CO2 reductions, and fuel savings associated with each
alternative. The agencies reduced the number of alternatives analyzed
in this final rulemaking compared to the proposal because we did not
receive any comments supporting standard setting for a smaller subset
than HD pickup trucks, combination tractors, and vocational vehicles
(as well as engines installed in vocational vehicles and combination
tractors). As discussed below, the agencies have also refined some of
the alternatives analyzed in response to the comments received.

A. What are the alternatives that the agencies considered?

    In developing alternatives, NHTSA must consider EISA's requirement
for the MD/HD fuel efficiency program noted above. 49 U.S.C.
32902(k)(2) and (3) contain the following three requirements specific
to the MD/HD vehicle fuel efficiency improvement program: (1) The
program must be ``designed to achieve the maximum feasible
improvement''; (2) the various required aspects of the program must be
appropriate, cost-effective, and technologically feasible for MD/HD
vehicles; and (3) the standards adopted under the program must provide
not less than four model years of lead time and three model years of
regulatory stability. In considering these various requirements, NHTSA
will also account for relevant environmental and safety considerations.
    The alternatives below represent a broad range of approaches for a
HD vehicle fuel efficiency and GHG emissions program. Details regarding
the modeling of each alternative are included in RIA Chapter 6. The
alternatives in order of increasing fuel efficiency and GHG emissions
reductions are:
(1) Alternative 1: No Action
    A ``no action'' alternative assumes that the agencies would not
issue rules regarding a MD/HD fuel efficiency improvement program. This
alternative is presented in order for NHTSA to comply with the National
Environmental Policy Act (NEPA) and to provide an analytical baseline
against which to compare environmental impacts of the other regulatory
alternatives.\564\ The agencies refer to this as the ``No Action
Alternative'' or as a ``no increase'' or ``baseline'' alternative. As
described in RIA Chapter 5, this no-

action alternative is considered the reference case.
---------------------------------------------------------------------------

    \564\ NEPA requires agencies to consider a ``no action''
alternative in their NEPA analyses and to compare the effects of not
taking action with the effects of the reasonable action alternatives
to demonstrate the different environmental effects of the action
alternatives. See 40 CFR 1502.2(e), 1502.14(d).CEQ has explained
that ``[T]he regulations require the analysis of the no action
alternative even if the agency is under a court order or legislative
command to act. This analysis provides a benchmark, enabling
decision makers to compare the magnitude of environmental effects of
the action alternatives. [See 40 CFR 1502.14(c).] * * * Inclusion of
such an analysis in the EIS is necessary to inform Congress, the
public, and the President as intended by NEPA. [See 40 CFR
1500.1(a).]'' Forty Most Asked Questions Concerning CEQ's National
Environmental Policy Act Regulations, 46 FR 18026 (1981) (emphasis
added).
---------------------------------------------------------------------------

    The no action alternative first presented in this final action is
based on the assumption that the new vehicle fleet continues to perform
at the same level as new 2010 vehicles. In this way, it provides a
comparison between today's new trucks and the increased cost and
reduced fuel consumption of future compliant vehicles.
    The agencies recognize that there is substantial uncertainty in
determining an appropriate baseline against which to compare the
effects of the proposed action. The lack of prior regulation of HD fuel
efficiency means that there is a lack of historic data regarding trends
in this sector. Therefore, in this final action, the agencies have also
included an analysis using a baseline derived from annual projections
developed by the U.S. Energy Information Administration (EIA) for the
Annual Energy Outlook (AEO). For this alternative baseline, the
agencies analyzed the new truck fuel economy projections for the Light
Commercial Trucks, along with the Medium- and Heavy-Duty Freight
Vehicles developed in AEO 2011.\565\ The agencies converted the fuel
economy improvements into CO2 emissions reductions relative
to a 2010 model year (See RIA Chapter 6).
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    \565\ U.S. Energy Information Administration. Annual Energy
Outlook 2011 Early Release. Last viewed on March 29, 2011 at http://www.eia.doe.gov/forecasts/aeo/. See Supplemental Tables 7, 63, and
68.
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    The baseline derived from the AEO forecast provides a comparison
between the impacts of the proposed standards and EIA's projection of
future new truck performance absent regulation. This alternative
baseline is informative in showing one possible projection of future
vehicle performance based on other factors beyond the regulation the
agencies are finalizing today. The AEO forecast makes a number of
assumptions that should be noted. AEO 2011 assumes improved fuel
efficiency for 8,500-10,000 lb. GVWR heavy-duty pickups due to the
light-duty 2012-2016 MY regulations. We project a similar capability
for fuel economy improvement as AEO does for this class of vehicles;
however, the agencies recognize that absent regulation manufacturers
may decline to add the necessary technologies to reach the level of our
proposed standards. For medium- and heavy-duty vocational vehicles, AEO
2011 projects a small reduction in fuel efficiency over time (an
increase in fuel consumption), similar to that achieved under the MY
2010 baseline. For Class 8 combination tractors, the AEO 2011 baseline
projects an annual improvement of approximately 0.3 percent.
    We are not able to make an estimate of the cost of the AEO 2011
alternative baseline because we are not able to accurately determine
the technology mix used in the AEO 2011 analysis to achieve the
projected improvements in fuel efficiency. We do know they differ
significantly from our own analysis as the EIA projections do not
include the full range of technologies considered by the agencies
(e.g., EIA's analysis does not consider the use of idle reduction
technologies and diesel auxiliary power units to reduce fuel
consumption associated with vehicle hoteling). If one were to assume
that the cost of the AEO2011 baseline was proportional to projected
improvement relative to our preferred alternative, the total AEO2011
baseline cost estimate would be approximately equal to the total cost
of the preferred case, but would vary by category.
(2) Alternative 2: 12 Percent Less Stringent Than the Preferred
Alternative
    Alternative 2 represents an alternative stringency level to the
agencies' preferred approach. Alternative 2 represents a stringency
level which is approximately 12 percent less stringent than the
preferred approach. The agencies calculated the Alternative 2
stringency level in order to meet two goals. First, we sought to create
an alternative that regulated the same engine and vehicle categories as
the preferred alternative, but at lower stringency (10-20 percent
lower) than the preferred alternative. Second we wanted an alternative
that reflected removal of the least cost effective technology that we
believed manufacturers would add last in order to meet the preferred
alternative. In other words, we wanted an alternative that as closely
as possible reflected the last increment in stringency prior to
reaching our preferred alternative. Please see Table 2-39 in RIA
Chapter 2 for a list of all of the technologies, as well as their cost
and relative effectiveness. The resulting Alternative 2 is based on the
same technologies used in Alternative 3 except as follows for each of
the three categories.
    The combination tractor standard would be based on the removal of
the Advanced SmartWay aerodynamic package and weight reduction
technologies, which decreases the average combination tractor GHG
emissions and fuel consumption reduction by approximately 1 percent.
    The HD pickup truck and van standard would be based on removal of
the 5 percent mass reduction technology, which decreases the average
truck reduction of fuel consumption and GHG emissions by approximately
1.6 percent.
    The vocational vehicle standard would be based on removal of low
rolling resistance tires--in essence meaning that there would be no
expected improvement in performance from vocational vehicles, only from
engines used to power them. This alternative would also reduce the
amount of technologies applied to diesel engines used in vocational
vehicles such that the engines achieve a 3 percent reduction in 2014
model year and a 5 percent reduction in 2017 model year, both compared
to a 2010 model year baseline,
    The agencies have decided not to finalize Alternative 2, because as
shown below, Alternative 3 is more stringent, is technically feasible,
highly cost effective, and results in a greater net benefit to society.
(3) Alternative 3: Preferred Alternative and Final Standards
    Alternative 3 represents the agencies' preferred approach. This
alternative consists of the finalized fuel efficiency and GHG standards
for HD engines, HD pickup trucks and vans, Class 2b through Class 8
vocational vehicles, and Class 7 and 8 combination tractors. Details
regarding modeling of this alternative are included in RIA Chapter 5 as
the control case.
    The agencies selected Alternative 3 over Alternatives 4 and 5
described below because the agencies concluded that alternatives 4 and
5 were not technically feasible to achieve given the leadtime provided
in these final rules. Hence, we have concluded that Alternative 3
represents the maximum feasible improvement. Section II of this
preamble provides an explanation of the consideration that agencies
gave to setting more stringent standards based on the application of
additional technologies and our reasons for concluding that the
identified technologies for each of the vehicle and engine standards
that constitute Alternative 3 represented the maximum feasible
improvement based on technological feasibility. In general, for
advanced technologies, we reached this conclusion for one of two
reasons. For some technologies such as Rankine Waste Heat Recovery
engine technologies, the agencies have concluded that the technology is
still in the research phase and will not be developed fully for new
engine production in the time frame of this first regulatory action. In
other cases, the agencies concluded that the

manufacturing capacity for technologies such as advanced battery
systems for heavy-duty hybrid drivetrains could not be expanded quickly
enough to allow for significant vehicle production volume in the time
frame of this program. Section III also details the agencies' reasons
for not basing standard stringencies on other technologies.
(4) Alternative 4: 20 Percent More Stringent Than the Preferred
Alternative
    Alternative 4 represents a modeled alternative which is 20 percent
more stringent than the preferred approach. The agencies derived the
stringency level based on similar goals as for Alternative 2.
Specifically, we wanted an alternative that would reflect an
incremental improvement over the preferred alternative based on adding
the next most cost effective technology in each of the categories. We
believed these were the technologies most likely to be attempted by
manufacturers if a more stringent standard were established. As
discussed above and in the feasibility discussion in Section III, we
are not finalizing Alternative 4 because we do not believe that the
technologies used in this alternative can be developed and introduced
in the time frame of this rulemaking. We note that the estimated costs
for this alternative are denoted as `+c.' The +c is intended to make
clear that the cost estimates we are showing do not include additional
costs related to pulling ahead the development and expanding
manufacturing base for the additional technologies (for example,
building new factories in the next few years). The resulting
Alternative 4 is based on the same technologies used in Alternative 3
except as follows for each of the three categories.
    The combination tractor standard would be based on the addition of
Rankine waste heat recovery systems and 100 percent application of
advanced aerodynamic technologies, such as underbody airflow treatment,
advanced gap reduction, rearview cameras to replace mirrors, and wheel
system streamlining, to high roof sleeper cab combination tractors. The
agencies do not believe that either advanced aerodynamic technologies
or Rankine waste heat recovery systems should be used to set the
standard for HD engines in 2017 MY because this technology is still in
the research phase. The agencies assumed 59 percent of all combination
tractors are sleeper cabs and of those, 80 percent are high roof